Exhibit 10.2

SECOND AMENDMENT TO THIRD AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

THIS SECOND AMENDMENT TO THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
(this “Amendment”), dated as of January 4, 2019, is entered into by and among
the Lenders (as defined below) signatory hereto, BANK OF AMERICA, N.A., as
administrative agent and as security trustee for the Lenders (in such capacity,
“Agent”), CALLAWAY GOLF COMPANY, a Delaware corporation (“Parent”), CALLAWAY
GOLF SALES COMPANY, a California corporation (“Callaway Sales”), CALLAWAY GOLF
BALL OPERATIONS, INC., a Delaware corporation (“Callaway Operations”), OGIO
INTERNATIONAL INC., a Utah corporation (“Ogio”), TRAVISMATHEW, LLC, a California
limited liability company (“travisMathew” and together with Parent, Callaway
Sales, Callaway Operations and Ogio, collectively, “U.S. Borrowers”), CALLAWAY
GOLF CANADA LTD., a Canada corporation (“Canadian Borrower”), CALLAWAY GOLF
EUROPE LTD., a company organized under the laws of England (registered number
02756321) (“U.K. Borrower” and together with the U.S. Borrowers and the Canadian
Borrower, collectively, “Borrowers”), and the other Obligors party hereto.

RECITALS

A.    Borrowers, the other Obligors party thereto, Agent, and the financial
institutions signatory thereto from time to time (each a “Lender” and
collectively the “Lenders”) have previously entered into that certain Third
Amended and Restated Loan and Security Agreement dated as of November 20, 2017
(as amended, supplemented, restated and modified from time to time, the “Loan
Agreement”), pursuant to which the Lenders have made certain loans and financial
accommodations available to Borrowers. Terms used herein without definition
shall have the meanings ascribed to them in the Loan Agreement.

B.    Obligors have requested that Agent and the Lenders amend the Loan
Agreement, which Agent and the Lenders are willing to do pursuant to the terms
and conditions set forth herein.

C.    Obligors are entering into this Amendment with the understanding and
agreement that, except as specifically provided herein, none of Agent’s or any
Lender’s rights or remedies as set forth in the Loan Agreement or any of the
other Loan Documents are being waived or modified by the terms of this
Amendment.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

1.    Amendments to Loan Agreement.

(a)    Subject to the satisfaction of the conditions set forth in Section 2 of
this Amendment, the Loan Agreement (but not including any Exhibits or Schedules
thereto unless expressly provided herein) is hereby amended as set forth in
Exhibit A attached hereto such that all of the newly inserted bold,
double-underlined text (indicated textually in the same manner as the following
examples: double-underlined text and double-underlined text) and any formatting
changes attached hereto shall be deemed to be inserted in the text of the Loan
Agreement and all of the deleted stricken text (indicated textually in the same
manner as the following examples: stricken text and stricken text) shall be
deemed to be deleted from the text of the Loan Agreement. An unmarked draft of
the Loan Agreement (but not

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including any Exhibits or Schedules thereto), as amended by this Amendment, is
attached hereto as Exhibit B.

(b)    Schedule 9.1.17 of the Loan Agreement is hereby amended and replaced in
its entirety with Schedule 9.1.17 attached hereto on Exhibit C.

(c)    Schedule 9.1.24 attached hereto on Exhibit D is hereby added to the Loan
Agreement.

2.    Effectiveness of this Amendment. The following shall have occurred before
this Amendment is effective:

(a)    Amendment. Agent shall have received this Amendment, executed by Agent,
each Obligor and the Lenders in a sufficient number of counterparts for
distribution to all parties.

(b)    Intercreditor Agreement. Agent shall have received the Intercreditor
Agreement (as defined after giving effect to this Amendment), executed by Agent
and the Term Loan Collateral Agent (as defined after giving effect to this
Amendment), and acknowledged by each Obligor in a sufficient number of
counterparts for distribution to all parties.

(c)    Loan Documents. Agent shall have received fully executed copies of the
loan documents evidencing and governing the Debt permitted under
Section 10.2.3(s) of the Loan Agreement, and such Debt transaction shall have
been consummated.

(d)    Representations and Warranties. The representations and warranties set
forth herein must be true and correct.

(e)    No Default. No event has occurred and is continuing that constitutes an
Event of Default.

(f)    Other Required Documentation. All other documents and legal matters in
connection with the transactions contemplated by this Amendment shall have been
delivered or executed or recorded and shall be in form and substance
satisfactory to Agent.

3.    Representations and Warranties. Each Obligor represents and warrants as
follows:

(a)    Authority. Each Obligor has the requisite corporate power and authority
to execute and deliver this Amendment, and to perform its obligations hereunder
and under the Loan Documents (as amended or modified hereby) to which it is a
party. The execution, delivery and performance by each Obligor of this Amendment
have been duly approved by all necessary corporate action and no other corporate
proceedings are necessary to consummate such transactions.

(b)    Enforceability. This Amendment has been duly executed and delivered by
each Obligor. This Amendment and each Loan Document to which any Obligor is a
party (as amended or modified hereby) is a legal, valid and binding obligation
of such Obligor, enforceable against such Obligor in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors’ rights generally or by equitable
principles relating to enforceability, and is in full force and effect.

(c)    Representations and Warranties. The representations and warranties
contained in each Loan Document to which any Obligor is a party (other than any
such representations or warranties

 

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that, by their terms, are specifically made as of a date other than the date
hereof) are correct on and as of the date hereof as though made on and as of the
date hereof.

(d)    Due Execution. The execution, delivery and performance of this Amendment
are within the power of each Obligor, have been duly authorized by all necessary
corporate action, have received all necessary governmental approval, if any, and
do not contravene any law or any contractual restrictions binding on any
Obligor.

(e)    No Default. No event has occurred and is continuing that constitutes an
Event of Default.

4.    Choice of Law. The validity of this Amendment, its construction,
interpretation and enforcement, the rights of the parties hereunder, shall be
determined under, governed by, and construed in accordance with the internal
laws of the State of New York, without giving effect to any conflict of law
principles (but giving effect to Section 5-1401 of the New York General
Obligation Law and Federal laws relating to national banks). The consent to
forum and judicial reference provisions set forth in Section 14.15 of the Loan
Agreement are hereby incorporated in this Amendment by reference.

5.    Counterparts. This Amendment may be executed in any number of counterparts
and by different parties and separate counterparts, each of which when so
executed and delivered, shall be deemed an original, and all of which, when
taken together, shall constitute one and the same instrument. Delivery of an
executed counterpart of a signature page to this Amendment by telefacsimile or a
substantially similar electronic transmission shall have the same force and
effect as the delivery of an original executed counterpart of this Amendment.
Any party delivering an executed counterpart of this Amendment by telefacsimile
or a substantially similar electronic transmission shall also deliver an
original executed counterpart, but the failure to do so shall not affect the
validity, enforceability or binding effect of such agreement.

6.    Reference to and Effect on the Loan Documents.

(a)    Upon and after the effectiveness of this Amendment, each reference in the
Loan Agreement to “this Agreement”, “hereunder”, “hereof” or words of like
import referring to the Loan Agreement, and each reference in the other Loan
Documents to “the Loan Agreement”, “thereof” or words of like import referring
to the Loan Agreement, shall mean and be a reference to the Loan Agreement as
modified and amended hereby.

(b)    Except as specifically amended above, the Loan Agreement and all other
Loan Documents are and shall continue to be in full force and effect and are
hereby in all respects ratified and confirmed and shall constitute the legal,
valid, binding and enforceable obligations of Obligors to Agent and the Lenders.

(c)    The execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein, operate as a waiver of any right, power or
remedy of Agent or any Lender under any of the Loan Documents, nor constitute a
waiver of any provision of any of the Loan Documents.

(d)    To the extent that any terms and conditions in any of the Loan Documents
shall contradict or be in conflict with any terms or conditions of the Loan
Agreement, after giving effect to this Amendment, such terms and conditions are
hereby deemed modified or amended accordingly to reflect the terms and
conditions of the Loan Agreement as modified or amended hereby.

 

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7.    Ratification. Each Obligor hereby restates, ratifies and reaffirms each
and every term and condition set forth in the Loan Agreement, as amended hereby,
and the Loan Documents effective as of the date hereof. Subject to and without
limiting the foregoing, all security interests, pledges, assignments and other
Liens and Guarantees previously granted by any Obligor pursuant to the Loan
Documents are hereby reaffirmed, ratified, renewed and continued, and all such
security interests, pledges, assignments and other Liens and Guarantees shall
remain in full force and effect as security for the Obligations on and after the
date hereof.

8.    Estoppel. To induce Lenders to enter into this Amendment and to continue
to make advances to Borrowers under the Loan Agreement, each Obligor hereby
acknowledges and agrees that, as of the date hereof, there exists no right of
offset, defense, counterclaim or objection in favor of any Obligor as against
Agent or any Lender with respect to the Obligations.

9.    Integration. This Amendment, together with the other Loan Documents,
incorporates all negotiations of the parties hereto with respect to the subject
matter hereof and is the final expression and agreement of the parties hereto
with respect to the subject matter hereof.

10.    Severability. In case any provision in this Amendment shall be invalid,
illegal or unenforceable, such provision shall be severable from the remainder
of this Amendment and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

[Remainder of Page Left Intentionally Blank]

 

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IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date
first above written.

 

OBLIGORS: CALLAWAY GOLF COMPANY, a Delaware corporation By:  

/s/ Brian P. Lynch

Name:   Brian P. Lynch Title:   Senior Vice President, General Counsel,
Corporate Secretary and Chief Financial Officer CALLAWAY GOLF SALES COMPANY, a
California corporation By:  

/s/ Jennifer L. Thomas

Name:   Jennifer L. Thomas Title:   Chief Financial Officer and Treasurer
CALLAWAY GOLF BALL OPERATIONS, INC., a Delaware corporation By:  

/s/ Jennifer L. Thomas

Name:   Jennifer L. Thomas Title:   Treasurer CALLAWAY GOLF CANADA LTD., a
Canada corporation By:  

/s/ Patrick S. Burke

Name:   Patrick S. Burke Title:   Director CALLAWAY GOLF EUROPE LTD., a company
organized under the laws of England and Wales By:  

/s/ Patrick S. Burke

Name:   Patrick S. Burke Title:   Director

 

[Signature Page to Second Amendment to Third Amended and Restated Loan and
Security Agreement]

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CALLAWAY GOLF EUROPE LTD.,

a company organized under the laws of England and Wales

By:  

/s/ Neil Howie

Name:   Neil Howie Title:   Director

CALLAWAY GOLF INTERACTIVE, INC.

a Texas corporation

By:  

/s/ Jennifer L. Thomas

Name:   Jennifer L. Thomas Title:   Chief Financial Officer

CALLAWAY GOLF INTERNATIONAL SALES COMPANY,

a California corporation

By:  

/s/ Patrick S. Burke

Name:   Patrick S. Burke Title:   President

CALLAWAY GOLF EUROPEAN HOLDING COMPANY LIMITED,

a company limited by shares incorporated under the laws of England and Wales

By:  

/s/ Neil Howie

Name:   Neil Howie Title:   Director

CALLAWAY GOLF EUROPEAN HOLDING COMPANY LIMITED,

a company limited by shares incorporated under the laws of England and Wales

By:  

/s/ Steven Gluyas

Name:   Steven Gluyas Title:   Director

 

[Signature Page to Second Amendment to Third Amended and Restated Loan and
Security Agreement]

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OGIO INTERNATIONAL INC., a Utah corporation By:  

/s/ Patrick S. Burke

Name:   Patrick S. Burke Title:   Vice President and Treasurer TRAVISMATHEW,
LLC, a California limited liability company By:  

/s/ Patrick S. Burke

Name:   Patrick S. Burke Title:   Treasurer

 

[Signature Page to Second Amendment to Third Amended and Restated Loan and
Security Agreement]

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AGENT AND LENDERS BANK OF AMERICA, N.A., as Agent and as a U.S. Lender By:  

/s/ James Fallahay

Name:   James Fallahay Title:   Senior Vice President BANK OF AMERICA, N.A.
(acting through its Canada branch), as a Canadian Lender By:  

/s/ Sylwia Durkiewicz

Name:   Sylwia Durkiewicz Title:   Senior Vice President BANK OF AMERICA, N.A.
(acting through its London branch), as a U.K. Lender By:  

/s/ James Fallahay

Name:   James Fallahay Title:   Senior Vice President

SUNTRUST BANK,

as a U.S. Lender, a Canadian Lender and a U.K. Lender

By:  

/s/ Brian O’Fallon

Name:   Brian O’Fallon Title:   Director

MUFG UNION BANK N.A.,

as a U.S. Lender, a Canadian Lender and a U.K. Lender

By:  

/s/ Pete Ehlinger

Name:   Pete Ehlinger Title:   Vice President

 

[Signature Page to Second Amendment to Third Amended and Restated Loan and
Security Agreement]

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JPMORGAN CHASE BANK, N.A., as a U.S. Lender By:  

/s/ Anna C. Araya

Name:   Anna C. Araya Title:   Executive Director JPMORGAN CHASE BANK, N.A.,
TORONTO BRANCH, as a Canadian Lender By:  

/s/ Maria Hornak

Name:   Maria Hornak Title:   Authorized Officer JPMORGAN CHASE BANK, N.A.,
LONDON BRANCH, as a U.K. Lender By:  

/s/ Kennedy Capin

Name:   Kennedy Capin Title:   Executive Director

 

[Signature Page to Second Amendment to Third Amended and Restated Loan and
Security Agreement]

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Exhibit A

Amendments to the Loan Agreement

(see attached)

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MARKED VERSION REFLECTING CHANGES

CONFORMED THROUGH FIRSTSECOND AMENDMENT TO THIRD AMENDED

AND RESTATED LOAN AGREEMENT

 

 

 

CALLAWAY GOLF COMPANY,

CALLAWAY GOLF SALES COMPANY,

CALLAWAY GOLF BALL OPERATIONS, INC.,

OGIO INTERNATIONAL INC.,TRAVIS MATHEW RETAIL, LLC, and

TRAVISMATHEW, LLC

as U.S. Borrowers, Canadian Facility Guarantors, and U.K. Facility Guarantors

CALLAWAY GOLF CANADA LTD.,

as the Canadian Borrower and a U.K. Facility Guarantor,

CALLAWAY GOLF EUROPE LTD.,

as the U.K. Borrower and a Canadian Facility Guarantor, and

THE OTHER OBLIGORS PARTY HERETO

 

 

THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

Dated as of November 20, 2017

$360,000,000

 

 

CERTAIN FINANCIAL INSTITUTIONS,

as Lenders,

BANK OF AMERICA, N.A.,

as Administrative Agent

MUFG UNION BANK N.A.

as Syndication Agent

SUNTRUST BANK,

as Documentation Agent

and

BANK OF AMERICA, N.A.,

as Sole Lead Arranger and Sole Bookrunner

 

 

 

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TABLE OF CONTENTS

 

         Page  

Section 1.

  Definitions; Rules of Construction      2  

1.1

  Definitions      2  

1.2

  Accounting Terms      61  

1.3

  Uniform Commercial Code/PPSA      61  

1.4

  Certain Matters of Construction      62  

1.5

  Calculations      62  

1.6

  Interpretation (Quebec)      63  

Section 2.

  Credit Facilities      63  

2.1

  Revolver Commitments      63  

2.2

  U.K. Letter of Credit Facility      68  

2.3

  U.S. Letter of Credit Facility      71  

2.4

  Canadian Letter of Credit Facility      75  

2.5

  Term Loans      78  

Section 3.

  Interest, Fees and Charges      79  

3.1

  Interest      79  

3.2

  Fees      81  

3.3

  Computation of Interest, Fees, Yield Protection      83  

3.4

  Reimbursement Obligations      84  

3.5

  Illegality      84  

3.6

  Inability to Determine Rates      85  

3.7

  Increased Costs; Capital Adequacy      85  

3.8

  Mitigation      86  

3.9

  Funding Losses      87  

3.10

  Maximum Interest      87  

Section 4.

  Loan Administration      88  

4.1

  Manner of Borrowing and Funding Revolver Loans      88  

4.2

  Defaulting Lender      92  

4.3

  Number and Amount of LIBOR Loans and Canadian BA Rate Loans; Determination of
Rate      92  

4.4

  Borrower Agent      93  

4.5

  One Obligation      93  

4.6

  Effect of Termination      93  

Section 5.

  Payments      94  

5.1

  General Payment Provisions      94  

5.2

  Repayment of Revolver Loans      94  

5.3

  Repayment of Term Loans      95  

5.4

  Payment of Other Obligations      96  

5.5

  Marshaling; Payments Set Aside      96  

5.6

  Post-Default Allocation of Payments      96  

5.7

  Application of Payments      99  

 

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5.8

  Loan Account; Account Stated      100  

5.9

  Taxes      101  

5.10

  Lender Tax Information      105  

5.11

  Guarantee by Obligors      106  

5.12

  Currency Matters      113  

5.13

  Currency Fluctuations      114  

Section 6.

  Conditions Precedent      114  

6.1

  Conditions Precedent to Effectiveness and Loans      114  

6.2

  Conditions Precedent to All Credit Extensions      115  

Section 7.

  Collateral      116  

7.1

  Grant of Security Interest      116  

7.2

  Lien on Deposit Accounts; Cash Collateral      118  

7.3

  Intentionally Omitted      119  

7.4

  Certain After-Acquired Collateral      119  

7.5

  No Assumption of Liability      120  

7.6

  Further Assurances      120  

Section 8.

  Collateral Administration      120  

8.1

  Borrowing Base Certificates      120  

8.2

  Administration of Accounts      121  

8.3

  Administration of Inventory      122  

8.4

  Intentionally Omitted      123  

8.5

  Administration of Deposit Accounts      123  

8.6

  General Provisions      123  

8.7

  Power of Attorney      124  

Section 9.

  Representations and Warranties      125  

9.1

  General Representations and Warranties      125  

Section 10.

  Covenants and Continuing Agreements      132  

10.1

  Affirmative Covenants      132  

10.2

  Negative Covenants      139  

10.3

  Financial Covenants      150  

10.4

  Company Trademark      151  

Section 11.

  Events of Default; Remedies on Default      151  

11.1

  Events of Default      151  

11.2

  Remedies upon Default      153  

11.3

  License      154  

11.4

  Setoff      154  

11.5

  Remedies Cumulative; No Waiver      154  

11.6

  Judgment Currency      155  

Section 12.

  Agent      155  

12.1

  Appointment, Authority and Duties of Agent      155  

 

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12.2

  Agreements Regarding Collateral and Field Examination Reports      158  

12.3

  Reliance By Agent      159  

12.4

  Action Upon Default      159  

12.5

  Ratable Sharing      159  

12.6

  Indemnification      159  

12.7

  Limitation on Responsibilities of Agent      160  

12.8

  Successor Agent and Co-Agents      160  

12.9

  Due Diligence and Non-Reliance      161  

12.10

  Remittance of Payments and Collections      161  

12.11

  Agent in its Individual Capacity      162  

12.12

  Agent Titles      162  

12.13

  Bank Product Providers      162  

12.14

  No Third Party Beneficiaries      163  

Section 13.

  Benefit of Agreement; Assignments      163  

13.1

  Successors and Assigns      163  

13.2

  Participations      163  

13.3

  Assignments      164  

13.4

  Replacement of Certain Lenders      165  

Section 14.

  Miscellaneous      165  

14.1

  Consents, Amendments and Waivers      165  

14.2

  Indemnity      166  

14.3

  Notices and Communications      167  

14.4

  Performance of Obligors’ Obligations      167  

14.5

  Credit Inquiries      168  

14.6

  Severability      168  

14.7

  Cumulative Effect; Conflict of Terms      168  

14.8

  Counterparts      168  

14.9

  Entire Agreement      168  

14.10

  Relationship with Lenders      168  

14.11

  Lender Loss Sharing Agreement      168  

14.12

  No Advisory or Fiduciary Responsibility      171  

14.13

  Confidentiality      171  

14.14

  GOVERNING LAW      172  

14.15

  Consent to Forum; Judicial Reference; Bail-In of EEA Financial Institutions   
  172  

14.16

  Waivers by Obligors      173  

14.17

  Patriot Act Notice      173  

14.18

  Canadian Anti-Money Laundering Legislation      174  

14.19

  Reinstatement      174  

14.20

  Nonliability of Lenders      174  

14.21

  Know Your Customer      175  

14.22

  Amendment and Restatement      175  

 

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LIST OF EXHIBITS AND SCHEDULES

Exhibit A-1

   Form of Canadian Revolver Note

Exhibit A-2

   Form of U.S. Revolver Note

Exhibit A-3

   Form of U.K. Revolver Note

Exhibit B

   Assignment and Acceptance

Exhibit C

   Assignment Notice

Exhibit D

   Form of Compliance Certificate

Exhibit E

   Form of Mortgage

Schedule E-1

   Existing Letters of Credit

Schedule F-1

   Company Trademarks

Schedule 1.1

   Commitments of Lenders

Schedule 1.1A

   Mandatory Cost Formulae

Schedule 1.1C

   U.K. Eligible Foreign Accounts

Schedule 1.1D

   U.K. Non-Bank Lenders

Schedule 5.9.9

   Treaty Lenders under HMRC DT Passport Scheme

Schedule 8.6.1

   Business Locations

Schedule 9.1.8

   Real Property in a Special Flood Hazard Zone

Schedule 9.1.9

   Environmental Matters

Schedule 9.1.12

   ERISA Compliance

Schedule 9.1.13

   Names and Capital Structure

Schedule 9.1.17

   Patents, Trademarks, Copyrights and Licenses

Schedule 9.1.21

   Labor Contracts

Schedule 9.1.24

   Commercial Tort Claims

Schedule 10.2.1

   Existing Liens

Schedule 10.2.2

   Permitted Investments

Schedule 10.2.3

   Permitted Debt

 

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THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

THIS THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is dated as of
November 20, 2017, among CALLAWAY GOLF COMPANY, a Delaware corporation
(“Parent”), CALLAWAY GOLF SALES COMPANY, a California corporation (“Callaway
Sales”), CALLAWAY GOLF BALL OPERATIONS, INC., a Delaware corporation (“Callaway
Operations”), OGIO INTERNATIONAL INC., a Utah corporation, (“Ogio”), TRAVIS
MATHEW RETAIL, LLC, a California limited liability company (“Travis Mathew
Retail”), TRAVISMATHEW, LLC, a California limited liability company
(“travisMathew” and together with Parent, Callaway Sales, and Callaway
Operations and Travis Mathew Retail, collectively, “U.S. Borrowers”), CALLAWAY
GOLF CANADA LTD., a Canada corporation (“Canadian Borrower”) CALLAWAY GOLF
EUROPE LTD., a company organized under the laws of England (registered number
02756321) (“U.K. Borrower” and together with the U.S. Borrowers and the Canadian
Borrower, collectively, “Borrowers”), the other Obligors party to this Agreement
from time to time, the financial institutions party to this Agreement from time
to time as lenders (collectively, “Lenders”), and BANK OF AMERICA, N.A., a
national banking association, as administrative agent and as security trustee
for the Lenders (“Agent”).

R E C I T A L S:

WHEREAS, Agent, the Lenders party thereto, Parent, Callaway Sales, Callaway
Operations, the Canadian Borrower, and the other Obligors party thereto entered
into that certain Second Amended and Restated Loan and Security Agreement (the
“Second Amended and Restated Loan Agreement”), dated as of December 22, 2011
(the “Second Amended Original Closing Date”), which amended and restated that
certain Amended and Restated Loan and Security Agreement dated as of July 22,
2011 (the “Original Amended and Restated Loan Agreement”), which amended and
restated that certain Loan and Security Agreement dated as of June 30, 2011 (the
“Original Loan Agreement”);

WHEREAS, the parties hereto have agreed to amend and restate in their entirety
the agreements contained in the Second Amended and Restated Loan Agreement as
amongst themselves;

WHEREAS, the Obligors have requested that: (i) the U.S. Lenders provide a credit
facility to the U.S. Borrowers; (ii) the Canadian Lenders provide a credit
facility to the Canadian Borrower; and (iii) the U.K. Lenders provide a credit
facility to the U.K. Borrower, in each case, to finance their mutual and
collective business enterprise;

WHEREAS, the applicable Lenders are willing to provide such credit facilities on
the terms and conditions set forth herein; and

WHEREAS, each Obligor hereby restates, ratifies and reaffirms each and every
term and condition set forth in the Second Amended and Restated Loan Agreement,
as amended and restated hereby, and the other Loan Documents effective as of the
date hereof;

NOW, THEREFORE, in consideration of the mutual conditions and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is

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hereby acknowledged, the parties hereto amend and restate the Second Amended and
Restated Loan Agreement and agree as follows:

 

SECTION 1.

DEFINITIONS; RULES OF CONSTRUCTION

1.1    Definitions. As used herein, the following terms have the meanings set
forth below:

Account: as defined in the UCC (and/or, with respect to any Accounts of a
Canadian Subsidiary, as defined in the PPSA), including all rights to payment
for goods sold or leased, or for services rendered.

Account Debtor: a Person who is obligated under an Account, Chattel Paper or
General Intangible.

Acquisition: any transaction, or any series of related transactions, consummated
on or after the Original Agreement Closing Date, by which Parent, directly or
indirectly, acquires (a) any going business or all or substantially all of the
assets of any Person or division thereof, whether through purchase of assets,
merger, or otherwise or (b) in one transaction or as the most recent transaction
in a series of transactions, a majority (in number of votes) of the Equity
Interests of a Person which has ordinary voting power for the election of
directors or other similar management personnel of a Person (other than Equity
Interests having such power only by reason of the happening of a contingency) or
a majority of the outstanding Equity Interests of a Person.

Acquisition Cap: $25,000,000.

Additional Collateral: as defined in Section 10.2.1(o).

Affiliate: with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified. “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. “Controlling” and
“Controlled” have correlative meanings.

Agent: as defined in the preamble to this Agreement.

Agent Indemnitees: Agent and its officers, directors, employees, Affiliates,
agents and attorneys.

Agent Professionals: attorneys, accountants, appraisers, auditors, business
valuation experts, environmental engineers or consultants, turnaround
consultants, and other professionals and experts retained by Agent.

Agreement: this Third Amended and Restated Loan and Security Agreement.

Allocable Amount: as defined in Section 5.11.

 

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AML Legislation: as defined in Section 14.17.

Anti-Corruption Laws: means all laws, rules, and regulations of any jurisdiction
applicable to any Obligor or any Subsidiaries from time to time concerning or
relating to bribery or corruption.

Anti-Terrorism Laws: any laws relating to terrorism or money laundering,
including the Patriot Act and the Proceeds of Crime Act.

Applicable Law: all laws, rules, regulations and governmental guidelines with
the force of law applicable to the Person, conduct, transaction, agreement or
matter in question, including all applicable statutory law, common law and
equitable principles, and all provisions of constitutions, treaties, statutes,
rules, regulations, orders and decrees of Governmental Authorities.

Applicable Lenders: with respect to: (a) the U.S. Borrowers, the U.S. Lenders
who have a U.S. Revolver Commitments (and if the U.S. Revolver Commitments have
terminated, each U.S. Lender that had a U.S. Revolver Commitment immediately
prior to such termination), (b) the Canadian Borrower, the Canadian Lenders, and
(c) the U.K. Borrower, the U.K. Lenders.

Applicable Margin: with respect to any Type of Loan, the respective margin set
forth in the grid below (the “Pricing Grid”), as determined by the Availability
Ratio for the last calendar month:

 

Level

  

Availability Ratio

   U.S.
Base
Rate
Revolver
Loans     LIBOR
Revolver
Loans     Canadian
BA Rate
Loans     Canadian
Prime
Rate
Loans
and
Canadian
Base Rate
Loans     U.K.
Base
Rate
Loans     Base
Rate
Term
Loans     LIBOR
Term
Loans  

I

   Greater than or equal to 67%      0.50 %      1.50 %      1.50 %      0.50 % 
    1.50 %      2.00 %      3.00 % 

II

   Less than 67% but greater than or equal to 33%      0.75 %      1.75 %     
1.75 %      0.75 %      1.75 %      2.25 %      3.25 % 

III

   Less than 33%      1.00 %      2.00 %      2.00 %      1.00 %      2.00 %   
  2.50 %      3.50 % 

Margins shall be subject to increase or decrease based upon the Availability
Ratio for the prior calendar month, as determined by Agent. If, by the first day
of a calendar month, any

 

3

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Borrowing Base Certificate due in the preceding calendar month has not been
received, then, at the option of Agent or Required Lenders, the margins shall be
determined as if Level III were applicable, from such day until the first day of
the calendar month following actual receipt.

Notwithstanding the foregoing, the Applicable Margin for any month with respect
to (i) U.S. Base Rate Revolver Loans, Canadian Prime Rate Loans, Canadian Base
Rate Loans, LIBOR Revolver Loans, Canadian BA Rate Loans and U.K. Base Rate
Loans shall be increased by .50% if any U.S. Availability is generated under
both clause (b)(iii) and clause (b)(iv) of the definition of the U.S. Borrowing
Base at any time in such month, and (ii) U.S. Base Rate Revolver Loans, Canadian
Prime Rate Loans, Canadian Base Rate Loans, LIBOR Revolver Loans, Canadian BA
Rate Loans and U.K. Base Rate Loans, shall be increased by .25% if any U.S.
Availability is generated under either clause (b)(iii) or clause (b)(iv) of the
definition of the U.S. Borrowing Base (but not both such clauses) at any time in
such month.

Applicable Time Zone: for borrowings under, and payments due by Borrowers or
Lenders on (a) with respect to U.S. Revolver Loans, Term Loans and Canadian
Revolver Loans, Pacific time, and (b) with respect to U.K. Revolver Loans,
London time.

Approved Fund: any Person (other than a natural person) that is engaged in
making, purchasing, holding or otherwise investing in commercial loans and
similar extensions of credit in the Ordinary Course of Business, and is
administered or managed by a Lender, an entity that administers or manages a
Lender, or an Affiliate of either.

Asset Disposition: a sale, lease, license, consignment, transfer or other
disposition of Property of an Obligor or a Subsidiary, including a disposition
of Property in connection with a sale-leaseback transaction or synthetic lease.

Assignment and Acceptance: an assignment agreement between a Lender and Eligible
Assignee, in the form of Exhibit B.

Assignment of Claims Act: Assignment of Claims Act of 1940, 31 U.S.C. § 3727, 41
U.S.C. § 15, as amended.

Attorney: as defined in Section 12.1.1(c).

Availability: as of any date of determination, the sum of the U.S. Availability
plus the Canadian Availability plus the U.K. Availability.

Availability Ratio: the ratio (expressed as a percentage), for any calendar
month, of (a) the average daily Availability for such calendar month to (b) an
amount equal to the sum of (i) the average daily Canadian Borrowing Base
(without giving effect to the Canadian LC Reserve for purposes of this
calculation) for such calendar month, plus (ii) the average daily U.S. Borrowing
Base (without giving effect to the U.S. LC Reserve, the Canadian Overadvance
Loan Balance, and the U.K. Overadvance Loan Balance for purposes of this
calculation) for such calendar month, plus (iii) the average daily U.K.
Borrowing Base (without giving effect to the U.K. LC Reserve for purposes of
this calculation) for such calendar month.

 

4

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Available Currency: (i) in the case of a U.S. Borrower, Dollars, (ii) in the
case of the Canadian Borrower, Dollars or Canadian Dollars, and (iii) in the
case of the U.K. Borrower, Dollars, British Pounds or Euro (but in the case of
U.K. Base Rate Loans, Dollars only).

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

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

Bank of America: Bank of America, N.A., a national banking association, and its
successors and assigns.

Bank of America (Canada): Bank of America, N.A. (acting through its Canada
branch), and its successors and assigns.

Bank of America Indemnitees: Bank of America and its officers, directors,
employees, Affiliates, branches, agents and attorneys.

Bank Product: any of the following products, services or facilities extended to
any Obligor or Subsidiary by a Lender or any of its Affiliates: (a) Cash
Management Services; (b) products under Hedging Agreements; (c) commercial
credit card and merchant card services; (d) purchase cards (including so-called
“procurement cards” or “P-cards”), and (e) other banking products or services as
may be requested by any Obligor or Subsidiary unless otherwise agreed in writing
between such Obligor or Subsidiary and the provider of such products or
services, other than Letters of Credit.

Bank Product Debt: Debt and other obligations of an Obligor or Subsidiary
relating to Bank Products.

Base Rate Loan: a U.S. Base Rate Loan, a Canadian Base Rate Loan or a U.K. Base
Rate Loan, as applicable.

Base Rate Term Loan: a Term Loan that bears interest based on the U.S. Base
Rate.

Board of Governors: the Board of Governors of the Federal Reserve System.

Borrowed Money: with respect to any Obligor or Subsidiary, without duplication,
its (a) Debt that (i) arises from the lending of money by any Person to such
Obligor or Subsidiary, (ii) is evidenced by notes, drafts, bonds, debentures,
credit documents or similar instruments, (iii) accrues interest or is a type
upon which interest charges are customarily paid (excluding trade payables owing
in the Ordinary Course of Business), or (iv) was issued or assumed as full or
partial payment for Property; (b) Capital Leases; (c) reimbursement obligations
with respect to letters of credit; and (d) guaranties of any Debt of the
foregoing types owing by another Person.

Borrower Agent: as defined in Section 4.4.

 

5

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Borrower Group: a group consisting of (i) the U.S. Borrowers, (ii) the Canadian
Borrower, or (iii) the U.K. Borrower, as the context requires.

Borrowers: as defined in the preamble to this Agreement.

Borrowing: a group of Loans of one Type that are made on the same day or are
converted into Loans of one Type on the same day.

Borrowing Base: the Canadian Borrowing Base and/or the U.S. Borrowing Base
and/or the U.K. Borrowing Base, as the context requires.

Borrowing Base Certificate: a U.S. Borrowing Base Certificate, a Canadian
Borrowing Base Certificate, or a U.K. Borrowing Base Certificate, as applicable.

British Pounds or £: the lawful currency of the United Kingdom.

Business Day: any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the laws of, or are in fact
closed in, North Carolina and New York, and if such day relates to: (a) a LIBOR
Loan, any such day on which dealings in deposits in the relevant Available
Currency of that LIBOR Loan are conducted between banks in the London interbank
eurocurrency market, (b) a Canadian Revolver Loan, any such day on which banks
in Toronto, Ontario, Canada are open for the transaction of banking business,
(c) any U.K. Revolver Loan or U.K. Lender, any day on which commercial banks are
open for the transaction of banking business in London, or (d) any Revolver Loan
denominated in Euro, any day which is a TARGET Day.

CAM: as defined in Section 14.11(a)(i).

CAM Exchange: as defined in Section 14.11(a)(ii).

CAM Exchange Date: as defined in Section 14.11(a)(iii).

CAM Percentage: as defined in Section 14.11(a)(iv).

Calculation Date: as defined in Section 5.13.

Canadian Accounts Formula Amount: (a) as of any date of determination within the
period beginning on May 1 through and including October 31 of each Fiscal Year,
85% of the Value of Eligible Accounts of the Canadian Borrower; and (b) as of
any date of determination within the period beginning on November 1 through and
including April 30 of each Fiscal Year, 90% of the Value of Eligible Accounts of
the Canadian Borrower.

Canadian Availability: as of any date of determination, the Canadian Borrowing
Base as of such date of determination minus the aggregate principal amount of
all Canadian Revolver Loans outstanding on such date of determination.

Canadian Availability Reserve: the sum (without duplication) of (a) the
Inventory Reserve with respect to the Canadian Borrower’s Inventory; (b) the
Canadian Rent and Charges Reserve;

 

6

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(c) the Canadian LC Reserve; (d) the Canadian Bank Product Reserve; (e) all
accrued Royalties of the Canadian Domiciled Obligors, whether or not then due
and payable by a Canadian Domiciled Obligor; (f) the aggregate amount of
liabilities secured by Liens upon Canadian Facility Collateral that are senior
to the Agent’s Liens (but imposition of any such reserve shall not waive an
Event of Default arising therefrom); (g) the Canadian Priority Payables Reserve;
(h) the Wage Earner Protection Act Reserve; (i) the Canadian Dilution Reserve;
(j) the Canadian Top Golf Reserve; and (k) such additional reserves, in such
amounts and with respect to such matters, as Agent in its Credit Judgment may
elect to impose from time to time with respect to the Canadian Borrowing Base.

Canadian BA Rate: with respect to each Interest Period for a Canadian BA Rate
Loan, a per annum rate of interest equal to the Canadian Dollar bankers’
acceptance rate, or comparable or successor rate approved by Agent, determined
by it at or about 10:00 a.m. (Toronto time) on the applicable day (or the
preceding Business Day, if the applicable day is not a Business Day) for a term
comparable to the Canadian BA Rate Loan, as published on the CDOR Page or other
applicable Reuters screen page (or other commercially available source
designated by Agent from time to time), provided, that in no event shall the
Canadian BA Rate be less than zero.

Canadian BA Rate Loan: a Canadian Revolver Loan, or portion thereof, funded in
Canadian Dollars and bearing interest calculated by reference to the Canadian BA
Rate.

Canadian Bank Product Reserve: the aggregate amount of reserves established by
Agent from time to time in its discretion in respect of Secured Bank Product
Obligations owing by the Canadian Domiciled Obligors and their Subsidiaries.

Canadian Base Rate: for any day, the greater of (i) the per annum rate of
interest designated by Bank of America (Canada) from time to time as its base
rate for commercial loans made by it in Dollars, which rate is based on various
factors, including its costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans, which
may be priced at, above or below such rate; (ii) the Federal Funds Rate for such
day, plus 0.50% per annum; or (iii) LIBOR for a 30 day interest period as of
such day, plus 1.00%; provided, that in no event shall the Canadian Base Rate be
less than zero. Any change in such rate shall take effect at the opening of
business on the applicable Business Day.

Canadian Base Rate Loan: a Canadian Revolver Loan, or portion thereof, funded in
Dollars and bearing interest calculated by reference to the Canadian Base Rate.

Canadian Borrower: as defined in the preamble to this Agreement.

Canadian Borrowing Base: on any date of determination, an amount equal to the
lesser of (a) the result of: (i) the Maximum Canadian Facility Amount, minus
(ii) the Canadian LC Reserve, minus (iii) the Canadian Top Golf Reserve; or
(b) the result of: (i) the Canadian Accounts Formula Amount, plus (ii) the
Canadian Inventory Formula Amount, plus (iii) 100% of the amount of Canadian
Pledged Cash, minus (iv) the Canadian Availability Reserve.

Canadian Borrowing Base Certificate: a certificate, in form and substance
satisfactory to Agent, by which the Canadian Borrower certifies calculation of
the Canadian Borrowing Base.

 

7

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Canadian Cash Collateral Account: a demand deposit, money market or other
account established by Agent at Bank of America (Canada) or such other financial
institution as Agent may select in its discretion, which account shall be for
the benefit of the Canadian Facility Secured Parties and shall be subject to
Agent’s Liens securing the Canadian Facility Obligations.

Canadian Dilution Reserve: as of any date of determination, an amount sufficient
to reduce the advance rate against Eligible Accounts of the Canadian Borrower by
1% for each whole percentage point (or portion thereof) by which the Dilution
Percent is in excess of 5.0%.

Canadian Dollars or Cdn$: the lawful currency of Canada.

Canadian Domiciled Obligor: each Canadian Subsidiary which is at any time an
Obligor, and “Canadian Domiciled Obligors” means all such Persons, collectively.

Canadian Dominion Account: a special account established by the Canadian
Borrower at Bank of America (Canada) or another bank acceptable to Agent, over
which Agent has exclusive control for withdrawal purposes during any Dominion
Trigger Period.

Canadian Employee Benefits Legislation: the Employment Pensions Plan Act
(Alberta), Pension Benefits Standards Act (British Columbia), the Supplemental
Pension Plans Act (Quebec) and any Canadian federal, provincial or local
counterparts or equivalents, in each case, as applicable and as amended from
time to time.

Canadian Employee Plan: any payroll practice and other employee benefit plan,
policy, program, agreement or arrangement, including retirement, pension, profit
sharing, employment, individual consultant or other compensation agreement,
collective bargaining agreement, bonus or other incentive compensation,
retention, stock purchase, equity or equity-based compensation, deferred
compensation, change in control, severance, sick leave, vacation, loans, salary
continuation, hospitalization, health, life insurance, educational assistance or
other fringe benefit or perquisite plan, policy, agreement which is or was
sponsored, maintained or contributed to by, or required to be contributed to by,
a Canadian Domiciled Obligor, or with respect to which a Canadian Domiciled
Obligor has or could have any obligation or liability, contingent or otherwise.

Canadian Expeditors Reserve: as of any date of determination, the aggregate
amount of accounts payable owed by any Canadian Facility Obligor to Expeditors,
as determined by Agent in its Credit Judgment.

Canadian Facility Collateral: all Collateral that now or hereafter secures (or
is intended to secure) any of the Canadian Facility Obligations, including
Property of each Canadian Domiciled Obligor, each U.S. Domiciled Obligor, and
each U.K. Domiciled Obligor.

Canadian Facility Guarantee: each guarantee agreement (including this Agreement)
at any time executed by a Canadian Facility Guarantor in favor of Agent
guaranteeing all or any portion of the Canadian Facility Obligations.

Canadian Facility Guarantor: Parent, each Canadian Subsidiary, each U.S.
Subsidiary (other than uPlay unless uPlay becomes a Guarantor in accordance with
Section 10.2.15), each

 

8

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U.K. Subsidiary, and each other Person (if any) who guarantees payment and
performance of any Canadian Facility Obligations.

Canadian Facility Obligations: all Obligations of the Canadian Facility Obligors
(excluding, for the avoidance of doubt, the Obligations of the U.S. Domiciled
Obligors as guarantors of any U.S. Facility Obligations).

Canadian Facility Obligor: each of the Canadian Borrower or any Canadian
Facility Guarantor, and “Canadian Facility Obligors” means all of such Persons,
collectively.

Canadian Facility Secured Parties: Agent, the Canadian Issuing Bank, the
Canadian Lenders and the Secured Bank Product Providers who provide Bank
Products to the Canadian Facility Obligors and their Subsidiaries.

Canadian Inventory Formula Amount: as of any date of determination, the lesser
of (a) the sum of (i) with respect to Eligible Inventory that has been owned by
the Canadian Borrower for less than one (1) calendar year as of the applicable
date of determination, (A) for the period beginning on March 1 through and
including September 30 of each Fiscal Year, 65% of the Value of the Canadian
Borrower’s Eligible Inventory, and (B) for the period beginning on October 1
through and including February 28 (or February 29, as applicable) of each Fiscal
Year, 75% of the Value of the Canadian Borrower’s Eligible Inventory, plus
(ii) with respect to Eligible Inventory that has been owned by the Canadian
Borrower for more than one (1) calendar year, as of the applicable date of
determination, 50% of the Value of the Canadian Borrower’s Eligible Inventory;
or (b) 85% of the NOLV Percentage of the Value of the Canadian Borrower’s
Eligible Inventory. Notwithstanding the foregoing, the aggregate amount of the
Canadian Inventory Formula Amount which may be attributed to Eligible In-Transit
Inventory (the “Canadian In-Transit Availability”) shall not exceed $5,000,000;
provided, that, the Canadian In-Transit Availability (after taking into effect
the previous proviso) shall be reduced by the Canadian Expeditors Reserve if, as
of any date of determination, either (I) Canadian Net Excess Availability is
less than 10% of the Maximum Canadian Facility Amount, or (II) there are any
accounts payable owed by any Canadian Facility Obligor to Expeditors which are
aged in excess of historical levels (except in cases of good faith disputes).

Canadian Issuing Bank: Bank of America (Canada) or an Affiliate of Bank of
America (Canada).

Canadian LC Obligations: the sum (without duplication) of (a) all amounts owing
by the Canadian Borrower for any drawings under Letters of Credit; (b) the
stated amount of all outstanding Letters of Credit issued for the account of the
Canadian Borrower, which if such Letter of Credit is denominated in a currency
other than Canadian Dollars or Dollars, may be stated by Agent (at its option)
in Canadian Dollars or Dollars calculated at the Spot Rate; and (c) all fees and
other amounts owing with respect to Letters of Credit issued for the account of
the Canadian Borrower.

Canadian LC Reserve: the aggregate of all Canadian LC Obligations, other than
those that have been Cash Collateralized.

 

9

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Canadian Lenders: Bank of America (Canada) and each other Lender that has issued
a Canadian Revolver Commitment (provided that such Person or an Affiliate of
such Person also has a U.S. Revolver Commitment). Each Canadian Lender shall be
a Canadian Qualified Lender.

Canadian Letter of Credit Subline: $5,000,000.

Canadian Letters of Credit: any standby or documentary letter of credit issued
by the Canadian Issuing Bank for the account of the Canadian Borrower, or any
indemnity, guarantee, exposure transmittal memorandum or similar form of credit
support issued by Agent or the Canadian Issuing Bank for the benefit of the
Canadian Borrower.

Canadian Multi-Employer Plan: each multi-employer plan, within the meaning of
the Regulations under the Income Tax Act (Canada).

Canadian Net Excess Availability: as of any date of determination, an amount
equal to the Canadian Availability minus the aggregate amount, if any, of all
trade payables of Canadian Domiciled Obligors that are more than 60 days past
due (or such later date as Agent may approve in its sole discretion) and all
book overdrafts of Canadian Domiciled Obligors in excess of historical practices
with respect thereto, in each case as determined by Agent in its Credit
Judgment.

Canadian Overadvance: as defined in Section 2.15.

Canadian Overadvance Loan: a Canadian Revolver Loan made to the Canadian
Borrower when a Canadian Overadvance exists or is caused by the funding thereof.

Canadian Overadvance Loan Balance: on any date, the amount by which the
aggregate Canadian Revolver Exposure exceeds the amount of the Canadian
Borrowing Base on such date.

Canadian Pension Plan: a “registered pension plan,” as defined in the Income Tax
Act (Canada) and any other pension plan maintained or contributed to by, or to
which there is or may be an obligation to contribute by, any Obligor in respect
of its Canadian employees or former employees, excluding, for greater certainty,
a Canadian Multi-Employer Plan.

Canadian Pledged Cash: the funds maintained in a blocked Deposit Account or
securities account of the Canadian Borrower subject to a Deposit Account Control
Agreement or securities account control agreement, as applicable, which give
Agent at all times exclusive access and control for withdrawal purposes to the
exclusion of the Canadian Borrower and precluding the Canadian Borrower from
withdrawing or otherwise giving any instructions in connection therewith and
which may not be withdrawn without the Agent’s prior written consent (such
consent not to be unreasonably withheld if (i) upon and after giving effect to
such withdrawal, no Default or Event of Default shall have occurred and be
continuing and (ii) immediately after such withdrawal (for clarification,
including after giving effect to any recalculation of the Canadian Borrowing
Base upon giving effect to such withdrawal), Canadian Availability would be a
positive number), and which are subject to effective security documents, in form
and substance satisfactory to Agent, that provide Agent with an unencumbered
perfected first priority/ranking security interest in and Lien on such funds.

 

10

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Canadian Prime Rate: on any date, the greater of (i) the per annum rate of
interest designated by Bank of America (Canada) from time to time as its prime
rate for commercial loans made by it in Canada in Canadian Dollars, which rate
is based on various factors, including its costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above or below such rate; or
(ii) the Canadian BA Rate for a one month interest period as of such day, plus
1.00%; provided, that in no event shall the Canadian Prime Rate be less than
zero. Any change in such rate shall take effect at the opening of business on
the applicable Business Day.

Canadian Prime Rate Loan: a Canadian Revolver Loan, or portion thereof, funded
in Canadian Dollars and bearing interest calculated by reference to the Canadian
Prime Rate.

Canadian Priority Payables Reserve: on any date of determination, a reserve in
such amount as Agent may determine which reflects the unpaid (when due) or
un-remitted (when due) payroll tax deductions, unpaid (when due) pension plan
contributions, employment insurance premiums, amounts deducted for vacation pay,
wages, workers’ compensation, unpaid (when due) or un-remitted (when due) sales
tax, goods and services tax, value added tax, harmonized tax, excise tax, tax
payable pursuant to Part IX of the Excise Tax Act (Canada) or similar applicable
provincial legislation and other unpaid (when due) or unremitted (when due)
amounts by any Canadian Domiciled Obligor which would give rise to a Lien with
priority under Applicable Law over the Lien of Agent.

Canadian Qualified Lender: a financial institution that is not precluded from
being a Canadian Lender under the terms of the Bank Act (Canada) or other
applicable Canadian federal or provincial legislation.

Canadian Reimbursement Date: as defined in Section 2.4.2.

Canadian Rent and Charges Reserve: the aggregate of (a) all past due rent and
other amounts owing by an Obligor to any landlord, warehouseman, processor,
repairman, mechanic, shipper, freight forwarder, broker or other Person who
possesses any Canadian Facility Collateral or could assert a Lien on any
Canadian Facility Collateral; and (b) a reserve at least equal to three months’
rent and other charges that could be payable to any such Person, unless it has
executed a Lien Waiver.

Canadian Required Lenders: Canadian Lenders (subject to Section 4.2) having
(a) Canadian Revolver Commitments in excess of 50% of the aggregate Canadian
Revolver Commitments; and (b) if the Canadian Revolver Commitments have
terminated, Canadian Revolver Loans and Canadian LC Obligations in excess of 50%
of all outstanding Canadian Revolver Loans and Canadian LC Obligations;
provided, however, that the Canadian Revolver Commitments and Canadian Revolver
Loans of any Defaulting Lender shall be excluded from such calculation;
provided, further, that at any time there are: (i) 3 or more Canadian Lenders,
“Canadian Required Lenders” must include at least 3 Canadian Lenders, and
(ii) less than 3 Canadian Lenders, “Canadian Required Lenders” must include all
Canadian Lenders.

Canadian Revolver Commitment: for any Canadian Lender, its obligation to make
Canadian Revolver Loans and to participate in Canadian LC Obligations in the
applicable

 

11

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Available Currencies up to the maximum principal amount shown on Schedule 1.1,
or as hereafter determined pursuant to each Assignment and Acceptance to which
it is a party, as such Canadian Revolver Commitment may be adjusted from time to
time in accordance with the provisions of Sections 2.1.4 or 11.2. “Canadian
Revolver Commitments” means the aggregate amount of such commitments of all
Canadian Lenders.

Canadian Revolver Commitment Termination Date: the earliest of (a) the U.S.
Revolver Commitment Termination Date (without regard to the reason therefor),
(b) the date on which the Borrower Agent terminates or reduces to zero all of
the Canadian Revolver Commitments pursuant to Section 2.1.4, and (c) the date on
which the Canadian Revolver Commitments are terminated pursuant to Section 11.2.

Canadian Revolver Exposure: on any date, an amount equal to the sum of the
Dollar Equivalent of the Canadian Revolver Loans outstanding on such date plus
the Canadian LC Obligations on such date.

Canadian Revolver Loan: a Revolver Loan made by Canadian Lenders to Canadian
Borrower pursuant to Section 2.1.1(b), which Revolver Loan shall, if denominated
in Canadian Dollars, be either a Canadian BA Rate Loan or a Canadian Prime Rate
Loan and, if denominated in Dollars, shall be either a Canadian Base Rate Loan
or a LIBOR Loan, in each case as selected by the Borrower Agent, and any
Canadian Swingline Loan, Canadian Overadvance Loan or Protective Advance made to
or owed by the Canadian Borrower.

Canadian Revolver Notes: a promissory note executed by Canadian Borrower in
favor of a Canadian Lender in the form of Exhibit A-1, in the amount of such
Canadian Lender’s Canadian Revolver Commitment.

Canadian Security Agreement: each (a) general security agreement, security
agreement, deed of hypothec, pledge agreement, mortgage or similar agreement
pursuant to which any Canadian Domiciled Obligor grants to Agent, for the
benefit of the Canadian Facility Secured Parties, Liens upon its Property as
security for the Canadian Facility Obligations or (b) security agreement, deed
of hypothec, pledge agreement, mortgage or similar agreement pursuant to which
any U.S. Domiciled Obligor or U.K. Domiciled Obligor grants to Agent, for the
benefit of the Secured Parties, Liens on its Property located in Canada or
otherwise subject to Canadian law as security for the Obligations.

Canadian Subsidiary: a Subsidiary of Parent incorporated or organized under the
laws of Canada or any province or territory of Canada.

Canadian Swingline Loan: any Borrowing of Canadian Base Rate Loans funded with
Agent’s funds, until such Borrowing is settled among the Canadian Lenders or
repaid by the Canadian Borrower.

Canadian Top Golf Reserve: a reserve established by Agent at Parent’s request in
accordance with the definition of Top Golf Proceeds, in an initial amount as of
such establishment equal to $0. The Canadian Top Golf Reserve (a) shall be
reduced on a dollar for dollar basis for the amount expended in connection with
(x) any Common Stock Repurchases made, or dividends paid on Parent’s common
stock, in each case after the Third Amendment to Second Amended and

 

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Restated Effective Date in accordance with Section 10.2.6(g)(ii)(C) and (y) any
Investments made after the Third Amendment to Second Amended and Restated
Effective Date in accordance with Section 10.2.2(k)(ii)(C); (b) may be
permanently reduced from time to time upon Parent’s written request to Agent;
and (c) subject to Agent’s written consent (such consent not to be unreasonably
withheld if (i) upon and after giving effect to such adjustment, no Default or
Event of Default shall have occurred and be continuing, and (ii) immediately
after such adjustment (for clarification, including after giving effect to any
recalculation of the U.K. Borrowing Base and U.S. Borrowing Base upon giving
effect to such adjustment), U.K. Availability and U.S. Availability would be a
positive number), may be reallocated on a dollar for dollar basis to the U.K.
Top Golf Reserve and/or the U.S. Top Golf Reserve upon Parent’s written request
to Agent; provided, however, that once reduced pursuant to clause (b) above, the
Canadian Top Golf Reserve may not be increased. The parties agree that the
Canadian Top Golf Reserve shall never be less than zero (-0-). For
clarification, the aggregate amount of the Canadian Top Golf Reserve, the U.K.
Top Golf Reserve, and the U.S. Top Golf Reserve may not exceed an amount equal
to the aggregate amount of Top Golf Proceeds received by Parent as reflected in
all Top Golf Proceeds Notices (less any amounts Parent elects to deposit into
the Top Golf Blocked Account) less all amounts expended in connection with
(x) any Common Stock Repurchases made, or dividends paid on Parent’s common
stock, in each case after the Third Amendment to Second Amended and Restated
Effective Date in accordance with Section 10.2.6(g) and (y) any Investments made
after the Third Amendment to Second Amended and Restated Effective Date in
accordance with Section 10.2.2(k) and less all permanent reductions elected by
Parent pursuant to clause (b) of each of the definitions of Canadian Top Golf
Reserve, U.K. Top Golf Reserve, and U.S. Top Golf Reserve.

Canadian Unused Line Fee Rate: a per annum rate equal to 0.25%.

Capital Expenditures: all liabilities incurred or expenditures made by an
Obligor or Subsidiary for the acquisition of fixed assets, or any improvements,
replacements, substitutions or additions thereto with a useful life of more than
one year.

Capital Lease: any lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

Cash Collateral: cash, and any interest or other income earned thereon, that is
delivered to Agent to Cash Collateralize any Obligations.

Cash Collateral Account: the U.S. Cash Collateral Account and/or the Canadian
Cash Collateral Account and/or the U.K. Cash Collateral Account, as the context
may require.

Cash Collateralize: the delivery of cash to Agent, as security for the payment
of Obligations, in an amount equal to (a) with respect to LC Obligations, 105%
of the aggregate LC Obligations, and (b) with respect to any inchoate,
contingent or other Obligations (including Secured Bank Product Obligations),
Agent’s good faith estimate of the amount due or to become due, including all
fees and other amounts relating to such Obligations. “Cash Collateralization”
has a correlative meaning.

Cash Equivalents: (a) marketable obligations issued or unconditionally
guaranteed by, and backed by the full faith and credit of, the United States,
Canadian or United Kingdom government,

 

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maturing within 12 months of the date of acquisition; (b) certificates of
deposit, time deposits and bankers’ acceptances maturing within 12 months of the
date of acquisition, and overnight bank deposits, in each case which are issued
by Bank of America or a commercial bank organized under the laws of the United
States (or any state or district of the United States), Canada (or any province
or territory of Canada), England, Wales, Scotland or Northern Ireland, rated A-1
(or better) by S&P or P-1 (or better) by Moody’s at the time of acquisition, and
(unless issued by a Lender) not subject to offset rights; (c) repurchase
obligations with a term of not more than 30 days for underlying investments of
the types described in clauses (a) and (b) entered into with any bank described
in clause (b); (d) commercial paper issued by Bank of America or rated A-1 (or
better) by S&P or P-1 (or better) by Moody’s, and maturing within nine months of
the date of acquisition; and (e) shares of any money market fund that has
substantially all of its assets invested continuously in the types of
investments referred to above, has net assets of at least $500,000,000 and has
the highest rating obtainable from either Moody’s or S&P.

Cash Management Services: any services provided from time to time by any Lender
or any of its Affiliates to any Obligor or Subsidiary in connection with
operating, collections, payroll, trust, or other depository or disbursement
accounts, including automated clearinghouse, e-payable, electronic funds
transfer, wire transfer, controlled disbursement, overdraft, depository,
information reporting, lockbox and stop payment services.

CERCLA: the Comprehensive Environmental Response Compensation and Liability Act
(42 U.S.C. § 9601 et seq.).

Change in Law: the occurrence, after the date hereof, of (a) the adoption,
taking effect or phasing in of any law, rule, regulation or treaty; (b) any
change in any law, rule, regulation or treaty or in the administration,
interpretation or application thereof; or (c) the making, issuance or
application of any request, guideline, requirement or directive (whether or not
having the force of law) by any Governmental Authority; provided that,
notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street
Reform and Consumer Protection Act and all requests, rules, guidelines or
directives thereunder or issued in connection therewith and (y) all requests,
rules, guidelines or directives promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority) or the United States or foreign regulatory authorities, in
each case pursuant to Basel III, shall in each case be deemed to be a “Change in
Law,” regardless of the date enacted, adopted or issued.

Change of Control: (a) any “person” or “group” (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding
any employee benefit plan of Parent or its Subsidiaries, and any person or
entity acting in its capacity as trustee, agent or other fiduciary or
administrator of any such plan) becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a
person or group shall be deemed to have “beneficial ownership” of all securities
that such person or group has the right to acquire (such right, an “option
right”), whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of 35% or more of the Equity Interests of
Parent entitled to vote for members of the board of directors or equivalent
governing body of Parent on a fully-diluted basis (and taking into account all
such securities that such person or group has the right to acquire pursuant to
any option right); or (b) Parent ceases to own and control, beneficially and of
record, directly or indirectly, all Equity Interests in all other Obligors.

 

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Claims: all claims, liabilities, obligations, losses, damages, penalties,
judgments, proceedings, interest, costs and expenses of any kind (including
remedial response costs, reasonable attorneys’ fees and Extraordinary Expenses)
at any time (including after Full Payment of the Obligations or replacement of
Agent or any Lender) incurred by any Indemnitee or asserted against any
Indemnitee by any Obligor or other Person, in any way relating to (a) any Loans,
Letters of Credit, Loan Documents, or the use thereof or transactions relating
thereto, (b) any action taken or omitted in connection with any Loan Documents,
(c) the existence or perfection of any Liens, or realization upon any
Collateral, (d) exercise of any rights or remedies under any Loan Documents or
Applicable Law, or (e) failure by any Obligor to perform or observe any terms of
any Loan Document, in each case including all costs and expenses relating to any
investigation, litigation, arbitration or other proceeding (including an
Insolvency Proceeding or appellate proceedings), whether or not the applicable
Indemnitee is a party thereto.

Closing Date: as defined in Section 6.1.

Code: the Internal Revenue Code of 1986.

Collateral: all Property described in Section 7.1, all Property described in any
Security Documents as security for any Obligations, and all other Property that
now or hereafter secures (or is intended to secure) any Obligations.

Commitment: for any Lender, the aggregate amount of such Lender’s U.S. Revolver
Commitment, Term Loan Commitment, Canadian Revolver Commitment, and U.K.
Revolver Commitment. “Commitments” means the aggregate amount of all U.S.
Revolver Commitments, Canadian Revolver Commitments, and U.K. Revolver
Commitments.

Commodity Exchange Act: the Commodity Exchange Act (7 U.S.C. § 1 et seq.).

Common Stock Repurchase: a repurchase, redemption or other retirement for value
of Parent’s common stock.

Company Trademark: collectively, the trademarks owned by the U.S. Borrowers set
forth on Schedule F-1 (as such Schedule may updated to include additional
trademarks with the written consent of all Lenders).

Compliance Certificate: a certificate, in the form of Exhibit D, by which
Borrowers certify compliance with Section 10.3 and for purposes of determination
of the Applicable Margin (such certificate to include a calculation of the Fixed
Charge Coverage Ratio and the Leverage Ratio in all cases, whether or not a
Covenant Trigger Period is in effect and regardless of the current pricing level
as set forth in the Pricing Grid).

Consolidated Tangible Assets: as of any date of determination, the Consolidated
Total Assets of Parent and its Subsidiaries minus consolidated intangible assets
of Parent and its Subsidiaries, all determined in accordance with GAAP.

Consolidated Total Assets: as of any date of determination, the consolidated
total assets of Parent and its Subsidiaries as of such date, determined in
accordance with GAAP.

 

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Contingent Obligation: as to any Person, any (a) obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Debt or other obligation payable or performable by another
Person (the “primary obligor”) in any manner, whether directly or indirectly,
and including any obligation of such Person, direct or indirect, (i) to purchase
or pay (or advance or supply funds for the purchase or payment of) such Debt or
other obligation, (ii) to purchase or lease property, securities or services for
the purpose of assuring the obligee in respect of such Debt or other obligation
of the payment or performance of such Debt or other obligation, (iii) to
maintain working capital, equity capital or any other financial statement
condition or liquidity or level of income or cash flow of the primary obligor so
as to enable the primary obligor to pay such Debt or other obligation, or
(iv) entered into for the purpose of assuring in any other manner the obligee in
respect of such Debt or other obligation of the payment or performance thereof
or to protect such obligee against loss in respect thereof (in whole or in
part), or (b) Lien on any assets of such Person securing any Debt or other
obligation of any other Person, whether or not such Debt or other obligation is
assumed by such Person. The amount of any Contingent Obligation shall be deemed
to be an amount equal to the stated or determinable amount of the related
primary obligation, or portion thereof, in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by the guaranteeing
Person in good faith.

Contractual Obligation: as to any Person, any provision of any security issued
by such Person or of any agreement, instrument or other undertaking to which
such Person is a party or by which it or any of its property is bound.

Costco: Costco Wholesale Corporation, a Washington corporation.

Covenant Trigger Period: the period (a) commencing on the day that Net Excess
Availability is less than, at any time, an amount equal to the Covenant Trigger
Period Threshold Percentage of the Maximum Facility Amount; and (b) continuing
until, during the preceding 30 consecutive days, Net Excess Availability has
been greater than, at all times, an amount equal to the Covenant Trigger Period
Threshold Percentage of the Maximum Facility Amount.

Covenant Trigger Period Threshold Percentage: 10%.

Credit Judgment: Agent’s judgment exercised in good faith, based upon its
consideration of any factor that it believes (a) could reasonably be expected to
adversely affect the quantity, quality, mix or value of Collateral (including
any Applicable Law that may inhibit collection of an Account), the
enforceability or priority of Agent’s Liens, or the amount that Agent and
Lenders could receive in liquidation of any Collateral; (b) provides a
reasonable basis to conclude that any collateral report or financial information
delivered by any Obligor is incomplete, inaccurate or misleading in any material
respect; (c) materially increases the likelihood of any Insolvency Proceeding
involving an Obligor; or (d) creates or could reasonably be expected to result
in a Default or Event of Default. In exercising such judgment, Agent may
consider any factors that could reasonably be expected to increase the credit
risk of lending to Borrowers on the security of the Collateral.

Credit Party: Agent, a Lender or an Issuing Bank; and “Credit Parties” means
Agent, Lenders and Issuing Banks.

 

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Creditor Representative: under any Applicable Law, a receiver, interim receiver,
receiver and manager, trustee (including any trustee in bankruptcy), custodian,
conservator, administrator, examiner, sheriff, monitor, assignee, liquidator,
provisional liquidator, sequestrator or similar officer or fiduciary.

CWA: the Clean Water Act (33 U.S.C. §§ 1251 et seq.).

Debt: as to any Person at a particular time, without duplication, all of the
following, whether or not included as indebtedness or liabilities in accordance
with GAAP: (a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes, loan
agreements or other similar instruments; (b) all direct or contingent
obligations of such Person arising under letters of credit (including standby
and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar
instruments; (c) all obligations of such Person to pay the deferred purchase
price of property or services (other than trade accounts payable and accrued
expenses arising in the Ordinary Course of Business); (d) indebtedness
(excluding prepaid interest thereon) secured by a Lien on property owned or
being purchased by such Person (including indebtedness arising under conditional
sales or other title retention agreements), whether or not such indebtedness
shall have been assumed by such Person or is limited in recourse; (e) Capital
Leases and Off-Balance Sheet Liabilities; (f) all Contingent Obligations of such
Person in respect of the foregoing clauses (a) through (e); and (g) in the case
of an Obligor, the Obligations.

Default: an event or condition that, with the lapse of time or giving of notice,
would constitute an Event of Default.

Default Rate: for any Obligation (including, to the extent permitted by law,
interest not paid when due), 2% plus the interest rate otherwise applicable
thereto.

Defaulting Lender: any Lender that, as determined by Agent, (a) has failed to
perform any funding obligations hereunder, and such failure is not cured within
three Business Days; (b) has notified Agent or any Borrower that such Lender
does not intend to comply with its funding obligations hereunder or has made a
public statement to the effect that it does not intend to comply with its
funding obligations hereunder or under any other credit facility; (c) has
failed, within three Business Days following request by Agent, to confirm in a
manner satisfactory to Agent that such Lender will comply with its funding
obligations hereunder; or (d) has, or has a direct or indirect parent company
that has, become the subject of an Insolvency Proceeding (including
reorganization, liquidation, or appointment of a receiver, custodian,
administrator or similar Person by the Federal Deposit Insurance Corporation or
any other regulatory authority), or Bail-In Action; provided, however, that a
Lender shall not be a Defaulting Lender solely by virtue of a Governmental
Authority’s ownership of an equity interest in such Lender or parent company
unless the ownership provides immunity for such Lender from jurisdiction of
courts within the United States or from enforcement of judgments or writs of
attachment on its assets, or permits such Lender or Governmental Authority to
repudiate or otherwise to reject such Lender’s agreements.

Deposit Account: as defined in the UCC (and/or with respect to any Deposit
Account located in Canada and/or the U.K., any bank account with a deposit
function).

 

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Deposit Account Control Agreements: the deposit account control agreements to be
executed by each institution maintaining a Deposit Account for an Obligor, in
favor of Agent, for the benefit of Secured Parties.

Designated Jurisdiction: a country or territory that is the target of Sanctions.

Designated Obligations: as defined in Section 14.11(a)(v).

Dilution Percent: the percent, for any period determined by Agent, equal to
(a) bad debt write-downs or write-offs, discounts, returns, promotions, credits,
credit memos and other dilutive items with respect to Accounts of the U.S.
Borrowers (in the case of the U.S. Dilution Reserve), the Canadian Borrower (in
the case of the Canadian Dilution Reserve), or the U.K. Borrower (in the case of
the U.K. Dilution Reserve), divided by (b) gross sales of the U.S. Borrowers (in
the case of the U.S. Dilution Reserve), of the Canadian Borrower (in the case of
the Canadian Dilution Reserve), or of the U.K. Borrower (in the case of the U.K.
Dilution Reserve).

Direction: as defined in Section 5.9.2(b)(i).

Distribution: any declaration or payment of a distribution, interest or dividend
on any Equity Interest (other than payment-in-kind); any distribution, advance
or repayment of Debt to a holder of Equity Interests; or any purchase,
redemption, or other acquisition or retirement for value of any Equity Interest.

Document: as defined in the UCC (and/or with respect to any Document of a
Canadian Subsidiary, a “document of title” as defined in the PPSA).

Dollars: lawful money of the United States.

Dollar Equivalent: on any date, with respect to any amount denominated in
Dollars, such amount in Dollars, and with respect to any stated amount in a
currency other than Dollars, the amount of Dollars that Agent determines (which
determination shall be conclusive and binding absent manifest error) would be
necessary to be sold on such date at the applicable Exchange Rate to obtain the
stated amount of the other currency.

Dominion Account: with respect to the U.S. Domiciled Obligors, a U.S. Dominion
Account, with respect to the Canadian Domiciled Obligors, a Canadian Dominion
Account, and with respect to the U.K. Domiciled Obligors, a U.K. Dominion
Account.

Dominion Trigger Period: the period (a) commencing on the day that an Event of
Default occurs, or Net Excess Availability is less than: (i) an amount equal to
10% of the Maximum Facility Amount for five (5) consecutive Business Days, or
(ii) 7.5% of the Maximum Facility Amount at any time, and (b) continuing until,
during the preceding 30 consecutive days, no Event of Default has existed and
Net Excess Availability has been greater than, at all times, an amount equal to
10% of the Maximum Facility Amount. Agent will endeavor to provide copies of
each notice of control Agent sends to any Dominion Account bank to Borrower
Agent substantially contemporaneously with providing such notice to such
Dominion Account bank; provided, however, that the failure of Agent to provide a
copy of any such notice to Borrower Agent shall not give rise to any liability
on the part of Agent and shall not affect the validity and effectiveness of such
notice.

 

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EBITDA: determined on a consolidated basis for Parent and Subsidiaries, net
income, calculated before interest expense, non-cash stock compensation expense,
provision for income taxes, depreciation and amortization expense, other
non-cash expenses (except to the extent representing a reserve or accrual for
cash expenses in another period) of Borrower Agent and its subsidiaries
(including, without limitation, non-cash amounts related to any downsizing,
restructuring or partial close of any operations of Borrower Agent or any of its
subsidiaries), gains or losses arising from the sale of capital assets, gains
arising from the write-up of assets, any extraordinary gains, any gains on
account of a transaction which results in Parent receiving Top Golf Proceeds,
the transaction expenses incurred during the 2017 Fiscal Year in an aggregate
amount not to exceed $4,000,000, and one-time transaction expenses incurred with
respect to any Debt incurrence permitted by Section 10.2.3 (in each case, to the
extent included in determining net income).

EEA Financial Institution: (a) any credit institution or investment firm
established in an EEA Member Country that is subject to the supervision of an
EEA Resolution Authority; (b) any entity established in an EEA Member Country
that is a parent of an institution described in clause (a) above; or (c) any
financial institution established in an EEA Member Country that is a subsidiary
of an institution described in the foregoing clauses and is subject to
consolidated supervision with its parent.

EEA Member Country: any of the member states of the European Union, Iceland,
Liechtenstein and Norway.

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

Eligible Account: an Account owing to a Borrower that arises in the Ordinary
Course of Business from the sale of goods or rendition of services, is payable
in Dollars (or, in the case of: (x) an Account owing to the Canadian Borrower,
in Dollars or Canadian Dollars, and (y) an Account owing to the U.K. Borrower,
in Dollars, Euro, or British Pounds), and is deemed by Agent, in its Credit
Judgment, to satisfy the criteria set forth below. No Account shall be an
Eligible Account if (a) it is unpaid for more than 60 days after the original
due date (or up to an additional 30 days as Agent may approve on an Account
Debtor by Account Debtor basis in its sole discretion), or it is unpaid for more
than 150 days after the original invoice date (or up to an additional 30 days as
Agent may approve on an Account Debtor by Account Debtor basis in its sole
discretion); (b) 50% or more of the Accounts owing by the Account Debtor are not
Eligible Accounts under the foregoing clause; (c) when aggregated with other
Accounts owing by the Account Debtor and such Account Debtor’s Affiliates, it
exceeds 15% of the aggregate Eligible Accounts (or such higher percentage as
Agent may establish for the Account Debtor and its Affiliates from time to
time); provided that, with respect to Accounts owing by Dick’s Sporting Goods,
such percentage shall be 30%; (d) it does not conform with a covenant or
representation herein; (e) it is owing by a creditor or supplier, or is
otherwise subject to a potential offset, counterclaim, dispute, deduction,
discount, recoupment, reserve, defense, chargeback, credit or allowance (but
ineligibility shall be limited to the amount thereof); (f) an Insolvency
Proceeding has been commenced by or against the Account Debtor; or the Account
Debtor has failed, has suspended or ceased doing business, is liquidating,
dissolving or winding up its affairs, or is not

 

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Solvent, or is the target of any Sanction or on any specially designated
nationals list maintained by OFAC; or the Borrower that originated such Account
is not able to bring suit or enforce remedies against the Account Debtor through
judicial process; (g) with respect to Accounts owing to: (i) the U.S. Borrowers
or the Canadian Borrower, the Account Debtor is organized or has its principal
offices or assets outside the United States or Canada, and (ii) the U.K.
Borrower, the Account Debtor is organized or has its principal offices or assets
outside of England, Wales, Scotland or Northern Ireland other than a U.K.
Eligible Foreign Account; (h) it is owing by a Government Authority, unless the
Account Debtor is the United States or any department, agency or instrumentality
thereof and the Account has been assigned to Agent in compliance with the
Assignment of Claims Act or the Account Debtor is the federal government of
Canada or any Crown corporation, department, agency or instrumentality of Canada
and the Canadian Borrower has complied, to the satisfaction of Agent, with the
Financial Administration Act or other Applicable Law; (i) it is not subject to a
duly perfected, first priority (in the case of U.K. Accounts, expressed as a
fixed charge) Lien in favor of Agent, or is subject to any other Lien; (j) the
goods giving rise to it have not been delivered to the Account Debtor, the
services giving rise to it have not been accepted by the Account Debtor, or it
otherwise does not represent a final sale; (k) it is evidenced by Chattel Paper
or an Instrument of any kind, or has been reduced to judgment; (l) its payment
has been extended or the Account Debtor has made a partial payment; (m) it
arises from a sale to an Affiliate, from a sale on a cash-on-delivery,
bill-and-hold, sale-or-return, sale-on-approval, consignment, or other
repurchase or return basis, or from a sale for personal, family or household
purposes; (n) it represents a progress billing or retainage, or relates to
services for which a performance, surety or completion bond or similar assurance
has been issued; or (o) it includes a billing for interest, fees or late
charges, but ineligibility shall be limited to the extent thereof. In
calculating delinquent portions of Accounts under clauses (a) and (b), credit
balances more than 60 days old (or such later date as Agent may approve in its
sole discretion) will be excluded.

The criteria for Eligible Accounts set forth above may only be changed and any
new criteria for Eligible Accounts may only be established by Agent in its
Credit Judgment, based on: (i) an event, condition or other circumstance arising
after the date hereof, (ii) an event, condition or other circumstance existing
on the date hereof to the extent that the Agent has no knowledge thereof or its
effect on the Account, or (iii) facts, information, or circumstances provided to
or learned by Agent in the course of its administration of the facility,
including, without limitation, in connection with field exams, audits, reports
and other information received, and observance of Collateral and the Obligors’
business performance, in any case under clauses (i), (ii) or (iii), which
adversely affects or would reasonably be expected to adversely affect the
Accounts as determined by Agent in its Credit Judgment.

Eligible Assignee: a Person that is (i) a Lender or a U.S.-based Affiliate of a
Lender, (ii) if such Person is to hold U.S. Facility Obligations, an Approved
Fund; (iii) if such Person is to hold Canadian Facility Obligations, such person
is at all times, other than during any Event of Default, a Canadian Qualified
Lender and an Affiliate or branch of a U.S. Lender; (iv) if such Person is to
hold U.K. Facility Obligations, such person is at all times, other than during
any Event of Default, a U.K. Qualified Lender and an Affiliate of a U.S. Lender,
(v) any other financial institution approved by Agent and Borrower Agent (which
approval by Borrower Agent shall not be unreasonably withheld or delayed), that
is organized under the laws of the United States or Canada or any state,
province or district thereof, has total assets in excess of $5 billion, extends

 

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asset-based lending facilities in its Ordinary Course of Business and whose
becoming an assignee would not constitute a prohibited transaction under
Section 4975 of the Code or any other Applicable Law; and (vi) during any Event
of Default, any Person acceptable to Agent in its discretion.

Eligible Costco Inventory: Inventory consisting of finished goods owned by a
U.S. Borrower and consigned to Costco that would otherwise be Eligible Inventory
if it were not consigned to a Person in violation of clause (h)(i) of the
definition of “Eligible Inventory” and either (a) Costco has delivered to Agent
a Lien Waiver with respect to such Inventory, or (b) Costco is rated BBB- (or
better) by S&P and Baa3 (or better) by Moody’s as of the applicable date of
determination.

Eligible Inventory: Inventory owned by a Borrower that Agent, in its Credit
Judgment, deems to satisfy the criteria set forth below. No Inventory shall be
Eligible Inventory unless it (a) is finished goods or raw materials, and not
packaging or shipping materials, labels, samples, display items, bags,
replacement parts or manufacturing supplies; (b) is not held on consignment, nor
subject to any deposit or down payment; (c) is in new and saleable condition and
is not damaged, defective, shopworn or otherwise unfit for sale; (d) is not
slow-moving (as determined by Agent from time to time), perishable, obsolete or
unmerchantable, and does not constitute returned or repossessed goods; (e) meets
all standards imposed by any Governmental Authority, has not been acquired from
a Person that is the target of any Sanction or on any specially designated
nationals list maintained by OFAC, and does not constitute hazardous materials
under any Environmental Law; (f) conforms with the covenants and representations
herein; (g) is subject to Agent’s duly perfected, first priority Lien, and no
other Lien; (h) (i) other than Eligible Costco Inventory, is not consigned to
any Person, and (ii) other than Eligible In-Transit Inventory, is within:
(A) the continental United States, in the case of Inventory of a U.S. Borrower,
(B) Canada, in the case of Inventory of the Canadian Borrower, and (C) England,
Wales, Scotland or Northern Ireland, in the case of Inventory of the U.K.
Borrower; (i) other than Eligible In-Transit Inventory, is not in transit unless
it is, in the case of: (i) Inventory of a U.S. Borrower, in transit between
facilities in the United States of the U.S. Borrowers, (ii) Inventory of the
Canadian Borrower, in transit between facilities in Canada of the Canadian
Borrower, and (iii) Inventory of the U.K. Borrower, in transit between
facilities in England, Wales, Scotland or Northern Ireland of the U.K.
Borrower); (j) is not subject to any warehouse receipt or negotiable Document;
(k) is not subject to any License or other arrangement that restricts such
Borrower’s or Agent’s right to dispose of such Inventory, unless Agent has
received an appropriate Lien Waiver; (l) is not located on leased premises or in
the possession of a warehouseman, processor, repairman, mechanic, shipper,
freight forwarder or other Person, unless the lessor or such Person has
delivered a Lien Waiver or an appropriate U.S. Rent and Charges Reserve (in the
case of the U.S. Borrowers), a Canadian Rent and Charges Reserve (in the case of
the Canadian Borrower), or a U.K. Rent and Charges Reserve (in the case of the
U.K. Borrower) has been established; and (m) is reflected in the details of a
current perpetual inventory report.

The criteria for Eligible Inventory set forth above may only be changed and any
new criteria for Eligible Inventory may only be established by Agent in its
Credit Judgment, based on: (i) an event, condition or other circumstance arising
after the date hereof, (ii) an event, condition or other circumstance existing
on the date hereof to the extent that the Agent has no knowledge thereof or its
effect on Inventory, or (iii) facts, information, or circumstances provided to
or learned

 

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by Agent in the course of its administration of the facility, including, without
limitation, in connection with field exams, audits, reports and other
information received, and observance of Collateral and the Obligors’ business
performance, in any case under clauses (i), (ii) or (iii), which adversely
affects or would reasonably be expected to adversely affect the Inventory as
determined by Agent in its Credit Judgment.

Eligible In-Transit Inventory: Inventory consisting of finished goods owned by a
Borrower that would be Eligible Inventory if it were not subject to a Document
and in transit from a foreign location to a location of a Borrower within the
United States, Canada or England, and that Agent, in its Credit Judgment, deems
to be Eligible In-Transit Inventory, and thus to be Eligible Inventory. Without
limiting the foregoing, no Inventory shall be Eligible In-Transit Inventory
unless it (a) is finished goods, (b) has been delivered to a carrier in a
foreign port or foreign airport for receipt by a Borrower in the United States
(in the case of the U.S. Borrowers) or Canada (in the case of the Canadian
Borrower) or England, Wales, Scotland or Northern Ireland (in the case of the
U.K. Borrower) within sixty (60) days of the date of determination, but which
has not yet been received by the applicable Borrower, (c) is subject to a
negotiable Document showing Agent (or, with the consent of Agent, the applicable
Borrower) as consignee, which Document is in the possession of Agent or such
other Person as Agent shall approve; (d) is fully insured in a manner
satisfactory to Agent; (e) has been identified to the applicable sales contract
and title has passed to the applicable Borrower; (f) is not sold by a vendor
that has a right to reclaim, divert shipment of, repossess, stop delivery, claim
any reservation of title or otherwise assert Lien rights against the Inventory,
or with respect to whom any Borrower is in default of any obligations; (g) is
subject to purchase orders and other sale documentation satisfactory to Agent;
(h) is shipped by a common carrier that is not affiliated with the vendor and is
not the target of any Sanction or on any specially designated nationals list
maintained by OFAC; and (i) is being handled by a customs broker,
freight-forwarder or other handler that has delivered a Lien Waiver.

Eligible Real Estate: Real Estate owned by a U.S. Borrower that is located at
2180 Rutherford Road, Carlsbad, CA 92008, and that Agent, in its Credit
Judgment, deems to satisfy the criteria set forth in the subsequent sentence.
Such Real Estate shall not be Eligible Real Estate unless: (a) a first priority
Mortgage, in substantially the form attached hereto as Exhibit E, has been
executed, delivered and recorded with respect to such Real Estate, and (b) Agent
shall have received the Related Real Estate Documents with respect to such Real
Estate.

EMU Legislation: the legislative measures of the European Council for the
introduction of, changeover to or operation of a single or unified European
currency.

Enforcement Action: any action to enforce any Obligations (other than Secured
Bank Product Obligations) or Loan Documents or to exercise any rights or
remedies relating to any Collateral (whether by judicial action, self-help,
notification of Account Debtors, exercise of setoff or recoupment, exercise of
any right to vote or act in an Obligor’s Insolvency Proceeding, or otherwise).

Environmental Laws: all Applicable Laws (including all programs, permits and
guidance promulgated by regulatory agencies) relating to public health (but
excluding occupational safety and health, to the extent regulated by OSHA) or
the protection or pollution of the environment,

 

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including CERCLA, RCRA, CWA, the Environmental Protection Act (Ontario) and
similar Applicable Laws of foreign jurisdictions.

Environmental Notice: a notice (whether written or oral) from any Governmental
Authority or other Person of any possible noncompliance with, investigation of a
possible violation of, litigation relating to, or potential fine or liability
under any Environmental Law, or with respect to any Environmental Release,
environmental pollution or hazardous materials, including any complaint,
summons, citation, order, claim, demand or request for correction, remediation
or otherwise.

Environmental Release: a release as defined in CERCLA or under any other
Environmental Law.

Equity Interest: the interest of any (a) shareholder in a corporation;
(b) partner in a partnership (whether general, limited, limited liability or
joint venture); (c) member in a limited liability company; or (d) other Person
having any other form of equity security or ownership interest.

ERISA: the Employee Retirement Income Security Act of 1974.

ERISA Affiliate: any trade or business (whether or not incorporated) under
common control with an Obligor within the meaning of Section 414(b) or (c) of
the Code (and Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code).

ERISA Event: (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by any Obligor or ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by any Obligor or ERISA Affiliate from a Multiemployer Plan
or notification that a Multiemployer Plan is in reorganization; (d) the filing
of a notice of intent to terminate, the treatment of a Plan amendment as a
termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan;
(e) any Obligor or ERISA Affiliate fails to meet any funding obligations with
respect to any Pension Plan or Multiemployer Plan, or requests a minimum funding
waiver; (f) an event or condition which constitutes grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Pension Plan or Multiemployer Plan; or (g) the imposition of any liability
under Title IV of ERISA, other than for PBGC premiums due but not delinquent
under Section 4007 of ERISA, upon any Obligor or ERISA Affiliate.

EU Bail-In Legislation Schedule: the EU Bail-In Legislation Schedule published
by the Loan Market Association, as in effect from time to time.

Euro: the lawful currency of the Participating Member States introduced in
accordance with EMU Legislation.

Event of Default: as defined in Section 11.

Excess Amount: as defined in Section 5.13.

 

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Excess Cash Flow: determined on a consolidated basis for Parent and Subsidiaries
for any period, EBITDA, minus (a) cash interest expense; (b) Capital
Expenditures (except those financed with Borrowed Money other than Revolver
Loans or Term Loans); (c) principal payments made on Borrowed Money and Capital
Leases; (d) Distributions made (to the extent permitted hereunder and other than
Distributions made among Parent and its Subsidiaries) to the extent such
Distributions are consistent with prior practice as of the Closing Date; (e) any
non-cash items to the extent added to the calculation of EBITDA in accordance
with the definition thereof; (f) amounts expended (including transaction costs)
in connection with any Acquisition and other Investment permitted hereunder
provided that the aggregate amount under this clause (f) shall not exceed
$10,000,000; and (g) cash taxes paid.

Exchange Rate: on any date of determination, with respect to Canadian Dollars,
British Pounds, Euro or another foreign currency in relation to Dollars, the
Spot Rate for Canadian Dollars, British Pounds, Euro or such other foreign
currency, as applicable.

Excluded Intellectual Property: any Intellectual Property: (i) owned by
travisMathew or Travis Mathew Retail as of the date hereof; (ii) hereafter
developed by travisMathew or Travis Mathew Retail (and unrelated to any
Intellectual Property of the Obligors (other than travisMathew or Travis Mathew
Retail) as of the date hereof); or (iii) related to the brands of travisMathew
or Travis Mathew Retail as of the date hereof. For the avoidance of doubt, any
Intellectual Property listed on Schedule 9.1.17 shall not constitute Excluded
Intellectual Property.

“Excluded Property” shall mean

(a)    any permit or license issued by a Governmental Authority to any U.S.
Domiciled Obligor or any agreement to which any U.S. Domiciled Obligor is a
party, in each case, only to the extent and for so long as the terms of such
permit, license or agreement or any requirement of law applicable thereto,
validly prohibit the creation by such U.S. Domiciled Obligor of a security
interest in such permit, license or agreement in favor of the Agent (after
giving effect to Sections 9-406(d), 9-407(a), 9-408(a) or 9-409 of the UCC (or
any successor provision or provisions) or any other applicable law (including
the U.S. Bankruptcy Code) or principles of equity);

(b)    assets owned by any U.S. Domiciled Obligor on the date hereof or
hereafter acquired and any proceeds thereof that are subject to a Lien permitted
by Section  10.2.1(j ) of the Credit Agreement to the extent and for so long as
the contract or other agreement in which such Lien is granted (or the
documentation providing for the Capital Lease, Off-Balance Sheet Liability or
purchase money obligation subject to such Lien) validly prohibits the creation
of any other Lien on such assets and proceeds;

(c)    any Equity Interests of a Foreign Subsidiary to the extent and for so
long as the pledge thereof to the Agent would constitute an investment of
earnings in United States property under Section 956 (or a successor provision)
of the Code, which investment would or could reasonably be expected to trigger a
material increase in the net income of a United States shareholder of such
Foreign Subsidiary pursuant to Section 951 (or a successor provision) of the
Code, as reasonably determined by the Agent; provided that this clause (c) shall
not apply to (a) voting stock of any Subsidiary which is a first-tier controlled
foreign corporation (as defined in

 

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Section 957(a) of the Code) representing 65% of the total voting power of all
outstanding voting stock of such Subsidiary and (b) 100% of the Equity Interests
not constituting voting stock of any such Subsidiary, except that any such
Equity Interests constituting “stock entitled to vote” within the meaning of
Treasury Regulation Section 1.956-2(c)(2) shall be treated as voting stock for
purposes of this clause (c);

(d)    any intent-to-use trademark application to the extent and for so long as
creation by a U.S. Domiciled Obligor of a security interest therein would result
in the loss by such U.S. Domiciled Obligor of any material rights therein;

(e)    any fee owned real property (other than Material Real Property and the
fee-owned real property located at 2180 Rutherford Road, Carlsbad, CA 92008),
and any leasehold rights and interests in such real property;

(f)    Margin Stock;

(g)    motor vehicles and other assets subject to certificates of title other
than to the extent a security interest therein can be perfected by a UCC filing;

(h)    pledges and security interests prohibited by applicable law, rule,
regulation or contractual obligation after giving effect to the anti-assignment
provisions of the UCC and other applicable law; and

(i)    those assets as to which the Agent and the Borrowers reasonably agree
that the cost or other consequence (including any adverse tax consequences to
the Borrowers or any of their Subsidiaries) of obtaining such a security
interest or perfection thereof are excessive in relation to the value afforded
thereby;

provided, however, that Excluded Property shall not include any Proceeds,
substitutions or replacements of any Excluded Property referred to in clause
(a), (b), (c), (d), (e), (f), (g), (h) or (i) (unless such Proceeds,
substitutions or replacements would constitute Excluded Property referred to in
clauses (a), (b), (c), (d), (e), (f), (g), (h) or (i)).

Excluded Stock Repurchases: any Common Stock Repurchases made, or dividends paid
on Parent’s common stock, in accordance with Section 10.2.6(g).

Excluded Swap Obligation: with respect to an Obligor, each Swap Obligation as to
which, and only to the extent that, such Obligor’s guaranty of or grant of a
Lien as security for such Swap Obligation is or becomes illegal under the
Commodity Exchange Act because the Obligor does not constitute an “eligible
contract participant” as defined in the Act (determined after giving effect to
any keepwell, support or other agreement for the benefit of such Obligor and all
guarantees of Swap Obligations by other Obligors) when such guaranty or grant of
Lien becomes effective with respect to the Swap Obligation. If a Hedging
Agreement governs more than one Swap Obligation, only the Swap Obligation(s) or
portions thereof described in the foregoing sentence shall be Excluded Swap
Obligation(s) for the applicable Obligor.

Excluded Tax: with respect to Agent, any Lender, any Issuing Bank or any other
recipient of a payment to be made by or on account of any Obligation, (a) taxes
imposed on or measured by

 

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its overall net income (however denominated), and franchise taxes imposed on it
(in lieu of net income taxes), by the jurisdiction (or any political subdivision
thereof) under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable Lending Office is located; (b) any branch profits taxes imposed by
the United States or any similar tax imposed by any other jurisdiction in which
Borrower Agent is located; (c) any backup withholding tax required by the Code
to be withheld from amounts payable to a Lender that has failed to comply with
Section 5.10; (d) in the case of a Foreign Lender, any United States withholding
tax that is (i) required pursuant to laws in force at the time such Lender
becomes a Lender (or designates a new Lending Office) hereunder, or
(ii) attributable to such Lender’s failure or inability (other than as a result
of a Change in Law) to comply with Section 5.10, except to the extent that such
Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new Lending Office (or assignment), to receive additional
amounts from Borrowers with respect to such withholding tax; and (e) any U.S.
federal withholding Taxes imposed under FATCA.

Expeditors: Expeditors International of Washington, Inc., a Washington
corporation.

Existing Letters of Credit: those letter(s) of credit described on Schedule E-1.

Extraordinary Expenses: all costs, expenses or advances that Agent or any Lender
may incur during a Default or Event of Default, or during the pendency of an
Insolvency Proceeding of an Obligor, including those relating to (a) any audit,
inspection, repossession, storage, repair, appraisal, insurance, manufacture,
preparation or advertising for sale, sale, collection, or other preservation of
or realization upon any Collateral; (b) any action, arbitration or other
proceeding (whether instituted by or against Agent, any Lender, any Obligor, any
representative of creditors of an Obligor or any other Person) in any way
relating to any Collateral (including the validity, perfection, priority or
avoidability of Agent’s Liens with respect to any Collateral), Loan Documents,
Letters of Credit or Obligations, including any lender liability or other
Claims; (c) the exercise, protection or enforcement of any rights or remedies of
Agent or any Lender in, or the monitoring of, any Insolvency Proceeding;
(d) settlement or satisfaction of any taxes, charges or Liens with respect to
any Collateral; (e) any Enforcement Action; (f) negotiation and documentation of
any modification, waiver, workout, restructuring or forbearance with respect to
any Loan Documents or Obligations; and (g) Protective Advances. Such costs,
expenses and advances include transfer fees, Other Taxes, storage fees,
insurance costs, permit fees, utility reservation and standby fees, legal fees,
appraisal fees, brokers’ fees and commissions, auctioneers’ fees and
commissions, accountants’ fees, environmental study fees, wages and salaries
paid to employees of any Obligor or independent contractors in liquidating any
Collateral, and travel expenses. Notwithstanding the forgoing, absent a conflict
of interest among Lenders, Extraordinary Expenses shall not include (i) legal
fees for more than one counsel to the Lenders (plus any local counsel deemed
necessary by the Lenders) in addition to any counsel engaged by Agent or
(ii) other costs, expenses or advances incurred by any Lender to the extent
unreasonably duplicative of such costs, expenses or advances incurred by the
Agent.

Facility Termination Date: November 19, 2022.

FATCA: Sections 1471 through 1474 of the Code, as of the date of this Agreement
(or any amended or successor version that is substantially comparable and not
materially more onerous to

 

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comply with), any current or future regulations or official interpretations
thereof and any agreements entered into pursuant to Section 1471(b)(1) of the
Code.

Federal Funds Rate: (a) the weighted average of interest rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers on the applicable Business Day (or on the preceding
Business Day, if the applicable day is not a Business Day), as published by the
Federal Reserve Bank of New York on the next Business Day; or (b) if no such
rate is published on the next Business Day, the average rate (rounded up, if
necessary, to the nearest 1/8 of 1%) charged to Bank of America on the
applicable day on such transactions, as determined by Agent; provided, that in
no event shall the Federal Funds Rate be less than zero.

Fee Letters: each fee letter agreement between Agent and Borrowers (or any of
them).

Financial Administration Act: the Financial Administration Act (Canada) and all
regulations and schedules thereunder.

First Amendment to Second Amended and Restated Effective Date: June 11, 2012.

First Amendment to Third Amended and Restated Effective Date: November 29, 2018.

Fiscal Quarter: each period of three months, commencing on the first day of a
Fiscal Year.

Fiscal Year: the fiscal year of Parent and its Subsidiaries for accounting and
tax purposes, ending on December 31 of each year.

Fixed Charge Coverage Ratio: the ratio, determined on a consolidated basis for
Parent and its Subsidiaries for the most recent twelve calendar months, of
(a) EBITDA minus Capital Expenditures (except those financed with Borrowed Money
other than Revolver Loans or Term Loans) and cash taxes paid (which amount may
not be less than zero), to (b) Fixed Charges; provided, however, that solely for
the purposes of calculating the Fixed Charge Coverage Ratio under Section 10.3,
Fixed Charges shall not include any Excluded Stock Repurchases.

Fixed Charges: the sum of cash interest expense, principal payments made on
Borrowed Money, and Distributions made (other than Distributions made to
Obligors to the extent permitted hereunder).

FLSA: the Fair Labor Standards Act of 1938.

Flood Laws: the National Flood Insurance Act of 1968, Flood Disaster Protection
Act of 1973 and related laws.

Foreign Lender: any Lender that is (a) in the case of the U.S. Borrowers,
organized under the laws of a jurisdiction other than the laws of the United
States, or any state or district thereof, (b) in the case of the Canadian
Borrower, not a Canadian Qualified Lender, and (c) in the case of the U.K.
Borrower, not a U.K. Qualified Lender.

 

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Foreign Plan: any employee benefit plan or arrangement (a) maintained or
contributed to by any Obligor or Subsidiary that is not subject to the laws of
the United States or Canada; or (b) mandated by a government other than the
United States or Canada for employees of any Obligor or Subsidiary.

Foreign Subsidiary: a Subsidiary of Parent that is a “controlled foreign
corporation” under Section 957 of the Code.

Fronting Exposure: a Defaulting Lender’s Pro Rata share of U.S. LC Obligations,
Canadian LC Obligations, U.K. LC Obligations, U.S. Swingline Loans, Canadian
Swingline Loans, or U.K. Swingline Loans, as applicable, except to the extent
allocated to other Lenders under Section 4.2.

FSCO: the Financial Services Commission of Ontario or like body in any other
province of Canada and any other Governmental Authority succeeding to the
functions thereof.

Full Payment: with respect to any Obligations, (a) the full and indefeasible
cash payment thereof in the applicable currency required hereunder, including
any interest, fees and other charges accruing during an Insolvency Proceeding
(whether or not allowed in the proceeding); (b) if such Obligations are LC
Obligations or inchoate or contingent in nature, Cash Collateralization thereof
(or delivery of a standby letter of credit acceptable to Agent in its
discretion, in the amount of required Cash Collateral); and (c) a release of any
Claims of Obligors against Agent, Lenders and Issuing Banks arising on or before
the payment date. No Loans shall be deemed to have been paid in full until all
Commitments related to such Loans have expired or been terminated.

Funded Debt: as of any date of determination, all Debt for borrowed money of
Parent and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP.

GAAP: generally accepted accounting principles in effect in the United States
from time to time.

General Intangibles: as defined in the UCC (and/or with respect to any General
Intangible of a Canadian Subsidiary, an “intangible” as defined in the PPSA).

Governmental Approvals: all authorizations, consents, approvals, licenses and
exemptions of, registrations and filings with, and required reports to, all
Governmental Authorities.

Governmental Authority: any federal, state, provincial, municipal, foreign or
other governmental department, agency, commission, board, bureau, court,
tribunal, instrumentality, political subdivision, or other entity or officer
exercising executive, legislative, judicial, regulatory or administrative
functions for or pertaining to any government or court, in each case whether it
is or is not associated with the United States, a state, district or territory
thereof, Canada, a province or territory thereof or any other foreign entity or
government.

Guarantee: each guarantee agreement (including this Agreement, the Canadian
Facility Guarantee, and the U.K. Facility Guarantee) executed by a Guarantor in
favor of Agent guaranteeing all or any portion of any Canadian Facility
Obligation, U.S. Facility Obligation, or U.K. Facility Obligation.

 

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Guarantor Payment: as defined in Section 5.11.

Guarantors: Canadian Facility Guarantors, U.S. Facility Guarantors, U.K.
Facility Guarantors, and each other Person who guarantees payment or performance
of any Obligations.

Hedging Agreement: any “swap agreement” as defined in Section 101(53B)(A) of the
U.S. Bankruptcy Code.

Immaterial Subsidiary: at any time, any Subsidiary of Parent that is not a
Material Subsidiary.

Indemnified Taxes: Taxes other than Excluded Taxes.

Indemnitees: Agent Indemnitees, Lender Indemnitees, Issuing Bank Indemnitees and
Bank of America Indemnitees.

Insolvency Proceeding: any case or proceeding or proposal commenced by or
against a Person under any state, provincial, federal or foreign law for, or any
agreement of such Person to, (a) the entry of an order for relief under the U.S.
Bankruptcy Code, or any other insolvency, debtor relief, bankruptcy,
receivership, debt adjustment law or other similar law (whether state,
provincial, federal or foreign), including the Bankruptcy and Insolvency Act
(Canada), the Companies’ Creditors Arrangement Act (Canada), the United Kingdom
Insolvency Act 1986 and/or the Enterprise Act 2002; (b) the appointment of a
Creditor Representative or other custodian for such Person or any part of its
Property; or (c) an assignment or trust mortgage for the benefit of creditors.

Intellectual Property: all intellectual and similar Property of a Person,
including inventions, designs, patents, copyrights (and all associated moral and
neighboring rights), mask works, industrial design rights, trademarks and
service marks (together with all associated goodwill), trade names, trade dress,
domain names, trade secrets, confidential or proprietary information, customer
lists, know-how, software and databases; all embodiments or fixations thereof
and all related documentation, applications, registrations and franchises; all
licenses or other rights to use any of the foregoing; and all books and records
relating to the foregoing.

Intellectual Property Claim: any claim or assertion (whether in writing, by suit
or otherwise) that an Obligor’s or Subsidiary’s ownership, use, marketing, sale
or distribution of any Inventory, Equipment, Intellectual Property or other
Property violates another Person’s Intellectual Property.

Intercreditor Agreement: that certain Intercreditor Agreement dated as of the
Second Amendment to Third Amended and Restated Effective Date between Agent and
the Term Loan Collateral Agent, relating to the Debt permitted under
Section 10.2.3(s) .

Interest Period: as defined in Section 3.1.4.

Interest Period Loans: LIBOR Loans or Canadian BA Rate Loans.

 

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Inventory: as defined in the UCC (and/or with respect to any inventory located
in Canada, as defined in the PPSA), including all goods intended for sale,
lease, display or demonstration; all work in process; and all raw materials, and
other materials and supplies of any kind that are or could be used in connection
with the manufacture, printing, packing, shipping, advertising, sale, lease or
furnishing of such goods, or otherwise used or consumed in the applicable
Obligor’s business (but excluding Equipment).

Inventory Reserve: reserves established by Agent in its Credit Judgment to
reflect factors that may negatively impact the Value of Inventory, including
change in salability, obsolescence, seasonality, theft, shrinkage, imbalance,
change in composition or mix, markdowns and vendor chargebacks.

Investment: as to any Person, any direct or indirect acquisition or investment
by such Person, whether by means of (a) the purchase or other acquisition of
capital stock or other securities of another Person, (b) a loan, advance or
capital contribution to, Contingent Obligation in respect of Debt of, assumption
of Debt of, or purchase or other acquisition of any other Debt or equity
participation or interest in, another Person, including any partnership or joint
venture interest in such other Person, or (c) the purchase or other acquisition
(in one transaction or a series of transactions) of assets of another Person
that constitute a business unit. For purposes of covenant compliance, the amount
of any Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.

IP Assignment: a collateral assignment or security agreement pursuant to which
an Obligor grants a Lien on its Intellectual Property to Agent, as security for
its Obligations.

IRS: the United States Internal Revenue Service.

Issuing Bank Indemnitees: the Issuing Banks and their officers, directors,
employees, Affiliates, branches, agents and attorneys.

Issuing Banks: the U.S. Issuing Bank, the Canadian Issuing Bank, and the U.K.
Issuing Bank.

LC Application: an application by a Borrower or Borrower Agent on behalf of a
Borrower to an Issuing Bank for issuance of a Letter of Credit, in form and
substance satisfactory to such Issuing Bank.

LC Conditions: the following conditions necessary for issuance of a Letter of
Credit: (a) each of the conditions set forth in Section 6; (b) after giving
effect to such issuance, total U.S. LC Obligations do not exceed the U.S. Letter
of Credit Subline, no U.S. Overadvance exists or would result therefrom and, if
no U.S. Revolver Loans are outstanding, the U.S. LC Obligations do not exceed
the U.S. Borrowing Base (without giving effect to the U.S. LC Reserve for
purposes of this calculation); (c) after giving effect to such issuance, total
Canadian LC Obligations do not exceed the Canadian Letter of Credit Subline, no
Canadian Overadvance exists or would result therefrom and, if no Canadian
Revolver Loans are outstanding, the Canadian LC Obligations do not exceed the
Canadian Borrowing Base (without giving effect to the Canadian LC Reserve for
purposes of this calculation); (d) after giving effect to such issuance, total
U.K. LC Obligations do not exceed the U.K. Letter of Credit Subline, no U.K.
Overadvance exists or would result therefrom and, if

 

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no U.K. Revolver Loans are outstanding, the U.K. LC Obligations do not exceed
the U.K. Borrowing Base (without giving effect to the U.K. LC Reserve for
purposes of this calculation); (e) the expiration date of such Letter of Credit
is (i) no more than 365 days from issuance, in the case of standby Letters of
Credit, provided, however, that any standby Letter of Credit may provide for the
automatic extension thereof for any number of additional periods each of up to
365 days in duration, and (ii) no more than 120 days from issuance, in the case
of documentary Letters of Credit; (f) in the case of U.S. Letters of Credit, the
Letter of Credit and payments thereunder are denominated in Dollars or any
foreign currency acceptable to Agent and U.S. Issuing Bank and, unless otherwise
specified by Agent or U.S. Issuing Bank (at their respective option) that it
requires payment in Dollars calculated at the Spot Rate, payments thereunder are
to be made in the same currency in which the Letter of Credit was denominated;
(g) in the case of Canadian Letters of Credit, the Letter of Credit and payments
thereunder are denominated in Dollars, Canadian Dollars, or any foreign currency
acceptable to Agent and Canadian Issuing Bank and, unless otherwise specified by
Agent or Canadian Issuing Bank (at their respective option) that it requires
payment in Dollars or Canadian Dollars calculated at the Spot Rate, payments
thereunder are to be made in the same currency in which the Letter of Credit was
denominated; (h) in the case of U.K. Letters of Credit, the Letter of Credit and
payments thereunder are denominated in Dollars, British Pounds, Euros, or any
foreign currency acceptable to the Agent and U.K. Issuing Bank and, unless
otherwise specified by Agent or U.K. Issuing Bank (at their respective option)
that it requires payment in Dollars, British Pounds or Euros calculated at the
Spot Rate, payments thereunder are to be made in the same currency in which the
Letter of Credit was denominated, and (i) the form of the proposed Letter of
Credit is satisfactory to Agent and the applicable Issuing Bank in their
discretion.

LC Documents: all documents, instruments and agreements (including LC Requests
and LC Applications) delivered by the Borrower Agent on behalf of a Borrower or
by any other Person to an Issuing Bank or Agent in connection with the issuance,
amendment or renewal of, or payment under, any Letter of Credit.

LC Obligations: the U.S. LC Obligations, the Canadian LC Obligations, and the
U.K. LC Obligations.

LC Request: a request for issuance of a Letter of Credit, to be provided by the
U.S. Borrowers, the Canadian Borrower, the U.K. Borrower, or the Borrower Agent,
as applicable, to an Issuing Bank, in form satisfactory to Agent and such
Issuing Bank.

Lender Indemnitees: Lenders and their officers, directors, employees,
Affiliates, agents and attorneys.

Lenders: as defined in the preamble to this Agreement, including the U.S.
Lenders, the Canadian Lenders, the U.K. Lenders, Agent in its capacity as a
provider of Swingline Loans and any other Person who hereafter becomes a
“Lender” pursuant to an Assignment and Acceptance or in accordance with
Section 2.1.7.

Lending Office: the office designated as such by the applicable Lender at the
time it becomes party to this Agreement or thereafter by notice to Agent and
Borrower Agent.

 

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Letter of Credit: any U.S. Letter of Credit, Canadian Letter of Credit, or U.K.
Letter of Credit.

Leverage Ratio: means, as of any date of determination, the ratio of (a) the
amount of Funded Debt as of such date, to (b) EBITDA for the most recently 12
month period ended for which financial statements have been delivered pursuant
to Section 10.1.1, in each case, determined on a consolidated basis for Parent
and its Subsidiaries.

LIBOR: for any Interest Period with respect to a LIBOR Loan, the per annum rate
of interest, determined by Agent at approximately 11:00 a.m. (London time) two
Business Days prior to commencement of such Interest Period, for a term
comparable to such Interest Period, equal to (a) the applicable Screen Rate for
the currency of that LIBOR Loan; or (b) if the Screen Rate is not available for
any reason, the interest rate at which deposits in the applicable Available
Currency in the approximate amount of the LIBOR Loan would be offered by Bank of
America’s London branch to major banks in the London interbank eurocurrency
market; provided, that in no event shall LIBOR be less than zero. If the Board
of Governors imposes a Reserve Percentage with respect to LIBOR deposits, then
LIBOR shall be the foregoing rate, divided by 1 minus the Reserve Percentage.

LIBOR Loan: each set of LIBOR Revolver Loans or LIBOR Term Loans having a common
length and commencement of Interest Period.

LIBOR Revolver Loan: a Revolver Loan that bears interest based on LIBOR.

LIBOR Term Loan: a Term Loan that bears interest based on LIBOR.

License: any license or agreement under which an Obligor or Subsidiary is
authorized to use Intellectual Property in connection with any manufacture,
marketing, distribution or disposition of Collateral, any use of Property or any
other conduct of its business.

Licensor: any Person from whom an Obligor obtains the right to use any
Intellectual Property.

Lien: any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge, or preference, priority or other
security interest or preferential arrangement of any kind or nature whatsoever
in respect of property (including any conditional sale or other title retention
agreement and any financing lease having substantially the same economic effect
as any of the foregoing).

Lien Waiver: an agreement, in form and substance satisfactory to Agent, by which
(unless, in each case, otherwise agreed to by Agent in its sole discretion) (a)
for any material Collateral located on leased premises, the lessor waives or
subordinates any Lien it may have on the Collateral, and agrees to permit Agent
to enter upon the premises and remove the Collateral or to use the premises to
store or dispose of the Collateral; (b) for any Collateral held by a
warehouseman, processor, shipper, customs broker or freight forwarder, such
Person waives or subordinates any Lien it may have on the Collateral, agrees to
hold any Documents in its possession relating to the Collateral as agent for
Agent, and agrees to deliver the Collateral to Agent upon request; (c) for any
Collateral held by a repairman, mechanic or bailee, such Person

 

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acknowledges Agent’s Lien, waives or subordinates any Lien it may have on the
Collateral, and agrees to deliver the Collateral to Agent upon request; (d) for
any Collateral subject to a Licensor’s Intellectual Property rights, the
Licensor grants to Agent the right, vis-à-vis such Licensor, to enforce Agent’s
Liens with respect to the Collateral, including the right to dispose of it with
the benefit of the Intellectual Property, whether or not a default exists under
any applicable License; and (e) for any Collateral held by Costco on consignment
on behalf of a U.S. Domiciled Obligor, Costco acknowledges the applicable
Obligor’s ownership of such Collateral, acknowledges Agent’s Lien on such
Collateral, authorizes the filing of UCC financing statements naming Costco as
consignee, the applicable Obligor as consignor, and Agent as such Obligor’s
assignee, and agrees to deliver the Collateral to Agent upon request.

Loan: a Revolver Loan or Term Loan.

Loan Account: the loan account established by each Lender on its books pursuant
to Section 5.8.

Loan Documents: this Agreement, Other Agreements and Security Documents.

Mandatory Costs: the percentage rate per annum calculated by Agent in accordance
with Schedule 1.1A.

Margin Stock: as defined in Regulation U of the Board of Governors.

Material Adverse Effect: (a) a material adverse change in, or a material adverse
effect upon, the operations, business, Properties, condition (financial or
otherwise) of Parent and its Subsidiaries taken as a whole; (b) a material
impairment of the ability of any Borrower or Guarantor to perform its
obligations under any Loan Document to which it is a party; (c) a material
adverse effect upon the legality, validity, binding effect or enforceability
against any Borrower or Guarantor of any Loan Document to which it is a party or
on the validity or priority of Agent’s Liens on the Collateral; or (d) the
effect of any event or circumstance that, taken alone or in conjunction with
other events or circumstances, otherwise impairs the ability of Agent or any
Lender to enforce or collect any Obligations or to realize upon any material
portion of the Collateral.

Material Real Property: means any fee-owned real property that is owned by any
U.S Domiciled Obligor with a fair market value in excess of $15,000,000 (at the
Second Amendment Third Amended and Restated Effective Date or, with respect to
fee-owned real property acquired after the Second Amendment Third Amended and
Restated Effective Date, at the time of acquisition, in each case, as reasonably
estimated by the U.S. Borrowers in good faith), other than the property located
at 2180 Rutherford Road, Carlsbad, CA 92008.

Material Subsidiary: at any time, any Subsidiary of Parent (other than an
Obligor) (a) in which the aggregate Investments made by Parent and its
Subsidiaries (excluding Investments in the nature of inter-company receivables
payable by such Subsidiary arising in the Ordinary Course of Business for the
sale of Inventory and provision of services but, in the case of Investments in a
Foreign Subsidiary, including Investments in Subsidiaries of such Foreign
Subsidiary other than any such receivables) exceed $20,000,000 or (b) that had
net annual sales during the four fiscal

 

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quarters most recently ended (calculated on a Pro Forma Basis after giving
effect to any Acquisition made during such period) of $50,000,000 or more

Maximum Canadian Facility Amount: on any date of determination, the lesser of
(i) the Canadian Revolver Commitments on such date and (ii) $25,000,000 (or such
lesser amount after giving effect to any reductions in the Commitments pursuant
to and in accordance with Section 2.1.4); it being acknowledged and agreed that
at no time can the sum of the Maximum Canadian Facility Amount plus the Maximum
U.S. Facility Amount plus the Maximum U.K. Facility Amount exceed the Maximum
Facility Amount in effect at such time.

Maximum Facility Amount: $330,000,000, or such greater or lesser amount as shall
then be in effect after giving effect to any reductions in the Commitments
pursuant to and in accordance with Section 2.1.4 and increases in the U.S.
Revolver Commitments pursuant to and in accordance with Section 2.1.7.

Maximum U.K. Facility Amount: on any date of determination, the lesser of
(i) the U.K. Revolver Commitments on such date and (ii) $45,000,000 (or such
lesser amount after giving effect to any reductions in the Commitments pursuant
to and in accordance with Section 2.1.4); it being acknowledged and agreed that
at no time can the sum of the Maximum Canadian Facility Amount plus the Maximum
U.S. Facility Amount plus the Maximum U.K. Facility Amount exceed the Maximum
Facility Amount in effect at such time.

Maximum U.S. Facility Amount: on any date of determination, the lesser of
(i) the U.S. Revolver Commitments on such date and (ii) $260,000,000 (or such
greater or lesser amount after giving effect to any reductions in the
Commitments pursuant to and in accordance with Section 2.1.4 and increases in
the Commitments pursuant to and in accordance with Section 2.1.7; it being
acknowledged and agreed that at no time can the sum of the Maximum U.S. Facility
Amount plus the Maximum Canadian Facility Amount plus the Maximum U.K. Facility
Amount exceed the Maximum Facility Amount in effect at such time.

Moody’s: Moody’s Investors Service, Inc., and its successors.

Mortgage: a mortgage, deed of trust, deed of immovable hypothec or deed to
secure debt pursuant to which an Obligor grants a Lien on its Real Estate to
Agent, as security for the applicable Obligations.

Multiemployer Plan: any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which any Obligor or ERISA Affiliate makes or is
obligated to make contributions, or during the preceding five plan years, has
made or been obligated to make contributions.

Net Excess Availability: as of any date of determination, an amount equal to the
Availability minus the aggregate amount, if any, of all trade payables of
Obligors that are more than 60 days past due (or such later date as Agent may
approve in its sole discretion) and all book overdrafts of Obligors in excess of
historical practices with respect thereto, in each case as determined by Agent
in its Credit Judgment.

Net Orderly Liquidation Value: with respect to trademarks of any Person, the net
orderly liquidation value of such trademarks expected to be realized at an
orderly, negotiated sale held

 

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within a reasonable period of time, net of all liquidation expenses, as
determined from the most recent appraisal of such trademarks performed by an
appraiser and on terms satisfactory to Agent.

Net Proceeds: with respect to an Asset Disposition, proceeds (including, when
received, any deferred or escrowed payments) received by an Obligor or
Subsidiary in cash from such disposition, net of (a) reasonable and customary
costs and expenses actually incurred in connection therewith, including legal
fees and sales commissions; (b) amounts applied to repayment of Debt secured by
a Permitted Lien senior to Agent’s Liens on Collateral sold; (c) transfer or
similar taxes; and (d) reserves for indemnities, until such reserves are no
longer needed (after which, any such amounts previously held as reserves shall
become Net Proceeds when received).

New Lender: as defined in Section 5.9.15.

NOLV Percentage: with respect to each category of each Borrower’s Inventory (as
determined by Agent from to time in its discretion) the net orderly liquidation
value of such Inventory, expressed as a percentage (such percentage to be
adjusted seasonally at such times consistent with the most recently delivered
appraisal, as determined by Agent), expected to be realized at an orderly,
negotiated sale held within a reasonable period of time, net of all liquidation
expenses, as determined from the most recent appraisal of such Inventory
performed by an appraiser and on terms satisfactory to Agent.

Notes: each Revolver Note or other promissory note executed by a Borrower to
evidence any Obligations.

Notice of Borrowing: a Notice of Borrowing to be provided by Borrower Agent to
request a Borrowing of Loans, in form satisfactory to Agent.

Notice of Conversion/Continuation: a Notice of Conversion/Continuation to be
provided by Borrower Agent to request a conversion or continuation of any Loans
as LIBOR Loans or Canadian BA Rate Loans, in form satisfactory to Agent.

Noticed Hedge: Secured Bank Product Obligations arising under a Hedging
Agreement.

Obligations: all (a) principal of and premium, if any, on the Loans, (b) U.S. LC
Obligations and other obligations of the U.S. Facility Obligors with respect to
Letters of Credit, (c) Canadian LC Obligations and other obligations of the
Canadian Facility Obligors with respect to Letters of Credit, (d) U.K. LC
Obligations and other obligations of the U.K. Facility Obligors with respect to
Letters of Credit, (e) interest, expenses, fees, indemnification obligations,
Extraordinary Expenses and other amounts payable by Obligors under Loan
Documents, (f) Secured Bank Product Obligations, and (g) other Debts,
obligations and liabilities of any kind owing by Obligors pursuant to the Loan
Documents, whether now existing or hereafter arising, whether evidenced by a
note or other writing, whether allowed in any Insolvency Proceeding, whether
arising from an extension of credit, issuance of a letter of credit, acceptance,
loan, guaranty, indemnification or otherwise, and whether direct or indirect,
absolute or contingent, due or to become due, primary or secondary, or joint or
several; provided, that Obligations of an Obligor shall not include its Excluded
Swap Obligations.

 

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Obligor: each Borrower, Guarantor, or other Person that is liable for payment of
any Obligations or that has granted a Lien in favor of Agent on its assets to
secure any Obligations.

Obligor Group: a group consisting of (a) Canadian Facility Obligors, (b) U.S.
Facility Obligors, or (c) U.K. Facility Obligors.

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

Off-Balance Sheet Liabilities: with respect to any Person, the (a) monetary
obligations of such Person under a so-called synthetic lease, off-balance sheet
or tax retention lease, if such obligations are considered indebtedness for
borrowed money for tax purposes but such lease is classified as an operating
lease under GAAP, but in any case excluding any obligations (i) that are
liabilities of any such Person as lessee under any operating lease so long as
the terms of such operating lease do not require any payment by or on behalf of
such Person at termination of such operating lease pursuant to a required
purchase by or on behalf of such Person of the property or assets subject to
such operating lease or (ii) under any arrangement pursuant to which such Person
guarantees or otherwise assures any other Person of the value of the property or
assets subject to such operating lease and (b) the monetary obligations under
any sale and leaseback transaction which does not create a liability on the
consolidated balance sheet of such Person.

Ordinary Course of Business: with respect to any Person, the ordinary course of
business of such Person, consistent with past practices.

Organic Documents: with respect to any Person, its charter, certificate or
articles of incorporation, amalgamation or continuance, bylaws, articles of
organization, limited liability agreement, operating agreement, members
agreement, shareholders agreement, partnership agreement, certificate of
partnership, certificate of formation, memorandum of association, articles of
association, voting trust agreement, or similar agreement or instrument
governing the formation or operation of such Person.

Original Agreement Closing Date: June 30, 2011.

Original Amended and Restated Loan Agreement: as defined in the recitals hereto.

Original Loan Agreement: as defined in the recitals hereto.

OSHA: the Occupational Safety and Hazard Act of 1970.

Other Agreement: the Intercreditor Agreement; each Note; LC Document; Fee
Letter; Lien Waiver; Borrowing Base Certificate, Compliance Certificate,
financial statement or report delivered hereunder; or other document, instrument
or agreement (other than this Agreement or a Security Document) now or hereafter
delivered by an Obligor or other Person to Agent or a Lender in connection with
any transactions relating hereto.

Other Taxes: all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment
made under any Loan Document or from the execution, delivery or enforcement of,
or otherwise with respect to, any Loan Document.

 

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Overadvance: a Canadian Overadvance, U.S. Overadvance, or U.K. Overadvance, as
the context requires.

Overadvance Loan: a Canadian Overadvance Loan and/or a U.S. Overadvance Loan,
and/or a U.K. Overadvance Loan, as the context requires.

Parent: as defined in the preamble to this Agreement.

Participant: as defined in Section 13.2.

Participating Member State: each member state of the European Union that has
Euro as its lawful currency so described in any EMU Legislation.

Patriot Act: the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L.
No. 107-56, 115 Stat. 272 (2001).

Payment Item: each check, draft or other item of payment payable to an Obligor,
including those constituting proceeds of any Collateral.

PBA: the Pension Benefits Act (Ontario) or any other Canadian federal or
provincial statute in relation to Canadian Pension Plans, and any regulations
thereunder, as amended from time to time.

PBGC: the Pension Benefit Guaranty Corporation.

Pension Plan: any employee pension benefit plan (as such term is defined in
Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to
Title IV of ERISA and is sponsored or maintained by any Obligor or ERISA
Affiliate or to which the Obligor or ERISA Affiliate contributes or has an
obligation to contribute, or in the case of a multiple employer or other plan
described in Section 4064(a) of ERISA, has made contributions at any time during
the preceding five plan years.

Permitted Acquisition: any Acquisition by Parent or any of its Subsidiaries
where:

(a)    the Board of Directors or authorized management committee of Parent or of
the applicable Subsidiary and of the Person whose assets or Equity Interests are
being acquired has approved such Acquisition;

(b)    the business acquired in connection with such Acquisition is engaged in
one or more of the leisure goods, products and services businesses generally or
any business activities that are substantially similar, related, incidental or
complementary thereto;

(c)    both before and after giving effect to such Acquisition and the Loans and
Letters of Credit (if any) requested to be made in connection therewith, each of
the representations and warranties in the Loan Documents is true and correct in
all material (except that such materiality qualifier shall not be applicable to
any representations and warranties that already are qualified or modified by
materiality in the text thereof) respects (except (i) any such representation or
warranty

 

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which relates to a specified prior date and (ii) to the extent the Agent has
been notified in writing by Borrower Agent that any representation or warranty
is not correct and the Required Lenders have explicitly waived in writing
compliance with such representation or warranty) and no Default or Event of
Default exists, will exist, or would result therefrom;

(d)    after giving effect to the Acquisition, the Parent and its Subsidiaries
will continue to be in compliance with the covenants in this Agreement,
determined on a Pro Forma Basis;

(e)    the purchase consideration payable in respect of all Permitted
Acquisitions (including the proposed Acquisition and including deferred payment
obligations) shall not exceed the Acquisition Cap in the aggregate; provided,
however, that no such Acquisition shall count against the Acquisition Cap if
either: (i) (A) on a Pro Forma Basis after giving effect to such Acquisition,
Net Excess Availability has been greater than an amount equal to the Threshold
Percentage of the Maximum Facility Amount at all times during the thirty
(30) day period immediately prior to the consummation of such Acquisition,
(B) Net Excess Availability is greater than an amount equal to the Threshold
Percentage of the Maximum Facility Amount after giving effect to such
Acquisition, and (C) the Fixed Charge Coverage Ratio, on a Pro Forma Basis after
giving effect to such Acquisition (calculated on a trailing twelve month basis
recomputed for the most recent month for which financial statements have been
delivered) is not less than 1.0 to 1.0; or (ii) (A) average daily Net Excess
Availability, on a Pro Forma Basis after giving effect to such Acquisition, has
been greater than an amount equal to 20% of the Maximum Facility Amount for the
ninety (90) day period immediately prior to the consummation of such
Acquisition, (B) Net Excess Availability is greater than an amount equal to 20%
of the Maximum Facility Amount after giving effect to such Acquisition, and
(C) no Term Loans are outstanding at the time such Acquisition is consummated
and after giving effect to the payment of any consideration in connection with
such Acquisition;

(f)    as soon as available, but not less than 15 Business Days prior to such
Acquisition, Borrower Agent has provided Agent (i) notice of such Acquisition
and (ii) a copy of all available business and financial information reasonably
requested by Agent including pro forma financial statements, statements of cash
flow, financial covenant projections, and Availability projections;

(g)    not later than: (i) 15 Business Days prior to the anticipated closing
date of such Acquisition, Borrower Agent shall have provided Agent with the then
current drafts of the acquisition agreement and other material documents
relative to such Acquisition, and (ii) 3 Business Days prior to the anticipated
closing date of such Acquisition, Borrower Agent shall have provided Agent with
the final copies of the acquisition agreement and other material documents
relative to such Acquisition;

(h)    the assets being acquired (other than a de minimis amount of assets in
relation to the assets being acquired) are located within the United States,
Canada or the U.K., or the Person whose Equity Interests are being acquired is
organized in a jurisdiction located within the United States, Canada or the
U.K.; provided, however, that this clause (h) shall not be applicable to any
Acquisition if either: (i) (A) on a Pro Forma Basis after giving effect to such
Acquisition, Net Excess Availability has been greater than an amount equal to
the Threshold Percentage of the Maximum Facility Amount at all times during the
thirty (30) day period immediately prior to the consummation of such
Acquisition, (B) Net Excess Availability is greater than an amount equal to

 

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the Threshold Percentage of the Maximum Facility Amount after giving effect to
such Acquisition, and (C) the Fixed Charge Coverage Ratio, on a Pro Forma Basis
after giving effect to such Acquisition (calculated on a trailing twelve month
basis recomputed for the most recent month for which financial statements have
been delivered) is not less than 1.0 to 1.0; or (ii) (A) average daily Net
Excess Availability, on a Pro Forma Basis after giving effect to such
Acquisition, has been greater than an amount equal to 20% of the Maximum
Facility Amount for the ninety (90) day period immediately prior to the
consummation of such Acquisition, (B) Net Excess Availability is greater than an
amount equal to 20% of the Maximum Facility Amount after giving effect to such
Acquisition, and (C) no Term Loans are outstanding at the time such Acquisition
is consummated and after giving effect to the payment of any consideration in
connection with such Acquisition; and

(i)    concurrently with such Acquisition, any Person required to become a
Guarantor or to execute or to deliver any Loan Document will do so in accordance
with the requirements of this Agreement.

In no event will assets exceeding $15,000,000 in Value acquired pursuant to a
Permitted Acquisition constitute assets eligible for inclusion in the Borrowing
Base prior to completion of a field examination, appraisal and other due
diligence acceptable to Agent in its discretion, and if such satisfactory field
examination, appraisal and due diligence is undertaken prior to the closing of
such Acquisition, the assets acquired pursuant to such Acquisition may be taken
into account in the applicable Borrowing Base (subject to all eligibility
criteria) in determining whether the foregoing conditions are satisfied. Assets
less than $15,000,000 in Value acquired pursuant to a Permitted Acquisition
shall constitute assets eligible for inclusion in the applicable Borrowing Base
(subject to all eligibility criteria) on a temporary basis pending completion of
a field examination, appraisal and other due diligence acceptable to Agent in
its discretion.

Permitted Lien: as defined in Section 10.2.1.

Person: any individual, corporation, limited liability company, unlimited
liability company, partnership, joint venture, joint stock company, land trust,
business trust, unincorporated organization, Governmental Authority or other
entity.

Plan: any employee benefit plan (as such term is defined in Section 3(3) of
ERISA) established by an Obligor or, with respect to any such plan that is
subject to Section 412 of the Code or Title IV of ERISA, an ERISA Affiliate.

PPSA: the Personal Property Security Act (Ontario) and the regulations
thereunder; provided, however, if validity, perfection and effect of perfection
and non-perfection of Agent’s security interest in and Lien on any Collateral
are governed by the personal property security laws of any jurisdiction other
than Ontario, PPSA shall mean those personal property security laws (including
the Civil Code of Quebec) in such other jurisdiction for the purposes of the
provisions hereof relating to such validity, perfection, and effect of
perfection and non-perfection and for the definitions related to such
provisions, as from time to time in effect.

Pro Forma Basis: with respect to compliance with any test or covenant hereunder,
in connection with or after the occurrence of an Acquisition, compliance with
such covenant or test

 

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after giving effect to any such Acquisition as if such Acquisition had occurred
on the first day of the relevant test period (including pro forma adjustments
arising out of events which are directly attributable to the proposed
Acquisition, are factually supportable and are expected to have a continuing
impact, in each case to be mutually and reasonably agreed upon by Borrower Agent
and Agent).

Pro Rata: (a) with respect to any U.S. Lender and in reference to its U.S.
Revolver Commitment or other matters (including (A) payments of principal,
accrued interest and fees related thereto, (B) participations in U.S. LC
Obligations and U.S. Swingline Loans, and (C) increases or reductions to the
U.S. Revolver Commitments pursuant to Section 2.1.4 or 2.1.7) relating thereto,
as applicable, a percentage (carried out to the ninth decimal place) determined
(i) while the U.S. Revolver Commitments are outstanding, by dividing the amount
of such U.S. Lender’s U.S. Revolver Commitment by the aggregate amount of all
U.S. Revolver Commitments, and (ii) at any other time, by dividing the amount of
such U.S. Lender’s U.S. Revolver Loans and U.S. LC Obligations by the aggregate
amount of all U.S. Revolver Loans and U.S. LC Obligations; (b) with respect to
any Canadian Lender and in reference to its Canadian Revolver Commitment,
Canadian Facility Obligations or other matters (including (A) payments of
principal, accrued interest and fees related thereto, (B) participations in
Canadian LC Obligations and Canadian Swingline Loans, (C) reductions to the
Canadian Revolver Commitments pursuant to Section 2.1.4, and (D) obligations to
pay or reimburse Agent for Extraordinary Expenses owed by or in respect of the
Canadian Facility Obligors or to indemnify any Indemnitees for Claims relating
to the Canadian Facility Obligors) relating thereto, as applicable, a percentage
(carried out to the ninth decimal place) determined (i) while the Canadian
Revolver Commitments are outstanding, by dividing such Canadian Lender’s
Canadian Revolver Commitment by the aggregate amount of all Canadian Revolver
Commitments, and (ii) at any other time, by dividing the amount of such Canadian
Lender’s Canadian Revolver Loans and Canadian LC Obligations by the aggregate
amount of all Canadian Revolver Loans and Canadian LC Obligations; (c) with
respect to any U.K. Lender and in reference to its U.K. Revolver Commitment,
U.K. Facility Obligations or other matters (including (A) payments of principal,
accrued interest and fees related thereto, (B) participations in U.K. LC
Obligations and U.K. Swingline Loans, (C) reductions to the U.K. Revolver
Commitments pursuant to Section 2.1.4, and (D) obligations to pay or reimburse
Agent for Extraordinary Expenses owed by or in respect of the U.K. Facility
Obligors or to indemnify any Indemnitees for Claims relating to the U.K.
Facility Obligors) relating thereto, as applicable, a percentage (carried out to
the ninth decimal place) determined (i) while the U.K. Revolver Commitments are
outstanding, by dividing such U.K. Lender’s U.K. Revolver Commitment by the
aggregate amount of all U.K. Revolver Commitments, and (ii) at any other time,
by dividing the amount of such U.K. Lender’s U.K. Revolver Loans and U.K. LC
Obligations by the aggregate amount of all U.K. Revolver Loans and U.K. LC
Obligations; (d) with respect to any U.S. Lender and in reference to its Term
Loan Commitment or other matters (including payments of principal, accrued
interest and fees related thereto) relating thereto, as applicable, a percentage
(carried out to the ninth decimal place) determined (i) while the Term Loan
Commitments are outstanding, by dividing the amount of such U.S. Lender’s Term
Loan Commitment by the aggregate amount of all Term Loan Commitments, and
(ii) at any other time, by dividing the amount of such U.S. Lender’s Term Loans
and by the aggregate amount of all Term Loans; (e) with respect to any U.S.
Lender and in reference to U.S. Facility Obligations or other matters (including
obligations to pay or reimburse Agent for Extraordinary Expenses owed by or in
respect of the U.S. Facility Obligors or to indemnify any Indemnitees for Claims
relating to the U.S. Facility Obligors) relating thereto

 

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which, in each case, are not governed by clause (a) or clause (d) preceding of
this definition (as reasonably determined by Agent from time to time), a
percentage (carried out to the ninth decimal place) determined by dividing the
amount of such U.S. Lender’s unused U.S. Revolver Commitment, unused Term Loan
Commitment, and outstanding U.S. Revolver Loans, U.S. LC Obligations, and Term
Loans, by the aggregate amount of all unused U.S. Revolver Commitments, all
unused Term Loan Commitments, and all U.S. Revolver Loans, U.S. LC Obligations,
and Term Loans; and (f) with respect to any Lender and in reference to any other
matter relating to this Agreement or any other Loan Document which is not
governed by clause (a), clause (b), clause (c), clause (d), or clause
(e) preceding of this definition (as reasonably determined by Agent from time to
time), a percentage (carried out in the ninth decimal place) determined by
dividing the amount of such Lender’s unused Revolver Commitments, unused Term
Loan Commitment, and outstanding Loans and LC Obligations, by the aggregate
amount of all unused Revolver Commitments, all unused Term Loan Commitments, and
all outstanding Loans and LC Obligations.

Proceeds: as defined in Section 7.1.

Proceeds of Crime Act: the Proceeds of Crime (Money Laundering) and Terrorist
Financing Act (Canada) (or any successor statute), as amended from time to time,
and includes all regulations thereunder.

Project Max Commitment Letter: that certain Commitment Letter, dated as of the
First Amendment to Third Amended and Restated Effective Date, by and among
Parent, Bank of America, N.A. (or any of its designated affiliates), JPMorgan
Chase Bank, N.A. (together with any of its designated affiliates) and any
Additional Lead Arranger (as defined therein) and any Additional Initial Lender
(as defined therein) appointed in accordance with the terms thereof].

Properly Contested: with respect to any obligation of any Person, (a) the
obligation is subject to a bona fide dispute regarding amount or such Person’s
liability to pay; (b) the obligation is being properly contested in good faith
by appropriate proceedings promptly instituted and diligently pursued;
(c) appropriate reserves have been established in accordance with GAAP;
(d) non-payment could not have a Material Adverse Effect; (e) no Lien is imposed
on assets of such Person or its Affiliates in an aggregate amount in excess of
$1,000,000 for all such Liens, unless bonded and stayed to the reasonable
satisfaction of Agent; and (f) if the obligation results from entry of a
judgment or other order in an aggregate amount in excess of $1,000,000 for all
such obligations, such judgment or order is stayed pending appeal or other
judicial review.

Property: any interest in any kind of property or asset, whether real, personal
or mixed, or tangible or intangible.

Protective Advances: as defined in Section 2.1.6.

Qualified ECP: an Obligor with total assets exceeding $10,000,000, or that
constitutes an “eligible contract participant” under the Commodity Exchange Act
and can cause another Person to qualify as an “eligible contract participant”
under Section 1a(18)(A)(v)(II) of such Act.

RCRA: the Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-6991i).

 

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RDPRM: Quebec Register of Personal and Movable Real Rights or Registre des
droits personnels et reels mobiliers du Quebec.

Real Estate: all right, title and interest (whether as owner, lessor or lessee)
in any real Property or any buildings, structures, parking areas or other
improvements thereon.

Related Real Estate Documents: with respect to any Real Estate subject to a
Mortgage, the following, in form and substance reasonably satisfactory to Agent
(or such other Persons as expressly set forth below): (a) all information
requested by Agent or any Lender for due diligence and required for Agent or any
Lender to comply with Flood Laws; and (b) (i) a mortgagee title policy (or
binder therefor) covering Agent’s interest under the Mortgage, by an insurer
reasonably acceptable to Agent, which must be fully paid as of the date the U.S.
Real Estate Formula Amount is first included in the calculation of the U.S.
Borrowing Baseof the applicable Mortgage; (ii) such assignments of leases,
estoppel letters, attornment agreements, consents, waivers and releases as Agent
may reasonably require and which would be customarily obtained by a lender in
connection with a mortgage financing of a property such as the Real Estate with
respect to other Persons having an interest in the Real Estate; (iii) a current,
as-built survey of the Real Estate and certified by a licensed surveyor
reasonably acceptable to Agent; (iv) a life-of-loan flood hazard determination
and, if any Real Estate is located in a special flood hazard zone, flood
insurance documentation and coverage as required by Flood Laws; (v) a current
appraisal of the Real Estate, prepared by an appraiser acceptable to Agent, and
in form and substance satisfactory to all Lenders; (vi) an environmental
assessment, prepared by environmental engineers acceptable to Agent, a customary
environmental indemnity agreement if appropriate, and such other reports,
certificates, studies or data as Agent may reasonably require, all in form and
substance satisfactory to all Lenders; and (vii) such other documents, legal
opinions, instruments or agreements as Agent may reasonably require with respect
to the Real Estate and Mortgage and which are customary for a mortgage financing
transaction.

Report: as defined in Section 12.2.3.

Reportable Event: any of the events set forth in Section 4043(c) of ERISA, other
than events for which the 30 day notice period has been waived.

Reporting Trigger Period: the period (a) commencing on the day that an Event of
Default occurs, or Net Excess Availability is less than, at any time, an amount
equal to 10% of the Maximum Facility Amount; and (b) continuing until, during
the preceding 30 consecutive days, no Event of Default has existed and Net
Excess Availability has been greater than, at all times, an amount equal to 10%
of the Maximum Facility Amount.

Required Lenders: Lenders (subject to Section 4.2) having unused Revolver
Commitments, unused Term Loan Commitments, and outstanding Loans and LC
Obligations, in excess of 50% of the aggregate amount of all unused Revolver
Commitments, all unused Term Loan Commitments, and all outstanding Loans and LC
Obligations; provided, however, that the Commitments and Loans of any Defaulting
Lender shall be excluded from such calculation; provided, further, that at any
time there are: (i) 3 or more Lenders, “Required Lenders” must include at least
3 Lenders, and (ii) less than 3 Lenders, “Required Lenders” must include all
Lenders.

 

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Reserve Percentage: the reserve percentage (expressed as a decimal, rounded up
to the nearest 1/16th of 1%) applicable to member banks under regulations issued
by the Board of Governors for determining the maximum reserve requirement for
Eurocurrency liabilities.

Reset Date: as defined Section 5.13.

Restricted Assets: any of the following Property of any Obligor solely to the
extent there are any Term Loan Commitments or Term Loans outstanding: (a) all
Real Estate; (b) all Intellectual Property; (c) all Equity Interests of Top
Golf.

Restrictive Agreement: an agreement (other than a Loan Document) that conditions
or restricts the right of any Borrower, Subsidiary or other Obligor to incur or
repay Borrowed Money, to grant Liens on any assets, to declare or make
Distributions, to modify, extend or renew any agreement evidencing Borrowed
Money, or to repay any intercompany Debt.

Revolver Commitment: a U.S. Revolver Commitment and/or a Canadian Revolver
Commitment and/or a U.K. Revolver Commitment, as the context requires. “Revolver
Commitments” means the aggregate of the U.S. Revolver Commitments, the Canadian
Revolver Commitments, and the U.K. Revolver Commitments.

Revolver Facilities: as defined in Section 14.11(a)(vi).

Revolver Loan: a U.S. Revolver Loan and/or a Canadian Revolver Loan and/or a
U.K. Revolver Loan, as the context requires.

Revolver Notes: collectively, the U.S. Revolver Notes, the Canadian Revolver
Notes, and the U.K. Revolver Notes.

Royalties: all royalties, fees, expense reimbursement and other amounts payable
by an Obligor or a Subsidiary under a License.

S&P: Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and its successors.

Sanction: any sanction administered or enforced by the U.S. government
(including OFAC), United Nations Security Council, European Union, U.K.
government, Canadian government or other sanctions authority.

Screen Rate: in relation to LIBOR, the London interbank offered rate
administered by ICE Benchmark Administration Limited (or any other person which
takes over the administration of that rate) for the relevant currency and period
displayed on pages LIBOR01 or LIBOR02 of the Thomson Reuters screen (or any
replacement Thomson Reuters page which displays that rate) or on the appropriate
page of such other information service which publishes that rate from time to
time in place of Thomson Reuters.

SEC: the Securities and Exchange Commission, or any Governmental Authority
succeeding to any of its principal functions.

 

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Second Amended and Restated Loan Agreement: as defined in the recitals hereto.

Second Amended Original Closing Date: as defined in the recitals hereto.

Second Amendment to Third Amended and Restated Effective Date: January 4, 2019.

Secured Bank Product Obligations: Bank Product Debt owing to a Secured Bank
Product Provider, up to the maximum amount (in the case of any Secured Bank
Product Provider other than Bank of America and its Affiliates) specified by
such provider in writing to Agent, which amount may be established or increased
(by further written notice to Agent from time to time) as long as no Default or
Event of Default exists and no Overadvance would result from establishment of a
Canadian Bank Product Reserve, U.S. Bank Product Reserve, or U.K. Bank Product
Reserve, as applicable, for such amount and all other Secured Bank Product
Obligations; provided, that Secured Bank Product Obligations of an Obligor shall
not include its Excluded Swap Obligations.

Secured Bank Product Provider: (a) Bank of America or any of its Affiliates; and
(b) any other Lender or Affiliate of a Lender that is providing a Bank Product,
provided such provider delivers written notice to Agent, in form and substance
satisfactory to Agent, by the later of the Closing Date or 10 days following
creation of the Bank Product, (i) describing the Bank Product and setting forth
the maximum amount to be secured by the Collateral and the methodology to be
used in calculating such amount, and (ii) agreeing to be bound by Section 12.13.

Secured Parties: Canadian Facility Secured Parties and/or U.S. Facility Secured
Parties and/or U.K. Facility Secured Parties, as the context requires.

Security Documents: this Agreement, the Guarantees, Mortgages, IP Assignments,
Canadian Security Agreements, U.K. Security Agreements, Deposit Account Control
Agreements, and all other documents, instruments and agreements now or hereafter
securing (or given with the intent to secure) any Obligations.

Senior Officer: the chairman of the board, director, president, chief executive
officer, chief financial officer or treasurer of a Borrower or, if the context
requires, an Obligor.

Settlement Report: a report delivered by Agent to the Applicable Lenders
summarizing the Revolver Loans and, if applicable, participations in LC
Obligations outstanding as of a given settlement date, allocated to the
Applicable Lenders on a Pro Rata basis in accordance with their Revolver
Commitments.

Solidary Claim: as defined in Section 12.1.1(b).

Solvent: as to any Person, such Person (a) owns Property whose fair salable
value is greater than the amount required to pay all of its debts (including
contingent, subordinated, unmatured and unliquidated liabilities); (b) owns
Property whose present fair salable value (as defined below) is greater than the
probable total liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities) of such Person as they become absolute and matured;
(c) is able to pay all of its debts as they mature; (d) has capital that is not
unreasonably small for its business and is sufficient to carry on its business
and transactions and all business and transactions in which it is about to
engage; (e) is not “insolvent” within the meaning of Section 101(32) of the U.S.

 

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Bankruptcy Code; and (f) has not incurred (by way of assumption or otherwise)
any obligations or liabilities (contingent or otherwise) under any Loan
Documents, or made any conveyance in connection therewith, with actual intent to
hinder, delay or defraud either present or future creditors of such Person or
any of its Affiliates. “Fair salable value” means the amount that could be
obtained for assets within a reasonable time, either through collection or
through sale under ordinary selling conditions by a capable and diligent seller
to an interested buyer who is willing (but under no compulsion) to purchase. In
addition to the foregoing, “Solvent” means, with respect to any Canadian
Subsidiary, that such Canadian Subsidiary is (i) adequately capitalized,
(ii) owns assets, the value of which, on a going concern basis, exceeds the
liabilities of such Person, (iii) will have sufficient working capital to pay
its debts as they become due, (iv) has not incurred (by way of assumption or
otherwise) any obligations or liabilities (contingent or otherwise) under any
Loan Documents, or made any conveyance in connection therewith, with actual
intent to hinder, delay or defraud either the present or future creditors of
such Subsidiary or any of its Affiliates, and (v) is not an “insolvent person”
as defined in the Bankruptcy and Insolvency Act (Canada). “Solvent” means, with
respect to any U.K. Subsidiary, it is not and is not deemed for the purpose of
and under the Insolvency Act 1986 to be unable to pay its debts as they fall due
(other than under section 123(1)(a) of the Insolvency Act 1986).

Specified Obligor: an Obligor that is not then an “eligible contract
participant” under the Commodity Exchange Act (determined prior to giving effect
to Section 5.11).

Spot Rate: the exchange rate, as determined by Agent, that is applicable to
conversion of one currency into another currency, which is (a) the exchange rate
reported by Bloomberg (or other commercially available source designated by
Agent) as of the end of the preceding business day in the financial market for
the first currency; or (b) if such report is unavailable for any reason, the
spot rate for the purchase of the first currency with the second currency as in
effect during the preceding business day in Agent’s principal foreign exchange
trading office for the first currency.

Subsidiary: any entity at least 50% of whose voting securities or Equity
Interests are owned by the Parent (including indirect ownership by the Parent
through other entities in which the Parent directly or indirectly owns 50% of
the voting securities or Equity Interests).

Supermajority Lenders: Lenders (subject to Section 4.2) having (a) Revolver
Commitments in excess of 75% of the aggregate Revolver Commitments; and (b) if
the Revolver Commitments have terminated, Revolver Loans and LC Obligations in
excess of 75% of all outstanding Revolver Loans and LC Obligations; provided,
however, that the Commitments and Loans of any Defaulting Lender shall be
excluded from such calculation.

Swap Obligations: with respect to an Obligor, its obligations under a Hedging
Agreement that constitutes a “swap” within the meaning of Section 1a(47) of the
Commodity Exchange Act.

Swingline Loans: the Canadian Swingline Loans, the U.S. Swingline Loans, and the
U.K. Swingline Loans.

TARGET Day: any day on which the Trans-European Automated Real-time Gross
Settlement Express Transfer (TARGET) payment system (or, if such payment system
ceases to be

 

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operative, such other payment system (if any) determined by the Agent acting
reasonably to be a suitable replacement) is open for the settlement of payments
in Euro.

Tax Credit: a credit against, relief or remission for, or repayment of any Tax.

Tax Deduction: as defined in Section 5.9.2.

Taxes: all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.

Term Loan: a loan made by a U.S. Lender to the U.S. Borrowers pursuant to
Section 2.5, which Loan shall be denominated in Dollars and shall be either a
U.S. Base Rate Loan or a LIBOR Loan, in each case as selected by Borrower Agent.

Term Loan Cap: as of any date of determination, 18% of the Net Orderly
Liquidation Value of the Company Trademark, rounded up to the nearest million in
Agent’s sole discretion.

Term Loan Collateral Agent: as defined in the Intercreditor Agreement.

Term Loan Commitment: for any U.S. Lender, the obligation of such U.S. Lender to
make a Term Loan hereunder, up to the principal amount shown on Schedule 1.1.
“Term Loan Commitments” means the aggregate amount of such commitments of all
Lenders.

Term Loan Commitment Termination Date: the earliest of (a) the Facility
Termination Date, (b) the date on which the Borrower Agent terminates the Term
Loan Commitments pursuant to Section 2.5.4, (c) the date that is six months
after the Closing Date, and (d) the date on which the Term Loan Commitments are
terminated pursuant to Section 11.2.

Term Loan Maturity Date: the earlier of (a) the Facility Termination Date, and
(b) the date that is the four year anniversary of the making of the Terms Loans
pursuant to Section 2.5.

Term Loan Unused Commitment Fee Rate: a per annum rate equal to 0.50%.

Termination Event: (a) the whole or partial withdrawal of a Canadian Subsidiary
from a Canadian Pension Plan during a plan year; or (b) the filing of a notice
of interest to terminate in whole or in part a Canadian Pension Plan or the
treatment of a Canadian Pension Plan amendment as a termination or partial
termination; or (c) the institution of proceedings by any Governmental Authority
to terminate in whole or in part or have a trustee appointed to administer a
Canadian Pension Plan; or (d) any other event or condition which might
constitute grounds for the termination of or winding up, or partial termination
of or winding up, or the appointment of a trustee to administer, any Canadian
Pension Plan.

Third Amendment to Second Amended and Restated Effective Date: June 23, 2014.

Threshold Percentage: (a) 15% at any time no Term Loans are outstanding; (b)
17.5% at any time there are Term Loans outstanding in an aggregate principal
amount of less than

 

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$15,000,000; and (c) 20% at any time there are Term Loans outstanding in an
aggregate principal amount equal to $15,000,000 or more.

Top Golf: Topgolf International, Inc., a Delaware corporation.

Top Golf Blocked Account: as defined in the definition of Top Golf Proceeds.

Top Golf Proceeds: cash proceeds received by Parent in connection with any:
(a) sale of all or a portion of the Equity Interests of Top Golf owned by
Parent, or (b) dividend received by Parent from Top Golf on account of Parent’s
ownership interest in Top Golf; provided that (i) Parent elects to designate
such proceeds as Top Golf Proceeds by at least five (5) Business Days (or such
lesser time as approved by Agent in its sole discretion) prior written notice
(such notice, the “Top Golf Proceeds Notice”) to Agent of the occurrence of such
transaction which will give rise to such cash proceeds; (ii) Parent sends
written notice to Agent on the Business Day prior to the consummation of such
transaction which will give rise to such cash proceeds; (iii) on the day such
cash proceeds are received by Parent, either (in accordance with Parent’s
election made in the Top Golf Proceeds Notice): (A) Parent deposits all of such
proceeds in a separate Deposit Account (such Deposit Account, the “Top Golf
Blocked Account”), and provides evidence to Agent, in form and substance
satisfactory to Agent, of such deposit, or (B) Agent establishes or modifies, as
applicable, the U.S. Top Golf Reserve, the U.K. Top Golf Reserve and the
Canadian Top Golf Reserve; (iv) the Top Golf Blocked Account shall not contain
any other funds other than Top Golf Proceeds; (v) Parent may remove Top Golf
Proceeds from the Top Golf Blocked Account, provided, however that (A) once
removed other than (1) to consummate Common Stock Repurchases or pay dividends
on Parent’s common stock, in each case in accordance with Section 10.2.6(g)(A)
on the date of such removal or (2) to make Investments in accordance with
Section 10.2.2(k)(A) on the date of such removal, such funds shall no longer
constitute Top Golf Proceeds, and (B) Parent shall provide Agent (1) three (3)
Business Days’ prior written notice of such removal, and (2) evidence of the
removal of such funds from the Top Golf Blocked Account within two (2) Business
Days of such removal; (vi) Parent shall provide Agent with copies of all monthly
statements with respect to the Top Golf Blocked Account and such other
information with respect to such Deposit Account as reasonably requested by
Agent from time to time; and (vii) the Top Golf Blocked Account shall be subject
to a Deposit Account Control Agreement prior to any Top Golf Proceeds being
deposited into the Top Golf Blocked Account.

Top Golf Proceeds Notice: as defined in the definition of Top Golf Proceeds.

Total Revolver Exposure: as of any date of determination, the sum of the U.S.
Revolver Exposure plus the Canadian Revolver Exposure plus the U.K. Revolver
Exposure.

Transferee: any actual or potential Eligible Assignee, Participant or other
Person acquiring an interest in any Obligations.

Travis Mathew Retail: Travis Mathew Retail, LLC, a California limited liability
company.

Treaty Lender: a Lender which: (a) is treated as a resident of a Treaty State
for the purposes of a Treaty; and (b) does not carry on a business in the United
Kingdom through a permanent establishment with which that Lender’s participation
in the Loan is effectively connected.

 

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Treaty State: a jurisdiction having a double taxation agreement (a “Treaty”)
with the United Kingdom which makes provision for full exemption from tax
imposed by the United Kingdom on interest.

Type: any type of a Loan (i.e., a LIBOR Loan, a U.S. Base Rate Loan, a Canadian
BA Rate Loan, a Canadian Base Rate Loan, a Canadian Prime Rate Loan, or a U.K.
Base Rate Loan) and, in the case of LIBOR Loans and Canadian BA Rate Loans, the
same Interest Period.

UCC: the Uniform Commercial Code as in effect in the State of New York or, when
the laws of any other jurisdiction govern the perfection or enforcement of any
Lien, the Uniform Commercial Code of such jurisdiction.

Unfunded Pension Liability: the excess of a Pension Plan’s benefit liabilities
under Section 4001(a)(16) of ERISA, over the current value of that Pension
Plan’s assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year and includes any unfunded liability or solvency deficiency as determined
for the purposes of the PBA in respect of any Canadian Pension Plan.

uPlay: uPlay, Inc., a Delaware corporation.

U.K./Canadian Allocable Amount: as defined in Section 5.11.

U.K./Canadian Guarantor Payment: as defined in Section 5.11.

U.K. and United Kingdom: the United Kingdom of Great Britain and Northern
Ireland.

U.K. Accounts Formula Amount: (a) as of any date of determination within the
period beginning on May 1 through and including October 31 of each Fiscal Year,
85% of the Value of Eligible Accounts of the U.K. Borrower; and (b) as of any
date of determination within the period beginning on November 1 through and
including April 30 of each Fiscal Year, 90% of the Value of Eligible Accounts of
the U.K. Borrower.

U.K. Availability: as of any date of determination, the U.K. Borrowing Base as
of such date of determination minus the aggregate principal amount of all U.K.
Revolver Loans outstanding on such date of determination.

U.K. Availability Reserve: the sum (without duplication) of (a) the Inventory
Reserve with respect to the U.K. Borrower’s Inventory; (b) the U.K. Rent and
Charges Reserve; (c) the U.K. LC Reserve; (d) the U.K. Bank Product Reserve;
(e) all accrued Royalties of the U.K. Domiciled Obligors, whether or not then
due and payable by a U.K. Domiciled Obligor; (f) the aggregate amount of
liabilities secured by Liens upon U.K. Facility Collateral that are senior to
the Agent’s Liens (but imposition of any such reserve shall not waive an Event
of Default arising therefrom); (g) the U.K. Dilution Reserve; (h) the U.K. Top
Golf Reserve; and (i) such additional reserves, in such amounts and with respect
to such matters, as Agent in its Credit Judgment may elect to impose from time
to time with respect to the U.K. Borrowing Base.

 

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U.K. Bank Product Reserve: the aggregate amount of reserves established by Agent
from time to time in its discretion in respect of Secured Bank Product
Obligations owing by the U.K. Domiciled Obligors and their Subsidiaries.

U.K. Base Rate: for any day, the reference rate for U.K. Base Rate Loans, being
a fluctuating rate of interest per annum equal to the rate of interest in effect
for such day as announced from time to time by the local branch of Bank of
America in the jurisdiction in which such currency is funded as its “base rate”
with respect to such currency. Any change in such rate shall take effect at the
opening of business on the day of such change.

U.K. Base Rate Loan: a U.K. Revolver Loan, or portion thereof, funded in Dollars
and bearing interest calculated by reference to U.K. Base Rate.

U.K. Borrower: as defined in the preamble to this Agreement.

U.K. Borrowing Base: on any date of determination, an amount equal to the lesser
of (a) the result of: (i) the Maximum U.K. Facility Amount, minus (ii) the U.K.
LC Reserve, minus (iii) the U.K. Top Golf Reserve; or (b) the result of: (i) the
U.K. Accounts Formula Amount, plus (ii) the U.K. Inventory Formula Amount, plus
(iii) 100% of the amount of U.K. Pledged Cash, minus (iv) the U.K. Availability
Reserve.

U.K. Borrowing Base Certificate: a certificate, in form and substance
satisfactory to Agent, by which the U.K. Borrower certifies calculation of the
U.K. Borrowing Base.

U.K. Cash Collateral Account: a demand deposit, money market or other account
established by Agent at Bank of America, N.A. (London Branch) or such other
financial institution as Agent may select in its discretion, which account shall
be for the benefit of the U.K. Facility Secured Parties and shall be subject to
Agent’s Liens securing the U.K. Facility Obligations.

U.K. Dilution Reserve: as of any date of determination, an amount sufficient to
reduce the advance rate against Eligible Accounts of the U.K. Borrower by 1% for
each whole percentage point (or portion thereof) by which the Dilution Percent
is in excess of 5.0%.

U.K. Domiciled Obligor: each U.K. Subsidiary which is at any time an Obligor,
and “U.K. Domiciled Obligors” means all such Persons, collectively.

U.K. Dominion Account: a special account established by the U.K. Borrower at
Bank of America, N.A. (London Branch) or another bank acceptable to Agent, over
which Agent has exclusive control for withdrawal purposes at all times.

U.K. Eligible Foreign Account: an Account of the U.K. Borrower that is owed by
an Account Debtor that is organized or has its principal offices or assets in a
jurisdiction (a) that has been a Participating Member State since before May
2004 or (b) that is listed on Schedule 1.1C.

U.K. Expeditors Reserve: as of any date of determination, the aggregate amount
of accounts payable owed by any U.K. Facility Obligor to Expeditors, as
determined by Agent in its Credit Judgment.

 

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U.K. Facility Collateral: all Collateral that now or hereafter secures (or is
intended to secure) any of the U.K. Facility Obligations, including Property of
each U.K. Domiciled Obligor, each U.S. Domiciled Obligor, and each Canadian
Domiciled Obligor.

U.K. Facility Guarantee: each guarantee agreement (including this Agreement) at
any time executed by a U.K. Facility Guarantor in favor of Agent guaranteeing
all or any portion of the U.K. Facility Obligations.

U.K. Facility Guarantor: Parent, each U.K. Subsidiary, each Canadian Subsidiary,
and each U.S. Subsidiary (other than uPlay unless uPlay becomes a Guarantor in
accordance with Section 10.2.15) and each other Person (if any) who guarantees
payment and performance of any U.K. Facility Obligations.

U.K. Facility Obligations: all Obligations of the U.K. Facility Obligors
(excluding, for the avoidance of doubt, the Obligations of the U.S. Domiciled
Obligors as guarantors of any U.S. Facility Obligations).

U.K. Facility Obligor: each of the U.K. Borrower or any U.K. Facility Guarantor,
and “U.K. Facility Obligors” means all of such Persons, collectively.

U.K. Facility Secured Parties: the Agent, the U.K. Issuing Bank, the U.K.
Lenders and the Secured Bank Product Providers who provide Bank Products to the
U.K. Facility Obligors and their Subsidiaries.

U.K. Inventory Formula Amount: as of any date of determination, the lesser of
(a) the sum of (i) with respect to Eligible Inventory that has been owned by the
U.K. Borrower for less than one (1) calendar year as of the applicable date of
determination, (A) for the period beginning on March 1 through and including
September 30 of each Fiscal Year, 65% of the Value of such U.K. Borrower’s
Eligible Inventory, (B) for the period beginning on October 1 through and
including February 28 (or February 29, as applicable) of each Fiscal Year, 75%
of the Value of such U.K. Borrower’s Eligible Inventory, plus (ii) with respect
to Eligible Inventory that has been owned by the U.K. Borrower for more than one
(1) calendar year, as of the applicable date of determination, 50% of the Value
of such U.K. Borrower’s Eligible Inventory; or (b) 85% of the NOLV Percentage of
the Value of the U.K. Borrower’s Eligible Inventory. Notwithstanding the
foregoing, the aggregate amount of the U.K. Inventory Formula Amount which may
be attributed to Eligible In-Transit Inventory (the “U.K. In-Transit
Availability”) shall not exceed $2,000,000; provided that, the U.K. In-Transit
Availability (after taking into effect the previous proviso) shall be reduced by
the U.K. Expeditors Reserve if, as of any date of determination, either (I) U.K.
Net Excess Availability is less than 10% of the Maximum U.K. Facility Amount, or
(II) there are any accounts payable owed by any U.K. Facility Obligor to
Expeditors which are aged in excess of historical levels (except in cases of
good faith disputes).

U.K. Issuing Bank: Bank of America or an Affiliate of Bank of America.

U.K. LC Obligations: the sum (without duplication) of (a) all amounts owing by
the U.K. Borrower for any drawings under Letters of Credit; (b) the stated
amount of all outstanding Letters of Credit issued for the account of the U.K.
Borrower, which if such Letter of Credit is denominated in a currency other than
Dollars, British Pounds or Euros, may be stated by Agent (at

 

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its option) in Dollars, British Pounds or Euros calculated at the Spot Rate; and
(c) all fees and other amounts owing with respect to Letters of Credit issued
for the account of the U.K. Borrower.

U.K. LC Reserve: the aggregate of all U.K. LC Obligations, other than those that
have been Cash Collateralized.

U.K. Lenders: each Lender that has issued a U.K. Revolver Commitment (provided
that such Person or an Affiliate of such Person also has a U.S. Revolver
Commitment).

U.K. Letter of Credit Subline: $2,000,000.

U.K. Letters of Credit: any standby or documentary letter of credit issued by
the U.K. Issuing Bank for the account of the U.K. Borrower, or any indemnity,
guarantee, exposure transmittal memorandum or similar form of credit support
issued by Agent or the U.K. Issuing Bank for the benefit of the U.K. Borrower.

U.K. Net Excess Availability: as of any date of determination, an amount equal
to the U.K. Availability minus the aggregate amount, if any, of all trade
payables of U.K. Domiciled Obligors that are more than 60 days past due (or such
later date as Agent may approve in its sole discretion) and all book overdrafts
of U.K. Domiciled Obligors in excess of historical practices with respect
thereto, in each case as determined by Agent in its Credit Judgment.

U.K. Non-Bank Lender: means:

(a)    where a Lender becomes a party to this Agreement on the day on which this
Agreement is entered into, any Lender listed in Schedule 1.1D; and

(b)    where a Lender becomes a party to this Agreement after the day on which
this Agreement is entered into, a Lender which gives a U.K. Tax Confirmation in
the assignment notice which it executes pursuant to, or in connection with,
Section 13.3 below.

U.K. Overadvance: as defined in Section 2.15.

U.K. Overadvance Loan: a U.K. Revolver Loan made to the U.K. Borrower when a
U.K. Overadvance exists or is caused by the funding thereof.

U.K. Overadvance Loan Balance: on any date, the amount by which the aggregate
U.K. Revolver Exposure exceeds the amount of the U.K. Borrowing Base on such
date.

U.K. Pledged Cash: the funds maintained in a blocked Deposit Account or
securities account of the U.K. Borrower subject to a Deposit Account Control
Agreement or securities account control agreement, as applicable, which give
Agent at all times exclusive access and control for withdrawal purposes to the
exclusion of the U.K. Borrower and precluding the U.K. Borrower from withdrawing
or otherwise giving any instructions in connection therewith and which may not
be withdrawn without the Agent’s prior written consent (such consent not to be
unreasonably withheld if (i) upon and after giving effect to such withdrawal, no
Default or Event of Default shall have occurred and be continuing and
(ii) immediately after such withdrawal (for clarification, including after
giving effect to any recalculation of the U.K. Borrowing Base upon

 

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giving effect to such withdrawal), U.K. Availability would be a positive
number), and which are subject to effective security documents, in form and
substance satisfactory to Agent, that provide Agent with an unencumbered
perfected first priority/ranking security interest in and Lien on such funds.

U.K. Qualified Lender:

(i)    a Lender (other than a Lender within paragraph (ii) below) which is
beneficially entitled to interest payable to that Lender in respect of any
advance under the Loan Documents and is:

(A)     a Lender:

(1) which is a bank (as defined for the purpose of section 879 of the Income Tax
Act 2007 (United Kingdom) (“ITA”) making an advance under the Loan Documents; or

(2) in respect of an advance made under the Loan Documents by a person that was
a bank (as defined for the purpose of section 879 of ITA) at the time that that
advance was made

and with respect to (i)(A)(1) and (i)(A)(2), which is within the charge to U.K.
corporation tax as respects any payments of interest made in respect of that
advance or would be within such charge as respects such payments apart from
section 18A of the Corporation Taxes Act 2009 (United Kingdom) (“CTA”); or

(B)    a Lender which is:

 

  (1)

a company resident in the U.K. for U.K. tax purposes;

 

  (2)

a partnership each member of which is:

 

  (a)

a company so resident in the U.K.; or

 

  (b)

a company not so resident in the U.K. which carries on a trade in the U.K.
through a permanent establishment and which brings into account in computing its
chargeable profits (within the meaning of section 19 of the CTA the whole of any
share of interest payable in respect of that advance that falls to it by reason
of Part 17 of the CTA; or

 

  (3)

a company not so resident in the U.K. which carries on a trade in the U.K.
through a permanent establishment and which brings into account interest payable
in respect of that advance in computing the chargeable profits (within the
meaning of section 19 of the CTA) of that company; or

(C)    a Treaty Lender; or

(ii)    a building society (as defined for the purposes of section 880 of ITA)
making an advance under the Loan Documents.

 

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U.K. Reimbursement Date: as defined in Section 2.2.2.

U.K. Rent and Charges Reserve: the aggregate of (a) all past due rent and other
amounts owing by an Obligor to any landlord, warehouseman, processor, repairman,
mechanic, shipper, freight forwarder, broker or other Person who possesses any
U.K. Facility Collateral or could assert a Lien on any U.K. Facility Collateral;
and (b) a reserve at least equal to three months’ rent and other charges that
could be payable to any such Person, unless it has executed a Lien Waiver.

U.K. Required Lenders: U.K. Lenders (subject to Section 4.2) having (a) U.K.
Revolver Commitments in excess of 50% of the aggregate U.K. Revolver
Commitments; and (b) if the U.K. Revolver Commitments have terminated, U.K.
Revolver Loans and U.K. LC Obligations in excess of 50% of all outstanding U.K.
Revolver Loans and U.K. LC Obligations; provided, however, that the U.K.
Revolver Commitments and U.K. Revolver Loans of any Defaulting Lender shall be
excluded from such calculation; provided, further, that at any time there are:
(i) 3 or more U.K. Lenders, “U.K. Required Lenders” must include at least 3 U.K.
Lenders, and (ii) less than 3 U.K. Lenders, “U.K. Required Lenders” must include
all U.K. Lenders.

U.K. Revolver Commitment: for any U.K. Lender, its obligation to make U.K.
Revolver Loans and to participate in U.K. LC Obligations, in the applicable
Available Currencies, up to the maximum principal amount shown on Schedule 1.1,
or as hereafter determined pursuant to each Assignment and Acceptance to which
it is a party, as such U.K. Revolver Commitment may be adjusted from time to
time in accordance with the provisions of Sections 2.1.4 or 11.2. “U.K. Revolver
Commitments” means the aggregate amount of such commitments of all U.K. Lenders.

U.K. Revolver Commitment Termination Date: the earliest of (a) the U.S. Revolver
Commitment Termination Date (without regard to the reason therefor), (b) the
date on which the Borrower Agent terminates or reduces to zero all of the U.K.
Revolver Commitments pursuant to Section 2.1.4, and (c) the date on which the
U.K. Revolver Commitments are terminated pursuant to Section 11.2.

U.K. Revolver Exposure: on any date, an amount equal to the sum of the Dollar
Equivalent of the U.K. Revolver Loans outstanding on such date plus the U.K. LC
Obligations on such date.

U.K. Revolver Loan: a Revolver Loan made by U.K. Lenders to the U.K. Borrower
pursuant to Section 2.1.1(c), which Revolver Loan shall be either a U.K. Base
Rate Loan (which shall be denominated in Dollars only) or a LIBOR Loan (which
may be denominated in Dollars, British Pounds or Euros, as selected by the
Borrower Agent), and any U.K. Swingline Loan, U.K. Overadvance Loan or
Protective Advance made to or owed by the U.K. Borrower.

U.K. Revolver Notes: a promissory note executed by the U.K. Borrower in favor of
a U.K. Lender in the form of Exhibit A-3, in the amount of such U.K. Lender’s
U.K. Revolver Commitment.

U.K. Security Agreement:

(a)    the security agreements dated as of the date hereof made by each U.K.
Domiciled Obligor in favor of the Agent;

 

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(b)    the debenture dated 15 June 2012 and made by the U.K. Borrower in favor
of the Agent;

(c)    the supplemental debenture dated 18 December 2013 and made by the U.K.
Borrower in favor of the Agent;

(d)    the debenture dated 15 June 2012 and made by Callaway Golf European
Holding Company Limited in favor of the Agent; and

(e)    any other debenture, deed of charge or other similar agreement,
instrument or document governed by the laws of England and Wales, Scotland or
Northern Ireland, in each case now or hereafter securing (or given with the
interest to secure) the U.K. Facility Obligations.

U.K. Subsidiary: a Subsidiary of Parent incorporated or organized under the laws
of England and Wales.

U.K. Swingline Loan: any Borrowing of U.K. Base Rate Loans funded with Agent’s
funds, until such Borrowing is settled among the U.K. Lenders or repaid by the
U.K. Borrower.

U.K. Tax Confirmation: means a confirmation by a Lender that the person
beneficially entitled to interest payable to it in respect of an advance under a
Loan Document is either:

(a)    a company resident in the United Kingdom for United Kingdom tax purposes;

(b)    a partnership each member of which is:

(i)    a company so resident in the United Kingdom; or

(ii)    a company not so resident in the United Kingdom which carries on a trade
in the United Kingdom through a permanent establishment and which brings into
account in computing its chargeable profits (within the meaning of Section 19 of
CTA) the whole of any share of interest payable in respect of that advance that
falls to it by reason of Part 17 of CTA; or

(c)    a company not so resident in the United Kingdom which carries on a trade
in the United Kingdom through a permanent establishment and which brings into
account interest payable in respect of that advance in computing the chargeable
profits (within the meaning of Section 19 of CTA) of that company.

U.K. Tax Payment: as defined in Section 5.9.14.

U.K. Top Golf Reserve: a reserve established by Agent at Parent’s request in
accordance with the definition of Top Golf Proceeds, in an initial amount as of
such establishment equal to $0. The U.K. Top Golf Reserve (a) shall be reduced
on a dollar for dollar basis for the amount expended in connection with (x) any
Common Stock Repurchases made, or dividends paid on Parent’s common stock, in
each case after the Third Amendment to Second Amended and Restated Effective
Date in accordance with Section 10.2.6(g)(ii)(D) and (y) any Investments made
after the Third Amendment to Second Amended and Restated Effective Date in
accordance with Section 10.2.2(k)(ii)(D); (b) may be permanently reduced from
time to time upon Parent’s written request

 

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to Agent; and (c) subject to Agent’s written consent (such consent not to be
unreasonably withheld if (i) upon and after giving effect to such adjustment, no
Default or Event of Default shall have occurred and be continuing, and
(ii) immediately after such adjustment (for clarification, including after
giving effect to any recalculation of the Canadian Borrowing Base and U.S.
Borrowing Base upon giving effect to such adjustment), Canadian Availability and
U.S. Availability would be a positive number), may be reallocated on a dollar
for dollar basis to the Canadian Top Golf Reserve and/or the U.S. Top Golf
Reserve upon Parent’s written request to Agent; provided, however, that once
reduced pursuant to clause (b) above, the U.K. Top Golf Reserve may not be
increased. The parties agree that the U.K. Top Golf Reserve shall never be less
than zero (-0-). For clarification, the aggregate amount of the Canadian Top
Golf Reserve, the U.K. Top Golf Reserve, and the U.S. Top Golf Reserve may not
exceed an amount equal to the aggregate amount of Top Golf Proceeds received by
Parent as reflected in all Top Golf Proceeds Notices (less any amounts Parent
elects to deposit into the Top Golf Blocked Account) less all amounts expended
in connection with (x) any Common Stock Repurchases made, or dividends paid on
Parent’s common stock, in each case after the Third Amendment to Second Amended
and Restated Effective Date in accordance with Section 10.2.6(g) and (y) any
Investments made after the Third Amendment to Second Amended and Restated
Effective Date in accordance with Section 10.2.2(k) and less all permanent
reductions elected by Parent pursuant to clause (b) of each of the definitions
of Canadian Top Golf Reserve, U.K. Top Golf Reserve, and U.S. Top Golf Reserve.

U.K. Unused Line Fee Rate: a per annum rate equal to 0.25%.

U.S. Accounts Formula Amount: (a) as of any date of determination within the
period beginning on May 1 through and including October 31 of each Fiscal Year,
85% of the Value of Eligible Accounts of the U.S. Borrowers; and (b) as of any
date of determination within the period beginning on November 1 through and
including April 30 of each Fiscal Year, 90% of the Value of Eligible Accounts of
the U.S. Borrowers.

U.S. Availability: as of any date of determination, the U.S. Borrowing Base as
of such date of determination minus the aggregate principal amount of U.S.
Revolver Loans outstanding on such date of determination.

U.S. Availability Reserve: the sum (without duplication) of (a) the Inventory
Reserve with respect to the U.S. Borrowers’ Inventory; (b) the U.S. Rent and
Charges Reserve; (c) the U.S. LC Reserve; (d) the U.S. Bank Product Reserve;
(e) all accrued Royalties of the U.S. Facility Obligors, whether or not then due
and payable by a U.S. Facility Obligor; (f) the aggregate amount of liabilities
secured by Liens upon U.S. Facility Collateral that are senior to the Agent’s
Liens (but imposition of any such reserve shall not waive an Event of Default
arising therefrom); (g) the U.S. Dilution Reserve; (h) the Canadian Overadvance
Loan Balance, if any, outstanding on such date, and the U.K. Overadvance Loan
Balance, if any, outstanding on such date; (i) the U.S. Top Golf Reserve; and
(j) such additional reserves, in such amounts and with respect to such matters,
as Agent in its Credit Judgment may elect to impose from time to time with
respect to the U.S. Borrowing Base.

U.S. Bank Product Reserve: the aggregate amount of reserves established by Agent
from time to time in its discretion in respect of Secured Bank Product
Obligations owing by the U.S. Domiciled Obligors and their Subsidiaries.

 

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U.S. Bankruptcy Code: Title 11 of the United States Code.

U.S. Base Rate: for any day, a per annum rate equal to the greater of (a) the
U.S. Prime Rate for such day; (b) the Federal Funds Rate for such day, plus
0.50%; or (c) LIBOR for a 30 day interest period as determined on such day, plus
1.0%.

U.S. Base Rate Loan: a Loan that bears interest based on the U.S. Base Rate.

U.S. Base Rate Revolver Loan: a Revolver Loan that bears interest based on the
U.S. Base Rate.

U.S. Borrowers: as defined in the preamble to this Agreement.

U.S. Borrowing Base: on any date of determination, an amount equal to the lesser
of (a) the result of: (i) the Maximum U.S. Facility Amount, minus (ii) the U.S.
LC Reserve, minus (iii) the Canadian Overadvance Loan Balance, if any,
outstanding on such date, minus (iv) the U.K. Overadvance Loan Balance, if any,
outstanding on such date, minus (v) the U.S. Top Golf Reserve; or (b) the result
of: (i) the U.S. Accounts Formula Amount, plus (ii) the U.S. Inventory Formula
Amount, plus (iii) the U.S. Trademark Formula Amount, plus (iv) the U.S. Real
Estate Formula Amount, plus (v) 100% of the amount of U.S. Pledged Cash, minus
(vi) the U.S. Availability Reserve; provided, that clauses (b)(iii) and (b)(iv)
above may be removed from such calculation in accordance with Sections 2.1.4(c)
and (d) respectively.

U.S. Borrowing Base Certificate: a certificate, in form and substance
satisfactory to Agent, by which the U.S. Borrowers certify calculation of the
U.S. Borrowing Base.

U.S. Cash Collateral Account: a demand deposit, money market or other account
established by Agent at Bank of America or such other financial institution as
Agent may select in its discretion, which account shall be for the benefit of
the U.S. Facility Secured Parties and shall be subject to Agent’s Liens securing
the U.S. Facility Obligations.

U.S. Dilution Reserve: as of any date of determination, an amount sufficient to
reduce the advance rate against Eligible Accounts of the U.S. Borrowers by one
(1) percentage point for each whole percentage point (or portion thereof) by
which the Dilution Percent is in excess of 5.0%.

U.S. Domiciled Obligor: each of the Parent, any U.S. Borrower or any U.S.
Subsidiary which it is at any time an Obligor, and “U.S. Domiciled Obligors”
means all such Persons, collectively.

U.S. Dominion Account: a special account established by the U.S. Borrowers at
Bank of America or another bank acceptable to Agent, over which Agent has
exclusive control for withdrawal purposes during any Dominion Trigger Period.

U.S. Expeditors Reserve: as of any date of determination, the aggregate amount
of accounts payable owed by any U.S. Facility Obligor to Expeditors, as
determined by Agent in its Credit Judgment.

 

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U.S. Facility Collateral: all Collateral that now or hereafter secures (or is
intended to secure) any of the U.S. Facility Obligations, including Property of
each U.S. Domiciled Obligor.

U.S. Facility Guarantee: each guarantee agreement (including this Agreement) at
any time executed by a U.S. Facility Guarantor in favor of Agent guaranteeing
all or any portion of the U.S. Facility Obligations.

U.S. Facility Guarantor: each U.S. Subsidiary other than uPlay (unless uPlay
becomes a Guarantor in accordance with Section 10.2.15) and each other Person
(if any) who guarantees payment and performance of any U.S. Facility
Obligations.

U.S. Facility Obligations: all Obligations of the U.S. Facility Obligors
(including, for the avoidance of doubt, the Obligations of the U.S. Domiciled
Obligors as guarantors of the Canadian Facility Obligations and U.K. Facility
Obligations).

U.S. Facility Obligor: each of any U.S. Borrower or any U.S. Facility Guarantor,
and “U.S. Facility Obligors” means all of such Persons, collectively.

U.S. Facility Secured Parties: the Agent, the U.S. Issuing Bank, the U.S.
Lenders and the Secured Bank Product Providers who provide Bank Products to the
U.S. Facility Obligors and their Subsidiaries.

U.S. Inventory Formula Amount: as of any date of determination, the lesser of
(a) the sum of (i) with respect to Eligible Inventory that has been owned by a
U.S. Borrower for less than one (1) calendar year as of the applicable date of
determination, (A) for the period beginning on March 1 through and including
September 30 of each Fiscal Year, 65% of the Value of such U.S. Borrowers’
Eligible Inventory, (B) for the period beginning on October 1 through and
including February 28 (or February 29, as applicable) of each Fiscal Year, 75%
of the Value of such U.S. Borrowers’ Eligible Inventory, plus (ii) with respect
to Eligible Inventory that has been owned by a U.S. Borrower for more than one
(1) calendar year, as of the applicable date of determination, 50% of the Value
of such U.S. Borrowers’ Eligible Inventory; or (b) 85% of the NOLV Percentage of
the Value of the U.S. Borrowers’ Eligible Inventory. Notwithstanding the
foregoing, (1) the aggregate amount of the U.S. Inventory Formula Amount which
may be attributed to Eligible In-Transit Inventory (the “U.S. In-Transit
Availability”) shall not exceed $25,000,000; provided that, the U.S. In-Transit
Availability (after taking into effect the previous proviso) shall be reduced by
the U.S. Expeditors Reserve if, as of any date of determination, either (I) U.S.
Net Excess Availability is less than 10% of the Maximum U.S. Facility Amount, or
(II) there are any accounts payable owed by any U.S. Facility Obligor to
Expeditors which are aged in excess of historical levels (except in cases of
good faith disputes); and (2) so long as there is no Lien Waiver then in place
with respect thereto, the aggregate amount of the U.S. Inventory Formula Amount
which may be attributed to Eligible Costco Inventory shall not exceed
$20,000,000.

U.S. Issuing Bank: Bank of America or an Affiliate or branch of Bank of America

U.S. LC Obligations: the sum (without duplication) of (a) all amounts owing by
the U.S. Borrowers for any drawings under Letters of Credit; (b) the stated
amount of all outstanding Letters of Credit issued for the account of any U.S.
Borrower, which if such Letter of Credit is denominated in a currency other than
Dollars, may be stated by Agent (at its option) in Dollars

 

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calculated at the Spot Rate; and (c) all fees and other amounts owing with
respect to Letters of Credit issued for the account of any U.S. Borrower.

U.S. LC Reserve: the aggregate of all U.S. LC Obligations, other than those that
have been Cash Collateralized.

U.S. Lenders: Bank of America and each other Lender (other than Canadian Lenders
or U.K. Lenders) party hereto.

U.S. Letter of Credit Subline: $20,000,000.

U.S. Letters of Credit: any standby or documentary letter of credit issued by
the U.S. Issuing Bank for the account of the U.S. Borrowers (or any U.S.
Borrower), or any indemnity, guarantee, exposure transmittal memorandum or
similar form of credit support issued by Agent or the U.S. Issuing Bank for the
benefit of any U.S. Borrower, and shall include the Existing Letters of Credit.

U.S. Net Excess Availability: as of any date of determination, an amount equal
to the U.S. Availability minus the aggregate amount, if any, of all trade
payables of U.S. Domiciled Obligors that are more than 60 days past due (or such
later date as Agent may approve in its sole discretion) and all book overdrafts
of U.S. Domiciled Obligors in excess of historical practices with respect
thereto, in each case as determined by Agent in its Credit Judgment.

U.S. Overadvance: as defined in Section 2.1.5.

U.S. Overadvance Loan: a U.S. Revolver Loan made to the U.S. Borrowers or the
amount owed by the U.S. Borrowers when a U.S. Overadvance exists or is caused by
the funding thereof.

U.S. Pledged Cash: the funds maintained in a blocked Deposit Account or
securities account of a U.S. Borrower subject to a Deposit Account Control
Agreement or securities account control agreement, as applicable, which give
Agent at all times exclusive access and control for withdrawal purposes to the
exclusion of the U.S. Borrowers and precluding the U.S. Borrowers from
withdrawing or otherwise giving any instructions in connection therewith and
which may not be withdrawn without the Agent’s prior written consent (such
consent not to be unreasonably withheld if (i) upon and after giving effect to
such withdrawal, no Default or Event of Default shall have occurred and be
continuing and (ii) immediately after such withdrawal (for clarification,
including after giving effect to any recalculation of the U.S. Borrowing Base
upon giving effect to such withdrawal), U.S. Availability would be a positive
number), and which are subject to effective security documents, in form and
substance satisfactory to Agent, that provide Agent with an unencumbered
perfected first priority/ranking security interest in and Lien on such funds.

U.S. Prime Rate: the rate of interest announced by Bank of America from time to
time as its prime rate. Such rate is set by Bank of America on the basis of
various factors, including its costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above or below such rate. Any change in such rate
announced by Bank of America shall take effect at the opening of business on the
day specified in the public announcement of such change.

 

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U.S. Real Estate Formula Amount: as of any date of determination, the lesser of
(a) 80% of the fair market value of the Eligible Real Estate, as determined from
the most recent appraisal of such Real Estate performed by an appraiser and on
terms satisfactory to Agent; or (b) $28,600,000 (such amount in this clause
(b) to be reduced by $476,666.67 on the first day of each calendar quarter
occurring after the Closing Date, commencing with the calendar quarter beginning
on April 1, 2018).

U.S. Reimbursement Date: as defined in Section 2.3.2.

U.S. Rent and Charges Reserve: the aggregate of (a) all past due rent and other
amounts owing by an Obligor to any landlord, warehouseman, processor, repairman,
mechanic, shipper, freight forwarder, broker or other Person who possesses any
U.S. Facility Collateral or could assert a Lien on any U.S. Facility Collateral;
and (b) a reserve at least equal to three months’ rent and other charges that
could be payable to any such Person, unless it has executed a Lien Waiver.

U.S. Required Lenders: U.S. Lenders (subject to Section 4.2) having (a) U.S.
Revolver Commitments in excess of 50% of the aggregate U.S. Revolver
Commitments; and (b) if the U.S. Revolver Commitments have terminated, U.S.
Revolver Loans and U.S. LC Obligations in excess of 50% of all outstanding U.S.
Revolver Loans and U.S. LC Obligations; provided, however, that the Commitments
and Loans of any Defaulting Lender shall be excluded from such calculation;
provided, further, that at any time there are: (i) 3 or more U.S. Lenders with
U.S. Revolver Commitments or outstanding U.S. Revolver Loans or U.S. LC
Obligations, “U.S. Required Lenders” must include at least 3 such U.S. Lenders,
and (ii) less than 3 U.S. Lenders with U.S. Revolver Commitments or outstanding
U.S. Revolver Loans or U.S. LC Obligations, “U.S. Required Lenders” must include
all such U.S. Lenders.

U.S. Required Term Lenders: U.S. Lenders (subject to Section 4.2) having
(a) Term Loan Commitments in excess of 50% of the aggregate Term Loan
Commitments; and (b) if the Term Loan Commitments have terminated, Term Loans in
excess of 50% of all outstanding Term Loans; provided, however, that the
Commitments and Loans of any Defaulting Lender shall be excluded from such
calculation; provided, further, that at any time there are: (i) 3 or more U.S.
Lenders with Term Loan Commitments or outstanding Term Loans, “U.S. Required
Term Lenders” must include at least 3 such U.S. Lenders, and (ii) less than 3
U.S. Lenders with Term Loan Commitments or outstanding Term Loans, “U.S.
Required Term Lenders” must include all such U.S. Lenders.

U.S. Revolver Commitment: for any U.S. Lender, its obligation to make U.S.
Revolver Loans and to participate in U.S. LC Obligations up to the maximum
principal amount shown on Schedule 1.1, or as hereafter determined pursuant to
each Assignment and Acceptance to which it is a party, as such U.S. Revolver
Commitment may be adjusted from time to time in accordance with the provisions
of Sections 2.1.4, 2.1.7, or 11.2. “U.S. Revolver Commitments” means the
aggregate amount of such commitments of all U.S. Lenders.

U.S. Revolver Commitment Termination Date: the earliest of (a) the Facility
Termination Date, (b) the date on which the Borrower Agent terminates or reduces
to zero the U.S. Revolver Commitments pursuant to Section 2.1.4, and (c) the
date on which the U.S. Revolver Commitments are terminated pursuant to
Section 11.2.

 

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U.S. Revolver Exposure: on any date, an amount equal to the sum of the U.S.
Revolver Loans outstanding on such date plus the U.S. LC Obligations on such
date.

U.S. Revolver Loan: a Revolver Loan made by a U.S. Lender to a U.S. Borrower
pursuant to Section 2.1.1(a), which Loan shall be denominated in Dollars and
shall be either a U.S. Base Rate Revolver Loan or a LIBOR Loan, in each case as
selected by Borrower Agent, and any U.S. Swingline Loan, U.S. Overadvance Loan
or Protective Advance made to or owed by the U.S. Borrowers.

U.S. Revolver Notes: a promissory note executed by U.S. Borrowers in favor of a
U.S. Lender in the form of Exhibit A-2, in the amount of such U.S. Lender’s U.S.
Revolver Commitment.

U.S. Subsidiary: a Subsidiary of Parent that is organized under the laws of a
state of the United States or the District of Columbia.

U.S. Swingline Loan: any Borrowing of U.S. Base Rate Revolver Loans funded with
Agent’s funds, until such Borrowing is settled among the U.S. Lenders or repaid
by the U.S. Borrowers.

U.S. Top Golf Reserve: a reserve established by Agent at Parent’s request in
accordance with the definition of Top Golf Proceeds, in an initial amount as of
such establishment equal to the amount of the Top Golf Proceeds received as of
the date of such establishment. The U.S. Top Golf Reserve (a) shall be reduced
on a dollar for dollar basis for the amount expended in connection with (x) any
Common Stock Repurchases made, or dividends paid on Parent’s common stock, in
each case after the Third Amendment to Second Amended and Restated Effective
Date in accordance with Section 10.2.6(g)(ii)(B) and (y) any Investments made
after the Third Amendment to Second Amended and Restated Effective Date in
accordance with Section 10.2.2(k)(ii)(B); (b) may be permanently reduced from
time to time upon Parent’s written request to Agent; and (c) subject to Agent’s
written consent (such consent not to be unreasonably withheld if (i) upon and
after giving effect to such adjustment, no Default or Event of Default shall
have occurred and be continuing, and (ii) immediately after such adjustment (for
clarification, including after giving effect to any recalculation of the
Canadian Borrowing Base and U.K. Borrowing Base upon giving effect to such
adjustment), Canadian Availability and U.K. Availability would be a positive
number), may be reallocated on a dollar for dollar basis to the Canadian Top
Golf Reserve and/or the U.K. Top Golf Reserve upon Parent’s written request to
Agent; provided, however, that once reduced pursuant to clause (b) above, the
U.S. Top Golf Reserve may not be increased. The parties agree that the U.S. Top
Golf Reserve shall never be less than zero (-0-). For clarification, the
aggregate amount of the Canadian Top Golf Reserve, the U.K. Top Golf Reserve,
and the U.S. Top Golf Reserve may not exceed an amount equal to the aggregate
amount of Top Golf Proceeds received by Parent as reflected in all Top Golf
Proceeds Notices (less any amounts Parent elects to deposit into the Top Golf
Blocked Account) less all amounts expended in connection with (x) any Common
Stock Repurchase made, or dividends paid on Parent’s common stock, in each case
after the Third Amendment to Second Amended and Restated Effective Date in
accordance with Section 10.2.6(g) and (y) any Investments made after the Third
Amendment to Second Amended and Restated Effective Date in accordance with
Section 10.2.2(k) and less all

 

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permanent reductions elected by Parent pursuant to clause (b) of each of the
definitions of Canadian Top Golf Reserve, U.K. Top Golf Reserve, and U.S. Top
Golf Reserve.

U.S. Trademark Formula Amount: as of any date of determination, the lesser of
(a) 42% of the Net Orderly Liquidation Value of the Company Trademark; or (b)
$70,000,000 (such amount in this clause (b) to be permanently reduced by
$1,666,666.67 on the first day of each calendar quarter occurring after the
Closing Date, commencing with the calendar quarter beginning on April 1, 2018,
until such amount (for the avoidance of doubt, at all times) is less than or
equal to the lesser of (i) $50,000,000 and (ii) 30% of the Net Orderly
Liquidation Value of the Company Trademark).

U.S. Unused Line Fee Rate: a per annum rate equal to 0.25%.

Value: (a) for Inventory, its Dollar Equivalent value determined on the basis of
the lower of cost or market, calculated on a first-in, first-out basis, and
excluding any portion of cost attributable to intercompany profit among
Borrowers and their Affiliates; and (b) for an Account, its Dollar Equivalent
face amount, net of any returns, rebates, discounts (calculated on the shortest
terms), credits, allowances or Taxes (including sales, excise or other taxes)
that have been or could be claimed by the Account Debtor or any other Person.

Wage Earner Protection Act Reserve: on any date of determination, a reserve
established from time to time by Agent in its Credit Judgment in such amount as
Agent determines reflects the amounts that may become due under the Wage Earner
Protection Program Act (Canada) with respect to the employees of any Obligor
employed in Canada which would give rise to a Lien with priority under
Applicable Law over the Lien of Agent.

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

1.2    Accounting Terms. Under the Loan Documents (except as otherwise specified
herein), all accounting terms shall be interpreted, all accounting
determinations shall be made, and all financial statements shall be prepared, in
accordance with GAAP applied on a basis consistent with the most recent audited
financial statements of Obligors delivered to Agent before the Original
Agreement Closing Date and using the same inventory valuation method as used in
such financial statements, except for any change required or permitted by GAAP
if Obligors’ certified public accountants concur in such change, the change is
disclosed to Agent, and Section 10.3 and any other provision hereof are amended
in a manner satisfactory to Required Lenders to take into account the effects of
the change, if any. No calculations under the Loan Documents shall give effect
to any such change prior to any such amendment.

1.3    Uniform Commercial Code/PPSA. As used herein, the following terms are
defined in accordance with the UCC in effect in the State of New York from time
to time: “Chattel Paper,” “Commercial Tort Claim,” “Equipment,” “Goods,”
“Instrument,” “Investment Property,” “Letter-of-Credit Right” and “Supporting
Obligation” and, as such terms relate to any such

 

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Property of any Canadian Domiciled Obligor, such terms shall refer to such
Property as defined in the PPSA (to the extent such terms are defined therein).

1.4    Certain Matters of Construction. The terms “herein,” “hereof,”
“hereunder” and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. In the computation of periods of time from
a specified date to a later specified date, “from” means “from and including,”
and “to” and “until” each mean “to but excluding.” The terms “including” and
“include” shall mean “including, without limitation” and, for purposes of each
Loan Document, the parties agree that the rule of ejusdem generis shall not be
applicable to limit any provision. Section titles appear as a matter of
convenience only and shall not affect the interpretation of any Loan Document.
All references to (a) laws or statutes include all related rules, regulations,
interpretations, amendments and successor provisions; (b) any document,
instrument or agreement include any amendments, waivers and other modifications,
extensions or renewals (to the extent permitted by the Loan Documents); (c) any
section mean, unless the context otherwise requires, a section of this
Agreement; (d) any exhibits or schedules mean, unless the context otherwise
requires, exhibits and schedules attached hereto, which are hereby incorporated
by reference; (e) any Person include successors and assigns; (f) except as
otherwise specified herein, time of day means time of day at Agent’s notice
address under Section 14.3.1; or (g) discretion of Agent, any Issuing Bank or
any Lender mean the sole and absolute discretion of such Person. Except as
expressly otherwise provided herein, all calculations of Value, fundings of
Loans, issuances of Letters of Credit and payments of Obligations shall be in
Dollars and, unless the context otherwise requires, all determinations
(including calculations of Borrowing Base and financial covenants) made from
time to time under the Loan Documents shall be made in light of the
circumstances existing at such time. Borrowing Base calculations shall be
consistent with historical methods of valuation and calculation, and otherwise
satisfactory to Agent (and not necessarily calculated in accordance with GAAP).
Obligors shall have the burden of establishing any alleged negligence,
misconduct or lack of good faith by Agent, any Issuing Bank or any Lender under
any Loan Documents. No provision of any Loan Documents shall be construed
against any party by reason of such party having, or being deemed to have,
drafted the provision. Whenever the phrase “to the best of an Obligor’s
knowledge” or words of similar import are used in any Loan Documents, it means
actual knowledge of a Senior Officer of such Obligor, or knowledge that a Senior
Officer of such Obligor would have obtained if he or she had engaged in good
faith and diligent performance of his or her duties, including reasonably
specific inquiries of employees or agents and a good faith attempt to ascertain
the matter to which such phrase relates.

1.5    Calculations. All references in the Loan Documents to Loans, Letters of
Credit, Obligations, Borrowing Base components and other amounts shall be
denominated in Dollars, unless expressly provided otherwise. The Dollar
equivalent of any amounts denominated or reported under a Loan Document in a
currency other than Dollars shall be determined by Agent on a daily basis, based
on the current Spot Rate. Borrowers shall report Value and other Borrowing Base
components to Agent in the currency invoiced by Obligors or shown in Obligors’
financial records, and unless expressly provided otherwise, shall deliver
financial statements and calculate financial covenants in Dollars.
Notwithstanding anything herein to the contrary, if any Obligation is funded and
expressly denominated in a currency other than Dollars, Obligors shall repay
such Obligation in such other currency.

 

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1.6    Interpretation (Quebec). For purposes of any Collateral located in the
Province of Quebec or charged by any deed of hypothec (or any other Loan
Document) and for all other purposes pursuant to which the interpretation or
construction of a Loan Document may be subject to the laws of the Province of
Quebec 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” and “mortgage” shall be deemed to include a “hypothec”, (f) all
references to filing, registering or recording under the UCC or the PPSA shall
be deemed to include publication under the Civil Code of Québec, (g) all
references to “perfection” of or “perfected” Liens shall be deemed to include a
reference to the “opposability” of such Liens to 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 willful 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”, and (r) “fee simple title”
shall be deemed to include “absolute ownership”. For purposes of greater
certainty, the reference to the “Loan Agreement” in the deed of hypothec dated
November 3, 2017 executed by the Canadian Borrower in favour of the Agent means
this Agreement.

 

SECTION 2.

CREDIT FACILITIES

2.1    Revolver Commitments.

2.1.1.    Revolver Loans.

(a)    U.S. Revolver Loans to U.S. Borrowers. Each U.S. Lender agrees, severally
and not jointly with the other U.S. Lenders, upon the terms and subject to the
conditions set forth herein, to make U.S. Revolver Loans to the U.S. Borrowers
on any Business Day during the period from the Closing Date to the U.S. Revolver
Commitment Termination Date, not to exceed in aggregate principal amount
outstanding at any time such U.S. Lender’s U.S. Revolver Commitment at such
time, which U.S. Revolver Loans may be repaid and reborrowed in accordance with
the terms and provisions of this Agreement; provided, however, that such U.S.
Lenders shall have no obligation to the U.S. Borrowers whatsoever to honor any
request for a U.S. Revolver Loan on or after the U.S. Revolver Commitment
Termination Date or if the amount of the proposed U.S. Revolver Loan exceeds
U.S. Availability on the proposed funding date for such U.S. Revolver Loan. Each
Borrowing of U.S. Revolver Loans shall be funded by the U.S. Lenders on a Pro
Rata basis. The U.S. Revolver Loans shall bear interest as set forth in
Section 3.1. Each U.S. Revolver Loan shall, at the option of the Borrower Agent,
be made or continued as, or converted into, part of one or more Borrowings that,
unless specifically provided herein, shall consist entirely of U.S. Base Rate
Revolver Loans or LIBOR Revolver Loans. The U.S. Revolver Loans shall be repaid
in accordance with the terms of this Agreement and shall be secured by all

 

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of the U.S. Facility Collateral. U.S. Borrowers shall be jointly and severally
liable to pay all of the U.S. Revolver Loans. Each U.S. Revolver Loan shall be
funded and repaid in Dollars.

(b)    Canadian Revolver Loans to Canadian Borrower. Each Canadian Lender
agrees, severally and not jointly with the other Canadian Lenders, upon the
terms and subject to the conditions set forth herein, to make Canadian Revolver
Loans to the Canadian Borrower on any Business Day during the period from the
Closing Date to the Canadian Revolver Commitment Termination Date, not to exceed
in aggregate principal amount outstanding at any time such Canadian Lender’s
Canadian Revolver Commitment at such time, which Canadian Revolver Loans may be
repaid and reborrowed in accordance with the terms and provisions of this
Agreement; provided, however, that such Canadian Lenders shall have no
obligation to the Canadian Borrower whatsoever to honor any request for a
Canadian Revolver Loan on or after the Canadian Revolver Commitment Termination
Date or if the amount of the proposed Canadian Revolver Loan exceeds Canadian
Availability on the proposed funding date for such Canadian Revolver Loan. Each
Borrowing of Canadian Revolver Loans shall be funded by the Canadian Lenders on
a Pro Rata basis. The Canadian Revolver Loans shall bear interest as set forth
in Section 3.1. Each Canadian Revolver Loan shall, at the option of the Borrower
Agent, be made or continued as, or converted into, part of one or more
Borrowings that, unless specifically provided herein, shall consist entirely of
Canadian Prime Rate Loans or Canadian BA Rate Loans if denominated in Canadian
Dollars, or shall consist entirely of Canadian Base Rate Loans or LIBOR Loans if
denominated in Dollars. The Canadian Revolver Loans shall be repaid in
accordance with the terms of this Agreement and shall be secured by all of the
Canadian Facility Collateral. Each Canadian Revolver Loan shall be funded in
Canadian Dollars or, at the option of the Borrower Agent, Dollars and repaid in
the same currency as such underlying Canadian Revolver Loan was made.

(c)    U.K. Revolver Loans to U.K. Borrower. Each U.K. Lender agrees, severally
and not jointly with the other U.K. Lenders, upon the terms and subject to the
conditions set forth herein, to make U.K. Revolver Loans to the U.K. Borrower on
any Business Day during the period from the Closing Date to the U.K. Revolver
Commitment Termination Date, not to exceed in aggregate principal amount
outstanding at any time such U.K. Lender’s U.K. Revolver Commitment at such
time, which U.K. Revolver Loans may be repaid and reborrowed in accordance with
the terms and provisions of this Agreement; provided, however, that such U.K.
Lenders shall have no obligation to the U.K. Borrower whatsoever to honor any
request for a U.K. Revolver Loan on or after the U.K. Revolver Commitment
Termination Date or if the amount of the proposed U.K. Revolver Loan exceeds
U.K. Availability on the proposed funding date for such U.K. Revolver Loan. Each
Borrowing of U.K. Revolver Loans shall be funded by the U.K. Lenders on a Pro
Rata basis. The U.K. Revolver Loans shall bear interest as set forth in
Section 3.1. Each U.K. Revolver Loan shall, at the option of the Borrower Agent,
be made or continued as, or converted into, part of one or more Borrowings that,
unless specifically provided herein, shall consist entirely of U.K. Base Rate
Loans or LIBOR Loans (provided, that U.K. Base Rate Loans shall only be
denominated in Dollars). The U.K. Revolver Loans shall be repaid in accordance
with the terms of this Agreement and shall be secured by all of the U.K.
Facility Collateral. Each U.K. Revolver Loan shall be funded in Dollars, British
Pounds and/or Euro (in the case of LIBOR Loans) and Dollars only (in the case of
U.K. Base Rate Loans) and shall be repaid in the same currency as such
underlying U.K. Revolver Loan was made.

 

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(d)    Maximum Total Revolver Exposure. Notwithstanding anything to the contrary
contained in this Section 2.1.1, in no event shall any Borrower be entitled to
receive a Revolver Loan if, at the time of the proposed funding of such Loan
(and after giving effect thereto and all pending requests for Loans), the Total
Revolver Exposure exceeds (or would exceed) the lesser of the Maximum Facility
Amount and the Revolver Commitments.

2.1.2.    Revolver Notes. The Revolver Loans made by each Lender and interest
accruing thereon shall be evidenced by the records of Agent and such Lender. At
the request of any Lender, the U.S. Borrowers and/or the Canadian Borrower
and/or the U.K. Borrower shall execute and deliver a U.S. Revolver Note and/or a
Canadian Revolver Note and/or a U.K. Revolver Note, respectively, to such Lender
in the amount of such Lender’s applicable Revolver Commitment(s).

2.1.3.    Use of Proceeds. The proceeds of Revolver Loans shall be used by
Borrowers solely (a) to satisfy existing Debt on the Original Agreement Closing
Date; (b) to pay fees and transaction expenses associated with the closing of
this credit facility; (c) to pay Obligations in accordance with this Agreement;
and (d) for working capital and other lawful corporate purposes of Borrowers.
Borrowers shall not, directly or indirectly, use any Letter of Credit or Loan
proceeds, nor use, lend, contribute or otherwise make available any Letter of
Credit or Loan proceeds to any Subsidiary, joint venture partner or other
Person, (i) to fund any activities of or business with any Person, or in any
country or territory, that, at the time of issuance of the Letter of Credit or
funding of the Loan, is the target of a Sanction; or (ii) in any manner that
would result in a violation of a Sanction by any Person (including any Secured
Party or other individual or entity participating in the transaction) or in
violation of Anti-Corruption Laws.

2.1.4.    Voluntary Reduction or Termination of Revolver Commitments.

(a)    The Canadian Revolver Commitments shall terminate on the Canadian
Revolver Commitment Termination Date, the U.K. Revolver Commitments shall
terminate on the U.K. Revolver Commitment Termination Date, and the U.S.
Revolver Commitments shall terminate on the U.S. Revolver Commitment Termination
Date, in each case, unless sooner terminated in accordance with this Agreement.
Upon at least 10 days’ prior written notice to Agent from the Borrower Agent,
(i) U.S. Borrowers may, at their option, terminate the U.S. Revolver Commitments
and this credit facility and/or (ii) the Canadian Borrower may, at its option,
terminate the Canadian Revolver Commitments and/or (iii) the U.K. Borrower may,
at its option, terminate the U.K. Revolver Commitments, in each case, without
premium or penalty (other than funding losses payable pursuant to Section 3.9).
If the U.S. Borrowers elect to reduce to zero or terminate the U.S. Revolver
Commitments pursuant to the previous sentence, the Canadian Revolver Commitments
and U.K. Revolver Commitments shall automatically terminate concurrently with
the termination of the U.S. Revolver Commitments. Any notice of termination
given by Borrowers pursuant to this Section 2.1.4 shall be irrevocable but may
be conditioned on a refinancing or another material event. On the Canadian
Revolver Commitment Termination Date, the Canadian Borrower shall make Full
Payment of all Canadian Facility Obligations. On the U.K. Revolver Commitment
Termination Date, the U.K. Borrower shall make Full Payment of all U.K. Facility
Obligations. On the U.S. Revolver Commitment Termination Date, the U.S.
Borrowers shall make Full Payment of all U.S. Facility Obligations.

 

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(b)    So long as (i) no Default or Event of Default then exists or would result
therefrom, and (ii) no U.S. Overadvance, Canadian Overadvance, or U.K.
Overadvance then exists or would result therefrom, the Borrower Agent may
permanently and irrevocably reduce the Maximum Facility Amount by giving Agent
at least 10 days’ prior irrevocable written notice thereof from a Senior Officer
of the Borrower Agent, which notice shall (A) specify the date (which shall be a
Business Day) and amount of such reduction (which shall be in a minimum amount
of $10,000,000 and increments of $5,000,000 in excess thereof), (B) specify the
allocation of such reduction to, and the corresponding reductions of, each of
the Maximum U.S. Facility Amount and/or the Maximum Canadian Facility Amount
and/or the Maximum U.K. Facility Amount (and the respective U.S. Revolver
Commitments, Canadian Revolver Commitments, and the U.K. Revolver Commitments of
the U.S. Lenders, the Canadian Lenders, and the U.K. Lenders, respectively, in
respect thereof, each of which shall be allocated to such Lenders on a Pro Rata
basis at the time of such reduction) and (C) certify the satisfaction of the
foregoing conditions precedent (including calculations thereof in reasonable
detail) both as of the date of such certificate and as of the effective date of
any such proposed reduction. In addition to and without limiting the generality
of the foregoing, (1) each reduction in the Maximum U.S. Facility Amount and the
U.S. Revolver Commitments shall in no event exceed U.S. Availability and shall
be in a minimum amount of $5,000,000 and increments of $1,000,000 in excess
thereof, (2) each reduction in the Maximum Canadian Facility Amount and the
Canadian Revolver Commitments shall in no event exceed Canadian Availability and
shall be in a minimum amount of $5,000,000 and increments of $1,000,000 in
excess thereof, and (3) each reduction in the Maximum U.K. Facility Amount and
the U.K. Revolver Commitments shall in no event exceed U.K. Availability and
shall be in a minimum amount of $5,000,000 and increments of $1,000,000 in
excess thereof.

(c)    Upon at least 10 days’ prior written notice to Agent from the Borrower
Agent, U.S. Borrowers may, at their option, permanently remove the U.S.
Trademark Formula Amount from the calculation of the U.S. Borrowing Base,
without premium or penalty (other than funding losses payable pursuant to
Section 3.9 ) so long as (i) no Term Loans or Term Loan Commitments are
outstanding, and (ii) no U.S. Overadvance, Canadian Overadvance, or U.K.
Overadvance then exists or would result therefrom. Any notice of removal given
by Borrowers pursuant to this Section 2.1.4(c) shall be irrevocable. Agent and
the Lenders agree that Agent shall release any Liens with respect to the
Obligors’ Intellectual Property to the extent the U.S. Trademark Formula Amount
is removed from the calculation of the U.S. Borrowing Base in accordance with
this Section 2.1.4(c) and so long as no Default or Event of Default has occurred
and is continuing.Intentionally Omitted.

(d)    Upon at least 10 days’ prior written notice to Agent from the Borrower
Agent, U.S. Borrowers may, at their option, permanently remove the U.S. Real
Estate Formula Amount from the calculation of the U.S. Borrowing Base, without
premium or penalty (other than funding losses payable pursuant to Section 3.9).
Any notice of removal given by Borrowers pursuant to this Section 2.1.4(d) shall
be irrevocable. Agent and the Lenders agree that Agent shall release any Liens
with respect to the Eligible Real Estate to the extent the U.S. Real Estate
Formula Amount is removed from the calculation of the U.S. Borrowing Base in
accordance with this Section 2.1.4(d) and so long as no Default or Event of
Default has occurred and is continuing.

2.1.5.    Overadvances. If the aggregate U.S. Revolver Loans exceed the U.S.
Borrowing Base (a “U.S. Overadvance”) at any time, the excess amount shall be
payable by U.S.

 

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Borrowers on demand by Agent, but all such U.S. Revolver Loans shall
nevertheless constitute U.S. Facility Obligations secured by the U.S. Facility
Collateral. If the aggregate Canadian Revolver Loans exceed the Canadian
Borrowing Base (a “Canadian Overadvance”) at any time, the excess amount shall
be payable by Canadian Borrower on demand by Agent, but all such Canadian
Revolver Loans shall nevertheless constitute Canadian Facility Obligations
secured by the Canadian Facility Collateral. If the aggregate U.K. Revolver
Loans exceed the U.K. Borrowing Base (a “U.K. Overadvance”) at any time, the
excess amount shall be payable by the U.K. Borrower on demand by Agent, but all
such U.K. Revolver Loans shall nevertheless constitute U.K. Facility Obligations
secured by the U.K. Facility Collateral. Agent may require the Applicable
Lenders to honor requests for Overadvance Loans and to forbear from requiring
the applicable Borrowers to cure an Overadvance, (a) when no other Event of
Default is known to Agent, as long as (i) the Overadvance does not continue for
more than 30 consecutive days (and no Overadvance may exist for at least five
consecutive days thereafter before further Overadvance Loans are required), and
(ii) the Overadvance is not known by Agent to exceed 7.5% of the U.S. Borrowing
Base with respect to the U.S. Borrowers, 7.5% of the Canadian Borrowing Base
with respect to the Canadian Borrower, or 7.5% of the U.K. Borrowing Base with
respect to the U.K. Borrower; and (b) regardless of whether an Event of Default
exists, if Agent discovers an Overadvance not previously known by it to exist,
as long as from the date of such discovery the Overadvance does not continue for
more than 30 consecutive days. In no event shall Overadvance Loans be required
that would cause the outstanding U.S. Revolver Exposure to exceed the aggregate
U.S. Revolver Commitments, the outstanding Canadian Revolver Exposure to exceed
the aggregate Canadian Revolver Commitments, or the outstanding U.K. Revolver
Exposure to exceed the aggregate U.K. Revolver Commitments. Any funding of an
Overadvance Loan or sufferance of an Overadvance shall not constitute a waiver
by Agent or Lenders of the Event of Default caused thereby. In no event shall
any Borrower or other Obligor be deemed a beneficiary of this Section nor
authorized to enforce any of its terms. Required Lenders may at any time revoke
Agent’s authority to knowingly make further Overadvance Loans by written notice
to Agent

2.1.6.    Protective Advances. Agent shall be authorized, in its discretion, at
any time that any conditions in Section 6 are not satisfied, and without regard
to the aggregate U.S. Revolver Commitments, the Canadian Revolver Commitments,
or the U.K. Revolver Commitments, to make U.S. Base Rate Revolver Loans,
Canadian Prime Rate Loans, and U.K. Base Rate Loans, as applicable (each a
“Protective Advance”) (a) up to an aggregate amount of (i) 10% of the aggregate
Canadian Revolver Commitments (minus the aggregate amount of any outstanding
Canadian Overadvances), with respect to the Canadian Borrower, (ii) 10% of the
aggregate U.S. Revolver Commitments (minus the aggregate amount of any
outstanding U.S. Overadvances), with respect to the U.S. Borrowers, or (iii) 10%
of the aggregate U.K. Revolver Commitments (minus the aggregate amount of any
outstanding U.K. Overadvances), with respect to the U.K. Borrower, in each case,
outstanding at any time, if Agent deems such Loans necessary or desirable to
preserve or protect Collateral, or to enhance the collectibility or repayment of
Obligations; or (b) to pay any other amounts chargeable to Obligors under any
Loan Documents, including costs, fees and expenses. Each Applicable Lender shall
participate in each Protective Advance on a Pro Rata basis. Required Lenders may
at any time revoke Agent’s authority to make further Protective Advances under
clause (a) by written notice to Agent. Absent such revocation, Agent’s
determination that funding of a Protective Advance is appropriate shall be
conclusive. All Protective Advances made by Agent with respect to U.S. Borrowers
shall be U.S. Facility

 

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Obligations, secured by the U.S. Facility Collateral and shall be treated for
all purposes as Extraordinary Expenses. All Protective Advances made by Agent
with respect to Canadian Borrower shall be Canadian Facility Obligations,
secured by the Canadian Facility Collateral and shall be treated for all
purposes as Extraordinary Expenses. All Protective Advances made by Agent with
respect to the U.K. Borrower shall be U.K. Facility Obligations, secured by the
U.K. Facility Collateral and shall be treated for all purposes as Extraordinary
Expenses. In no event shall Protective Advances be made by Agent if it would
cause the outstanding U.S. Revolver Exposure to exceed the aggregate U.S.
Revolver Commitments, the outstanding Canadian Revolver Exposure to exceed the
aggregate Canadian Revolver Commitments, or the outstanding U.K. Revolver
Exposure to exceed the aggregate U.K. Revolver Commitments.

2.1.7.    Increase in U.S. Revolver Commitments. Borrowers may request an
increase in the aggregate U.S. Revolver Commitments from time to time upon
notice to Agent, as long as (a) the requested increase is in a minimum amount of
$10,000,000 and is offered on the same terms as the existing U.S. Revolver
Commitments, except for fees mutually agreed upon by Borrowers and Agent,
(b) increases under this Section do not exceed $150,000,000 in the aggregate and
no more than 3 increases are made, (c) no reduction in Revolver Commitments
pursuant to Section 2.1.4 has occurred prior to the requested increase, and
(d) no Default or Event of Default shall have occurred and be continuing at the
time of such increase or result therefrom. Agent shall promptly notify U.S.
Lenders of the requested increase and, within 10 Business Days thereafter, each
U.S. Lender shall notify Agent if and to what extent such Lender commits to
increase its U.S. Revolver Commitment. Any U.S. Lender not responding within
such period shall be deemed to have declined an increase. If U.S. Lenders fail
to commit to the full requested increase, Eligible Assignees may issue
additional U.S. Revolver Commitments and become U.S. Lenders hereunder. Agent
may allocate, in its discretion, the increased U.S. Revolver Commitments among
committing U.S. Lenders and, if necessary, Eligible Assignees. Provided the
conditions set forth in Section 6.2 are satisfied, total U.S. Revolver
Commitments shall be increased by the requested amount (or such lesser amount
committed by U.S. Lenders and Eligible Assignees) on a date agreed upon by Agent
and Borrower Agent, but no later than 45 days following Borrowers’ increase
request. Agent, Borrowers, and new and existing Lenders shall execute and
deliver such documents and agreements as Agent deems appropriate to evidence the
increase in and allocations of U.S. Revolver Commitments. On the effective date
of an increase, all outstanding U.S. Revolver Loans, U.S. LC Obligations and
other exposures under the U.S. Revolver Commitments shall be reallocated among
U.S. Lenders, and settled by Agent if necessary, in accordance with U.S.
Lenders’ adjusted shares of such U.S. Revolver Commitments.

2.2    U.K. Letter of Credit Facility.

2.2.1.    Issuance of U.K. Letters of Credit. U.K. Issuing Bank shall issue U.K.
Letters of Credit from time to time on and after the Closing Date until 30 days
prior to the Facility Termination Date (or until the U.K. Revolver Commitment
Termination Date, if earlier), on the terms set forth herein, including the
following:

(a)    The U.K. Borrower acknowledges that U.K. Issuing Bank’s issuance of any
U.K. Letter of Credit is conditioned upon U.K. Issuing Bank’s receipt of a LC
Application with respect to the requested U.K. Letter of Credit, as well as such
other instruments and agreements as U.K. Issuing Bank may customarily require
for issuance of a letter of credit of similar type and

 

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amount. U.K. Issuing Bank shall have no obligation to issue any U.K. Letter of
Credit unless (i) U.K. Issuing Bank receives a LC Request and LC Application at
least three Business Days prior to the requested date of issuance; (ii) each LC
Condition is satisfied; and (iii) if a Defaulting Lender that is a U.K. Lender
exists, such Lender or the U.K. Borrower has entered into arrangements
satisfactory to Agent and U.K. Issuing Bank to eliminate any Fronting Exposure
associated with such Lender. If, in sufficient time to act, U.K. Issuing Bank
receives written notice from U.K. Required Lenders that a LC Condition has not
been satisfied, U.K. Issuing Bank shall not issue the requested U.K. Letter of
Credit. Prior to receipt of any such notice, U.K. Issuing Bank shall not be
deemed to have knowledge of any failure of LC Conditions.

(b)    U.K. Letters of Credit may be requested by the U.K. Borrower to support
obligations incurred in the Ordinary Course of Business, or as otherwise
approved by Agent. The renewal or extension of any U.K. Letter of Credit shall
be treated as the issuance of a new U.K. Letter of Credit, except that delivery
of a new LC Application shall be required at the discretion of U.K. Issuing
Bank.

(c)    The U.K. Borrower assumes all risks of the acts, omissions or misuses of
any U.K. Letter of Credit by the beneficiary. In connection with issuance of any
U.K. Letter of Credit, none of Agent, Issuing Banks or any Lender shall be
responsible for the existence, character, quality, quantity, condition, packing,
value or delivery of any goods purported to be represented by any Documents; any
differences or variation in the character, quality, quantity, condition,
packing, value or delivery of any goods from that expressed in any Documents;
the form, validity, sufficiency, accuracy, genuineness or legal effect of any
Documents or of any endorsements thereon; the time, place, manner or order in
which shipment of goods is made; partial or incomplete shipment of, or failure
to ship, any goods referred to in a U.K. Letter of Credit or Documents; any
deviation from instructions, delay, default or fraud by any shipper or other
Person in connection with any goods, shipment or delivery; any breach of
contract between a shipper or vendor and the U.K. Borrower; errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex, telecopy, e-mail, telephone or otherwise; errors in
interpretation of technical terms; the misapplication by a beneficiary of any
U.K. Letter of Credit or the proceeds thereof; or any consequences arising from
causes beyond the control of Issuing Banks, Agent or any Lender, including any
act or omission of a Governmental Authority. The rights and remedies of U.K.
Issuing Bank under the Loan Documents shall be cumulative. U.K. Issuing Bank
shall be fully subrogated to the rights and remedies of each beneficiary whose
claims against the U.K. Borrower are discharged with proceeds of any U.K. Letter
of Credit.

(d)    In connection with its administration of and enforcement of rights or
remedies under any U.K. Letters of Credit or LC Documents, U.K. Issuing Bank
shall be entitled to act, and shall be fully protected in acting, upon any
certification, documentation or communication in whatever form believed by U.K.
Issuing Bank, in good faith, to be genuine and correct and to have been signed,
sent or made by a proper Person. U.K. Issuing Bank may consult with and employ
legal counsel, accountants and other experts to advise it concerning its
obligations, rights and remedies, and shall be entitled to act upon, and shall
be fully protected in any action taken in good faith reliance upon, any advice
given by such experts. U.K. Issuing Bank may employ agents and attorneys-in-fact
in connection with any matter relating to U.K. Letters of Credit or LC
Documents, and shall not be liable for the negligence or misconduct of agents
and attorneys-in-fact selected with reasonable care.

 

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2.2.2.    Reimbursement; Participations.

(a)    If U.K. Issuing Bank honors any request for payment under a U.K. Letter
of Credit, the U.K. Borrower shall pay to U.K. Issuing Bank, on the same day
(“U.K. Reimbursement Date”), the amount paid by U.K. Issuing Bank under such
U.K. Letter of Credit in the same currency in which the Letter of Credit was
denominated unless otherwise specified by Agent or U.K. Issuing Bank (at their
respective option) that it requires payment in Dollars, British Pounds or Euros
calculated at the Spot Rate, together with interest at the interest rate for
U.K. Base Rate Loans from the U.K. Reimbursement Date until payment by the U.K.
Borrower. The obligation of the U.K. Borrower to reimburse U.K. Issuing Bank for
any payment made under a U.K. Letter of Credit shall be absolute, unconditional,
irrevocable, and joint and several, and shall be paid without regard to any lack
of validity or enforceability of any U.K. Letter of Credit or the existence of
any claim, setoff, defense or other right that the U.K. Borrower may have at any
time against the beneficiary. Whether or not Borrower Agent submits a Notice of
Borrowing, the U.K. Borrower shall be deemed to have requested a Borrowing of a
LIBOR Revolver Loan (the initial Interest Period of which shall be 30 days
commencing on the relevant Reimbursement Date) in an amount necessary to pay all
amounts due U.K. Issuing Bank on that U.K. Reimbursement Date and each U.K.
Lender agrees to fund its Pro Rata share of such Borrowing whether or not the
U.K. Revolver Commitments have terminated, a U.K. Overadvance exists or is
created thereby, or the conditions in Section 6 are satisfied. In the event that
(i) a drawing denominated in a foreign currency (other than Dollars, British
Pounds and Euros) (such foreign currency, a “U.K. Reimbursed Foreign Currency”)
is to be reimbursed in Dollars, British Pounds or Euros pursuant to the first
sentence in this Section 2.2.2(a); and (ii) the Dollars, British Pounds or Euros
amount, as applicable, paid by the U.K. Borrower shall not be adequate on the
date of that payment to purchase in accordance with normal banking procedures a
sum denominated in the U.K. Reimbursed Foreign Currency equal to the drawing,
the U.K. Borrower agrees, as a separate and independent obligation, to indemnify
U.K. Issuing Bank for the loss resulting from its inability on that date to
purchase the U.K. Reimbursed Foreign Currency in the full amount of the drawing.

(b)    Upon issuance of a U.K. Letter of Credit, each U.K. Lender shall be
deemed to have irrevocably and unconditionally purchased from U.K. Issuing Bank,
without recourse or warranty, an undivided Pro Rata interest and participation
in all U.K. LC Obligations relating to the U.K. Letter of Credit. If U.K.
Issuing Bank makes any payment under a U.K. Letter of Credit and the U.K.
Borrower does not reimburse such payment on the U.K. Reimbursement Date, Agent
shall promptly notify U.K. Lenders and each U.K. Lender shall promptly (within
one Business Day) and unconditionally pay to Agent, for the benefit of U.K.
Issuing Bank, the U.K. Lender’s Pro Rata share of such payment in the same
currency as required of the U.K. Borrower in accordance with Section 2.2.2(a).
Upon request by a U.K. Lender, U.K. Issuing Bank shall furnish copies of any
U.K. Letters of Credit and LC Documents in its possession at such time.

(c)    The obligation of each U.K. Lender to make payments to Agent for the
account of U.K. Issuing Bank in connection with U.K. Issuing Bank’s payment
under a U.K. Letter of Credit shall be absolute, unconditional and irrevocable,
not subject to any counterclaim, setoff, qualification or exception whatsoever,
and shall be made in accordance with this Agreement under all circumstances,
irrespective of any lack of validity or unenforceability of any Loan Documents;
any draft, certificate or other document presented under a U.K. Letter of Credit
having been determined to be forged, fraudulent, invalid or insufficient in any
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being untrue or inaccurate in any respect; or the existence of any setoff or
defense that any Obligor may have with respect to any Obligations. U.K. Issuing
Bank does not assume any responsibility for any failure or delay in performance
or any breach by the U.K. Borrower or other Person of any obligations under any
LC Documents. U.K. Issuing Bank does not make to Lenders any express or implied
warranty, representation or guaranty with respect to the Collateral, LC
Documents or any Obligor. U.K. Issuing Bank shall not be responsible to any
Lender for any recitals, statements, information, representations or warranties
contained in, or for the execution, validity, genuineness, effectiveness or
enforceability of any LC Documents; the validity, genuineness, enforceability,
collectibility, value or sufficiency of any Collateral or the perfection of any
Lien therein; or the assets, liabilities, financial condition, results of
operations, business, creditworthiness or legal status of any Obligor.

(d)    No Issuing Bank Indemnitee shall be liable to any Lender or other Person
for any action taken or omitted to be taken in connection with any LC Documents
except as a result of its actual gross negligence or willful misconduct. U.K.
Issuing Bank shall not have any liability to any Lender if U.K. Issuing Bank
refrains from any action under a Letter of Credit or LC Documents until it
receives written instructions from U.K. Required Lenders.

2.2.3.    Cash Collateral. If any U.K. LC Obligations, whether or not then due
or payable, shall for any reason be outstanding at any time (a) that an Event of
Default exists, (b) that U.K. Availability is less than zero, or (c) within 10
Business Days prior to the U.K. Revolver Commitment Termination Date, then the
U.K. Borrower shall, at U.K. Issuing Bank’s or Agent’s request, Cash
Collateralize the stated amount of all outstanding U.K. Letters of Credit and
pay to U.K. Issuing Bank the amount of all other U.K. LC Obligations. The U.K.
Borrower shall, on demand by U.K. Issuing Bank or Agent from time to time, Cash
Collateralize the Fronting Exposure of any Defaulting Lender which is a U.K.
Lender. If the U.K. Borrower fails to provide any Cash Collateral as required
hereunder, U.K. Lenders may (and shall upon direction of Agent) advance, as U.K.
Revolver Loans, the amount of the Cash Collateral required (whether or not the
U.K. Revolver Commitments have terminated, a U.K. Overadvance exists or the
conditions in Section 6 are satisfied).

2.2.4.    Resignation of U.K. Issuing Bank. U.K. Issuing Bank may resign at any
time upon notice to Agent and the U.K. Borrower. On the effective date of such
resignation, U.K. Issuing Bank shall have no further obligation to issue, amend,
renew, extend or otherwise modify any Letter of Credit, but shall continue to
have all rights and obligations of an Issuing Bank hereunder, including under
Sections 2.2, 12.6 and 14.2, relating to any Letter of Credit issued prior to
such date. Agent shall promptly appoint a replacement U.K. Issuing Bank, which,
as long as no Default or Event of Default exists, shall be reasonably acceptable
to the U.K. Borrower.

2.3    U.S. Letter of Credit Facility.

2.3.1.    Issuance of U.S. Letters of Credit. U.S. Issuing Bank shall issue U.S.
Letters of Credit from time to time until 30 days prior to the Facility
Termination Date (or until the U.S. Revolver Commitment Termination Date, if
earlier), on the terms set forth herein, including the following:

 

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(a)    Each U.S. Borrower acknowledges that U.S. Issuing Bank’s issuance of any
U.S. Letter of Credit is conditioned upon U.S. Issuing Bank’s receipt of a LC
Application with respect to the requested U.S. Letter of Credit, as well as such
other instruments and agreements as U.S. Issuing Bank may customarily require
for issuance of a letter of credit of similar type and amount. U.S. Issuing Bank
shall have no obligation to issue any U.S. Letter of Credit unless (i) U.S.
Issuing Bank receives a LC Request and LC Application at least three Business
Days prior to the requested date of issuance; (ii) each LC Condition is
satisfied; and (iii) if a Defaulting Lender that is a U.S. Lender exists, such
Lender or U.S. Borrowers have entered into arrangements satisfactory to Agent
and U.S. Issuing Bank to eliminate any Fronting Exposure associated with such
Lender. If, in sufficient time to act, U.S. Issuing Bank receives written notice
from U.S. Required Lenders that a LC Condition has not been satisfied, U.S.
Issuing Bank shall not issue the requested U.S. Letter of Credit. Prior to
receipt of any such notice, U.S. Issuing Bank shall not be deemed to have
knowledge of any failure of LC Conditions.

(b)    U.S. Letters of Credit may be requested by a U.S. Borrower to support
obligations incurred in the Ordinary Course of Business, or as otherwise
approved by Agent. The renewal or extension of any U.S. Letter of Credit shall
be treated as the issuance of a new U.S. Letter of Credit, except that delivery
of a new LC Application shall be required at the discretion of U.S. Issuing
Bank.

(c)    U.S. Borrowers assume all risks of the acts, omissions or misuses of any
U.S. Letter of Credit by the beneficiary. In connection with issuance of any
U.S. Letter of Credit, none of Agent, Issuing Banks or any Lender shall be
responsible for the existence, character, quality, quantity, condition, packing,
value or delivery of any goods purported to be represented by any Documents; any
differences or variation in the character, quality, quantity, condition,
packing, value or delivery of any goods from that expressed in any Documents;
the form, validity, sufficiency, accuracy, genuineness or legal effect of any
Documents or of any endorsements thereon; the time, place, manner or order in
which shipment of goods is made; partial or incomplete shipment of, or failure
to ship, any goods referred to in a U.S. Letter of Credit or Documents; any
deviation from instructions, delay, default or fraud by any shipper or other
Person in connection with any goods, shipment or delivery; any breach of
contract between a shipper or vendor and a U.S. Borrower; errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex, telecopy, e-mail, telephone or otherwise; errors in
interpretation of technical terms; the misapplication by a beneficiary of any
U.S. Letter of Credit or the proceeds thereof; or any consequences arising from
causes beyond the control of Issuing Banks, Agent or any Lender, including any
act or omission of a Governmental Authority. The rights and remedies of U.S.
Issuing Bank under the Loan Documents shall be cumulative. U.S. Issuing Bank
shall be fully subrogated to the rights and remedies of each beneficiary whose
claims against U.S. Borrowers are discharged with proceeds of any U.S. Letter of
Credit.

(d)    In connection with its administration of and enforcement of rights or
remedies under any U.S. Letters of Credit or LC Documents, U.S. Issuing Bank
shall be entitled to act, and shall be fully protected in acting, upon any
certification, documentation or communication in whatever form believed by U.S.
Issuing Bank, in good faith, to be genuine and correct and to have been signed,
sent or made by a proper Person. U.S. Issuing Bank may consult with and employ
legal counsel, accountants and other experts to advise it concerning its
obligations, rights and remedies, and shall be entitled to act upon, and shall
be fully protected in

 

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any action taken in good faith reliance upon, any advice given by such experts.
U.S. Issuing Bank may employ agents and attorneys-in-fact in connection with any
matter relating to U.S. Letters of Credit or LC Documents, and shall not be
liable for the negligence or misconduct of agents and attorneys-in-fact selected
with reasonable care.

(e)    Obligors, Agent and Lenders hereby acknowledge and agree that all
Existing Letters of Credit shall constitute U.S. Letters of Credit under this
Agreement on and after the Original Agreement Closing Date with the same effect
as if such Existing Letters of Credit were issued by U.S. Issuing Bank at the
request of U.S. Borrowers on the Original Agreement Closing Date.

2.3.2.    Reimbursement; Participations.

(a)    If U.S. Issuing Bank honors any request for payment under a U.S. Letter
of Credit, U.S. Borrowers shall pay to U.S. Issuing Bank, on the same day (“U.S.
Reimbursement Date”), the amount paid by U.S. Issuing Bank under such U.S.
Letter of Credit in the same currency in which the Letter of Credit was
denominated unless otherwise specified by Agent or U.S. Issuing Bank (at their
respective option) that it requires payment in Dollars calculated at the Spot
Rate, together with interest at the interest rate for U.S. Base Rate Revolver
Loans from the U.S. Reimbursement Date until payment by U.S. Borrowers. The
obligation of U.S. Borrowers to reimburse U.S. Issuing Bank for any payment made
under a U.S. Letter of Credit shall be absolute, unconditional, irrevocable, and
joint and several, and shall be paid without regard to any lack of validity or
enforceability of any U.S. Letter of Credit or the existence of any claim,
setoff, defense or other right that U.S. Borrowers may have at any time against
the beneficiary. Whether or not Borrower Agent submits a Notice of Borrowing,
U.S. Borrowers shall be deemed to have requested a Borrowing of U.S. Base Rate
Revolver Loans in an amount necessary to pay all amounts due U.S. Issuing Bank
on any U.S. Reimbursement Date and each U.S. Lender agrees to fund its Pro Rata
share of such Borrowing whether or not the U.S. Revolver Commitments have
terminated, a U.S. Overadvance exists or is created thereby, or the conditions
in Section 6 are satisfied. In the event that (i) a drawing denominated in a
foreign currency (such foreign currency, a “U.S. Reimbursed Foreign Currency”)
is to be reimbursed in Dollars pursuant to the first sentence in this
Section 2.3.2(a); and (ii) the Dollars amount paid by the U.S. Borrowers shall
not be adequate on the date of that payment to purchase in accordance with
normal banking procedures a sum denominated in the U.S. Reimbursed Foreign
Currency equal to the drawing, the U.S. Borrowers agree, as a separate and
independent obligation, to indemnify U.S. Issuing Bank for the loss resulting
from its inability on that date to purchase the U.S. Reimbursed Foreign Currency
in the full amount of the drawing.

(b)    Upon issuance of a U.S. Letter of Credit, each U.S. Lender shall be
deemed to have irrevocably and unconditionally purchased from U.S. Issuing Bank,
without recourse or warranty, an undivided Pro Rata interest and participation
in all U.S. LC Obligations relating to the U.S. Letter of Credit. If U.S.
Issuing Bank makes any payment under a U.S. Letter of Credit and U.S. Borrowers
do not reimburse such payment on the U.S. Reimbursement Date, Agent shall
promptly notify U.S. Lenders and each U.S. Lender shall promptly (within one
Business Day) and unconditionally pay to Agent, for the benefit of U.S. Issuing
Bank, the U.S. Lender’s Pro Rata share of such payment in the same currency as
required of the U.S. Borrowers in accordance with

 

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Section 2.3.2(a). Upon request by a U.S. Lender, U.S. Issuing Bank shall furnish
copies of any U.S. Letters of Credit and LC Documents in its possession at such
time.

(c)    The obligation of each U.S. Lender to make payments to Agent for the
account of U.S. Issuing Bank in connection with U.S. Issuing Bank’s payment
under a U.S. Letter of Credit shall be absolute, unconditional and irrevocable,
not subject to any counterclaim, setoff, qualification or exception whatsoever,
and shall be made in accordance with this Agreement under all circumstances,
irrespective of any lack of validity or unenforceability of any Loan Documents;
any draft, certificate or other document presented under a U.S. Letter of Credit
having been determined to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect; or
the existence of any setoff or defense that any Obligor may have with respect to
any Obligations. U.S. Issuing Bank does not assume any responsibility for any
failure or delay in performance or any breach by any U.S. Borrower or other
Person of any obligations under any LC Documents. U.S. Issuing Bank does not
make to Lenders any express or implied warranty, representation or guaranty with
respect to the Collateral, LC Documents or any Obligor. U.S. Issuing Bank shall
not be responsible to any Lender for any recitals, statements, information,
representations or warranties contained in, or for the execution, validity,
genuineness, effectiveness or enforceability of any LC Documents; the validity,
genuineness, enforceability, collectibility, value or sufficiency of any
Collateral or the perfection of any Lien therein; or the assets, liabilities,
financial condition, results of operations, business, creditworthiness or legal
status of any Obligor.

(d)    No Issuing Bank Indemnitee shall be liable to any Lender or other Person
for any action taken or omitted to be taken in connection with any LC Documents
except as a result of its actual gross negligence or willful misconduct. U.S.
Issuing Bank shall not have any liability to any Lender if U.S. Issuing Bank
refrains from any action under a Letter of Credit or LC Documents until it
receives written instructions from U.S. Required Lenders.

2.3.3.    Cash Collateral. If any U.S. LC Obligations, whether or not then due
or payable, shall for any reason be outstanding at any time (a) that an Event of
Default exists, (b) that U.S. Availability is less than zero, or (c) within 10
Business Days prior to the U.S. Revolver Commitment Termination Date, then U.S.
Borrowers shall, at U.S. Issuing Bank’s or Agent’s request, Cash Collateralize
the stated amount of all outstanding U.S. Letters of Credit and pay to U.S.
Issuing Bank the amount of all other U.S. LC Obligations. U.S. Borrowers shall,
on demand by U.S. Issuing Bank or Agent from time to time, Cash Collateralize
the Fronting Exposure of any Defaulting Lender which is a U.S. Lender. If U.S.
Borrowers fail to provide any Cash Collateral as required hereunder, U.S.
Lenders may (and shall upon direction of Agent) advance, as U.S. Revolver Loans,
the amount of the Cash Collateral required (whether or not the U.S. Revolver
Commitments have terminated, a U.S. Overadvance exists or the conditions in
Section 6 are satisfied).

2.3.4.    Resignation of U.S. Issuing Bank. U.S. Issuing Bank may resign at any
time upon notice to Agent and U.S. Borrowers. On the effective date of such
resignation, U.S. Issuing Bank shall have no further obligation to issue, amend,
renew, extend or otherwise modify any Letter of Credit, but shall continue to
have all rights and obligations of an Issuing Bank hereunder, including under
Sections 2.3, 12.6 and 14.2, relating to any Letter of Credit issued prior

 

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to such date. Agent shall promptly appoint a replacement U.S. Issuing Bank,
which, as long as no Default or Event of Default exists, shall be reasonably
acceptable to U.S. Borrowers.

2.4    Canadian Letter of Credit Facility.

2.4.1.    Issuance of Canadian Letters of Credit. Canadian Issuing Bank shall
issue Canadian Letters of Credit from time to time until 30 days prior to the
Facility Termination Date (or until the Canadian Revolver Commitment Termination
Date, if earlier), on the terms set forth herein, including the following:

(a)    Canadian Borrower acknowledges that Canadian Issuing Bank’s issuance of
any Canadian Letter of Credit is conditioned upon Canadian Issuing Bank’s
receipt of a LC Application with respect to the requested Canadian Letter of
Credit, as well as such other instruments and agreements as Canadian Issuing
Bank may customarily require for issuance of a letter of credit of similar type
and amount. Canadian Issuing Bank shall have no obligation to issue any Canadian
Letter of Credit unless (i) Canadian Issuing Bank receives a LC Request and LC
Application at least three Business Days prior to the requested date of
issuance; (ii) each LC Condition is satisfied; and (iii) if a Defaulting Lender
that is a Canadian Lender exists, such Lender or Canadian Borrower has entered
into arrangements satisfactory to Agent and Canadian Issuing Bank to eliminate
any Fronting Exposure associated with such Lender. If, in sufficient time to
act, Canadian Issuing Bank receives written notice from Canadian Required
Lenders that a LC Condition has not been satisfied, Canadian Issuing Bank shall
not issue the requested Canadian Letter of Credit. Prior to receipt of any such
notice, Canadian Issuing Bank shall not be deemed to have knowledge of any
failure of LC Conditions.

(b)    Canadian Letters of Credit may be requested by Canadian Borrower to
support obligations incurred in the Ordinary Course of Business, or as otherwise
approved by Agent. The renewal or extension of any Canadian Letter of Credit
shall be treated as the issuance of a new Canadian Letter of Credit, except that
delivery of a new LC Application shall be required at the discretion of Canadian
Issuing Bank.

(c)    Canadian Borrower assumes all risks of the acts, omissions or misuses of
any Canadian Letter of Credit by the beneficiary. In connection with issuance of
any Canadian Letter of Credit, none of Agent, Issuing Banks or any Lender shall
be responsible for the existence, character, quality, quantity, condition,
packing, value or delivery of any goods purported to be represented by any
Documents; any differences or variation in the character, quality, quantity,
condition, packing, value or delivery of any goods from that expressed in any
Documents; the form, validity, sufficiency, accuracy, genuineness or legal
effect of any Documents or of any endorsements thereon; the time, place, manner
or order in which shipment of goods is made; partial or incomplete shipment of,
or failure to ship, any goods referred to in a Canadian Letter of Credit or
Documents; any deviation from instructions, delay, default or fraud by any
shipper or other Person in connection with any goods, shipment or delivery; any
breach of contract between a shipper or vendor and Canadian Borrower; errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex, telecopy, e-mail, telephone or otherwise;
errors in interpretation of technical terms; the misapplication by a beneficiary
of any Canadian Letter of Credit or the proceeds thereof; or any consequences
arising from causes beyond the control of Issuing Banks, Agent or any Lender,
including any act or

 

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omission of a Governmental Authority. The rights and remedies of Canadian
Issuing Bank under the Loan Documents shall be cumulative. Canadian Issuing Bank
shall be fully subrogated to the rights and remedies of each beneficiary whose
claims against Canadian Borrower are discharged with proceeds of any Canadian
Letter of Credit.

(d)    In connection with its administration of and enforcement of rights or
remedies under any Canadian Letters of Credit or LC Documents, Canadian Issuing
Bank shall be entitled to act, and shall be fully protected in acting, upon any
certification, documentation or communication in whatever form believed by
Canadian Issuing Bank, in good faith, to be genuine and correct and to have been
signed, sent or made by a proper Person. Canadian Issuing Bank may consult with
and employ legal counsel, accountants and other experts to advise it concerning
its obligations, rights and remedies, and shall be entitled to act upon, and
shall be fully protected in any action taken in good faith reliance upon, any
advice given by such experts. Canadian Issuing Bank may employ agents and
attorneys-in-fact in connection with any matter relating to Canadian Letters of
Credit or LC Documents, and shall not be liable for the negligence or misconduct
of agents and attorneys-in-fact selected with reasonable care.

2.4.2.    Reimbursement; Participations.

(a)    If Canadian Issuing Bank honors any request for payment under a Canadian
Letter of Credit, Canadian Borrower shall pay to Canadian Issuing Bank, on the
same day (“Canadian Reimbursement Date”), the amount paid by Canadian Issuing
Bank under such Canadian Letter of Credit in the same currency in which the
Letter of Credit was denominated unless otherwise specified by Agent or Canadian
Issuing Bank (at their respective option) that it requires payment in Dollars or
Canadian Dollars calculated at the Spot Rate, together with interest at the
interest rate for Canadian Prime Rate Loans from the Canadian Reimbursement Date
until payment by Canadian Borrower. The obligation of Canadian Borrower to
reimburse Canadian Issuing Bank for any payment made under a Canadian Letter of
Credit shall be absolute, unconditional, irrevocable, and joint and several, and
shall be paid without regard to any lack of validity or enforceability of any
Canadian Letter of Credit or the existence of any claim, setoff, defense or
other right that Canadian Borrower may have at any time against the beneficiary.
Whether or not Borrower Agent submits a Notice of Borrowing, Canadian Borrower
shall be deemed to have requested a Borrowing of Canadian Prime Rate Loans in an
amount necessary to pay all amounts due Canadian Issuing Bank on any Canadian
Reimbursement Date and each Canadian Lender agrees to fund its Pro Rata share of
such Borrowing whether or not the Canadian Revolver Commitments have terminated,
a Canadian Overadvance exists or is created thereby, or the conditions in
Section 6 are satisfied. In the event that (i) a drawing denominated in a
foreign currency (other than Dollars or Canadian Dollars) (such foreign
currency, a “Canadian Reimbursed Foreign Currency”) is to be reimbursed in
Dollars or Canadian Dollars pursuant to the first sentence in this
Section 2.4.2(a); and (ii) the Dollars or Canadian Dollars amount, as
applicable, paid by Canadian Borrower shall not be adequate on the date of that
payment to purchase in accordance with normal banking procedures a sum
denominated in the Canadian Reimbursed Foreign Currency equal to the drawing,
Canadian Borrower agrees, as a separate and independent obligation, to indemnify
Canadian Issuing Bank for the loss resulting from its inability on that date to
purchase the Canadian Reimbursed Foreign Currency in the full amount of the
drawing.

 

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(b)    Upon issuance of a Canadian Letter of Credit, each Canadian Lender shall
be deemed to have irrevocably and unconditionally purchased from Canadian
Issuing Bank, without recourse or warranty, an undivided Pro Rata interest and
participation in all Canadian LC Obligations relating to the Canadian Letter of
Credit. If Canadian Issuing Bank makes any payment under a Canadian Letter of
Credit and Canadian Borrower does not reimburse such payment on the Canadian
Reimbursement Date, Agent shall promptly notify Canadian Lenders and each
Canadian Lender shall promptly (within one Business Day) and unconditionally pay
to Agent, for the benefit of Canadian Issuing Bank, the Canadian Lender’s Pro
Rata share of such payment in the same currency as required of the Canadian
Borrower in accordance with Section 2.4.2(a). Upon request by a Canadian Lender,
Canadian Issuing Bank shall furnish copies of any Canadian Letters of Credit and
LC Documents in its possession at such time.

(c)    The obligation of each Canadian Lender to make payments to Agent for the
account of Canadian Issuing Bank in connection with Canadian Issuing Bank’s
payment under a Canadian Letter of Credit shall be absolute, unconditional and
irrevocable, not subject to any counterclaim, setoff, qualification or exception
whatsoever, and shall be made in accordance with this Agreement under all
circumstances, irrespective of any lack of validity or unenforceability of any
Loan Documents; any draft, certificate or other document presented under a
Canadian Letter of Credit having been determined to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or the existence of any setoff or defense that any
Obligor may have with respect to any Obligations. Canadian Issuing Bank does not
assume any responsibility for any failure or delay in performance or any breach
by Canadian Borrower or other Person of any obligations under any LC Documents.
Canadian Issuing Bank does not make to Lenders any express or implied warranty,
representation or guaranty with respect to the Collateral, LC Documents or any
Obligor. Canadian Issuing Bank shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties contained in,
or for the execution, validity, genuineness, effectiveness or enforceability of
any LC Documents; the validity, genuineness, enforceability, collectibility,
value or sufficiency of any Collateral or the perfection of any Lien therein; or
the assets, liabilities, financial condition, results of operations, business,
creditworthiness or legal status of any Obligor.

(d)    No Issuing Bank Indemnitee shall be liable to any Lender or other Person
for any action taken or omitted to be taken in connection with any LC Documents
except as a result of its actual gross negligence or willful misconduct.
Canadian Issuing Bank shall not have any liability to any Lender if Canadian
Issuing Bank refrains from any action under a Letter of Credit or LC Documents
until it receives written instructions from Canadian Required Lenders.

2.4.3.    Cash Collateral. If any Canadian LC Obligations, whether or not then
due or payable, shall for any reason be outstanding at any time (a) that an
Event of Default exists, (b) that Canadian Availability is less than zero, or
(c) within 10 Business Days prior to the Canadian Revolver Commitment
Termination Date, then Canadian Borrower shall, at Canadian Issuing Bank’s or
Agent’s request, Cash Collateralize the stated amount of all outstanding
Canadian Letters of Credit and pay to Canadian Issuing Bank the amount of all
other Canadian LC Obligations. Canadian Borrower shall, on demand by Canadian
Issuing Bank or Agent from time to time, Cash Collateralize the Fronting
Exposure of any Defaulting Lender which is a Canadian Lender. If Canadian
Borrower fails to provide any Cash Collateral as required hereunder, Canadian
Lenders may (and shall upon direction of Agent) advance, as Canadian Revolver
Loans,

 

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the amount of the Cash Collateral required (whether or not the Canadian Revolver
Commitments have terminated, a Canadian Overadvance exists or the conditions in
Section 6 are satisfied).

2.4.4.    Resignation of Canadian Issuing Bank. Canadian Issuing Bank may resign
at any time upon notice to Agent and Canadian Borrower. On the effective date of
such resignation, Canadian Issuing Bank shall have no further obligation to
issue, amend, renew, extend or otherwise modify any Letter of Credit, but shall
continue to have all rights and obligations of an Issuing Bank hereunder,
including under Sections 2.4, 12.6 and 14.2, relating to any Letter of Credit
issued prior to such date. Agent shall promptly appoint a replacement Canadian
Issuing Bank, which, as long as no Default or Event of Default exists, shall be
reasonably acceptable to Canadian Borrower.

2.5    Term Loans.

2.5.1.    Term Loans to U.S. Borrowers. Each U.S. Lender agrees, severally (and
not jointly) on a Pro Rata basis up to its Term Loan Commitment, upon the terms
and subject to the conditions set forth herein, to make a one-time Term Loan to
the U.S. Borrowers on any Business Day during the period from the Closing Date
to the date that is six months after the Closing Date; provided, however, that
such U.S. Lenders shall have no obligation to the U.S. Borrowers whatsoever to
honor any request for a Term Loan on or after the Term Loan Commitment
Termination Date or to the extent the aggregate Term Loans will exceed the Term
Loan Cap on the proposed funding date of the Term Loans (in which case such U.S.
Lenders shall be obligated to fund the Term Loans in an amount up to the Term
Loan Cap). The Term Loans shall bear interest as set forth in Section 3.1. The
Term Loans shall, at the option of the Borrower Agent, be made or continued as,
or converted into, part of one or more Borrowings that, unless specifically
provided herein, shall consist entirely of Base Rate Term Loans or LIBOR Term
Loans. The Term Loans shall be repaid in accordance with the terms of this
Agreement and shall be secured by all of the U.S. Facility Collateral. U.S.
Borrowers shall be jointly and severally liable to pay all of the Term Loans.
The Term Loans shall be funded and repaid in Dollars. For clarification, once
repaid, the Term Loans may not be reborrowed.

2.5.2.    Term Notes. The Term Loans made by each U.S. Lender and interest
accruing thereon shall be evidenced by the records of Agent and such Lender. At
the request of any U.S. Lender, the U.S. Borrowers shall execute and deliver a
promissory note to such Lender, evidencing its Term Loans.

2.5.3.    Use of Term Loan Proceeds. The proceeds of the Term Loans shall be
used by U.S. Borrowers solely (a) to pay Obligations in accordance with this
Agreement; and (b) for working capital and other lawful corporate purposes of
U.S. Borrowers.

2.5.4.    Termination of Term Loan Commitments. The Term Loan Commitments shall
terminate on the Term Loan Commitment Termination Date unless sooner terminated
in accordance with this Agreement. Any unused Term Loan Commitment shall
terminate on the date of the making of the Term Loans. Upon at least 10 days’
prior written notice to Agent from the Borrower Agent, U.S. Borrowers may, at
their option, terminate the Term Loan Commitments without premium or penalty.
Any notice of termination given by Borrowers pursuant to this Section 2.5.4
shall be irrevocable but may be conditioned on a refinancing or another material

 

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event.

 

SECTION 3.

INTEREST, FEES AND CHARGES

3.1    Interest.

3.1.1.    Rates and Payment of Interest.

(a)    The Obligations shall bear interest (i) if a U.S. Base Rate Revolver
Loan, at the U.S. Base Rate in effect from time to time, plus the Applicable
Margin, (ii) if a LIBOR Revolver Loan, at LIBOR for the applicable Interest
Period, plus the Applicable Margin plus with respect to any U.K. Revolver Loan
that is a LIBOR Loan, any Mandatory Costs; (iii) if a Canadian Prime Rate Loan,
at the Canadian Prime Rate in effect from time to time, plus the Applicable
Margin, (iv) if a Canadian Base Rate Loan, at the Canadian Base Rate in effect
from time to time, plus the Applicable Margin, (v) if a Canadian BA Rate Loan,
at the Canadian BA Rate for the applicable Interest Period, plus the Applicable
Margin, (vi) if a U.K. Base Rate Loan, at the U.K. Base Rate in effect from time
to time, plus the Applicable Margin, (vii) if a Base Rate Term Loan, at the U.S.
Base Rate in effect from time to time, plus the Applicable Margin, (viii) if a
LIBOR Term Loan, at LIBOR for the applicable Interest Period, plus the
Applicable Margin, (ix) if any other U.S. Facility Obligation (including, to the
extent permitted by law, interest not paid when due), at the U.S. Base Rate in
effect from time to time, plus the Applicable Margin for U.S. Base Rate Revolver
Loans; (x) if any other Canadian Facility Obligation (including, to the extent
permitted by law, interest not paid when due), at the Canadian Prime Rate in
effect from time to time, plus the Applicable Margin for Canadian Prime Rate
Loans; and (xi) if any other U.K. Facility Obligation (including, to the extent
permitted by law, interest not paid when due), at the U.K. Base Rate in effect
from time to time, plus the Applicable Margin for U.K. Base Rate Loans. Interest
shall accrue from the date the Loan is advanced or the Obligation is incurred or
payable, until paid by the applicable Borrower(s). If a Loan is repaid on the
same day made, one day’s interest shall accrue.

(b)    Interest on the Revolver Loans shall be payable in the currency (i.e.,
Dollars, Canadian Dollars, British Pounds or Euro, as the case may be) of the
underlying Revolver Loan (which shall be Dollars only in the case of any U.K.
Base Rate Loan).

(c)    During an Insolvency Proceeding with respect to any Obligor, or during
any other Event of Default if Agent or Required Lenders in their discretion so
elect, Obligations shall bear interest at the Default Rate (whether before or
after any judgment). Each Obligor acknowledges that the cost and expense to
Agent and Lenders due to an Event of Default are difficult to ascertain and that
the Default Rate is a fair and reasonable estimate to compensate Agent and
Lenders for this.

(d)    Interest accrued on the Loans shall be due and payable (i) on the last
day of the relevant Interest Period with respect to Interest Period Loans (or in
the case of an Interest Period Loan with an Interest Period of more than 90
days’ duration, on each quarterly anniversary of the first day of such Interest
Period) or, in arrears on the first day of each month with respect to Base Rate
Loans, and (ii) on any date of prepayment, with respect to the principal amount
of Loans being prepaid. In addition, interest accrued on the Canadian Revolver
Loans shall be due and

 

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payable in arrears on the Canadian Revolver Commitment Termination Date,
interest accrued on the U.S. Revolver Loans shall be due and payable in arrears
on the U.S. Revolver Commitment Termination Date, and interest accrued on the
U.K. Revolver Loans shall be due and payable in arrears on the U.K. Revolver
Commitment Termination Date. Interest accrued on any other Obligations shall be
due and payable as provided in the Loan Documents and, if no payment date is
specified, shall be due and payable on demand. Notwithstanding the foregoing,
interest accrued at the Default Rate shall be due and payable on demand.

3.1.2.    Application of LIBOR to Outstanding Loans.

(a)    Borrowers may on any Business Day, subject to delivery of a Notice of
Conversion/Continuation, elect to convert any portion of the U.S. Base Rate
Loans, the Canadian Base Rate Loans, or the U.K. Base Rate Loans, as applicable,
to, or to continue any LIBOR Loan at the end of its Interest Period as, a LIBOR
Loan; provided that, in the case of U.K. Base Rate Loans only, portions of such
Loans may be converted to a LIBOR Loan denominated in Dollars only. During any
Default or Event of Default, Agent may (and shall at the direction of Required
Lenders) declare that no Loan may be made, converted or continued as a LIBOR
Loan.

(b)    Whenever Borrowers desire to convert or continue Loans as LIBOR Loans,
Borrower Agent shall give Agent a Notice of Conversion/Continuation, no later
than 11:00 a.m. at least three Business Days (and at least four Business Days in
the case of a U.K. Revolver Loan) before the requested conversion or
continuation date. Promptly after receiving any such notice, Agent shall notify
each Applicable Lender (or Lenders with outstanding Term Loans if related to the
Term Loans) thereof. Each Notice of Conversion/Continuation shall be
irrevocable, and shall specify the amount of Loans to be converted or continued,
the conversion or continuation date (which shall be a Business Day), and the
duration of the Interest Period (which shall be deemed to be 30 days if not
specified). If, upon the expiration of any Interest Period in respect of any
LIBOR Loans, Borrower Agent shall have failed to deliver a Notice of
Conversion/Continuation, Borrowers shall be deemed to have elected to convert
such Loans into U.S. Base Rate Loans (if owing by the U.S. Borrowers), Canadian
Base Rate Loans (if owing by the Canadian Borrower), or a U.K. Base Rate Loan
(if owing by the U.K. Borrower) if that LIBOR Loan was denominated in Dollars,
or (as the case may be) a LIBOR Loan (the initial Interest Period of which shall
be 30 days commencing on the date of expiration of the Interest Period
applicable to that LIBOR Loan) if that LIBOR Loan was denominated in British
Pounds or Euro.

3.1.3.    Application of Canadian BA Rate to Outstanding Loans.

(a)    Canadian Borrower may on any Business Day, subject to delivery of a
Notice of Conversion/Continuation and the other terms hereof, elect to convert
any portion of the Canadian Prime Rate Loans, or to continue any Canadian BA
Rate Loan at the end of its Interest Period as, a Canadian BA Rate Loan. During
any Default or Event of Default, Agent may (and shall at the direction of
Required Lenders) declare that no Loan may be made, converted or continued as a
Canadian BA Rate Loan.

(b)    Whenever Canadian Borrower desires to convert or continue Loans as
Canadian BA Rate Loans, Borrower Agent shall give Agent a Notice of
Conversion/Continuation, no later than 11:00 a.m. at least three Business Days
before the requested conversion or

 

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continuation date. Promptly after receiving any such notice, Agent shall notify
each Canadian Lender thereof. Each Notice of Conversion/Continuation shall be
irrevocable, and shall specify the amount of Loans to be converted or continued,
the conversion or continuation date (which shall be a Business Day), and the
duration of the Interest Period (which shall be deemed to be one month if not
specified). If, upon the expiration of any Interest Period in respect of any
Canadian BA Rate Loans, Borrower Agent shall have failed to deliver a Notice of
Conversion/Continuation with respect thereto as required above, Canadian
Borrower shall be deemed to have elected to convert such Loans into Canadian
Prime Rate Loans.

3.1.4.    Interest Periods. In connection with the making, conversion or
continuation of any LIBOR Loans or Canadian BA Rate Loans, Borrower Agent shall
select an interest period (“Interest Period”) to apply, which interest period
shall be 30, 60, 90 or 180 days; provided, however, that:

(a)    the Interest Period shall commence on the date the Loan is made or
continued as, or converted into, a LIBOR Loan or Canadian BA Rate Loan, and
shall expire on the numerically corresponding day in the calendar month at its
end;

(b)    if any Interest Period commences on a day for which there is no
corresponding day in the calendar month at its end or if such corresponding day
falls after the last Business Day of such month, then the Interest Period shall
expire on the last Business Day of such month; and if any Interest Period would
expire on a day that is not a Business Day, the period shall expire on the next
Business Day; and

(c)    no Interest Period shall extend beyond: (i) the U.S. Revolver Commitment
Termination Date in the case of any Revolving Loan owing by the U.S. Borrowers,
(ii) the Canadian Revolver Commitment Termination Date in the case of any Loan
owing by the Canadian Borrower, (iii) the U.K. Revolver Commitment Termination
Date in the case of any Loan owing by the U.K. Borrower, and (iv) the Term Loan
Maturity Date in the case of any Term Loan owing by the U.S. Borrowers. No
Interest Period for a LIBOR Term Loan may be established that would require
repayment before the end of an Interest Period in order to make any scheduled
principal payment on Term Loans.

3.1.5.    Interest Rate Not Ascertainable. If Agent shall determine that, on any
date for determining LIBOR or the Canadian BA Rate, due to any circumstance
affecting the London interbank market or the Canadian interbank bankers’
acceptances market, respectively, adequate and fair means do not exist for
ascertaining such rate on the basis provided herein, then Agent shall
immediately notify the Borrower Agent of such determination. Until Agent
notifies the Borrower Agent that such circumstance no longer exists, the
obligation of the Lenders to make LIBOR Loans or Canadian BA Rate Loans, as
applicable, shall be suspended, and no further Loans may be converted into or
continued as LIBOR Loans or Canadian BA Rate Loans, as applicable.

3.2    Fees.

3.2.1.    Unused Line Fee.

(a)    U.S. Borrowers shall pay to Agent, for the Pro Rata benefit of U.S.
Lenders, a fee equal to the U.S. Unused Line Fee Rate times the amount by which
the U.S. Revolver

 

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Commitments exceed the average daily balance of U.S. Revolver Loans and stated
amount of U.S. Letters of Credit during any month. Such fee shall be payable in
arrears, on the first day of each month and on the U.S. Revolver Commitment
Termination Date.

(b)    Canadian Borrower shall pay to Agent, for the Pro Rata benefit of
Canadian Lenders, a fee equal to the Canadian Unused Line Fee Rate times the
amount by which the Canadian Revolver Commitments exceed the average daily
balance of Canadian Revolver Loans and stated amount of Canadian Letters of
Credit during any month. Such fee shall be payable in arrears, on the first day
of each month and on the Canadian Revolver Commitment Termination Date.

(c)    The U.K. Borrower shall pay to Agent, for the Pro Rata benefit of U.K.
Lenders, a fee equal to the U.K. Unused Line Fee Rate times the amount by which
the U.K. Revolver Commitments exceed the average daily balance of U.K. Revolver
Loans and stated amount of U.K. Letters of Credit during any month. Such fee
shall be payable in arrears, on the first day of each month and on the U.K.
Revolver Commitment Termination Date.

3.2.2.    U.S. LC Facility Fees. The U.S. Borrowers shall pay (a) to Agent, for
the Pro Rata benefit of the U.S. Lenders, a fee equal to the per annum rate of
the Applicable Margin in effect for LIBOR Revolver Loans times the average daily
stated amount of U.S. Letters of Credit, which fee shall be payable monthly in
arrears, on the first day of each month; (b) to Agent, for its own account, a
fronting fee equal to 0.125% per annum on the stated amount of each U.S. Letter
of Credit, which fee shall be payable monthly in arrears, on the first day of
each month; and (c) to the U.S. Issuing Bank, for its own account, all customary
charges associated with the issuance, amending, negotiating, payment,
processing, transfer and administration of U.S. Letters of Credit, which charges
shall be paid as and when incurred. At the election of Agent or the U.S.
Required Lenders, during an Event of Default, the fee payable under clause
(a) shall be increased by 2% per annum.

3.2.3.    Canadian LC Facility Fees. The Canadian Borrower shall pay (a) to
Agent, for the Pro Rata benefit of the Canadian Lenders, a fee equal to the per
annum rate of the Applicable Margin in effect for Canadian BA Rate Loans times
the average daily stated amount of Canadian Letters of Credit, which fee shall
be payable monthly in arrears, on the first day of each month; (b) to Agent, for
its own account, a fronting fee equal to 0.125% per annum on the stated amount
of each Canadian Letter of Credit, which fee shall be payable monthly in
arrears, on the first day of each month; and (c) to the Canadian Issuing Bank,
for its own account, all customary charges associated with the issuance,
amending, negotiating, payment, processing, transfer and administration of
Canadian Letters of Credit, which charges shall be paid as and when incurred. At
the election of Agent or the Canadian Required Lenders, during an Event of
Default, the fee payable under clause (a) shall be increased by 2% per annum.

3.2.4.    U.K. LC Facility Fees. The U.K. Borrower shall pay (a) to Agent, for
the Pro Rata benefit of the U.K. Lenders, a fee equal to the per annum rate of
the Applicable Margin in effect for LIBOR Revolver Loans times the average daily
stated amount of U.K. Letters of Credit, which fee shall be payable monthly in
arrears, on the first day of each month; (b) to Agent, for its own account, a
fronting fee equal to 0.125% per annum on the stated amount of each U.K. Letter
of Credit, which fee shall be payable monthly in arrears, on the first day of
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(c) to the U.K. Issuing Bank, for its own account, all customary charges
associated with the issuance, amending, negotiating, payment, processing,
transfer and administration of U.K. Letters of Credit, which charges shall be
paid as and when incurred. At the election of Agent or the U.K. Required
Lenders, during an Event of Default, the fee payable under clause (a) shall be
increased by 2% per annum.

3.2.5.    U.S. Term Loan Fees. U.S. Borrowers shall pay to Agent, for the Pro
Rata benefit of U.S. Lenders with Term Loan Commitments, a fee equal to the Term
Loan Unused Commitment Fee Rate times the Term Loan Commitments during each
month from the Closing to the earlier of (a) date of the making of the Term
Loans or (b) Term Loan Commitment Termination Date. Such fee shall be payable in
arrears, on the first day of each month and on the earlier of (x) date of the
making of the Term Loans or (y) the Term Loan Commitment Termination Date.

3.2.6.    Other Fees. Borrowers shall pay such other fees as described in the
Fee Letters.

3.3    Computation of Interest, Fees, Yield Protection. All interest, as well as
fees and other charges calculated on a per annum basis, shall be computed for
the actual days elapsed, based on a year of 360 days, or, in the case of
(a) interest based on the Canadian Prime Rate or Canadian BA Rate or (b) a
Revolver Loan made in British Pounds, on the basis of a 365 day year, as the
case may be. Each determination by Agent of any interest, fees or interest rate
hereunder shall be final, conclusive and binding for all purposes, absent
manifest error. All fees shall be fully earned when due and shall not be subject
to rebate, refund or proration. All fees payable under Section 3.2 are
compensation for services and are not, and shall not be deemed to be, interest
or any other charge for the use, forbearance or detention of money. A
certificate as to amounts payable by any Borrower under Section 3.4, 3.5, 3.7,
3.9 or 5.9, submitted to the Borrower Agent by Agent or the affected Lender or
Issuing Bank, as applicable, shall be final, conclusive and binding for all
purposes, absent manifest error, and the Borrowers shall pay such amounts to the
appropriate party within 10 days following receipt of the certificate. For the
purposes of the Interest Act (Canada), the yearly rate of interest to which any
rate calculated on the basis of a period of time different from the actual
number of days in the year (360 days, for example) is equivalent is the stated
rate multiplied by the actual number of days in the year (365 or 366, as
applicable) and divided by the number of days in the shorter period (360 days,
in the example), and the parties hereto acknowledge that there is a material
distinction between the nominal and effective rates of interest and that they
are capable of making the calculations necessary to compare such rates and that
the calculations herein are to be made using the nominal rate method and not on
any basis that gives effect to the principle of deemed reinvestment of interest.
Each Canadian Domiciled Obligor confirms that it fully understands and is able
to calculate the rate of interest applicable to Loans and other Obligations
based on the methodology for calculating per annum rates provided for in this
Agreement and each Canadian Domiciled Obligor hereby irrevocably agrees not to
plead or assert, whether by way of defense or otherwise, in any proceeding
relating to this Agreement or to any other Loan Documents, that the interest
payable under this Agreement and the calculation thereof has not been adequately
disclosed to the Canadian Domiciled Obligors as required pursuant to Section 4
of the Interest Act (Canada).

 

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3.4    Reimbursement Obligations. Borrowers within each Borrower Group shall
reimburse Agent and each Lender for all Extraordinary Expenses incurred by Agent
or such Lender in reference to such Borrower Group or its related Obligations or
Collateral. In addition to such Extraordinary Expenses, such Borrowers shall
also reimburse Agent for all legal, accounting, appraisal, consulting, and other
fees, costs and expenses incurred by it in connection with (a) negotiation and
preparation of any Loan Documents, including any amendment or other modification
thereof; (b) administration of and actions relating to any Collateral for its
Obligations, Loan Documents and transactions contemplated thereby, including any
actions taken to perfect or maintain priority of Agent’s Liens on any such
Collateral, to maintain any insurance required hereunder or to verify such
Collateral; and (c) subject to any limits of Section 10.1.1(b), each inspection,
audit or appraisal with respect to any Obligor within such Borrowers’ related
Obligor Group or Collateral securing such Obligor Group’s Obligations, whether
prepared by Agent’s personnel or a third party. All legal, accounting and
consulting fees shall be charged to Borrowers by Agent’s professionals at their
full hourly rates, regardless of any reduced or alternative fee billing
arrangements that Agent, any Lender or any of their Affiliates may have with
such professionals with respect to this or any other transaction. If, for any
reason (including inaccurate reporting on financial statements, a Borrowing Base
Certificate, or a Compliance Certificate), it is determined that a higher
Applicable Margin, U.S. Unused Line Fee Rate, Canadian Unused Line Fee Rate, or
U.K. Unused Line Fee Rate should have applied to a period than was actually
applied, then the proper margin shall be applied retroactively and the
applicable Borrowers shall immediately pay to Agent, for the Pro Rata benefit of
Applicable Lenders (or Lenders with outstanding Term Loans in the case of
interest related to the Term Loans), an amount equal to the difference between
the amount of interest and fees that would have accrued using the proper margin
and the amount actually paid. All amounts payable by Borrowers under this
Section shall be due on demand.

3.5    Illegality. If any Lender determines that any Applicable Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund LIBOR
Loans or Canadian BA Rate Loans, or to determine or charge interest rates based
upon LIBOR or the Canadian BA Rate, or any Governmental Authority has imposed
material restrictions on the authority of such Lender to purchase or sell, or to
take deposits of, the applicable Available Currency in the London interbank
market, or Canadian Dollars through bankers’ acceptances, then, on notice
thereof by such Lender to Agent, any obligation of such Lender to make or
continue LIBOR Loans or Canadian BA Rate Loans, as applicable, or to convert
U.S. Base Rate Loans or Canadian Base Rate Loans to LIBOR Loans, or Canadian
Prime Rate Loans to Canadian BA Rate Loans, or U.K. Base Rate Loans to LIBOR
Loans, as applicable, shall be suspended until such Lender notifies Agent that
the circumstances giving rise to such determination no longer exist. Upon
delivery of such notice, the applicable Borrower(s) with respect to such Loans
shall prepay or, if applicable, convert all LIBOR Loans of such Lender to U.S.
Base Rate Loans, Canadian Base Rate Loans or U.K. Base Rate Loans (which
alternative to prepayment aforesaid shall only be applicable in relation to any
LIBOR Loans of such Lenders to the U.K. Borrower in the case of any such LIBOR
Loans denominated in Dollars), or all Canadian Prime Rate Loans to Canadian BA
Rate Loans, as applicable, either on the last day of the Interest Period
therefor, if such Lender may lawfully continue to maintain such LIBOR Loans or
Canadian BA Rate Loans to such day, or immediately, if such Lender may not
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Loans. Upon any such prepayment or conversion, the applicable Borrower(s) with
respect to such Loans shall also pay accrued interest on the amount so prepaid
or converted.

3.6    Inability to Determine Rates. If the U.S. Required Lenders, with respect
to U.S. Revolver Loans, or the U.S. Required Term Lenders, with respect to Term
Loans, or the Canadian Required Lenders, with respect to Canadian Revolver
Loans, or the U.K. Required Lenders, with respect to U.K. Revolver Loans, notify
Agent for any reason in connection with a request for a Borrowing of, or
conversion to or continuation of, a LIBOR Loan or a Canadian BA Rate Loan that
(a) deposits or bankers’ acceptances in the relevant Available Currency are not
being offered to, as regards LIBOR, banks in the London interbank eurocurrency
market or, as regards Canadian BA Rate, Persons in Canada, for the applicable
amount and Interest Period of such Loan, (b) adequate and reasonable means do
not exist for determining LIBOR or the Canadian BA Rate for the requested
Interest Period, or (c) LIBOR or the Canadian BA Rate for the requested Interest
Period does not adequately and fairly reflect the cost to such Lenders of
funding such Loan, then Agent will promptly so notify the Borrower Agent and
each Applicable Lender (or Lenders with outstanding Term Loans if related to
Term Loans). Thereafter, the obligation of the Applicable Lenders (or Lenders
with Term Loan Commitments or outstanding Term Loans if related to the Term
Loans) to make or maintain the affected LIBOR Loans or Canadian BA Rate Loans
shall be suspended until Agent (upon instruction by the U.S. Required Lenders,
U.S. Required Term Lenders, Canadian Required Lenders or U.K. Required Lenders,
as applicable) revokes such notice. Upon receipt of such notice, the Borrower
Agent may revoke any pending request for a Borrowing of, conversion to or
continuation of a LIBOR Loan or a Canadian BA Rate Loan or, failing that, will
be deemed to have submitted a request for a U.S. Base Rate Loan, a Canadian
Prime Rate Loan or a U.K. Base Rate Loan (but in the case of any such pending
request in relation to a LIBOR Loan for the U.K. Borrower, if (a) that LIBOR
Loan was denominated in British Pounds or Euro, the Borrower Agent shall be
deemed to have revoked any such pending request for a Borrowing of, conversion
to or continuation of that LIBOR Loan, and the U.K. Borrower shall repay any
such outstanding LIBOR Loan which was the subject of a continuation request, and
(b) only if that LIBOR Loan was denominated in Dollars shall the Borrower Agent
be deemed to have submitted a request for a U.K. Base Rate Loan).

3.7    Increased Costs; Capital Adequacy.

3.7.1.    Change in Law. If any Change in Law shall:

(a)    impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by,
any Lender (except any reserve requirement reflected in LIBOR or the Canadian BA
Rate or Mandatory Costs) or any Issuing Bank;

(b)    subject any Lender or any Issuing Bank to any Tax with respect to any
Loan, Loan Document, Letter of Credit or participation in LC Obligations, or
change the basis of taxation of payments to such Lender or such Issuing Bank in
respect thereof (except for Indemnified Taxes or Other Taxes covered by
Section 5.9 (or would be covered by Section 5.9 but for exclusions in Sections
5.9.2 and 5.9.13) and the imposition of, or any change in the rate of, any
Excluded Tax payable by such Lender or such Issuing Bank); or

 

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(c)    impose on any Lender or any Issuing Bank or the London interbank market
or the Canadian bankers’ acceptances market any other condition, cost or expense
affecting any Loan, Loan Document, Letter of Credit, participation in LC
Obligations, or Commitment;

and the result thereof shall be to increase the cost to such Lender of making or
maintaining any LIBOR Loan or Canadian BA Rate Loan (or of maintaining its
obligation to make any such Loan), or to increase the cost to such Lender or
such Issuing Bank of participating in, issuing or maintaining any Letter of
Credit (or of maintaining its obligation to participate in or to issue any
Letter of Credit), or to reduce the amount of any sum received or receivable by
such Lender or such Issuing Bank hereunder (whether of principal, interest or
any other amount) then, upon request of such Lender or such Issuing Bank, the
Borrower(s) of any Borrower Group with respect to such Commitments, Loans,
Letters of Credit or participations in LC Obligations) will pay to such Lender
or such Issuing Bank, as applicable, such additional amount or amounts as will
compensate such Lender or such Issuing Bank, as applicable, for such additional
costs incurred or reduction suffered.

3.7.2.    Capital Adequacy. If any Lender or any Issuing Bank determines that
any Change in Law affecting such Lender or such Issuing Bank or any Lending
Office of such Lender or such Lender’s or such Issuing Bank’s holding company,
if any, regarding capital or liquidity requirements has or would have the effect
of reducing the rate of return on such Lender’s, such Issuing Bank’s or holding
company’s capital as a consequence of this Agreement, or such Lender’s or such
Issuing Bank’s Commitments, Loans, Letters of Credit or participations in LC
Obligations, to a level below that which such Lender, such Issuing Bank or
holding company could have achieved but for such Change in Law (taking into
consideration such Lender’s, such Issuing Bank’s and holding company’s policies
with respect to capital adequacy), then from time to time the Borrowers (or the
applicable Borrower(s) of any Borrower Group with respect to such Commitments,
Loans, Letters of Credit or participations in LC Obligations) will pay to such
Lender or such Issuing Bank, as the case may be, such additional amount or
amounts as will compensate it or its holding company for any such reduction
suffered.

3.7.3.    Compensation. Failure or delay on the part of any Lender or any
Issuing Bank to demand compensation pursuant to this Section shall not
constitute a waiver of its right to demand such compensation, but the
Borrower(s) of any Borrower Group shall not be required to compensate a Lender
or an Issuing Bank for any increased costs incurred or reductions suffered more
than nine months prior to the date that such Lender or such Issuing Bank
notifies the Borrower Agent of the Change in Law giving rise to such increased
costs or reductions and of such Lender’s or such Issuing Bank’s intention to
claim compensation therefor (except that, if the Change in Law giving rise to
such increased costs or reductions is retroactive, then the nine-month period
referred to above shall be extended to include the period of retroactive effect
thereof).

3.8    Mitigation. If any Lender gives a notice under Section 3.5 or requests
compensation under Section 3.7, or if the Borrower(s) of any Borrower Group are
required to pay additional amounts with respect to a Lender under Section 5.9,
then such Lender shall use reasonable efforts to designate a different Lending
Office or to assign its rights and obligations hereunder to another of its
offices, branches or Affiliates, if, in the judgment of such Lender, such
designation or assignment (a) would eliminate the need for such notice or reduce
amounts payable or to be withheld in the future, as applicable; and (b) would
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unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender or unlawful. The Borrower(s) of each affected Borrower Group shall pay
all reasonable costs and expenses incurred by any Lender that has issued a
Commitment to such Borrower Group in connection with any such designation or
assignment.

3.9    Funding Losses. If for any reason (other than default by a Lender) (a)
any Borrowing of, or conversion to or continuation of, a LIBOR Loan or a
Canadian BA Rate Loan does not occur on the date specified therefor in a Notice
of Borrowing or Notice of Conversion/Continuation (whether or not withdrawn),
(b) any repayment or conversion of a LIBOR Loan or a Canadian BA Rate Loan
occurs on a day other than the end of its Interest Period, (c) a Lender (other
than a Defaulting Lender) is required to assign a LIBOR Loan or Canadian BA Rate
Loan prior to the end of its Interest Period pursuant to Section 13.4, or
(d) the Borrower(s) of any Borrower Group fail(s) to repay a LIBOR Loan or a
Canadian BA Rate Loan when required hereunder, then such applicable Borrower(s)
shall pay to Agent its customary administrative charge and to each Applicable
Lender all losses and expenses that it sustains as a consequence thereof,
including loss of anticipated profits and any loss or expense arising from
liquidation or redeployment of funds or from fees payable to terminate deposits
of matching funds but excluding the Applicable Margin and Mandatory Costs. The
Lenders shall not be required to purchase deposits in the London interbank
market or any other offshore market to fund any LIBOR Loan or to transact in
bankers’ acceptances to make any Canadian BA Rate Loan, but the provisions
hereof shall be deemed to apply as if each Applicable Lender had purchased such
deposits to fund its LIBOR Loans or Canadian BA Rate Loans, as applicable.

3.10    Maximum Interest. Notwithstanding anything to the contrary contained in
any Loan Document, the interest paid or agreed to be paid under the Loan
Documents shall not exceed the maximum rate of non-usurious interest permitted
by Applicable Law (“maximum rate”). If Agent or any Lender shall receive
interest in an amount that exceeds the maximum rate, the excess interest shall
be applied to the principal of the Obligations of the Borrower Group to which
such excess interest relates or, if it exceeds such unpaid principal, refunded
to such Borrower Group. In determining whether the interest contracted for,
charged or received by Agent or a Lender exceeds the maximum rate, such Person
may, to the extent permitted by Applicable Law, (a) characterize any payment
that is not principal as an expense, fee or premium rather than interest;
(b) exclude voluntary prepayments and the effects thereof; and (c) amortize,
prorate, allocate and spread in equal or unequal parts the total amount of
interest throughout the contemplated term of the Obligations hereunder. Without
limiting the generality of the foregoing provisions of this Section 3.10, if any
provision of any of the Loan Documents would obligate any Canadian Domiciled
Obligor to make any payment of interest with respect to the Canadian Facility
Obligations in an amount or calculated at a rate which would be prohibited by
Applicable Law or would result in the receipt of interest with respect to the
Canadian Facility Obligations at a criminal rate (as such terms are construed
under the Criminal Code (Canada)), then, notwithstanding such provision, such
amount or rates 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 law or so result in a receipt by the applicable recipient of
interest with respect to the Canadian Facility Obligations at a criminal rate,
such adjustment to be effected, to the extent necessary, as follows: (i) first,
by reducing the amount or rates of interest required to be paid by the Canadian
Domiciled Obligors to the applicable recipient under the Loan Documents; and
(ii) thereafter, by reducing any fees, commissions, premiums and other amounts
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Domiciled Obligors to the applicable recipient which would constitute interest
with respect to the Canadian Facility Obligations for purposes of Section 347 of
the Criminal Code (Canada). Notwithstanding the foregoing, and after giving
effect to all adjustments contemplated thereby, if the applicable recipient
shall have received an amount in excess of the maximum permitted by that section
of the Criminal Code (Canada), then the Canadian Domiciled Obligors shall be
entitled, by notice in writing to Agent, to obtain reimbursement from the
applicable recipient in an amount equal to such excess, and, pending such
reimbursement, such amount shall be deemed to be an amount payable by the
applicable recipient to the applicable Canadian Domiciled Obligor. Any amount or
rate of interest with respect to the Canadian Facility Obligations referred to
in this Section 3.10 shall be determined in accordance with generally accepted
actuarial practices and principles as an effective annual rate of interest over
the term that any Loans to the Canadian Borrower remain outstanding on the
assumption that any charges, fees or expenses that fall within the meaning of
“interest” (as defined in the Criminal Code (Canada)) shall, if they relate to a
specific period of time, be pro rated over that period of time and otherwise be
pro rated over the period from the Original Agreement Closing Date to the date
of Full Payment of the Canadian Facility Obligations, and, in the event of a
dispute, a certificate of a Fellow of the Canadian Institute of Actuaries
appointed by Agent shall be conclusive for the purposes of such determination.

 

SECTION 4.

LOAN ADMINISTRATION

4.1    Manner of Borrowing and Funding Revolver Loans.

4.1.1.    Notice of Borrowing.

(a)    Whenever Borrowers within a Borrower Group desire funding of a Borrowing
of Revolver Loans, Borrower Agent shall give Agent a Notice of Borrowing. Such
notice must be received by Agent no later than 11:00 a.m. (i) on the Business
Day of the requested funding date, in the case of U.S. Base Rate Loans, Canadian
Prime Rate Loans, or Canadian Base Rate Loans, (ii) on the Business Day prior to
the requested funding date, in the case of U.K. Base Rate Loans, and (iii) at
least three Business Days prior (and at least four Business Days in the case of
a U.K. Revolver Loan) to the requested funding date, in the case of LIBOR Loans
or Canadian BA Rate Loans. Notices received after 11:00 a.m. shall be deemed
received on the next Business Day. Each Notice of Borrowing shall be irrevocable
and shall specify (A) the amount of the Borrowing, (B) the requested funding
date (which must be a Business Day), (C) whether the Borrowing is to be made as
a U.S. Base Rate Loan or a LIBOR Loan (in the case of a Borrowing by the U.S.
Borrowers), or as a Canadian Base Rate Loan, a Canadian Prime Rate Loan, LIBOR
Loan, or a Canadian BA Rate Loan (in the case of a Borrowing by the Canadian
Borrower) or as a U.K. Base Rate Loan or a LIBOR Loan (in the case of a
Borrowing by the U.K. Borrower), (D) in the case of LIBOR Loans or Canadian BA
Rate Loans, the duration of the applicable Interest Period (which shall be
deemed to be 30 days if not specified), (E) in the case of a Borrowing by the
Canadian Borrower, whether such Loan is to be denominated in Dollars or Canadian
Dollars, and (F) in the case of a Borrowing by the U.K. Borrower, in the case of
LIBOR Loans only, whether such Loan is to be denominated in Dollars, British
Pounds or Euro.

(b)    Unless payment is otherwise timely made by Borrowers within a Borrower
Group, the becoming due of any amount required to be paid with respect to any of
the Obligations

 

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of the Obligor Group to which such Borrower Group belongs (whether principal,
interest, fees or other charges, including Extraordinary Expenses, LC
Obligations, Cash Collateral and Secured Bank Product Obligations) shall be
deemed to be a request for Revolver Loans by such Borrower Group on the due
date, in the amount of such Obligations and shall bear interest at the per annum
rate applicable hereunder to U.S. Base Rate Revolver Loans, in the case of such
Obligations owing by any U.S. Facility Obligor, or to Canadian Prime Rate Loans,
in the case of such Obligations owing by a Canadian Domiciled Obligor, or to
U.K. Base Rate Loans, in the case of such Obligations owing by a U.K. Domiciled
Obligor. The proceeds of such Revolver Loans shall be disbursed as direct
payment of the relevant Obligation. In addition, Agent may, at its option,
charge such Obligations of an Obligor Group against any operating, investment or
other account of an Obligor within such Obligor Group maintained with Agent or
any of its Affiliates.

(c)    If Borrowers within a Borrower Group establish a controlled disbursement
account with Agent or any branch or Affiliate of Agent, then the presentation
for payment of any check, ACH or electronic debit, or other payment item at a
time when there are insufficient funds to cover it shall be deemed to be a
request for Revolver Loans by such Borrower Group on the date of such
presentation, in the amount of such payment item, and shall bear interest at the
per annum rate applicable hereunder to U.S. Base Rate Revolver Loans, in the
case of insufficient funds owing by any U.S. Facility Obligor, or to Canadian
Prime Rate Loans, in the case of insufficient funds owing by a Canadian
Domiciled Obligor, or to U.K. Base Rate Loans, in the case of insufficient funds
owing by a U.K. Domiciled Obligor. The proceeds of such Revolver Loans may be
disbursed directly to the controlled disbursement account or other appropriate
account.

(d)    Whenever U.S. Borrowers desire funding of the Borrowing of the Term
Loans, Borrower Agent shall give Agent a Notice of Borrowing. Such notice must
be received by Agent no later than 11:00 a.m. (i) at least two (2) Business Days
prior to the requested funding date in the case of Base Rate Term Loans and
(ii) at least three (3) Business Days prior to the requested funding date in the
case of LIBOR Term Loans. Notices received after 11:00 a.m. shall be deemed
received on the next Business Day. Any such Notice of Borrowing shall be
irrevocable (subject to the last sentence of this Section 4.1.1(d)) and shall
specify (A) the amount of the Term Loans to be borrowed (subject to the limits
set forth herein), (B) the requested funding date (which must be a Business
Day), (C) whether the Borrowing is to be made as a Base Rate Term Loan or a
LIBOR Term Loan, and (D) in the case of LIBOR Term Loans, the duration of the
applicable Interest Period (which shall be deemed to be 30 days if not
specified). Notwithstanding the foregoing, a request for a Base Rate Term Loan
(a “Base Rate Term Loan Request”) meeting the foregoing requirements may be
conditioned by U.S. Borrowers on a material event occurring, provided, that,
Agent must receive notice no later than 11:00 a.m. on the requested funding date
on whether such material event has, or shall be deemed to have, occurred (a
“Material Event Confirmation”) (it being understood that to the extent Agent
does not receive a Material Event Confirmation by such time, the corresponding
Base Rate Term Loan Request shall be deemed null and void).

4.1.2.    Fundings by Lenders.

(a)    Each Applicable Lender shall timely honor its Revolver Commitment by
funding its Pro Rata share of each Borrowing of Revolver Loans that is properly
requested

 

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hereunder. Except for Borrowings to be made as Swingline Loans, Agent shall
endeavor to notify the Applicable Lenders of each Notice of Borrowing (or deemed
request for a Borrowing) by 12:00 noon (Applicable Time Zone) on the proposed
funding date (and by 12:00 p.m. (Applicable Time Zone) on the Business Day prior
to the proposed funding date, in the case of U.K. Base Rate Loans) for U.S. Base
Rate Loans, Canadian Base Rate Loans, Canadian Prime Rate Loans or U.K. Base
Rate Loans, or by 3:00 p.m. (Applicable Time Zone) at least two Business Days
before any proposed funding of LIBOR Loans or Canadian BA Rate Loans. Each
Applicable Lender shall fund to Agent such Lender’s Pro Rata share of the
Borrowing to the account specified by Agent in immediately available funds not
later than 2:00 p.m. (Applicable Time Zone) on the requested funding date,
unless Agent’s notice is received after the times provided above, in which case
Lender shall fund its Pro Rata share by 11:00 a.m. (Applicable Time Zone) on the
next Business Day. Subject to its receipt of such amounts from the Applicable
Lenders, Agent shall disburse the proceeds of the Revolver Loans as directed by
Borrower Agent. Unless Agent shall have received (in sufficient time to act)
written notice from an Applicable Lender that it does not intend to fund its Pro
Rata share of a Borrowing, Agent may assume that such Lender has deposited or
promptly will deposit its share with Agent, and Agent may disburse a
corresponding amount to the applicable Borrower(s). If an Applicable Lender’s
share of any Borrowing or of any settlement pursuant to Section 4.1.3(b) is not
received by Agent, then the Borrowers within the applicable Borrower Group agree
to repay to Agent on demand the amount of such share, together with interest
thereon from the date disbursed until repaid, at the rate applicable to such
Borrowing.

(b)    Each U.S. Lender shall timely honor its Term Loan Commitment by funding
its Pro Rata share of the Term Loans that are properly requested hereunder.
Agent shall endeavor to notify the U.S. Lenders with Term Loan Commitments of
any Notice of Borrowing to request the Term Loans by 12:00 noon (Pacific time)
at least three (3) Business Days prior to the proposed funding date. Each U.S.
Lender with a Term Loan Commitment shall fund to Agent such Lender’s Pro Rata
share of the Borrowing to the account specified by Agent in immediately
available funds not later than 2:00 p.m. (Pacific time) on the requested funding
date. Subject to its receipt of such amounts from such U.S. Lenders, Agent shall
disburse the proceeds of the Term Loans as directed by Borrower Agent. Unless
Agent shall have received (in sufficient time to act) written notice from a U.S.
Lender with a Term Loan Commitment that it does not intend to fund its Pro Rata
share of such Borrowing, Agent may assume that such U.S. Lender has deposited or
promptly will deposit its share with Agent, and Agent may disburse a
corresponding amount to the applicable U.S. Borrower(s). If a U.S. Lender’s
share of any such Borrowing is not received by Agent, then the U.S. Borrowers
agree to repay to Agent on demand the amount of such share, together with
interest thereon from the date disbursed until repaid, at the rate applicable to
such Borrowing.

4.1.3.    Swingline Loans; Settlement.

(a)    Agent may, but shall not be obligated to, advance U.S. Swingline Loans to
the U.S. Borrowers, up to an aggregate outstanding amount equal to 10% of the
aggregate U.S. Revolver Commitments, unless the funding is specifically required
to be made by all U.S. Lenders hereunder. Each U.S. Swingline Loan shall
constitute a U.S. Base Rate Revolver Loan for all purposes, except that payments
thereon shall be made to Agent for its own account. The obligation of the U.S.
Borrowers to repay U.S. Swingline Loans shall be evidenced by the records of
Agent and need not be evidenced by any promissory note. Agent (acting through
its Canada branch)

 

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may, but shall not be obligated to, advance Canadian Swingline Loans to the
Canadian Borrower, up to an aggregate outstanding amount equal to 10% of the
aggregate Canadian Revolver Commitments, unless the funding is specifically
required to be made by all Canadian Lenders hereunder. Each Canadian Swingline
Loan shall constitute a Canadian Prime Rate Revolver Loan or a Canadian Base
Rate Loan, as applicable, for all purposes, except that payments thereon shall
be made to Agent (acting through its Canada branch) for its own account. The
obligation of the Canadian Borrower to repay Canadian Swingline Loans shall be
evidenced by the records of Agent (acting through its Canada branch) and need
not be evidenced by any promissory note. Agent may, but shall not be obligated
to, advance U.K. Swingline Loans to the U.K. Borrower, up to an aggregate
outstanding amount equal to 10% of the aggregate U.K. Revolver Commitments,
unless the funding is specifically required to be made by all U.K. Lenders
hereunder. Each U.K. Swingline Loan shall be made in and denominated only in
Dollars, and shall constitute a U.K. Base Rate Loan for all purposes, except
that payments thereon shall be made to Agent for its own account. The obligation
of the U.K. Borrower to repay U.K. Swingline Loans shall be evidenced by the
records of Agent and need not be evidenced by any promissory note

(b)    Settlement of Swingline Loans and other Revolver Loans among Lenders and
Agent shall take place on a date determined from time to time by Agent (but at
least weekly), in accordance with the Settlement Report delivered by Agent to
Lenders. Between settlement dates, Agent may in its discretion apply payments on
Revolver Loans to Swingline Loans, regardless of any designation by any Borrower
or any provision herein to the contrary. Each Lender’s obligation to make
settlements with Agent is absolute and unconditional, without offset,
counterclaim or other defense, and whether or not the Commitments have
terminated, an Overadvance exists or the conditions in Section 6 are satisfied.
If, due to an Insolvency Proceeding with respect to a Borrower or otherwise, any
U.S. Swingline Loan may not be settled among the U.S. Lenders hereunder, then
each U.S. Lender shall be deemed to have purchased from Agent a Pro Rata
participation in such Loan and shall transfer the amount of such participation
to Agent, in immediately available funds, within one Business Day after Agent’s
request therefor. If, due to an Insolvency Proceeding with respect to a Borrower
or otherwise, any Canadian Swingline Loan may not be settled among the Canadian
Lenders hereunder, then each Canadian Lender shall be deemed to have purchased
from Agent a Pro Rata participation in such Loan and shall transfer the amount
of such participation to Agent, in immediately available funds, within one
Business Day after Agent’s request therefore. If, due to an Insolvency
Proceeding with respect to a Borrower or otherwise, any U.K. Swingline Loan may
not be settled among the U.K. Lenders hereunder, then each U.K. Lender shall be
deemed to have purchased from Agent a Pro Rata participation in such Loan and
shall transfer the amount of such participation to Agent, in immediately
available funds, within one Business Day after Agent’s request therefore

4.1.4.    Notices. Borrowers may request, convert or continue Loans, select
interest rates and transfer funds based on telephonic or e-mailed instructions
to Agent. Borrowers shall confirm each such request by prompt delivery to Agent
of a Notice of Borrowing or Notice of Conversion/Continuation, if applicable,
but if it differs materially from the action taken by Agent or Lenders, the
records of Agent and Lenders shall govern. Neither Agent nor any Lender shall
have any liability for any loss suffered by a Borrower as a result of Agent or
any Lender acting upon its understanding of telephonic or e-mailed instructions
from a person believed in good faith by Agent or any Lender to be a person
authorized to give such instructions on a Borrower’s behalf.

 

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4.2    Defaulting Lender.

4.2.1.    Reallocation of Pro Rata Share; Amendments. For purposes of
determining Lenders’ obligations to fund or participate in Loans or Letters of
Credit, Agent may exclude the Commitments and Loans of any Defaulting Lender(s)
from the calculation of Pro Rata shares. A Defaulting Lender shall have no right
to vote on any amendment, waiver or other modification of a Loan Document,
except as provided in Section 14.1.1(c).

4.2.2.    Payments; Fees. Agent may, in its discretion, receive and retain any
amounts payable to a Defaulting Lender under the Loan Documents, and a
Defaulting Lender shall be deemed to have assigned to Agent such amounts until
all Obligations owing to Agent, non-Defaulting Lenders and other Secured Parties
have been paid in full. Agent may apply such amounts to the Defaulting Lender’s
defaulted obligations, use the funds to Cash Collateralize such Lender’s
Fronting Exposure, or readvance the amounts, in accordance with this Agreement,
to the Borrowers of the Borrower Group to which such defaulted obligations
relate. A Lender shall not be entitled to receive any fees accruing hereunder
during the period in which it is a Defaulting Lender, and the unfunded portion
of its Commitment shall be disregarded for purposes of calculating the unused
line fees under Section 3.2.1. If any LC Obligations owing to a Defaulted Lender
are reallocated to other Lenders, fees attributable to such LC Obligations under
Section 3.2.2, Section 3.2.3, and Section 3.2.4, as applicable, shall be paid to
such Lenders. Agent shall be paid all fees attributable to LC Obligations that
are not reallocated.

4.2.3.    Cure. Borrowers, Agent and Issuing Banks may agree in writing that a
Lender is no longer a Defaulting Lender. At such time, Pro Rata shares shall be
reallocated without exclusion of such Lender’s Commitments and Loans, and all
outstanding Revolver Loans, LC Obligations and other exposures under the
Revolver Commitments shall be reallocated among Lenders and settled by Agent
(with appropriate payments by the reinstated Lender) in accordance with the
readjusted Pro Rata shares. Unless expressly agreed by Borrowers, Agent and
Issuing Banks, or as expressly provided herein with respect to Bail-In Actions
and related matters, no reinstatement of a Defaulting Lender shall constitute a
waiver or release of claims against such Lender. The failure of any Lender to
fund a Loan, to make a payment in respect of LC Obligations or otherwise to
perform its obligations hereunder shall not relieve any other Lender of its
obligations, and no Lender shall be responsible for default by another Lender.

4.3    Number and Amount of LIBOR Loans and Canadian BA Rate Loans;
Determination of Rate. With respect to the U.S. Borrowers, (i) no more than 10
Borrowings of LIBOR Loans may be outstanding at any time, and all LIBOR Loans to
U.S. Borrowers having the same length and beginning date of their Interest
Periods shall be aggregated together and considered one Borrowing for this
purpose, and (ii) each Borrowing of LIBOR Loans when made, continued or
converted shall be in a minimum amount of $1,000,000 or an increment of
$1,000,000, in excess thereof. With respect to the Canadian Borrower, (x) no
more than 5 Borrowings of LIBOR Loans may be outstanding at any time, and all
LIBOR Loans having the same length and beginning date of their Interest Periods
shall be aggregated together and considered one Borrowing for this purpose,
(y) no more than 5 Borrowings of Canadian BA Rate Loans may be outstanding at
any time, and all Canadian BA Rate Loans having the same length and beginning
date of their Interest Periods shall be aggregated together and considered one
Borrowing for this purpose, and (z) each Borrowing of such Loans when made,
continued or

 

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converted shall be in a minimum amount of $1,000,000 (or, in the case of
Canadian BA Rate Loans, Cdn$1,000,000) or an increment of $1,000,000 (or, in the
case of Canadian BA Rate Loans, Cdn$1,000,000), in excess thereof. With respect
to the U.K. Borrower, (1) no more than 5 Borrowings of LIBOR Loans may be
outstanding at any time, and all LIBOR Loans having the same length and
beginning date of their Interest Periods and in the same Available Currency
shall be aggregated together and considered one Borrowing for this purpose, and
(2) each Borrowing of such Loans when made, continued or converted shall be in a
minimum amount of $1,000,000 (or, in the case of LIBOR Loans denominated in
British Pounds, £1,000,000 or, in the case of LIBOR Loans denominated in Euros,
Euros 1,000,000) or an increment of $1,000,000 (or, in the case of LIBOR Loans
denominated in British Pounds, £1,000,000 or, in the case of LIBOR Loans
denominated in Euros, Euros 1,000,000), in excess thereof. Upon determining
LIBOR or the Canadian BA Rate for any Interest Period requested by the Borrower
Agent on behalf of a Borrower Group, Agent shall promptly notify the Borrower
Agent thereof by telephone or electronically and, if requested by the Borrower
Agent, shall confirm any telephonic notice in writing.

4.4    Borrower Agent. Each Borrower and other Obligor hereby designates
Callaway Golf Company, a Delaware corporation (“Borrower Agent”) as its
representative and agent for all purposes under the Loan Documents, including
requests for Loans and Letters of Credit, designation of interest rates,
delivery or receipt of communications, preparation and delivery of Borrowing
Base and financial reports, receipt and payment of Obligations, requests for
waivers, amendments or other accommodations, actions under the Loan Documents
(including in respect of compliance with covenants), and all other dealings with
Agent, any Issuing Bank or any Lender. Borrower Agent hereby accepts such
appointment. Agent and Lenders shall be entitled to rely upon, and shall be
fully protected in relying upon, any notice or communication (including any
notice of borrowing) delivered by Borrower Agent on behalf of any Borrower.
Agent and Lenders may give any notice or communication with a Borrower or other
Obligor hereunder to Borrower Agent on behalf of such Borrower or other Obligor.
Each of Agent, Issuing Banks and Lenders shall have the right, in its
discretion, to deal exclusively with Borrower Agent for any or all purposes
under the Loan Documents. Each Borrower and other Obligor agrees that any
notice, election, communication, representation, agreement or undertaking made
on its behalf by Borrower Agent shall be binding upon and enforceable against
it.

4.5    One Obligation. The Loans, LC Obligations and other Obligations of the
applicable Borrower(s) of each Borrower Group and their respective Guarantors
shall constitute one general obligation of such Borrower(s) of such Borrower
Group and their respective Guarantors and (unless otherwise expressly provided
in any Loan Document) shall be secured by Agent’s Lien upon all Collateral of
such Borrower(s) of such Borrower Group and their respective Guarantors;
provided, however, that each Credit Party shall be deemed to be a creditor of,
and the holder of a separate claim against, each Borrower or other Obligor to
the extent of any Obligations jointly or severally owed by such Borrower or
other Obligor to such Credit Party.

4.6    Effect of Termination. On the effective date of any termination of any of
the Revolver Commitments, all Obligations with respect thereto shall be
immediately due and payable, and any Lender may terminate its and its
Affiliates’ Bank Products. All undertakings of Borrowers contained in the Loan
Documents shall survive any termination, and Agent shall retain its Liens in the
Collateral and all of its rights and remedies under the Loan Documents until
Full Payment

 

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of the Obligations. Notwithstanding Full Payment of the Obligations, Agent shall
not be required to terminate its Liens in any Collateral unless, with respect to
any damages Agent may incur as a result of the dishonor or return of Payment
Items applied to Obligations, Agent receives (a) a written agreement
satisfactory to Agent, executed by Borrowers and any Person whose advances are
used in whole or in part to satisfy the Obligations, indemnifying Agent and
Lenders from such damages; and (b) such Cash Collateral as Agent, in its
discretion, deems appropriate to protect against such damages. Sections 2.2,
2.3, 2.4, 3.4, 3.6, 3.7, 3.9, 5.5, 5.9, 5.10, 12, 14.2 and this Section, and the
obligation of each Obligor and Lender with respect to each indemnity given by it
in any Loan Document, shall survive Full Payment of the Obligations and any
release relating to this credit facility.

 

SECTION 5.

PAYMENTS

5.1    General Payment Provisions. All payments of Obligations shall be made
without offset, counterclaim or defense of any kind, free of (and without
deduction for) any Taxes, and in immediately available funds, not later than
12:00 noon (Applicable Time Zone) on the due date. Any payment after such time
shall be deemed made on the next Business Day. Any payment of a LIBOR Loan or a
Canadian BA Rate Loan prior to the end of its Interest Period shall be
accompanied by all amounts due under Section 3.9. Any prepayment of Loans by a
Borrower Group shall be applied first to U.S. Base Rate Loans, Canadian Base
Rate Loans, Canadian Prime Rate Loans or U.K. Base Rate Loans, as applicable, of
such Borrower Group and then to LIBOR Loans or Canadian BA Rate Loans, as
applicable, of such Borrower Group. All payments with respect to any U.S.
Facility Obligations shall be made in Dollars and all payments with respect to
any Canadian Facility Obligations shall be made in Canadian Dollars or, if any
portion of such Canadian Facility Obligations is denominated in Dollars, then in
Dollars and all payments with respect to any U.K. Facility Obligations shall be
made in British Pounds or, if any portion of such U.K. Facility Obligations is
denominated in Euro, then in Euro or, if any portion of such U.K. Facility
Obligations is denominated in Dollars, then in Dollars.

5.2    Repayment of Revolver Loans. All U.S. Revolver Loans shall be due and
payable in full on the U.S. Revolver Commitment Termination Date, all Canadian
Revolver Loans shall be due and payable in full on the Canadian Revolver
Commitment Termination Date, and all U.K. Revolver Loans shall be due and
payable in full on the U.K. Revolver Commitment Termination Date, in each case
unless payment is sooner required hereunder. Revolver Loans may be prepaid from
time to time, without penalty or premium, subject to, in the case of LIBOR Loans
and Canadian BA Rate Loans, Section 3.9. If any Asset Disposition includes the
disposition of Accounts or Inventory of an Obligor, then Net Proceeds equal to
the greater of (a) the net book value of such Accounts and Inventory, or (b) the
reduction in the applicable Borrowing Base (i.e., the U.S. Borrowing Base in the
case of an Asset Disposition with respect to Accounts or Inventory of the U.S.
Borrowers, the Canadian Borrowing Base in the case of an Asset Disposition with
respect to Accounts or Inventory of the Canadian Borrower, and the U.K.
Borrowing Base in the case of an Asset Disposition with respect to Accounts or
Inventory of the U.K. Borrower) upon giving effect to such disposition, shall be
applied to the applicable Revolver Loans (i.e., the U.S. Revolver Loans in the
case of an Asset Disposition of Accounts or Inventory of the U.S. Borrowers, the
Canadian Revolver Loans in the case of an Asset Disposition with respect to the
Accounts or Inventory of the Canadian Borrower, and the U.K. Revolver Loans in
the case of an Asset Disposition with respect to the Accounts or Inventory of
the U.K. Borrower).

 

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Notwithstanding anything herein to the contrary, if an Overadvance exists
(including as a result of any Asset Disposition), the applicable Borrower(s)
(i.e., the U.S. Borrowers in the case of a U.S. Overadvance, the Canadian
Borrower in the case of a Canadian Overadvance, and the U.K. Borrower in the
case of a U.K. Overadvance) shall, on the sooner of Agent’s demand or the first
Business Day after any such Borrower has knowledge thereof, repay the
outstanding applicable Revolver Loans (i.e., the U.S. Revolver Loans in the case
of a U.S. Overadvance, the Canadian Revolver Loans in the case of a Canadian
Overadvance, and the U.K. Revolver Loans in the case of a U.K. Overadvance) in
an amount sufficient to reduce the principal balance of such Revolver Loans to
the applicable Borrowing Base (i.e., the U.S. Borrowing Base in the case of a
U.S. Revolver Loans, the Canadian Borrowing Base in the case of Canadian
Revolver Loans, and the U.K. Borrowing Base in the case of U.K. Revolver Loans).

5.3    Repayment of Term Loans.

5.3.1.    Payment of Principal. Commencing on the first day of the month
immediately following the date that is fifteen (15) months after the date the
Term Loans are made (such month, the “First Term Loan Repayment Month”), and on
the first day of each third month ending after the First Term Loan Repayment
Month, the principal amount of the Term Loans shall be repaid by an amount equal
to 1/12th of the original principal aggregate amount of the Term Loans. In
addition to the foregoing, on the earlier of the Term Loan Maturity Date and the
U.S. Revolver Commitment Termination Date, all principal, interest and other
amounts owing with respect to the Term Loans shall be due and payable in full.
Each installment shall be paid to Agent for the Pro Rata benefit of Lenders.
Once repaid, whether such repayment is voluntary or required, Term Loans may not
be reborrowed. Any prepayment of Term Loans shall be accompanied by all interest
accrued thereon and any amounts payable under Section 3.9.

5.3.2.    Mandatory Prepayments.

(a)    Within sixty days after delivery to Agent of Borrowers’ audited annual
financial statements (and accompanying Compliance Certificate) for the Fiscal
Year ending on December 31, 2018, U.S. Borrowers shall (a) deliver to Agent a
written calculation of Excess Cash Flow for such Fiscal Year, certified by a
Senior Officer of Borrower Agent, and (b) prepay Term Loans in an amount equal
to the least of: (i) 50% of such Excess Cash Flow; (ii) $10,000,000; and
(iii) the greatest amount available such that after giving effect to the payment
of such amount, the sum of Net Excess Availability plus unrestricted cash and
cash equivalents of the Obligors is not less than an amount equal to 15% of the
Maximum Facility Amount. Any such prepayment of the Term Loans shall be applied
to principal in inverse order of maturity.

(b)    Concurrently with any Asset Disposition by any U.S. Facility Obligor of
any Real Estate, Intellectual Property, or Equity Interests of Top Golf, U.S.
Borrowers shall prepay Term Loans in an amount equal to the Net Proceeds of such
disposition. Any such prepayment of the Term Loans shall be applied to principal
in inverse order of maturity.

5.3.3.    Optional Prepayments. U.S. Borrowers may, at their option from time to
time, prepay Term Loans, which prepayment must be at least $5,000,000, plus any
increment of $1,000,000 in excess thereof. Borrower Agent shall give written
notice to Agent of an intended prepayment of Term Loans, which notice shall
specify the amount of the prepayment and the date

 

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of such prepayment (which must be a Business Day), shall be irrevocable once
given, and shall be given at least 3 Business Days prior to the date of such
prepayment. Any such voluntary prepayment of the Term Loans shall be applied to
principal in inverse order of maturity.

5.4    Payment of Other Obligations. Obligations other than Loans, including LC
Obligations and Extraordinary Expenses, shall be paid by Borrowers as provided
in the Loan Documents or, if no payment date is specified, on demand.

5.5    Marshaling; Payments Set Aside. None of Agent or Lenders shall be under
any obligation to marshal any assets in favor of any Obligor or against any
Obligations. If any payment by or on behalf of Borrowers or any other Obligor is
made to Agent, any Issuing Bank or any Lender, or Agent, any Issuing Bank or any
Lender exercises a right of setoff, and such payment or the proceeds of such
setoff or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by Agent, such Issuing Bank or such Lender in its
discretion) to be repaid to a Creditor Representative or any other Person, then
to the extent of such recovery, the Obligation originally intended to be
satisfied, and all Liens, rights and remedies relating thereto, shall be revived
and continued in full force and effect as if such payment had not been made or
such setoff had not occurred.

5.6    Post-Default Allocation of Payments.

5.6.1.    Allocation. Notwithstanding anything herein to the contrary, during an
Event of Default, monies to be applied to the Obligations, whether arising from
payments by or on behalf of any Obligor, realization on Collateral, setoff or
otherwise, shall be allocated as follows:

(a)    with respect to monies, payments, Property or Collateral of or from any
U.S. Domiciled Obligor:

(i)    first, to all costs and expenses, including Extraordinary Expenses, owing
to Agent;

(ii)    second, to all Extraordinary Expenses owing to any U.S. Lender;

(iii)    third, to all amounts owing to Agent on U.S. Swingline Loans;

(iv)    fourth, to all amounts owing to U.S. Issuing Bank on account of U.S. LC
Obligations;

(v)    fifth, to all Obligations constituting fees (other than Secured Bank
Product Obligations) owing by any U.S. Domiciled Obligor (exclusive of any such
amounts owing by the Canadian Domiciled Obligors or U.K. Domiciled Obligors
which are guaranteed by the U.S. Domiciled Obligors);

(vi)    sixth, to all U.S. Facility Obligations constituting interest (other
than Secured Bank Product Obligations and other than on account of the Term
Loans) owing by any U.S. Domiciled Obligor (exclusive of any such amounts owing
by the Canadian

 

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Domiciled Obligors or U.K. Domiciled Obligors which are guaranteed by the U.S.
Domiciled Obligors);

(vii)    seventh, to Cash Collateralize the U.S. LC Obligations;

(viii)    eighth, to all U.S. Revolver Loans and Noticed Hedges (solely to the
extent such Noticed Hedges were reserved for by Agent under the U.S. Borrowing
Base immediately prior to the time of such allocation) of any U.S. Domiciled
Obligor, including Cash Collateralization of Noticed Hedges (solely to the
extent such Noticed Hedges were reserved for by Agent under the U.S. Borrowing
Base immediately prior to the time of such allocation) of any U.S. Domiciled
Obligor;

(ix)    ninth, to all other U.S. Facility Obligations (exclusive of any such
amounts owing by the Canadian Domiciled Obligors or U.K. Domiciled Obligors
which are guaranteed by the U.S. Domiciled Obligors);

(x)    tenth, ratably: (i) to be applied in accordance with clause (b) below, to
the extent there are insufficient funds for the Full Payment of all Obligations
owing by any Canadian Domiciled Obligor, and (ii) to be applied in accordance
with clause (c) below, to the extent there are insufficient funds for the Full
Payment of all Obligations owing by any U.K. Domiciled Obligor;

(xi)    eleventh, to all interest owing by any U.S. Domiciled Obligor on account
of the Term Loans; and

(xii)    twelfth, to all Term Loans.

(b)    with respect to monies, payments, Property or Collateral of or from any
Canadian Domiciled Obligor, together with any allocations pursuant to subclause
(x) of clause (a) above and subclause (x) of clause (c) below:

(i)    first, to all costs and expenses, including Extraordinary Expenses, owing
to Agent, to the extent owing by any Canadian Domiciled Obligor;

(ii)    second, to all Extraordinary Expenses owing to any Canadian Lender;

(iii)    third, to all amounts owing to Agent (acting through its Canada branch)
on Canadian Swingline Loans;

(iv)    fourth, to all amounts owing to the Canadian Issuing Bank on account of
Canadian LC Obligations;

(v)    fifth, to all Canadian Facility Obligations constituting fees (other than
Secured Bank Product Obligations) owing by any Canadian Domiciled Obligor
(exclusive of any such amounts owing by the U.K. Domiciled Obligors which are
guaranteed by the Canadian Domiciled Obligors);

 

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(vi)    sixth, to all Canadian Facility Obligations constituting interest (other
than Secured Bank Product Obligations) owing by any Canadian Domiciled Obligor
(exclusive of any such amounts owing by the U.K. Domiciled Obligors which are
guaranteed by the Canadian Domiciled Obligors);

(vii)    seventh, to Cash Collateralize the Canadian LC Obligations;

(viii)    eighth, to all Canadian Revolver Loans and Noticed Hedges of any
Canadian Domiciled Obligor (solely to the extent such Noticed Hedges were
reserved for by Agent under the Canadian Borrowing Base immediately prior to the
time of such allocation), including Cash Collateralization of Noticed Hedges
(solely to the extent such Noticed Hedges were reserved for by Agent under the
Canadian Borrowing Base immediately prior to the time of such allocation) of any
Canadian Domiciled Obligor;

(ix)    ninth, to all other Canadian Facility Obligations (exclusive of any such
amounts owing by the U.K. Domiciled Obligors which are guaranteed by the
Canadian Domiciled Obligors); and

(x)    tenth, to be applied in accordance with clause (c) below, to the extent
there are insufficient funds for the Full Payment of all Obligations owing by
any U.K. Domiciled Obligor.

(c)    with respect to monies, payments, Property or Collateral of or from any
U.K. Domiciled Obligor, together with any allocations pursuant to subclause
(x) of clause (a) above and subclause (x) of clause (b) above:

(i)    first, to all costs and expenses, including Extraordinary Expenses, owing
to Agent, to the extent owing by any U.K. Domiciled Obligor;

(ii)    second, to all Extraordinary Expenses owing to any U.K. Lender;

(iii)    third, to all amounts owing to Agent on U.K. Swingline Loans;

(iv)    fourth, to all amounts owing to the U.K. Issuing Bank on account of U.K.
LC Obligations;

(v)    fifth, to all U.K. Facility Obligations constituting fees (other than
Secured Bank Product Obligations) owing by any U.K. Domiciled Obligor (exclusive
of any such amounts owing by the Canadian Domiciled Obligors which are
guaranteed by the U.K. Domiciled Obligors);

(vi)    sixth, to all U.K. Facility Obligations constituting interest (other
than Secured Bank Product Obligations) owing by any U.K. Domiciled Obligor
(exclusive of any such amounts owing by the Canadian Domiciled Obligors which
are guaranteed by the U.K. Domiciled Obligors);

(vii)    seventh, to Cash Collateralize the U.K. LC Obligations;

 

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(viii)    eighth, to all U.K. Revolver Loans and Noticed Hedges of any U.K.
Domiciled Obligor (solely to the extent such Noticed Hedges were reserved for by
Agent under the U.K. Borrowing Base immediately prior to the time of such
allocation), including Cash Collateralization of Noticed Hedges (solely to the
extent such Noticed Hedges were reserved for by Agent under the U.K. Borrowing
Base immediately prior to the time of such allocation) of any U.K. Domiciled
Obligor;

(ix)    ninth, to all other U.K. Facility Obligations (exclusive of any such
amounts owing by the Canadian Domiciled Obligors which are guaranteed by the
U.K. Domiciled Obligors); and

(x)    tenth, to be applied in accordance with clause (b) above, to the extent
there are insufficient funds for the Full Payment of all Obligations owing by
any Canadian Domiciled Obligor.

Amounts shall be applied to each category of Obligations set forth above until
Full Payment thereof and then to the next category. If amounts are insufficient
to satisfy a category, they shall be applied on a pro rata basis among the
Obligations in the category. Amounts distributed with respect to any Secured
Bank Product Obligations shall be the lesser of the maximum Secured Bank Product
Obligations last reported to Agent or the actual Secured Bank Product
Obligations as calculated by the methodology reported to Agent for determining
the amount due. Monies and proceeds obtained from an Obligor shall not be
applied to its Excluded Swap Obligations, but appropriate adjustments shall be
made with respect to amounts obtained from other Obligors to preserve the
allocations in any applicable category. Agent shall have no obligation to
calculate the amount to be distributed with respect to any Secured Bank Product
Obligations, and may request a reasonably detailed calculation of such amount
from the applicable Secured Party. If a Secured Party fails to deliver such
calculation within five days following request by Agent, Agent may assume the
amount to be distributed is the last reported amount. The allocations set forth
in this Section are solely to determine the rights and priorities of Agent and
Secured Parties as among themselves, and may be changed by agreement among them
without the consent of any Obligor. This Section is not for the benefit of or
enforceable by any Borrower.

5.6.2.    Erroneous Application. Agent shall not be liable for any application
of amounts made by it in good faith and, if any such application is subsequently
determined to have been made in error, the sole recourse of any Lender or other
Person to which such amount should have been made shall be to recover the amount
from the Person that actually received it (and, if such amount was received by
any Lender, such Lender hereby agrees to return it).

5.7    Application of Payments.

5.7.1.    Dominion Account(s) of U.S. Borrowers. The ledger balance in the main
Dominion Account of the U.S. Borrowers as of the end of a Business Day shall be
applied to the Obligations of the U.S. Borrowers at the beginning of the next
Business Day, during any Dominion Trigger Period. If, at the end of a Business
Day, after giving effect to such application, if any, a credit balance exists,
the balance shall not accrue interest in favor of the U.S. Borrowers and shall
be made available to the U.S. Borrowers as long as the Obligations have not been
accelerated on account of an Event of Default. During any Dominion Trigger
Period, each U.S. Borrower and

 

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other Obligor irrevocably waive the right to direct the application of any
payments or Collateral proceeds, and agree that Agent shall have the continuing,
exclusive right to apply and reapply same against the Obligations, in such
manner as Agent deems advisable.

5.7.2.    Dominion Account(s) of Canadian Borrower. The ledger balance in the
main Dominion Account of the Canadian Borrower as of the end of a Business Day
shall be applied to the Obligations of the Canadian Borrower at the beginning of
the next Business Day, during any Dominion Trigger Period. If, at the end of a
Business Day, after giving effect to such application, if any, a credit balance
exists, the balance shall not accrue interest in favor of the Canadian Borrower
and shall be made available to the Canadian Borrower as long as the Obligations
have not been accelerated on account of an Event of Default. During any Dominion
Trigger Period, the Canadian Borrower and each other Obligor irrevocably waive
the right to direct the application of any payments or Collateral proceeds, and
agree that Agent shall have the continuing, exclusive right to apply and reapply
same against the Obligations, in such manner as Agent deems advisable.

5.7.3.    Dominion Account(s) of U.K. Borrower. The ledger balance in the main
Dominion Account of the U.K. Borrower as of the end of a Business Day occurring
on and after the Closing Date shall be applied to the Obligations of the U.K.
Borrower at the beginning of the next Business Day. If, at the end of a Business
Day occurring after the Closing Date, after giving effect to such application,
if any, a credit balance exists, the balance shall not accrue interest in favor
of the U.K. Borrower and shall be made available to the U.K. Borrower as long as
the Obligations have not been accelerated on account of an Event of Default and
in any event subject to the terms of the U.K. Security Agreements. The U.K.
Borrower and each other Obligor irrevocably waive the right to direct the
application of any payments or Collateral proceeds, and agree that Agent shall
have the continuing, exclusive right to apply and reapply same against the
Obligations, in such manner as Agent deems advisable.

5.8    Loan Account; Account Stated.

5.8.1.    Loan Account. Agent shall maintain, in accordance with its usual and
customary practices, an account or accounts (“Loan Account”) evidencing the Debt
of each of the Borrower(s) within each Borrower Group resulting from each Loan
made to such Borrower Group or issuance of a Letter of Credit for the account of
such Borrower(s) from time to time. Any failure of Agent to record anything in
any Loan Account, or any error in doing so, shall not limit or otherwise affect
the obligations of the applicable Borrower(s) to pay any amount owing hereunder.
Agent may maintain a single Loan Account in the name of the Borrower Agent, and
each Borrower and other Obligor confirms that such arrangement shall have no
effect on the joint and several character of its liability for the Obligations
as and to the extent provided herein or in the other Loan Documents.

5.8.2.    Entries Binding. Entries made in any Loan Account shall constitute
presumptive evidence of the information contained therein. If any information
contained in the Loan Account is provided to or inspected by any Person, then
such information shall be conclusive and binding on such Person for all purposes
absent manifest error, except to the extent such Person notifies Agent in
writing within 30 days after receipt or inspection that specific information is
subject to dispute.

 

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5.9    Taxes.

5.9.1.    Payments Free of Taxes. All payments by or on behalf of any Obligor
hereunder shall be free and clear of and without withholding or deduction for
any Taxes. If Applicable Law requires any Obligor or Agent to withhold or deduct
any Tax (including backup withholding or withholding Tax), the withholding or
deduction shall be based on information provided pursuant to Section 5.10 and
Agent shall pay the amount withheld or deducted to the relevant Governmental
Authority. If the withholding or deduction is made on account of Indemnified
Taxes or Other Taxes, the sum payable by the applicable Borrowers or other
Obligors shall be increased so that Agent, each Lender and each Issuing Bank, as
applicable, receives an amount equal to the sum it would have received if no
such withholding or deduction (including withholdings or deductions applicable
to additional sums payable under this Section) had been made. In addition,
Borrowers and the other Obligors shall timely pay all Other Taxes to the
relevant Governmental Authorities.

5.9.2.    Payments Free of Tax by the U.K. Borrower. A payment by the U.K.
Borrower under this Agreement shall not be increased under Section 5.9.1 above
by reason of a withholding or deduction on account of Tax imposed by the United
Kingdom (“Tax Deduction”), if on the date on which the payment falls due:

(a)    the payment could have been made to the relevant Lender without a Tax
Deduction if the Lender had been a U.K. Qualified Lender, but on that date that
Lender is not or has ceased to be a U.K. Qualified Lender other than as a result
of any change after the date it became a Lender under this Agreement in (or in
the interpretation, administration, or application of) any law or Treaty or any
published practice or published concession of any relevant taxing authority; or

(b)    the relevant Lender is a U.K. Qualified Lender solely by virtue of
paragraph (i)(B) of the definition of U.K. Qualified Lender; and:

(i)    an officer of H.M. Revenue & Customs has given (and not revoked) a
direction (a “Direction”) under section 931 of ITA which relates to the payment
and that Lender has received from the U.K. Borrower making the payment a
certified copy of that Direction; and

(ii)    the payment could have been made to the Lender without any Tax Deduction
if that Direction had not been made; or

(c)    the Lender is a U.K. Qualified Lender solely by virtue of paragraph
(i)(B) of the definition of U.K. Qualified Lender and:

(i)    the Lender has not given a U.K. Tax Confirmation to the U.K. Borrower;
and

(ii)    the payment could have been made to the Lender without any Tax Deduction
if the Lender had given a U.K. Tax Confirmation to the U.K. Borrower, on the
basis that the U.K. Tax Confirmation would have enabled the U.K. Borrower to
have

 

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formed a reasonable belief that the payment was an “excepted payment” for the
purposes of Section 930 of ITA; or

(d)    the relevant Lender is a Treaty Lender and the U.K. Borrower making the
payment is able to demonstrate that the payment could have been made to the
Lender without the Tax Deduction had that Lender complied with its obligations
under Section 5.9.5 below.

5.9.3.    Timing and Amount. If the U.K. Borrower is required to make a Tax
Deduction, the U.K. Borrower shall make that Tax Deduction and any payment
required in connection with that Tax Deduction within the time allowed and in
the minimum amount required by law.

5.9.4.    Evidence of Payment. Within 30 days of making either a Tax Deduction
or any payment required in connection with that Tax Deduction, the U.K. Borrower
shall deliver to the Agent for the Lender or the Agent entitled to the payment a
statement under Section 975 of ITA or other evidence reasonably satisfactory to
that Lender or the Agent that the Tax Deduction has been made or (as applicable)
any appropriate payment paid to the relevant taxing authority.

5.9.5.    Co-operation between a Treaty Lender and the U.K. Borrower. A Treaty
Lender and the U.K. Borrower making a payment to which that Treaty Lender is
entitled shall co-operate in completing any procedural formalities necessary for
U.K. Borrower to obtain authorization to make that payment without a Tax
Deduction.

5.9.6.    Exceptions. Nothing in Section 5.9.5 above shall require a Treaty
Lender to: (a) register under the HMRC DT Treaty Passport scheme; (b) apply the
HMRC DT Treaty Passport scheme to any Loan if it has so registered; or (c) file
Treaty forms if it has included an indication to the effect that it wishes the
HMRC DT Treaty Passport scheme to apply to this Agreement in accordance with
Section 5.9.9 below or Section 5.9.16 below and the Obligor making that payment
has complied with its obligations under Section 5.9.10 below or Section 5.9.17
below.

5.9.7.    Existing Lenders. A U.K. Non-Bank Lender which becomes a Lender on the
day on which this Agreement is entered into gives a U.K. Tax Confirmation to the
U.K. Borrower by entering into this Agreement.

5.9.8.    Notice. A U.K. Non-Bank Lender shall promptly notify the U.K. Borrower
and the Agent if there is any change in the position from that set out in the
U.K. Tax Confirmation.

5.9.9.    HMRC DT Treaty Passport schemes. A Treaty Lender which becomes a party
to this Agreement on the day on which this Agreement is entered into that holds
a passport under the HMRC DT Treaty Passport scheme, and which then wishes that
scheme to apply to this Agreement, shall include an indication to that effect
(for the benefit of the Agent and without liability to any Obligor) by including
its scheme reference number and its jurisdiction of tax residence opposite its
name in Schedule 5.9.9.

5.9.10.    Form DTTP2. Where a Lender includes the indication described in
Section 5.9.9 above in Schedule 5.9.9, the U.K. Borrower shall, to the extent
that such Lender is

 

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a Lender under the facilities made available to the U.K. Borrower pursuant to
Section 2.1 or Section 2.2, file a duly completed form DTTP2 in respect of such
Lender with HM Revenue & Customs within 30 days of the date of this Agreement
and shall promptly provide such Lender with a copy of that filing.

5.9.11.    No Filings. If a Lender has not included an indication to the effect
that it wishes the HMRC DT Treaty Passport scheme to apply to this Agreement in
accordance with Section 5.9.9 above or Section 5.9.16 below, no Obligor shall
file a form DTTP2 or any other form relating to the HMRC DT Treaty Passport
scheme in respect of that Lender’s commitment(s) or its participation in any
facility made available under this Agreement.

5.9.12.    Payment. Obligors shall indemnify, hold harmless and reimburse
(within 10 days after demand therefor) Agent, Lenders and Issuing Banks for any
Indemnified Taxes or Other Taxes (including those attributable to amounts
payable under this Section) paid by Agent, any Lender or any Issuing Bank, with
respect to any Obligations of such Borrower’s Borrower Group, Letters of Credit
of such Borrower’s Borrower Group or Loan Documents, whether or not such Taxes
were properly asserted by the relevant Governmental Authority, and including all
penalties, interest and reasonable expenses relating thereto, as well as any
amount that a Lender or an Issuing Bank fails to pay indefeasibly to Agent under
Section 5.10. A certificate as to the amount of any such payment or liability
delivered to Borrower Agent by Agent, or by a Lender or an Issuing Bank (with a
copy to Agent), shall be conclusive, absent manifest error. As soon as
practicable after any payment of Taxes by any Obligor, Borrower Agent shall
deliver to Agent a receipt from the Governmental Authority or other evidence of
payment satisfactory to Agent.

5.9.13.    Payment by the U.K. Borrower. Section 5.9.12 shall not apply:

(a)    with respect to any Tax assessed on a Lender or the Agent:

(i)    under the law of the jurisdiction in which that Lender or the Agent is
incorporated or, if different, the jurisdiction (or jurisdictions) in which that
Lender or the Agent is treated as resident for tax purposes; or

(ii)    under the law of the jurisdiction in which that Lender’s or the Agent’s
lending office is located in respect of amounts received or receivable in that
jurisdiction,

if that Tax is imposed on or calculated by reference to the net income received
or receivable (but not any sum deemed to be received or receivable) by that
Lender or the Agent; or

(b)    to the extent a loss, liability or cost:

(i)    is compensated for by an increased payment under Section 5.9.1; or

(ii)    would have been compensated for by an increased payment under
Section 5.9.1 but was not so compensated solely because one of the exclusions in
Section 5.9.2 applied.

 

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5.9.14.    Tax Credit. If the U.K. Borrower makes a payment under Section 5.9.1
or Section 5.9.12 (a “U.K. Tax Payment”) and either a Lender or the Agent
determines that:

(a)    a Tax Credit is attributable either to an increased payment of which that
U.K. Tax Payment forms part, or to that U.K. Tax Payment; and

(b)    that Lender or the Agent has obtained, utilized and retained that Tax
Credit,

that Lender or the Agent shall pay an amount to the U.K. Borrower which that
Lender or the Agent determines will leave it (after that payment) in the same
after-Tax position as it would have been in had the U.K. Tax Payment not been
required to be made by the U.K. Borrower.

5.9.15.    New Lenders. Each Lender which becomes a party to this Agreement in
the capacity of a U.K. Lender after the date of this Agreement (“New Lender”)
shall indicate, at the time it becomes a New Lender, on and for the benefit of
the Agent and without liability to the U.K. Borrower, which of the following
categories it falls in:

(a)    not a U.K. Qualified Lender;

(b)    a U.K. Qualified Lender (other than a Treaty Lender); or

(c)    a Treaty Lender.

If a New Lender fails to indicate its status in accordance with this
Section 5.9.15 then such New Lender shall be treated for the purposes of this
Agreement (including by each Obligor) as if it is not a U.K. Qualified Lender
until such time as it notifies the Agent which category applies (and the Agent,
upon receipt of such notification, shall inform the U.K. Borrower). For the
avoidance of doubt, an assignment in accordance with Section 13.3 shall not be
invalidated by any failure of a New Lender to comply with this Section 5.9.15.

5.9.16.    HMRC DT Treaty Passport schemes – New Lenders. A New Lender that is a
Treaty Lender that holds a passport under the HMRC DT Treaty Passport scheme,
and which then wishes that scheme to apply to this Agreement, shall include an
indication to that effect (for the benefit of the Agent and without liability to
any Obligor) in the assignment notice which it executes pursuant to, or in
connection with, Section 13.3 below by including its scheme reference number and
its jurisdiction of tax residence in that assignment notice.

5.9.17.    Form DTTP2 – New Lenders. Where a New Lender includes the indication
described in Section 5.9.16 above in the relevant assignment notice the U.K.
Borrower shall, to the extent that that New Lender becomes a Lender under a
facility which is made available to the U.K. Borrower pursuant to pursuant to
Section 2.1 or Section 2.2, file a duly completed form DTTP2 in respect of such
Lender with HM Revenue & Customs within 30 days of the date of that assignment
and shall promptly provide the Lender with a copy of that filing.

5.9.18.    FATCA Grandfathering. For purposes of determining withholding Taxes
imposed under FATCA, from and after the effective date of this Agreement, the
Borrowers and the Agent shall treat (and the Lenders hereby authorize the Agent
to treat) this Agreement as not

 

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qualifying as a “grandfathered obligation” within the meaning of Treasury
Regulation Section 1.1471-2(b)(2)(i).

5.10    Lender Tax Information.

5.10.1.    Status of Lenders. Each Lender shall deliver documentation and
information to Agent and Borrower Agent, at the times and in form required by
Applicable Law or reasonably requested by Agent or Borrower Agent, sufficient to
permit Agent or Borrowers to determine (a) whether or not payments made with
respect to Obligations are subject to Taxes, (b) if applicable, the required
rate of withholding or deduction, and (c) such Lender’s entitlement to any
available exemption from, or reduction of, applicable Taxes for such payments or
otherwise to establish such Lender’s status for withholding tax purposes in the
applicable jurisdiction.

5.10.2.    Documentation. If a Borrower is resident for tax purposes in the
United States, any Lender that is a “United States person” within the meaning of
section 7701(a)(30) of the Code shall deliver to Agent and Borrower Agent IRS
Form W-9 or such other documentation or information prescribed by Applicable Law
or reasonably requested by Agent or Borrower Agent to determine whether such
Lender is subject to backup withholding or information reporting requirements.
If any Foreign Lender is entitled to any exemption from or reduction of
withholding tax for payments with respect to the U.S. Facility Obligations, it
shall deliver to Agent and Borrower Agent, on or prior to the date on which it
becomes a Lender hereunder (and from time to time thereafter upon request by
Agent or Borrower Agent, but only if such Foreign Lender is legally entitled to
do so), (a) IRS Form W-8BEN-E claiming eligibility for benefits of an income tax
treaty to which the United States is a party; (b) IRS Form W-8ECI; (c) IRS Form
W-8IMY and all required supporting documentation; (d) in the case of a Foreign
Lender claiming the benefits of the exemption for portfolio interest under
section 881(c) of the Code, IRS Form W-8BEN-E and a certificate showing such
Foreign Lender is not (i) a “bank” within the meaning of section 881(c)(3)(A) of
the Code, (ii) a “10 percent shareholder” of any Obligor within the meaning of
section 881(c)(3)(B) of the Code, or (iii) a “controlled foreign corporation”
described in section 881(c)(3)(C) of the Code; or (e) any other form prescribed
by Applicable Law as a basis for claiming exemption from or a reduction in
withholding tax, together with such supplementary documentation necessary to
allow Agent and Borrowers to determine the withholding or deduction required to
be made.

5.10.3.    Lender Obligations. Each Lender and each Issuing Bank shall promptly
notify Borrower Agent and Agent of any change in circumstances that would change
any claimed Tax exemption or reduction. Each Lender and each Issuing Bank, in
each case severally and not jointly with the other Lenders and/or applicable
Issuing Bank, shall indemnify, hold harmless and reimburse (within 10 days after
demand therefor) the affected Borrower to which such Lender or such Issuing Bank
(as applicable) has issued a Commitment and Agent for any Taxes, losses, claims,
liabilities, penalties, interest and expenses (including reasonable attorneys’
fees) incurred by or asserted against such affected Borrower or Agent by any
Governmental Authority due to such Lender’s or such Issuing Bank’s failure to
deliver, or inaccuracy or deficiency in, any documentation required to be
delivered by it pursuant to this Section. Each Lender and each Issuing Bank
authorizes Agent to set off any amounts due to Agent under this Section against
any amounts payable to such Lender or such Issuing Bank under any Loan Document.

 

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5.11    Guarantee by Obligors.

5.11.1.    Guarantee by U.S. Domiciled Obligors.

(a)    Joint and Several Liability. Each U.S. Domiciled Obligor agrees that it
is jointly and severally liable for, and absolutely and unconditionally
guarantees to the Secured Parties the prompt payment and performance of, all
Obligations and all agreements of each other Obligor under the Loan Documents,
except its Excluded Swap Obligations, and that it is a U.S. Facility Guarantor,
a Canadian Facility Guarantor, and a U.K. Facility Guarantor hereunder. Each
U.S. Domiciled Obligor agrees that its guaranty or guarantee of obligations as a
U.S. Facility Guarantor, a Canadian Facility Guarantor, and a U.K. Facility
Guarantor hereunder, as applicable, constitute a continuing guaranty or
guarantee of payment and not of collection, that such obligations shall not be
discharged until Full Payment of all Obligations, and that such obligations are
absolute and unconditional, irrespective of (a) the genuineness, validity,
regularity, enforceability, subordination or any future modification of, or
change in, any Obligations or Loan Document, or any other document, instrument
or agreement to which any Obligor is or may become a party or be bound; (b) the
absence of any action to enforce this Agreement (including this Section) or any
other Loan Document, or any waiver, consent or indulgence of any kind by any
Secured Party with respect thereto; (c) the existence, value or condition of, or
failure to perfect a Lien or to preserve rights against, any security or
guaranty or guarantee for the Obligations or any action, or the absence of any
action, by any Secured Party in respect thereof (including the release of any
security or guaranty or guarantee); (d) the insolvency of any Obligor; (e) any
election by Agent or any Lender in an Insolvency Proceeding for the application
of Section 1111(b)(2) of the U.S. Bankruptcy Code or similar provision of other
Applicable Law; (f) any borrowing or grant of a Lien by any other Obligor, as
debtor-in-possession under Section 364 of the U.S. Bankruptcy Code, under other
Applicable Law or otherwise; (g) the disallowance of any claims of any Secured
Party against any Obligor for the repayment of any Obligations under Section 502
of the U.S. Bankruptcy Code, under other Applicable Law or otherwise; (h) any
other insolvency, debtor relief or debt adjustment law (whether state,
provincial, federal or foreign, including the Bankruptcy and Insolvency Act
(Canada), the Companies’ Creditors Arrangement Act (Canada), and the Insolvency
Act 1986 of the United Kingdom and the Enterprise Act 2002 of the United
Kingdom); (i) any change in the ownership, control, name, objects, businesses,
assets, capital structure or constitution of any Obligor or any other person;
(j) any merger, amalgamation or consolidation of any Obligor with any person or
persons; (k) the occurrence of any change in the laws, rules, regulations or
ordinances of any jurisdiction or by any present or future action of any
governmental body or court amending, varying, reducing or otherwise affecting,
or purporting to amend, vary, reduce or otherwise affect, any of the Obligations
under the Loan Documents; (l) the existence of any claim, set-off, compensation
or other rights which any Obligor may have at any time against any other Obligor
or any other person, or which any Obligor may have at any time against the
Secured Parties, whether in connection with the Loan Documents or otherwise; or
(m) any other action or circumstances that might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor, except Full Payment of
all Obligations.

(b)    Waivers.

(i)    Each U.S. Domiciled Obligor expressly waives all rights that it may have
now or in the future under any statute, at common law, in equity or otherwise,
to

 

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compel Agent or Lenders to marshal assets or to proceed against any Obligor,
other Person or security for the payment or performance of any Obligations
before, or as a condition to, proceeding against such Obligor. Each U.S.
Domiciled Obligor waives all defenses available to a surety, guarantor or
accommodation co-obligor other than Full Payment of all Obligations. It is
agreed among each U.S. Domiciled Obligor, Agent and Lenders that the provisions
of this Section 5.11 are of the essence of the transaction contemplated by the
Loan Documents and that, but for such provisions, Agent and Lenders would
decline to make Loans and issue Letters of Credit. Each U.S. Domiciled Obligor
acknowledges that its guaranty pursuant to this Section is necessary to the
conduct and promotion of its business, and can be expected to benefit such
business.

(ii)    Agent and Lenders may, in their discretion, pursue such rights and
remedies as they deem appropriate, including realization upon Collateral
(including any Real Estate owned by any Obligor) by judicial foreclosure or
non-judicial sale or enforcement, without affecting any rights and remedies
under this Section 5.11. If, in taking any action in connection with the
exercise of any rights or remedies, Agent or any Lender shall forfeit any other
rights or remedies, including the right to enter a deficiency judgment against
any U.S. Domiciled Obligor or other Person, whether because of any Applicable
Laws pertaining to “election of remedies” or otherwise, each U.S. Domiciled
Obligor consents to such action and waives any claim based upon it, even if the
action may result in loss of any rights of subrogation that any U.S. Domiciled
Obligor might otherwise have had. Any election of remedies that results in
denial or impairment of the right of Agent or any Lender to seek a deficiency
judgment against any U.S. Domiciled Obligor shall not impair any other U.S.
Domiciled Obligor’s obligation to pay the full amount of the Obligations. Each
U.S. Domiciled Obligor waives all rights and defenses arising out of an election
of remedies, such as nonjudicial foreclosure with respect to any security for
the Obligations, even though that election of remedies destroys such U.S.
Domiciled Obligor’s rights of subrogation against any other Person. Agent may
bid all or a portion of the Obligations at any foreclosure or trustee’s sale or
at any private sale, and the amount of such bid need not be paid by Agent but
shall be credited against the Obligations. The amount of the successful bid at
any such sale, whether Agent or any other Person is the successful bidder, shall
be conclusively deemed to be the fair market value of the Collateral, and the
difference between such bid amount and the remaining balance of the Obligations
shall be conclusively deemed to be the amount of the Obligations guaranteed
under this Section 5.11, notwithstanding that any present or future law or court
decision may have the effect of reducing the amount of any deficiency claim to
which Agent or any Lender might otherwise be entitled but for such bidding at
any such sale.

(c)    Extent of Liability; Contribution.

(i)    Notwithstanding anything herein to the contrary, each U.S. Domiciled
Obligor’s liability under this Section 5.11 shall be limited to the greater of
(i) all amounts for which such U.S. Domiciled Obligor is primarily liable, as
described below, and (ii) such U.S. Domiciled Obligor’s Allocable Amount.

(ii)    If any U.S. Domiciled Obligor makes a payment under this Section 5.11 of
any Obligations (other than amounts for which such U.S. Domiciled Obligor is

 

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primarily liable) (a “Guarantor Payment”) that, taking into account all other
Guarantor Payments previously or concurrently made by any other U.S. Domiciled
Obligor, exceeds the amount that such U.S. Domiciled Obligor would otherwise
have paid if each U.S. Domiciled Obligor had paid the aggregate Obligations
satisfied by such Guarantor Payments in the same proportion that such U.S.
Domiciled Obligor’s Allocable Amount bore to the total Allocable Amounts of all
U.S. Domiciled Obligors, then such U.S. Domiciled Obligor shall be entitled to
receive contribution and indemnification payments from, and to be reimbursed by,
each other U.S. Domiciled Obligor for the amount of such excess, pro rata based
upon their respective Allocable Amounts in effect immediately prior to such
Guarantor Payment. The “Allocable Amount” for any U.S. Domiciled Obligor shall
be the maximum amount that could then be recovered from such U.S. Domiciled
Obligor under this Section 5.11 without rendering such payment voidable under
Section 548 of the U.S. Bankruptcy Code or under any similar applicable
fraudulent transfer or conveyance Applicable Law, or the Applicable Law in
Canada or any province or territory thereof, or in England.

(iii)    Each U.S. Domiciled Obligor that is a Qualified ECP when its guaranty
of or grant of Lien as security for a Swap Obligation becomes effective hereby
jointly and severally, absolutely, unconditionally and irrevocably undertakes to
provide funds or other support to each other U.S. Domiciled Obligor that is a
Specified Obligor with respect to such Swap Obligation as may be needed by such
Specified Obligor from time to time to honor all of its obligations under the
Loan Documents in respect of such Swap Obligation (but, in each case, only up to
the maximum amount of such liability that can be hereby incurred without
rendering such Qualified ECP’s obligations and undertakings under this
Section 5.11 voidable under any applicable fraudulent transfer or conveyance
act). The obligations and undertakings of each Qualified ECP under this Section
shall remain in full force and effect until Full Payment of all Obligations.
Each U.S. Domiciled Obligor intends this Section to constitute, and this Section
shall be deemed to constitute, a guarantee of the obligations of, and a
“keepwell, support or other agreement” for the benefit of, each Obligor for all
purposes of the Commodity Exchange Act.

5.11.2.    Guarantee by Canadian Domiciled Obligors and U.K. Domiciled Obligors.

(a)    Joint and Several Liability. Each Canadian Domiciled Obligor and U.K.
Domiciled Obligor agrees that it is jointly and severally liable for, and
absolutely and unconditionally guarantees to the Secured Parties the prompt
payment and performance of, all Canadian Facility Obligations, U.K. Facility
Obligations, and all agreements of each other Canadian Domiciled Obligor and
U.K. Domiciled Obligor under the Loan Documents, except its Excluded Swap
Obligations, and that it is a Canadian Facility Guarantor and a U.K. Facility
Guarantor hereunder. Each Canadian Domiciled Obligor and U.K. Domiciled Obligor
agrees that its guaranty or guarantee of obligations as a Canadian Facility
Guarantor and a U.K. Facility Guarantor hereunder, as applicable, constitute a
continuing guaranty or guarantee of payment and not of collection, that such
obligations shall not be discharged until Full Payment of all Obligations, and
that such obligations are absolute and unconditional, irrespective of (a) the
genuineness, validity, regularity, enforceability, subordination or any future
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change in, any Obligations or Loan Document, or any other document, instrument
or agreement to which any Obligor is or may become a party or be bound; (b) the
absence of any action to enforce this Agreement (including this Section) or any
other Loan Document, or any waiver, consent or indulgence of any kind by any
Secured Party with respect thereto; (c) the existence, value or condition of, or
failure to perfect a Lien or to preserve rights against, any security or
guaranty or guarantee for the Obligations or any action, or the absence of any
action, by any Secured Party in respect thereof (including the release of any
security or guaranty or guarantee); (d) the insolvency of any Obligor; (e) any
election by Agent or any Lender in an Insolvency Proceeding for the application
of Section 1111(b)(2) of the U.S. Bankruptcy Code or similar provision of other
Applicable Law; (f) any borrowing or grant of a Lien by any other Obligor, as
debtor-in-possession under Section 364 of the U.S. Bankruptcy Code, under other
Applicable Law or otherwise; (g) the disallowance of any claims of any Secured
Party against any Obligor for the repayment of any Obligations under Section 502
of the U.S. Bankruptcy Code, under other Applicable Law or otherwise; (h) any
other insolvency, debtor relief or debt adjustment law (whether state,
provincial, federal or foreign, including the Bankruptcy and Insolvency Act
(Canada), the Companies’ Creditors Arrangement Act (Canada), and the Insolvency
Act 1986 of England and the Enterprise Act 2002 of England); (i) any change in
the ownership, control, name, objects, businesses, assets, capital structure or
constitution of any Obligor or any other person; (j) any merger, amalgamation or
consolidation of any Obligor with any person or persons; (k) the occurrence of
any change in the laws, rules, regulations or ordinances of any jurisdiction or
by any present or future action of any governmental body or court amending,
varying, reducing or otherwise affecting, or purporting to amend, vary, reduce
or otherwise affect, any of the Obligations under the Loan Documents; (l) the
existence of any claim, set-off, compensation or other rights which any Obligor
may have at any time against any other Obligor or any other person, or which any
Obligor may have at any time against the Secured Parties, whether in connection
with the Loan Documents or otherwise; or (m) any other action or circumstances
that might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor, except Full Payment of all Obligations.

(b)    Waivers.

(i)    Each Canadian Domiciled Obligor and U.K. Domiciled Obligor expressly
waives all rights that it may have now or in the future under any statute, at
common law, in equity or otherwise, to compel Agent or Lenders to marshal assets
or to proceed against any Obligor, other Person or security for the payment or
performance of any Obligations before, or as a condition to, proceeding against
such Obligor. Each Canadian Domiciled Obligor and U.K. Domiciled Obligor waives
all defenses available to a surety, guarantor or accommodation co-obligor other
than Full Payment of all Obligations. It is agreed among each Canadian Domiciled
Obligor and U.K. Domiciled Obligor, Agent and Lenders that the provisions of
this Section 5.11 are of the essence of the transaction contemplated by the Loan
Documents and that, but for such provisions, Agent and Lenders would decline to
make Loans and issue Letters of Credit. Each Canadian Domiciled Obligor and U.K.
Domiciled Obligor acknowledges that its guaranty pursuant to this Section is
necessary to the conduct and promotion of its business, and can be expected to
benefit such business.

(ii)    Agent and Lenders may, in their discretion, pursue such rights and
remedies as they deem appropriate, including realization upon Collateral
(including any

 

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Real Estate owned by any Obligor) by judicial foreclosure or non-judicial sale
or enforcement, without affecting any rights and remedies under this
Section 5.11. If, in taking any action in connection with the exercise of any
rights or remedies, Agent or any Lender shall forfeit any other rights or
remedies, including the right to enter a deficiency judgment against any
Canadian Domiciled Obligor or U.K. Domiciled Obligor or other Person, whether
because of any Applicable Laws pertaining to “election of remedies” or
otherwise, each Canadian Domiciled Obligor and U.K. Domiciled Obligor consents
to such action and waives any claim based upon it, even if the action may result
in loss of any rights of subrogation that any Canadian Domiciled Obligor or U.K.
Domiciled Obligor might otherwise have had. Any election of remedies that
results in denial or impairment of the right of Agent or any Lender to seek a
deficiency judgment against any Canadian Domiciled Obligor or U.K. Domiciled
Obligor shall not impair any other Canadian Domiciled Obligor’s or U.K.
Domiciled Obligor’s obligation to pay the full amount of the Obligations it is
jointly and severally liable for and has guaranteed under the Loan Documents.
Each Canadian Domiciled Obligor and U.K. Domiciled Obligor waives all rights and
defenses arising out of an election of remedies, such as nonjudicial foreclosure
with respect to any security for the Obligations, even though that election of
remedies destroys such Canadian Domiciled Obligor’s or U.K. Domiciled Obligor’s
rights of subrogation against any other Person. Agent may bid all or a portion
of the Obligations at any foreclosure or trustee’s sale or at any private sale,
and the amount of such bid need not be paid by Agent but shall be credited
against the Obligations. The amount of the successful bid at any such sale,
whether Agent or any other Person is the successful bidder, shall be
conclusively deemed to be the fair market value of the Collateral, and the
difference between such bid amount and the remaining balance of the Obligations
shall be conclusively deemed to be the amount of the Obligations guaranteed
under this Section 5.11, notwithstanding that any present or future law or court
decision may have the effect of reducing the amount of any deficiency claim to
which Agent or any Lender might otherwise be entitled but for such bidding at
any such sale.

(c)    Extent of Liability; Contribution.

(i)    Notwithstanding anything herein to the contrary, each Canadian Domiciled
Obligor’s and U.K. Domiciled Obligor’s liability under this Section 5.11 shall
be limited to the greater of (i) all amounts for which such Canadian Domiciled
Obligor or U.K. Domiciled Obligor is primarily liable, as described below, and
(ii) such Canadian Domiciled Obligor’ and U.K. Domiciled Obligor’s U.K./Canadian
Allocable Amount.

(ii)    If any Canadian Domiciled Obligor or U.K. Domiciled Obligor makes a
payment under this Section 5.11 of any Obligations (other than amounts for which
such Canadian Domiciled Obligor or U.K. Domiciled Obligor is primarily liable)
(a “U.K./Canadian Guarantor Payment”) that, taking into account all other
U.K./Canadian Guarantor Payments previously or concurrently made by any other
Canadian Domiciled Obligor or U.K. Domiciled Obligor, exceeds the amount that
such Canadian Domiciled Obligor or U.K. Domiciled Obligor would otherwise have
paid if each Canadian Domiciled Obligor and U.K. Domiciled Obligor had paid the
aggregate Obligations satisfied by such U.K./Canadian Guarantor Payments in the
same proportion that such Canadian Domiciled Obligor’s or U.K. Domiciled
Obligor’s U.K./Canadian Allocable Amount bore to the total

 

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U.K./Canadian Allocable Amounts of all Canadian Domiciled Obligors and U.K.
Domiciled Obligors, then such Canadian Domiciled Obligor or U.K. Domiciled
Obligor shall be entitled to receive contribution and indemnification payments
from, and to be reimbursed by, each other Canadian Domiciled Obligor and U.K.
Domiciled Obligor for the amount of such excess, pro rata based upon their
respective U.K./Canadian Allocable Amounts in effect immediately prior to such
U.K./Canadian Guarantor Payment. The “U.K./Canadian Allocable Amount” for any
Canadian Domiciled Obligor or U.K. Domiciled Obligor shall be the maximum amount
that could then be recovered from such Canadian Domiciled Obligor or U.K.
Domiciled Obligor under this Section 5.11 without rendering such payment
voidable under Section 548 of the U.S. Bankruptcy Code or under any similar
applicable fraudulent transfer or conveyance Applicable Law, or the Applicable
Law in Canada or any province or territory thereof, or in England.

(iii)    Each Canadian Domiciled Obligor and each U.K. Domiciled Obligor that is
a Qualified ECP when its guaranty of or grant of Lien as security for a Swap
Obligation becomes effective hereby jointly and severally, absolutely,
unconditionally and irrevocably undertakes to provide funds or other support to
each Canadian Domiciled Obligor and U.K. Domiciled Obligor that is a Specified
Obligor with respect to such Swap Obligation as may be needed by such Specified
Obligor from time to time to honor all of its obligations under the Loan
Documents in respect of such Swap Obligation (but, in each case, only up to the
maximum amount of such liability that can be hereby incurred without rendering
such Qualified ECP’s obligations and undertakings under this Section 5.11
voidable under any applicable fraudulent transfer or conveyance act). The
obligations and undertakings of each Qualified ECP under this Section shall
remain in full force and effect until Full Payment of all Obligations. Each
Canadian Domiciled Obligor and each U.K. Domiciled Obligor intends this Section
to constitute, and this Section shall be deemed to constitute, a guarantee of
the obligations of, and a “keepwell, support or other agreement” for the benefit
of, each Obligor for all purposes of the Commodity Exchange Act.

5.11.3.    No Limitation. Nothing contained in this Section 5.11 shall limit the
liability of any Obligor to pay Loans made directly or indirectly to that
Obligor (including Loans advanced to any other Obligor and then re-loaned or
otherwise transferred to, or for the benefit of, such Obligor), LC Obligations
relating to Letters of Credit issued to support such Obligor’s business, and all
accrued interest, fees, expenses and other related Obligations with respect
thereto, for which such Obligor shall be primarily liable for all purposes
hereunder. Agent and Lenders shall have the right, at any time in their
discretion, to condition Loans and Letters of Credit upon a separate calculation
of borrowing availability for each Borrower and to restrict the disbursement and
use of such Loans and Letters of Credit to such Borrower.

5.11.4.    Joint Enterprise. Each Obligor has requested that Agent and Lenders
make the credit facilities available to the applicable Borrowers on a combined
basis, in order to finance Borrowers’ business most efficiently and
economically. Obligors’ business is a mutual and collective enterprise, and the
successful operation of each Obligor is dependent upon the successful
performance of the integrated group. The Obligors believe that the credit
facilities provided to the applicable Borrowers under this Agreement will
enhance the borrowing power of each Borrower and ease administration of such
credit facilities, all to their mutual advantage. Obligors acknowledge that
Agent’s and Lenders’ willingness to extend credit and to administer

 

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the Collateral as provided under the Loan Documents is done solely as an
accommodation to Obligors and at Obligors’ request.

5.11.5.    California Waivers.

(a)    Notwithstanding anything to the contrary set forth in this Agreement or
any of the Loan Documents, each of the Obligors hereby understands and
acknowledges that if Agent forecloses judicially or nonjudicially against any
Collateral consisting of Real Estate located in California for the Obligations,
that foreclosure could impair or destroy any ability that the Obligors may have
to seek reimbursement, contribution, or indemnification from one another based
on any right any Obligor may have of subrogation, reimbursement, contribution,
or indemnification for any amounts paid by the Obligors under this Agreement.
Each of the Obligors further understands and acknowledges that in the absence of
this paragraph, such potential impairment or destruction of the Obligors’
rights, if any, may entitle the Obligors to assert a defense to this Agreement
based on Section 580d of the California Code of Civil Procedure as interpreted
in Union Bank v. Gradsky, 265 Cal. App. 2d 40 (1968). By executing this
Agreement, each Obligor freely, irrevocably, and unconditionally: (i) waives and
relinquishes that defense and agrees that the Obligors will be fully liable
under this Agreement even though Agent may foreclose, either by judicial
foreclosure or by exercise of power of sale, any deed of trust securing the
Obligations; (ii) agrees that the Obligors will not assert that defense in any
action or proceeding which Agent may commence to enforce this Agreement or any
other Loan Document; (iii) acknowledges and agrees that the rights and defenses
waived by the Obligors in this Agreement include any right or defense that the
Obligors may have or be entitled to assert based upon or arising out of any one
or more of Sections 580a, 580b, 580d, or 726 of the California Code of Civil
Procedure or Section 2848 of the California Civil Code; and (iv) acknowledges
and agrees that Agent and the Lenders are relying on this waiver in creating the
Obligations, and that this waiver is a material part of the consideration which
Agent and the Lenders are receiving for creating the Obligations.

(b)    Each of the Obligors waives all rights and defenses that each Obligor may
have because of any of the Obligations is secured by Real Estate. This means,
among other things: (i) Agent may collect from the Obligors without first
foreclosing on any real or personal property collateral pledged by the Obligors;
and (ii) if Agent forecloses on any Collateral consisting of Real Estate pledged
by the Obligors: (A) the amount of the Obligations may be reduced only by the
price for which that Collateral is sold at the foreclosure sale, even if the
Collateral is worth more than the sale price, and (B) Agent may collect from the
Obligors even if Agent, by foreclosing on the Collateral consisting of Real
Estate, has destroyed any right the Obligors may have to collect from one
another. This is an unconditional and irrevocable waiver of any rights and
defenses the Obligors may have because any of the Obligations are secured by
real property. These rights and defenses include, but are not limited to, any
rights or defenses based upon Section 580a, 580b, 580d, or 726 of the California
Code of Civil Procedure.

(c)    Each of the Obligors waives any right or defense it may have at law or
equity, including California Code of Civil Procedure Section 580a, to a fair
market value hearing or action to determine a deficiency judgment after a
foreclosure.

5.11.6.    Subordination. Each Obligor hereby subordinates any claims, including
any rights at law or in equity to payment, subrogation, reimbursement,
exoneration, contribution,

 

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indemnification or set off, that it may have at any time against any other
Obligor, howsoever arising, to the Full Payment of all Obligations.

5.12    Currency Matters. Dollars are the currency of account and payment for
each and every sum at any time due from Borrowers hereunder unless otherwise
specifically provided in this Agreement, any other Loan Document or otherwise
agreed to by Agent. The parties hereto hereby agree as follows:

(a)    Each repayment of a Loan or LC Obligation or a part thereof shall be made
in the currency in which such Loan or LC Obligation is denominated at the time
of that repayment;

(b)    Each payment of interest shall be made in the currency in which the
principal or other sum in respect of which such interest is denominated;

(c)    Each payment of fees by a U.S. Borrower pursuant to Section 3.2 shall be
in Dollars;

(d)    Each payment of fees by Canadian Borrower pursuant to Section 3.2 shall
be in Dollars;

(e)    Each payment of fees by U.K. Borrower pursuant to Section 3.2 shall be in
Dollars;

(f)    Each payment in respect of Extraordinary Expenses and any other costs,
expenses and indemnities shall be made in the currency in which the same were
incurred by the party to whom payment is to be made;

(g)    Any amount expressed to be payable in Canadian Dollars shall be paid in
Canadian Dollars;

(h)    Any amount expressed to be payable in British Pounds shall be paid in
British Pounds; and

(i)    Any amount expressed to be payable in Euro shall be paid in Euro.

No payment to any Credit Party (whether under any judgment or court order or
otherwise) shall discharge the obligation or liability of the Obligor in respect
of which it was made unless and until such Credit Party shall have received Full
Payment in the currency in which such obligation or liability is payable
pursuant to the above provisions of this Section 5.12. To the extent that the
amount of any such payment shall, on actual conversion into such currency, be
less than the full amount of such obligation or liability (actual or contingent)
expressed in that currency, such Obligor (together with the other Obligors who
are liable thereunder or obligated therefor) agrees to indemnify and hold
harmless such Credit Party with respect to the amount of such deficiency, with
such indemnity surviving the termination of this Agreement and any legal
proceeding, judgment or court order pursuant to which the original payment was
made which resulted in such deficiency. To the extent that the amount of any
such payment to a Credit Party shall, upon an actual conversion into such
currency, exceed such obligation or liability, actual or contingent, expressed
in that currency, such Credit Party shall return such excess to the Borrower
Agent.

 

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5.13    Currency Fluctuations. On each Business Day or such other date
determined by Agent (the “Calculation Date”), Agent shall determine the Exchange
Rate as of such date. The Exchange Rate so determined shall become effective on
the first Business Day immediately following such determination (a “Reset Date”)
and shall remain effective until the next succeeding Reset Date. On each Reset
Date, Agent shall determine the Dollar Equivalent of the Canadian Revolver
Exposure and the U.K. Revolver Exposure. If, on any Reset Date: (a) the Total
Revolver Exposure exceeds the total amount of the Revolver Commitments on such
date, (b) the Canadian Revolver Exposure on such date exceeds the lesser of the
Canadian Borrowing Base or the Canadian Revolver Commitments on such date, or
(c) the U.K. Revolver Exposure on such date exceeds the lesser of the U.K.
Borrowing Base or the U.K. Revolver Commitments on such date (in any case, the
amount of any such excess referred to herein as the “Excess Amount”) then
(i) Agent shall give notice thereof to Borrower Agent and Lenders and
(ii) within one (1) Business Day thereafter, Borrowers shall cause such excess
to be eliminated, either by repayment of Revolver Loans or depositing of Cash
Collateral with Agent with respect to LC Obligations and until such Excess
Amount is repaid, Lenders shall not have any obligation to make any Loans and
the Issuing Banks shall not have any obligation to issue any Letters of Credit.

 

SECTION 6.

CONDITIONS PRECEDENT

6.1    Conditions Precedent to Effectiveness and Loans. In addition to the
conditions set forth in Section 6.2, this Agreement shall not become effective
and Agent, the Issuing Banks and the Lenders shall not be required to fund any
requested Loans, issue any Letter of Credit for the benefit of the Borrowers or
otherwise extend credit to the Borrowers hereunder, until the date (“Closing
Date”) that each of the following conditions has been satisfied:

(a)    Notes shall have been executed by each Borrower and delivered to each
Applicable Lender that requests issuance of a Note. Each other Loan Document to
which any Obligor is a party shall have been duly executed and delivered to
Agent by each of the signatories thereto, and each such Obligor shall be in
compliance with all terms thereof.

(b)    U.S. Borrowers shall have paid all fees and expenses to be paid to Agent
and Lenders on the Closing Date.

(c)    Agent shall have received certificates, in form and substance
satisfactory to it, from a knowledgeable Senior Officer of each Obligor
certifying that, after giving effect to the initial Loans and transactions
hereunder, (i) such Obligor is Solvent; (ii) no Default or Event of Default
exists; (iii) the representations and warranties set forth in Section 9 are true
and correct; and (iv) such Obligor has complied with all agreements and
conditions to be satisfied by it under the Loan Documents to which such Obligor
is a party.

(d)    Agent shall have received a certificate of a duly authorized officer of
each Obligor certifying (i) that attached copies of such Obligor’s Organic
Documents are true and complete, and in full force and effect, without amendment
except as shown; (ii) that an attached copy of resolutions authorizing execution
and delivery of the Loan Documents to which such Obligor is a party is true and
complete, and that such resolutions are in full force and effect, were duly
adopted, have not been amended, modified or revoked, and constitute all
resolutions adopted with respect to this credit facility; and (iii) to the
title, name and signature of each Person

 

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authorized to sign the Loan Documents to which such Obligor is a party. Agent
may conclusively rely on this certificate until it is otherwise notified by the
applicable Obligor in writing.

(e)    Agent shall have received a written opinion of Gibson, Dunn & Crutcher
LLP, Durham Jones & Pinegar, P.C., McMillan LLP, and CMS Cameron McKenna Nabarro
Olswang LLP, in form and substance satisfactory to Agent.

(f)    Agent shall have received good standing certificates for each Obligor
(other than the U.K. Borrower and the U.K. Subsidiaries), issued by the
Secretary of State or other appropriate official of such Obligor’s jurisdiction
of organization.

(g)    There shall exist no action, suit, investigation, litigation or
proceeding pending or threatened in any court or before any arbitrator or
governmental instrumentality that in Agent’s judgment (i) could reasonably be
expected to have a material adverse effect on any Obligor’s business, assets,
properties, liabilities, operations, condition or prospects, or could impair any
Obligor’s ability to perform satisfactorily under this Agreement and the other
Loan Documents; or (ii) could reasonably be expected to materially and adversely
affect this Agreement or the transactions contemplated hereby.

(h)    (i) Each Canadian Security Agreement (amended as required) shall have
been duly executed and delivered to Agent by each of the signatories thereto,
and each signatory thereto shall be in compliance with all terms thereof,
(ii) all PPSA and other Lien filings or recordations necessary to perfect
Agent’s Liens on the Collateral of each signatory to the Canadian Security
Agreement shall have been filed, and (iii) Agent shall have received PPSA and
Lien searches and other evidence satisfactory to Agent that such Liens are the
only Liens upon the Collateral of each signatory to the Canadian Security
Agreement (including estoppel letters), except Permitted Liens.

(i)    Each document listed in paragraph (a) of the definition of U.K. Security
Agreement shall have been duly executed and delivered to the Agent by each of
the signatories thereto, and each U.K. Domiciled Obligor shall be in compliance
with all terms thereof.

6.2    Conditions Precedent to All Credit Extensions. Agent, Issuing Banks and
Lenders shall not be required to fund any Loans, arrange for issuance of any
Letters of Credit or grant any other accommodation to or for the benefit of
Borrowers, unless the following conditions are satisfied:

(a)    No Default or Event of Default shall exist at the time of, or result
from, such funding, issuance or grant;

(b)    The representations and warranties of each Obligor in the Loan Documents
shall be true and correct on the date of, and upon giving effect to, such
funding, issuance or grant (except for representations and warranties that
expressly relate to an earlier date);

(c)    All conditions precedent in any other Loan Document shall be satisfied;
and

(d)    With respect to issuance of a Letter of Credit, the LC Conditions shall
be satisfied.

 

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Each request (or deemed request) by Borrower Agent or any Borrower for funding
of a Loan, issuance of a Letter of Credit or grant of an accommodation shall
constitute a representation by Borrowers that the foregoing conditions are
satisfied on the date of such request and on the date of such funding, issuance
or grant. As an additional condition to any funding, issuance or grant, Agent
shall have received such other information, documents, instruments and
agreements as it deems appropriate in connection therewith.

 

SECTION 7.

COLLATERAL

7.1    Grant of Security Interest.

7.1.1.     (a) To secure the prompt payment and performance of: (a) all
Obligations (including, without limitation, all Obligations of the Guarantors),
each U.S. Domiciled Obligor hereby grants to Agent, for the benefit of the
Secured Parties, a continuing security interest in and Lien upon all Property of
such Obligor, in which such Obligor has rights, or the power to transfer rights,
including all of the following Property of such Obligor, whether now or in the
future, and wherever located:

(i)     all Accounts;

(ii)     all Goods, including Inventory, Equipment and fixtures;

(iii)    all Deposit Accounts (including all cash, cash equivalents, financial
assets, negotiable instruments and other evidence of payment, and other funds on
deposit therein or credited thereto);

(iv)    all securities accounts (including any and all Investment Property held
therein or credited thereto);

(v)     all General Intangibles, including Intellectual Property (including the
right to sue and recover for any and all past, present or future infringements
of, violations of, dilution of or other damages or injuries to any Intellectual
Property);

(vi)     all monies, whether or not in the possession or under the control of
Agent, a Lender, or a bailee or Affiliate of Agent or a Lender, and any Cash
Collateral;

(vii)     all Supporting Obligations;

(viii)     all Instruments, Documents and Chattel Paper;

(ix)     all Investment Property

(x)     all Letters of Credit (as defined in the UCC) and Letter-of-Credit
Rights;

(xi)     all Commercial Tort Claims, including those shown on Schedule 9.1.24;

 

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(xii)     all accessions to, substitutions for, and all replacements, products,
and cash and non-cash proceeds of the foregoing, including proceeds of and
unearned premiums with respect to insurance policies, and claims against any
Person for loss, damage or destruction of any of the Property described in this
Section  7.1.1(a) (the “Proceeds ”); and

(xiii)     all books and records (including customer lists, files,
correspondence, tapes, computer programs, print-outs and computer records)
pertaining to any of the Property described in this Section  7.1.1(a).

Notwithstanding anything to the contrary contained in clauses (i) through (xiii)
above, the security interest granted by the U.S. Domiciled Obligors pursuant to
this Agreement shall not extend to, and the “Collateral ” of the U.S. Domiciled
Obligors shall not include, any Excluded Property.

(b)    To secure the prompt payment and performance of: (i) all Canadian
Facility Obligations (including, without limitation, all Canadian Facility
Obligations of each Canadian Facility Guarantor), each Canadian Domiciled
Obligor hereby grants to Agent, for the benefit of the Canadian Facility Secured
Parties and the U.K. Facility Secured Parties and (cii) all U.K. Facility
Obligations (including, without limitation, all U.K. Facility Obligations of
each U.K. Facility Guarantor) each U.K. Domiciled Obligor hereby grants to
Agent, for the benefit of the U.K. Facility Secured Parties and the Canadian
Facility Secured Parties, in each case of clause (ai), (b), and (cii), a
continuing security interest in and Lien upon all of the following Property of
such Obligor, in which such Obligor has rights, or the power to transfer rights,
whether now or in the future, and wherever located:

(i)    all Accounts;

(ii)    all Inventory;

(iii)    all Deposit Accounts (including all cash, cash equivalents, financial
assets, negotiable instruments and other evidence of payment, and other funds on
deposit therein or credited thereto);

(iv)    all securities accounts (including any and all Investment Property held
therein or credited thereto);

(v)    all Intellectual Property (including the right to sue and recover for any
and all past, present or future infringements of, violations of, dilution of or
other damages or injuries to any Intellectual Property), other than Excluded
Intellectual Property;

(vi)    all monies, whether or not in the possession or under the control of
Agent, a Lender, or a bailee or Affiliate of Agent or a Lender that were derived
from or consist of any of the Property described in this Section 7.1.1,7.1.1(b),
and any Cash Collateral;

(vii)    all Supporting Obligations of any of the Property described in this
Section 7.1.1(b);

 

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(viii)    all Instruments, Documents and Chattel Paper, in each case only to the
extent evidencing or governing any of the Property described in this
Section 7.1.1(b);

(ix)    all accessions to, substitutions for, and all replacements, products,
and cash and non-cash proceeds of the foregoing, including proceeds of and
unearned premiums with respect to insurance policies, and claims against any
Person for loss, damage or destruction of any of the Property described in this
Section 7.1.1(b) (the “Proceeds”); and

(x)    all books and records (including customer lists, files, correspondence,
tapes, computer programs, print-outs and computer records) pertaining to any of
the Property described in this Section 7.1.1,7.1.1(b) , and any General
Intangibles to the extent evidencing or governing any of the Property described
in this Section 7.1.1.7.1.1(b).

In the case of each U.K. Domiciled Obligor, the continuing security interest in
and Lien upon all of the above Property of such U.K. Domiciled Obligor granted
above is limited to the Property of that U.K. Domiciled Obligor which is
expressed to be subject to a security interest under the U.K. Security
Agreements to which that U.K. Obligor is expressed to be a party.

7.2    Lien on Deposit Accounts; Cash Collateral.

7.2.1.    Deposit Accounts. To further secure the prompt payment and performance
of: (a) all Obligations (including, without limitation, all Obligations of the
Guarantors), each U.S. Domiciled Obligor hereby grants to Agent, for the benefit
of the Secured Parties, (b) all Canadian Facility Obligations (including,
without limitation, all Canadian Facility Obligations of each Canadian Facility
Guarantor), each Canadian Domiciled Obligor hereby grants to Agent, for the
benefit of the Canadian Facility Secured Parties and the U.K. Facility Secured
Parties, and (c) all U.K. Facility Obligations (including, without limitation,
all U.K. Facility Obligations of each U.K. Facility Guarantor), each U.K.
Domiciled Obligor hereby grants to Agent, for the benefit of the U.K. Facility
Secured Parties and the Canadian Facility Secured Parties, in each case of
clause (a), (b), and (c), a continuing security interest in and Lien on all
amounts credited to any Deposit Account of such Obligor, including any sums in
any blocked or lockbox accounts or in any accounts into which such sums are
swept. Each Obligor hereby authorizes and directs each bank or other depository
to deliver to Agent, upon request, all balances in any Deposit Account
maintained by such Obligor, without inquiry into the authority or right of Agent
to make such request. In the case of each U.K. Domiciled Obligor, the continuing
security interest in and Lien upon all amounts credited to any Deposit Accounts
of such U.K. Domiciled Obligor, and any sums in any blocked or lockbox accounts
or in any accounts into which such sums are swept, granted above is limited to
the sums in the Deposit Accounts of that U.K. Domiciled Obligor, and any sums in
any blocked or lockbox accounts or in any accounts into which such sums are
swept, which are expressed to be subject to a security interest under the U.K.
Security Agreements to which that U.K. Obligor is expressed to be a party.

7.2.2.    Cash Collateral. Any Cash Collateral may be invested, at Agent’s
discretion (and with the consent of Borrowers, as long as no Event of Default
exists), but Agent shall have no duty to do so, regardless of any agreement or
course of dealing with any Obligor,

 

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and shall have no responsibility for any investment or loss. To further secure
the prompt payment and performance of all: (a) Obligations (including, without
limitation, all Obligations of the Guarantors), each U.S. Domiciled Obligor
hereby grants to Agent, for the benefit of the Secured Parties, (b) Canadian
Facility Obligations (including, without limitation, all Canadian Facility
Obligations of each Canadian Facility Guarantor), each Canadian Domiciled
Obligor hereby grants to Agent, for the benefit of the Canadian Facility Secured
Parties and the U.K. Facility Secured Parties, and (c) U.K. Facility Obligations
(including, without limitation, all U.K. Facility Obligations of each U.K.
Facility Guarantor), each U.K. Domiciled Obligor hereby grants to Agent, for the
benefit of the U.K. Facility Secured Parties and the Canadian Facility Secured
Parties, in each case of clause (a), (b), and (c), a continuing security
interest in and Lien on all Cash Collateral held from time to time and all
proceeds thereof, whether such Cash Collateral is held in a Cash Collateral
Account or elsewhere. Agent may apply Cash Collateral of a U.S. Domiciled
Obligor to the payment of any Obligations, may apply Cash Collateral of a
Canadian Domiciled Obligor to the payment of any Canadian Facility Obligations,
and may apply Cash Collateral of a U.K. Domiciled Obligor to the payment of any
U.K. Facility Obligations, in each case, in such order as Agent may elect, as
they become due and payable. Each Cash Collateral Account and all Cash
Collateral shall be under the sole dominion and control of Agent. No U.S.
Domiciled Obligor or other Person claiming through or on behalf of any U.S.
Domiciled Obligor shall have any right to any Cash Collateral, until Full
Payment of all Obligations. No Canadian Domiciled Obligor or other Person
claiming through or on behalf of any Canadian Domiciled Obligor shall have any
right to any Cash Collateral, until Full Payment of all Canadian Facility
Obligations. No U.K. Domiciled Obligor or other Person claiming through or on
behalf of any U.K. Domiciled Obligor shall have any right to any Cash
Collateral, until Full Payment of all U.K. Facility Obligations

7.3     Intentionally Omitted. Real Estate Collateral. If any U.S. Domiciled
Obligor owns any Material Real Property as of the Second Amendment to Third
Amended and Restated Effective Date, Borrowers shall, within 120 days of the
Second Amendment to Third Amended and Restated Effective Date, execute, deliver
and record a first priority (subject to the terms of the Intercreditor
Agreement) Mortgage, in form and substance satisfactory to Agent, together with
all Related Real Estate Documents. If any U.S. Domiciled Obligor acquires
Material Real Property after the Second Amendment to Third Amended and Restated
Effective Date, Borrowers shall promptly notify Agent and, within 120 days,
execute, deliver and record a first priority (subject to the terms of the
Intercreditor Agreement) Mortgage, in form and substance satisfactory to Agent,
together with all Related Real Estate Documents. Notwithstanding anything
contained in this Agreement to the contrary, no Mortgage shall be executed and
delivered with respect to any real property unless and until each Lender has
received, at least twenty Business Days prior to such execution and delivery, a
life of loan flood zone determination and such other documents as it may
reasonably request to complete its flood insurance due diligence and has
confirmed to the Agent that flood insurance due diligence and flood insurance
compliance has been completed to its satisfaction.

7.4     Other Collateral

7.4.1.     Commercial Tort Claims. U.S. Borrowers shall promptly notify Agent in
writing if any U.S. Domiciled Obligor has a Commercial Tort Claim (other than a
Commercial Tort Claim for less than $1,000,000), shall promptly amend Schedule
9.1.24 to include such claim, and shall take such actions as Agent deems
appropriate to subject such claim to a duly perfected, first priority (subject
to the terms of the Intercreditor Agreement) Lien in favor of Agent.7.4

 

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Certain After-Acquired Collateral. Borrowers shall promptly notify Agent in
writing if, after the Original Agreement Closing Date, any Obligor obtains any
interest in any Collateral consisting of Deposit Accounts, Chattel Paper,
Documents, Instruments, Intellectual Property (other than Excluded Intellectual
Property), Investment Property or Letter-of-Credit Rights and, upon Agent’s
request, shall promptly take such actions as Agent deems appropriate to effect
Agent’s duly perfected, first priority Lien upon such Collateral, including
obtaining any appropriate possession, control agreement or Lien Waiver. If any
Collateral is in the possession of a third party, at Agent’s request, Borrowers
shall obtain an acknowledgment that such third party holds the Collateral for
the benefit of Agent.

7.5    No Assumption of Liability. The Liens on the Collateral granted hereunder
are given as security only and shall not subject Agent or any Lender to, or in
any way modify, any obligation or liability of any Obligor relating to any
Collateral. In no event shall the grant of any Lien under any Loan Document
secure an Excluded Swap Obligation of the granting Obligor.

7.6    Further Assurances. Promptly upon request, Obligors shall deliver such
instruments, assignments, title certificates, or other documents or agreements,
and shall take such actions, as Agent deems appropriate under Applicable Law to
evidence or perfect its Lien on any Collateral, or otherwise to give effect to
the intent of this Agreement. Each Obligor authorizes Agent to file any
financing statement that Agent deems desirable to preserve and perfect Agent’s
security interest in the Collateral of such Obligor, and ratifies any action
taken by Agent before the Closing Date to effect or perfect its Lien on any
Collateral.

 

SECTION 8.

COLLATERAL ADMINISTRATION

8.1    Borrowing Base Certificates. By the 20th day of each month, Borrower
Agent shall deliver to Agent (and Agent shall promptly deliver same to Lenders)
a U.S. Borrowing Base Certificate, Canadian Borrowing Base Certificate, and a
U.K. Borrowing Base Certificate, in each case, prepared as of the close of
business of the previous month, and at such other times as Agent may request;
provided that during any Reporting Trigger Period, Borrower Agent shall also be
required to deliver to Agent weekly U.S. Borrowing Base Certificates, Canadian
Borrowing Base Certificates, and U.K. Borrowing Base Certificates by the 3rd
Business Day of each week which begins during such Reporting Trigger Period, in
each case, prepared as of the close of business on the last Business Day of the
previous week (in the case of matters other than those related to Inventory) or
of the close of business of the previous month (in the case of matters relating
to Inventory). All calculations of U.S. Availability, Canadian Availability, or
U.K. Availability in any Borrowing Base Certificate shall originally be made by
Borrower Agent and certified by a Senior Officer of Borrower Agent; provided,
that Agent may from time to time review and adjust any such calculation (a) to
reflect its reasonable estimate of declines in value of any Collateral, due to
collections received in any Dominion Account or otherwise; (b) to adjust advance
rates to reflect changes in dilution, quality, mix and other factors affecting
Collateral; and (c) to the extent the calculation is not made in accordance with
this Agreement or does not accurately reflect the U.S. Availability Reserve
and/or the Canadian Availability Reserve and/or the U.K. Availability Reserve.
The U.S. Borrowing Base Certificate shall set forth the calculation of the U.S.
Borrowing Base in Dollars. The Canadian Borrowing Base shall set forth the
calculation of the Canadian Borrowing Base in both Canadian Dollars and the
Dollar Equivalent thereof along with the Exchange Rate used to determine such
Dollar Equivalent. The U.K. Borrowing Base shall set forth the calculation of
the U.K. Borrowing Base in each of British Pounds, Dollars and Euros and

 

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the Dollar Equivalent thereof along with the Exchange Rate used to determine
such Dollar Equivalent.

8.2    Administration of Accounts.

8.2.1.    Records and Schedules of Accounts. Each Obligor shall keep accurate
and complete records of its Accounts, including all payments and collections
thereon, and shall submit to Agent sales, collection, reconciliation and other
reports in form satisfactory to Agent, on such periodic basis as Agent may
request. Borrower Agent shall also provide to Agent, on or before the 20th day
of each month, a detailed aged trial balance of all Accounts of each Borrower as
of the end of the preceding month, specifying each Account’s Account Debtor name
and address, amount, invoice date and due date, showing any discount, allowance,
credit, authorized return or dispute, and including such proof of delivery,
copies of invoices and invoice registers, copies of related documents, repayment
histories, status reports and other information as Agent may reasonably request.
If Accounts of any Borrower Group in an aggregate face amount of $2,500,000 or
more cease to be Eligible Accounts, Borrower Agent shall notify Agent of such
occurrence promptly (and in any event within one Business Day) after any Obligor
has knowledge thereof.

8.2.2.    Taxes. If an Account of any Obligor includes a charge for any Taxes,
Agent is authorized, in its discretion, to pay the amount thereof to the proper
taxing authority for the account of such Obligor and to charge the Borrowers of
the applicable Borrower Group therefor; provided, however, that neither Agent
nor Lenders shall be liable for any Taxes that may be due from any Obligor or
with respect to any Collateral.

8.2.3.    Account Verification. Whether or not a Default or Event of Default
exists, Agent shall have the right at any time, in the name of Agent, any
designee of Agent or any Obligor, to verify the validity, amount or any other
matter relating to any Accounts of Obligors by mail, telephone or otherwise.
Obligors shall cooperate fully with Agent in an effort to facilitate and
promptly conclude any such verification process.

8.2.4.    Maintenance of Dominion Accounts.

(a)    U.S. Domiciled Obligors and Canadian Domiciled Obligors shall maintain
Dominion Accounts pursuant to lockbox or other arrangements acceptable to Agent.
U.S. Domiciled Obligors and Canadian Domiciled Obligors shall obtain an
agreement (in form and substance satisfactory to Agent) from each lockbox
servicer and Dominion Account bank, establishing Agent’s control over and Lien
in the lockbox or Dominion Account, which may be exercised by Agent during any
Dominion Trigger Period, requiring immediate deposit of all remittances received
in the lockbox to a Dominion Account, and waiving offset rights of such servicer
or bank, except for customary administrative charges. If a Dominion Account of a
U.S. Domiciled Obligor or Canadian Domiciled Obligor is not maintained with Bank
of America or Bank of America (Canada), as applicable, Agent may, during any
Dominion Trigger Period, require immediate transfer of all funds in such account
to a Dominion Account maintained with Bank of America or Bank of America
(Canada), as applicable.

 

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(b)    U.K. Domiciled Obligors shall maintain Dominion Accounts at all times
pursuant to lockbox or other arrangements acceptable to Agent. U.K. Domiciled
Obligors shall obtain an agreement (in form and substance satisfactory to Agent)
from each lockbox servicer and Dominion Account bank, establishing Agent’s
control over and Lien in the lockbox or Dominion Account at all times, requiring
immediate deposit of all remittances received in the lockbox to a Dominion
Account, and waiving offset rights of such servicer or bank, except for
customary administrative charges. If a Dominion Account of a U.K. Domiciled
Obligor is not maintained with Bank of America, N.A., London Branch, Agent may
require immediate transfer of all funds in such account to a Dominion Account
maintained with Bank of America, N.A., London Branch.

(c)    Agent and Lenders assume no responsibility to any Obligor for any lockbox
arrangement or Dominion Account, including any claim of accord and satisfaction
or release with respect to any Payment Items accepted by any bank.

8.2.5.    Proceeds of Collateral. Obligors (other than U.K. Domiciled Obligors)
shall request in writing and otherwise take all necessary steps to ensure that
all payments on Accounts or otherwise relating to Collateral are made directly
to a Dominion Account (or a lockbox relating to a Dominion Account). U.K.
Domiciled Obligors shall request in writing and otherwise take all necessary
steps to ensure that all payments on Accounts or otherwise relating to
Collateral are made directly to a Dominion Account (or a lockbox relating to a
Dominion Account). If any Obligor receives cash or Payment Items with respect to
any Collateral, it shall hold same in trust for Agent and promptly (not later
than the next Business Day) deposit same into a Dominion Account.

8.3    Administration of Inventory.

8.3.1.    Records and Reports of Inventory. Each Obligor shall keep accurate and
complete records of its Inventory, including costs and daily withdrawals and
additions, and shall submit to Agent inventory and reconciliation reports in
form satisfactory to Agent, on such periodic basis as Agent may request. Each
Obligor shall conduct periodic cycle counts consistent with historical
practices, and shall provide to Agent a report based on each such count promptly
upon completion thereof, together with such supporting information as Agent may
request.

8.3.2.    Returns of Inventory. No Obligor shall return any Inventory to a
supplier, vendor or other Person, whether for cash, credit or otherwise, unless
(a) such return is in the Ordinary Course of Business; (b) no Default, Event of
Default or Overadvance exists or would result therefrom; (c) Agent is promptly
notified if the aggregate Value of all Inventory returned in any month exceeds
$5,000,000; and (d) any payment received by an Obligor for a return during any
Dominion Trigger Period is promptly remitted to Agent for application to the
Obligations.

8.3.3.    Acquisition, Sale and Maintenance. No Obligor shall acquire or accept
any Inventory on consignment or approval, and each Obligor shall take all steps
to assure that all Inventory is produced in accordance with Applicable Law,
including the FLSA. Except to the extent permitted by Section 10.2.5(b) in the
case of consignments, no Obligor shall sell any Inventory on consignment or
approval or any other basis under which the customer may return or require an
Obligor to repurchase such Inventory. Each Obligor shall use, store and maintain
all Inventory with reasonable care and caution, in accordance with applicable
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insurance and in conformity with all Applicable Law, and, except in cases of
good faith disputes, shall make current rent payments (within applicable grace
and cure periods provided for in leases) at all locations where any Collateral
is located.

8.4    Intentionally Omitted.

8.5    Administration of Deposit Accounts. Each Obligor shall take all actions
necessary to establish Agent’s control of all Deposit Accounts (including
Dominion Accounts) and securities accounts maintained by such Obligor; provided,
however, that such control shall not be required for the following
(collectively, the “Excluded Deposit Accounts”): (a) an account exclusively used
for payroll, payroll taxes or employee benefits, and (b) at any time during
which an Event of Default does not exist, an account containing not more than
$250,000, provided, that the aggregate amounts contained in all such accounts
referred to in this clause (b) for which Agent does not have control at any time
shall not exceed $1,000,000. The applicable Obligor shall be the sole account
holder of each Deposit Account or securities account and shall not allow any
other Person (other than Agent) to have control over a Deposit Account,
securities account or any Property deposited therein. Each of the Obligors shall
promptly notify Agent in writing of any opening or closing of a Deposit Account
or securities account and, concurrently with the opening thereof, shall ensure
that such account (except an Excluded Deposit Account) is subject to a fully
executed Deposit Account Control Agreement or, in the case of a securities
account, similar control agreement in favor of Agent and acceptable to Agent.

8.6    General Provisions.

8.6.1.    Location of Collateral. All tangible items of Collateral, other than
Inventory in transit (including in transit to or from a manufacturing facility),
shall at all times be kept by Obligors at the business locations for such
Obligors set forth in Schedule 8.6.1, except that Obligors may (a) make sales or
other dispositions of Collateral in accordance with Section 10.2.5; and (b) move
Collateral to another location in the United States or, in the case of: (i) a
Canadian Domiciled Obligor, in Canada, or (ii) a U.K. Domiciled Obligor, in
England, Wales, Scotland or Northern Ireland (subject, in each case, to Agent
being granted a first priority Lien (subject to Permitted Liens) if none has
been previously granted in such province or territory), in each case, upon 15
Business Days’ prior written notice to Agent.

8.6.2.    Insurance of Collateral; Condemnation Proceeds.

(a)    Each Obligor shall maintain insurance with respect to the Collateral,
covering casualty, hazard, theft, malicious mischief, flood and other risks, in
amounts, with endorsements and with insurers (with a Best’s Financial Strength
Rating of at least A_ VII, unless otherwise approved by Agent) satisfactory to
Agent; provided, that if Real Estate secures any Obligations, flood hazard
diligence, documentation and insurance for such Real Estate shall comply with
all Flood Laws or shall otherwise be satisfactory to all Lenders. From time to
time upon request, Borrower Agent shall deliver to Agent the originals or
certified copies of its insurance policies and updated flood plain searches.
Unless Agent shall agree otherwise, each policy shall include satisfactory
endorsements (i) showing Agent as lender first loss payee (with respect to
property policies only); (ii) requiring at least 30 days prior written notice to
Agent in the event of cancellation of the policy for any reason whatsoever; and
(iii) specifying that the interest

 

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of Agent shall not be impaired or invalidated by any act or neglect of any
Obligor or the owner of the Property, nor by the occupation of the premises for
purposes more hazardous than are permitted by the policy. If any Obligor fails
to provide and pay for any insurance, Agent may, at its option, but shall not be
required to, procure the insurance and charge Borrowers therefor. Each Obligor
agrees to deliver to Agent, promptly as rendered, copies of all reports made to
insurance companies. While no Event of Default exists, Obligors may settle,
adjust or compromise any insurance claim, as long as the proceeds are delivered
to Agent in accordance with Section 8.6.2(b). If an Event of Default exists,
only Agent shall be authorized to settle, adjust and compromise any claims
involving any Collateral.

(b)    Any proceeds of insurance relating to the Collateral and any awards
arising from condemnation of any Collateral shall be paid to Agent for
application to the Obligations in accordance with the terms hereof.

8.6.3.    Protection of Collateral. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping any Collateral, all
Taxes payable with respect to any Collateral (including any sale thereof), and
all other payments required to be made by Agent to any Person to realize upon
any Collateral, shall be borne and paid by Borrowers. Agent shall not be liable
or responsible in any way for the safekeeping of any Collateral, for any loss or
damage thereto (except for reasonable care in its custody while Collateral is in
Agent’s actual possession), for any diminution in the value thereof, or for any
act or default of any warehouseman, carrier, forwarding agency or other Person
whatsoever, but the same shall be at Obligors’ sole risk.

8.6.4.    Defense of Title to Collateral. Each Obligor shall at all times defend
its title to Collateral and Agent’s Liens therein against all Persons, claims
and demands whatsoever, except Permitted Liens.

8.7    Power of Attorney. Each Obligor hereby irrevocably constitutes and
appoints Agent (and all Persons designated by Agent) as such Obligor’s true and
lawful attorney (and agent-in-fact), coupled with an interest, for the purposes
provided in this Section. Agent, or Agent’s designee, may, without notice and in
either its or a an Obligor’s name, but at the cost and expense of the Borrowers:

(a)    Endorse an Obligor’s name on any Payment Item or other proceeds of
Collateral (including proceeds of insurance) that come into Agent’s possession
or control; and

(b)    During an Event of Default, (i) notify any Account Debtors of the
assignment of their Accounts, demand and enforce payment of Accounts, by legal
proceedings or otherwise, and generally exercise any rights and remedies with
respect to Accounts; (ii) settle, adjust, modify, compromise, discharge or
release any Accounts or other Collateral, or any legal proceedings brought to
collect Accounts or Collateral; (iii) sell or assign any Accounts and other
Collateral upon such terms, for such amounts and at such times as Agent deems
advisable; (iv) collect, liquidate and receive balances in Deposit Accounts or
securities accounts, and take control, in any manner, of any proceeds of
Collateral; (v) prepare, file and sign an Obligor’s name to a proof of claim or
other document in a bankruptcy or other Insolvency Proceeding of an Account
Debtor, or to any notice, assignment or satisfaction of Lien or similar
document; (vi) receive, open and dispose of mail addressed to an Obligor where
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the addressor is not identifiable with certainty, and notify postal authorities
to deliver any such mail to an address designated by Agent; (vii) endorse any
Chattel Paper, Document, Instrument, invoice, freight bill, bill of lading, or
other document or agreement relating to any Accounts, Inventory or other
Collateral; (viii) use an Obligor’s stationery and sign its name to
verifications of Accounts and notices to Account Debtors; (ix) use the
information recorded on or contained in any data processing, electronic or
information systems relating to any Collateral; (x) make and adjust claims under
insurance policies; (xi) take any action as may be necessary or appropriate to
obtain payment under any letter of credit, banker’s acceptance or other
instrument for which an Obligor is a beneficiary; and (xii(xii) exercise any
voting or other rights under or with respect to any Investment Property; and
(xiii) take all other actions as Agent deems appropriate to fulfill any
Obligor’s obligations under the Loan Documents.

 

SECTION 9.

REPRESENTATIONS AND WARRANTIES

9.1    General Representations and Warranties. To induce Agent and Lenders to
enter into this Agreement and to make available the Commitments, Loans and
Letters of Credit, each Obligor represents and warrants that:

9.1.1.    Existence, Qualification and Power; Compliance with Applicable Laws.
Each Obligor and each Subsidiary (a) is duly organized or formed, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, (b) has all requisite power and authority and all
requisite governmental licenses, authorizations, consents and approvals to
(i) own its assets and carry on its business and (ii) execute, deliver and
perform its obligations under the Loan Documents to which it is a party, (c) is
duly qualified and is licensed and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification or license, and (d) is in
compliance with all Applicable Laws; except in each case referred to in clause
(b)(i), (c) or (d), to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect. No Obligor is an EEA Financial
Institution.

9.1.2.    Authorization; No Contravention. The execution, delivery and
performance by each Obligor of each Loan Document to which such Person is party,
have been duly authorized by all necessary corporate or other organizational
action, and do not and will not (a) contravene the terms of any of such Person’s
Organic Documents; (b) conflict with or result in any breach of or contravention
under (i) any Contractual Obligation to which such Person is a party or by which
it is bound, the termination or adverse modification of which could reasonably
be expected to have a Material Adverse Effect, or (ii) any order, injunction,
writ or decree of any Governmental Authority or any arbitral award to which such
Person or its property is subject; (c) result in the creation of any Lien (other
than Permitted Liens), or (d) violate any Applicable Law.

9.1.3.    Governmental Authorization; Other Consents. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, any Obligor of
this Agreement or any other Loan Document except for such approvals, consents,
exemptions, authorizations, actions, notices and filings which have been
obtained, taken, given or made and are in full force and effect. All necessary
import, export or other licenses, permits or certificates for the import or
handling of any goods or other Collateral

 

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have been procured and are in effect, and Obligors and Subsidiaries have
complied with all foreign and domestic laws with respect to the shipment and
importation of any goods or Collateral, except where noncompliance could not
reasonably be expected to have a Material Adverse Effect.

9.1.4.    Binding Effect. This Agreement has been, and each other Loan Document,
when delivered hereunder, will have been, duly executed and delivered by each
Obligor that is party thereto. This Agreement constitutes, and each other Loan
Document when so delivered will constitute, a legal, valid and binding
obligation of such Obligor, enforceable against each Obligor that is party
thereto in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors’ rights generally or by equitable principles relating to
enforceability.

9.1.5.    Financial Statements; No Material Adverse Effect.

(a)    The consolidated and consolidating balance sheets, and related statements
of income, cash flow and shareholder’s equity, of Parent and its Subsidiaries
that have been and are hereafter delivered to Agent and Lenders (i) are prepared
in accordance with GAAP consistently applied throughout the period covered
thereby, except as otherwise expressly noted therein; (ii) fairly present the
financial positions and results of operations of Parent and Subsidiaries at the
dates and for the periods indicated, except as otherwise expressly noted
therein; and (iii) show all material indebtedness and other liabilities, direct
or contingent, of Parent and its Subsidiaries as of the date thereof, including
liabilities for taxes, material commitments and Debt, to the extent required by
GAAP to be shown on such financial statements.

(b)    Since December 31, 2010, there has been no change in the condition,
financial or otherwise, of any Borrower or any Subsidiary that could reasonably
be expected to have a Material Adverse Effect.

(c)    Each Borrower is Solvent and Parent and the Subsidiaries on a
consolidated basis are Solvent.

9.1.6.    Litigation. There are no actions, suits, proceedings, claims or
disputes pending or, to the knowledge of any Obligor, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, by or against any Borrower or any Subsidiaries or against any of
their properties or revenues that (a) purport to affect or pertain to this
Agreement or any other Loan Document, or any of the transactions contemplated
hereby, or (b) either individually or in the aggregate, if determined adversely,
could reasonably be expected to have a Material Adverse Effect.

9.1.7.    No Default. No Borrower or Subsidiary is in default under or with
respect to any Contractual Obligation that could, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. No Default
or Event of Default has occurred and is continuing or would result from the
consummation of the transactions contemplated by this Agreement or any other
Loan Document.

9.1.8.    Ownership of Property; Liens. Each Borrower and each Subsidiary has
good record and marketable title in fee simple to, or valid leasehold interests
in, all Real Estate necessary or used in the ordinary conduct of its business
(other than minor defects in title as could

 

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not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect), and all personal Property, including all Property reflected in
any financial statements delivered to Agent or Lenders, in each case free of
Liens except Permitted Liens. Except disclosed on the survey delivered to Agent
as part of the Related Real Estate Documents, no Eligible Real Estate is located
in a special flood hazard zone, except as disclosed on Schedule 9.1.8. Each
Borrower and each Subsidiary has paid and discharged all lawful claims that, if
unpaid, could become a Lien on its Properties, other than Permitted Liens. All
Liens of Agent in the Collateral are duly perfected, first priority Liens,
subject only to Permitted Liens that are expressly allowed to have priority over
Agent’s Liens.

9.1.9.    Environmental Compliance. Borrowers and Subsidiaries conduct in the
Ordinary Course of Business a review of the effect of existing Environmental
Laws and claims alleging potential liability or responsibility for violation of
any Environmental Law on their respective businesses, operations and properties
(including Real Estate), and as a result thereof the Obligors have reasonably
concluded that, except as specifically disclosed on Schedule 9.1.9, such
Environmental Laws and claims could not, individually or in the aggregate
reasonably be expected to have a Material Adverse Effect. No Borrower or
Subsidiary has any contingent liability with respect to any Environmental
Release, environmental pollution or hazardous material on any Real Estate now or
previously owned, leased or operated by it.

9.1.10.    Insurance. The properties of Borrowers and Subsidiaries are insured
with financially sound and reputable insurance companies not Affiliates of any
Obligor, in such amounts (after giving effect to any self-insurance compatible
with the following standards), with such deductibles and covering such risks as
are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the applicable Borrower or the applicable
Subsidiary operates.

9.1.11.    Taxes. Each Borrower and each Subsidiary has filed all federal, state
and material local tax returns and other material reports that it is required by
law to file, and has paid, or made proper provision in accordance with relevant
accounting standards for the payment of, all Taxes upon it, its income and its
Properties that are due and payable, except to the extent being Properly
Contested.

9.1.12.    ERISA; Canadian Pension Plan Compliance.    Except as disclosed on
Schedule 9.1.12:

(a)    Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is
intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS or an application for such a letter is
currently being processed by the IRS with respect thereto and, to the best
knowledge of Obligors, nothing has occurred which would prevent, or cause the
loss of, such qualification. Parent and each ERISA Affiliate has made all
required contributions to each Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.

 

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(b)    There are no pending or, to the best knowledge of Obligors, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan that could be reasonably be expected to have a Material
Adverse Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.

(c)    No Canadian Borrower or any Canadian Subsidiary provides benefits to
retired Canadian Employees or to beneficiaries or dependents of retired Canadian
Employees. Except as would not reasonably be expected to result in a Material
Adverse Effect, Canadian Borrower and each Canadian Subsidiary is in compliance
with all Requirements of Law and all Canadian Employee Benefits Legislation and
health and safety, workers compensation, employment standards, labor relations,
health insurance, employment insurance, protection of personal information,
human rights laws and any Canadian federal, provincial or local counterparts or
equivalents in each case, as applicable to the Canadian Employees and as amended
from time to time.

(d)    (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither Parent
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability under Title IV of ERISA with respect to any Pension Plan (other than
premiums due and not delinquent under Section 4007 of ERISA); (iv) neither
Parent nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Sections 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) neither Parent nor
any ERISA Affiliate has engaged in a transaction that could be subject to
Sections 4069 or 4212(c) of ERISA.

(e)    Canadian Borrower and Canadian Subsidiaries are in compliance with the
requirements of the PBA and other federal, provincial or state laws with respect
to each Canadian Pension Plan, except where the failure to so comply would not
reasonably be expected to have a Material Adverse Effect. No fact or situation
that may reasonably be expected to result in a Material Adverse Effect exists in
connection with any Canadian Pension Plan. Neither Canadian Borrower nor any of
Canadian Subsidiary has any material withdrawal liability in connection with a
Plan. No Termination Event has occurred. Each Canadian Pension Plan has no
solvency deficiency and is fully funded as required under the most recent
actuarial valuation filed with the applicable Governmental Authority pursuant to
generally accepted actuarial practices and principles. No fact or circumstance
exists that could adversely affect the tax-exempt status of a Canadian Pension
Plan. No Lien has arisen, choate or inchoate, in respect of Canadian Borrower or
Canadian Subsidiaries or their property in connection with any Canadian Pension
Plan (save for contribution amounts not yet due). No Canadian Pension Plan
provides benefits on a defined benefit basis.

(f)    With respect to any Foreign Plan, except as could not reasonably be
expected to have a Material Adverse Effect, (i) all employer and employee
contributions required by law or by the terms of the Foreign Plan have been
made, or, if applicable, accrued, in accordance with normal accounting
practices; (ii) the fair market value of the assets of each funded Foreign Plan,
the liability of each insurer for any Foreign Plan funded through insurance, or
the book reserve established for any Foreign Plan, together with any accrued
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procure or provide for the accrued benefit obligations with respect to all
current and former participants in such Foreign Plan according to the actuarial
assumptions and valuations most recently used to account for such obligations in
accordance with applicable generally accepted accounting principles; and
(iii) it has been registered as required and has been maintained in good
standing with applicable regulatory authorities.

(g)    No U.K. Domiciled Obligor nor any of its U.K. subsidiaries is nor has at
any time been: (i) an employer (for the purposes of Sections 38 to 51 of the
Pensions Act 2004 of the United Kingdom) of an occupational pension scheme which
is not a money purchase scheme (as those terms are defined in the Pension
Schemes Act 1993 of the United Kingdom); or (ii) “connected” with or an
“associate” of the Parent or any of its Subsidiaries which is such an employer
(as those terms are used in Sections 38 and 43 of the Pensions Act 2004 of the
United Kingdom) in relation to an occupational pension scheme in the United
Kingdom which is not a money purchase scheme.

9.1.13.    Subsidiaries. Schedule 9.1.13 shows, for each Borrower and each
Subsidiary, its name and its jurisdiction of organization. Schedule 9.1.13
shows, for each Subsidiary of Parent, its authorized and issued Equity
Interests, the holders of its Equity Interests, and all agreements binding on
such holders with respect to their Equity Interests. Except as disclosed on
Schedule 9.1.13, in the five years preceding the Closing Date, no Borrower or
Subsidiary has acquired any substantial assets from any other Person nor been
the surviving entity in a merger, amalgamation or combination. Each Borrower has
good title to its Equity Interests in its Subsidiaries, and all such Equity
Interests are duly issued, fully paid and non-assessable. There are no
outstanding purchase options, warrants, subscription rights, agreements to issue
or sell, convertible interests, phantom rights or powers of attorney relating to
Equity Interests of any Subsidiary of Parent.

9.1.14.    Margin Regulations; Investment Company Act.

(a)    No Borrower or Subsidiary is engaged, principally or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any Margin Stock. No Loan proceeds or Letters of Credit
will be used by Borrowers to purchase or carry, or to reduce or refinance any
Debt incurred to purchase or carry, any Margin Stock or for any related purpose,
in each case, in violation of Regulations T, U or X of the Board of Governors.

(b)    None of the Borrowers is or is required to be registered as an
“investment company” under the Investment Company Act of 1940.

9.1.15.    Disclosure. No written report, financial statement, certificate or
other written information furnished by or on behalf of any Obligor to Agent or
any Lender in connection with the transactions contemplated hereby and the
negotiation of this Agreement or delivered hereunder (as modified or
supplemented by other information so furnished) taken as a whole contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected financial
information, the Borrowers represent only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time (it
being understood that projections are subject to significant uncertainties

 

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and contingencies, many of which are beyond the Borrowers’ control, and that no
assurance can be given the projections will be realized).

9.1.16.    Compliance with Laws. Each Borrower and each Subsidiary is in
compliance in all material respects with the requirements of all Applicable Laws
and all orders, writs, injunctions and decrees applicable to it or to its
Properties, except in such instances in which (a) such requirement of Applicable
Law or order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply
therewith, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. Except as would not reasonably be
expected to have a Material Adverse Effect, no Inventory has been produced in
violation of the FLSA.

9.1.17.     Intellectual Property; Licenses, Etc. To the best knowledge of
Obligors, or as could not reasonably be expected to have a Material Adverse
Effect, Borrowers and Subsidiaries own, or possess the lawful right to use, all
Intellectual Property necessary for the conduct of its business, without
conflict with the rights of any other Person. To the best knowledge of Obligors,
no slogan or other advertising device, product, process, method, substance, part
or other material now employed by any Borrower or any Subsidiary infringes upon
any valid, proprietary rights held by any other Person that could result in a
claim, that, if successful, could reasonably be expected to have a Material
Adverse Effect. No claim or litigation regarding any of the foregoing is pending
or, to the best knowledge of the Obligors, threatened, which, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. Borrower Agent has disclosed on Schedule 9.1.17 (i) all
Royalties or other compensation paid by any Borrower or Subsidiary to any Person
with respect to any Intellectual Property and (ii) all Intellectual Property
(other than Excluded Intellectual Property) registrations, filings and
applications for registration owned by any Obligor.

9.1.18.    Accounts. Agent may rely, in determining which Accounts are Eligible
Accounts, on all statements and representations made by Borrowers with respect
thereto. Borrowers warrant, with respect to each Account at the time it is shown
as an Eligible Account in a Borrowing Base Certificate, that:

(a)    it is genuine and in all respects what it purports to be, and is not
evidenced by a judgment;

(b)    it arises out of a completed, bona fide sale and delivery of goods or
rendition of services in the Ordinary Course of Business, and substantially in
accordance with any purchase order, contract or other document relating thereto;

(c)    it is for a sum certain, maturing as stated in the invoice covering such
sale or rendition of services, a copy of which has been furnished or is
available to Agent on request;

(d)    it is not subject to any offset, Lien (other than Agent’s Lien),
deduction, defense, dispute, counterclaim or other adverse condition except as
arising in the Ordinary Course of Business and disclosed to Agent; and it is
absolutely owing by the Account Debtor, without contingency in any respect;

 

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(e)    no purchase order, agreement, document or Applicable Law restricts
assignment of the Account to Agent (regardless of whether, under the UCC or
PPSA, the restriction is ineffective), and the applicable Borrower is the sole
payee or remittance party shown on the invoice;

(f)    no extension, compromise, settlement, modification, credit, deduction or
return has been authorized with respect to the Account, except discounts or
allowances granted in the Ordinary Course of Business for prompt payment that
are reflected on the face of the invoice related thereto and in the reports
submitted to Agent hereunder; and

(g)    to the best of Borrowers’ knowledge, (i) there are no facts or
circumstances that are reasonably likely to impair the enforceability or
collectibility of such Account; (ii) the Account Debtor had the capacity to
contract when the Account arose, continues to meet the applicable Borrower’s
customary credit standards, is Solvent, is not contemplating or subject to an
Insolvency Proceeding, and has not failed, or suspended or ceased doing
business; and (iii) there are no proceedings or actions threatened or pending
against any Account Debtor that could reasonably be expected to have a material
adverse effect on the Account Debtor’s financial condition.

9.1.19.    Brokers. There are no brokerage commissions, finder’s fees or
investment banking fees payable in connection with any transactions contemplated
by the Loan Documents.

9.1.20.    Trade Relations. Except as would not reasonably be expected to have a
Material Adverse Effect, there exists no actual or threatened termination,
limitation or modification of any business relationship between any Borrower or
Subsidiary and any customer or supplier, or any group of customers or suppliers,
who individually or in the aggregate are material to the business of such
Borrower or Subsidiary.

9.1.21.    Labor Relations. Except as described on Schedule 9.1.21, no Obligor
is party to or bound by any collective bargaining agreement. Except as would not
reasonably be expected to have a Material Adverse Effect, there are no material
grievances, disputes or controversies with any union or other organization of
any Borrower’s or Subsidiary’s employees, or, to any Obligor’s knowledge, any
asserted or threatened strikes, work stoppages or demands for collective
bargaining.

9.1.22.    OFAC. No Obligor (i) or (to the knowledge of any Obligor) any
director, officer, employee, agent, affiliate or representative thereof, is or
is owned or controlled by any individual or entity that is currently the target
of any Sanction or is located, organized or resident in a Designated
Jurisdiction, (ii) is a person whose property or interest in property is blocked
or subject to blocking pursuant to (A) Section 1 of Executive Order 13224 of
September 23, 2001 Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079
(2001)), (B) the United Nations Act (Canada), the Special Economic Measures Act
(Canada), the Export and Import Permits Act (Canada), the Freezing Assets of
Corrupt Foreign Officials Act (Canada), the Criminal Code (Canada), the Defence
Production Act (Canada), the Proceeds of Crime Act, the Anti-terrorism Act
(Canada) or the Foreign Extraterritorial Measures Act (Canada) (together with
and all regulations and orders

 

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made thereunder, collectively, “Canadian Sanctions Laws”), or (C) the Proceeds
of Crime Act 2002, the Counter-Terrorism Act 2008 and Export Control Order 2008,
the Export Control Act 2002, the Export Control (Al-Qaida and Taliban Sanctions)
Regulations 2011, the Terrorist Asset-Freezing etc. Act 2010 and the
Consolidated List of Financial Sanctions Targets administered by HM Treasury
through the Office of Financial Sanctions Implementations, EU Council Regulation
2580/2001 and all supplementary instruments thereto including Implementing
Resolution 1169/2012 and EU (EC) Regulation 881/2002, (EU) 753/2011, (EU)
754/2011 and (EU) 2017/1411 (collectively, the “U.K. Sanctions Laws”), (iii)
engages in any dealings or transactions prohibited by (A) Section 2 of such
executive order, (B) Canadian Sanctions Laws or (C) U.K. Sanctions Laws, or is
otherwise associated with any such person in any manner violative of Section 2
of such executive order or by Canadian Sanctions Laws or U.K. Sanctions Laws, or
(iv) is a person (A) on the list of Specially Designated Nationals and Blocked
Persons or subject to the limitations or prohibitions under any other OFAC
regulation or executive order, (B) on the list of names subject to the
Regulations Establishing a List of Entities made under subsection 83.05(1) of
the Criminal Code, and/or the Regulations Implementing the United Nations
Resolutions on the Suppression of Terrorism (RIUNRST) and/or United Nations
Al-Qaida and Taliban Regulations (UNAQTR), or (C) is a person included on the
UK’s Consolidated List of Financial Sanctions Targets.

9.1.23.    Anti-Corruption Laws. Each Obligor has implemented and maintains in
effect policies and procedures designed to ensure compliance by such Obligor,
its Subsidiaries and their respective directors, officers, employees and agents
with Anti-Corruption Laws of Canada, United Kingdom, United States, and any of
the member states of the European Union and applicable Sanctions, and such
Obligor, its Subsidiaries and their respective officers and directors and, to
the knowledge of such Loan Party, its employees and agents, are in compliance
with Anti-Corruption Laws of Canada, United Kingdom, United States, and any of
the member states of the European Union and applicable Sanctions in all material
respects.

9.1.24.    Commercial Tort Claims. Except as shown on Schedule 9.1.24, no U.S.
Domiciled Obligor has a Commercial Tort Claim (other than a Commercial Tort
Claim for less than $1,000,000).

 

SECTION 10.

COVENANTS AND CONTINUING AGREEMENTS

10.1    Affirmative Covenants. As long as any Commitments or Obligations are
outstanding, each Obligor shall, and shall cause each Subsidiary to:

10.1.1.    Financial Statements. Deliver to Agent (with sufficient copies for
each Lender), in form and detail satisfactory to Agent and the Required Lenders:

(a)    as soon as available, but in any event within 90 days after the end of
each Fiscal Year of Parent, balance sheets as at the end of such Fiscal Year,
and the related statements of income or operations, shareholders’ equity and
cash flows for such Fiscal Year, on a consolidated and consolidating basis for
Parent and its Subsidiaries, setting forth in each case in comparative form the
figures for the previous Fiscal Year, all in reasonable detail and prepared in
accordance with GAAP, which consolidated statements shall be audited and
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report and opinion of an independent certified public accountant or chartered
accountant, as applicable, of nationally recognized standing, which report and
opinion shall be prepared in accordance with generally accepted auditing
standards and shall not be subject to any “going concern” or like qualification
or exception or any qualification or exception as to the scope of such audit;

(b)    as soon as available, but in any event within 45 days after the end of
each of the first three fiscal quarters of each Fiscal Year of Parent, unaudited
balance sheets as at the end of such fiscal quarter, and the related statements
of income or operations, shareholders’ equity and cash flows for such fiscal
quarter and for the portion of Parent’s fiscal year then ended, on a
consolidated and consolidating basis for Parent and its Subsidiaries, setting
forth in each case in comparative form the figures for the corresponding fiscal
quarter of the previous fiscal year and the corresponding portion of the
previous fiscal year, all in reasonable detail, certified by the chief financial
officer of Borrower Agent as fairly presenting the financial condition, results
of operations, shareholders’ equity and cash flows of Parent and its
Subsidiaries in accordance with GAAP, subject only to normal year-end audit
adjustments and the absence of footnotes; and

(c)    as soon as available, and in any event within 30 days after the end of
each month other than the last month of each fiscal quarter of Parent, unaudited
balance sheets as at the end of such month, and the related statements of income
or operations for such month and for the portion of Parent’s fiscal year then
ended, on a consolidated basis for Parent and its Subsidiaries, setting forth in
each case in comparative form the figures for the corresponding month of the
previous fiscal year and the corresponding portion of the previous fiscal year,
all in reasonable detail, certified by the chief financial officer of Borrower
Agent as fairly presenting the financial condition, results of operations,
shareholders’ equity and cash flows of Parent and its Subsidiaries in accordance
with historical practices.

10.1.2.    Certificates; Other Information. Deliver to Agent, for delivery to
each Lender, in form and detail satisfactory to Agent and the Required Lenders:

(a)    concurrently with the delivery of the financial statements referred to in
Sections 10.1.1(a), (b) and (c), or more frequently if requested by Agent when a
Default or Event of Default exists, a duly completed Compliance Certificate
signed by the chief financial officer of the Borrower Agent;

(b)    concurrently with the delivery of financial statements under
Section 10.1.1(a), copies of any detailed audit reports, management letters or
recommendations submitted to the board of directors (or the audit committee of
the board of directors) of Parent by independent accountants in connection with
the accounts or books of Borrowers or any Subsidiary, or any audit of any of
them;

(c)    promptly after the same are available, copies of each annual report,
proxy or financial statement or other report or communication sent to the
stockholders of Parent, and copies of all annual, regular, periodic and special
reports and registration statements which any Obligor may file or be required to
file with the Securities and Exchange Commission or any provincial securities
commission or regulator, and not otherwise required to be delivered to Agent
pursuant hereto;

 

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(d)    promptly following the Agent’s request therefor, all documentation and
other information that the Agent reasonably requests on its behalf or on behalf
of any Lender in order to comply with its ongoing obligations under applicable
“know your customer” and anti-money laundering rules and regulations, including
the Patriot Act and the Proceeds of Crime Act;

(e)    promptly following the Agent’s request therefor, copies of (i) any
documents described in Section 101(k)(1) of ERISA that any Borrower or any of
its ERISA Affiliates may request with respect to any Multiemployer Plan and
(ii) any notices described in Section 101(l)(1) of ERISA that any Borrower or
any of its ERISA Affiliates may request with respect to any Plan or
Multiemployer Plan; provided that if any Borrower or any of its ERISA Affiliates
have not requested such documents or notices from the administrator or sponsor
of the applicable Plan or Multiemployer Plan prior to the Agent’s request
therefor, a Borrower or one of its ERISA Affiliates shall promptly make a
request for such documents or notices from such administrator or sponsor and
shall provide copies of such documents and notices promptly after receipt
thereof and promptly after the sending or filing thereof, copies of any annual
report to be filed in connection with any Canadian Pension Plan or any Foreign
Plan of any Obligor incorporated in the U.K.;

(f)    promptly after Borrower Agent has notified Agent of any intention by
Borrowers to treat the Loans and/or Letters of Credit and related transactions
as being a “reportable transaction” (within the meaning of Treasury Regulation
Section 1.6011-4), a duly completed copy of IRS Form 8886 or any successor form;

(g)    not later than 30 days after the end of each Fiscal Year, projections of
Parent’s consolidated balance sheets, results of operations, cash flow, U.S.
Availability, U.K. Availability and Canadian Availability for the next Fiscal
Year, month by month;

(h)    at Agent’s request, a listing of each Obligor’s trade payables,
specifying the trade creditor and balance due, and a detailed trade payable
aging, all in form satisfactory to Agent;

(i)    within 45 days of the end of each fiscal quarter of Parent, or more
frequently if requested by Agent when a Default or Event of Default exists:
(i) all Royalties or other compensation (to the extent not previously disclosed
to Agent in writing) paid by any Borrower or Subsidiary to any Person with
respect to any Intellectual Property, and (ii) all Intellectual Property (to the
extent not previously disclosed to Agent in writing) owned, used or licensed by,
or otherwise subject to any interests of, any Borrower or Subsidiary; and

(j)    promptly, such additional information regarding the Collateral or the
business, financial or corporate affairs of Borrowers or any Subsidiary, or
compliance with the terms of the Loan Documents, as Agent or any Lender may from
time to time reasonably request.

Documents required to be delivered pursuant to Section 10.1.1(a) or (b) or
Section 10.1.2(c) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which
Borrower Agent posts such documents, or provides a link thereto on Borrower
Agent’s website; or (ii) on which such documents are posted on Borrower Agent’s
behalf on IntraLinks/IntraAgency or another relevant website, if any, to which
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access (whether a commercial, third-party website or whether sponsored by
Agent); provided that: (i) if any Lender so requests, the Borrower Agent shall
deliver paper copies or electronic copies via electronic mail of such documents
to Agent or any Lender that requests Borrower Agent to deliver such paper or
electronic copies until a written request to cease delivering paper or
electronic copies is given by Agent or such Lender and (ii) Borrower Agent shall
notify (which may be by facsimile or electronic mail) Agent and each Lender of
the posting of any such documents. Notwithstanding anything contained herein, in
every instance Borrower Agent shall be required to provide paper copies of the
Compliance Certificates required by Section 10.1.2(a) to Agent and each of the
Lenders. Except for such Compliance Certificates, Agent shall have no obligation
to request the delivery or to maintain copies of the documents referred to
above, and in any event shall have no responsibility to monitor compliance by
Borrower Agent with any such request for delivery, and each Lender shall be
solely responsible for requesting delivery to it or maintaining its copies of
such documents.

10.1.3.    Notices. Notify Agent and each Lender:

(a)    Within five (5) Business Days after the occurrence of a Default or Event
of Default under Section 11.1(f) and promptly after the occurrence of any other
Default or Event of Default;

(b)    Promptly of any matter that has resulted or could reasonably be expected
to result in a Material Adverse Effect, including, if applicable (i) breach or
non-performance of, or any default under, a Contractual Obligation of any
Borrower or any Subsidiary; (ii) any dispute, litigation, investigation,
proceeding or suspension between any Borrower or any Subsidiary and any
Governmental Authority; (iii) the commencement of, or any material development
in, any litigation or proceeding affecting any Borrower or any Subsidiary,
including pursuant to any applicable Environmental Laws; or (iv) the assertion
of any Intellectual Property Claim;

(c)    Promptly of the occurrence of any ERISA Event or Termination Event;

(d)    Promptly of any material change in accounting policies or financial
reporting practices by any Borrower or any Subsidiary;

(e)    Promptly after obtaining knowledge of any pending or threatened labor
dispute, strike or walkout, or the expiration of any material labor contract
that, in each case, materially and adversely affects any Obligor or any
Subsidiary;

(f)    Promptly of any judgment affecting any Obligor in an amount exceeding the
Dollar Equivalent of $5,000,000;

(g)    Promptly after the discharge or any withdrawal or resignation by
Borrowers’ accountants; and

(h)    At least 30 days prior to any opening of a new office or place of
business where Collateral will be located.

Each notice pursuant to this Section shall be accompanied by a statement of a
Senior Officer of Borrower Agent setting forth details of the occurrence
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Borrowers have taken and proposes to take with respect thereto. Each notice
pursuant to Section 10.1.3 shall describe with particularity any and all
provisions of this Agreement and any other Loan Document that have been
breached.

10.1.4.    Payment of Obligations. Pay and discharge as the same shall become
due and payable, all its obligations and liabilities in an aggregate amount in
excess of $10,000,000, including (a) all Taxes and tax liabilities, assessments
and governmental charges or levies upon it or its Properties, unless such Taxes
are being Properly Contested; provided, that all such Taxes, tax liabilities,
assessments, governmental charges and levies shall be paid and discharged prior
to the date on which a Lien on any Collateral shall attach in an aggregate
amount in excess of $250,000 for all federal tax liens and $2,500,000 for all
other liens which is senior to Agent’s Lien; (b) all lawful claims which, if
unpaid, would by law become a Lien upon its property; and (c) all Debt, as and
when due and payable, but subject to any subordination provisions contained in
any instrument or agreement evidencing such Debt.

10.1.5.    Preservation of Existence, Etc. (a) Preserve, renew and maintain in
full force and effect its legal existence and good standing under the laws of
the jurisdiction of its organization except in a transaction permitted by
Section 10.2.4 or 10.2.5; (b) take all reasonable action to maintain all rights,
privileges, permits, licenses and franchises necessary or desirable in the
normal conduct of its business, except to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Effect; and (c) preserve
or renew all of its registered patents, trademarks, trade names and service
marks, the non-preservation of which could reasonably be expected to have a
Material Adverse Effect.

10.1.6.    Maintenance of Properties. (a) Except for any downsizing,
restructuring, closure or partial closure of the golf ball manufacturing
operations of Borrowers in existence on the Original Agreement Closing Date,
maintain, preserve and protect all of its material properties and material
equipment necessary in the operation of its business in good working order and
condition, ordinary wear and tear excepted; and (b) make all necessary repairs
thereto and renewals and replacements thereof except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect.

10.1.7.    Maintenance of Insurance. In addition to the insurance required
hereunder with respect to Collateral, maintain insurance with insurers (with a
Best Rating of at least A7, unless otherwise approved by Agent) satisfactory to
Agent, with respect to the Properties and business of Borrowers and Subsidiaries
of such type (including product liability, workers’ compensation, larceny,
embezzlement, or other criminal misappropriation insurance), in such amounts,
and with such coverages and deductibles as are customary for companies similarly
situated.

10.1.8.    Compliance with Laws. Comply in all material respects with the
requirements of all Applicable Laws and all orders, writs, injunctions and
decrees applicable to it or to its business or property, except in such
instances in which (a) such requirement of Applicable Law or order, write,
injunction or decree is being contested in good faith by appropriate proceedings
diligently conducted; or (b) the failure to comply therewith could not
reasonably be expected to have a Material Adverse Effect. Materially comply with
all Anti-Terrorism Laws.

 

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10.1.9.    Books and Records. Maintain proper books of record and account, in
which full, true and correct entries in conformity with GAAP consistently
applied shall be made of all financial transactions and matters involving the
assets and business of each Borrower and each Subsidiary, as the case may be;
and (b) maintain such books of record and account in material conformity with
all applicable requirements of any Governmental Authority having regulatory
jurisdiction over each Borrower and each Subsidiary, as the case may be.

10.1.10.    Inspections; Appraisals.

(a)    Permit Agent from time to time, subject (except when a Default or Event
of Default exists) to reasonable notice and normal business hours, to visit and
inspect the Properties of any Borrower or Subsidiary, inspect, audit and make
extracts from any Borrower’s or Subsidiary’s books and records, and discuss with
its officers, employees, agents, advisors and independent accountants such
Borrower’s or Subsidiary’s business, financial condition, assets, prospects and
results of operations. For each calendar year, at least one examination will be
held by Agent during such calendar year and at least two examinations will be
held by Agent during such calendar year if Availability on any day during such
year is less than $35,000,000. Lenders may participate in any such visit or
inspection, at their own expense. Neither Agent nor any Lender shall have any
duty to any Borrower to make any inspection, nor to share any results of any
inspection, appraisal or report with any Borrower. Borrowers acknowledge that
all inspections, appraisals and reports are prepared by Agent and Lenders for
their purposes, and Borrowers shall not be entitled to rely upon them.

(b)    Reimburse Agent for all charges, costs and expenses of Agent in
connection with (i) examinations of any Obligor’s books and records or any other
financial or Collateral matters as Agent deems appropriate, up to two times per
calendar year; (ii) appraisals of Inventory, up to two times per calendar year
and (iii) appraisals of Intellectual Property (other than Excluded Intellectual
Property), up to one time per calendar year; provided, however, that:
(A) Borrowers shall reimburse Agent for all charges, costs and expenses in
connection with a third appraisal of Inventory or second appraisal of
Intellectual Property (other than Excluded Intellectual Property) in any
calendar year if such appraisal is commenced during any Reporting Trigger
Period; (B) Borrowers shall reimburse Agent for all charges, costs and expenses
in connection with a third examination in any calendar year if such examination
is commenced during any Reporting Trigger Period; and (C) if an examination or
appraisal is initiated during a Default or Event of Default, all charges, costs
and expenses therefor shall be reimbursed by Borrowers without regard to such
limits. Borrowers agree to pay Agent’s then standard charges for examination
activities, including the standard charges of Agent’s internal examination and
appraisal groups, as well as the charges of any third party used for such
purposes.

10.1.11.    Use of Proceeds. Use the proceeds of the Loans or other extensions
of credit (a) to refinance existing indebtedness, (b) to issue standby or
commercial letters of credit and (c) to finance ongoing working capital needs
and for general corporate purposes (including Permitted Acquisitions) not in
contravention of any Applicable Law or of any Loan Document.

10.1.12.    Additional Guarantors. Promptly notify Agent upon any Person
becoming a Subsidiary and (a) cause (i)(A) each U.S. Subsidiary and (B) any
Foreign Subsidiary that loses its status as a “controlled foreign corporation”
under Section 957 of the Code promptly to execute

 

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and deliver to Agent a Guarantee (including, if requested by Agent, a joinder to
this Agreement in form and substance satisfactory to Agent) in favor of Agent
for the benefit of the Secured Parties, and (ii) each Canadian Subsidiary and
U.K. Subsidiary to execute and deliver to Agent a Canadian Facility Guarantee
and U.K. Facility Guarantee (including, if requested by Agent, a joinder to this
Agreement in form and substance satisfactory to Agent) in favor of Agent for the
benefit of the Canadian Secured Parties and U.K. Secured Parties, (b) cause such
Guarantor to deliver to the Agent such certificates of resolutions or other
action, incumbency certificates and/or other certificates of Senior Officers or
other authorized Persons of such Subsidiary as Agent may require evidencing the
identity, authority and capacity of each Senior Officer or other authorized
Person thereof in connection with the Guarantee, Canadian Facility Guarantee, or
U.K. Facility Guarantee, as applicable, to which such Subsidiary is a party and
such additional and other documents and certifications as Agent may reasonably
require to evidence that such Subsidiary is duly organized or formed and is
validly existing, in good standing and qualified to engage in business, in each
case to the extent applicable, in jurisdictions reasonably identified by Agent,
and (c) cause such Guarantor to execute and deliver such documents, instruments
and agreements and to take such other actions as Agent shall require to evidence
and perfect a Lien in favor of Agent (for the benefit of Secured Parties (in the
case of a Subsidiary described in clause (a)(i) above) and the Canadian Secured
Parties and U.K. Secured Parties (in the case of a Subsidiary described in
clause (a)(ii) above)) on all assets of such Person which are the same type as
the Collateral, including delivery of legal opinions, in form and substance
satisfactory to Agent, as it shall deem appropriate.

10.1.13.    Landlord and Storage Agreements. Upon request, provide Agent with
copies of all existing agreements, and promptly after execution thereof provide
Agent with copies of all future agreements, between an Obligor and any landlord,
warehouseman, processor, shipper, bailee or other Person that owns any premises
at which any Collateral may be kept or that otherwise may possess or handle any
Collateral.

10.1.14.    Licenses. (a) Keep each License affecting any Collateral (including
the manufacture, distribution or disposition of Inventory) or any other material
Property of Borrowers and Subsidiaries in full force and effect except to the
extent that failure to do so could not reasonably be expected to have a Material
Adverse Effect; (b) pay all Royalties when due except as would not materially
adversely affect the value of the Collateral; and (d) notify Agent of any
default or breach asserted by any Person to have occurred under any License
which breach would materially adversely affect the value of the Collateral.

10.1.15.    U.K. Pension Plans. Each U.K. Domiciled Obligor shall ensure that it
is not and will not be and none of its U.K. subsidiaries will be at any time:
(i) an employer (for the purposes of Sections 38 to 51 of the Pensions Act 2004
of the United Kingdom) of an occupational pension scheme which is not a money
purchase scheme (as those terms are defined in the Pension Schemes Act 1993 of
the United Kingdom); or (ii) “connected” with or an “associate” of the Parent or
any of its Subsidiaries which is an employer (as those terms are used in
Sections 38 or 43 of the Pensions Act 2004 of the United Kingdom) in relation to
an occupational pension scheme in the United Kingdom which is not a money
purchase scheme.

10.1.16.    Anti-Corruption Laws. Each Obligor will maintain in effect and
enforce policies and procedures designed to ensure compliance by such Obligor,
its Subsidiaries and their respective directors, officers, employees and agents
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Kingdom, United States, and any of the member states of the European Union and
applicable Sanctions.

10.1.17.    Post-Closing.

(a)    In order to include the U.S. Real Estate Formula Amount in the
calculation of the U.S. Borrowing Base, deliver to Agent the Related Real Estate
Documents and Mortgage for the Real Estate located at 2180 Rutherford Road,
Carlsbad, CA 92008.

(b)    Within 60 days of the date of this Agreement, Ogio shall close all
Deposit Accounts and securities accounts maintained at Wells Fargo and each
Obligor shall take all other necessary steps to be in compliance of Sections
8.2.4, 8.2.5, and 8.5 of this Agreement.

10.2    Negative Covenants. As long as any Commitments or Obligations are
outstanding, each Obligor shall not, and shall cause each Subsidiary not to:

10.2.1.    Liens. Create, incur, assume or suffer to exist any Lien upon any of
its Property, whether now owned or hereafter acquired, other than the following
(collectively, “Permitted Liens”):

(a)    Liens in favor of Agent;

(b)    Liens existing on the Closing Date that are listed on Schedule 10.2.1;

(c)    Liens for taxes, fees, assessments or other governmental charges not yet
delinquent or being Properly Contested;

(d)    carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or
other like Liens arising in the Ordinary Course of Business which are not
overdue for a period of more than 30 days or which are being Properly Contested;

(e)    pledges or deposits in the Ordinary Course of Business in connection with
workers’ compensation, unemployment insurance and other social security
legislation, other than any Lien imposed by ERISA;

(f)    deposits or other Liens to secure the performance of bids, trade
contracts and leases (other than Debt), statutory obligations, surety bonds
(other than bonds related to judgments or litigation), performance bonds and
other obligations of a like nature incurred in the Ordinary Course of Business;

(g)    easements, rights-of-way, restrictions and other similar encumbrances
affecting Real Estate which, are (i) shown in any lender’s policy of title
insurance insuring any Mortgage, or (ii) in the aggregate, are not substantial
in amount, and which do not in any case materially detract from the value of the
property subject thereto or materially interfere with the ordinary conduct of
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(h)    Liens arising solely by virtue of any statutory or common law provision
relating to banker’s liens, rights of set-off or similar rights and remedies as
to deposit accounts or other funds maintained with a creditor depository
institution;

(i)    Liens securing judgments for the payment of money not constituting an
Event of Default under Section 11.1(g) or securing appeal or other surety bonds
related to such judgments (so long as such judgments do not constitute an Event
of Default under Section 11.1(g));

(j)    Liens securing Debt permitted under Section 10.2.3(e); provided that
(i) such Liens do not at any time encumber any property other than the property
financed by such Debt and (ii) the Debt secured thereby does not exceed, on the
date of acquisition, the cost or fair market value, whichever is lower, of the
property being acquired;

(k)    any Lien existing on any property or asset (other than Accounts,
Inventory, Dominion Accounts, Restricted Assets, the Company Trademark, and
Eligible Real Estate) prior to the acquisition thereof by any Obligor or any
Subsidiary or existing on any property or asset (other than Accounts, Inventory,
Dominion Accounts, Restricted Assets, the Company Trademark, and Eligible Real
Estate) of any Person that becomes an Obligor or Subsidiary after the date
hereof prior to the time such Person becomes an Obligor or Subsidiary; provided
that (i) such Lien is not created in contemplation of or in connection with such
acquisition or such Person becoming an Obligor or Subsidiary, as the case may
be, (ii) such Lien shall not apply to any other property or assets of the
Obligor or Subsidiary, (iii) such Lien shall secure only those obligations which
it secures on the date of such acquisition or the date such Person becomes an
Obligor or Subsidiary, as the case may be, (iv) all obligations secured by a
Lien permitted under this clause (k) shall not exceed an aggregate amount of
$25,000,000 at any one time outstanding, and (v) if requested by Agent, such
Liens will be subject to an intercreditor agreement, in form and substance
satisfactory to Agent;

(l)    extensions, renewals and replacements of Liens referred to in clauses
(a) through (k) above, provided that the property covered thereby is not
increased and any renewal or extension of the obligations secured or benefited
thereby is permitted by Section 10.2.3;

(m)    Liens (other than on: (i) Accounts, Inventory, Dominion Accounts, and
Restricted Assets of a Borrower or Guarantor; and (ii) the Company Trademark and
Eligible Real Estate) arising under leases, subleases, licenses and rights to
use granted to others and permitted under Section 10.2.5(f);

(n)    Liens (other than on: (i) Accounts, Inventory, Dominion Accounts, and
Restricted Assets of a Borrower or Guarantor; and (ii) the Company Trademark and
Eligible Real Estate) not expressly permitted by clauses (a) through (m) above
and as to which the aggregate amount of obligations secured thereby does not
exceed $50,000,000 at any one time;

(o)    Liens securing Debt permitted under Section 10.2.3(q) or (s) so long:
(i) such Liens will be subject to an intercreditor agreement, in form and
substance satisfactory to Agent; (ii) to the extent any such Liens are on any
Collateral (as defined on the First Amendment to Third Amended and Restated
Effective Date), such Liens are subordinated to the Liens of Agent pursuant to
such intercreditor agreement (provided that, in the case of any Liens securing
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permitted under Section 10.2.3(s), any such Liens on Term Loan Priority
Intellectual Property (as defined in the Project Max Commitment Letter as in
effect on the First Amendment to Third Amended and Restated Effective Date)
shall be senior to the Liens of Agent hereunder and shall not be subordinated to
the Liens of Agent); and (iii) to the extent such Liens extend to Property which
does not (or would not) constitute Collateral (as defined on the First Amendment
to Third Amended and Restated Effective Date) (“Additional Collateral”), at the
request of the Required Lenders, the Obligors and their Subsidiaries shall
execute and deliver such documents, instruments and agreements and take such
other actions as Agent shall require to evidence and perfect a Lien in favor of
Agent (for the benefit of Secured Parties) on all Additional Collateral (it
being understood that any such Liens held by Agent on Additional Collateral
shall be junior to the Liens permitted under this Section 10.2.1(o) as set forth
in an intercreditor agreement in form and substance satisfactory to Agent); and

(p)    Liens securing Debt permitted under Section 10.2.3.(r); provided that
such Liens do not at any time encumber any property other than the property
financed or leased by such Debt.

10.2.2.    Investments. Make any Investments, except:

(a)    advances to officers, directors and employees of the Obligors and
Subsidiaries for travel, entertainment, relocation and analogous ordinary
business purposes;

(b)    Investments in Subsidiaries to the extent existing on the Closing Date
and other Investments in existence on the Closing Date and set forth on Schedule
10.2.2;

(c)    Investments by: (i) a U.S. Borrower in another U.S. Borrower; (ii) a U.S.
Domiciled Obligor (other than a U.S. Borrower) in another U.S. Domiciled
Obligor; (iii) a U.S. Domiciled Obligor in the Canadian Borrower so long as:
(A) the aggregate amount of such Investments shall not exceed $10,000,000 at any
time outstanding, and (B) no Event of Default has occurred and is continuing at
the time of such Investment, or would result therefrom; (iv) a U.S. Domiciled
Obligor in Callaway de México, S.A. de C.V. so long as such Investments are in
the Ordinary Course of Business and consistent with historical practices;
(v) any Canadian Domiciled Obligor or U.K. Domiciled Obligor in a Borrower;
(vi) a Borrower in a Guarantor or Subsidiary that is not a Borrower or Guarantor
so long as: (A) the aggregate amount of such Investments shall not exceed: (I)
$3,000,000 in any calendar year, and (II) $10,000,000 at any time outstanding,
and (B) no Event of Default has occurred and is continuing at the time of such
Investment, or would result therefrom; and (vii) a Subsidiary that is not a
Borrower or Guarantor in any other Subsidiary;

(d)    Investments consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade credit in the
Ordinary Course of Business, and Investments received in satisfaction or partial
satisfaction thereof from financially troubled account debtors to the extent
reasonably necessary in order to prevent or limit loss;

(e)    Investments consisting of Permitted Acquisitions;

(f)    Investments pursuant to Hedging Agreements otherwise permitted hereunder;

 

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(g)    Investments in Cash Equivalents;

(h)    so long as no Event of Default has occurred and is continuing or would
result therefrom, any other Investments (other than an Acquisition) made after
the Third Amendment to Second Amended and Restated Effective Date in an
aggregate amount not to exceed $30,000,000 (such limitation, the “Investment
Cap”); provided, however, that no such Investment shall count against the
Investment Cap if either: (i) (A) on a pro forma basis after giving effect to
such Investment, Net Excess Availability has been greater than an amount equal
to the Threshold Percentage of the Maximum Facility Amount at all times during
the thirty (30) day period immediately prior to the consummation of such
Investment, (B) Net Excess Availability is greater than an amount equal to the
Threshold Percentage of the Maximum Facility Amount after giving effect to such
Investment, and (C) the Fixed Charge Coverage Ratio, on a pro forma basis after
giving effect to such Investment (calculated on a trailing twelve month basis
recomputed for the most recent month for which financial statements have been
delivered) is not less than 1.0 to 1.0; or (ii) (A) average daily Net Excess
Availability, on a pro forma basis after giving effect to such Investment, has
been greater than an amount equal to 20% of the Maximum Facility Amount for the
ninety (90) day period immediately prior to the consummation of such Investment,
(B) Net Excess Availability is greater than an amount equal to 20% of the
Maximum Facility Amount after giving effect to such Investment, and (C) no Term
Loans are outstanding at the time such Investment is consummated and after
giving effect to the payment of any consideration in connection with such
Investment;

(i)    Investments by a U.S. Domiciled Obligor in any Subsidiary that is not a
Borrower or Guarantor to the extent such Investments are in the form of a
transfer of assets (other than any Collateral) of such U.S. Domiciled Obligor so
long as: (A) such assets are in existence as of the First Amendment to Second
Amended and Restated Effective Date, and (B) such assets are predominantly used
in connection with the golf ball manufacturing operations of Parent;

(j)    [Reserved];

(k)    Investments, so long as: (i) no Default or Event of Default has occurred
and is continuing or would result therefrom; (ii) the amount expended in
connection with any such Investment either (at the written election of Parent in
accordance with the definition of Top Golf Proceeds): (A) is made solely using
Top Golf Proceeds contained in the Top Golf Blocked Account, (B) does not exceed
the U.S. Top Golf Reserve in effect immediately prior to giving effect to any
such expenditures, (C)(1) is made solely using cash proceeds of a substantially
contemporaneous (I) dividend from the Canadian Borrower to Parent, or
(II) repayment by the Canadian Borrower of an intercompany obligation owing to
Parent, and (2) does not exceed the Canadian Top Golf Reserve in effect
immediately prior to giving effect to any such expenditures, or (D)(1) is made
solely using cash proceeds of a substantially contemporaneous (I) dividend from
the U.K. Borrower to Parent, or (II) repayment by the U.K. Borrower of an
intercompany obligation owing to Parent, and (2) does not exceed the U.K. Top
Golf Reserve in effect immediately prior to giving effect to any such
expenditures; (iii) the aggregate amount expended in connection with all such
Investments consummated under this clause (k) and transactions consummated under
clause 10.2.6(g) does not exceed $150,000,000 in the aggregate; (iv) Parent
provides Agent with at least 7 days prior written notice of any such Investment
(which notice shall contain the amount to be expended in such transaction and
evidence of the source of funds for such

 

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expenditure); (v) Parent provides Agent with evidence of the making of any
Investment under this clause (k), and (vi) no Term Loans are outstanding at the
time such Investment is made; and

(l)    additional Investments in Top Golf in an amount not to exceed $30,000,000
in the aggregate at any time so long as at the time of any such Investment, no
Default or Event of Default has occurred and is continuing or would result
therefrom.

10.2.3.    Debt. Create, incur, guarantee or suffer to exist any Debt, except:

(a)    the Obligations;

(b)    Debt outstanding on the Closing Date and listed on Schedule 10.2.3;

(c)    Debt consisting of unsecured intercompany loans among Parent and any
Subsidiary or unsecured guarantees of Parent or any Subsidiary in respect of
Debt of Parent or any Subsidiary so long as, in each case, the corresponding
Investment is permitted under Section 10.2.2;

(d)    Debt of Parent or any Subsidiary existing or arising under any Hedging
Agreement, provided that such Hedging Agreement was entered into by such Person
to hedge risks arising in the Ordinary Course of Business and not for
speculative purposes;

(e)    Debt in respect of Capital Leases, Off-Balance Sheet Liabilities and
purchase money obligations for fixed or capital assets (other than Eligible Real
Estate); provided, however, that the aggregate amount of all such Debt at any
one time outstanding shall not exceed $25,000,000;

(f)    Debt that is in existence when a Person becomes a Subsidiary or that is
secured by an asset when acquired by a Borrower or Subsidiary, as long as such
Debt was not incurred in contemplation of such Person becoming a Subsidiary or
such acquisition, and does not exceed $25,000,000 in the aggregate at any time;

(g)    Debt of any wholly owned Subsidiary to Parent or another wholly owned
Subsidiary constituting the purchase price in respect of intercompany transfers
of goods and services made in the Ordinary Course of Business to the extent
otherwise permitted by Section 10.2.8 and not constituting Debt for borrowed
money;

(h)    Debt of Parent or any Subsidiary in connection with guaranties resulting
from endorsement of negotiable instruments in the Ordinary Course of Business;

(i)    Debt on account of surety bonds and appeal bonds in connection with the
enforcement of rights or claims of Parent or its Subsidiaries or in connection
with judgments not resulting in an Event of Default under Section 11.1(g);

(j)    any refinancings, refundings, renewals or extensions of Debt permitted
pursuant to Sections 10.2.3(b) and (e); provided that (i) the amount of such
Debt is not increased at the time of such refinancing, refunding, renewal or
extension except by an amount equal to a reasonable premium or other reasonable
amount paid, and fees and expenses reasonably incurred,

 

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in connection with such refinancing and by an amount equal to any existing
commitments unutilized thereunder, and (ii) Debt subordinated to the Obligations
is not refinanced except on subordination terms at least as favorable to Agent
and the Lenders and no more restrictive on Parent and its Subsidiaries than the
subordinated Debt being refinanced;

(k)    Bank Product Debt (other than Debt arising under Hedging Agreements);

(l)    [Reserved];

(m)    [Reserved];

(n)    Debt that is not included in any of the preceding clauses of this
Section, is not secured by a Lien, or is secured by a lien permitted by
Section 10.2.1(n), and does not exceed $50,000,000 in the aggregate at any time;

(o)    other Debt that is not included in any of the preceding clauses of this
Section so long as such Debt: (i) is not secured by a Lien, (ii) has a maturity
date that is at least 6 months after the Facility Termination Date, and
(iii) does not have scheduled amortization in excess of 10% per year;

(p)    Debt to the Person, or the beneficial holders of Equity Interests in the
Person, whose assets or Equity Interests are acquired in a Permitted Acquisition
where such Debt (i) is payable in full no sooner than three years from the date
of such Acquisition, (ii) is repayable in installments of no more than one-third
of the initial amount in any year after the date of such Permitted Acquisition,
(iii) bears interest and fees that are consistent with then available market
rates for such Debt, (iv) is not secured by a Lien and (v) does not exceed
(together with all other Debt incurred under this clause (p)) $25,000,000 in the
aggregate at any time;

(q)    other Debt that is not included in any of the preceding clauses of this
Section so long as: (i) such Debt does not exceed $250,000,000 in the aggregate
at any one time outstanding, (ii) such Debt is not secured by a Lien, or is
secured by a lien permitted by Section 10.2.1(o), (iii) such Debt has a maturity
date that is at least 6 months after the Facility Termination Date, (iv) such
Debt does not have scheduled amortization in excess of 15% per year, and
(v) immediately upon and after giving effect to such Debt, the Leverage Ratio is
not greater than 4.5 to 1.0;

(r)    Debt pursuant to equipment financing and/or leases entered into among one
or more Obligors and Banc of America Leasing & Capital, LLC, in an aggregate
amount not to exceed $50,000,000 at any time outstanding; and

(s)    Debt (i) as described in the Project Max Commitment Letter, as may be
modified by the market flex conditions referenced in the Fee Letter (as defined
in the Project Max Commitment Letter), as disclosed to Agent prior to the First
Amendment to Third Amended and Restated Effective Date, so long as: (A) the
aggregate outstanding principal amount of such Debt at any one time does not
exceed the amount incurred in connection with the consummation of the
Acquisition (as defined in the Project Max Commitment Letter) in accordance with
the terms of the Project Max Commitment Letter, less any principal payments made
on account of such Debt, (B) any Liens securing such Debt are permitted by
Section 10.2.1(o), (C) such Debt has a maturity

 

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date that is at least 6 months after the Facility Termination Date; and (D) such
Debt is incurred in accordance with the terms of the Project Max Commitment
Letter as in effect on the First Amendment to Third Amended and Restated
Effective Date, or as amended from time to time thereafter so long as such
amendments are not materially adverse to the interest of the Lenders and
(ii) any refinancings, refundings, renewals or extensions of such Debt permitted
in clause (i) hereto, so long as (A) the amount of such Debt is not increased at
the time of such refinancing, refunding, renewal or extension except by an
amount equal to a reasonable premium or other reasonable amount paid, and fees
and expenses reasonably incurred, in connection with such refinancing, (B) such
Debt has a maturity date that is at least 6 months after the Facility
Termination Date, (C) such Debt does not have scheduled amortization in excess
of 15% per year, (D) any Liens securing such Debt are permitted by
Section 10.2.1(o), and (E) upon giving effect to it, no Default or Event of
Default exists.

10.2.4.    Fundamental Changes.

(a)    Merge, amalgamate, dissolve, liquidate, consolidate with or into another
Person, or dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except that, so long as no
Default exists or would result therefrom:

(i)    Intentionally Omitted;Travis Mathew Retail may be dissolved, so long as
(A) such dissolution is completed within 30 days of the Second Amendment to
Third Amended and Restated Effective Date, and (B) all assets of Travis Mathew
Retail are distributed to travisMathew in connection with such dissolution;

(ii)    any Subsidiary may merge or amalgamate with Parent or any other
Subsidiary, provided that (A) in such a merger in which a U.S. Borrower is
involved, such U.S. Borrower is the continuing or surviving Person, (B) in such
a merger or amalgamation in which the Canadian Borrower is involved (other than
with a U.S. Borrower or the U.K. Borrower), the Canadian Borrower is the
continuing or surviving Person, (C) in such a merger or amalgamation in which
the U.K. Borrower is involved (other than with a U.S. Borrower or the Canadian
Borrower), the U.K. Borrower is the continuing or surviving Person, (D) in such
a merger in which a U.S. Domiciled Obligor (other than a U.S. Borrower) is
involved (other than with a Borrower), the U.S. Domiciled Obligor is the
continuing or surviving Person, (E) in such a merger or amalgamation in which a
U.K. Domiciled Obligor (other than the U.K. Borrower) is involved (other than
with a U.S. Domiciled Obligor, a Canadian Domiciled Obligor, or the U.K.
Borrower), the U.K. Domiciled Obligor is the continuing or surviving Person, and
(F) in such a merger or amalgamation in which a Canadian Domiciled Obligor
(other than the Canadian Borrower) is involved (other than with a U.S. Domiciled
Obligor, a U.K. Domiciled Obligor, or the Canadian Borrower), the Canadian
Domiciled Obligor is the continuing or surviving Person;

(iii)    any Subsidiary which is not an Obligor may dispose of all or
substantially all of its assets (upon voluntary liquidation or otherwise) to its
immediate parent or another Obligor;

 

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(iv)    any Immaterial Subsidiary may be wound up, liquidated or dissolved; and

(v)     Parent and its Subsidiaries may make those Asset Dispositions permitted
by Section 10.2.5; or

(b)    Change its name; change its tax, charter or other organizational
identification number; or change its form or state of organization without 10
Business Days’ prior written notice to Agent.

10.2.5.    Disposition of Assets. Make any Asset Disposition or enter into any
agreement to make any Asset Disposition, except:

(a)    Asset Dispositions of obsolete or worn out property, whether now owned or
hereafter acquired, in the Ordinary Course of Business;

(b)    sales of Inventory in the Ordinary Course of Business, and consignments
of Inventory in the Ordinary Course of Business so long as the aggregate Value
of all such consigned Inventory at any one time does not exceed $15,000,000;

(c)    Asset Dispositions of Equipment or Real Estate (other than Eligible Real
Estate unless the U.S. Real Estate Formula Amount has been removed from the U.S.
Borrowing Base in accordance with Sections 2.1.4(d)) to the extent that (i) such
property is exchanged for credit against the purchase price of similar
replacement property or (ii) the proceeds of such disposition are reasonably
promptly applied to the purchase price of such replacement property;

(d)    Asset Dispositions by (i) any U.S. Borrower to any other U.S. Borrower,
(ii) any U.S. Domiciled Obligor (other than a U.S. Borrower) to any other U.S.
Domiciled Obligor, (iii) any Canadian Domiciled Obligor or U.K. Domiciled
Obligor to any U.S. Borrower, and (iv) any Subsidiary that is not a Borrower or
Guarantor to any other Subsidiary;

(e)    (i) Asset Dispositions permitted by Section 10.2.4, (ii) Investments
permitted by Section 10.2.2, and (iii) Distributions permitted by
Section 10.2.6;

(f)    leases, subleases, licenses and rights to use granted to others in the
Ordinary Course of Business and not otherwise prohibited by this Agreement so
long as such leases, subleases, licenses and rights to use do not materially
adversely affect the conduct by Parent and its Subsidiaries of their core golf
products business or the value of the Collateral;

(g)    Asset Dispositions made in connection with the closure, downsizing,
restructuring, closure or partial closure of the golf ball manufacturing
operations of Parent;

(h)    (i) Asset Dispositions of excess Real Estate (other than Eligible Real
Estate) and related assets made in connection with the consolidation of business
activities in other locations and (ii) sale and leaseback transactions involving
Real Estate (other than Eligible Real Estate unless the U.S. Real Estate Formula
Amount has been removed from the U.S. Borrowing Base in accordance with Sections
2.1.4(d)) and related assets;

 

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(i)    Asset Dispositions consisting of Intellectual Property (other than the
Company Trademark), manufacturing assets, inventory, accounts, contracts, domain
names, marketing materials and marketing related assets related to the brands
disclosed to the Agent and the Lenders on the Business Day prior to the Second
Amended Original Closing Date; provided, in each case, that (i) at the time of
such Asset Disposition, no Event of Default has occurred or is continuing or
would result therefrom, (ii) the Borrowers shall have provided Agent with three
(3) Business Days prior written notice of any such Asset Disposition, (iii) if
any such Asset Disposition includes the disposition of Accounts or Inventory of
an Obligor, the Borrowers shall have complied with Section 5.2, and (iv) if any
such Asset Disposition includes the disposition of any Eligible Accounts or
Eligible Inventory, the Borrowers shall have delivered pro forma Borrowing Base
Certificates on or prior to the consummation of such Asset Disposition which
give effect to such Asset Disposition; and

(j)    other Asset Dispositions (other than with respect to Accounts, Inventory,
the Company Trademark (unless the U.S. Trademark Formula Amount has been removed
from the U.S. Borrowing Base in accordance with Sections 2.1.4(c)) and Eligible
Real Estate (unless the U.S. Real Estate Formula Amount has been removed from
the U.S. Borrowing Base in accordance with Sections 2.1.4(d))) in an aggregate
amount in any fiscal year not to exceed 5% of the Consolidated Tangible Assets
of Parent and its Subsidiaries as of the end of the most recently ended fiscal
year of Parent;

provided, however, that any Asset Disposition pursuant to clauses (a) through
(i) shall be for fair market value; provided, further, that Parent or any of its
Subsidiaries may enter into an agreement to make an Asset Disposition otherwise
prohibited by this Section 10.2.5 if failure to consummate such Asset
Disposition would not result in a liability or Debt otherwise prohibited by this
Agreement and the consummation of the Asset Disposition contemplated by such
agreement is conditioned upon either the termination of this Agreement or
receipt of the prior written consent of the Agent and the Required Lenders.

10.2.6.    Distributions. Declare or make, directly or indirectly, any
Distribution, or incur any obligation (contingent or otherwise) to do so, except
that:

(a)    (i) a U.S. Borrower may make Distributions to another U.S. Borrower;
(ii) a U.S. Domiciled Obligor (other than a U.S. Borrower) may make
Distributions to another U.S. Domiciled Obligor; (iii) a Canadian Domiciled
Obligor may make Distributions to a U.S. Borrower, the Canadian Borrower, and
the U.K. Borrower; (iv) a U.K. Domiciled Obligor may make Distributions to a
Borrower; and (v) a Subsidiary that is not a Borrower or Guarantor may make
Distributions to Parent or any Subsidiary;

(b)    Parent and each Subsidiary may declare and make dividend payments or
other distributions payable solely in the common stock or other Equity Interests
of such Person;

(c)    so long as no Event of Default has occurred and is continuing or would
result therefrom, Parent and each Subsidiary may purchase, redeem or otherwise
acquire shares of its common stock or other Equity Interests or warrants or
options to acquire any such Equity Interests with the proceeds received from the
substantially concurrent issue of new shares of its common stock or other Equity
Interests;

 

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(d)    Parent may purchase Equity Interests in any Obligor or options with
respect to Equity Interests in any Obligor held by employees or management of
any Obligor in connection with the termination of employment of such employees
or management so long as: (i) the aggregate amount of such purchases do not
exceed $5,000,000 in any fiscal year of Parent, and (ii) no Event of Default has
occurred and is continuing at the time of any such purchase or would result
therefrom; and

(e)    so long as no Event of Default has occurred and is continuing or would
result therefrom, Parent and its Subsidiaries may make other Distributions in an
aggregate amount not to exceed $20,000,000 during each year (the “Distributions
Cap”); provided, however, that no such Distribution shall count against the
Distributions Cap if at the time such Distribution is declared (subject to the
last sentence of this clause (e)) either: (i) (A) on a pro forma basis after
giving effect to such Distribution, Net Excess Availability has been greater
than an amount equal to the Threshold Percentage of the Maximum Facility Amount
at all times during the thirty (30) day period immediately prior to the making
of such Distribution, (B) Net Excess Availability is greater than an amount
equal to the Threshold Percentage of the Maximum Facility Amount after giving
effect to such Distribution, and (C) the Fixed Charge Coverage Ratio, on a pro
forma basis after giving effect to such Distribution (calculated on a trailing
twelve month basis recomputed for the most recent month for which financial
statements have been delivered) is not less than 1.0 to 1.0; or (ii) (A) average
daily Net Excess Availability, on a pro forma basis after giving effect to such
Distribution, has been greater than an amount equal to 20% of the Maximum
Facility Amount for the ninety (90) day period immediately prior to the making
of such Distribution, (B) Net Excess Availability is greater than an amount
equal to 20% of the Maximum Facility Amount after giving effect to such
Distribution, and (C) no Term Loans are outstanding at the time such
Distribution is consummated.

(f)    so long as no Event of Default has occurred and is continuing or would
result therefrom, Parent may make cash payments in lieu of issuance of
fractional shares in connection with the conversion of any convertible stock or
debt securities of Parent, in an aggregate amount not to exceed $5,000,000 for
all such payments; and

(g)    Parent may make Common Stock Repurchases and pay dividends on Parent’s
common stock so long as: (i) no Default or Event of Default has occurred and is
continuing or would result therefrom; (ii) the amount expended in connection
with any such transaction either (at the written election of Parent in
accordance with the definition of Top Golf Proceeds): (A) is made solely using
Top Golf Proceeds contained in the Top Golf Blocked Account, (B) does not exceed
the U.S. Top Golf Reserve in effect immediately prior to giving effect to any
such expenditures, (C)(1) is made solely using cash proceeds of a substantially
contemporaneous (I) dividend from the Canadian Borrower to Parent, or
(II) repayment by the Canadian Borrower of an intercompany obligation owing to
Parent, and (2) does not exceed the Canadian Top Golf Reserve in effect
immediately prior to giving effect to any such expenditures, or (D)(1) is made
solely using cash proceeds of a substantially contemporaneous (I) dividend from
the U.K. Borrower to Parent, or (II) repayment by the U.K. Borrower of an
intercompany obligation owing to Parent, and (2) does not exceed the U.K. Top
Golf Reserve in effect immediately prior to giving effect to any such
expenditures; (iii) the aggregate amount expended in connection with all such
transactions consummated under this clause (g) and Investments made under clause
10.2.2(k) does not exceed $150,000,000 in the aggregate; (iv) Parent provides
Agent

 

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with at least 7 days prior written notice of any such transaction (which notice
shall contain the amount to be expended in such transaction and evidence of the
source of funds for such expenditure); (v) Parent provides Agent with evidence
of the completion of any such transaction under this clause (g), and (vi) no
Term Loans are outstanding at the time any such transaction is consummated.

10.2.7.    Change in Nature of Business. Engage in any material line of business
substantially different from those lines of business conducted by Parent and its
Subsidiaries on the date hereof, one or more of the leisure goods, products and
services businesses generally or, in each case, any business substantially
related or incidental thereto.

10.2.8.    Affiliate Transactions. Enter into any transaction of any kind with
any Affiliate of Parent, except (a) transactions between or among: (i) the U.S.
Borrowers, (ii) the U.S. Domiciled Obligors (other than any U.S. Borrower),
(iii) the Canadian Domiciled Obligors, (iv) the U.K. Domiciled Obligors, and
(v) Subsidiaries that are not Borrowers or Guarantors; (b) transactions
constituting Investments in Subsidiaries as permitted by Section 10.2.2, (c)
transactions constituting Debt among Parent or any of its Subsidiaries, in each
case as permitted by Section 10.2.3; (d) transactions among Parent or any of its
Subsidiaries, in each case as permitted by Section 10.2.4 or Section 10.2.5, (e)
transactions constituting Distributions permitted by Section 10.2.6, (f)
transactions constituting reasonable fees and compensation paid to (including
issuance and grants of securities and stock options, employment agreements and
stock option and ownership plans for the benefit of, and indemnities provided on
behalf of) officers, directors, employees and consultants of Parent or any
Subsidiary, (g) constituting loans or advances to employees and officers of
Parent and its Subsidiaries to the extent permitted by Section 10.2.2(a), and
(h) transactions with Affiliates in the Ordinary Course of Business, upon fair
and reasonable terms fully disclosed to Agent and no less favorable than would
be obtained in a comparable arm’s-length transaction with a non-Affiliate.

10.2.9.    Burdensome Agreements. Enter into any Contractual Obligation (other
than this Agreement or any other Loan Document) that limits the ability (a) of
any Subsidiary to make Distributions to any Borrower or any Guarantor or to
otherwise transfer property to any Borrower or any Guarantor, (b) of Parent or
any Subsidiary to incur or repay the Obligations, (c) of Parent or any
Subsidiary to grant Liens on any Collateral in favor of the Agent for the
benefit of the Lenders, or (d) of any U.S. Subsidiary, U.K. Subsidiary, or
Canadian Subsidiary to guarantee the Obligations; provided, that the
restrictions set forth herein shall not apply to (i) customary restrictions on
transfers of property subject to a capital lease as set forth in such capital
lease; (ii) customary restrictions with respect to a Subsidiary (other than a
Borrower) pursuant to an agreement that has been entered into for the sale or
disposition (not otherwise prohibited by this Agreement or any other Loan
Document) of all or substantially all of the capital stock or assets of such
Subsidiary; (iii) customary prohibitions on assignment in any contract or lease;
(iv) customary net worth provisions contained in leases and other agreements
entered into by a Subsidiary in the Ordinary Course of Business; and
(v) customary restrictions with respect to Debt permitted under
Section 10.2.3(s).

10.2.10.    Restrictions on Payment of Certain Debt. Make any (a) payments
(whether voluntary or mandatory, or a prepayment, redemption, retirement,
defeasance or acquisition) with respect to any Debt which is subordinated to the
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avoidance of doubt, does not include any Debt permitted under
Section 10.2.3(s)), except regularly scheduled payments of principal, interest
and fees, but only to the extent permitted under any subordination agreement
relating to such Debt (and a Senior Officer of Borrower Agent shall certify to
Agent, not less than five Business Days prior to the date of payment, that all
conditions under such agreement have been satisfied); (b) any voluntary payments
with respect to any Borrowed Money (other than the Obligations and any
intercompany obligations) prior to its due date; provided, however, that the
restriction set forth in clause (b) shall not apply to: (x) any voluntary
payments made to consummate a refinancing in full of the Debt permitted under
Section 10.2.3(s) to the extent such refinancing is permitted under the terms of
Section 10.2.3(s); and (y) any payment if either: (A) (1) on a pro forma basis
after giving effect to such payment, Net Excess Availability has been greater
than an amount equal to 15% of the Maximum Facility Amount at all times during
the thirty (30) day period immediately prior to the making of such payment,
(2) Net Excess Availability is greater than an amount equal to 15% of the
Maximum Facility Amount after giving effect to such payment, and (3) the Fixed
Charge Coverage Ratio, on a pro forma basis after giving effect to such payment
(calculated on a trailing twelve month basis recomputed for the most recent
month for which financial statements have been delivered) is not less than 1.0
to 1.0; or (B) (1) average daily Net Excess Availability, on a pro forma basis
after giving effect to such payment, has been greater than an amount equal to
20% of the Maximum Facility Amount for the ninety (90) day period immediately
prior to the making of such payment, (2) Net Excess Availability is greater than
an amount equal to 20% of the Maximum Facility Amount after giving effect to
such payment, and (3) no Term Loans are outstanding at the time such payment is
made.

10.2.11.    Organic Documents. Amend, modify or otherwise change any of its
Organic Documents as in effect on the Original Agreement Closing Date where such
amendment, modification or other change would have a Material Adverse Effect.

10.2.12.    Tax Consolidation. File or consent to the filing of any consolidated
income tax return with any Person other than Borrowers and Subsidiaries.

10.2.13.    Accounting Changes. Make any material change in accounting treatment
or reporting practices, except as required by GAAP and in accordance with
Section 1.2; or change its Fiscal Year.

10.2.14.    Activities of uPlay. Unless Borrowers cause uPlay to become a
Guarantor hereunder in accordance with Section 10.1.12, uPlay will not
(a) engage in any business or activity or (b) own any assets or have any
liabilities (other than liabilities reasonably incurred in connection with its
maintenance of its existence).

10.2.15.    Canadian Pension Plans. Without the prior written consent of Agent,
no Obligor shall establish, or otherwise incur any obligations or liabilities
under or in connection with any Canadian Pension Plan that provides benefits on
a defined benefit basis.

10.3    Financial Covenants. As long as any Commitments or Obligations are
outstanding, Borrowers shall:

(a)    At any time the Term Loans or Term Loan Commitments are outstanding as of
the last day of any Fiscal Quarter:

 

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(i)    Fixed Charge Coverage Ratio. Maintain a Fixed Charge Coverage Ratio,
measured at the end of each such Fiscal Quarter, of at least 1.25 to 1.0; and

(ii)    Leverage Ratio. Maintain a Leverage Ratio, measured at the end of each
such Fiscal Quarter, of not greater than 4.0 to 1.0.

(b)    At any time there are no Term Loans or Term Loan Commitment outstanding,
maintain a Fixed Charge Coverage Ratio, measured on a Fiscal Quarter-end basis,
of at least 1.0 to 1.0 as of (a) the end of the last Fiscal Quarter immediately
preceding the occurrence of any Covenant Trigger Period for which financial
statements have most recently been delivered pursuant to Section 10.1.1, and
(b) the end of each Fiscal Quarter for which financial statements are delivered
pursuant to Section 10.1.1 during any Covenant Trigger Period.

10.4    Company Trademark. The Obligors shall maintain, defend and preserve the
Company Trademark and its value, usefulness, merchantability and marketability
in a manner consistent with past practices, and shall not sell, assign,
transfer, encumber or license the Company Trademark to any Person (other than
Liens created pursuant to the Loan Documents) to the extent that doing so would
cause (i) the amount specified in clause (a) of the definition of “U.S.
Trademark Formula Amount” to be less than the amount specified in clause (b) of
the definition of “U.S. Trademark Formula Amount” or (ii) the amount of
outstanding Term Loans to exceed the Term Loan Cap, in each case without the
prior written consent of the U.S. Required Lenders.

 

SECTION 11.

EVENTS OF DEFAULT; REMEDIES ON DEFAULT

11.1    Events of Default. Each of the following shall be an “Event of Default”
hereunder, if the same shall occur for any reason whatsoever, whether voluntary
or involuntary, by operation of law or otherwise:

(a)    An Obligor fails to pay (i) when due (whether at stated maturity, on
demand, upon acceleration or otherwise) any amount of principal of any Loan or
any reimbursement obligation in respect of any LC Obligation, or (ii) any
interest on any Loan or any fee or any other amount (other than an amount
referred to in clause (a)(i) above), when and as the same shall become due and
payable hereunder or under any other Loan Document (whether at stated maturity,
on demand, upon acceleration or otherwise), and such failure shall continue
unremedied for a period of three Business Days;

(b)    Any representation, warranty or other written statement of an Obligor
made in connection with any Loan Documents or transactions contemplated thereby
is incorrect or misleading in any material respect when given;

(c)    An Obligor breaches or fail to perform any covenant contained in
Section 7.2, 7.4, 7.6, 8.1, 8.2.4, 8.2.5, 8.6.2, 10.1.1, 10.1.2, 10.1.10, 10.2
or 10.3;

(d)    An Obligor breaches or fails to perform any other covenant contained in
any Loan Documents, and such breach or failure is not cured within 30 days after
a Senior Officer of such Obligor has knowledge thereof or receives notice
thereof from Agent, whichever is sooner; provided, however, that such notice and
opportunity to cure shall not apply if the breach or failure to perform is not
capable of being cured within such period;

 

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(e)    A Guarantor repudiates, revokes or attempts to revoke its Guarantee; an
Obligor or third party denies or contests the validity or enforceability of any
Loan Documents or Obligations, or the perfection or priority of any Lien granted
to Agent; or any Loan Document ceases to be in full force or effect for any
reason (other than a waiver or release by Agent and Lenders);

(f)    Any breach or default of an Obligor occurs under any Hedging Agreement,
or any document, instrument or agreement to which it is a party or by which it
or any of its Properties is bound, relating to any Debt (other than the
Obligations) in excess of the Dollar Equivalent of $10,000,000, if the maturity
of or any payment with respect to such Debt may be accelerated or demanded due
to such breach;

(g)    Any judgment or order for the payment of money is entered against an
Obligor and is unsatisfied for a period of more than 30 days in an amount that
exceeds, individually or cumulatively with all other unsatisfied judgments or
orders against all Obligors, the Dollar Equivalent of $5,000,000 (net of any
insurance coverage therefor acknowledged in writing by the insurer), unless a
stay of enforcement of such judgment or order is in effect, by reason of a
pending appeal or otherwise;

(h)    A loss, theft, damage or destruction occurs with respect to any
Collateral if the amount not covered by insurance (either individually or in the
aggregate) exceeds the Dollar Equivalent of $2,500,000;

(i)    An Obligor is enjoined, restrained or in any way prevented by any
Governmental Authority from conducting any material part of its business and
such enjoinment, restraint or prevention could reasonably be expected to have a
Material Adverse Effect; an Obligor suffers the loss, revocation or termination
of any material license, permit, lease or agreement necessary to its business
and such loss, revocation or termination could reasonably be expected to have a
Material Adverse Effect; there is a cessation of any material part of an
Obligor’s business for a material period of time and such cessation could
reasonably be expected to have a Material Adverse Effect; any material
Collateral or Property of an Obligor is taken or impaired through condemnation
and such taking or impairment could reasonably be expected to have a Material
Adverse Effect; a Borrower agrees to or commences any liquidation, dissolution
or winding up of its affairs; or a Borrower is not Solvent;

(j)    Any Obligor generally fails to pay, or admits in writing its inability or
refusal to pay, its debts as they become due; or an Insolvency Proceeding is
commenced by any Obligor; any Obligor agrees to, commences or is subject to a
liquidation, dissolution or winding up of its affairs; any Obligor makes an
offer of settlement, extension, proposal (or files a notice of intention to make
a proposal), plan of arrangement or composition to its unsecured creditors
generally; a Creditor Representative is appointed to take possession of any
substantial Property of or to operate or sell any of the business of any
Obligor; or an Insolvency Proceeding is commenced against any Obligor and such
Obligor consents to the institution of the proceeding against it, such petition
commencing the proceeding is not timely contested by such Obligor, such petition
is not dismissed within 30 days after its filing, or an order for relief is
entered in the proceeding;

 

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(k)    An ERISA Event occurs with respect to a Pension Plan or Multiemployer
Plan that has resulted or could reasonably be expected to result in liability of
an Obligor to a Pension Plan, Multiemployer Plan or PBGC in an aggregate amount
in excess of $10,000,000, or that constitutes grounds for appointment of a
trustee for or termination by the PBGC of any Pension Plan or Multiemployer
Plan; an Obligor or ERISA Affiliate fails to pay when due any installment
payment with respect to its withdrawal liability under Section 4201 of ERISA
under a Multiemployer Plan in an aggregate amount in excess of $10,000,000; or
any event similar to the foregoing occurs or exists with respect to a Foreign
Plan;

(l)    (A) a Termination Event shall occur or any Canadian Multi-Employer Plan
shall be terminated, in each case, in circumstances which would result or could
reasonably be expected to result in a Canadian Facility Obligor required to make
a contribution to or in respect of a Canadian Pension Plan or a Canadian
Multi-Employer Plan in an aggregate amount in excess of $2,500,000 or results in
the appointment, by FSCO, of an administrator to wind up a Canadian Pension
Plan, (B) any Canadian Domiciled Obligor is in default with respect to any
required contributions to a Canadian Pension Plan or fails to eliminate a
solvency deficiency or keep such plan fully funded; or (C) any Lien arises (save
for contribution amounts not yet due) in connection with any Canadian Pension
Plan; or

(m)    A Change of Control occurs.

11.2    Remedies upon Default. If an Event of Default described in
Section 11.1(j) occurs with respect to any Obligor, then to the extent permitted
by Applicable Law, all Obligations (other than Secured Bank Product Obligations)
shall become automatically due and payable and all Commitments shall terminate,
without any action by Agent or notice of any kind. In addition, or if any other
Event of Default exists, Agent may in its discretion (and shall upon written
direction of Required Lenders) do any one or more of the following from time to
time:

(a)    declare any Obligations (other than Secured Bank Product Obligations)
immediately due and payable, whereupon they shall be due and payable without
diligence, presentment, demand, protest or notice of any kind, all of which are
hereby waived by Borrowers to the fullest extent permitted by law;

(b)    terminate, reduce or condition any Commitment, or make any adjustment to
the Borrowing Base;

(c)    require Obligors to Cash Collateralize LC Obligations, Secured Bank
Product Obligations and other Obligations that are contingent or not yet due and
payable, and, if Obligors fail promptly to deposit such Cash Collateral, Agent
may (and shall upon the direction of Required Lenders) advance the required Cash
Collateral as Revolver Loans (whether or not an Overadvance exists or is created
thereby, or the conditions in Section 6 are satisfied); and

(d)    exercise any other rights or remedies afforded under any agreement, by
law, at equity or otherwise, including the rights and remedies of a secured
party under the UCC and the PPSA. Such rights and remedies include the rights to
(i) take possession of any Collateral; (ii) require Obligors to assemble
Collateral, at Obligors’ expense, and make it available to Agent at a place
designated by Agent; (iii) enter any premises where Collateral is located and
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on such premises until sold (and if the premises are owned or leased by an
Obligor, Obligors agree not to charge for such storage); and (iv) sell or
otherwise dispose of any Collateral in its then condition, or after any further
manufacturing or processing thereof, at public or private sale, with such notice
as may be required by Applicable Law, in lots or in bulk, at such locations, all
as Agent, in its discretion, deems advisable. Each Obligor agrees that 10 days’
notice of any proposed sale or other disposition of Collateral by Agent shall be
reasonable. Agent shall have the right to conduct such sales on any Obligor’s
premises, without charge, and such sales may be adjourned from time to time in
accordance with Applicable Law. Agent shall have the right to sell, lease or
otherwise dispose of any Collateral for cash, credit or any combination thereof,
and Agent may purchase any Collateral at public or, if permitted by law, private
sale and, in lieu of actual payment of the purchase price, may credit bid and
set off the amount of such price against the Obligations.

11.3    License. Agent is hereby granted an irrevocable, non-exclusive license
or other right to use, license or sub-license (without payment of royalty or
other compensation to any Person), exercisable at any time following the
occurrence and during the continuation of an Event of Default, any or all
Intellectual Property of Obligors, computer hardware and software, trade
secrets, brochures, customer lists, promotional and advertising materials,
labels, packaging materials and other Property, in advertising for sale,
marketing, selling, collecting, completing manufacture of, or otherwise
exercising any rights or remedies with respect to, any Collateral. Each
Obligor’s rights and interests under Intellectual Property shall inure to
Agent’s benefit.

11.4    Setoff. At any time during an Event of Default, Agent, Issuing Banks,
Lenders, and any of their Affiliates are authorized, 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, in whatever currency) at any
time held and other obligations (in whatever currency) at any time owing by
Agent, such Issuing Bank, such Lender or such Affiliate to or for the credit or
the account of an Obligor against any Obligations, irrespective of whether or
not Agent, such Issuing Bank, such Lender or such Affiliate shall have made any
demand under this Agreement or any other Loan Document and although such
Obligations may be contingent or unmatured or are owed to a branch or office of
Agent, such Issuing Bank, such Lender or such Affiliate different from the
branch or office holding such deposit or obligated on such indebtedness. The
rights of Agent, each Issuing Bank, each Lender and each such Affiliate under
this Section are in addition to other rights and remedies (including other
rights of setoff) that such Person may have.

11.5    Remedies Cumulative; No Waiver.

11.5.1.    Cumulative Rights. All agreements, warranties, guaranties,
indemnities and other undertakings of Obligors under the Loan Documents are
cumulative and not in derogation of each other. The rights and remedies of Agent
and Lenders are cumulative, may be exercised at any time and from time to time,
concurrently or in any order, and are not exclusive of any other rights or
remedies available by agreement, by law, at equity or otherwise. All such rights
and remedies shall continue in full force and effect until Full Payment of all
Obligations.

11.5.2.    Waivers. No waiver or course of dealing shall be established by
(a) the failure or delay of Agent or any Lender to require strict performance by
Obligors with any terms of the Loan Documents, or to exercise any rights or
remedies with respect to Collateral or otherwise; (b) the making of any Loan or
issuance of any Letter of Credit during a Default, Event

 

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of Default or other failure to satisfy any conditions precedent; or
(c) acceptance by Agent or any Lender of any payment or performance by an
Obligor under any Loan Documents in a manner other than that specified therein.
It is expressly acknowledged by Obligors that any failure to satisfy a financial
covenant on a measurement date shall not be cured or remedied by satisfaction of
such covenant on a subsequent date.

11.6    Judgment Currency. If, for purposes of obtaining judgment in any court,
it is necessary to convert a sum from the currency provided under a Loan
Document (“Agreement Currency”) into another currency, the Spot Rate shall be
used as the rate of exchange. Notwithstanding any judgment in a currency
(“Judgment Currency”) other than the Agreement Currency, an Obligor shall
discharge its obligation in respect of any sum due under a Loan Document only
if, on the Business Day following receipt by Agent or any Secured Party of
payment in the Judgment Currency, Agent or such Secured Party can use the amount
paid to purchase the sum originally due in the Agreement Currency. If the
purchased amount is less than the sum originally due, such Obligor agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify Agent
and Secured Parties against such loss. If the purchased amount is greater than
the sum originally due, Agent or such Secured Party shall return the excess
amount to such Obligor (or to the Person legally entitled thereto).

 

SECTION 12.

AGENT

12.1    Appointment, Authority and Duties of Agent.

12.1.1.    Appointment and Authority.

(a)    Each Secured Party appoints and designates Bank of America as Agent under
all Loan Documents. Agent may, and each Secured Party authorizes Agent to, enter
into all Loan Documents to which Agent is intended to be a party and accept all
Security Documents, for the benefit of Secured Parties. Each Secured Party
agrees that any action taken by Agent, Required Lenders, U.S. Required Lenders,
U.S. Required Term Lenders, U.K. Required Lenders, or Canadian Required Lenders
in accordance with the provisions of the Loan Documents, and the exercise by
Agent or Required Lenders of any rights or remedies set forth therein, together
with all other powers reasonably incidental thereto, shall be authorized by and
binding upon all Secured Parties. Without limiting the generality of the
foregoing, Agent shall have the sole and exclusive authority to (a) act as the
disbursing and collecting agent for Lenders with respect to all payments and
collections arising in connection with the Loan Documents; (b) execute and
deliver as Agent each Loan Document, including any intercreditor or
subordination agreement, and accept delivery of each Loan Document from any
Obligor or other Person; (c) act as collateral agent for Secured Parties for
purposes of perfecting and administering Liens under the Loan Documents, and for
all other purposes stated therein; (d) manage, supervise or otherwise deal with
Collateral; and (e) take any Enforcement Action or otherwise exercise any rights
or remedies with respect to any Collateral under the Loan Documents, Applicable
Law or otherwise. The duties of Agent shall be ministerial and administrative in
nature, and Agent shall not have a fiduciary relationship with any Secured
Party, Participant or other Person, by reason of any Loan Document or any
transaction relating thereto. Agent alone shall be authorized to determine
whether any Accounts or Inventory constitute Eligible Accounts, Eligible
Inventory or Eligible In-Transit Inventory, whether to impose or release any
reserve, or whether any conditions to funding or to issuance of a Letter of

 

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Credit have been satisfied, which determinations and judgments, if exercised in
good faith, shall exonerate Agent from liability to any Lender or other Person
for any error in judgment.

(b)    For the purposes of creating a solidarité active in accordance with
Article 1541 of the Civil Code of Quebec between each Secured Party, taken
individually, on the one hand, and the Agent, on the other hand, each Obligor
and each such Secured Party acknowledge and agree with the Agent that such
Secured Party and the Agent are hereby conferred the legal status of solidary
creditors of each such Obligor in respect of all Obligations owed by each such
Obligor to the Agent and such Secured Party hereunder and under the other Loan
Documents (collectively, the “Solidary Claim”) and that, accordingly, but
subject (for the avoidance of doubt) to Article 1542 of the Civil Code of
Quebec, each such Obligor is irrevocably bound towards the Agent and each
Secured Party in respect of the entire Solidary Claim of the Agent and such
Secured Party. As a result of the foregoing, the parties hereto acknowledge that
the Agent and each Secured Party shall at all times have a valid and effective
right of action for the entire Solidary Claim of the Agent and such Secured
Party and the right to give full acquittance for it. Accordingly, and without
limiting the generality of the foregoing, the Agent, as solidary creditor with
each Secured Party, shall at all times have a valid and effective right of
action in respect of the Solidary Claim and the right to give a full acquittance
for same. By its execution of the Loan Documents to which it is a party, each
such Obligor not a party hereto shall also be deemed to have accepted the
stipulations hereinabove provided. The parties further agree and acknowledge
that such Liens (hypothecs) under the Security Documents and the other Loan
Documents shall be granted to the Agent, for its own benefit and for the benefit
of the Secured Parties, as solidary creditor as hereinabove set forth.

(c)    Without limiting the foregoing or any powers of Agent, for the purposes
of holding any hypothec granted to the Attorney (as defined below) pursuant to
the laws of the Province of Québec to secure the prompt payment and performance
of any and all Obligations by any Obligor, each of the Secured Parties hereby
irrevocably appoints and authorizes Agent and, to the extent necessary, ratifies
the appointment and authorization of Agent, to act as the hypothecary
representative of the present and future creditors as contemplated under Article
2692 of the Civil Code (in such capacity, the “Attorney”), and to enter into, to
take and to hold on their behalf, and for their benefit, any hypothec, and to
exercise such powers and duties that are conferred upon the Attorney under any
related deed of hypothec. The Attorney shall: (i) have the sole and exclusive
right and authority to exercise, except as may be otherwise specifically
restricted by the terms hereof, all rights and remedies given to the Attorney
pursuant to any such deed of hypothec and applicable law, and (ii) benefit from
and be subject to all provisions hereof with respect to Agent mutatis mutandis,
including, without limitation, all such provisions with respect to the liability
or responsibility to and indemnification by the Secured Parties and Obligors.
Any person who becomes a Secured Party shall, by its execution of an Assignment
and Acceptance, be deemed to have consented to and confirmed the Attorney as the
person acting as hypothecary representative holding the aforesaid hypothecs as
aforesaid and to have ratified, as of the date it becomes a Secured Party, all
actions taken by the Attorney in such capacity. The substitution of Agent
pursuant to the provisions of this Section 12 also constitutes the substitution
of the Attorney.

12.1.2.    Duties. Agent shall not have any duties except those expressly set
forth in the Loan Documents. The conferral upon Agent of any right shall not
imply a duty to exercise such right, unless instructed to do so by Lenders in
accordance with this Agreement.

 

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12.1.3.    Agent Professionals. Agent may perform its duties through agents and
employees. Agent may consult with and employ Agent Professionals, and shall be
entitled to act upon, and shall be fully protected in any action taken in good
faith reliance upon, any advice given by an Agent Professional. Agent shall not
be responsible for the negligence or misconduct of any agents, employees or
Agent Professionals selected by it with reasonable care.

12.1.4.    Instructions of Required Lenders. The rights and remedies conferred
upon Agent under the Loan Documents may be exercised without the necessity of
joinder of any other party, unless required by Applicable Law. Agent may request
instructions from Required Lenders or other Secured Parties with respect to any
act (including the failure to act) in connection with any Loan Documents, and
may seek assurances to its satisfaction from Secured Parties of their
indemnification obligations against all Claims that could be incurred by Agent
in connection with any act. Agent shall be entitled to refrain from any act
until it has received such instructions or assurances, and Agent shall not incur
liability to any Person by reason of so refraining. Instructions of Required
Lenders shall be binding upon all Secured Parties, and no Secured Party shall
have any right of action whatsoever against Agent as a result of Agent acting or
refraining from acting in accordance with the instructions of Required Lenders.
Notwithstanding the foregoing, instructions by and consent of specific parties
shall be required to the extent provided in Section 14.1.1. In no event shall
Agent be required to take any action that, in its opinion, is contrary to
Applicable Law or any Loan Documents or could subject any Agent Indemnitee to
personal liability.

12.1.5.    Agent as Security Trustee. In this Agreement and the U.K. Security
Agreement, any rights and remedies exercisable by, any documents to be delivered
to, or any other indemnities or obligations in favor of Agent shall be, as the
case may be, exercisable by, delivered to, or be indemnities or other
obligations in favor of, Agent (or any other Person acting in such capacity) in
its capacity as security trustee of Secured Parties to the extent that the
rights, deliveries, indemnities or other obligations relate to the U.K. Security
Agreement or the security thereby created. Any obligations of Agent (or any
other Person acting in such capacity) in this Agreement and U.K. Security
Agreement shall be obligations of Agent in its capacity as security trustee of
Secured Parties to the extent that the obligations relate to the U.K. Security
Agreement or the security thereby created. Additionally, in its capacity as
security trustee of Secured Parties Agent (or any other Person acting in such
capacity) shall have (i) all the rights, remedies and benefits in favor of Agent
contained in the provisions of the whole of this Section 12; (ii) all the powers
of an absolute owner of the security constituted by the U.K. Security Agreement
and (iii) all the rights, remedies and powers granted to it and be subject to
all the obligations and duties owed by it under the U.K. Security Agreement
and/or any of the Loan Documents.

12.1.6.    Appointment of Agent as Security Trustee. Each Secured Party hereby
appoints Agent to act as its trustee under and in relation to the U.K. Security
Agreement and to hold the assets subject to the security thereby created as
trustee for Secured Parties on the trusts and other terms contained in the U.K.
Security Agreement and each Secured Party hereby irrevocably authorizes Agent in
its capacity as security trustee of Secured Parties to exercise such rights,
remedies, powers and discretions as are specifically delegated to Agent as
security trustee of Secured Parties by the terms of the U.K. Security Agreement
together with all such rights, remedies, powers and discretions as are
reasonably incidental thereto.

 

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12.1.7.    Liens. Any reference in this Agreement to Liens stated to be in favor
of Agent shall be construed so as to include a reference to Liens granted in
favor of Agent in its capacity as security trustee of Secured Parties.

12.1.8.    Successors. Secured Parties agree that, if at any time that the
Person acting as security trustee of Secured Parties in respect of the U.K.
Security Agreement shall be a Person other than Agent, such other Person shall
have the rights, remedies, benefits and powers granted to Agent in its capacity
as security trustee of Secured Parties under this Agreement and the U.K.
Security Agreement.

12.1.9.    Capacity. Nothing in Sections 12.1.5 to 12.1.8 shall require Agent in
its capacity as security trustee of Secured Parties under this Agreement and the
U.K. Security Agreement to act as a trustee at common law or to be holding any
property on trust, in any jurisdiction outside the United States or the U.K.
which may not operate under principles of trust or where such trust would not be
recognized or its effects would not be enforceable.

12.2    Agreements Regarding Collateral and Field Examination Reports.

12.2.1.    Lien Releases; Care of Collateral. Secured Parties authorize Agent to
release any Lien with respect to any Collateral (a) upon Full Payment of the
Obligations; (b) that is the subject of an Asset Disposition which Borrowers
certify in writing to Agent is a disposition permitted hereunder or a Lien which
Borrowers certify is a Permitted Lien entitled to priority over Agent’s Liens
(and Agent may rely conclusively on any such certificate without further
inquiry); (c) that does not have, when aggregated with all other released
Collateral under this clause (c) in any calendar year, a book value greater than
$5,000,000; or (d) with the written consent of all Lenders. Secured Parties
authorize Agent to subordinate its Liens to any Lien permitted under
Section 10.2.1(j). Agent shall have no obligation to assure that any Collateral
exists or is owned by a Borrower, or is cared for, protected, insured or
encumbered, nor to assure that Agent’s Liens have been properly created,
perfected or enforced, or are entitled to any particular priority, nor to
exercise any duty of care with respect to any Collateral.

12.2.2.    Possession of Collateral. Agent and Secured Parties appoint each
Lender as agent (for the benefit of Secured Parties) for the purpose of
perfecting Liens in any Collateral held or controlled by such Lender, to the
extent such Liens are perfected by possession or control. If any Lender obtains
possession or control of any Collateral, it shall notify Agent thereof and,
promptly upon Agent’s request, deliver such Collateral to Agent or otherwise
deal with it in accordance with Agent’s instructions.

12.2.3.    Reports. Agent shall promptly forward to each Lender, when complete,
copies of any field audit, examination or appraisal report prepared by or for
Agent with respect to any Obligor or Collateral (“Report”). Each Lender agrees
(a) that neither Bank of America nor Agent makes any representation or warranty
as to the accuracy or completeness of any Report, and shall not be liable for
any information contained in or omitted from any Report; (b) that the Reports
are not intended to be comprehensive audits or examinations, and that Agent or
any other Person performing any audit or examination will inspect only specific
information regarding Obligations or the Collateral and will rely significantly
upon the applicable Obligors’ books and records as well as upon representations
of the applicable Obligors’ officers and employees; and (c) to keep

 

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all Reports confidential and strictly for such Lender’s internal use, and not to
distribute any Report (or the contents thereof) to any Person (except: (i) to
such Lender’s Participants, attorneys and accountants, (ii) to the extent
requested by any governmental, regulatory or self-regulatory authority
purporting to have jurisdiction over it or its Affiliates, or (iii) to the
extent required by Applicable Law or by any subpoena or other legal process) or
use any Report in any manner other than administration of the Loans and other
Obligations. Each Lender shall indemnify and hold harmless Agent and any other
Person preparing a Report from any action such Lender may take as a result of or
any conclusion it may draw from any Report, as well as from any Claims arising
as a direct or indirect result of Agent furnishing a Report to such Lender.

12.3    Reliance By Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any certification, notice or other communication
(including those by telephone, telex, telegram, telecopy or e-mail) believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person, and upon the advice and statements of Agent Professionals. Agent shall
have a reasonable and practicable amount of time to act upon any instruction,
notice or other communication under any Loan Document, and shall not be liable
for any delay in acting.

12.4    Action Upon Default. Agent shall not be deemed to have knowledge of any
Default or Event of Default, or of any failure to satisfy any conditions in
Section 6, unless it has received written notice from a Borrower or Required
Lenders specifying the occurrence and nature thereof. If any Lender acquires
knowledge of a Default, Event of Default or failure of such conditions, it shall
promptly notify Agent and the other Lenders thereof in writing. Each Secured
Party agrees that, except as otherwise provided in any Loan Documents or with
the written consent of Agent and Required Lenders, it will not take any
Enforcement Action, accelerate Obligations (other than Secured Bank Product
Obligations), or exercise any right that it might otherwise have under
Applicable Law to credit bid at foreclosure sales, UCC or PPSA sales or other
similar dispositions of Collateral or to assert any rights relating to any
Collateral.

12.5    Ratable Sharing. No Lender shall set off against any Dominion Account
without the prior consent of Agent. If any Lender shall obtain any payment or
reduction of any Obligation, whether through set-off or otherwise, in excess of
its share of such Obligation, determined on a Pro Rata basis or in accordance
with Section 5.6.1, as applicable, such Lender shall forthwith purchase from
Agent, the U.S. Issuing Bank (if such Obligation is a U.S. Facility Obligation),
the Canadian Issuing Bank (if such Obligation is a Canadian Facility
Obligation), the U.K. Issuing Bank (if such Obligation is a U.K. Facility
Obligation), and the other Lenders such participations in the affected
Obligation as are necessary to cause the purchasing Lender to share the excess
payment or reduction on a Pro Rata basis or in accordance with Section 5.6.1, as
applicable. If any of such payment or reduction is thereafter recovered from the
purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest. Notwithstanding
the foregoing, if a Defaulting Lender obtains a payment or reduction of any
Obligation, it shall immediately turn over the amount thereof to Agent for
application under Section 4.2.2 and it shall provide a written statement to
Agent describing the Obligation affected by such payment or reduction. No Lender
shall set off against any Dominion Account without the prior consent of the
Agent

12.6    Indemnification. EACH LENDER SHALL INDEMNIFY AND HOLD HARMLESS AGENT
INDEMNITEES AND ISSUING BANK INDEMNITEES, TO THE

 

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EXTENT NOT REIMBURSED BY OBLIGORS, ON A PRO RATA BASIS, AGAINST ALL CLAIMS THAT
MAY BE INCURRED BY OR ASSERTED AGAINST ANY SUCH INDEMNITEE (OTHER THAN CLAIMS
THAT ARE CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH
INDEMNITEE), PROVIDED THAT ANY CLAIM AGAINST AN AGENT INDEMNITEE RELATES TO OR
ARISES FROM ITS ACTING AS OR FOR AGENT (IN THE CAPACITY OF AGENT). In Agent’s
discretion, it may reserve for any Claims made against an Agent Indemnitee or
Issuing Bank Indemnitee, and may satisfy any judgment, order or settlement
relating thereto, from proceeds of Collateral prior to making any distribution
of Collateral proceeds to Secured Parties. If Agent is sued by any Creditor
Representative, debtor-in-possession or other Person for any alleged preference
or fraudulent transfer, then any monies paid by Agent in settlement or
satisfaction of such proceeding, together with all interest, costs and expenses
(including attorneys’ fees) incurred in the defense of same, shall be promptly
reimbursed to Agent by each Lender to the extent of its Pro Rata share.

12.7    Limitation on Responsibilities of Agent. Agent shall not be liable to
any Secured Party for any action taken or omitted to be taken under the Loan
Documents, except for losses directly and solely caused by Agent’s gross
negligence or willful misconduct. Agent does not assume any responsibility for
any failure or delay in performance or any breach by any Obligor, Lender or
other Secured Party of any obligations under the Loan Documents. Agent does not
make any express or implied representation, warranty or guarantee to Secured
Parties with respect to any Obligations, Collateral, Loan Documents or Obligor.
No Agent Indemnitee shall be responsible to Secured Parties for any recitals,
statements, information, representations or warranties contained in any Loan
Documents; the execution, validity, genuineness, effectiveness or enforceability
of any Loan Documents; the genuineness, enforceability, collectability, value,
sufficiency, location or existence of any Collateral, or the validity, extent,
perfection or priority of any Lien therein; the validity, enforceability or
collectability of any Obligations; or the assets, liabilities, financial
condition, results of operations, business, creditworthiness or legal status of
any Obligor or Account Debtor. No Agent Indemnitee shall have any obligation to
any Secured Party to ascertain or inquire into the existence of any Default or
Event of Default, the observance or performance by any Obligor of any terms of
the Loan Documents, or the satisfaction of any conditions precedent contained in
any Loan Documents.

12.8    Successor Agent and Co-Agents.

12.8.1.    Resignation; Successor Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, Agent may resign at any time
by giving at least 30 days written notice thereof to Lenders and Borrower Agent.
Upon receipt of such notice, Required Lenders shall have the right to appoint a
successor Agent which shall be (a) a U.S. Lender or an Affiliate of a U.S.
Lender; or (b) a commercial bank that is organized under the laws of the United
States or any state or district thereof, has a combined capital surplus of at
least $200,000,000 and (provided no Default or Event of Default exists) is
reasonably acceptable to Borrower Agent. If no successor agent is appointed
prior to the effective date of the resignation of Agent, then Agent may appoint
a successor agent from among Lenders or, if no Lender accepts such role, Agent
may appoint Required Lenders as successor Agent. Upon acceptance by a successor
Agent of an appointment to serve as Agent hereunder, or upon appointment of
Required Lenders as successor Agent, such successor Agent shall thereupon
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with all the powers and duties of the retiring Agent (including as security
trustee of Secured Parties under the U.K. Security Agreements) without further
act, and the retiring Agent shall be discharged from its duties and obligations
hereunder but shall continue to have the benefits of the indemnification set
forth in Sections 12.6 and 14.2. Notwithstanding any Agent’s resignation, the
provisions of this Section 12 shall continue in effect for its benefit with
respect to any actions taken or omitted to be taken by it while Agent. Any
successor to Bank of America by merger or acquisition of stock or this loan
shall continue to be Agent (including as security trustee of Secured Parties
under the U.K. Security Agreements) hereunder without further act on the part of
the parties hereto, unless such successor resigns as provided above.

12.8.2.    Separate Collateral Agent. It is the intent of the parties that there
shall be no violation of any Applicable Law denying or restricting the right of
financial institutions to transact business in any jurisdiction. If Agent
believes that it may be limited in the exercise of any rights or remedies under
the Loan Documents due to any Applicable Law, Agent may appoint an additional
Person who is not so limited, as a separate collateral agent or co-collateral
agent. If Agent so appoints a collateral agent or co-collateral agent, each
right and remedy intended to be available to Agent under the Loan Documents
shall also be vested in such separate agent. Secured Parties shall execute and
deliver such documents as Agent deems appropriate to vest any rights or remedies
in such agent. If any collateral agent or co-collateral agent shall die or
dissolve, become incapable of acting, resign or be removed, then all the rights
and remedies of such agent, to the extent permitted by Applicable Law, shall
vest in and be exercised by Agent until appointment of a new agent.

12.9    Due Diligence and Non-Reliance. Each Lender acknowledges and agrees that
it has, independently and without reliance upon Agent or any other Lenders, and
based upon such documents, information and analyses as it has deemed
appropriate, made its own credit analysis of each Obligor and its own decision
to enter into this Agreement and to fund Loans and participate in LC Obligations
hereunder. Each Secured Party has made such inquiries as it feels necessary
concerning the Loan Documents, Collateral and Obligors. Each Secured Party
acknowledges and agrees that the other Secured Parties have made no
representations or warranties concerning any Obligor, any Collateral or the
legality, validity, sufficiency or enforceability of any Loan Documents or
Obligations. Each Secured Party will, independently and without reliance upon
any other Secured Party, and based upon such financial statements, documents and
information as it deems appropriate at the time, continue to make and rely upon
its own credit decisions in making Loans and participating in LC Obligations,
and in taking or refraining from any action under any Loan Documents. Except for
notices, reports and other information expressly requested by a Lender, Agent
shall have no duty or responsibility to provide any Secured Party with any
notices, reports or certificates furnished to Agent by any Obligor or any credit
or other information concerning the affairs, financial condition, business or
Properties of any Obligor (or any of its Affiliates) which may come into
possession of Agent or its Affiliates.

12.10    Remittance of Payments and Collections.

12.10.1.    Remittances Generally. All payments by any Lender to Agent shall be
made by the time and on the day set forth in this Agreement, in immediately
available funds. If no time for payment is specified or if payment is due on
demand by Agent and request for payment is made by Agent by 11:00 a.m.
(Applicable Time Zone) on a Business Day, payment shall be

 

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made by Lender not later than 2:00 p.m. (Applicable Time Zone) on such day, and
if request is made after 11:00 a.m. (Applicable Time Zone), then payment shall
be made by 11:00 a.m. (Applicable Time Zone) on the next Business Day. Payment
by Agent to any Secured Party shall be made by wire transfer, in the type of
funds received by Agent. Any such payment shall be subject to Agent’s right of
offset for any amounts due from such payee under the Loan Documents.

12.10.2.    Failure to Pay. If any Secured Party fails to pay any amount when
due by it to Agent pursuant to the terms hereof, such amount shall bear interest
from the due date until paid at the rate determined by Agent as customary in the
banking industry for interbank compensation. In no event shall Obligors be
entitled to receive credit for any interest paid by a Secured Party to Agent,
nor shall any Defaulting Lender be entitled to interest on any amounts held by
Agent pursuant to Section 4.2.

12.10.3.    Recovery of Payments. If Agent pays any amount to a Secured Party in
the expectation that a related payment will be received by Agent from an Obligor
and such related payment is not received, then Agent may recover such amount
from each Secured Party that received it. If Agent determines at any time that
an amount received under any Loan Document must be returned to an Obligor or
paid to any other Person pursuant to Applicable Law or otherwise, then,
notwithstanding any other term of any Loan Document, Agent shall not be required
to distribute such amount to any Lender. If any amounts received and applied by
Agent to any Obligations are later required to be returned by Agent pursuant to
Applicable Law, each Lender shall pay to Agent, on demand, such Lender’s Pro
Rata share of the amounts required to be returned.

12.11    Agent in its Individual Capacity. As a Lender, Bank of America shall
have the same rights and remedies under the other Loan Documents as any other
Lender, and the terms “Lenders,” “Required Lenders,” “U.S. Required Lenders,”
“U.S. Required Term Lenders,” “U.K. Required Lenders,” “Canadian Required
Lenders” or any similar term shall include Bank of America, if applicable, in
its capacity as a Lender. Bank of America and its Affiliates may accept deposits
from, lend money to, provide Bank Products to, act as financial or other advisor
to, and generally engage in any kind of business with, Obligors and their
Affiliates, as if Bank of America were not Agent hereunder, without any duty to
account therefor to Lenders. In their individual capacities, Bank of America and
its Affiliates may receive information regarding Obligors, their Affiliates and
their Account Debtors (including information subject to confidentiality
obligations), and each Secured Party agrees that Bank of America and its
Affiliates shall be under no obligation to provide such information to any
Secured Party, if acquired in such individual capacity.

12.12    Agent Titles. Each Lender, other than Bank of America, that is
designated (on the cover page of this Agreement or otherwise) by Bank of America
as an “Agent” or “Arranger” of any type shall not have any right, power,
responsibility or duty under any Loan Documents other than those applicable to
all Lenders, and shall in no event be deemed to have any fiduciary relationship
with any other Lender.

12.13    Bank Product Providers. Each Secured Bank Product Provider, by delivery
of a notice to Agent of a Bank Product, agrees to be bound by Section 5.6 and
this Section 12. Each Secured Bank Product Provider shall indemnify and hold
harmless Agent Indemnitees, to the extent not reimbursed by Obligors, against
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any Agent Indemnitee in connection with such provider’s Secured Bank Product
Obligations, unless such Claim is caused by the gross negligence or willful
misconduct of such Agent Indemnitee.

12.14    No Third Party Beneficiaries. This Section 12 is an agreement solely
among Secured Parties and Agent, and shall survive Full Payment of the
Obligations. This Section 12 does not confer any rights or benefits upon
Obligors or any other Person. As between Obligors and Agent, any action that
Agent may take under any Loan Documents or with respect to any Obligations shall
be conclusively presumed to have been authorized and directed by Secured
Parties.

 

SECTION 13.

BENEFIT OF AGREEMENT; ASSIGNMENTS

13.1    Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of Obligors, Agent, Lenders, Secured Parties, and their
respective successors and assigns, except that (a) no Obligor shall have the
right to assign its rights or delegate its obligations under any Loan Documents;
and (b) any assignment by a Lender must be made in compliance with Section 13.3.
Agent may treat the Person which made any Loan as the owner thereof for all
purposes until such Person makes an assignment in accordance with Section 13.3.
Any authorization or consent of a Lender shall be conclusive and binding on any
subsequent transferee or assignee of such Lender.

13.2    Participations.

13.2.1.    Permitted Participants; Effect. Any Lender may, in the Ordinary
Course of Business and in accordance with Applicable Law, at any time sell to a
financial institution (“Participant”) a participating interest in the rights and
obligations of such Lender under any Loan Documents. Despite any sale by a
Lender of participating interests to a Participant, such Lender’s obligations
under the Loan Documents shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for performance of such obligations,
such Lender shall remain the holder of its Loans and Commitments for all
purposes, all amounts payable by Obligors shall be determined as if such Lender
had not sold such participating interests, and Obligors and Agent shall continue
to deal solely and directly with such Lender in connection with the Loan
Documents. Each Lender shall be solely responsible for notifying its
Participants of any matters under the Loan Documents, and Agent and the other
Lenders shall not have any obligation or liability to any such Participant. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 5.9 unless Borrower Agent agrees otherwise
in writing.

13.2.2.    Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, waiver or other
modification of any Loan Documents other than that which forgives principal,
interest or fees, reduces the stated interest rate or fees payable with respect
to any Loan or Commitment in which such Participant has an interest, postpones
the Canadian Revolver Commitment Termination Date (if such Participant has an
interest in the Canadian Revolver Commitments), U.K. Revolver Commitment
Termination Date (if such Participant has an interest in the U.K. Revolver
Commitments), or U.S. Revolver Commitment Termination Date (if such Participant
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Commitments), or any date fixed for any regularly scheduled payment of
principal, interest or fees on such Loan or Commitment, or releases any
Borrower, Guarantor or substantial portion of the Collateral.

13.2.3.    Benefit of Set-Off. Obligors agree that each Participant shall have a
right of set-off in respect of its participating interest to the same extent as
if such interest were owing directly to a Lender, and each Lender shall also
retain the right of set-off with respect to any participating interests sold by
it. By exercising any right of set-off, a Participant agrees to share with
Lenders all amounts received through its set-off, in accordance with
Section 12.5 as if such Participant were a Lender.

13.3    Assignments.

13.3.1.    Permitted Assignments. A Lender may assign to an Eligible Assignee
any of its rights and obligations under the Loan Documents, as long as (a) each
assignment is of a constant, and not a varying, percentage of the transferor
Lender’s rights and obligations under the Loan Documents and, in the case of a
partial assignment, is in a minimum principal amount of $10,000,000 (unless
otherwise agreed by Agent in its discretion) and integral multiples of
$1,000,000 in excess of that amount; (b) except in the case of an assignment in
whole of a Lender’s rights and obligations, the aggregate amount of the
Commitments retained by the transferor Lender is at least $10,000,000 (unless
otherwise agreed by Agent in its discretion); and (c) the parties to each such
assignment shall execute and deliver to Agent, for its acceptance and recording,
an Assignment and Acceptance. Nothing herein shall limit the right of a Lender
to pledge or assign any rights under the Loan Documents to (i) any Federal
Reserve Bank or the United States Treasury as collateral security pursuant to
Regulation A of the Board of Governors and any Operating Circular issued by such
Federal Reserve Bank, or (ii) counterparties to swap agreements relating to any
Loans; provided, however, that any payment by Obligors to the assigning Lender
in respect of any Obligations assigned as described in this sentence shall
satisfy Obligors’ obligations hereunder to the extent of such payment, and no
such assignment shall release the assigning Lender from its obligations
hereunder.

13.3.2.    Effect; Effective Date. Upon delivery to Agent of an assignment
notice in the form of Exhibit C and a processing fee of $3,500 (unless otherwise
agreed by Agent in its discretion), the assignment shall become effective as
specified in the notice, if it complies with this Section 13.3. From such
effective date, the Eligible Assignee shall for all purposes be a Lender under
the Loan Documents, and shall have all rights and obligations of a Lender
thereunder. Upon consummation of an assignment, the transferor Lender, Agent and
Borrowers shall make appropriate arrangements for issuance of replacement and/or
new Notes, as applicable. The transferee Lender shall comply with Section 5.10
and deliver, upon request, an administrative questionnaire satisfactory to
Agent.

13.3.3.    Certain Assignees. No assignment or participation may be made to an
Obligor, Affiliate of an Obligor, Defaulting Lender or natural person. In
connection with any assignment by a Defaulting Lender, such assignment shall be
effective only upon payment by the Eligible Assignee or Defaulting Lender to
Agent of an aggregate amount sufficient, upon distribution (through direct
payment, purchases of participations or other compensating actions as Agent
deems appropriate), (a) to satisfy all funding and payment liabilities then
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Defaulting Lender hereunder, and (b) to acquire its Pro Rata share of all Loans
and LC Obligations. If an assignment by a Defaulting Lender shall become
effective under Applicable Law for any reason without compliance with the
foregoing sentence, then the assignee shall be deemed a Defaulting Lender for
all purposes until such compliance occurs.

13.4    Replacement of Certain Lenders. If a Lender (a) fails to give its
consent to any amendment, waiver or action for which consent of all Lenders was
required and Required Lenders consented, or (b) is a Defaulting Lender, then, in
addition to any other rights and remedies that any Person may have, Agent or
Borrower Agent may, by notice to such Lender within 120 days after such event,
require such Lender to assign all of its rights and obligations under the Loan
Documents to Eligible Assignee(s), pursuant to appropriate Assignment and
Acceptance(s), within 20 days after the notice. Agent is irrevocably appointed
as attorney-in-fact to execute any such Assignment and Acceptance if the Lender
fails to execute it. Such Lender shall be entitled to receive, in cash,
concurrently with such assignment, all amounts owed to it under the Loan
Documents, including all principal, interest and fees through the date of
assignment (but excluding any prepayment charge).

 

SECTION 14.

MISCELLANEOUS

14.1    Consents, Amendments and Waivers.

14.1.1.    Amendment. No modification of any Loan Document, including any
extension or amendment of a Loan Document or any waiver of a Default or Event of
Default, shall be effective without the prior written agreement of the Required
Lenders or of Agent (with the consent of Required Lenders) and each Obligor
party to such Loan Document; provided, however, that

(a)    without the prior written consent of Agent, no modification shall be
effective with respect to any provision in a Loan Document that relates to any
rights, duties or discretion of Agent;

(b)    without the prior written consent of each affected Issuing Bank, no
modification shall be effective with respect to any LC Obligations, Section 2.2,
Section 2.3, Section 2.4, or any other provision in a Loan Document that relates
to any rights, duties or discretion of such affected Issuing Bank;

(c)    without the prior written consent of each affected Lender, including a
Defaulting Lender, no modification shall be effective that would (i) increase
the Commitment of such Lender; (ii) reduce the amount of, or waive or delay
payment of, any principal, interest or fees payable to such Lender (except as
provided in Section 4.2); (iii) extend the Commitment of such Lender, or
(iv) amend this clause (c);

(d)    without the prior written consent of all Lenders (except any Defaulting
Lender), no modification shall be effective that would (i) extend the U.S.
Revolver Commitment Termination Date, the U.K. Revolver Commitment Termination
Date, the Canadian Revolver Commitment Termination Date, the Term Loan Maturity
Date, or the Facility Termination Date, (ii) alter Section 5.6, 7.1 (except to
add Collateral), 12.5 or 14.1.1; (iii) amend the definition of Pro Rata,
Supermajority Lenders, or Required Lenders; (iv) increase any advance rate;
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Collateral with a book value greater than $5,000,000 during any calendar year,
except as currently contemplated by the Loan Documents; or (vi) release any
Obligor from liability for any Obligations;

(e)    without the prior written consent of the Supermajority Lenders, no
modification shall be effective that would amend the definition of U.S.
Borrowing Base (or any defined term used in such definition, including any
defined term used therein) to the extent that any such amendment results in more
credit being made available to U.S. Borrowers, the Canadian Borrowing Base (or
any defined term used in such definition, including any defined term used
therein) to the extent that any such amendment results in more credit being made
available to the Canadian Borrower, or the U.K. Borrowing Base (or any defined
term used in such definition, including any defined term used therein) to the
extent that any such amendment results in more credit being made available to
the U.K. Borrower;

(f)    without the prior written consent of a Secured Bank Product Provider, no
modification shall be effective that affects its relative payment priority under
Section 5.6;

(g)    without the prior written consent of all Lenders, (i) the Obligations
shall not be subordinated to any other obligations, and (ii) Agent shall not
agree to subordinate its Liens in the Collateral to any other Liens except to
the extent contemplated by Section 12.2.1;

(h)    without the prior written consent of all: (i) U.S. Lenders, amend the
definition of U.S. Required Lenders, (ii) Canadian Lenders, amend the definition
of Canadian Required Lenders, (iii) U.K. Lenders, amend the definition of U.K.
Required Lenders, and (iv) Term Lenders, amend the definition of U.S. Required
Term Lenders; and

(i)    if Real Estate secures any Obligations, no modification of a Loan
Document shall add, increase, renew or extend any credit line hereunder until
the completion of flood diligence and documentation as required by all Flood
Laws.

14.1.2.    Limitations. The agreement of Obligors shall not be necessary to the
effectiveness of any modification of a Loan Document that deals solely with the
rights and duties of Lenders, Agent and/or Issuing Banks as among themselves.
Only the consent of the parties to the Fee Letters or any agreement relating to
a Bank Product shall be required for any modification of such agreement, and any
non-Lender that is party to a Bank Product agreement shall have no right to
participate in any manner in modification of any other Loan Document. Any waiver
or consent granted by Agent or Lenders hereunder shall be effective only if in
writing and only for the matter specified.

14.1.3.    Payment for Consents. No Obligor will, directly or indirectly, pay
any remuneration or other thing of value, whether by way of additional interest,
fee or otherwise, to any Lender (in its capacity as a Lender hereunder) as
consideration for agreement by such Lender with any modification of any Loan
Documents, unless such remuneration or value is concurrently paid, on the same
terms, on a Pro Rata basis to all Lenders providing their consent.

14.2    Indemnity. EACH OBLIGOR SHALL INDEMNIFY AND HOLD HARMLESS THE
INDEMNITEES AGAINST ANY CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY
INDEMNITEE, INCLUDING CLAIMS

 

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ASSERTED BY ANY OBLIGOR OR OTHER PERSON OR ARISING FROM THE NEGLIGENCE OF AN
INDEMNITEE. In no event shall any party to a Loan Document have any obligation
thereunder to indemnify or hold harmless an Indemnitee with respect to a Claim
that is determined in a final, non-appealable judgment by a court of competent
jurisdiction to result from the gross negligence or willful misconduct of such
Indemnitee.

14.3    Notices and Communications.

14.3.1.    Notice Address. Subject to Section 4.1.4, all notices and other
communications by or to a party hereto shall be in writing and shall be given to
any Obligor, at Borrower Agent’s address shown on the signature pages hereof,
and to any other Person at its address shown on the signature pages hereof (or,
in the case of a Person who becomes a Lender after the Closing Date, at the
address shown on its Assignment and Acceptance), or at such other address as a
party may hereafter specify by notice in accordance with this Section 14.3. Each
such notice or other communication shall be effective only (a) if given by
facsimile transmission, when transmitted to the applicable facsimile number, if
confirmation of receipt is received; (b) if given by mail, three Business Days
after deposit in the mail, with first-class postage pre-paid, addressed to the
applicable address; or (c) if given by personal delivery, when duly delivered to
the notice address with receipt acknowledged. Notwithstanding the foregoing, no
notice to Agent pursuant to Section 2.1.4, 2.2, 2.3, 2.4, 3.1.2, 4.1.1 or 5.3.3
shall be effective until actually received by the individual to whose attention
at Agent such notice is required to be sent. Any written notice or other
communication that is not sent in conformity with the foregoing provisions shall
nevertheless be effective on the date actually received by the noticed party.
Any notice received by Borrower Agent shall be deemed received by all Obligors.

14.3.2.    Electronic Communications; Voice Mail. Electronic mail and internet
websites may be used only for routine communications, such as financial
statements, Borrowing Base Certificates and other information required by
Section 10.1.2, administrative matters, distribution of Loan Documents, and
matters permitted under Section 4.1.4. Agent and Lenders make no assurances as
to the privacy and security of electronic communications. Electronic and voice
mail may not be used as effective notice under the Loan Documents.

14.3.3.    Non-Conforming Communications. Agent and Lenders may rely upon any
notices purportedly given by or on behalf of any Obligor even if such notices
were not made in a manner specified herein, were incomplete or were not
confirmed, or if the terms thereof, as understood by the recipient, varied from
a later confirmation. Each Obligor shall indemnify and hold harmless each
Indemnitee from any liabilities, losses, costs and expenses arising from any
telephonic communication purportedly given by or on behalf of an Obligor.

14.4    Performance of Obligors’ Obligations. Agent may, in its discretion at
any time and from time to time, at the applicable Borrowers’ expense, pay any
amount or do any act required of an Obligor under any Loan Documents or
otherwise lawfully requested by Agent to (a) enforce any Loan Documents or
collect any Obligations; (b) protect, insure, maintain or realize upon any
Collateral; or (c) defend or maintain the validity or priority of Agent’s Liens
in any Collateral, including any payment of a judgment, insurance premium,
warehouse charge, finishing or processing charge, or landlord claim, or any
discharge of a Lien. All payments, costs and expenses (including Extraordinary
Expenses) of Agent under this Section shall be reimbursed to Agent by

 

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Borrowers, on demand, with interest from the date incurred to the date of
payment thereof at the Default Rate applicable to U.S. Base Rate Revolver Loans.
Any payment made or action taken by Agent under this Section shall be without
prejudice to any right to assert an Event of Default or to exercise any other
rights or remedies under the Loan Documents.

14.5    Credit Inquiries. Each Obligor hereby authorizes Agent and Lenders (but
they shall have no obligation) to respond to usual and customary credit
inquiries from third parties concerning any Obligor or Subsidiary.

14.6    Severability. Wherever possible, each provision of the Loan Documents
shall be interpreted in such manner as to be valid under Applicable Law. If any
provision is found to be invalid under Applicable Law, it shall be ineffective
only to the extent of such invalidity and the remaining provisions of the Loan
Documents shall remain in full force and effect.

14.7    Cumulative Effect; Conflict of Terms. The provisions of the Loan
Documents are cumulative. The parties acknowledge that the Loan Documents may
use several limitations, tests or measurements to regulate similar matters, and
they agree that these are cumulative and that each must be performed as
provided. Except as otherwise provided in another Loan Document (by specific
reference to the applicable provision of this Agreement), if any provision
contained herein is in direct conflict with any provision in another Loan
Document, the provision herein shall govern and control.

14.8    Counterparts. Any Loan Document may be executed in counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute a single contract. This Agreement shall become effective when Agent
has received counterparts bearing the signatures of all parties hereto. Delivery
of a signature page of any Loan Document by telecopy or other electronic means
shall be effective as delivery of a manually executed counterpart of such
agreement.

14.9    Entire Agreement. Time is of the essence of the Loan Documents. The Loan
Documents 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.

14.10    Relationship with Lenders. The obligations of each Lender hereunder are
several, and no Lender shall be responsible for the obligations or Commitments
of any other Lender. Amounts payable hereunder to each Lender shall be a
separate and independent debt. It shall not be necessary for Agent or any other
Lender to be joined as an additional party in any proceeding for such purposes.
Nothing in this Agreement and no action of Agent, Lenders or any other Secured
Party pursuant to the Loan Documents or otherwise shall be deemed to constitute
Agent and any Secured Party to be a partnership, association, joint venture or
any other kind of entity, nor to constitute control of any Obligor.

14.11    Lender Loss Sharing Agreement.

(a)    Definitions. As used in this Section 14.11, the following terms shall
have the following meanings:

 

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(i)    CAM: the mechanism for the allocation and exchange of interests in the
Loans, participations in Letters of Credit and collections thereunder
established under Section 14.11(b).

(ii)    CAM Exchange: the exchange of the U.S. Lenders’ interests, U.K. Lenders’
interests, and the Canadian Lenders’ interests provided for in Section 14.11(b).

(iii)    CAM Exchange Date: the first date after the Closing Date on which there
shall occur (a) any event described in Section 11.1(j) with respect to any
Borrower, or (b) an acceleration of Loans and termination of the Commitments
pursuant to Section 11.2.

(iv)    CAM Percentage: as to each Lender, a fraction, (a) the numerator of
which shall be the aggregate amount of such Lender’s Revolver Commitments
immediately prior to the CAM Exchange Date and the termination of the Revolver
Commitments, and (b) the denominator of which shall be the amount of the
Revolver Commitments of all the Lenders immediately prior to the CAM Exchange
Date and the termination of the Revolver Commitments.

(v)    Designated Obligations: all Obligations of the Borrowers with respect to
(a) principal and interest under the U.S. Revolver Loans, U.K. Revolver Loans,
Canadian Revolver Loans, Overadvance Loans and Protective Advances,
(b) unreimbursed drawings under Letters of Credit and interest thereon, and
(c) fees under Sections 3.2.1, 3.2.2(a), 3.2.3(a), and 3.2.4(a).

(vi)    Revolver Facilities: the facility established under the U.S. Revolver
Commitments, the U.K. Revolver Commitments, and the Canadian Revolver
Commitments, and Revolver Facility means any one of such Revolver Facilities.

(b)    CAM Exchange.

(i)    On the CAM Exchange Date,

(A)    the U.S. Revolver Commitments, the U.K. Revolver Commitments, and the
Canadian Revolver Commitments shall have terminated in accordance with
Section 11.2,

(B)    each U.S. Lender shall fund its participation in any outstanding
Protective Advances in accordance with Section 2.1.6, each U.K. Lender shall
fund its participation in any outstanding Protective Advances in accordance with
Section 2.1.6, and each Canadian Lender shall fund its participation in any
outstanding Protective Advances in accordance with Section 2.1.6

(C)    each U.S. Lender shall fund its participation in any unreimbursed
drawings made under the applicable Letters of Credit pursuant to
Section 2.3.2(b), each Canadian Lender

 

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shall fund its participation in any unreimbursed drawings made under the
applicable Letters of Credit pursuant to Section 2.4.2(b), and each U.K. Lender
shall fund its participation in any unreimbursed drawings made under the
applicable Letters of Credit pursuant to Section 2.2.2(b), and

(D)    the Lenders shall purchase at par interests (in Dollars) in the
Designated Obligations under each Revolver Facility (and shall make payments to
Agent for reallocation to other Lenders to the extent necessary to give effect
to such purchases) and shall assume the obligations to reimburse the applicable
Issuing Bank for unreimbursed drawings under outstanding Letters of Credit under
such Revolver Facility such that, in lieu of the interests of each Lender in the
Designated Obligations under the U.S. Revolver Commitments, the U.K. Revolver
Commitments, and the Canadian Revolver Commitments in which it shall participate
immediately prior to the CAM Exchange Date, such Lender shall own an interest
equal to such Lender’s CAM Percentage in each component of the Designated
Obligations immediately following the CAM Exchange.

(ii)    Each Lender and each Person acquiring a participation from any Lender as
contemplated by Section 13.2 hereby consents and agrees to the CAM Exchange.
Each Borrower agrees from time to time to execute and deliver to Lenders all
such promissory notes and other instruments and documents as Agent shall
reasonably request to evidence and confirm the respective interests and
obligations of Lenders after giving effect to the CAM Exchange, and each Lender
agrees to surrender any promissory notes originally received by it in connection
with its Loans under this Agreement to Agent against delivery of any promissory
notes so executed and delivered; provided that the failure of any Lender to
deliver or accept any such promissory note, instrument or document shall not
affect the validity or effectiveness of the CAM Exchange.

(iii)    As a result of the CAM Exchange, from and after the CAM Exchange Date,
each payment received by Agent pursuant to any Loan Document in respect of any
of the Designated Obligations shall be distributed to Lenders, pro rata in
accordance with their respective CAM Percentages.

(iv)    In the event that on or after the CAM Exchange Date, the aggregate
amount of the Designated Obligations shall change as a result of the making of a
disbursement under a Letter of Credit by any Issuing Bank that is not reimbursed
by the applicable Borrowers, then each Lender shall promptly reimburse such
Issuing Bank for its CAM Percentage of such unreimbursed payment.

(c)    Notwithstanding any other provision of this Section 14.11, Agent and each
Lender agree that if Agent or a Lender is required under Applicable Law to
withhold or deduct any taxes or other amounts from payments made by it hereunder
or as a result hereof, such Person

 

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shall be entitled to withhold or deduct such amounts and pay over such taxes or
other amounts to the applicable Governmental Authority imposing such tax without
any obligation to indemnify Agent or any Lender with respect to such amounts and
without any other obligation of gross up or offset with respect thereto and
there shall be no recourse whatsoever by Agent or any Lender subject to such
withholding to Agent or any other Lender making such withholding and paying over
such amounts, but without diminution of the rights of Agent or such Lender
subject to such withholding as against Borrowers and the other Obligors to the
extent (if any) provided in this Agreement and the other Loan Documents. Any
amounts so withheld or deducted shall be treated as, for the purpose of this
Section 14.11, having been paid to Agent or such Lender with respect to which
such withholding or deduction was made.

14.12    No Advisory or Fiduciary Responsibility. In connection with all aspects
of each transaction contemplated by any Loan Document, Obligors acknowledge and
agree that (a)(i) this credit facility and any related arranging or other
services by Agent, any Lender, any of their Affiliates or any arranger are
arm’s-length commercial transactions between Obligors and such Person;
(ii) Obligors have consulted their own legal, accounting, regulatory and tax
advisors to the extent they have deemed appropriate; and (iii) Obligors are
capable of evaluating, and understand and accept, the terms, risks and
conditions of the transactions contemplated by the Loan Documents; (b) each of
Agent, Lenders, their Affiliates and any arranger is and has been acting solely
as a principal and, except as expressly agreed in writing by the relevant
parties, has not been, is not, and will not be acting as an advisor, agent or
fiduciary for Obligors, any of their Affiliates or any other Person, and has no
obligation with respect to the transactions contemplated by the Loan Documents
except as expressly set forth therein; and (c) Agent, Lenders, their Affiliates
and any arranger may be engaged in a broad range of transactions that involve
interests that differ from those of Obligors and their Affiliates, and have no
obligation to disclose any of such interests to Obligors or their Affiliates. To
the fullest extent permitted by Applicable Law, each Obligor hereby waives and
releases any claims that it may have against Agent, Lenders, their Affiliates
and any arranger with respect to any breach of agency or fiduciary duty in
connection with any transaction contemplated by a Loan Document.

14.13    Confidentiality. Each of Agent, Lenders and Issuing Banks shall
maintain the confidentiality of all Information (as defined below), except that
Information may be disclosed (a) to its Affiliates, and to its and their
partners, directors, officers, employees, agents, advisors and representatives
(provided such Persons are informed of the confidential nature of the
Information and instructed to keep it confidential); (b) to the extent requested
by any governmental, regulatory or self-regulatory authority purporting to have
jurisdiction over it or its Affiliates; (c) to the extent required by Applicable
Law or by any subpoena or other legal process; (d) to any other party hereto;
(e) in connection with any action or proceeding, or other exercise of rights or
remedies, relating to any Loan Documents or Obligations; (f) subject to an
agreement containing provisions substantially the same as this Section, to any
Transferee or any actual or prospective party (or its advisors) to any Bank
Product; (g) with the consent of Borrower Agent; or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) is available to Agent, any Lender, any Issuing Bank or any
of their Affiliates on a nonconfidential basis from a source other than
Obligors. Notwithstanding the foregoing, Agent and Lenders may publish or
disseminate general information describing this credit facility, including the
names and addresses of Obligors and a general description of Obligors’
businesses, and may use Obligors’ logos, trademarks or product photographs in
advertising materials. As used herein, “Information”

 

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means all information received from an Obligor or Subsidiary relating to it or
its business that is identified as confidential when delivered. Any Person
required to maintain the confidentiality of Information pursuant to this Section
shall be deemed to have complied if it exercises the same degree of care that it
accords its own confidential information. Each of Agent, Lenders and Issuing
Banks acknowledges that (i) Information may include material non-public
information concerning an Obligor or Subsidiary; (ii) it has developed
compliance procedures regarding the use of material non-public information; and
(iii) it will handle such material non-public information in accordance with
Applicable Law, including federal, state, provincial and territorial securities
laws.

14.14    GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, UNLESS
OTHERWISE SPECIFIED, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT TO
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATION LAW AND FEDERAL LAWS RELATING
TO NATIONAL BANKS).

14.15    Consent to Forum; Judicial Reference; Bail-In of EEA Financial
Institutions.

14.15.1.    Forum. EACH OBLIGOR HEREBY CONSENTS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY FEDERAL OR STATE COURT SITTING IN OR WITH JURISDICTION OVER
NEW YORK, NEW YORK, IN ANY PROCEEDING OR DISPUTE RELATING IN ANY WAY TO ANY LOAN
DOCUMENTS, AND AGREES THAT ANY SUCH PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN
ANY SUCH COURT. EACH OBLIGOR IRREVOCABLY WAIVES ALL CLAIMS, OBJECTIONS AND
DEFENSES THAT IT MAY HAVE REGARDING SUCH COURT’S PERSONAL OR SUBJECT MATTER
JURISDICTION, VENUE OR INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY
CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION
14.3.1. Nothing herein shall limit the right of Agent or any Lender to bring
proceedings against any Obligor in any other court, nor limit the right of any
party to serve process in any other manner permitted by Applicable Law. Nothing
in this Agreement shall be deemed to preclude enforcement by Agent of any
judgment or order obtained in any forum or jurisdiction.

14.15.2.    Judicial Reference. If any controversy or claim among the parties
relating in any way to any Obligations or Loan Documents, including any alleged
tort, shall be pending before any court sitting in or with jurisdiction over
California or applying California law, then at the request of any party such
proceeding shall be referred by the court to a referee (who shall be an active
or retired judge) to hear and determine all issues in such proceeding (whether
of fact or law) and to report a statement of decision for adoption by the court.
Nothing in this Section shall limit any right of Agent or any other Secured
Party to exercise self-help remedies, such as setoff, foreclosure or sale of any
Collateral, or to obtain provisional or ancillary remedies from a court of
competent jurisdiction before, during or after any judicial reference. The
exercise of a remedy does not waive the right of any party to resort to judicial
reference. At Agent’s option, foreclosure under a mortgage or deed of trust may
be accomplished either by exercise of power of sale thereunder or by judicial
foreclosure.

 

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14.15.3.    Acknowledgement and Consent to Bail-In of EEA Financial
Institutions. Notwithstanding anything to the contrary in any Loan Document or
in any other agreement, arrangement or understanding among the parties, each
party hereto (including each Secured Party) acknowledges that, with respect to
any Secured Party that is an EEA Financial Institution, any unsecured liability
of such Secured Party arising under a Loan Document may be subject to the
write-down and conversion powers of an EEA Resolution Authority, and each party
hereto agrees and consents to, and acknowledges and agrees to be bound by,
(a) the application of any Write-Down and Conversion Powers by an EEA Resolution
Authority to any such liability which may be payable to it by such Secured
Party; and (b) the effects of any Bail-in Action on any such liability,
including (i) a reduction in full or in part or cancellation of any such
liability; (ii) a conversion of all, or a portion of, such liability into shares
or other instruments of ownership in such EEA Financial Institution, its parent,
or a bridge institution that may be issued to the party or otherwise conferred
on it, and that such shares or other instruments of ownership will be accepted
by it in lieu of any rights with respect to any such liability under any Loan
Document; or (iii) the variation of the terms of such liability in connection
with the exercise of any Write-Down and Conversion Powers.

14.16    Waivers by Obligors. To the fullest extent permitted by Applicable Law,
each Obligor waives (a) the right to trial by jury (which Agent and each Lender
hereby also waives) in any proceeding or dispute of any kind relating in any way
to any Loan Documents, Obligations or Collateral; (b) presentment, demand,
protest, notice of presentment, default, non-payment, maturity, release,
compromise, settlement, extension or renewal of any commercial paper, accounts,
documents, instruments, chattel paper and guaranties at any time held by Agent
on which an Obligor may in any way be liable, and hereby ratifies anything Agent
may do in this regard; (c) notice prior to taking possession or control of any
Collateral; (d) any bond or security that might be required by a court prior to
allowing Agent to exercise any rights or remedies; (e) the benefit of all
valuation, appraisement and exemption laws; (f) any claim against Agent, any
Issuing Bank or any Lender, on any theory of liability, for special, indirect,
consequential, exemplary or punitive damages (as opposed to direct or actual
damages) in any way relating to any Enforcement Action, Obligations, Loan
Documents or transactions relating thereto; and (g) notice of acceptance hereof.
Each Obligor acknowledges that the foregoing waivers are a material inducement
to Agent, Issuing Banks and Lenders entering into this Agreement and that they
are relying upon the foregoing in their dealings with Obligors. Each Obligor has
reviewed the foregoing waivers with its legal counsel and has knowingly and
voluntarily waived its jury trial and other rights following consultation with
legal counsel. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.

14.17    Patriot Act Notice. Agent and Lenders hereby notify Obligors that
pursuant to the requirements of the Patriot Act, the Proceeds of Crime Act and
other applicable anti-money laundering, anti-terrorist financing, government
sanction and “know your client” policies, regulations, laws or rules (the
Proceeds of Crime Act and such other applicable policies, regulations, laws or
rules, collectively, including any guidelines or orders thereunder, “AML
Legislation”), Agent and Lenders are required to obtain, verify and record
information that identifies each Obligor, including its legal name, address, tax
ID number and other information that will allow Agent and Lenders to identify it
in accordance with the Patriot Act and the AML Legislation. Agent and Lenders
will also require information regarding each personal guarantor,

 

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if any, and may require information regarding Obligors’ management and owners,
such as legal name, address, social security number and date of birth. Each
Obligor shall promptly provide all such information, including supporting
documentation and other evidence, as may be reasonably requested by any Lender
or any prospective assignee or participant of a Lender, in order to comply with
the Patriot Act and/or the applicable AML Legislation, whether now or hereafter
in existence.

14.18    Canadian Anti-Money Laundering Legislation. If the Agent has
ascertained the identity of any Canadian Facility Obligor or any authorized
signatories of any Canadian Facility Obligor for the purposes of applicable AML
Legislation, then the Agent: (a) shall be deemed to have done so as an agent for
each Canadian Lender, and this Agreement shall constitute a “written agreement”
in such regard between each Canadian Lender and the Agent within the meaning of
the applicable AML Legislation; and (b) shall provide to each Canadian 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 Canadian
Lenders agrees that Agent has no obligation to ascertain the identity of the
Canadian Facility Obligors or any authorized signatories of the Canadian
Facility Obligors on behalf of any Canadian Lender, or to confirm the
completeness or accuracy of any information it obtains from any Canadian
Facility Obligor or any such authorized signatory in doing so.

14.19    Reinstatement. This Agreement shall remain in full force and effect and
continue to be effective should any petition be filed by or against any Obligor
for liquidation or reorganization, should any Obligor become insolvent or make
an assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of such Obligor’s assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Obligations, or any part thereof, is, pursuant to
Applicable Law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Obligations, whether as a “voidable preference”,
“fraudulent conveyance” or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Obligations shall be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.

14.20    Nonliability of Lenders. Neither the Agent, any Issuing Bank nor any
Lender undertakes any responsibility to any Obligor to review or inform any
Obligor of any matter in connection with any phase of any Obligor’s business or
operations. Each Obligor agrees, on behalf of itself and each other Obligor,
that neither the Agent, any Issuing Bank nor any Lender shall have liability to
any Obligor (whether sounding in tort, contract or otherwise) for losses
suffered by any Obligor in connection with, arising out of or in any way related
to any of the transactions contemplated and the relationship established by the
Loan Documents, or any act, omission or event occurring in connection therewith,
unless it is determined in a final, non-appealable judgment by a court of
competent jurisdiction that such losses resulted from the gross negligence or
willful misconduct of the party from which recovery is sought or a breach of
obligations under this Agreement by the party from which recovery is sought.
NEITHER THE AGENT NOR ANY LENDER SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM
THE USE BY OTHERS OF ANY INFORMATION OR OTHER MATERIALS OBTAINED THROUGH
INTRALINKS OR OTHER SIMILAR INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH
THIS AGREEMENT.

 

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14.21    Know Your Customer. Nothing in this Agreement shall oblige the Agent to
carry out any “know your customer” or other checks in relation to any person on
behalf of any Lender and each Lender confirms to the Agent that it is solely
responsible for any such checks it is required to carry out and that it may not
rely on any statement in relation to such checks made by the Agent.

14.22    Amendment and Restatement.

14.22.1.    This Agreement amends and restates in its entirety the Second
Amended and Restated Loan Agreement and, upon the effectiveness of this
Agreement, the terms and provisions of the Second Amended and Restated Loan
Agreement shall, subject to Section 14.22.3, be superseded hereby.

14.22.2.    Notwithstanding the amendment and restatement of the Second Amended
and Restated Loan Agreement by this Agreement, all of the Obligations under the
Second Amended and Restated Loan Agreement which remain outstanding as of the
date hereof, shall constitute Obligations owing hereunder. This Agreement is
given in substitution for the Second Amended and Restated Loan Agreement, and
not as payment of the Obligations of the Borrowers thereunder, and is in no way
intended to constitute a novation of the Second Amended and Restated Loan
Agreement.

14.22.3.    Upon the effectiveness of this Agreement, unless the context
otherwise requires, each reference to the Second Amended and Restated Loan
Agreement in any of the Loan Documents and in each document, instrument or
agreement executed and/or delivered in connection therewith shall mean and be a
reference to this Agreement. Except as expressly modified as of the Closing
Date, all of the other Loan Documents shall remain in full force and effect and
are hereby ratified and confirmed. Without limiting the generality of the
foregoing, all security interests, pledges, assignments and other Liens and
Guarantees previously granted by any Obligor pursuant to the Loan Documents
executed and delivered in connection with the Original Loan Agreement, the
Original Amended and Restated Loan Agreement or the Second Amended and Restated
Loan Agreement are hereby reaffirmed, ratified, renewed and continued, and all
such security interests, pledges, assignments and other Liens and Guarantees
shall remain in full force and effect as security for the Obligations on and
after the Closing Date.

14.23      Intercreditor Agreement. Notwithstanding anything herein to the
contrary, the priority of the Lien and security interest granted to the Agent
pursuant to any Loan Document and the exercise of any right or remedy in respect
of the Collateral by the Agent (or any Secured Party) hereunder or under any
other Loan Document are subject to the provisions of the Intercreditor Agreement
and in the event of any conflict between the terms of the Intercreditor
Agreement and any Loan Document, the terms of the Intercreditor Agreement shall
govern and control. Notwithstanding anything herein to the contrary, prior to
the Discharge of Term Loan Obligations (as defined in the Intercreditor
Agreement), (i) the delivery or granting of “control ” (as defined in the UCC)
to the extent only one Person can be granted “control” therein under applicable
law of any Term Loan Collateral (as defined in the Intercreditor Agreement) by
the Term Loan Collateral Agent pursuant to the terms of the Term Loan Collateral
Documents (as defined in the Intercreditor Agreement) shall satisfy any such
“control ” requirement hereunder or under any other Loan Document with respect
to any Term Loan Collateral to the extent that such “control ” is consistent
with the terms of the Intercreditor Agreement and (ii) the possession of any
Term Loan Collateral

 

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by the Term Loan Collateral Agent pursuant to the terms of the Term Loan
Collateral Documents shall satisfy any such possession requirement hereunder or
under any other Loan Document with respect to Term Loan Collateral to the extent
that such possession is consistent with the terms of the Intercreditor
Agreement.

[Remainder of page intentionally left blank; signatures begin on following page]

 

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IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date
first above written.

 

OBLIGORS:

CALLAWAY GOLF COMPANY,

a Delaware corporation

By:  

                                                                       

Name:  

 

Title:  

 

CALLAWAY GOLF SALES COMPANY,

a California corporation

By:  

 

Name:  

 

Title:  

 

CALLAWAY GOLF BALL OPERATIONS, INC.,

a Delaware corporation

 

[Signature Page to Third Amended and Restated Loan and Security Agreement]

--------------------------------------------------------------------------------

By:  

                                                                       

Name:  

 

Title:  

 

CALLAWAY GOLF CANADA LTD.,

a Canada corporation

By:  

 

Name:  

 

Title:  

 

CALLAWAY GOLF EUROPE LTD.,

a company organized under the laws of England and Wales

By:  

 

Name:  

 

Title:  

 

 

[Signature Page to Third Amended and Restated Loan and Security Agreement]

--------------------------------------------------------------------------------

CALLAWAY GOLF INTERACTIVE, INC.

a Texas corporation

By:  

                                                                           

Name:  

 

Title:  

 

CALLAWAY GOLF INTERNATIONAL SALES COMPANY,

a California corporation

By:  

 

Name:  

 

Title:  

 

 

[Signature Page to Third Amended and Restated Loan and Security Agreement]

--------------------------------------------------------------------------------

CALLAWAY GOLF EUROPEAN HOLDING COMPANY LIMITED,

a company limited by shares incorporated under the laws of England and Wales

By:  

                                          

Name:  

 

Title:  

 

OGIO INTERNATIONAL, INC.,

a Utah corporation

By:  

                                          

Name:  

 

Title:  

 

TRAVIS MATHEW RETAIL, LLC,

a California limited liability company

By:  

                                                          
                                      

Name:  

                                                          
                                      

Title:  

                                                          
                                      

 

[Signature Page to Third Amended and Restated Loan and Security Agreement]

--------------------------------------------------------------------------------

TRAVISMATHEW, LLC,

a California limited liability company

By:  

                                                              

Name:  

 

Title:  

 

 

[Signature Page to Third Amended and Restated Loan and Security Agreement]

--------------------------------------------------------------------------------

AGENT AND LENDERS BANK OF AMERICA, N.A., as Agent and as a U.S. Lender By:  

                                                              

Name:   Title:   BANK OF AMERICA, N.A. (acting through its Canada branch), as a
Canadian Lender By:  

                                                              

Name:  

 

Title:  

 

BANK OF AMERICA, N.A. (acting through its London branch), as a U.K. Lender By:  

                                                              

Name:  

 

Title:  

 

 

[Signature Page to Third Amended and Restated Loan and Security Agreement]

--------------------------------------------------------------------------------

[Additional Lender sig pages to be provided]

 

[Signature Page to Third Amended and Restated Loan and Security Agreement]

--------------------------------------------------------------------------------

Exhibit B

Unmarked Conformed Loan Agreement

(see attached)

--------------------------------------------------------------------------------

CONFORMED THROUGH SECOND AMENDMENT TO THIRD AMENDED AND

RESTATED LOAN AGREEMENT

 

 

 

CALLAWAY GOLF COMPANY,

CALLAWAY GOLF SALES COMPANY,

CALLAWAY GOLF BALL OPERATIONS, INC.,

OGIO INTERNATIONAL INC., and

TRAVISMATHEW, LLC

as U.S. Borrowers, Canadian Facility Guarantors, and U.K. Facility Guarantors

CALLAWAY GOLF CANADA LTD.,

as the Canadian Borrower and a U.K. Facility Guarantor,

CALLAWAY GOLF EUROPE LTD.,

as the U.K. Borrower and a Canadian Facility Guarantor, and

THE OTHER OBLIGORS PARTY HERETO

 

 

THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

Dated as of November 20, 2017

$360,000,000

 

 

CERTAIN FINANCIAL INSTITUTIONS,

as Lenders,

BANK OF AMERICA, N.A.,

as Administrative Agent

MUFG UNION BANK N.A.

as Syndication Agent

SUNTRUST BANK,

as Documentation Agent

and

BANK OF AMERICA, N.A.,

as Sole Lead Arranger and Sole Bookrunner

 

 

 

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

         Page  

Section 1.

 

Definitions; Rules of Construction

     2  

1.1

 

Definitions

     2  

1.2

 

Accounting Terms

     61  

1.3

 

Uniform Commercial Code/PPSA

     61  

1.4

 

Certain Matters of Construction

     62  

1.5

 

Calculations

     62  

1.6

 

Interpretation (Quebec)

     63  

Section 2.

 

Credit Facilities

     63  

2.1

 

Revolver Commitments

     63  

2.2

 

U.K. Letter of Credit Facility

     68  

2.3

 

U.S. Letter of Credit Facility

     71  

2.4

 

Canadian Letter of Credit Facility

     74  

2.5

 

Term Loans

     78  

Section 3.

 

Interest, Fees and Charges

     78  

3.1

 

Interest

     78  

3.2

 

Fees

     81  

3.3

 

Computation of Interest, Fees, Yield Protection

     83  

3.4

 

Reimbursement Obligations

     83  

3.5

 

Illegality

     84  

3.6

 

Inability to Determine Rates

     84  

3.7

 

Increased Costs; Capital Adequacy

     85  

3.8

 

Mitigation

     86  

3.9

 

Funding Losses

     86  

3.10

 

Maximum Interest

     87  

Section 4.

 

Loan Administration

     88  

4.1

 

Manner of Borrowing and Funding Revolver Loans

     88  

4.2

 

Defaulting Lender

     91  

4.3

 

Number and Amount of LIBOR Loans and Canadian BA Rate Loans; Determination of
Rate

     92  

4.4

 

Borrower Agent

     93  

4.5

 

One Obligation

     93  

4.6

 

Effect of Termination

     93  

Section 5.

 

Payments

     93  

5.1

 

General Payment Provisions

     93  

5.2

 

Repayment of Revolver Loans

     94  

5.3

 

Repayment of Term Loans

     94  

5.4

 

Payment of Other Obligations

     95  

5.5

 

Marshaling; Payments Set Aside

     95  

5.6

 

Post-Default Allocation of Payments

     96  

5.7

 

Application of Payments

     99  

 

i

--------------------------------------------------------------------------------

5.8

 

Loan Account; Account Stated

     100  

5.9

 

Taxes

     100  

5.10

 

Lender Tax Information

     104  

5.11

 

Guarantee by Obligors

     105  

5.12

 

Currency Matters

     112  

5.13

 

Currency Fluctuations

     113  

Section 6.

 

Conditions Precedent

     114  

6.1

 

Conditions Precedent to Effectiveness and Loans

     114  

6.2

 

Conditions Precedent to All Credit Extensions

     115  

Section 7.

 

Collateral

     115  

7.1

 

Grant of Security Interest

     115  

7.2

 

Lien on Deposit Accounts; Cash Collateral

     118  

7.3

 

Intentionally Omitted

     118  

7.4

 

Certain After-Acquired Collateral

     118  

7.5

 

No Assumption of Liability

     119  

7.6

 

Further Assurances

     119  

Section 8.

 

Collateral Administration

     120  

8.1

 

Borrowing Base Certificates

     120  

8.2

 

Administration of Accounts

     120  

8.3

 

Administration of Inventory

     122  

8.4

 

Intentionally Omitted

     122  

8.5

 

Administration of Deposit Accounts

     122  

8.6

 

General Provisions

     123  

8.7

 

Power of Attorney

     124  

Section 9.

 

Representations and Warranties

     124  

9.1

 

General Representations and Warranties

     124  

Section 10.

 

Covenants and Continuing Agreements

     132  

10.1

 

Affirmative Covenants

     132  

10.2

 

Negative Covenants

     138  

10.3

 

Financial Covenants

     150  

10.4

 

Company Trademark

     150  

Section 11.

 

Events of Default; Remedies on Default

     151  

11.1

 

Events of Default

     151  

11.2

 

Remedies upon Default

     153  

11.3

 

License

     153  

11.4

 

Setoff

     154  

11.5

 

Remedies Cumulative; No Waiver

     154  

11.6

 

Judgment Currency

     154  

Section 12.

 

Agent

     155  

12.1

 

Appointment, Authority and Duties of Agent

     155  

 

ii

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12.2

 

Agreements Regarding Collateral and Field Examination Reports

     158  

12.3

 

Reliance By Agent

     158  

12.4

 

Action Upon Default

     159  

12.5

 

Ratable Sharing

     159  

12.6

 

Indemnification

     159  

12.7

 

Limitation on Responsibilities of Agent

     160  

12.8

 

Successor Agent and Co-Agents

     160  

12.9

 

Due Diligence and Non-Reliance

     161  

12.10

 

Remittance of Payments and Collections

     161  

12.11

 

Agent in its Individual Capacity

     162  

12.12

 

Agent Titles

     162  

12.13

 

Bank Product Providers

     162  

12.14

 

No Third Party Beneficiaries

     162  

Section 13.

 

Benefit of Agreement; Assignments

     163  

13.1

 

Successors and Assigns

     163  

13.2

 

Participations

     163  

13.3

 

Assignments

     164  

13.4

 

Replacement of Certain Lenders

     164  

Section 14.

 

Miscellaneous

     165  

14.1

 

Consents, Amendments and Waivers

     165  

14.2

 

Indemnity

     166  

14.3

 

Notices and Communications

     166  

14.4

 

Performance of Obligors’ Obligations

     167  

14.5

 

Credit Inquiries

     167  

14.6

 

Severability

     167  

14.7

 

Cumulative Effect; Conflict of Terms

     168  

14.8

 

Counterparts

     168  

14.9

 

Entire Agreement

     168  

14.10

 

Relationship with Lenders

     168  

14.11

 

Lender Loss Sharing Agreement

     168  

14.12

 

No Advisory or Fiduciary Responsibility

     171  

14.13

 

Confidentiality

     171  

14.14

 

GOVERNING LAW

     171  

14.15

 

Consent to Forum; Judicial Reference; Bail-In of EEA Financial Institutions

     172  

14.16

 

Waivers by Obligors

     173  

14.17

 

Patriot Act Notice

     173  

14.18

 

Canadian Anti-Money Laundering Legislation

     173  

14.19

 

Reinstatement

     174  

14.20

 

Nonliability of Lenders

     174  

14.21

 

Know Your Customer

     174  

14.22

 

Amendment and Restatement

     174  

 

iii

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LIST OF EXHIBITS AND SCHEDULES

Exhibit A-1

  

Form of Canadian Revolver Note

Exhibit A-2

  

Form of U.S. Revolver Note

Exhibit A-3

  

Form of U.K. Revolver Note

Exhibit B

  

Assignment and Acceptance

Exhibit C

  

Assignment Notice

Exhibit D

  

Form of Compliance Certificate

Exhibit E

  

Form of Mortgage

Schedule E-1

  

Existing Letters of Credit

Schedule F-1

  

Company Trademarks

Schedule 1.1

  

Commitments of Lenders

Schedule 1.1A

  

Mandatory Cost Formulae

Schedule 1.1C

  

U.K. Eligible Foreign Accounts

Schedule 1.1D

  

U.K. Non-Bank Lenders

Schedule 5.9.9

  

Treaty Lenders under HMRC DT Passport Scheme

Schedule 8.6.1

  

Business Locations

Schedule 9.1.8

  

Real Property in a Special Flood Hazard Zone

Schedule 9.1.9

  

Environmental Matters

Schedule 9.1.12

  

ERISA Compliance

Schedule 9.1.13

  

Names and Capital Structure

Schedule 9.1.17

  

Patents, Trademarks, Copyrights and Licenses

Schedule 9.1.21

  

Labor Contracts

Schedule 9.1.24

  

Commercial Tort Claims

Schedule 10.2.1

  

Existing Liens

Schedule 10.2.2

  

Permitted Investments

Schedule 10.2.3

  

Permitted Debt

 

iv

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THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

THIS THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is dated as of
November 20, 2017, among CALLAWAY GOLF COMPANY, a Delaware corporation
(“Parent”), CALLAWAY GOLF SALES COMPANY, a California corporation (“Callaway
Sales”), CALLAWAY GOLF BALL OPERATIONS, INC., a Delaware corporation (“Callaway
Operations”), OGIO INTERNATIONAL INC., a Utah corporation, (“Ogio”),
TRAVISMATHEW, LLC, a California limited liability company (“travisMathew” and
together with Parent, Callaway Sales and Callaway Operations, collectively,
“U.S. Borrowers”), CALLAWAY GOLF CANADA LTD., a Canada corporation (“Canadian
Borrower”) CALLAWAY GOLF EUROPE LTD., a company organized under the laws of
England (registered number 02756321) (“U.K. Borrower” and together with the U.S.
Borrowers and the Canadian Borrower, collectively, “Borrowers”), the other
Obligors party to this Agreement from time to time, the financial institutions
party to this Agreement from time to time as lenders (collectively, “Lenders”),
and BANK OF AMERICA, N.A., a national banking association, as administrative
agent and as security trustee for the Lenders (“Agent”).

R E C I T A L S:

WHEREAS, Agent, the Lenders party thereto, Parent, Callaway Sales, Callaway
Operations, the Canadian Borrower, and the other Obligors party thereto entered
into that certain Second Amended and Restated Loan and Security Agreement (the
“Second Amended and Restated Loan Agreement”), dated as of December 22, 2011
(the “Second Amended Original Closing Date”), which amended and restated that
certain Amended and Restated Loan and Security Agreement dated as of July 22,
2011 (the “Original Amended and Restated Loan Agreement”), which amended and
restated that certain Loan and Security Agreement dated as of June 30, 2011 (the
“Original Loan Agreement”);

WHEREAS, the parties hereto have agreed to amend and restate in their entirety
the agreements contained in the Second Amended and Restated Loan Agreement as
amongst themselves;

WHEREAS, the Obligors have requested that: (i) the U.S. Lenders provide a credit
facility to the U.S. Borrowers; (ii) the Canadian Lenders provide a credit
facility to the Canadian Borrower; and (iii) the U.K. Lenders provide a credit
facility to the U.K. Borrower, in each case, to finance their mutual and
collective business enterprise;

WHEREAS, the applicable Lenders are willing to provide such credit facilities on
the terms and conditions set forth herein; and

WHEREAS, each Obligor hereby restates, ratifies and reaffirms each and every
term and condition set forth in the Second Amended and Restated Loan Agreement,
as amended and restated hereby, and the other Loan Documents effective as of the
date hereof;

NOW, THEREFORE, in consideration of the mutual conditions and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto amend and
restate the Second Amended and Restated Loan Agreement and agree as follows:

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SECTION 1.

DEFINITIONS; RULES OF CONSTRUCTION

1.1    Definitions. As used herein, the following terms have the meanings set
forth below:

Account: as defined in the UCC (and/or, with respect to any Accounts of a
Canadian Subsidiary, as defined in the PPSA), including all rights to payment
for goods sold or leased, or for services rendered.

Account Debtor: a Person who is obligated under an Account, Chattel Paper or
General Intangible.

Acquisition: any transaction, or any series of related transactions, consummated
on or after the Original Agreement Closing Date, by which Parent, directly or
indirectly, acquires (a) any going business or all or substantially all of the
assets of any Person or division thereof, whether through purchase of assets,
merger, or otherwise or (b) in one transaction or as the most recent transaction
in a series of transactions, a majority (in number of votes) of the Equity
Interests of a Person which has ordinary voting power for the election of
directors or other similar management personnel of a Person (other than Equity
Interests having such power only by reason of the happening of a contingency) or
a majority of the outstanding Equity Interests of a Person.

Acquisition Cap: $25,000,000.

Additional Collateral: as defined in Section 10.2.1(o).

Affiliate: with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified. “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. “Controlling” and
“Controlled” have correlative meanings.

Agent: as defined in the preamble to this Agreement.

Agent Indemnitees: Agent and its officers, directors, employees, Affiliates,
agents and attorneys.

Agent Professionals: attorneys, accountants, appraisers, auditors, business
valuation experts, environmental engineers or consultants, turnaround
consultants, and other professionals and experts retained by Agent.

Agreement: this Third Amended and Restated Loan and Security Agreement.

Allocable Amount: as defined in Section 5.11.

AML Legislation: as defined in Section 14.17.

 

2

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Anti-Corruption Laws: means all laws, rules, and regulations of any jurisdiction
applicable to any Obligor or any Subsidiaries from time to time concerning or
relating to bribery or corruption.

Anti-Terrorism Laws: any laws relating to terrorism or money laundering,
including the Patriot Act and the Proceeds of Crime Act.

Applicable Law: all laws, rules, regulations and governmental guidelines with
the force of law applicable to the Person, conduct, transaction, agreement or
matter in question, including all applicable statutory law, common law and
equitable principles, and all provisions of constitutions, treaties, statutes,
rules, regulations, orders and decrees of Governmental Authorities.

Applicable Lenders: with respect to: (a) the U.S. Borrowers, the U.S. Lenders
who have a U.S. Revolver Commitments (and if the U.S. Revolver Commitments have
terminated, each U.S. Lender that had a U.S. Revolver Commitment immediately
prior to such termination), (b) the Canadian Borrower, the Canadian Lenders, and
(c) the U.K. Borrower, the U.K. Lenders.

Applicable Margin: with respect to any Type of Loan, the respective margin set
forth in the grid below (the “Pricing Grid”), as determined by the Availability
Ratio for the last calendar month:

 

Level

  

Availability

Ratio

   U.S.
Base
Rate
Revolver
Loans     LIBOR
Revolver
Loans     Canadian
BA Rate
Loans     Canadian
Prime
Rate
Loans
and
Canadian
Base
Rate
Loans     U.K.
Base
Rate
Loans     Base
Rate
Term
Loans     LIBOR
Term
Loans  

I

   Greater than or equal to 67%      0.50 %      1.50 %      1.50 %      0.50 % 
    1.50 %      2.00 %      3.00 % 

II

   Less than 67% but greater than or equal to 33%      0.75 %      1.75 %     
1.75 %      0.75 %      1.75 %      2.25 %      3.25 % 

III

   Less than 33%      1.00 %      2.00 %      2.00 %      1.00 %      2.00 %   
  2.50 %      3.50 % 

Margins shall be subject to increase or decrease based upon the Availability
Ratio for the prior calendar month, as determined by Agent. If, by the first day
of a calendar month, any Borrowing Base Certificate due in the preceding
calendar month has not been received, then, at

 

3

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the option of Agent or Required Lenders, the margins shall be determined as if
Level III were applicable, from such day until the first day of the calendar
month following actual receipt.

Notwithstanding the foregoing, the Applicable Margin for any month with respect
to (i) U.S. Base Rate Revolver Loans, Canadian Prime Rate Loans, Canadian Base
Rate Loans, LIBOR Revolver Loans, Canadian BA Rate Loans and U.K. Base Rate
Loans shall be increased by .50% if any U.S. Availability is generated under
both clause (b)(iii) and clause (b)(iv) of the definition of the U.S. Borrowing
Base at any time in such month, and (ii) U.S. Base Rate Revolver Loans, Canadian
Prime Rate Loans, Canadian Base Rate Loans, LIBOR Revolver Loans, Canadian BA
Rate Loans and U.K. Base Rate Loans, shall be increased by .25% if any U.S.
Availability is generated under either clause (b)(iii) or clause (b)(iv) of the
definition of the U.S. Borrowing Base (but not both such clauses) at any time in
such month.

Applicable Time Zone: for borrowings under, and payments due by Borrowers or
Lenders on (a) with respect to U.S. Revolver Loans, Term Loans and Canadian
Revolver Loans, Pacific time, and (b) with respect to U.K. Revolver Loans,
London time.

Approved Fund: any Person (other than a natural person) that is engaged in
making, purchasing, holding or otherwise investing in commercial loans and
similar extensions of credit in the Ordinary Course of Business, and is
administered or managed by a Lender, an entity that administers or manages a
Lender, or an Affiliate of either.

Asset Disposition: a sale, lease, license, consignment, transfer or other
disposition of Property of an Obligor or a Subsidiary, including a disposition
of Property in connection with a sale-leaseback transaction or synthetic lease.

Assignment and Acceptance: an assignment agreement between a Lender and Eligible
Assignee, in the form of Exhibit B.

Assignment of Claims Act: Assignment of Claims Act of 1940, 31 U.S.C. § 3727, 41
U.S.C. § 15, as amended.

Attorney: as defined in Section 12.1.1(c).

Availability: as of any date of determination, the sum of the U.S. Availability
plus the Canadian Availability plus the U.K. Availability.

Availability Ratio: the ratio (expressed as a percentage), for any calendar
month, of (a) the average daily Availability for such calendar month to (b) an
amount equal to the sum of (i) the average daily Canadian Borrowing Base
(without giving effect to the Canadian LC Reserve for purposes of this
calculation) for such calendar month, plus (ii) the average daily U.S. Borrowing
Base (without giving effect to the U.S. LC Reserve, the Canadian Overadvance
Loan Balance, and the U.K. Overadvance Loan Balance for purposes of this
calculation) for such calendar month, plus (iii) the average daily U.K.
Borrowing Base (without giving effect to the U.K. LC Reserve for purposes of
this calculation) for such calendar month.

 

4

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Available Currency: (i) in the case of a U.S. Borrower, Dollars, (ii) in the
case of the Canadian Borrower, Dollars or Canadian Dollars, and (iii) in the
case of the U.K. Borrower, Dollars, British Pounds or Euro (but in the case of
U.K. Base Rate Loans, Dollars only).

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

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

Bank of America: Bank of America, N.A., a national banking association, and its
successors and assigns.

Bank of America (Canada): Bank of America, N.A. (acting through its Canada
branch), and its successors and assigns.

Bank of America Indemnitees: Bank of America and its officers, directors,
employees, Affiliates, branches, agents and attorneys.

Bank Product: any of the following products, services or facilities extended to
any Obligor or Subsidiary by a Lender or any of its Affiliates: (a) Cash
Management Services; (b) products under Hedging Agreements; (c) commercial
credit card and merchant card services; (d) purchase cards (including so-called
“procurement cards” or “P-cards”), and (e) other banking products or services as
may be requested by any Obligor or Subsidiary unless otherwise agreed in writing
between such Obligor or Subsidiary and the provider of such products or
services, other than Letters of Credit.

Bank Product Debt: Debt and other obligations of an Obligor or Subsidiary
relating to Bank Products.

Base Rate Loan: a U.S. Base Rate Loan, a Canadian Base Rate Loan or a U.K. Base
Rate Loan, as applicable.

Base Rate Term Loan: a Term Loan that bears interest based on the U.S. Base
Rate.

Board of Governors: the Board of Governors of the Federal Reserve System.

Borrowed Money: with respect to any Obligor or Subsidiary, without duplication,
its (a) Debt that (i) arises from the lending of money by any Person to such
Obligor or Subsidiary, (ii) is evidenced by notes, drafts, bonds, debentures,
credit documents or similar instruments, (iii) accrues interest or is a type
upon which interest charges are customarily paid (excluding trade payables owing
in the Ordinary Course of Business), or (iv) was issued or assumed as full or
partial payment for Property; (b) Capital Leases; (c) reimbursement obligations
with respect to letters of credit; and (d) guaranties of any Debt of the
foregoing types owing by another Person.

Borrower Agent: as defined in Section 4.4.

 

5

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Borrower Group: a group consisting of (i) the U.S. Borrowers, (ii) the Canadian
Borrower, or (iii) the U.K. Borrower, as the context requires.

Borrowers: as defined in the preamble to this Agreement.

Borrowing: a group of Loans of one Type that are made on the same day or are
converted into Loans of one Type on the same day.

Borrowing Base: the Canadian Borrowing Base and/or the U.S. Borrowing Base
and/or the U.K. Borrowing Base, as the context requires.

Borrowing Base Certificate: a U.S. Borrowing Base Certificate, a Canadian
Borrowing Base Certificate, or a U.K. Borrowing Base Certificate, as applicable.

British Pounds or £: the lawful currency of the United Kingdom.

Business Day: any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the laws of, or are in fact
closed in, North Carolina and New York, and if such day relates to: (a) a LIBOR
Loan, any such day on which dealings in deposits in the relevant Available
Currency of that LIBOR Loan are conducted between banks in the London interbank
eurocurrency market, (b) a Canadian Revolver Loan, any such day on which banks
in Toronto, Ontario, Canada are open for the transaction of banking business,
(c) any U.K. Revolver Loan or U.K. Lender, any day on which commercial banks are
open for the transaction of banking business in London, or (d) any Revolver Loan
denominated in Euro, any day which is a TARGET Day.

CAM: as defined in Section 14.11(a)(i).

CAM Exchange: as defined in Section 14.11(a)(ii).

CAM Exchange Date: as defined in Section 14.11(a)(iii).

CAM Percentage: as defined in Section 14.11(a)(iv).

Calculation Date: as defined in Section 5.13.

Canadian Accounts Formula Amount: (a) as of any date of determination within the
period beginning on May 1 through and including October 31 of each Fiscal Year,
85% of the Value of Eligible Accounts of the Canadian Borrower; and (b) as of
any date of determination within the period beginning on November 1 through and
including April 30 of each Fiscal Year, 90% of the Value of Eligible Accounts of
the Canadian Borrower.

Canadian Availability: as of any date of determination, the Canadian Borrowing
Base as of such date of determination minus the aggregate principal amount of
all Canadian Revolver Loans outstanding on such date of determination.

Canadian Availability Reserve: the sum (without duplication) of (a) the
Inventory Reserve with respect to the Canadian Borrower’s Inventory; (b) the
Canadian Rent and Charges Reserve;

 

6

--------------------------------------------------------------------------------

(c) the Canadian LC Reserve; (d) the Canadian Bank Product Reserve; (e) all
accrued Royalties of the Canadian Domiciled Obligors, whether or not then due
and payable by a Canadian Domiciled Obligor; (f) the aggregate amount of
liabilities secured by Liens upon Canadian Facility Collateral that are senior
to the Agent’s Liens (but imposition of any such reserve shall not waive an
Event of Default arising therefrom); (g) the Canadian Priority Payables Reserve;
(h) the Wage Earner Protection Act Reserve; (i) the Canadian Dilution Reserve;
(j) the Canadian Top Golf Reserve; and (k) such additional reserves, in such
amounts and with respect to such matters, as Agent in its Credit Judgment may
elect to impose from time to time with respect to the Canadian Borrowing Base.

Canadian BA Rate: with respect to each Interest Period for a Canadian BA Rate
Loan, a per annum rate of interest equal to the Canadian Dollar bankers’
acceptance rate, or comparable or successor rate approved by Agent, determined
by it at or about 10:00 a.m. (Toronto time) on the applicable day (or the
preceding Business Day, if the applicable day is not a Business Day) for a term
comparable to the Canadian BA Rate Loan, as published on the CDOR Page or other
applicable Reuters screen page (or other commercially available source
designated by Agent from time to time), provided, that in no event shall the
Canadian BA Rate be less than zero.

Canadian BA Rate Loan: a Canadian Revolver Loan, or portion thereof, funded in
Canadian Dollars and bearing interest calculated by reference to the Canadian BA
Rate.

Canadian Bank Product Reserve: the aggregate amount of reserves established by
Agent from time to time in its discretion in respect of Secured Bank Product
Obligations owing by the Canadian Domiciled Obligors and their Subsidiaries.

Canadian Base Rate: for any day, the greater of (i) the per annum rate of
interest designated by Bank of America (Canada) from time to time as its base
rate for commercial loans made by it in Dollars, which rate is based on various
factors, including its costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans, which
may be priced at, above or below such rate; (ii) the Federal Funds Rate for such
day, plus 0.50% per annum; or (iii) LIBOR for a 30 day interest period as of
such day, plus 1.00%; provided, that in no event shall the Canadian Base Rate be
less than zero. Any change in such rate shall take effect at the opening of
business on the applicable Business Day.

Canadian Base Rate Loan: a Canadian Revolver Loan, or portion thereof, funded in
Dollars and bearing interest calculated by reference to the Canadian Base Rate.

Canadian Borrower: as defined in the preamble to this Agreement.

Canadian Borrowing Base: on any date of determination, an amount equal to the
lesser of (a) the result of: (i) the Maximum Canadian Facility Amount, minus
(ii) the Canadian LC Reserve, minus (iii) the Canadian Top Golf Reserve; or
(b) the result of: (i) the Canadian Accounts Formula Amount, plus (ii) the
Canadian Inventory Formula Amount, plus (iii) 100% of the amount of Canadian
Pledged Cash, minus (iv) the Canadian Availability Reserve.

Canadian Borrowing Base Certificate: a certificate, in form and substance
satisfactory to Agent, by which the Canadian Borrower certifies calculation of
the Canadian Borrowing Base.

 

7

--------------------------------------------------------------------------------

Canadian Cash Collateral Account: a demand deposit, money market or other
account established by Agent at Bank of America (Canada) or such other financial
institution as Agent may select in its discretion, which account shall be for
the benefit of the Canadian Facility Secured Parties and shall be subject to
Agent’s Liens securing the Canadian Facility Obligations.

Canadian Dilution Reserve: as of any date of determination, an amount sufficient
to reduce the advance rate against Eligible Accounts of the Canadian Borrower by
1% for each whole percentage point (or portion thereof) by which the Dilution
Percent is in excess of 5.0%.

Canadian Dollars or Cdn$: the lawful currency of Canada.

Canadian Domiciled Obligor: each Canadian Subsidiary which is at any time an
Obligor, and “Canadian Domiciled Obligors” means all such Persons, collectively.

Canadian Dominion Account: a special account established by the Canadian
Borrower at Bank of America (Canada) or another bank acceptable to Agent, over
which Agent has exclusive control for withdrawal purposes during any Dominion
Trigger Period.

Canadian Employee Benefits Legislation: the Employment Pensions Plan Act
(Alberta), Pension Benefits Standards Act (British Columbia), the Supplemental
Pension Plans Act (Quebec) and any Canadian federal, provincial or local
counterparts or equivalents, in each case, as applicable and as amended from
time to time.

Canadian Employee Plan: any payroll practice and other employee benefit plan,
policy, program, agreement or arrangement, including retirement, pension, profit
sharing, employment, individual consultant or other compensation agreement,
collective bargaining agreement, bonus or other incentive compensation,
retention, stock purchase, equity or equity-based compensation, deferred
compensation, change in control, severance, sick leave, vacation, loans, salary
continuation, hospitalization, health, life insurance, educational assistance or
other fringe benefit or perquisite plan, policy, agreement which is or was
sponsored, maintained or contributed to by, or required to be contributed to by,
a Canadian Domiciled Obligor, or with respect to which a Canadian Domiciled
Obligor has or could have any obligation or liability, contingent or otherwise.

Canadian Expeditors Reserve: as of any date of determination, the aggregate
amount of accounts payable owed by any Canadian Facility Obligor to Expeditors,
as determined by Agent in its Credit Judgment.

Canadian Facility Collateral: all Collateral that now or hereafter secures (or
is intended to secure) any of the Canadian Facility Obligations, including
Property of each Canadian Domiciled Obligor, each U.S. Domiciled Obligor, and
each U.K. Domiciled Obligor.

Canadian Facility Guarantee: each guarantee agreement (including this Agreement)
at any time executed by a Canadian Facility Guarantor in favor of Agent
guaranteeing all or any portion of the Canadian Facility Obligations.

Canadian Facility Guarantor: Parent, each Canadian Subsidiary, each U.S.
Subsidiary (other than uPlay unless uPlay becomes a Guarantor in accordance with
Section 10.2.15), each

 

8

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U.K. Subsidiary, and each other Person (if any) who guarantees payment and
performance of any Canadian Facility Obligations.

Canadian Facility Obligations: all Obligations of the Canadian Facility Obligors
(excluding, for the avoidance of doubt, the Obligations of the U.S. Domiciled
Obligors as guarantors of any U.S. Facility Obligations).

Canadian Facility Obligor: each of the Canadian Borrower or any Canadian
Facility Guarantor, and “Canadian Facility Obligors” means all of such Persons,
collectively.

Canadian Facility Secured Parties: Agent, the Canadian Issuing Bank, the
Canadian Lenders and the Secured Bank Product Providers who provide Bank
Products to the Canadian Facility Obligors and their Subsidiaries.

Canadian Inventory Formula Amount: as of any date of determination, the lesser
of (a) the sum of (i) with respect to Eligible Inventory that has been owned by
the Canadian Borrower for less than one (1) calendar year as of the applicable
date of determination, (A) for the period beginning on March 1 through and
including September 30 of each Fiscal Year, 65% of the Value of the Canadian
Borrower’s Eligible Inventory, and (B) for the period beginning on October 1
through and including February 28 (or February 29, as applicable) of each Fiscal
Year, 75% of the Value of the Canadian Borrower’s Eligible Inventory, plus
(ii) with respect to Eligible Inventory that has been owned by the Canadian
Borrower for more than one (1) calendar year, as of the applicable date of
determination, 50% of the Value of the Canadian Borrower’s Eligible Inventory;
or (b) 85% of the NOLV Percentage of the Value of the Canadian Borrower’s
Eligible Inventory. Notwithstanding the foregoing, the aggregate amount of the
Canadian Inventory Formula Amount which may be attributed to Eligible In-Transit
Inventory (the “Canadian In-Transit Availability”) shall not exceed $5,000,000;
provided, that, the Canadian In-Transit Availability (after taking into effect
the previous proviso) shall be reduced by the Canadian Expeditors Reserve if, as
of any date of determination, either (I) Canadian Net Excess Availability is
less than 10% of the Maximum Canadian Facility Amount, or (II) there are any
accounts payable owed by any Canadian Facility Obligor to Expeditors which are
aged in excess of historical levels (except in cases of good faith disputes).

Canadian Issuing Bank: Bank of America (Canada) or an Affiliate of Bank of
America (Canada).

Canadian LC Obligations: the sum (without duplication) of (a) all amounts owing
by the Canadian Borrower for any drawings under Letters of Credit; (b) the
stated amount of all outstanding Letters of Credit issued for the account of the
Canadian Borrower, which if such Letter of Credit is denominated in a currency
other than Canadian Dollars or Dollars, may be stated by Agent (at its option)
in Canadian Dollars or Dollars calculated at the Spot Rate; and (c) all fees and
other amounts owing with respect to Letters of Credit issued for the account of
the Canadian Borrower.

Canadian LC Reserve: the aggregate of all Canadian LC Obligations, other than
those that have been Cash Collateralized.

 

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Canadian Lenders: Bank of America (Canada) and each other Lender that has issued
a Canadian Revolver Commitment (provided that such Person or an Affiliate of
such Person also has a U.S. Revolver Commitment). Each Canadian Lender shall be
a Canadian Qualified Lender.

Canadian Letter of Credit Subline: $5,000,000.

Canadian Letters of Credit: any standby or documentary letter of credit issued
by the Canadian Issuing Bank for the account of the Canadian Borrower, or any
indemnity, guarantee, exposure transmittal memorandum or similar form of credit
support issued by Agent or the Canadian Issuing Bank for the benefit of the
Canadian Borrower.

Canadian Multi-Employer Plan: each multi-employer plan, within the meaning of
the Regulations under the Income Tax Act (Canada).

Canadian Net Excess Availability: as of any date of determination, an amount
equal to the Canadian Availability minus the aggregate amount, if any, of all
trade payables of Canadian Domiciled Obligors that are more than 60 days past
due (or such later date as Agent may approve in its sole discretion) and all
book overdrafts of Canadian Domiciled Obligors in excess of historical practices
with respect thereto, in each case as determined by Agent in its Credit
Judgment.

Canadian Overadvance: as defined in Section 2.15.

Canadian Overadvance Loan: a Canadian Revolver Loan made to the Canadian
Borrower when a Canadian Overadvance exists or is caused by the funding thereof.

Canadian Overadvance Loan Balance: on any date, the amount by which the
aggregate Canadian Revolver Exposure exceeds the amount of the Canadian
Borrowing Base on such date.

Canadian Pension Plan: a “registered pension plan,” as defined in the Income Tax
Act (Canada) and any other pension plan maintained or contributed to by, or to
which there is or may be an obligation to contribute by, any Obligor in respect
of its Canadian employees or former employees, excluding, for greater certainty,
a Canadian Multi-Employer Plan.

Canadian Pledged Cash: the funds maintained in a blocked Deposit Account or
securities account of the Canadian Borrower subject to a Deposit Account Control
Agreement or securities account control agreement, as applicable, which give
Agent at all times exclusive access and control for withdrawal purposes to the
exclusion of the Canadian Borrower and precluding the Canadian Borrower from
withdrawing or otherwise giving any instructions in connection therewith and
which may not be withdrawn without the Agent’s prior written consent (such
consent not to be unreasonably withheld if (i) upon and after giving effect to
such withdrawal, no Default or Event of Default shall have occurred and be
continuing and (ii) immediately after such withdrawal (for clarification,
including after giving effect to any recalculation of the Canadian Borrowing
Base upon giving effect to such withdrawal), Canadian Availability would be a
positive number), and which are subject to effective security documents, in form
and substance satisfactory to Agent, that provide Agent with an unencumbered
perfected first priority/ranking security interest in and Lien on such funds.

 

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Canadian Prime Rate: on any date, the greater of (i) the per annum rate of
interest designated by Bank of America (Canada) from time to time as its prime
rate for commercial loans made by it in Canada in Canadian Dollars, which rate
is based on various factors, including its costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above or below such rate; or
(ii) the Canadian BA Rate for a one month interest period as of such day, plus
1.00%; provided, that in no event shall the Canadian Prime Rate be less than
zero. Any change in such rate shall take effect at the opening of business on
the applicable Business Day.

Canadian Prime Rate Loan: a Canadian Revolver Loan, or portion thereof, funded
in Canadian Dollars and bearing interest calculated by reference to the Canadian
Prime Rate.

Canadian Priority Payables Reserve: on any date of determination, a reserve in
such amount as Agent may determine which reflects the unpaid (when due) or
un-remitted (when due) payroll tax deductions, unpaid (when due) pension plan
contributions, employment insurance premiums, amounts deducted for vacation pay,
wages, workers’ compensation, unpaid (when due) or un-remitted (when due) sales
tax, goods and services tax, value added tax, harmonized tax, excise tax, tax
payable pursuant to Part IX of the Excise Tax Act (Canada) or similar applicable
provincial legislation and other unpaid (when due) or unremitted (when due)
amounts by any Canadian Domiciled Obligor which would give rise to a Lien with
priority under Applicable Law over the Lien of Agent.

Canadian Qualified Lender: a financial institution that is not precluded from
being a Canadian Lender under the terms of the Bank Act (Canada) or other
applicable Canadian federal or provincial legislation.

Canadian Reimbursement Date: as defined in Section 2.4.2.

Canadian Rent and Charges Reserve: the aggregate of (a) all past due rent and
other amounts owing by an Obligor to any landlord, warehouseman, processor,
repairman, mechanic, shipper, freight forwarder, broker or other Person who
possesses any Canadian Facility Collateral or could assert a Lien on any
Canadian Facility Collateral; and (b) a reserve at least equal to three months’
rent and other charges that could be payable to any such Person, unless it has
executed a Lien Waiver.

Canadian Required Lenders: Canadian Lenders (subject to Section 4.2) having
(a) Canadian Revolver Commitments in excess of 50% of the aggregate Canadian
Revolver Commitments; and (b) if the Canadian Revolver Commitments have
terminated, Canadian Revolver Loans and Canadian LC Obligations in excess of 50%
of all outstanding Canadian Revolver Loans and Canadian LC Obligations;
provided, however, that the Canadian Revolver Commitments and Canadian Revolver
Loans of any Defaulting Lender shall be excluded from such calculation;
provided, further, that at any time there are: (i) 3 or more Canadian Lenders,
“Canadian Required Lenders” must include at least 3 Canadian Lenders, and
(ii) less than 3 Canadian Lenders, “Canadian Required Lenders” must include all
Canadian Lenders.

Canadian Revolver Commitment: for any Canadian Lender, its obligation to make
Canadian Revolver Loans and to participate in Canadian LC Obligations in the
applicable

 

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Available Currencies up to the maximum principal amount shown on Schedule 1.1,
or as hereafter determined pursuant to each Assignment and Acceptance to which
it is a party, as such Canadian Revolver Commitment may be adjusted from time to
time in accordance with the provisions of Sections 2.1.4 or 11.2. “Canadian
Revolver Commitments” means the aggregate amount of such commitments of all
Canadian Lenders.

Canadian Revolver Commitment Termination Date: the earliest of (a) the U.S.
Revolver Commitment Termination Date (without regard to the reason therefor),
(b) the date on which the Borrower Agent terminates or reduces to zero all of
the Canadian Revolver Commitments pursuant to Section 2.1.4, and (c) the date on
which the Canadian Revolver Commitments are terminated pursuant to Section 11.2.

Canadian Revolver Exposure: on any date, an amount equal to the sum of the
Dollar Equivalent of the Canadian Revolver Loans outstanding on such date plus
the Canadian LC Obligations on such date.

Canadian Revolver Loan: a Revolver Loan made by Canadian Lenders to Canadian
Borrower pursuant to Section 2.1.1(b), which Revolver Loan shall, if denominated
in Canadian Dollars, be either a Canadian BA Rate Loan or a Canadian Prime Rate
Loan and, if denominated in Dollars, shall be either a Canadian Base Rate Loan
or a LIBOR Loan, in each case as selected by the Borrower Agent, and any
Canadian Swingline Loan, Canadian Overadvance Loan or Protective Advance made to
or owed by the Canadian Borrower.

Canadian Revolver Notes: a promissory note executed by Canadian Borrower in
favor of a Canadian Lender in the form of Exhibit A-1, in the amount of such
Canadian Lender’s Canadian Revolver Commitment.

Canadian Security Agreement: each (a) general security agreement, security
agreement, deed of hypothec, pledge agreement, mortgage or similar agreement
pursuant to which any Canadian Domiciled Obligor grants to Agent, for the
benefit of the Canadian Facility Secured Parties, Liens upon its Property as
security for the Canadian Facility Obligations or (b) security agreement, deed
of hypothec, pledge agreement, mortgage or similar agreement pursuant to which
any U.S. Domiciled Obligor or U.K. Domiciled Obligor grants to Agent, for the
benefit of the Secured Parties, Liens on its Property located in Canada or
otherwise subject to Canadian law as security for the Obligations.

Canadian Subsidiary: a Subsidiary of Parent incorporated or organized under the
laws of Canada or any province or territory of Canada.

Canadian Swingline Loan: any Borrowing of Canadian Base Rate Loans funded with
Agent’s funds, until such Borrowing is settled among the Canadian Lenders or
repaid by the Canadian Borrower.

Canadian Top Golf Reserve: a reserve established by Agent at Parent’s request in
accordance with the definition of Top Golf Proceeds, in an initial amount as of
such establishment equal to $0. The Canadian Top Golf Reserve (a) shall be
reduced on a dollar for dollar basis for the amount expended in connection with
(x) any Common Stock Repurchases made, or dividends paid on Parent’s common
stock, in each case after the Third Amendment to Second Amended and

 

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Restated Effective Date in accordance with Section 10.2.6(g)(ii)(C) and (y) any
Investments made after the Third Amendment to Second Amended and Restated
Effective Date in accordance with Section 10.2.2(k)(ii)(C); (b) may be
permanently reduced from time to time upon Parent’s written request to Agent;
and (c) subject to Agent’s written consent (such consent not to be unreasonably
withheld if (i) upon and after giving effect to such adjustment, no Default or
Event of Default shall have occurred and be continuing, and (ii) immediately
after such adjustment (for clarification, including after giving effect to any
recalculation of the U.K. Borrowing Base and U.S. Borrowing Base upon giving
effect to such adjustment), U.K. Availability and U.S. Availability would be a
positive number), may be reallocated on a dollar for dollar basis to the U.K.
Top Golf Reserve and/or the U.S. Top Golf Reserve upon Parent’s written request
to Agent; provided, however, that once reduced pursuant to clause (b) above, the
Canadian Top Golf Reserve may not be increased. The parties agree that the
Canadian Top Golf Reserve shall never be less than zero (-0-). For
clarification, the aggregate amount of the Canadian Top Golf Reserve, the U.K.
Top Golf Reserve, and the U.S. Top Golf Reserve may not exceed an amount equal
to the aggregate amount of Top Golf Proceeds received by Parent as reflected in
all Top Golf Proceeds Notices (less any amounts Parent elects to deposit into
the Top Golf Blocked Account) less all amounts expended in connection with
(x) any Common Stock Repurchases made, or dividends paid on Parent’s common
stock, in each case after the Third Amendment to Second Amended and Restated
Effective Date in accordance with Section 10.2.6(g) and (y) any Investments made
after the Third Amendment to Second Amended and Restated Effective Date in
accordance with Section 10.2.2(k) and less all permanent reductions elected by
Parent pursuant to clause (b) of each of the definitions of Canadian Top Golf
Reserve, U.K. Top Golf Reserve, and U.S. Top Golf Reserve.

Canadian Unused Line Fee Rate: a per annum rate equal to 0.25%.

Capital Expenditures: all liabilities incurred or expenditures made by an
Obligor or Subsidiary for the acquisition of fixed assets, or any improvements,
replacements, substitutions or additions thereto with a useful life of more than
one year.

Capital Lease: any lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

Cash Collateral: cash, and any interest or other income earned thereon, that is
delivered to Agent to Cash Collateralize any Obligations.

Cash Collateral Account: the U.S. Cash Collateral Account and/or the Canadian
Cash Collateral Account and/or the U.K. Cash Collateral Account, as the context
may require.

Cash Collateralize: the delivery of cash to Agent, as security for the payment
of Obligations, in an amount equal to (a) with respect to LC Obligations, 105%
of the aggregate LC Obligations, and (b) with respect to any inchoate,
contingent or other Obligations (including Secured Bank Product Obligations),
Agent’s good faith estimate of the amount due or to become due, including all
fees and other amounts relating to such Obligations. “Cash Collateralization”
has a correlative meaning.

Cash Equivalents: (a) marketable obligations issued or unconditionally
guaranteed by, and backed by the full faith and credit of, the United States,
Canadian or United Kingdom government,

 

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maturing within 12 months of the date of acquisition; (b) certificates of
deposit, time deposits and bankers’ acceptances maturing within 12 months of the
date of acquisition, and overnight bank deposits, in each case which are issued
by Bank of America or a commercial bank organized under the laws of the United
States (or any state or district of the United States), Canada (or any province
or territory of Canada), England, Wales, Scotland or Northern Ireland, rated A-1
(or better) by S&P or P-1 (or better) by Moody’s at the time of acquisition, and
(unless issued by a Lender) not subject to offset rights; (c) repurchase
obligations with a term of not more than 30 days for underlying investments of
the types described in clauses (a) and (b) entered into with any bank described
in clause (b); (d) commercial paper issued by Bank of America or rated A-1 (or
better) by S&P or P-1 (or better) by Moody’s, and maturing within nine months of
the date of acquisition; and (e) shares of any money market fund that has
substantially all of its assets invested continuously in the types of
investments referred to above, has net assets of at least $500,000,000 and has
the highest rating obtainable from either Moody’s or S&P.

Cash Management Services: any services provided from time to time by any Lender
or any of its Affiliates to any Obligor or Subsidiary in connection with
operating, collections, payroll, trust, or other depository or disbursement
accounts, including automated clearinghouse, e-payable, electronic funds
transfer, wire transfer, controlled disbursement, overdraft, depository,
information reporting, lockbox and stop payment services.

CERCLA: the Comprehensive Environmental Response Compensation and Liability Act
(42 U.S.C. § 9601 et seq.).

Change in Law: the occurrence, after the date hereof, of (a) the adoption,
taking effect or phasing in of any law, rule, regulation or treaty; (b) any
change in any law, rule, regulation or treaty or in the administration,
interpretation or application thereof; or (c) the making, issuance or
application of any request, guideline, requirement or directive (whether or not
having the force of law) by any Governmental Authority; provided that,
notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street
Reform and Consumer Protection Act and all requests, rules, guidelines or
directives thereunder or issued in connection therewith and (y) all requests,
rules, guidelines or directives promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority) or the United States or foreign regulatory authorities, in
each case pursuant to Basel III, shall in each case be deemed to be a “Change in
Law,” regardless of the date enacted, adopted or issued.

Change of Control: (a) any “person” or “group” (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding
any employee benefit plan of Parent or its Subsidiaries, and any person or
entity acting in its capacity as trustee, agent or other fiduciary or
administrator of any such plan) becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a
person or group shall be deemed to have “beneficial ownership” of all securities
that such person or group has the right to acquire (such right, an “option
right”), whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of 35% or more of the Equity Interests of
Parent entitled to vote for members of the board of directors or equivalent
governing body of Parent on a fully-diluted basis (and taking into account all
such securities that such person or group has the right to acquire pursuant to
any option right); or (b) Parent ceases to own and control, beneficially and of
record, directly or indirectly, all Equity Interests in all other Obligors.

 

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Claims: all claims, liabilities, obligations, losses, damages, penalties,
judgments, proceedings, interest, costs and expenses of any kind (including
remedial response costs, reasonable attorneys’ fees and Extraordinary Expenses)
at any time (including after Full Payment of the Obligations or replacement of
Agent or any Lender) incurred by any Indemnitee or asserted against any
Indemnitee by any Obligor or other Person, in any way relating to (a) any Loans,
Letters of Credit, Loan Documents, or the use thereof or transactions relating
thereto, (b) any action taken or omitted in connection with any Loan Documents,
(c) the existence or perfection of any Liens, or realization upon any
Collateral, (d) exercise of any rights or remedies under any Loan Documents or
Applicable Law, or (e) failure by any Obligor to perform or observe any terms of
any Loan Document, in each case including all costs and expenses relating to any
investigation, litigation, arbitration or other proceeding (including an
Insolvency Proceeding or appellate proceedings), whether or not the applicable
Indemnitee is a party thereto.

Closing Date: as defined in Section 6.1.

Code: the Internal Revenue Code of 1986.

Collateral: all Property described in Section 7.1, all Property described in any
Security Documents as security for any Obligations, and all other Property that
now or hereafter secures (or is intended to secure) any Obligations.

Commitment: for any Lender, the aggregate amount of such Lender’s U.S. Revolver
Commitment, Term Loan Commitment, Canadian Revolver Commitment, and U.K.
Revolver Commitment. “Commitments” means the aggregate amount of all U.S.
Revolver Commitments, Canadian Revolver Commitments, and U.K. Revolver
Commitments.

Commodity Exchange Act: the Commodity Exchange Act (7 U.S.C. § 1 et seq.).

Common Stock Repurchase: a repurchase, redemption or other retirement for value
of Parent’s common stock.

Company Trademark: collectively, the trademarks owned by the U.S. Borrowers set
forth on Schedule F-1 (as such Schedule may updated to include additional
trademarks with the written consent of all Lenders).

Compliance Certificate: a certificate, in the form of Exhibit D, by which
Borrowers certify compliance with Section 10.3 and for purposes of determination
of the Applicable Margin (such certificate to include a calculation of the Fixed
Charge Coverage Ratio and the Leverage Ratio in all cases, whether or not a
Covenant Trigger Period is in effect and regardless of the current pricing level
as set forth in the Pricing Grid).

Consolidated Tangible Assets: as of any date of determination, the Consolidated
Total Assets of Parent and its Subsidiaries minus consolidated intangible assets
of Parent and its Subsidiaries, all determined in accordance with GAAP.

Consolidated Total Assets: as of any date of determination, the consolidated
total assets of Parent and its Subsidiaries as of such date, determined in
accordance with GAAP.

 

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Contingent Obligation: as to any Person, any (a) obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Debt or other obligation payable or performable by another
Person (the “primary obligor”) in any manner, whether directly or indirectly,
and including any obligation of such Person, direct or indirect, (i) to purchase
or pay (or advance or supply funds for the purchase or payment of) such Debt or
other obligation, (ii) to purchase or lease property, securities or services for
the purpose of assuring the obligee in respect of such Debt or other obligation
of the payment or performance of such Debt or other obligation, (iii) to
maintain working capital, equity capital or any other financial statement
condition or liquidity or level of income or cash flow of the primary obligor so
as to enable the primary obligor to pay such Debt or other obligation, or
(iv) entered into for the purpose of assuring in any other manner the obligee in
respect of such Debt or other obligation of the payment or performance thereof
or to protect such obligee against loss in respect thereof (in whole or in
part), or (b) Lien on any assets of such Person securing any Debt or other
obligation of any other Person, whether or not such Debt or other obligation is
assumed by such Person. The amount of any Contingent Obligation shall be deemed
to be an amount equal to the stated or determinable amount of the related
primary obligation, or portion thereof, in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by the guaranteeing
Person in good faith.

Contractual Obligation: as to any Person, any provision of any security issued
by such Person or of any agreement, instrument or other undertaking to which
such Person is a party or by which it or any of its property is bound.

Costco: Costco Wholesale Corporation, a Washington corporation.

Covenant Trigger Period: the period (a) commencing on the day that Net Excess
Availability is less than, at any time, an amount equal to the Covenant Trigger
Period Threshold Percentage of the Maximum Facility Amount; and (b) continuing
until, during the preceding 30 consecutive days, Net Excess Availability has
been greater than, at all times, an amount equal to the Covenant Trigger Period
Threshold Percentage of the Maximum Facility Amount.

Covenant Trigger Period Threshold Percentage: 10%.

Credit Judgment: Agent’s judgment exercised in good faith, based upon its
consideration of any factor that it believes (a) could reasonably be expected to
adversely affect the quantity, quality, mix or value of Collateral (including
any Applicable Law that may inhibit collection of an Account), the
enforceability or priority of Agent’s Liens, or the amount that Agent and
Lenders could receive in liquidation of any Collateral; (b) provides a
reasonable basis to conclude that any collateral report or financial information
delivered by any Obligor is incomplete, inaccurate or misleading in any material
respect; (c) materially increases the likelihood of any Insolvency Proceeding
involving an Obligor; or (d) creates or could reasonably be expected to result
in a Default or Event of Default. In exercising such judgment, Agent may
consider any factors that could reasonably be expected to increase the credit
risk of lending to Borrowers on the security of the Collateral.

Credit Party: Agent, a Lender or an Issuing Bank; and “Credit Parties” means
Agent, Lenders and Issuing Banks.

 

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Creditor Representative: under any Applicable Law, a receiver, interim receiver,
receiver and manager, trustee (including any trustee in bankruptcy), custodian,
conservator, administrator, examiner, sheriff, monitor, assignee, liquidator,
provisional liquidator, sequestrator or similar officer or fiduciary.

CWA: the Clean Water Act (33 U.S.C. §§ 1251 et seq.).

Debt: as to any Person at a particular time, without duplication, all of the
following, whether or not included as indebtedness or liabilities in accordance
with GAAP: (a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes, loan
agreements or other similar instruments; (b) all direct or contingent
obligations of such Person arising under letters of credit (including standby
and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar
instruments; (c) all obligations of such Person to pay the deferred purchase
price of property or services (other than trade accounts payable and accrued
expenses arising in the Ordinary Course of Business); (d) indebtedness
(excluding prepaid interest thereon) secured by a Lien on property owned or
being purchased by such Person (including indebtedness arising under conditional
sales or other title retention agreements), whether or not such indebtedness
shall have been assumed by such Person or is limited in recourse; (e) Capital
Leases and Off-Balance Sheet Liabilities; (f) all Contingent Obligations of such
Person in respect of the foregoing clauses (a) through (e); and (g) in the case
of an Obligor, the Obligations.

Default: an event or condition that, with the lapse of time or giving of notice,
would constitute an Event of Default.

Default Rate: for any Obligation (including, to the extent permitted by law,
interest not paid when due), 2% plus the interest rate otherwise applicable
thereto.

Defaulting Lender: any Lender that, as determined by Agent, (a) has failed to
perform any funding obligations hereunder, and such failure is not cured within
three Business Days; (b) has notified Agent or any Borrower that such Lender
does not intend to comply with its funding obligations hereunder or has made a
public statement to the effect that it does not intend to comply with its
funding obligations hereunder or under any other credit facility; (c) has
failed, within three Business Days following request by Agent, to confirm in a
manner satisfactory to Agent that such Lender will comply with its funding
obligations hereunder; or (d) has, or has a direct or indirect parent company
that has, become the subject of an Insolvency Proceeding (including
reorganization, liquidation, or appointment of a receiver, custodian,
administrator or similar Person by the Federal Deposit Insurance Corporation or
any other regulatory authority), or Bail-In Action; provided, however, that a
Lender shall not be a Defaulting Lender solely by virtue of a Governmental
Authority’s ownership of an equity interest in such Lender or parent company
unless the ownership provides immunity for such Lender from jurisdiction of
courts within the United States or from enforcement of judgments or writs of
attachment on its assets, or permits such Lender or Governmental Authority to
repudiate or otherwise to reject such Lender’s agreements.

Deposit Account: as defined in the UCC (and/or with respect to any Deposit
Account located in Canada and/or the U.K., any bank account with a deposit
function).

 

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Deposit Account Control Agreements: the deposit account control agreements to be
executed by each institution maintaining a Deposit Account for an Obligor, in
favor of Agent, for the benefit of Secured Parties.

Designated Jurisdiction: a country or territory that is the target of Sanctions.

Designated Obligations: as defined in Section 14.11(a)(v).

Dilution Percent: the percent, for any period determined by Agent, equal to
(a) bad debt write-downs or write-offs, discounts, returns, promotions, credits,
credit memos and other dilutive items with respect to Accounts of the U.S.
Borrowers (in the case of the U.S. Dilution Reserve), the Canadian Borrower (in
the case of the Canadian Dilution Reserve), or the U.K. Borrower (in the case of
the U.K. Dilution Reserve), divided by (b) gross sales of the U.S. Borrowers (in
the case of the U.S. Dilution Reserve), of the Canadian Borrower (in the case of
the Canadian Dilution Reserve), or of the U.K. Borrower (in the case of the U.K.
Dilution Reserve).

Direction: as defined in Section 5.9.2(b)(i).

Distribution: any declaration or payment of a distribution, interest or dividend
on any Equity Interest (other than payment-in-kind); any distribution, advance
or repayment of Debt to a holder of Equity Interests; or any purchase,
redemption, or other acquisition or retirement for value of any Equity Interest.

Document: as defined in the UCC (and/or with respect to any Document of a
Canadian Subsidiary, a “document of title” as defined in the PPSA).

Dollars: lawful money of the United States.

Dollar Equivalent: on any date, with respect to any amount denominated in
Dollars, such amount in Dollars, and with respect to any stated amount in a
currency other than Dollars, the amount of Dollars that Agent determines (which
determination shall be conclusive and binding absent manifest error) would be
necessary to be sold on such date at the applicable Exchange Rate to obtain the
stated amount of the other currency.

Dominion Account: with respect to the U.S. Domiciled Obligors, a U.S. Dominion
Account, with respect to the Canadian Domiciled Obligors, a Canadian Dominion
Account, and with respect to the U.K. Domiciled Obligors, a U.K. Dominion
Account.

Dominion Trigger Period: the period (a) commencing on the day that an Event of
Default occurs, or Net Excess Availability is less than: (i) an amount equal to
10% of the Maximum Facility Amount for five (5) consecutive Business Days, or
(ii) 7.5% of the Maximum Facility Amount at any time, and (b) continuing until,
during the preceding 30 consecutive days, no Event of Default has existed and
Net Excess Availability has been greater than, at all times, an amount equal to
10% of the Maximum Facility Amount. Agent will endeavor to provide copies of
each notice of control Agent sends to any Dominion Account bank to Borrower
Agent substantially contemporaneously with providing such notice to such
Dominion Account bank; provided, however, that the failure of Agent to provide a
copy of any such notice to Borrower Agent shall not give rise to any liability
on the part of Agent and shall not affect the validity and effectiveness of such
notice.

 

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EBITDA: determined on a consolidated basis for Parent and Subsidiaries, net
income, calculated before interest expense, non-cash stock compensation expense,
provision for income taxes, depreciation and amortization expense, other
non-cash expenses (except to the extent representing a reserve or accrual for
cash expenses in another period) of Borrower Agent and its subsidiaries
(including, without limitation, non-cash amounts related to any downsizing,
restructuring or partial close of any operations of Borrower Agent or any of its
subsidiaries), gains or losses arising from the sale of capital assets, gains
arising from the write-up of assets, any extraordinary gains, any gains on
account of a transaction which results in Parent receiving Top Golf Proceeds,
the transaction expenses incurred during the 2017 Fiscal Year in an aggregate
amount not to exceed $4,000,000, and one-time transaction expenses incurred with
respect to any Debt incurrence permitted by Section 10.2.3 (in each case, to the
extent included in determining net income).

EEA Financial Institution: (a) any credit institution or investment firm
established in an EEA Member Country that is subject to the supervision of an
EEA Resolution Authority; (b) any entity established in an EEA Member Country
that is a parent of an institution described in clause (a) above; or (c) any
financial institution established in an EEA Member Country that is a subsidiary
of an institution described in the foregoing clauses and is subject to
consolidated supervision with its parent.

EEA Member Country: any of the member states of the European Union, Iceland,
Liechtenstein and Norway.

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

Eligible Account: an Account owing to a Borrower that arises in the Ordinary
Course of Business from the sale of goods or rendition of services, is payable
in Dollars (or, in the case of: (x) an Account owing to the Canadian Borrower,
in Dollars or Canadian Dollars, and (y) an Account owing to the U.K. Borrower,
in Dollars, Euro, or British Pounds), and is deemed by Agent, in its Credit
Judgment, to satisfy the criteria set forth below. No Account shall be an
Eligible Account if (a) it is unpaid for more than 60 days after the original
due date (or up to an additional 30 days as Agent may approve on an Account
Debtor by Account Debtor basis in its sole discretion), or it is unpaid for more
than 150 days after the original invoice date (or up to an additional 30 days as
Agent may approve on an Account Debtor by Account Debtor basis in its sole
discretion); (b) 50% or more of the Accounts owing by the Account Debtor are not
Eligible Accounts under the foregoing clause; (c) when aggregated with other
Accounts owing by the Account Debtor and such Account Debtor’s Affiliates, it
exceeds 15% of the aggregate Eligible Accounts (or such higher percentage as
Agent may establish for the Account Debtor and its Affiliates from time to
time); provided that, with respect to Accounts owing by Dick’s Sporting Goods,
such percentage shall be 30%; (d) it does not conform with a covenant or
representation herein; (e) it is owing by a creditor or supplier, or is
otherwise subject to a potential offset, counterclaim, dispute, deduction,
discount, recoupment, reserve, defense, chargeback, credit or allowance (but
ineligibility shall be limited to the amount thereof); (f) an Insolvency
Proceeding has been commenced by or against the Account Debtor; or the Account
Debtor has failed, has suspended or ceased doing business, is liquidating,
dissolving or winding up its affairs, or is not

 

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Solvent, or is the target of any Sanction or on any specially designated
nationals list maintained by OFAC; or the Borrower that originated such Account
is not able to bring suit or enforce remedies against the Account Debtor through
judicial process; (g) with respect to Accounts owing to: (i) the U.S. Borrowers
or the Canadian Borrower, the Account Debtor is organized or has its principal
offices or assets outside the United States or Canada, and (ii) the U.K.
Borrower, the Account Debtor is organized or has its principal offices or assets
outside of England, Wales, Scotland or Northern Ireland other than a U.K.
Eligible Foreign Account; (h) it is owing by a Government Authority, unless the
Account Debtor is the United States or any department, agency or instrumentality
thereof and the Account has been assigned to Agent in compliance with the
Assignment of Claims Act or the Account Debtor is the federal government of
Canada or any Crown corporation, department, agency or instrumentality of Canada
and the Canadian Borrower has complied, to the satisfaction of Agent, with the
Financial Administration Act or other Applicable Law; (i) it is not subject to a
duly perfected, first priority (in the case of U.K. Accounts, expressed as a
fixed charge) Lien in favor of Agent, or is subject to any other Lien; (j) the
goods giving rise to it have not been delivered to the Account Debtor, the
services giving rise to it have not been accepted by the Account Debtor, or it
otherwise does not represent a final sale; (k) it is evidenced by Chattel Paper
or an Instrument of any kind, or has been reduced to judgment; (l) its payment
has been extended or the Account Debtor has made a partial payment; (m) it
arises from a sale to an Affiliate, from a sale on a cash-on-delivery,
bill-and-hold, sale-or-return, sale-on-approval, consignment, or other
repurchase or return basis, or from a sale for personal, family or household
purposes; (n) it represents a progress billing or retainage, or relates to
services for which a performance, surety or completion bond or similar assurance
has been issued; or (o) it includes a billing for interest, fees or late
charges, but ineligibility shall be limited to the extent thereof. In
calculating delinquent portions of Accounts under clauses (a) and (b), credit
balances more than 60 days old (or such later date as Agent may approve in its
sole discretion) will be excluded.

The criteria for Eligible Accounts set forth above may only be changed and any
new criteria for Eligible Accounts may only be established by Agent in its
Credit Judgment, based on: (i) an event, condition or other circumstance arising
after the date hereof, (ii) an event, condition or other circumstance existing
on the date hereof to the extent that the Agent has no knowledge thereof or its
effect on the Account, or (iii) facts, information, or circumstances provided to
or learned by Agent in the course of its administration of the facility,
including, without limitation, in connection with field exams, audits, reports
and other information received, and observance of Collateral and the Obligors’
business performance, in any case under clauses (i), (ii) or (iii), which
adversely affects or would reasonably be expected to adversely affect the
Accounts as determined by Agent in its Credit Judgment.

Eligible Assignee: a Person that is (i) a Lender or a U.S.-based Affiliate of a
Lender, (ii) if such Person is to hold U.S. Facility Obligations, an Approved
Fund; (iii) if such Person is to hold Canadian Facility Obligations, such person
is at all times, other than during any Event of Default, a Canadian Qualified
Lender and an Affiliate or branch of a U.S. Lender; (iv) if such Person is to
hold U.K. Facility Obligations, such person is at all times, other than during
any Event of Default, a U.K. Qualified Lender and an Affiliate of a U.S. Lender,
(v) any other financial institution approved by Agent and Borrower Agent (which
approval by Borrower Agent shall not be unreasonably withheld or delayed), that
is organized under the laws of the United States or Canada or any state,
province or district thereof, has total assets in excess of $5 billion, extends

 

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asset-based lending facilities in its Ordinary Course of Business and whose
becoming an assignee would not constitute a prohibited transaction under
Section 4975 of the Code or any other Applicable Law; and (vi) during any Event
of Default, any Person acceptable to Agent in its discretion.

Eligible Costco Inventory: Inventory consisting of finished goods owned by a
U.S. Borrower and consigned to Costco that would otherwise be Eligible Inventory
if it were not consigned to a Person in violation of clause (h)(i) of the
definition of “Eligible Inventory” and either (a) Costco has delivered to Agent
a Lien Waiver with respect to such Inventory, or (b) Costco is rated BBB- (or
better) by S&P and Baa3 (or better) by Moody’s as of the applicable date of
determination.

Eligible Inventory: Inventory owned by a Borrower that Agent, in its Credit
Judgment, deems to satisfy the criteria set forth below. No Inventory shall be
Eligible Inventory unless it (a) is finished goods or raw materials, and not
packaging or shipping materials, labels, samples, display items, bags,
replacement parts or manufacturing supplies; (b) is not held on consignment, nor
subject to any deposit or down payment; (c) is in new and saleable condition and
is not damaged, defective, shopworn or otherwise unfit for sale; (d) is not
slow-moving (as determined by Agent from time to time), perishable, obsolete or
unmerchantable, and does not constitute returned or repossessed goods; (e) meets
all standards imposed by any Governmental Authority, has not been acquired from
a Person that is the target of any Sanction or on any specially designated
nationals list maintained by OFAC, and does not constitute hazardous materials
under any Environmental Law; (f) conforms with the covenants and representations
herein; (g) is subject to Agent’s duly perfected, first priority Lien, and no
other Lien; (h) (i) other than Eligible Costco Inventory, is not consigned to
any Person, and (ii) other than Eligible In-Transit Inventory, is within:
(A) the continental United States, in the case of Inventory of a U.S. Borrower,
(B) Canada, in the case of Inventory of the Canadian Borrower, and (C) England,
Wales, Scotland or Northern Ireland, in the case of Inventory of the U.K.
Borrower; (i) other than Eligible In-Transit Inventory, is not in transit unless
it is, in the case of: (i) Inventory of a U.S. Borrower, in transit between
facilities in the United States of the U.S. Borrowers, (ii) Inventory of the
Canadian Borrower, in transit between facilities in Canada of the Canadian
Borrower, and (iii) Inventory of the U.K. Borrower, in transit between
facilities in England, Wales, Scotland or Northern Ireland of the U.K.
Borrower); (j) is not subject to any warehouse receipt or negotiable Document;
(k) is not subject to any License or other arrangement that restricts such
Borrower’s or Agent’s right to dispose of such Inventory, unless Agent has
received an appropriate Lien Waiver; (l) is not located on leased premises or in
the possession of a warehouseman, processor, repairman, mechanic, shipper,
freight forwarder or other Person, unless the lessor or such Person has
delivered a Lien Waiver or an appropriate U.S. Rent and Charges Reserve (in the
case of the U.S. Borrowers), a Canadian Rent and Charges Reserve (in the case of
the Canadian Borrower), or a U.K. Rent and Charges Reserve (in the case of the
U.K. Borrower) has been established; and (m) is reflected in the details of a
current perpetual inventory report.

The criteria for Eligible Inventory set forth above may only be changed and any
new criteria for Eligible Inventory may only be established by Agent in its
Credit Judgment, based on: (i) an event, condition or other circumstance arising
after the date hereof, (ii) an event, condition or other circumstance existing
on the date hereof to the extent that the Agent has no knowledge thereof or its
effect on Inventory, or (iii) facts, information, or circumstances provided to
or learned

 

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by Agent in the course of its administration of the facility, including, without
limitation, in connection with field exams, audits, reports and other
information received, and observance of Collateral and the Obligors’ business
performance, in any case under clauses (i), (ii) or (iii), which adversely
affects or would reasonably be expected to adversely affect the Inventory as
determined by Agent in its Credit Judgment.

Eligible In-Transit Inventory: Inventory consisting of finished goods owned by a
Borrower that would be Eligible Inventory if it were not subject to a Document
and in transit from a foreign location to a location of a Borrower within the
United States, Canada or England, and that Agent, in its Credit Judgment, deems
to be Eligible In-Transit Inventory, and thus to be Eligible Inventory. Without
limiting the foregoing, no Inventory shall be Eligible In-Transit Inventory
unless it (a) is finished goods, (b) has been delivered to a carrier in a
foreign port or foreign airport for receipt by a Borrower in the United States
(in the case of the U.S. Borrowers) or Canada (in the case of the Canadian
Borrower) or England, Wales, Scotland or Northern Ireland (in the case of the
U.K. Borrower) within sixty (60) days of the date of determination, but which
has not yet been received by the applicable Borrower, (c) is subject to a
negotiable Document showing Agent (or, with the consent of Agent, the applicable
Borrower) as consignee, which Document is in the possession of Agent or such
other Person as Agent shall approve; (d) is fully insured in a manner
satisfactory to Agent; (e) has been identified to the applicable sales contract
and title has passed to the applicable Borrower; (f) is not sold by a vendor
that has a right to reclaim, divert shipment of, repossess, stop delivery, claim
any reservation of title or otherwise assert Lien rights against the Inventory,
or with respect to whom any Borrower is in default of any obligations; (g) is
subject to purchase orders and other sale documentation satisfactory to
Agent; (h) is shipped by a common carrier that is not affiliated with the vendor
and is not the target of any Sanction or on any specially designated nationals
list maintained by OFAC; and (i) is being handled by a customs broker,
freight-forwarder or other handler that has delivered a Lien Waiver.

Eligible Real Estate: Real Estate owned by a U.S. Borrower that is located at
2180 Rutherford Road, Carlsbad, CA 92008, and that Agent, in its Credit
Judgment, deems to satisfy the criteria set forth in the subsequent sentence.
Such Real Estate shall not be Eligible Real Estate unless: (a) a first priority
Mortgage, in substantially the form attached hereto as Exhibit E, has been
executed, delivered and recorded with respect to such Real Estate, and (b) Agent
shall have received the Related Real Estate Documents with respect to such Real
Estate.

EMU Legislation: the legislative measures of the European Council for the
introduction of, changeover to or operation of a single or unified European
currency.

Enforcement Action: any action to enforce any Obligations (other than Secured
Bank Product Obligations) or Loan Documents or to exercise any rights or
remedies relating to any Collateral (whether by judicial action, self-help,
notification of Account Debtors, exercise of setoff or recoupment, exercise of
any right to vote or act in an Obligor’s Insolvency Proceeding, or otherwise).

Environmental Laws: all Applicable Laws (including all programs, permits and
guidance promulgated by regulatory agencies) relating to public health (but
excluding occupational safety and health, to the extent regulated by OSHA) or
the protection or pollution of the environment,

 

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including CERCLA, RCRA, CWA, the Environmental Protection Act (Ontario) and
similar Applicable Laws of foreign jurisdictions.

Environmental Notice: a notice (whether written or oral) from any Governmental
Authority or other Person of any possible noncompliance with, investigation of a
possible violation of, litigation relating to, or potential fine or liability
under any Environmental Law, or with respect to any Environmental Release,
environmental pollution or hazardous materials, including any complaint,
summons, citation, order, claim, demand or request for correction, remediation
or otherwise.

Environmental Release: a release as defined in CERCLA or under any other
Environmental Law.

Equity Interest: the interest of any (a) shareholder in a corporation;
(b) partner in a partnership (whether general, limited, limited liability or
joint venture); (c) member in a limited liability company; or (d) other Person
having any other form of equity security or ownership interest.

ERISA: the Employee Retirement Income Security Act of 1974.

ERISA Affiliate: any trade or business (whether or not incorporated) under
common control with an Obligor within the meaning of Section 414(b) or (c) of
the Code (and Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code).

ERISA Event: (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by any Obligor or ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by any Obligor or ERISA Affiliate from a Multiemployer Plan
or notification that a Multiemployer Plan is in reorganization; (d) the filing
of a notice of intent to terminate, the treatment of a Plan amendment as a
termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan;
(e) any Obligor or ERISA Affiliate fails to meet any funding obligations with
respect to any Pension Plan or Multiemployer Plan, or requests a minimum funding
waiver; (f) an event or condition which constitutes grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Pension Plan or Multiemployer Plan; or (g) the imposition of any liability
under Title IV of ERISA, other than for PBGC premiums due but not delinquent
under Section 4007 of ERISA, upon any Obligor or ERISA Affiliate.

EU Bail-In Legislation Schedule: the EU Bail-In Legislation Schedule published
by the Loan Market Association, as in effect from time to time.

Euro: the lawful currency of the Participating Member States introduced in
accordance with EMU Legislation.

Event of Default: as defined in Section 11.

Excess Amount: as defined in Section 5.13.

 

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Excess Cash Flow: determined on a consolidated basis for Parent and Subsidiaries
for any period, EBITDA, minus (a) cash interest expense; (b) Capital
Expenditures (except those financed with Borrowed Money other than Revolver
Loans or Term Loans); (c) principal payments made on Borrowed Money and Capital
Leases; (d) Distributions made (to the extent permitted hereunder and other than
Distributions made among Parent and its Subsidiaries) to the extent such
Distributions are consistent with prior practice as of the Closing Date; (e) any
non-cash items to the extent added to the calculation of EBITDA in accordance
with the definition thereof; (f) amounts expended (including transaction costs)
in connection with any Acquisition and other Investment permitted hereunder
provided that the aggregate amount under this clause (f) shall not exceed
$10,000,000; and (g) cash taxes paid.

Exchange Rate: on any date of determination, with respect to Canadian Dollars,
British Pounds, Euro or another foreign currency in relation to Dollars, the
Spot Rate for Canadian Dollars, British Pounds, Euro or such other foreign
currency, as applicable.

Excluded Intellectual Property: any Intellectual Property: (i) owned by
travisMathew or Travis Mathew Retail as of the date hereof; (ii) hereafter
developed by travisMathew or Travis Mathew Retail (and unrelated to any
Intellectual Property of the Obligors (other than travisMathew or Travis Mathew
Retail) as of the date hereof); or (iii) related to the brands of travisMathew
or Travis Mathew Retail as of the date hereof. For the avoidance of doubt, any
Intellectual Property listed on Schedule 9.1.17 shall not constitute Excluded
Intellectual Property.

“Excluded Property” shall mean

(a)    any permit or license issued by a Governmental Authority to any U.S.
Domiciled Obligor or any agreement to which any U.S. Domiciled Obligor is a
party, in each case, only to the extent and for so long as the terms of such
permit, license or agreement or any requirement of law applicable thereto,
validly prohibit the creation by such U.S. Domiciled Obligor of a security
interest in such permit, license or agreement in favor of the Agent (after
giving effect to Sections 9-406(d), 9-407(a), 9-408(a) or 9-409 of the UCC (or
any successor provision or provisions) or any other applicable law (including
the U.S. Bankruptcy Code) or principles of equity);

(b)    assets owned by any U.S. Domiciled Obligor on the date hereof or
hereafter acquired and any proceeds thereof that are subject to a Lien permitted
by Section 10.2.1(j) of the Credit Agreement to the extent and for so long as
the contract or other agreement in which such Lien is granted (or the
documentation providing for the Capital Lease, Off-Balance Sheet Liability or
purchase money obligation subject to such Lien) validly prohibits the creation
of any other Lien on such assets and proceeds;

(c)    any Equity Interests of a Foreign Subsidiary to the extent and for so
long as the pledge thereof to the Agent would constitute an investment of
earnings in United States property under Section 956 (or a successor provision)
of the Code, which investment would or could reasonably be expected to trigger a
material increase in the net income of a United States shareholder of such
Foreign Subsidiary pursuant to Section 951 (or a successor provision) of the
Code, as reasonably determined by the Agent; provided that this clause (c) shall
not apply to (a) voting stock of any Subsidiary which is a first-tier controlled
foreign corporation (as defined

 

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in Section 957(a) of the Code) representing 65% of the total voting power of all
outstanding voting stock of such Subsidiary and (b) 100% of the Equity Interests
not constituting voting stock of any such Subsidiary, except that any such
Equity Interests constituting “stock entitled to vote” within the meaning of
Treasury Regulation Section 1.956-2(c)(2) shall be treated as voting stock for
purposes of this clause (c);

(d)    any intent-to-use trademark application to the extent and for so long as
creation by a U.S. Domiciled Obligor of a security interest therein would result
in the loss by such U.S. Domiciled Obligor of any material rights therein;

(e)    any fee owned real property (other than Material Real Property and the
fee-owned real property located at 2180 Rutherford Road, Carlsbad, CA 92008),
and any leasehold rights and interests in such real property;

(f)    Margin Stock;

(g)    motor vehicles and other assets subject to certificates of title other
than to the extent a security interest therein can be perfected by a UCC filing;

(h)    pledges and security interests prohibited by applicable law, rule,
regulation or contractual obligation after giving effect to the anti-assignment
provisions of the UCC and other applicable law; and

(i)    those assets as to which the Agent and the Borrowers reasonably agree
that the cost or other consequence (including any adverse tax consequences to
the Borrowers or any of their Subsidiaries) of obtaining such a security
interest or perfection thereof are excessive in relation to the value afforded
thereby;

provided, however, that Excluded Property shall not include any Proceeds,
substitutions or replacements of any Excluded Property referred to in clause
(a), (b), (c), (d), (e), (f), (g), (h) or (i) (unless such Proceeds,
substitutions or replacements would constitute Excluded Property referred to in
clauses (a), (b), (c), (d), (e), (f), (g), (h) or (i)).

Excluded Stock Repurchases: any Common Stock Repurchases made, or dividends paid
on Parent’s common stock, in accordance with Section 10.2.6(g).

Excluded Swap Obligation: with respect to an Obligor, each Swap Obligation as to
which, and only to the extent that, such Obligor’s guaranty of or grant of a
Lien as security for such Swap Obligation is or becomes illegal under the
Commodity Exchange Act because the Obligor does not constitute an “eligible
contract participant” as defined in the Act (determined after giving effect to
any keepwell, support or other agreement for the benefit of such Obligor and all
guarantees of Swap Obligations by other Obligors) when such guaranty or grant of
Lien becomes effective with respect to the Swap Obligation. If a Hedging
Agreement governs more than one Swap Obligation, only the Swap Obligation(s) or
portions thereof described in the foregoing sentence shall be Excluded Swap
Obligation(s) for the applicable Obligor.

Excluded Tax: with respect to Agent, any Lender, any Issuing Bank or any other
recipient of a payment to be made by or on account of any Obligation, (a) taxes
imposed on or measured by

 

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its overall net income (however denominated), and franchise taxes imposed on it
(in lieu of net income taxes), by the jurisdiction (or any political subdivision
thereof) under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable Lending Office is located; (b) any branch profits taxes imposed by
the United States or any similar tax imposed by any other jurisdiction in which
Borrower Agent is located; (c) any backup withholding tax required by the Code
to be withheld from amounts payable to a Lender that has failed to comply with
Section 5.10; (d) in the case of a Foreign Lender, any United States withholding
tax that is (i) required pursuant to laws in force at the time such Lender
becomes a Lender (or designates a new Lending Office) hereunder, or
(ii) attributable to such Lender’s failure or inability (other than as a result
of a Change in Law) to comply with Section 5.10, except to the extent that such
Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new Lending Office (or assignment), to receive additional
amounts from Borrowers with respect to such withholding tax; and (e) any U.S.
federal withholding Taxes imposed under FATCA.

Expeditors: Expeditors International of Washington, Inc., a Washington
corporation.

Existing Letters of Credit: those letter(s) of credit described on Schedule E-1.

Extraordinary Expenses: all costs, expenses or advances that Agent or any Lender
may incur during a Default or Event of Default, or during the pendency of an
Insolvency Proceeding of an Obligor, including those relating to (a) any audit,
inspection, repossession, storage, repair, appraisal, insurance, manufacture,
preparation or advertising for sale, sale, collection, or other preservation of
or realization upon any Collateral; (b) any action, arbitration or other
proceeding (whether instituted by or against Agent, any Lender, any Obligor, any
representative of creditors of an Obligor or any other Person) in any way
relating to any Collateral (including the validity, perfection, priority or
avoidability of Agent’s Liens with respect to any Collateral), Loan Documents,
Letters of Credit or Obligations, including any lender liability or other
Claims; (c) the exercise, protection or enforcement of any rights or remedies of
Agent or any Lender in, or the monitoring of, any Insolvency Proceeding;
(d) settlement or satisfaction of any taxes, charges or Liens with respect to
any Collateral; (e) any Enforcement Action; (f) negotiation and documentation of
any modification, waiver, workout, restructuring or forbearance with respect to
any Loan Documents or Obligations; and (g) Protective Advances. Such costs,
expenses and advances include transfer fees, Other Taxes, storage fees,
insurance costs, permit fees, utility reservation and standby fees, legal fees,
appraisal fees, brokers’ fees and commissions, auctioneers’ fees and
commissions, accountants’ fees, environmental study fees, wages and salaries
paid to employees of any Obligor or independent contractors in liquidating any
Collateral, and travel expenses. Notwithstanding the forgoing, absent a conflict
of interest among Lenders, Extraordinary Expenses shall not include (i) legal
fees for more than one counsel to the Lenders (plus any local counsel deemed
necessary by the Lenders) in addition to any counsel engaged by Agent or
(ii) other costs, expenses or advances incurred by any Lender to the extent
unreasonably duplicative of such costs, expenses or advances incurred by the
Agent.

Facility Termination Date: November 19, 2022.

FATCA: Sections 1471 through 1474 of the Code, as of the date of this Agreement
(or any amended or successor version that is substantially comparable and not
materially more onerous to

 

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comply with), any current or future regulations or official interpretations
thereof and any agreements entered into pursuant to Section 1471(b)(1) of the
Code.

Federal Funds Rate: (a) the weighted average of interest rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers on the applicable Business Day (or on the preceding
Business Day, if the applicable day is not a Business Day), as published by the
Federal Reserve Bank of New York on the next Business Day; or (b) if no such
rate is published on the next Business Day, the average rate (rounded up, if
necessary, to the nearest 1/8 of 1%) charged to Bank of America on the
applicable day on such transactions, as determined by Agent; provided, that in
no event shall the Federal Funds Rate be less than zero.

Fee Letters: each fee letter agreement between Agent and Borrowers (or any of
them).

Financial Administration Act: the Financial Administration Act (Canada) and all
regulations and schedules thereunder.

First Amendment to Second Amended and Restated Effective Date: June 11, 2012.

First Amendment to Third Amended and Restated Effective Date: November 29, 2018.

Fiscal Quarter: each period of three months, commencing on the first day of a
Fiscal Year.

Fiscal Year: the fiscal year of Parent and its Subsidiaries for accounting and
tax purposes, ending on December 31 of each year.

Fixed Charge Coverage Ratio: the ratio, determined on a consolidated basis for
Parent and its Subsidiaries for the most recent twelve calendar months, of
(a) EBITDA minus Capital Expenditures (except those financed with Borrowed Money
other than Revolver Loans or Term Loans) and cash taxes paid (which amount may
not be less than zero), to (b) Fixed Charges; provided, however, that solely for
the purposes of calculating the Fixed Charge Coverage Ratio under Section 10.3,
Fixed Charges shall not include any Excluded Stock Repurchases.

Fixed Charges: the sum of cash interest expense, principal payments made on
Borrowed Money, and Distributions made (other than Distributions made to
Obligors to the extent permitted hereunder).

FLSA: the Fair Labor Standards Act of 1938.

Flood Laws: the National Flood Insurance Act of 1968, Flood Disaster Protection
Act of 1973 and related laws.

Foreign Lender: any Lender that is (a) in the case of the U.S. Borrowers,
organized under the laws of a jurisdiction other than the laws of the United
States, or any state or district thereof, (b) in the case of the Canadian
Borrower, not a Canadian Qualified Lender, and (c) in the case of the U.K.
Borrower, not a U.K. Qualified Lender.

 

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Foreign Plan: any employee benefit plan or arrangement (a) maintained or
contributed to by any Obligor or Subsidiary that is not subject to the laws of
the United States or Canada; or (b) mandated by a government other than the
United States or Canada for employees of any Obligor or Subsidiary.

Foreign Subsidiary: a Subsidiary of Parent that is a “controlled foreign
corporation” under Section 957 of the Code.

Fronting Exposure: a Defaulting Lender’s Pro Rata share of U.S. LC Obligations,
Canadian LC Obligations, U.K. LC Obligations, U.S. Swingline Loans, Canadian
Swingline Loans, or U.K. Swingline Loans, as applicable, except to the extent
allocated to other Lenders under Section 4.2.

FSCO: the Financial Services Commission of Ontario or like body in any other
province of Canada and any other Governmental Authority succeeding to the
functions thereof.

Full Payment: with respect to any Obligations, (a) the full and indefeasible
cash payment thereof in the applicable currency required hereunder, including
any interest, fees and other charges accruing during an Insolvency Proceeding
(whether or not allowed in the proceeding); (b) if such Obligations are LC
Obligations or inchoate or contingent in nature, Cash Collateralization thereof
(or delivery of a standby letter of credit acceptable to Agent in its
discretion, in the amount of required Cash Collateral); and (c) a release of any
Claims of Obligors against Agent, Lenders and Issuing Banks arising on or before
the payment date. No Loans shall be deemed to have been paid in full until all
Commitments related to such Loans have expired or been terminated.

Funded Debt: as of any date of determination, all Debt for borrowed money of
Parent and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP.

GAAP: generally accepted accounting principles in effect in the United States
from time to time.

General Intangibles: as defined in the UCC (and/or with respect to any General
Intangible of a Canadian Subsidiary, an “intangible” as defined in the PPSA).

Governmental Approvals: all authorizations, consents, approvals, licenses and
exemptions of, registrations and filings with, and required reports to, all
Governmental Authorities.

Governmental Authority: any federal, state, provincial, municipal, foreign or
other governmental department, agency, commission, board, bureau, court,
tribunal, instrumentality, political subdivision, or other entity or officer
exercising executive, legislative, judicial, regulatory or administrative
functions for or pertaining to any government or court, in each case whether it
is or is not associated with the United States, a state, district or territory
thereof, Canada, a province or territory thereof or any other foreign entity or
government.

Guarantee: each guarantee agreement (including this Agreement, the Canadian
Facility Guarantee, and the U.K. Facility Guarantee) executed by a Guarantor in
favor of Agent guaranteeing all or any portion of any Canadian Facility
Obligation, U.S. Facility Obligation, or U.K. Facility Obligation.

 

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Guarantor Payment: as defined in Section 5.11.

Guarantors: Canadian Facility Guarantors, U.S. Facility Guarantors, U.K.
Facility Guarantors, and each other Person who guarantees payment or performance
of any Obligations.

Hedging Agreement: any “swap agreement” as defined in Section 101(53B)(A) of the
U.S. Bankruptcy Code.

Immaterial Subsidiary: at any time, any Subsidiary of Parent that is not a
Material Subsidiary.

Indemnified Taxes: Taxes other than Excluded Taxes.

Indemnitees: Agent Indemnitees, Lender Indemnitees, Issuing Bank Indemnitees and
Bank of America Indemnitees.

Insolvency Proceeding: any case or proceeding or proposal commenced by or
against a Person under any state, provincial, federal or foreign law for, or any
agreement of such Person to, (a) the entry of an order for relief under the U.S.
Bankruptcy Code, or any other insolvency, debtor relief, bankruptcy,
receivership, debt adjustment law or other similar law (whether state,
provincial, federal or foreign), including the Bankruptcy and Insolvency Act
(Canada), the Companies’ Creditors Arrangement Act (Canada), the United Kingdom
Insolvency Act 1986 and/or the Enterprise Act 2002; (b) the appointment of a
Creditor Representative or other custodian for such Person or any part of its
Property; or (c) an assignment or trust mortgage for the benefit of creditors.

Intellectual Property: all intellectual and similar Property of a Person,
including inventions, designs, patents, copyrights (and all associated moral and
neighboring rights), mask works, industrial design rights, trademarks and
service marks (together with all associated goodwill), trade names, trade dress,
domain names, trade secrets, confidential or proprietary information, customer
lists, know-how, software and databases; all embodiments or fixations thereof
and all related documentation, applications, registrations and franchises; all
licenses or other rights to use any of the foregoing; and all books and records
relating to the foregoing.

Intellectual Property Claim: any claim or assertion (whether in writing, by suit
or otherwise) that an Obligor’s or Subsidiary’s ownership, use, marketing, sale
or distribution of any Inventory, Equipment, Intellectual Property or other
Property violates another Person’s Intellectual Property.

Intercreditor Agreement: that certain Intercreditor Agreement dated as of the
Second Amendment to Third Amended and Restated Effective Date between Agent and
the Term Loan Collateral Agent, relating to the Debt permitted under
Section 10.2.3(s).

Interest Period: as defined in Section 3.1.4.

Interest Period Loans: LIBOR Loans or Canadian BA Rate Loans.

 

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Inventory: as defined in the UCC (and/or with respect to any inventory located
in Canada, as defined in the PPSA), including all goods intended for sale,
lease, display or demonstration; all work in process; and all raw materials, and
other materials and supplies of any kind that are or could be used in connection
with the manufacture, printing, packing, shipping, advertising, sale, lease or
furnishing of such goods, or otherwise used or consumed in the applicable
Obligor’s business (but excluding Equipment).

Inventory Reserve: reserves established by Agent in its Credit Judgment to
reflect factors that may negatively impact the Value of Inventory, including
change in salability, obsolescence, seasonality, theft, shrinkage, imbalance,
change in composition or mix, markdowns and vendor chargebacks.

Investment: as to any Person, any direct or indirect acquisition or investment
by such Person, whether by means of (a) the purchase or other acquisition of
capital stock or other securities of another Person, (b) a loan, advance or
capital contribution to, Contingent Obligation in respect of Debt of, assumption
of Debt of, or purchase or other acquisition of any other Debt or equity
participation or interest in, another Person, including any partnership or joint
venture interest in such other Person, or (c) the purchase or other acquisition
(in one transaction or a series of transactions) of assets of another Person
that constitute a business unit. For purposes of covenant compliance, the amount
of any Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.

IP Assignment: a collateral assignment or security agreement pursuant to which
an Obligor grants a Lien on its Intellectual Property to Agent, as security for
its Obligations.

IRS: the United States Internal Revenue Service.

Issuing Bank Indemnitees: the Issuing Banks and their officers, directors,
employees, Affiliates, branches, agents and attorneys.

Issuing Banks: the U.S. Issuing Bank, the Canadian Issuing Bank, and the U.K.
Issuing Bank.

LC Application: an application by a Borrower or Borrower Agent on behalf of a
Borrower to an Issuing Bank for issuance of a Letter of Credit, in form and
substance satisfactory to such Issuing Bank.

LC Conditions: the following conditions necessary for issuance of a Letter of
Credit: (a) each of the conditions set forth in Section 6; (b) after giving
effect to such issuance, total U.S. LC Obligations do not exceed the U.S. Letter
of Credit Subline, no U.S. Overadvance exists or would result therefrom and, if
no U.S. Revolver Loans are outstanding, the U.S. LC Obligations do not exceed
the U.S. Borrowing Base (without giving effect to the U.S. LC Reserve for
purposes of this calculation); (c) after giving effect to such issuance, total
Canadian LC Obligations do not exceed the Canadian Letter of Credit Subline, no
Canadian Overadvance exists or would result therefrom and, if no Canadian
Revolver Loans are outstanding, the Canadian LC Obligations do not exceed the
Canadian Borrowing Base (without giving effect to the Canadian LC Reserve for
purposes of this calculation); (d) after giving effect to such issuance, total
U.K. LC Obligations do not exceed the U.K. Letter of Credit Subline, no U.K.
Overadvance exists or would result therefrom and, if

 

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no U.K. Revolver Loans are outstanding, the U.K. LC Obligations do not exceed
the U.K. Borrowing Base (without giving effect to the U.K. LC Reserve for
purposes of this calculation); (e) the expiration date of such Letter of Credit
is (i) no more than 365 days from issuance, in the case of standby Letters of
Credit, provided, however, that any standby Letter of Credit may provide for the
automatic extension thereof for any number of additional periods each of up to
365 days in duration, and (ii) no more than 120 days from issuance, in the case
of documentary Letters of Credit; (f) in the case of U.S. Letters of Credit, the
Letter of Credit and payments thereunder are denominated in Dollars or any
foreign currency acceptable to Agent and U.S. Issuing Bank and, unless otherwise
specified by Agent or U.S. Issuing Bank (at their respective option) that it
requires payment in Dollars calculated at the Spot Rate, payments thereunder are
to be made in the same currency in which the Letter of Credit was denominated;
(g) in the case of Canadian Letters of Credit, the Letter of Credit and payments
thereunder are denominated in Dollars, Canadian Dollars, or any foreign currency
acceptable to Agent and Canadian Issuing Bank and, unless otherwise specified by
Agent or Canadian Issuing Bank (at their respective option) that it requires
payment in Dollars or Canadian Dollars calculated at the Spot Rate, payments
thereunder are to be made in the same currency in which the Letter of Credit was
denominated; (h) in the case of U.K. Letters of Credit, the Letter of Credit and
payments thereunder are denominated in Dollars, British Pounds, Euros, or any
foreign currency acceptable to the Agent and U.K. Issuing Bank and, unless
otherwise specified by Agent or U.K. Issuing Bank (at their respective option)
that it requires payment in Dollars, British Pounds or Euros calculated at the
Spot Rate, payments thereunder are to be made in the same currency in which the
Letter of Credit was denominated, and (i) the form of the proposed Letter of
Credit is satisfactory to Agent and the applicable Issuing Bank in their
discretion.

LC Documents: all documents, instruments and agreements (including LC Requests
and LC Applications) delivered by the Borrower Agent on behalf of a Borrower or
by any other Person to an Issuing Bank or Agent in connection with the issuance,
amendment or renewal of, or payment under, any Letter of Credit.

LC Obligations: the U.S. LC Obligations, the Canadian LC Obligations, and the
U.K. LC Obligations.

LC Request: a request for issuance of a Letter of Credit, to be provided by the
U.S. Borrowers, the Canadian Borrower, the U.K. Borrower, or the Borrower Agent,
as applicable, to an Issuing Bank, in form satisfactory to Agent and such
Issuing Bank.

Lender Indemnitees: Lenders and their officers, directors, employees,
Affiliates, agents and attorneys.

Lenders: as defined in the preamble to this Agreement, including the U.S.
Lenders, the Canadian Lenders, the U.K. Lenders, Agent in its capacity as a
provider of Swingline Loans and any other Person who hereafter becomes a
“Lender” pursuant to an Assignment and Acceptance or in accordance with
Section 2.1.7.

Lending Office: the office designated as such by the applicable Lender at the
time it becomes party to this Agreement or thereafter by notice to Agent and
Borrower Agent.

 

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Letter of Credit: any U.S. Letter of Credit, Canadian Letter of Credit, or U.K.
Letter of Credit.

Leverage Ratio: means, as of any date of determination, the ratio of (a) the
amount of Funded Debt as of such date, to (b) EBITDA for the most recently 12
month period ended for which financial statements have been delivered pursuant
to Section 10.1.1, in each case, determined on a consolidated basis for Parent
and its Subsidiaries.

LIBOR: for any Interest Period with respect to a LIBOR Loan, the per annum rate
of interest, determined by Agent at approximately 11:00 a.m. (London time) two
Business Days prior to commencement of such Interest Period, for a term
comparable to such Interest Period, equal to (a) the applicable Screen Rate for
the currency of that LIBOR Loan; or (b) if the Screen Rate is not available for
any reason, the interest rate at which deposits in the applicable Available
Currency in the approximate amount of the LIBOR Loan would be offered by Bank of
America’s London branch to major banks in the London interbank eurocurrency
market; provided, that in no event shall LIBOR be less than zero. If the Board
of Governors imposes a Reserve Percentage with respect to LIBOR deposits, then
LIBOR shall be the foregoing rate, divided by 1 minus the Reserve Percentage.

LIBOR Loan: each set of LIBOR Revolver Loans or LIBOR Term Loans having a common
length and commencement of Interest Period.

LIBOR Revolver Loan: a Revolver Loan that bears interest based on LIBOR.

LIBOR Term Loan: a Term Loan that bears interest based on LIBOR.

License: any license or agreement under which an Obligor or Subsidiary is
authorized to use Intellectual Property in connection with any manufacture,
marketing, distribution or disposition of Collateral, any use of Property or any
other conduct of its business.

Licensor: any Person from whom an Obligor obtains the right to use any
Intellectual Property.

Lien: any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge, or preference, priority or other
security interest or preferential arrangement of any kind or nature whatsoever
in respect of property (including any conditional sale or other title retention
agreement and any financing lease having substantially the same economic effect
as any of the foregoing).

Lien Waiver: an agreement, in form and substance satisfactory to Agent, by which
(unless, in each case, otherwise agreed to by Agent in its sole discretion) (a)
for any material Collateral located on leased premises, the lessor waives or
subordinates any Lien it may have on the Collateral, and agrees to permit Agent
to enter upon the premises and remove the Collateral or to use the premises to
store or dispose of the Collateral; (b) for any Collateral held by a
warehouseman, processor, shipper, customs broker or freight forwarder, such
Person waives or subordinates any Lien it may have on the Collateral, agrees to
hold any Documents in its possession relating to the Collateral as agent for
Agent, and agrees to deliver the Collateral to Agent upon request; (c) for any
Collateral held by a repairman, mechanic or bailee, such Person

 

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acknowledges Agent’s Lien, waives or subordinates any Lien it may have on the
Collateral, and agrees to deliver the Collateral to Agent upon request; (d) for
any Collateral subject to a Licensor’s Intellectual Property rights, the
Licensor grants to Agent the right, vis-à-vis such Licensor, to enforce Agent’s
Liens with respect to the Collateral, including the right to dispose of it with
the benefit of the Intellectual Property, whether or not a default exists under
any applicable License; and (e) for any Collateral held by Costco on consignment
on behalf of a U.S. Domiciled Obligor, Costco acknowledges the applicable
Obligor’s ownership of such Collateral, acknowledges Agent’s Lien on such
Collateral, authorizes the filing of UCC financing statements naming Costco as
consignee, the applicable Obligor as consignor, and Agent as such Obligor’s
assignee, and agrees to deliver the Collateral to Agent upon request.

Loan: a Revolver Loan or Term Loan.

Loan Account: the loan account established by each Lender on its books pursuant
to Section 5.8.

Loan Documents: this Agreement, Other Agreements and Security Documents.

Mandatory Costs: the percentage rate per annum calculated by Agent in accordance
with Schedule 1.1A.

Margin Stock: as defined in Regulation U of the Board of Governors.

Material Adverse Effect: (a) a material adverse change in, or a material adverse
effect upon, the operations, business, Properties, condition (financial or
otherwise) of Parent and its Subsidiaries taken as a whole; (b) a material
impairment of the ability of any Borrower or Guarantor to perform its
obligations under any Loan Document to which it is a party; (c) a material
adverse effect upon the legality, validity, binding effect or enforceability
against any Borrower or Guarantor of any Loan Document to which it is a party or
on the validity or priority of Agent’s Liens on the Collateral; or (d) the
effect of any event or circumstance that, taken alone or in conjunction with
other events or circumstances, otherwise impairs the ability of Agent or any
Lender to enforce or collect any Obligations or to realize upon any material
portion of the Collateral.

Material Real Property: means any fee-owned real property that is owned by any
U.S Domiciled Obligor with a fair market value in excess of $15,000,000 (at the
Second Amendment Third Amended and Restated Effective Date or, with respect to
fee-owned real property acquired after the Second Amendment Third Amended and
Restated Effective Date, at the time of acquisition, in each case, as reasonably
estimated by the U.S. Borrowers in good faith), other than the property located
at 2180 Rutherford Road, Carlsbad, CA 92008.

Material Subsidiary: at any time, any Subsidiary of Parent (other than an
Obligor) (a) in which the aggregate Investments made by Parent and its
Subsidiaries (excluding Investments in the nature of inter-company receivables
payable by such Subsidiary arising in the Ordinary Course of Business for the
sale of Inventory and provision of services but, in the case of Investments in a
Foreign Subsidiary, including Investments in Subsidiaries of such Foreign
Subsidiary other than any such receivables) exceed $20,000,000 or (b) that had
net annual sales during the four fiscal

 

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quarters most recently ended (calculated on a Pro Forma Basis after giving
effect to any Acquisition made during such period) of $50,000,000 or more

Maximum Canadian Facility Amount: on any date of determination, the lesser of
(i) the Canadian Revolver Commitments on such date and (ii) $25,000,000 (or such
lesser amount after giving effect to any reductions in the Commitments pursuant
to and in accordance with Section 2.1.4); it being acknowledged and agreed that
at no time can the sum of the Maximum Canadian Facility Amount plus the Maximum
U.S. Facility Amount plus the Maximum U.K. Facility Amount exceed the Maximum
Facility Amount in effect at such time.

Maximum Facility Amount: $330,000,000, or such greater or lesser amount as shall
then be in effect after giving effect to any reductions in the Commitments
pursuant to and in accordance with Section 2.1.4 and increases in the U.S.
Revolver Commitments pursuant to and in accordance with Section 2.1.7.

Maximum U.K. Facility Amount: on any date of determination, the lesser of
(i) the U.K. Revolver Commitments on such date and (ii) $45,000,000 (or such
lesser amount after giving effect to any reductions in the Commitments pursuant
to and in accordance with Section 2.1.4); it being acknowledged and agreed that
at no time can the sum of the Maximum Canadian Facility Amount plus the Maximum
U.S. Facility Amount plus the Maximum U.K. Facility Amount exceed the Maximum
Facility Amount in effect at such time.

Maximum U.S. Facility Amount: on any date of determination, the lesser of
(i) the U.S. Revolver Commitments on such date and (ii) $260,000,000 (or such
greater or lesser amount after giving effect to any reductions in the
Commitments pursuant to and in accordance with Section 2.1.4 and increases in
the Commitments pursuant to and in accordance with Section 2.1.7; it being
acknowledged and agreed that at no time can the sum of the Maximum U.S. Facility
Amount plus the Maximum Canadian Facility Amount plus the Maximum U.K. Facility
Amount exceed the Maximum Facility Amount in effect at such time.

Moody’s: Moody’s Investors Service, Inc., and its successors.

Mortgage: a mortgage, deed of trust, deed of immovable hypothec or deed to
secure debt pursuant to which an Obligor grants a Lien on its Real Estate to
Agent, as security for the applicable Obligations.

Multiemployer Plan: any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which any Obligor or ERISA Affiliate makes or is
obligated to make contributions, or during the preceding five plan years, has
made or been obligated to make contributions.

Net Excess Availability: as of any date of determination, an amount equal to the
Availability minus the aggregate amount, if any, of all trade payables of
Obligors that are more than 60 days past due (or such later date as Agent may
approve in its sole discretion) and all book overdrafts of Obligors in excess of
historical practices with respect thereto, in each case as determined by Agent
in its Credit Judgment.

Net Orderly Liquidation Value: with respect to trademarks of any Person, the net
orderly liquidation value of such trademarks expected to be realized at an
orderly, negotiated sale held

 

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within a reasonable period of time, net of all liquidation expenses, as
determined from the most recent appraisal of such trademarks performed by an
appraiser and on terms satisfactory to Agent.

Net Proceeds: with respect to an Asset Disposition, proceeds (including, when
received, any deferred or escrowed payments) received by an Obligor or
Subsidiary in cash from such disposition, net of (a) reasonable and customary
costs and expenses actually incurred in connection therewith, including legal
fees and sales commissions; (b) amounts applied to repayment of Debt secured by
a Permitted Lien senior to Agent’s Liens on Collateral sold; (c) transfer or
similar taxes; and (d) reserves for indemnities, until such reserves are no
longer needed (after which, any such amounts previously held as reserves shall
become Net Proceeds when received).

New Lender: as defined in Section 5.9.15.

NOLV Percentage: with respect to each category of each Borrower’s Inventory (as
determined by Agent from to time in its discretion) the net orderly liquidation
value of such Inventory, expressed as a percentage (such percentage to be
adjusted seasonally at such times consistent with the most recently delivered
appraisal, as determined by Agent), expected to be realized at an orderly,
negotiated sale held within a reasonable period of time, net of all liquidation
expenses, as determined from the most recent appraisal of such Inventory
performed by an appraiser and on terms satisfactory to Agent.

Notes: each Revolver Note or other promissory note executed by a Borrower to
evidence any Obligations.

Notice of Borrowing: a Notice of Borrowing to be provided by Borrower Agent to
request a Borrowing of Loans, in form satisfactory to Agent.

Notice of Conversion/Continuation: a Notice of Conversion/Continuation to be
provided by Borrower Agent to request a conversion or continuation of any Loans
as LIBOR Loans or Canadian BA Rate Loans, in form satisfactory to Agent.

Noticed Hedge: Secured Bank Product Obligations arising under a Hedging
Agreement.

Obligations: all (a) principal of and premium, if any, on the Loans, (b) U.S. LC
Obligations and other obligations of the U.S. Facility Obligors with respect to
Letters of Credit, (c) Canadian LC Obligations and other obligations of the
Canadian Facility Obligors with respect to Letters of Credit, (d) U.K. LC
Obligations and other obligations of the U.K. Facility Obligors with respect to
Letters of Credit, (e) interest, expenses, fees, indemnification obligations,
Extraordinary Expenses and other amounts payable by Obligors under Loan
Documents, (f) Secured Bank Product Obligations, and (g) other Debts,
obligations and liabilities of any kind owing by Obligors pursuant to the Loan
Documents, whether now existing or hereafter arising, whether evidenced by a
note or other writing, whether allowed in any Insolvency Proceeding, whether
arising from an extension of credit, issuance of a letter of credit, acceptance,
loan, guaranty, indemnification or otherwise, and whether direct or indirect,
absolute or contingent, due or to become due, primary or secondary, or joint or
several; provided, that Obligations of an Obligor shall not include its Excluded
Swap Obligations.

 

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Obligor: each Borrower, Guarantor, or other Person that is liable for payment of
any Obligations or that has granted a Lien in favor of Agent on its assets to
secure any Obligations.

Obligor Group: a group consisting of (a) Canadian Facility Obligors, (b) U.S.
Facility Obligors, or (c) U.K. Facility Obligors.

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

Off-Balance Sheet Liabilities: with respect to any Person, the (a) monetary
obligations of such Person under a so-called synthetic lease, off-balance sheet
or tax retention lease, if such obligations are considered indebtedness for
borrowed money for tax purposes but such lease is classified as an operating
lease under GAAP, but in any case excluding any obligations (i) that are
liabilities of any such Person as lessee under any operating lease so long as
the terms of such operating lease do not require any payment by or on behalf of
such Person at termination of such operating lease pursuant to a required
purchase by or on behalf of such Person of the property or assets subject to
such operating lease or (ii) under any arrangement pursuant to which such Person
guarantees or otherwise assures any other Person of the value of the property or
assets subject to such operating lease and (b) the monetary obligations under
any sale and leaseback transaction which does not create a liability on the
consolidated balance sheet of such Person.

Ordinary Course of Business: with respect to any Person, the ordinary course of
business of such Person, consistent with past practices.

Organic Documents: with respect to any Person, its charter, certificate or
articles of incorporation, amalgamation or continuance, bylaws, articles of
organization, limited liability agreement, operating agreement, members
agreement, shareholders agreement, partnership agreement, certificate of
partnership, certificate of formation, memorandum of association, articles of
association, voting trust agreement, or similar agreement or instrument
governing the formation or operation of such Person.

Original Agreement Closing Date: June 30, 2011.

Original Amended and Restated Loan Agreement: as defined in the recitals hereto.

Original Loan Agreement: as defined in the recitals hereto.

OSHA: the Occupational Safety and Hazard Act of 1970.

Other Agreement: the Intercreditor Agreement; each Note; LC Document; Fee
Letter; Lien Waiver; Borrowing Base Certificate, Compliance Certificate,
financial statement or report delivered hereunder; or other document, instrument
or agreement (other than this Agreement or a Security Document) now or hereafter
delivered by an Obligor or other Person to Agent or a Lender in connection with
any transactions relating hereto.

Other Taxes: all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment
made under any Loan Document or from the execution, delivery or enforcement of,
or otherwise with respect to, any Loan Document.

 

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Overadvance: a Canadian Overadvance, U.S. Overadvance, or U.K. Overadvance, as
the context requires.

Overadvance Loan: a Canadian Overadvance Loan and/or a U.S. Overadvance Loan,
and/or a U.K. Overadvance Loan, as the context requires.

Parent: as defined in the preamble to this Agreement.

Participant: as defined in Section 13.2.

Participating Member State: each member state of the European Union that has
Euro as its lawful currency so described in any EMU Legislation.

Patriot Act: the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L.
No. 107-56, 115 Stat. 272 (2001).

Payment Item: each check, draft or other item of payment payable to an Obligor,
including those constituting proceeds of any Collateral.

PBA: the Pension Benefits Act (Ontario) or any other Canadian federal or
provincial statute in relation to Canadian Pension Plans, and any regulations
thereunder, as amended from time to time.

PBGC: the Pension Benefit Guaranty Corporation.

Pension Plan: any employee pension benefit plan (as such term is defined in
Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to
Title IV of ERISA and is sponsored or maintained by any Obligor or ERISA
Affiliate or to which the Obligor or ERISA Affiliate contributes or has an
obligation to contribute, or in the case of a multiple employer or other plan
described in Section 4064(a) of ERISA, has made contributions at any time during
the preceding five plan years.

Permitted Acquisition: any Acquisition by Parent or any of its Subsidiaries
where:

(a)    the Board of Directors or authorized management committee of Parent or of
the applicable Subsidiary and of the Person whose assets or Equity Interests are
being acquired has approved such Acquisition;

(b)    the business acquired in connection with such Acquisition is engaged in
one or more of the leisure goods, products and services businesses generally or
any business activities that are substantially similar, related, incidental or
complementary thereto;

(c)    both before and after giving effect to such Acquisition and the Loans and
Letters of Credit (if any) requested to be made in connection therewith, each of
the representations and warranties in the Loan Documents is true and correct in
all material (except that such materiality qualifier shall not be applicable to
any representations and warranties that already are qualified or modified by
materiality in the text thereof) respects (except (i) any such representation or
warranty

 

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which relates to a specified prior date and (ii) to the extent the Agent has
been notified in writing by Borrower Agent that any representation or warranty
is not correct and the Required Lenders have explicitly waived in writing
compliance with such representation or warranty) and no Default or Event of
Default exists, will exist, or would result therefrom;

(d)    after giving effect to the Acquisition, the Parent and its Subsidiaries
will continue to be in compliance with the covenants in this Agreement,
determined on a Pro Forma Basis;

(e)    the purchase consideration payable in respect of all Permitted
Acquisitions (including the proposed Acquisition and including deferred payment
obligations) shall not exceed the Acquisition Cap in the aggregate; provided,
however, that no such Acquisition shall count against the Acquisition Cap if
either: (i) (A) on a Pro Forma Basis after giving effect to such Acquisition,
Net Excess Availability has been greater than an amount equal to the Threshold
Percentage of the Maximum Facility Amount at all times during the thirty
(30) day period immediately prior to the consummation of such Acquisition,
(B) Net Excess Availability is greater than an amount equal to the Threshold
Percentage of the Maximum Facility Amount after giving effect to such
Acquisition, and (C) the Fixed Charge Coverage Ratio, on a Pro Forma Basis after
giving effect to such Acquisition (calculated on a trailing twelve month basis
recomputed for the most recent month for which financial statements have been
delivered) is not less than 1.0 to 1.0; or (ii) (A) average daily Net Excess
Availability, on a Pro Forma Basis after giving effect to such Acquisition, has
been greater than an amount equal to 20% of the Maximum Facility Amount for the
ninety (90) day period immediately prior to the consummation of such
Acquisition, (B) Net Excess Availability is greater than an amount equal to 20%
of the Maximum Facility Amount after giving effect to such Acquisition, and
(C) no Term Loans are outstanding at the time such Acquisition is consummated
and after giving effect to the payment of any consideration in connection with
such Acquisition;

(f)    as soon as available, but not less than 15 Business Days prior to such
Acquisition, Borrower Agent has provided Agent (i) notice of such Acquisition
and (ii) a copy of all available business and financial information reasonably
requested by Agent including pro forma financial statements, statements of cash
flow, financial covenant projections, and Availability projections;

(g)    not later than: (i) 15 Business Days prior to the anticipated closing
date of such Acquisition, Borrower Agent shall have provided Agent with the then
current drafts of the acquisition agreement and other material documents
relative to such Acquisition, and (ii) 3 Business Days prior to the anticipated
closing date of such Acquisition, Borrower Agent shall have provided Agent with
the final copies of the acquisition agreement and other material documents
relative to such Acquisition;

(h)    the assets being acquired (other than a de minimis amount of assets in
relation to the assets being acquired) are located within the United States,
Canada or the U.K., or the Person whose Equity Interests are being acquired is
organized in a jurisdiction located within the United States, Canada or the
U.K.; provided, however, that this clause (h) shall not be applicable to any
Acquisition if either: (i) (A) on a Pro Forma Basis after giving effect to such
Acquisition, Net Excess Availability has been greater than an amount equal to
the Threshold Percentage of the Maximum Facility Amount at all times during the
thirty (30) day period immediately prior to the consummation of such
Acquisition, (B) Net Excess Availability is greater than an amount equal to

 

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the Threshold Percentage of the Maximum Facility Amount after giving effect to
such Acquisition, and (C) the Fixed Charge Coverage Ratio, on a Pro Forma Basis
after giving effect to such Acquisition (calculated on a trailing twelve month
basis recomputed for the most recent month for which financial statements have
been delivered) is not less than 1.0 to 1.0; or (ii) (A) average daily Net
Excess Availability, on a Pro Forma Basis after giving effect to such
Acquisition, has been greater than an amount equal to 20% of the Maximum
Facility Amount for the ninety (90) day period immediately prior to the
consummation of such Acquisition, (B) Net Excess Availability is greater than an
amount equal to 20% of the Maximum Facility Amount after giving effect to such
Acquisition, and (C) no Term Loans are outstanding at the time such Acquisition
is consummated and after giving effect to the payment of any consideration in
connection with such Acquisition; and

(i)    concurrently with such Acquisition, any Person required to become a
Guarantor or to execute or to deliver any Loan Document will do so in accordance
with the requirements of this Agreement.

In no event will assets exceeding $15,000,000 in Value acquired pursuant to a
Permitted Acquisition constitute assets eligible for inclusion in the Borrowing
Base prior to completion of a field examination, appraisal and other due
diligence acceptable to Agent in its discretion, and if such satisfactory field
examination, appraisal and due diligence is undertaken prior to the closing of
such Acquisition, the assets acquired pursuant to such Acquisition may be taken
into account in the applicable Borrowing Base (subject to all eligibility
criteria) in determining whether the foregoing conditions are satisfied. Assets
less than $15,000,000 in Value acquired pursuant to a Permitted Acquisition
shall constitute assets eligible for inclusion in the applicable Borrowing Base
(subject to all eligibility criteria) on a temporary basis pending completion of
a field examination, appraisal and other due diligence acceptable to Agent in
its discretion.

Permitted Lien: as defined in Section 10.2.1.

Person: any individual, corporation, limited liability company, unlimited
liability company, partnership, joint venture, joint stock company, land trust,
business trust, unincorporated organization, Governmental Authority or other
entity.

Plan: any employee benefit plan (as such term is defined in Section 3(3) of
ERISA) established by an Obligor or, with respect to any such plan that is
subject to Section 412 of the Code or Title IV of ERISA, an ERISA Affiliate.

PPSA: the Personal Property Security Act (Ontario) and the regulations
thereunder; provided, however, if validity, perfection and effect of perfection
and non-perfection of Agent’s security interest in and Lien on any Collateral
are governed by the personal property security laws of any jurisdiction other
than Ontario, PPSA shall mean those personal property security laws (including
the Civil Code of Quebec) in such other jurisdiction for the purposes of the
provisions hereof relating to such validity, perfection, and effect of
perfection and non-perfection and for the definitions related to such
provisions, as from time to time in effect.

Pro Forma Basis: with respect to compliance with any test or covenant hereunder,
in connection with or after the occurrence of an Acquisition, compliance with
such covenant or test

 

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after giving effect to any such Acquisition as if such Acquisition had occurred
on the first day of the relevant test period (including pro forma adjustments
arising out of events which are directly attributable to the proposed
Acquisition, are factually supportable and are expected to have a continuing
impact, in each case to be mutually and reasonably agreed upon by Borrower Agent
and Agent).

Pro Rata: (a) with respect to any U.S. Lender and in reference to its U.S.
Revolver Commitment or other matters (including (A) payments of principal,
accrued interest and fees related thereto, (B) participations in U.S. LC
Obligations and U.S. Swingline Loans, and (C) increases or reductions to the
U.S. Revolver Commitments pursuant to Section 2.1.4 or 2.1.7) relating thereto,
as applicable, a percentage (carried out to the ninth decimal place) determined
(i) while the U.S. Revolver Commitments are outstanding, by dividing the amount
of such U.S. Lender’s U.S. Revolver Commitment by the aggregate amount of all
U.S. Revolver Commitments, and (ii) at any other time, by dividing the amount of
such U.S. Lender’s U.S. Revolver Loans and U.S. LC Obligations by the aggregate
amount of all U.S. Revolver Loans and U.S. LC Obligations; (b) with respect to
any Canadian Lender and in reference to its Canadian Revolver Commitment,
Canadian Facility Obligations or other matters (including (A) payments of
principal, accrued interest and fees related thereto, (B) participations in
Canadian LC Obligations and Canadian Swingline Loans, (C) reductions to the
Canadian Revolver Commitments pursuant to Section 2.1.4, and (D) obligations to
pay or reimburse Agent for Extraordinary Expenses owed by or in respect of the
Canadian Facility Obligors or to indemnify any Indemnitees for Claims relating
to the Canadian Facility Obligors) relating thereto, as applicable, a percentage
(carried out to the ninth decimal place) determined (i) while the Canadian
Revolver Commitments are outstanding, by dividing such Canadian Lender’s
Canadian Revolver Commitment by the aggregate amount of all Canadian Revolver
Commitments, and (ii) at any other time, by dividing the amount of such Canadian
Lender’s Canadian Revolver Loans and Canadian LC Obligations by the aggregate
amount of all Canadian Revolver Loans and Canadian LC Obligations; (c) with
respect to any U.K. Lender and in reference to its U.K. Revolver Commitment,
U.K. Facility Obligations or other matters (including (A) payments of principal,
accrued interest and fees related thereto, (B) participations in U.K. LC
Obligations and U.K. Swingline Loans, (C) reductions to the U.K. Revolver
Commitments pursuant to Section 2.1.4, and (D) obligations to pay or reimburse
Agent for Extraordinary Expenses owed by or in respect of the U.K. Facility
Obligors or to indemnify any Indemnitees for Claims relating to the U.K.
Facility Obligors) relating thereto, as applicable, a percentage (carried out to
the ninth decimal place) determined (i) while the U.K. Revolver Commitments are
outstanding, by dividing such U.K. Lender’s U.K. Revolver Commitment by the
aggregate amount of all U.K. Revolver Commitments, and (ii) at any other time,
by dividing the amount of such U.K. Lender’s U.K. Revolver Loans and U.K. LC
Obligations by the aggregate amount of all U.K. Revolver Loans and U.K. LC
Obligations; (d) with respect to any U.S. Lender and in reference to its Term
Loan Commitment or other matters (including payments of principal, accrued
interest and fees related thereto) relating thereto, as applicable, a percentage
(carried out to the ninth decimal place) determined (i) while the Term Loan
Commitments are outstanding, by dividing the amount of such U.S. Lender’s Term
Loan Commitment by the aggregate amount of all Term Loan Commitments, and
(ii) at any other time, by dividing the amount of such U.S. Lender’s Term Loans
and by the aggregate amount of all Term Loans; (e) with respect to any U.S.
Lender and in reference to U.S. Facility Obligations or other matters (including
obligations to pay or reimburse Agent for Extraordinary Expenses owed by or in
respect of the U.S. Facility Obligors or to indemnify any Indemnitees for Claims
relating to the U.S. Facility Obligors) relating thereto

 

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which, in each case, are not governed by clause (a) or clause (d) preceding of
this definition (as reasonably determined by Agent from time to time), a
percentage (carried out to the ninth decimal place) determined by dividing the
amount of such U.S. Lender’s unused U.S. Revolver Commitment, unused Term Loan
Commitment, and outstanding U.S. Revolver Loans, U.S. LC Obligations, and Term
Loans, by the aggregate amount of all unused U.S. Revolver Commitments, all
unused Term Loan Commitments, and all U.S. Revolver Loans, U.S. LC Obligations,
and Term Loans; and (f) with respect to any Lender and in reference to any other
matter relating to this Agreement or any other Loan Document which is not
governed by clause (a), clause (b), clause (c), clause (d), or clause
(e) preceding of this definition (as reasonably determined by Agent from time to
time), a percentage (carried out in the ninth decimal place) determined by
dividing the amount of such Lender’s unused Revolver Commitments, unused Term
Loan Commitment, and outstanding Loans and LC Obligations, by the aggregate
amount of all unused Revolver Commitments, all unused Term Loan Commitments, and
all outstanding Loans and LC Obligations.

Proceeds: as defined in Section 7.1.

Proceeds of Crime Act: the Proceeds of Crime (Money Laundering) and Terrorist
Financing Act (Canada) (or any successor statute), as amended from time to time,
and includes all regulations thereunder.

Project Max Commitment Letter: that certain Commitment Letter, dated as of the
First Amendment to Third Amended and Restated Effective Date, by and among
Parent, Bank of America, N.A. (or any of its designated affiliates), JPMorgan
Chase Bank, N.A. (together with any of its designated affiliates) and any
Additional Lead Arranger (as defined therein) and any Additional Initial Lender
(as defined therein) appointed in accordance with the terms thereof].

Properly Contested: with respect to any obligation of any Person, (a) the
obligation is subject to a bona fide dispute regarding amount or such Person’s
liability to pay; (b) the obligation is being properly contested in good faith
by appropriate proceedings promptly instituted and diligently pursued;
(c) appropriate reserves have been established in accordance with GAAP;
(d) non-payment could not have a Material Adverse Effect; (e) no Lien is imposed
on assets of such Person or its Affiliates in an aggregate amount in excess of
$1,000,000 for all such Liens, unless bonded and stayed to the reasonable
satisfaction of Agent; and (f) if the obligation results from entry of a
judgment or other order in an aggregate amount in excess of $1,000,000 for all
such obligations, such judgment or order is stayed pending appeal or other
judicial review.

Property: any interest in any kind of property or asset, whether real, personal
or mixed, or tangible or intangible.

Protective Advances: as defined in Section 2.1.6.

Qualified ECP: an Obligor with total assets exceeding $10,000,000, or that
constitutes an “eligible contract participant” under the Commodity Exchange Act
and can cause another Person to qualify as an “eligible contract participant”
under Section 1a(18)(A)(v)(II) of such Act.

RCRA: the Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-6991i).

 

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RDPRM: Quebec Register of Personal and Movable Real Rights or Registre des
droits personnels et reels mobiliers du Quebec.

Real Estate: all right, title and interest (whether as owner, lessor or lessee)
in any real Property or any buildings, structures, parking areas or other
improvements thereon.

Related Real Estate Documents: with respect to any Real Estate subject to a
Mortgage, the following, in form and substance reasonably satisfactory to Agent
(or such other Persons as expressly set forth below): (a) all information
requested by Agent or any Lender for due diligence and required for Agent or any
Lender to comply with Flood Laws; and (b) (i) a mortgagee title policy (or
binder therefor) covering Agent’s interest under the Mortgage, by an insurer
reasonably acceptable to Agent, which must be fully paid as of the date of the
applicable Mortgage; (ii) such assignments of leases, estoppel letters,
attornment agreements, consents, waivers and releases as Agent may reasonably
require and which would be customarily obtained by a lender in connection with a
mortgage financing of a property such as the Real Estate with respect to other
Persons having an interest in the Real Estate; (iii) a current, as-built survey
of the Real Estate and certified by a licensed surveyor reasonably acceptable to
Agent; (iv) a life-of-loan flood hazard determination and, if any Real Estate is
located in a special flood hazard zone, flood insurance documentation and
coverage as required by Flood Laws; (v) a current appraisal of the Real Estate,
prepared by an appraiser acceptable to Agent, and in form and substance
satisfactory to all Lenders; (vi) an environmental assessment, prepared by
environmental engineers acceptable to Agent, a customary environmental indemnity
agreement if appropriate, and such other reports, certificates, studies or data
as Agent may reasonably require, all in form and substance satisfactory to all
Lenders; and (vii) such other documents, legal opinions, instruments or
agreements as Agent may reasonably require with respect to the Real Estate and
Mortgage and which are customary for a mortgage financing transaction.

Report: as defined in Section 12.2.3.

Reportable Event: any of the events set forth in Section 4043(c) of ERISA, other
than events for which the 30 day notice period has been waived.

Reporting Trigger Period: the period (a) commencing on the day that an Event of
Default occurs, or Net Excess Availability is less than, at any time, an amount
equal to 10% of the Maximum Facility Amount; and (b) continuing until, during
the preceding 30 consecutive days, no Event of Default has existed and Net
Excess Availability has been greater than, at all times, an amount equal to 10%
of the Maximum Facility Amount.

Required Lenders: Lenders (subject to Section 4.2) having unused Revolver
Commitments, unused Term Loan Commitments, and outstanding Loans and LC
Obligations, in excess of 50% of the aggregate amount of all unused Revolver
Commitments, all unused Term Loan Commitments, and all outstanding Loans and LC
Obligations; provided, however, that the Commitments and Loans of any Defaulting
Lender shall be excluded from such calculation; provided, further, that at any
time there are: (i) 3 or more Lenders, “Required Lenders” must include at least
3 Lenders, and (ii) less than 3 Lenders, “Required Lenders” must include all
Lenders.

 

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Reserve Percentage: the reserve percentage (expressed as a decimal, rounded up
to the nearest 1/16th of 1%) applicable to member banks under regulations issued
by the Board of Governors for determining the maximum reserve requirement for
Eurocurrency liabilities.

Reset Date: as defined Section 5.13.

Restricted Assets: any of the following Property of any Obligor solely to the
extent there are any Term Loan Commitments or Term Loans outstanding: (a) all
Real Estate; (b) all Intellectual Property; (c) all Equity Interests of Top
Golf.

Restrictive Agreement: an agreement (other than a Loan Document) that conditions
or restricts the right of any Borrower, Subsidiary or other Obligor to incur or
repay Borrowed Money, to grant Liens on any assets, to declare or make
Distributions, to modify, extend or renew any agreement evidencing Borrowed
Money, or to repay any intercompany Debt.

Revolver Commitment: a U.S. Revolver Commitment and/or a Canadian Revolver
Commitment and/or a U.K. Revolver Commitment, as the context requires. “Revolver
Commitments” means the aggregate of the U.S. Revolver Commitments, the Canadian
Revolver Commitments, and the U.K. Revolver Commitments.

Revolver Facilities: as defined in Section 14.11(a)(vi).

Revolver Loan: a U.S. Revolver Loan and/or a Canadian Revolver Loan and/or a
U.K. Revolver Loan, as the context requires.

Revolver Notes: collectively, the U.S. Revolver Notes, the Canadian Revolver
Notes, and the U.K. Revolver Notes.

Royalties: all royalties, fees, expense reimbursement and other amounts payable
by an Obligor or a Subsidiary under a License.

S&P: Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and its successors.

Sanction: any sanction administered or enforced by the U.S. government
(including OFAC), United Nations Security Council, European Union, U.K.
government, Canadian government or other sanctions authority.

Screen Rate: in relation to LIBOR, the London interbank offered rate
administered by ICE Benchmark Administration Limited (or any other person which
takes over the administration of that rate) for the relevant currency and period
displayed on pages LIBOR01 or LIBOR02 of the Thomson Reuters screen (or any
replacement Thomson Reuters page which displays that rate) or on the appropriate
page of such other information service which publishes that rate from time to
time in place of Thomson Reuters.

SEC: the Securities and Exchange Commission, or any Governmental Authority
succeeding to any of its principal functions.

 

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Second Amended and Restated Loan Agreement: as defined in the recitals hereto.

Second Amended Original Closing Date: as defined in the recitals hereto.

Second Amendment to Third Amended and Restated Effective Date: January 4, 2019.

Secured Bank Product Obligations: Bank Product Debt owing to a Secured Bank
Product Provider, up to the maximum amount (in the case of any Secured Bank
Product Provider other than Bank of America and its Affiliates) specified by
such provider in writing to Agent, which amount may be established or increased
(by further written notice to Agent from time to time) as long as no Default or
Event of Default exists and no Overadvance would result from establishment of a
Canadian Bank Product Reserve, U.S. Bank Product Reserve, or U.K. Bank Product
Reserve, as applicable, for such amount and all other Secured Bank Product
Obligations; provided, that Secured Bank Product Obligations of an Obligor shall
not include its Excluded Swap Obligations.

Secured Bank Product Provider: (a) Bank of America or any of its Affiliates; and
(b) any other Lender or Affiliate of a Lender that is providing a Bank Product,
provided such provider delivers written notice to Agent, in form and substance
satisfactory to Agent, by the later of the Closing Date or 10 days following
creation of the Bank Product, (i) describing the Bank Product and setting forth
the maximum amount to be secured by the Collateral and the methodology to be
used in calculating such amount, and (ii) agreeing to be bound by Section 12.13.

Secured Parties: Canadian Facility Secured Parties and/or U.S. Facility Secured
Parties and/or U.K. Facility Secured Parties, as the context requires.

Security Documents: this Agreement, the Guarantees, Mortgages, IP Assignments,
Canadian Security Agreements, U.K. Security Agreements, Deposit Account Control
Agreements, and all other documents, instruments and agreements now or hereafter
securing (or given with the intent to secure) any Obligations.

Senior Officer: the chairman of the board, director, president, chief executive
officer, chief financial officer or treasurer of a Borrower or, if the context
requires, an Obligor.

Settlement Report: a report delivered by Agent to the Applicable Lenders
summarizing the Revolver Loans and, if applicable, participations in LC
Obligations outstanding as of a given settlement date, allocated to the
Applicable Lenders on a Pro Rata basis in accordance with their Revolver
Commitments.

Solidary Claim: as defined in Section 12.1.1(b).

Solvent: as to any Person, such Person (a) owns Property whose fair salable
value is greater than the amount required to pay all of its debts (including
contingent, subordinated, unmatured and unliquidated liabilities); (b) owns
Property whose present fair salable value (as defined below) is greater than the
probable total liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities) of such Person as they become absolute and matured;
(c) is able to pay all of its debts as they mature; (d) has capital that is not
unreasonably small for its business and is sufficient to carry on its business
and transactions and all business and transactions in which it is about to
engage; (e) is not “insolvent” within the meaning of Section 101(32) of the U.S.

 

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Bankruptcy Code; and (f) has not incurred (by way of assumption or otherwise)
any obligations or liabilities (contingent or otherwise) under any Loan
Documents, or made any conveyance in connection therewith, with actual intent to
hinder, delay or defraud either present or future creditors of such Person or
any of its Affiliates. “Fair salable value” means the amount that could be
obtained for assets within a reasonable time, either through collection or
through sale under ordinary selling conditions by a capable and diligent seller
to an interested buyer who is willing (but under no compulsion) to purchase. In
addition to the foregoing, “Solvent” means, with respect to any Canadian
Subsidiary, that such Canadian Subsidiary is (i) adequately capitalized,
(ii) owns assets, the value of which, on a going concern basis, exceeds the
liabilities of such Person, (iii) will have sufficient working capital to pay
its debts as they become due, (iv) has not incurred (by way of assumption or
otherwise) any obligations or liabilities (contingent or otherwise) under any
Loan Documents, or made any conveyance in connection therewith, with actual
intent to hinder, delay or defraud either the present or future creditors of
such Subsidiary or any of its Affiliates, and (v) is not an “insolvent person”
as defined in the Bankruptcy and Insolvency Act (Canada). “Solvent” means, with
respect to any U.K. Subsidiary, it is not and is not deemed for the purpose of
and under the Insolvency Act 1986 to be unable to pay its debts as they fall due
(other than under section 123(1)(a) of the Insolvency Act 1986).

Specified Obligor: an Obligor that is not then an “eligible contract
participant” under the Commodity Exchange Act (determined prior to giving effect
to Section 5.11).

Spot Rate: the exchange rate, as determined by Agent, that is applicable to
conversion of one currency into another currency, which is (a) the exchange rate
reported by Bloomberg (or other commercially available source designated by
Agent) as of the end of the preceding business day in the financial market for
the first currency; or (b) if such report is unavailable for any reason, the
spot rate for the purchase of the first currency with the second currency as in
effect during the preceding business day in Agent’s principal foreign exchange
trading office for the first currency.

Subsidiary: any entity at least 50% of whose voting securities or Equity
Interests are owned by the Parent (including indirect ownership by the Parent
through other entities in which the Parent directly or indirectly owns 50% of
the voting securities or Equity Interests).

Supermajority Lenders: Lenders (subject to Section 4.2) having (a) Revolver
Commitments in excess of 75% of the aggregate Revolver Commitments; and (b) if
the Revolver Commitments have terminated, Revolver Loans and LC Obligations in
excess of 75% of all outstanding Revolver Loans and LC Obligations; provided,
however, that the Commitments and Loans of any Defaulting Lender shall be
excluded from such calculation.

Swap Obligations: with respect to an Obligor, its obligations under a Hedging
Agreement that constitutes a “swap” within the meaning of Section 1a(47) of the
Commodity Exchange Act.

Swingline Loans: the Canadian Swingline Loans, the U.S. Swingline Loans, and the
U.K. Swingline Loans.

TARGET Day: any day on which the Trans-European Automated Real-time Gross
Settlement Express Transfer (TARGET) payment system (or, if such payment system
ceases to be

 

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operative, such other payment system (if any) determined by the Agent acting
reasonably to be a suitable replacement) is open for the settlement of payments
in Euro.

Tax Credit: a credit against, relief or remission for, or repayment of any Tax.

Tax Deduction: as defined in Section 5.9.2.

Taxes: all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.

Term Loan: a loan made by a U.S. Lender to the U.S. Borrowers pursuant to
Section 2.5, which Loan shall be denominated in Dollars and shall be either a
U.S. Base Rate Loan or a LIBOR Loan, in each case as selected by Borrower Agent.

Term Loan Cap: as of any date of determination, 18% of the Net Orderly
Liquidation Value of the Company Trademark, rounded up to the nearest million in
Agent’s sole discretion.

Term Loan Collateral Agent: as defined in the Intercreditor Agreement.

Term Loan Commitment: for any U.S. Lender, the obligation of such U.S. Lender to
make a Term Loan hereunder, up to the principal amount shown on Schedule 1.1.
“Term Loan Commitments” means the aggregate amount of such commitments of all
Lenders.

Term Loan Commitment Termination Date: the earliest of (a) the Facility
Termination Date, (b) the date on which the Borrower Agent terminates the Term
Loan Commitments pursuant to Section 2.5.4, (c) the date that is six months
after the Closing Date, and (d) the date on which the Term Loan Commitments are
terminated pursuant to Section 11.2.

Term Loan Maturity Date: the earlier of (a) the Facility Termination Date, and
(b) the date that is the four year anniversary of the making of the Terms Loans
pursuant to Section 2.5.

Term Loan Unused Commitment Fee Rate: a per annum rate equal to 0.50%.

Termination Event: (a) the whole or partial withdrawal of a Canadian Subsidiary
from a Canadian Pension Plan during a plan year; or (b) the filing of a notice
of interest to terminate in whole or in part a Canadian Pension Plan or the
treatment of a Canadian Pension Plan amendment as a termination or partial
termination; or (c) the institution of proceedings by any Governmental Authority
to terminate in whole or in part or have a trustee appointed to administer a
Canadian Pension Plan; or (d) any other event or condition which might
constitute grounds for the termination of or winding up, or partial termination
of or winding up, or the appointment of a trustee to administer, any Canadian
Pension Plan.

Third Amendment to Second Amended and Restated Effective Date: June 23, 2014.

Threshold Percentage: (a) 15% at any time no Term Loans are outstanding; (b)
17.5% at any time there are Term Loans outstanding in an aggregate principal
amount of less than

 

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$15,000,000; and (c) 20% at any time there are Term Loans outstanding in an
aggregate principal amount equal to $15,000,000 or more.

Top Golf: Topgolf International, Inc., a Delaware corporation.

Top Golf Blocked Account: as defined in the definition of Top Golf Proceeds.

Top Golf Proceeds: cash proceeds received by Parent in connection with any:
(a) sale of all or a portion of the Equity Interests of Top Golf owned by
Parent, or (b) dividend received by Parent from Top Golf on account of Parent’s
ownership interest in Top Golf; provided that (i) Parent elects to designate
such proceeds as Top Golf Proceeds by at least five (5) Business Days (or such
lesser time as approved by Agent in its sole discretion) prior written notice
(such notice, the “Top Golf Proceeds Notice”) to Agent of the occurrence of such
transaction which will give rise to such cash proceeds; (ii) Parent sends
written notice to Agent on the Business Day prior to the consummation of such
transaction which will give rise to such cash proceeds; (iii) on the day such
cash proceeds are received by Parent, either (in accordance with Parent’s
election made in the Top Golf Proceeds Notice): (A) Parent deposits all of such
proceeds in a separate Deposit Account (such Deposit Account, the “Top Golf
Blocked Account”), and provides evidence to Agent, in form and substance
satisfactory to Agent, of such deposit, or (B) Agent establishes or modifies, as
applicable, the U.S. Top Golf Reserve, the U.K. Top Golf Reserve and the
Canadian Top Golf Reserve; (iv) the Top Golf Blocked Account shall not contain
any other funds other than Top Golf Proceeds; (v) Parent may remove Top Golf
Proceeds from the Top Golf Blocked Account, provided, however that (A) once
removed other than (1) to consummate Common Stock Repurchases or pay dividends
on Parent’s common stock, in each case in accordance with Section 10.2.6(g)(A)
on the date of such removal or (2) to make Investments in accordance with
Section 10.2.2(k)(A) on the date of such removal, such funds shall no longer
constitute Top Golf Proceeds, and (B) Parent shall provide Agent (1) three (3)
Business Days’ prior written notice of such removal, and (2) evidence of the
removal of such funds from the Top Golf Blocked Account within two (2) Business
Days of such removal; (vi) Parent shall provide Agent with copies of all monthly
statements with respect to the Top Golf Blocked Account and such other
information with respect to such Deposit Account as reasonably requested by
Agent from time to time; and (vii) the Top Golf Blocked Account shall be subject
to a Deposit Account Control Agreement prior to any Top Golf Proceeds being
deposited into the Top Golf Blocked Account.

Top Golf Proceeds Notice: as defined in the definition of Top Golf Proceeds.

Total Revolver Exposure: as of any date of determination, the sum of the U.S.
Revolver Exposure plus the Canadian Revolver Exposure plus the U.K. Revolver
Exposure.

Transferee: any actual or potential Eligible Assignee, Participant or other
Person acquiring an interest in any Obligations.

Travis Mathew Retail: Travis Mathew Retail, LLC, a California limited liability
company.

Treaty Lender: a Lender which: (a) is treated as a resident of a Treaty State
for the purposes of a Treaty; and (b) does not carry on a business in the United
Kingdom through a permanent establishment with which that Lender’s participation
in the Loan is effectively connected.

 

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Treaty State: a jurisdiction having a double taxation agreement (a “Treaty”)
with the United Kingdom which makes provision for full exemption from tax
imposed by the United Kingdom on interest.

Type: any type of a Loan (i.e., a LIBOR Loan, a U.S. Base Rate Loan, a Canadian
BA Rate Loan, a Canadian Base Rate Loan, a Canadian Prime Rate Loan, or a U.K.
Base Rate Loan) and, in the case of LIBOR Loans and Canadian BA Rate Loans, the
same Interest Period.

UCC: the Uniform Commercial Code as in effect in the State of New York or, when
the laws of any other jurisdiction govern the perfection or enforcement of any
Lien, the Uniform Commercial Code of such jurisdiction.

Unfunded Pension Liability: the excess of a Pension Plan’s benefit liabilities
under Section 4001(a)(16) of ERISA, over the current value of that Pension
Plan’s assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year and includes any unfunded liability or solvency deficiency as determined
for the purposes of the PBA in respect of any Canadian Pension Plan.

uPlay: uPlay, Inc., a Delaware corporation.

U.K./Canadian Allocable Amount: as defined in Section 5.11.

U.K./Canadian Guarantor Payment: as defined in Section 5.11.

U.K. and United Kingdom: the United Kingdom of Great Britain and Northern
Ireland.

U.K. Accounts Formula Amount: (a) as of any date of determination within the
period beginning on May 1 through and including October 31 of each Fiscal Year,
85% of the Value of Eligible Accounts of the U.K. Borrower; and (b) as of any
date of determination within the period beginning on November 1 through and
including April 30 of each Fiscal Year, 90% of the Value of Eligible Accounts of
the U.K. Borrower.

U.K. Availability: as of any date of determination, the U.K. Borrowing Base as
of such date of determination minus the aggregate principal amount of all U.K.
Revolver Loans outstanding on such date of determination.

U.K. Availability Reserve: the sum (without duplication) of (a) the Inventory
Reserve with respect to the U.K. Borrower’s Inventory; (b) the U.K. Rent and
Charges Reserve; (c) the U.K. LC Reserve; (d) the U.K. Bank Product Reserve;
(e) all accrued Royalties of the U.K. Domiciled Obligors, whether or not then
due and payable by a U.K. Domiciled Obligor; (f) the aggregate amount of
liabilities secured by Liens upon U.K. Facility Collateral that are senior to
the Agent’s Liens (but imposition of any such reserve shall not waive an Event
of Default arising therefrom); (g) the U.K. Dilution Reserve; (h) the U.K. Top
Golf Reserve; and (i) such additional reserves, in such amounts and with respect
to such matters, as Agent in its Credit Judgment may elect to impose from time
to time with respect to the U.K. Borrowing Base.

 

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U.K. Bank Product Reserve: the aggregate amount of reserves established by Agent
from time to time in its discretion in respect of Secured Bank Product
Obligations owing by the U.K. Domiciled Obligors and their Subsidiaries.

U.K. Base Rate: for any day, the reference rate for U.K. Base Rate Loans, being
a fluctuating rate of interest per annum equal to the rate of interest in effect
for such day as announced from time to time by the local branch of Bank of
America in the jurisdiction in which such currency is funded as its “base rate”
with respect to such currency. Any change in such rate shall take effect at the
opening of business on the day of such change.

U.K. Base Rate Loan: a U.K. Revolver Loan, or portion thereof, funded in Dollars
and bearing interest calculated by reference to U.K. Base Rate.

U.K. Borrower: as defined in the preamble to this Agreement.

U.K. Borrowing Base: on any date of determination, an amount equal to the lesser
of (a) the result of: (i) the Maximum U.K. Facility Amount, minus (ii) the U.K.
LC Reserve, minus (iii) the U.K. Top Golf Reserve; or (b) the result of: (i) the
U.K. Accounts Formula Amount, plus (ii) the U.K. Inventory Formula Amount, plus
(iii) 100% of the amount of U.K. Pledged Cash, minus (iv) the U.K. Availability
Reserve.

U.K. Borrowing Base Certificate: a certificate, in form and substance
satisfactory to Agent, by which the U.K. Borrower certifies calculation of the
U.K. Borrowing Base.

U.K. Cash Collateral Account: a demand deposit, money market or other account
established by Agent at Bank of America, N.A. (London Branch) or such other
financial institution as Agent may select in its discretion, which account shall
be for the benefit of the U.K. Facility Secured Parties and shall be subject to
Agent’s Liens securing the U.K. Facility Obligations.

U.K. Dilution Reserve: as of any date of determination, an amount sufficient to
reduce the advance rate against Eligible Accounts of the U.K. Borrower by 1% for
each whole percentage point (or portion thereof) by which the Dilution Percent
is in excess of 5.0%.

U.K. Domiciled Obligor: each U.K. Subsidiary which is at any time an Obligor,
and “U.K. Domiciled Obligors” means all such Persons, collectively.

U.K. Dominion Account: a special account established by the U.K. Borrower at
Bank of America, N.A. (London Branch) or another bank acceptable to Agent, over
which Agent has exclusive control for withdrawal purposes at all times.

U.K. Eligible Foreign Account: an Account of the U.K. Borrower that is owed by
an Account Debtor that is organized or has its principal offices or assets in a
jurisdiction (a) that has been a Participating Member State since before May
2004 or (b) that is listed on Schedule 1.1C.

U.K. Expeditors Reserve: as of any date of determination, the aggregate amount
of accounts payable owed by any U.K. Facility Obligor to Expeditors, as
determined by Agent in its Credit Judgment.

 

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U.K. Facility Collateral: all Collateral that now or hereafter secures (or is
intended to secure) any of the U.K. Facility Obligations, including Property of
each U.K. Domiciled Obligor, each U.S. Domiciled Obligor, and each Canadian
Domiciled Obligor.

U.K. Facility Guarantee: each guarantee agreement (including this Agreement) at
any time executed by a U.K. Facility Guarantor in favor of Agent guaranteeing
all or any portion of the U.K. Facility Obligations.

U.K. Facility Guarantor: Parent, each U.K. Subsidiary, each Canadian Subsidiary,
and each U.S. Subsidiary (other than uPlay unless uPlay becomes a Guarantor in
accordance with Section 10.2.15) and each other Person (if any) who guarantees
payment and performance of any U.K. Facility Obligations.

U.K. Facility Obligations: all Obligations of the U.K. Facility Obligors
(excluding, for the avoidance of doubt, the Obligations of the U.S. Domiciled
Obligors as guarantors of any U.S. Facility Obligations).

U.K. Facility Obligor: each of the U.K. Borrower or any U.K. Facility Guarantor,
and “U.K. Facility Obligors” means all of such Persons, collectively.

U.K. Facility Secured Parties: the Agent, the U.K. Issuing Bank, the U.K.
Lenders and the Secured Bank Product Providers who provide Bank Products to the
U.K. Facility Obligors and their Subsidiaries.

U.K. Inventory Formula Amount: as of any date of determination, the lesser of
(a) the sum of (i) with respect to Eligible Inventory that has been owned by the
U.K. Borrower for less than one (1) calendar year as of the applicable date of
determination, (A) for the period beginning on March 1 through and including
September 30 of each Fiscal Year, 65% of the Value of such U.K. Borrower’s
Eligible Inventory, (B) for the period beginning on October 1 through and
including February 28 (or February 29, as applicable) of each Fiscal Year, 75%
of the Value of such U.K. Borrower’s Eligible Inventory, plus (ii) with respect
to Eligible Inventory that has been owned by the U.K. Borrower for more than one
(1) calendar year, as of the applicable date of determination, 50% of the Value
of such U.K. Borrower’s Eligible Inventory; or (b) 85% of the NOLV Percentage of
the Value of the U.K. Borrower’s Eligible Inventory. Notwithstanding the
foregoing, the aggregate amount of the U.K. Inventory Formula Amount which may
be attributed to Eligible In-Transit Inventory (the “U.K. In-Transit
Availability”) shall not exceed $2,000,000; provided that, the U.K. In-Transit
Availability (after taking into effect the previous proviso) shall be reduced by
the U.K. Expeditors Reserve if, as of any date of determination, either (I) U.K.
Net Excess Availability is less than 10% of the Maximum U.K. Facility Amount, or
(II) there are any accounts payable owed by any U.K. Facility Obligor to
Expeditors which are aged in excess of historical levels (except in cases of
good faith disputes).

U.K. Issuing Bank: Bank of America or an Affiliate of Bank of America.

U.K. LC Obligations: the sum (without duplication) of (a) all amounts owing by
the U.K. Borrower for any drawings under Letters of Credit; (b) the stated
amount of all outstanding Letters of Credit issued for the account of the U.K.
Borrower, which if such Letter of Credit is denominated in a currency other than
Dollars, British Pounds or Euros, may be stated by Agent (at

 

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its option) in Dollars, British Pounds or Euros calculated at the Spot Rate; and
(c) all fees and other amounts owing with respect to Letters of Credit issued
for the account of the U.K. Borrower.

U.K. LC Reserve: the aggregate of all U.K. LC Obligations, other than those that
have been Cash Collateralized.

U.K. Lenders: each Lender that has issued a U.K. Revolver Commitment (provided
that such Person or an Affiliate of such Person also has a U.S. Revolver
Commitment).

U.K. Letter of Credit Subline: $2,000,000.

U.K. Letters of Credit: any standby or documentary letter of credit issued by
the U.K. Issuing Bank for the account of the U.K. Borrower, or any indemnity,
guarantee, exposure transmittal memorandum or similar form of credit support
issued by Agent or the U.K. Issuing Bank for the benefit of the U.K. Borrower.

U.K. Net Excess Availability: as of any date of determination, an amount equal
to the U.K. Availability minus the aggregate amount, if any, of all trade
payables of U.K. Domiciled Obligors that are more than 60 days past due (or such
later date as Agent may approve in its sole discretion) and all book overdrafts
of U.K. Domiciled Obligors in excess of historical practices with respect
thereto, in each case as determined by Agent in its Credit Judgment.

U.K. Non-Bank Lender: means:

(a)    where a Lender becomes a party to this Agreement on the day on which this
Agreement is entered into, any Lender listed in Schedule 1.1D; and

(b)    where a Lender becomes a party to this Agreement after the day on which
this Agreement is entered into, a Lender which gives a U.K. Tax Confirmation in
the assignment notice which it executes pursuant to, or in connection with,
Section 13.3 below.

U.K. Overadvance: as defined in Section 2.15.

U.K. Overadvance Loan: a U.K. Revolver Loan made to the U.K. Borrower when a
U.K. Overadvance exists or is caused by the funding thereof.

U.K. Overadvance Loan Balance: on any date, the amount by which the aggregate
U.K. Revolver Exposure exceeds the amount of the U.K. Borrowing Base on such
date.

U.K. Pledged Cash: the funds maintained in a blocked Deposit Account or
securities account of the U.K. Borrower subject to a Deposit Account Control
Agreement or securities account control agreement, as applicable, which give
Agent at all times exclusive access and control for withdrawal purposes to the
exclusion of the U.K. Borrower and precluding the U.K. Borrower from withdrawing
or otherwise giving any instructions in connection therewith and which may not
be withdrawn without the Agent’s prior written consent (such consent not to be
unreasonably withheld if (i) upon and after giving effect to such withdrawal, no
Default or Event of Default shall have occurred and be continuing and
(ii) immediately after such withdrawal (for clarification, including after
giving effect to any recalculation of the U.K. Borrowing Base upon

 

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giving effect to such withdrawal), U.K. Availability would be a positive
number), and which are subject to effective security documents, in form and
substance satisfactory to Agent, that provide Agent with an unencumbered
perfected first priority/ranking security interest in and Lien on such funds.

U.K. Qualified Lender:

(i) a Lender (other than a Lender within paragraph (ii) below) which is
beneficially entitled to interest payable to that Lender in respect of any
advance under the Loan Documents and is:

 

  (A)

a Lender:

(1) which is a bank (as defined for the purpose of section 879 of the Income Tax
Act 2007 (United Kingdom) (“ITA”) making an advance under the Loan Documents; or

(2) in respect of an advance made under the Loan Documents by a person that was
a bank (as defined for the purpose of section 879 of ITA) at the time that that
advance was made

and with respect to (i)(A)(1) and (i)(A)(2), which is within the charge to U.K.
corporation tax as respects any payments of interest made in respect of that
advance or would be within such charge as respects such payments apart from
section 18A of the Corporation Taxes Act 2009 (United Kingdom) (“CTA”); or

 

  (B)

a Lender which is:

 

  (1)

a company resident in the U.K. for U.K. tax purposes;

 

  (2)

a partnership each member of which is:

 

  (a)

a company so resident in the U.K.; or

 

  (b)

a company not so resident in the U.K. which carries on a trade in the U.K.
through a permanent establishment and which brings into account in computing its
chargeable profits (within the meaning of section 19 of the CTA the whole of any
share of interest payable in respect of that advance that falls to it by reason
of Part 17 of the CTA; or

 

  (3)

a company not so resident in the U.K. which carries on a trade in the U.K.
through a permanent establishment and which brings into account interest payable
in respect of that advance in computing the chargeable profits (within the
meaning of section 19 of the CTA) of that company; or

 

  (C)

a Treaty Lender; or

(ii) a building society (as defined for the purposes of section 880 of ITA)
making an advance under the Loan Documents.

 

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U.K. Reimbursement Date: as defined in Section 2.2.2.

U.K. Rent and Charges Reserve: the aggregate of (a) all past due rent and other
amounts owing by an Obligor to any landlord, warehouseman, processor, repairman,
mechanic, shipper, freight forwarder, broker or other Person who possesses any
U.K. Facility Collateral or could assert a Lien on any U.K. Facility Collateral;
and (b) a reserve at least equal to three months’ rent and other charges that
could be payable to any such Person, unless it has executed a Lien Waiver.

U.K. Required Lenders: U.K. Lenders (subject to Section 4.2) having (a) U.K.
Revolver Commitments in excess of 50% of the aggregate U.K. Revolver
Commitments; and (b) if the U.K. Revolver Commitments have terminated, U.K.
Revolver Loans and U.K. LC Obligations in excess of 50% of all outstanding U.K.
Revolver Loans and U.K. LC Obligations; provided, however, that the U.K.
Revolver Commitments and U.K. Revolver Loans of any Defaulting Lender shall be
excluded from such calculation; provided, further, that at any time there are:
(i) 3 or more U.K. Lenders, “U.K. Required Lenders” must include at least 3 U.K.
Lenders, and (ii) less than 3 U.K. Lenders, “U.K. Required Lenders” must include
all U.K. Lenders.

U.K. Revolver Commitment: for any U.K. Lender, its obligation to make U.K.
Revolver Loans and to participate in U.K. LC Obligations, in the applicable
Available Currencies, up to the maximum principal amount shown on Schedule 1.1,
or as hereafter determined pursuant to each Assignment and Acceptance to which
it is a party, as such U.K. Revolver Commitment may be adjusted from time to
time in accordance with the provisions of Sections 2.1.4 or 11.2. “U.K. Revolver
Commitments” means the aggregate amount of such commitments of all U.K. Lenders.

U.K. Revolver Commitment Termination Date: the earliest of (a) the U.S. Revolver
Commitment Termination Date (without regard to the reason therefor), (b) the
date on which the Borrower Agent terminates or reduces to zero all of the U.K.
Revolver Commitments pursuant to Section 2.1.4, and (c) the date on which the
U.K. Revolver Commitments are terminated pursuant to Section 11.2.

U.K. Revolver Exposure: on any date, an amount equal to the sum of the Dollar
Equivalent of the U.K. Revolver Loans outstanding on such date plus the U.K. LC
Obligations on such date.

U.K. Revolver Loan: a Revolver Loan made by U.K. Lenders to the U.K. Borrower
pursuant to Section 2.1.1(c), which Revolver Loan shall be either a U.K. Base
Rate Loan (which shall be denominated in Dollars only) or a LIBOR Loan (which
may be denominated in Dollars, British Pounds or Euros, as selected by the
Borrower Agent), and any U.K. Swingline Loan, U.K. Overadvance Loan or
Protective Advance made to or owed by the U.K. Borrower.

U.K. Revolver Notes: a promissory note executed by the U.K. Borrower in favor of
a U.K. Lender in the form of Exhibit A-3, in the amount of such U.K. Lender’s
U.K. Revolver Commitment.

U.K. Security Agreement:

(a) the security agreements dated as of the date hereof made by each U.K.
Domiciled Obligor in favor of the Agent;

 

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(b) the debenture dated 15 June 2012 and made by the U.K. Borrower in favor of
the Agent;

(c) the supplemental debenture dated 18 December 2013 and made by the U.K.
Borrower in favor of the Agent;

(d) the debenture dated 15 June 2012 and made by Callaway Golf European Holding
Company Limited in favor of the Agent; and

(e) any other debenture, deed of charge or other similar agreement, instrument
or document governed by the laws of England and Wales, Scotland or Northern
Ireland, in each case now or hereafter securing (or given with the interest to
secure) the U.K. Facility Obligations.

U.K. Subsidiary: a Subsidiary of Parent incorporated or organized under the laws
of England and Wales.

U.K. Swingline Loan: any Borrowing of U.K. Base Rate Loans funded with Agent’s
funds, until such Borrowing is settled among the U.K. Lenders or repaid by the
U.K. Borrower.

U.K. Tax Confirmation: means a confirmation by a Lender that the person
beneficially entitled to interest payable to it in respect of an advance under a
Loan Document is either:

(a)    a company resident in the United Kingdom for United Kingdom tax purposes;

(b)    a partnership each member of which is:

(i)    a company so resident in the United Kingdom; or

(ii)    a company not so resident in the United Kingdom which carries on a trade
in the United Kingdom through a permanent establishment and which brings into
account in computing its chargeable profits (within the meaning of Section 19 of
CTA) the whole of any share of interest payable in respect of that advance that
falls to it by reason of Part 17 of CTA; or

(c)    a company not so resident in the United Kingdom which carries on a trade
in the United Kingdom through a permanent establishment and which brings into
account interest payable in respect of that advance in computing the chargeable
profits (within the meaning of Section 19 of CTA) of that company.

U.K. Tax Payment: as defined in Section 5.9.14.

U.K. Top Golf Reserve: a reserve established by Agent at Parent’s request in
accordance with the definition of Top Golf Proceeds, in an initial amount as of
such establishment equal to $0. The U.K. Top Golf Reserve (a) shall be reduced
on a dollar for dollar basis for the amount expended in connection with (x) any
Common Stock Repurchases made, or dividends paid on Parent’s common stock, in
each case after the Third Amendment to Second Amended and Restated Effective
Date in accordance with Section 10.2.6(g)(ii)(D) and (y) any Investments made
after the Third Amendment to Second Amended and Restated Effective Date in
accordance with Section 10.2.2(k)(ii)(D); (b) may be permanently reduced from
time to time upon Parent’s written request

 

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to Agent; and (c) subject to Agent’s written consent (such consent not to be
unreasonably withheld if (i) upon and after giving effect to such adjustment, no
Default or Event of Default shall have occurred and be continuing, and
(ii) immediately after such adjustment (for clarification, including after
giving effect to any recalculation of the Canadian Borrowing Base and U.S.
Borrowing Base upon giving effect to such adjustment), Canadian Availability and
U.S. Availability would be a positive number), may be reallocated on a dollar
for dollar basis to the Canadian Top Golf Reserve and/or the U.S. Top Golf
Reserve upon Parent’s written request to Agent; provided, however, that once
reduced pursuant to clause (b) above, the U.K. Top Golf Reserve may not be
increased. The parties agree that the U.K. Top Golf Reserve shall never be less
than zero (-0-). For clarification, the aggregate amount of the Canadian Top
Golf Reserve, the U.K. Top Golf Reserve, and the U.S. Top Golf Reserve may not
exceed an amount equal to the aggregate amount of Top Golf Proceeds received by
Parent as reflected in all Top Golf Proceeds Notices (less any amounts Parent
elects to deposit into the Top Golf Blocked Account) less all amounts expended
in connection with (x) any Common Stock Repurchases made, or dividends paid on
Parent’s common stock, in each case after the Third Amendment to Second Amended
and Restated Effective Date in accordance with Section 10.2.6(g) and (y) any
Investments made after the Third Amendment to Second Amended and Restated
Effective Date in accordance with Section 10.2.2(k) and less all permanent
reductions elected by Parent pursuant to clause (b) of each of the definitions
of Canadian Top Golf Reserve, U.K. Top Golf Reserve, and U.S. Top Golf Reserve.

U.K. Unused Line Fee Rate: a per annum rate equal to 0.25%.

U.S. Accounts Formula Amount: (a) as of any date of determination within the
period beginning on May 1 through and including October 31 of each Fiscal Year,
85% of the Value of Eligible Accounts of the U.S. Borrowers; and (b) as of any
date of determination within the period beginning on November 1 through and
including April 30 of each Fiscal Year, 90% of the Value of Eligible Accounts of
the U.S. Borrowers.

U.S. Availability: as of any date of determination, the U.S. Borrowing Base as
of such date of determination minus the aggregate principal amount of U.S.
Revolver Loans outstanding on such date of determination.

U.S. Availability Reserve: the sum (without duplication) of (a) the Inventory
Reserve with respect to the U.S. Borrowers’ Inventory; (b) the U.S. Rent and
Charges Reserve; (c) the U.S. LC Reserve; (d) the U.S. Bank Product Reserve;
(e) all accrued Royalties of the U.S. Facility Obligors, whether or not then due
and payable by a U.S. Facility Obligor; (f) the aggregate amount of liabilities
secured by Liens upon U.S. Facility Collateral that are senior to the Agent’s
Liens (but imposition of any such reserve shall not waive an Event of Default
arising therefrom); (g) the U.S. Dilution Reserve; (h) the Canadian Overadvance
Loan Balance, if any, outstanding on such date, and the U.K. Overadvance Loan
Balance, if any, outstanding on such date; (i) the U.S. Top Golf Reserve; and
(j) such additional reserves, in such amounts and with respect to such matters,
as Agent in its Credit Judgment may elect to impose from time to time with
respect to the U.S. Borrowing Base.

U.S. Bank Product Reserve: the aggregate amount of reserves established by Agent
from time to time in its discretion in respect of Secured Bank Product
Obligations owing by the U.S. Domiciled Obligors and their Subsidiaries.

 

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U.S. Bankruptcy Code: Title 11 of the United States Code.

U.S. Base Rate: for any day, a per annum rate equal to the greater of (a) the
U.S. Prime Rate for such day; (b) the Federal Funds Rate for such day, plus
0.50%; or (c) LIBOR for a 30 day interest period as determined on such day, plus
1.0%.

U.S. Base Rate Loan: a Loan that bears interest based on the U.S. Base Rate.

U.S. Base Rate Revolver Loan: a Revolver Loan that bears interest based on the
U.S. Base Rate.

U.S. Borrowers: as defined in the preamble to this Agreement.

U.S. Borrowing Base: on any date of determination, an amount equal to the lesser
of (a) the result of: (i) the Maximum U.S. Facility Amount, minus (ii) the U.S.
LC Reserve, minus (iii) the Canadian Overadvance Loan Balance, if any,
outstanding on such date, minus (iv) the U.K. Overadvance Loan Balance, if any,
outstanding on such date, minus (v) the U.S. Top Golf Reserve; or (b) the result
of: (i) the U.S. Accounts Formula Amount, plus (ii) the U.S. Inventory Formula
Amount, plus (iii) the U.S. Trademark Formula Amount, plus (iv) the U.S. Real
Estate Formula Amount, plus (v) 100% of the amount of U.S. Pledged Cash, minus
(vi) the U.S. Availability Reserve; provided, that clauses (b)(iii) and (b)(iv)
above may be removed from such calculation in accordance with Sections 2.1.4(c)
and (d) respectively.

U.S. Borrowing Base Certificate: a certificate, in form and substance
satisfactory to Agent, by which the U.S. Borrowers certify calculation of the
U.S. Borrowing Base.

U.S. Cash Collateral Account: a demand deposit, money market or other account
established by Agent at Bank of America or such other financial institution as
Agent may select in its discretion, which account shall be for the benefit of
the U.S. Facility Secured Parties and shall be subject to Agent’s Liens securing
the U.S. Facility Obligations.

U.S. Dilution Reserve: as of any date of determination, an amount sufficient to
reduce the advance rate against Eligible Accounts of the U.S. Borrowers by one
(1) percentage point for each whole percentage point (or portion thereof) by
which the Dilution Percent is in excess of 5.0%.

U.S. Domiciled Obligor: each of the Parent, any U.S. Borrower or any U.S.
Subsidiary which it is at any time an Obligor, and “U.S. Domiciled Obligors”
means all such Persons, collectively.

U.S. Dominion Account: a special account established by the U.S. Borrowers at
Bank of America or another bank acceptable to Agent, over which Agent has
exclusive control for withdrawal purposes during any Dominion Trigger Period.

U.S. Expeditors Reserve: as of any date of determination, the aggregate amount
of accounts payable owed by any U.S. Facility Obligor to Expeditors, as
determined by Agent in its Credit Judgment.

 

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U.S. Facility Collateral: all Collateral that now or hereafter secures (or is
intended to secure) any of the U.S. Facility Obligations, including Property of
each U.S. Domiciled Obligor.

U.S. Facility Guarantee: each guarantee agreement (including this Agreement) at
any time executed by a U.S. Facility Guarantor in favor of Agent guaranteeing
all or any portion of the U.S. Facility Obligations.

U.S. Facility Guarantor: each U.S. Subsidiary other than uPlay (unless uPlay
becomes a Guarantor in accordance with Section 10.2.15) and each other Person
(if any) who guarantees payment and performance of any U.S. Facility
Obligations.

U.S. Facility Obligations: all Obligations of the U.S. Facility Obligors
(including, for the avoidance of doubt, the Obligations of the U.S. Domiciled
Obligors as guarantors of the Canadian Facility Obligations and U.K. Facility
Obligations).

U.S. Facility Obligor: each of any U.S. Borrower or any U.S. Facility Guarantor,
and “U.S. Facility Obligors” means all of such Persons, collectively.

U.S. Facility Secured Parties: the Agent, the U.S. Issuing Bank, the U.S.
Lenders and the Secured Bank Product Providers who provide Bank Products to the
U.S. Facility Obligors and their Subsidiaries.

U.S. Inventory Formula Amount: as of any date of determination, the lesser of
(a) the sum of (i) with respect to Eligible Inventory that has been owned by a
U.S. Borrower for less than one (1) calendar year as of the applicable date of
determination, (A) for the period beginning on March 1 through and including
September 30 of each Fiscal Year, 65% of the Value of such U.S. Borrowers’
Eligible Inventory, (B) for the period beginning on October 1 through and
including February 28 (or February 29, as applicable) of each Fiscal Year, 75%
of the Value of such U.S. Borrowers’ Eligible Inventory, plus (ii) with respect
to Eligible Inventory that has been owned by a U.S. Borrower for more than one
(1) calendar year, as of the applicable date of determination, 50% of the Value
of such U.S. Borrowers’ Eligible Inventory; or (b) 85% of the NOLV Percentage of
the Value of the U.S. Borrowers’ Eligible Inventory. Notwithstanding the
foregoing, (1) the aggregate amount of the U.S. Inventory Formula Amount which
may be attributed to Eligible In-Transit Inventory (the “U.S. In-Transit
Availability”) shall not exceed $25,000,000; provided that, the U.S. In-Transit
Availability (after taking into effect the previous proviso) shall be reduced by
the U.S. Expeditors Reserve if, as of any date of determination, either (I) U.S.
Net Excess Availability is less than 10% of the Maximum U.S. Facility Amount, or
(II) there are any accounts payable owed by any U.S. Facility Obligor to
Expeditors which are aged in excess of historical levels (except in cases of
good faith disputes); and (2) so long as there is no Lien Waiver then in place
with respect thereto, the aggregate amount of the U.S. Inventory Formula Amount
which may be attributed to Eligible Costco Inventory shall not exceed
$20,000,000.

U.S. Issuing Bank: Bank of America or an Affiliate or branch of Bank of America

U.S. LC Obligations: the sum (without duplication) of (a) all amounts owing by
the U.S. Borrowers for any drawings under Letters of Credit; (b) the stated
amount of all outstanding Letters of Credit issued for the account of any U.S.
Borrower, which if such Letter of Credit is denominated in a currency other than
Dollars, may be stated by Agent (at its option) in Dollars

 

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calculated at the Spot Rate; and (c) all fees and other amounts owing with
respect to Letters of Credit issued for the account of any U.S. Borrower.

U.S. LC Reserve: the aggregate of all U.S. LC Obligations, other than those that
have been Cash Collateralized.

U.S. Lenders: Bank of America and each other Lender (other than Canadian Lenders
or U.K. Lenders) party hereto.

U.S. Letter of Credit Subline: $20,000,000.

U.S. Letters of Credit: any standby or documentary letter of credit issued by
the U.S. Issuing Bank for the account of the U.S. Borrowers (or any U.S.
Borrower), or any indemnity, guarantee, exposure transmittal memorandum or
similar form of credit support issued by Agent or the U.S. Issuing Bank for the
benefit of any U.S. Borrower, and shall include the Existing Letters of Credit.

U.S. Net Excess Availability: as of any date of determination, an amount equal
to the U.S. Availability minus the aggregate amount, if any, of all trade
payables of U.S. Domiciled Obligors that are more than 60 days past due (or such
later date as Agent may approve in its sole discretion) and all book overdrafts
of U.S. Domiciled Obligors in excess of historical practices with respect
thereto, in each case as determined by Agent in its Credit Judgment.

U.S. Overadvance: as defined in Section 2.1.5.

U.S. Overadvance Loan: a U.S. Revolver Loan made to the U.S. Borrowers or the
amount owed by the U.S. Borrowers when a U.S. Overadvance exists or is caused by
the funding thereof.

U.S. Pledged Cash: the funds maintained in a blocked Deposit Account or
securities account of a U.S. Borrower subject to a Deposit Account Control
Agreement or securities account control agreement, as applicable, which give
Agent at all times exclusive access and control for withdrawal purposes to the
exclusion of the U.S. Borrowers and precluding the U.S. Borrowers from
withdrawing or otherwise giving any instructions in connection therewith and
which may not be withdrawn without the Agent’s prior written consent (such
consent not to be unreasonably withheld if (i) upon and after giving effect to
such withdrawal, no Default or Event of Default shall have occurred and be
continuing and (ii) immediately after such withdrawal (for clarification,
including after giving effect to any recalculation of the U.S. Borrowing Base
upon giving effect to such withdrawal), U.S. Availability would be a positive
number), and which are subject to effective security documents, in form and
substance satisfactory to Agent, that provide Agent with an unencumbered
perfected first priority/ranking security interest in and Lien on such funds.

U.S. Prime Rate: the rate of interest announced by Bank of America from time to
time as its prime rate. Such rate is set by Bank of America on the basis of
various factors, including its costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above or below such rate. Any change in such rate
announced by Bank of America shall take effect at the opening of business on the
day specified in the public announcement of such change.

 

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U.S. Real Estate Formula Amount: as of any date of determination, the lesser of
(a) 80% of the fair market value of the Eligible Real Estate, as determined from
the most recent appraisal of such Real Estate performed by an appraiser and on
terms satisfactory to Agent; or (b) $28,600,000 (such amount in this clause
(b) to be reduced by $476,666.67 on the first day of each calendar quarter
occurring after the Closing Date, commencing with the calendar quarter beginning
on April 1, 2018).

U.S. Reimbursement Date: as defined in Section 2.3.2.

U.S. Rent and Charges Reserve: the aggregate of (a) all past due rent and other
amounts owing by an Obligor to any landlord, warehouseman, processor, repairman,
mechanic, shipper, freight forwarder, broker or other Person who possesses any
U.S. Facility Collateral or could assert a Lien on any U.S. Facility Collateral;
and (b) a reserve at least equal to three months’ rent and other charges that
could be payable to any such Person, unless it has executed a Lien Waiver.

U.S. Required Lenders: U.S. Lenders (subject to Section 4.2) having (a) U.S.
Revolver Commitments in excess of 50% of the aggregate U.S. Revolver
Commitments; and (b) if the U.S. Revolver Commitments have terminated, U.S.
Revolver Loans and U.S. LC Obligations in excess of 50% of all outstanding U.S.
Revolver Loans and U.S. LC Obligations; provided, however, that the Commitments
and Loans of any Defaulting Lender shall be excluded from such calculation;
provided, further, that at any time there are: (i) 3 or more U.S. Lenders with
U.S. Revolver Commitments or outstanding U.S. Revolver Loans or U.S. LC
Obligations, “U.S. Required Lenders” must include at least 3 such U.S. Lenders,
and (ii) less than 3 U.S. Lenders with U.S. Revolver Commitments or outstanding
U.S. Revolver Loans or U.S. LC Obligations, “U.S. Required Lenders” must include
all such U.S. Lenders.

U.S. Required Term Lenders: U.S. Lenders (subject to Section 4.2) having
(a) Term Loan Commitments in excess of 50% of the aggregate Term Loan
Commitments; and (b) if the Term Loan Commitments have terminated, Term Loans in
excess of 50% of all outstanding Term Loans; provided, however, that the
Commitments and Loans of any Defaulting Lender shall be excluded from such
calculation; provided, further, that at any time there are: (i) 3 or more U.S.
Lenders with Term Loan Commitments or outstanding Term Loans, “U.S. Required
Term Lenders” must include at least 3 such U.S. Lenders, and (ii) less than 3
U.S. Lenders with Term Loan Commitments or outstanding Term Loans, “U.S.
Required Term Lenders” must include all such U.S. Lenders.

U.S. Revolver Commitment: for any U.S. Lender, its obligation to make U.S.
Revolver Loans and to participate in U.S. LC Obligations up to the maximum
principal amount shown on Schedule 1.1, or as hereafter determined pursuant to
each Assignment and Acceptance to which it is a party, as such U.S. Revolver
Commitment may be adjusted from time to time in accordance with the provisions
of Sections 2.1.4, 2.1.7, or 11.2. “U.S. Revolver Commitments” means the
aggregate amount of such commitments of all U.S. Lenders.

U.S. Revolver Commitment Termination Date: the earliest of (a) the Facility
Termination Date, (b) the date on which the Borrower Agent terminates or reduces
to zero the U.S. Revolver Commitments pursuant to Section 2.1.4, and (c) the
date on which the U.S. Revolver Commitments are terminated pursuant to
Section 11.2.

 

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U.S. Revolver Exposure: on any date, an amount equal to the sum of the U.S.
Revolver Loans outstanding on such date plus the U.S. LC Obligations on such
date.

U.S. Revolver Loan: a Revolver Loan made by a U.S. Lender to a U.S. Borrower
pursuant to Section 2.1.1(a), which Loan shall be denominated in Dollars and
shall be either a U.S. Base Rate Revolver Loan or a LIBOR Loan, in each case as
selected by Borrower Agent, and any U.S. Swingline Loan, U.S. Overadvance Loan
or Protective Advance made to or owed by the U.S. Borrowers.

U.S. Revolver Notes: a promissory note executed by U.S. Borrowers in favor of a
U.S. Lender in the form of Exhibit A-2, in the amount of such U.S. Lender’s U.S.
Revolver Commitment.

U.S. Subsidiary: a Subsidiary of Parent that is organized under the laws of a
state of the United States or the District of Columbia.

U.S. Swingline Loan: any Borrowing of U.S. Base Rate Revolver Loans funded with
Agent’s funds, until such Borrowing is settled among the U.S. Lenders or repaid
by the U.S. Borrowers.

U.S. Top Golf Reserve: a reserve established by Agent at Parent’s request in
accordance with the definition of Top Golf Proceeds, in an initial amount as of
such establishment equal to the amount of the Top Golf Proceeds received as of
the date of such establishment. The U.S. Top Golf Reserve (a) shall be reduced
on a dollar for dollar basis for the amount expended in connection with (x) any
Common Stock Repurchases made, or dividends paid on Parent’s common stock, in
each case after the Third Amendment to Second Amended and Restated Effective
Date in accordance with Section 10.2.6(g)(ii)(B) and (y) any Investments made
after the Third Amendment to Second Amended and Restated Effective Date in
accordance with Section 10.2.2(k)(ii)(B); (b) may be permanently reduced from
time to time upon Parent’s written request to Agent; and (c) subject to Agent’s
written consent (such consent not to be unreasonably withheld if (i) upon and
after giving effect to such adjustment, no Default or Event of Default shall
have occurred and be continuing, and (ii) immediately after such adjustment (for
clarification, including after giving effect to any recalculation of the
Canadian Borrowing Base and U.K. Borrowing Base upon giving effect to such
adjustment), Canadian Availability and U.K. Availability would be a positive
number), may be reallocated on a dollar for dollar basis to the Canadian Top
Golf Reserve and/or the U.K. Top Golf Reserve upon Parent’s written request to
Agent; provided, however, that once reduced pursuant to clause (b) above, the
U.S. Top Golf Reserve may not be increased. The parties agree that the U.S. Top
Golf Reserve shall never be less than zero (-0-). For clarification, the
aggregate amount of the Canadian Top Golf Reserve, the U.K. Top Golf Reserve,
and the U.S. Top Golf Reserve may not exceed an amount equal to the aggregate
amount of Top Golf Proceeds received by Parent as reflected in all Top Golf
Proceeds Notices (less any amounts Parent elects to deposit into the Top Golf
Blocked Account) less all amounts expended in connection with (x) any Common
Stock Repurchase made, or dividends paid on Parent’s common stock, in each case
after the Third Amendment to Second Amended and Restated Effective Date in
accordance with Section 10.2.6(g) and (y) any Investments made after the Third
Amendment to Second Amended and Restated Effective Date in accordance with
Section 10.2.2(k) and less all

 

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permanent reductions elected by Parent pursuant to clause (b) of each of the
definitions of Canadian Top Golf Reserve, U.K. Top Golf Reserve, and U.S. Top
Golf Reserve.

U.S. Trademark Formula Amount: as of any date of determination, the lesser of
(a) 42% of the Net Orderly Liquidation Value of the Company Trademark; or (b)
$70,000,000 (such amount in this clause (b) to be permanently reduced by
$1,666,666.67 on the first day of each calendar quarter occurring after the
Closing Date, commencing with the calendar quarter beginning on April 1, 2018,
until such amount (for the avoidance of doubt, at all times) is less than or
equal to the lesser of (i) $50,000,000 and (ii) 30% of the Net Orderly
Liquidation Value of the Company Trademark).

U.S. Unused Line Fee Rate: a per annum rate equal to 0.25%.

Value: (a) for Inventory, its Dollar Equivalent value determined on the basis of
the lower of cost or market, calculated on a first-in, first-out basis, and
excluding any portion of cost attributable to intercompany profit among
Borrowers and their Affiliates; and (b) for an Account, its Dollar Equivalent
face amount, net of any returns, rebates, discounts (calculated on the shortest
terms), credits, allowances or Taxes (including sales, excise or other taxes)
that have been or could be claimed by the Account Debtor or any other Person.

Wage Earner Protection Act Reserve: on any date of determination, a reserve
established from time to time by Agent in its Credit Judgment in such amount as
Agent determines reflects the amounts that may become due under the Wage Earner
Protection Program Act (Canada) with respect to the employees of any Obligor
employed in Canada which would give rise to a Lien with priority under
Applicable Law over the Lien of Agent.

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

1.2    Accounting Terms. Under the Loan Documents (except as otherwise specified
herein), all accounting terms shall be interpreted, all accounting
determinations shall be made, and all financial statements shall be prepared, in
accordance with GAAP applied on a basis consistent with the most recent audited
financial statements of Obligors delivered to Agent before the Original
Agreement Closing Date and using the same inventory valuation method as used in
such financial statements, except for any change required or permitted by GAAP
if Obligors’ certified public accountants concur in such change, the change is
disclosed to Agent, and Section 10.3 and any other provision hereof are amended
in a manner satisfactory to Required Lenders to take into account the effects of
the change, if any. No calculations under the Loan Documents shall give effect
to any such change prior to any such amendment.

1.3    Uniform Commercial Code/PPSA. As used herein, the following terms are
defined in accordance with the UCC in effect in the State of New York from time
to time: “Chattel Paper,” “Commercial Tort Claim,” “Equipment,” “Goods,”
“Instrument,” “Investment Property,” “Letter-of-Credit Right” and “Supporting
Obligation” and, as such terms relate to any such

 

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Property of any Canadian Domiciled Obligor, such terms shall refer to such
Property as defined in the PPSA (to the extent such terms are defined therein).

1.4    Certain Matters of Construction. The terms “herein,” “hereof,”
“hereunder” and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. In the computation of periods of time from
a specified date to a later specified date, “from” means “from and including,”
and “to” and “until” each mean “to but excluding.” The terms “including” and
“include” shall mean “including, without limitation” and, for purposes of each
Loan Document, the parties agree that the rule of ejusdem generis shall not be
applicable to limit any provision. Section titles appear as a matter of
convenience only and shall not affect the interpretation of any Loan Document.
All references to (a) laws or statutes include all related rules, regulations,
interpretations, amendments and successor provisions; (b) any document,
instrument or agreement include any amendments, waivers and other modifications,
extensions or renewals (to the extent permitted by the Loan Documents); (c) any
section mean, unless the context otherwise requires, a section of this
Agreement; (d) any exhibits or schedules mean, unless the context otherwise
requires, exhibits and schedules attached hereto, which are hereby incorporated
by reference; (e) any Person include successors and assigns; (f) except as
otherwise specified herein, time of day means time of day at Agent’s notice
address under Section 14.3.1; or (g) discretion of Agent, any Issuing Bank or
any Lender mean the sole and absolute discretion of such Person. Except as
expressly otherwise provided herein, all calculations of Value, fundings of
Loans, issuances of Letters of Credit and payments of Obligations shall be in
Dollars and, unless the context otherwise requires, all determinations
(including calculations of Borrowing Base and financial covenants) made from
time to time under the Loan Documents shall be made in light of the
circumstances existing at such time. Borrowing Base calculations shall be
consistent with historical methods of valuation and calculation, and otherwise
satisfactory to Agent (and not necessarily calculated in accordance with GAAP).
Obligors shall have the burden of establishing any alleged negligence,
misconduct or lack of good faith by Agent, any Issuing Bank or any Lender under
any Loan Documents. No provision of any Loan Documents shall be construed
against any party by reason of such party having, or being deemed to have,
drafted the provision. Whenever the phrase “to the best of an Obligor’s
knowledge” or words of similar import are used in any Loan Documents, it means
actual knowledge of a Senior Officer of such Obligor, or knowledge that a Senior
Officer of such Obligor would have obtained if he or she had engaged in good
faith and diligent performance of his or her duties, including reasonably
specific inquiries of employees or agents and a good faith attempt to ascertain
the matter to which such phrase relates.

1.5    Calculations. All references in the Loan Documents to Loans, Letters of
Credit, Obligations, Borrowing Base components and other amounts shall be
denominated in Dollars, unless expressly provided otherwise. The Dollar
equivalent of any amounts denominated or reported under a Loan Document in a
currency other than Dollars shall be determined by Agent on a daily basis, based
on the current Spot Rate. Borrowers shall report Value and other Borrowing Base
components to Agent in the currency invoiced by Obligors or shown in Obligors’
financial records, and unless expressly provided otherwise, shall deliver
financial statements and calculate financial covenants in Dollars.
Notwithstanding anything herein to the contrary, if any Obligation is funded and
expressly denominated in a currency other than Dollars, Obligors shall repay
such Obligation in such other currency.

 

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1.6    Interpretation (Quebec). For purposes of any Collateral located in the
Province of Quebec or charged by any deed of hypothec (or any other Loan
Document) and for all other purposes pursuant to which the interpretation or
construction of a Loan Document may be subject to the laws of the Province of
Quebec 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” and “mortgage” shall be deemed to include a “hypothec”, (f) all
references to filing, registering or recording under the UCC or the PPSA shall
be deemed to include publication under the Civil Code of Québec, (g) all
references to “perfection” of or “perfected” Liens shall be deemed to include a
reference to the “opposability” of such Liens to 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 willful 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”, and (r) “fee simple title”
shall be deemed to include “absolute ownership”. For purposes of greater
certainty, the reference to the “Loan Agreement” in the deed of hypothec dated
November 3, 2017 executed by the Canadian Borrower in favour of the Agent means
this Agreement.

 

SECTION 2.

CREDIT FACILITIES

2.1    Revolver Commitments.

2.1.1.    Revolver Loans.

(a)    U.S. Revolver Loans to U.S. Borrowers. Each U.S. Lender agrees, severally
and not jointly with the other U.S. Lenders, upon the terms and subject to the
conditions set forth herein, to make U.S. Revolver Loans to the U.S. Borrowers
on any Business Day during the period from the Closing Date to the U.S. Revolver
Commitment Termination Date, not to exceed in aggregate principal amount
outstanding at any time such U.S. Lender’s U.S. Revolver Commitment at such
time, which U.S. Revolver Loans may be repaid and reborrowed in accordance with
the terms and provisions of this Agreement; provided, however, that such U.S.
Lenders shall have no obligation to the U.S. Borrowers whatsoever to honor any
request for a U.S. Revolver Loan on or after the U.S. Revolver Commitment
Termination Date or if the amount of the proposed U.S. Revolver Loan exceeds
U.S. Availability on the proposed funding date for such U.S. Revolver Loan. Each
Borrowing of U.S. Revolver Loans shall be funded by the U.S. Lenders on a Pro
Rata basis. The U.S. Revolver Loans shall bear interest as set forth in
Section 3.1. Each U.S. Revolver Loan shall, at the option of the Borrower Agent,
be made or continued as, or converted into, part of one or more Borrowings that,
unless specifically provided herein, shall consist entirely of U.S. Base Rate
Revolver Loans or LIBOR Revolver Loans. The U.S. Revolver Loans shall be repaid
in accordance with the terms of this Agreement and shall be secured by all

 

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of the U.S. Facility Collateral. U.S. Borrowers shall be jointly and severally
liable to pay all of the U.S. Revolver Loans. Each U.S. Revolver Loan shall be
funded and repaid in Dollars.

(b)    Canadian Revolver Loans to Canadian Borrower. Each Canadian Lender
agrees, severally and not jointly with the other Canadian Lenders, upon the
terms and subject to the conditions set forth herein, to make Canadian Revolver
Loans to the Canadian Borrower on any Business Day during the period from the
Closing Date to the Canadian Revolver Commitment Termination Date, not to exceed
in aggregate principal amount outstanding at any time such Canadian Lender’s
Canadian Revolver Commitment at such time, which Canadian Revolver Loans may be
repaid and reborrowed in accordance with the terms and provisions of this
Agreement; provided, however, that such Canadian Lenders shall have no
obligation to the Canadian Borrower whatsoever to honor any request for a
Canadian Revolver Loan on or after the Canadian Revolver Commitment Termination
Date or if the amount of the proposed Canadian Revolver Loan exceeds Canadian
Availability on the proposed funding date for such Canadian Revolver Loan. Each
Borrowing of Canadian Revolver Loans shall be funded by the Canadian Lenders on
a Pro Rata basis. The Canadian Revolver Loans shall bear interest as set forth
in Section 3.1. Each Canadian Revolver Loan shall, at the option of the Borrower
Agent, be made or continued as, or converted into, part of one or more
Borrowings that, unless specifically provided herein, shall consist entirely of
Canadian Prime Rate Loans or Canadian BA Rate Loans if denominated in Canadian
Dollars, or shall consist entirely of Canadian Base Rate Loans or LIBOR Loans if
denominated in Dollars. The Canadian Revolver Loans shall be repaid in
accordance with the terms of this Agreement and shall be secured by all of the
Canadian Facility Collateral. Each Canadian Revolver Loan shall be funded in
Canadian Dollars or, at the option of the Borrower Agent, Dollars and repaid in
the same currency as such underlying Canadian Revolver Loan was made.

(c)    U.K. Revolver Loans to U.K. Borrower. Each U.K. Lender agrees, severally
and not jointly with the other U.K. Lenders, upon the terms and subject to the
conditions set forth herein, to make U.K. Revolver Loans to the U.K. Borrower on
any Business Day during the period from the Closing Date to the U.K. Revolver
Commitment Termination Date, not to exceed in aggregate principal amount
outstanding at any time such U.K. Lender’s U.K. Revolver Commitment at such
time, which U.K. Revolver Loans may be repaid and reborrowed in accordance with
the terms and provisions of this Agreement; provided, however, that such U.K.
Lenders shall have no obligation to the U.K. Borrower whatsoever to honor any
request for a U.K. Revolver Loan on or after the U.K. Revolver Commitment
Termination Date or if the amount of the proposed U.K. Revolver Loan exceeds
U.K. Availability on the proposed funding date for such U.K. Revolver Loan. Each
Borrowing of U.K. Revolver Loans shall be funded by the U.K. Lenders on a Pro
Rata basis. The U.K. Revolver Loans shall bear interest as set forth in
Section 3.1. Each U.K. Revolver Loan shall, at the option of the Borrower Agent,
be made or continued as, or converted into, part of one or more Borrowings that,
unless specifically provided herein, shall consist entirely of U.K. Base Rate
Loans or LIBOR Loans (provided, that U.K. Base Rate Loans shall only be
denominated in Dollars). The U.K. Revolver Loans shall be repaid in accordance
with the terms of this Agreement and shall be secured by all of the U.K.
Facility Collateral. Each U.K. Revolver Loan shall be funded in Dollars, British
Pounds and/or Euro (in the case of LIBOR Loans) and Dollars only (in the case of
U.K. Base Rate Loans) and shall be repaid in the same currency as such
underlying U.K. Revolver Loan was made.

 

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(d)    Maximum Total Revolver Exposure. Notwithstanding anything to the contrary
contained in this Section 2.1.1, in no event shall any Borrower be entitled to
receive a Revolver Loan if, at the time of the proposed funding of such Loan
(and after giving effect thereto and all pending requests for Loans), the Total
Revolver Exposure exceeds (or would exceed) the lesser of the Maximum Facility
Amount and the Revolver Commitments.

2.1.2.    Revolver Notes. The Revolver Loans made by each Lender and interest
accruing thereon shall be evidenced by the records of Agent and such Lender. At
the request of any Lender, the U.S. Borrowers and/or the Canadian Borrower
and/or the U.K. Borrower shall execute and deliver a U.S. Revolver Note and/or a
Canadian Revolver Note and/or a U.K. Revolver Note, respectively, to such Lender
in the amount of such Lender’s applicable Revolver Commitment(s).

2.1.3.    Use of Proceeds. The proceeds of Revolver Loans shall be used by
Borrowers solely (a) to satisfy existing Debt on the Original Agreement Closing
Date; (b) to pay fees and transaction expenses associated with the closing of
this credit facility; (c) to pay Obligations in accordance with this Agreement;
and (d) for working capital and other lawful corporate purposes of Borrowers.
Borrowers shall not, directly or indirectly, use any Letter of Credit or Loan
proceeds, nor use, lend, contribute or otherwise make available any Letter of
Credit or Loan proceeds to any Subsidiary, joint venture partner or other
Person, (i) to fund any activities of or business with any Person, or in any
country or territory, that, at the time of issuance of the Letter of Credit or
funding of the Loan, is the target of a Sanction; or (ii) in any manner that
would result in a violation of a Sanction by any Person (including any Secured
Party or other individual or entity participating in the transaction) or in
violation of Anti-Corruption Laws.

2.1.4.    Voluntary Reduction or Termination of Revolver Commitments.

(a)    The Canadian Revolver Commitments shall terminate on the Canadian
Revolver Commitment Termination Date, the U.K. Revolver Commitments shall
terminate on the U.K. Revolver Commitment Termination Date, and the U.S.
Revolver Commitments shall terminate on the U.S. Revolver Commitment Termination
Date, in each case, unless sooner terminated in accordance with this Agreement.
Upon at least 10 days’ prior written notice to Agent from the Borrower Agent,
(i) U.S. Borrowers may, at their option, terminate the U.S. Revolver Commitments
and this credit facility and/or (ii) the Canadian Borrower may, at its option,
terminate the Canadian Revolver Commitments and/or (iii) the U.K. Borrower may,
at its option, terminate the U.K. Revolver Commitments, in each case, without
premium or penalty (other than funding losses payable pursuant to Section 3.9).
If the U.S. Borrowers elect to reduce to zero or terminate the U.S. Revolver
Commitments pursuant to the previous sentence, the Canadian Revolver Commitments
and U.K. Revolver Commitments shall automatically terminate concurrently with
the termination of the U.S. Revolver Commitments. Any notice of termination
given by Borrowers pursuant to this Section 2.1.4 shall be irrevocable but may
be conditioned on a refinancing or another material event. On the Canadian
Revolver Commitment Termination Date, the Canadian Borrower shall make Full
Payment of all Canadian Facility Obligations. On the U.K. Revolver Commitment
Termination Date, the U.K. Borrower shall make Full Payment of all U.K. Facility
Obligations. On the U.S. Revolver Commitment Termination Date, the U.S.
Borrowers shall make Full Payment of all U.S. Facility Obligations.

 

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(b)    So long as (i) no Default or Event of Default then exists or would result
therefrom, and (ii) no U.S. Overadvance, Canadian Overadvance, or U.K.
Overadvance then exists or would result therefrom, the Borrower Agent may
permanently and irrevocably reduce the Maximum Facility Amount by giving Agent
at least 10 days’ prior irrevocable written notice thereof from a Senior Officer
of the Borrower Agent, which notice shall (A) specify the date (which shall be a
Business Day) and amount of such reduction (which shall be in a minimum amount
of $10,000,000 and increments of $5,000,000 in excess thereof), (B) specify the
allocation of such reduction to, and the corresponding reductions of, each of
the Maximum U.S. Facility Amount and/or the Maximum Canadian Facility Amount
and/or the Maximum U.K. Facility Amount (and the respective U.S. Revolver
Commitments, Canadian Revolver Commitments, and the U.K. Revolver Commitments of
the U.S. Lenders, the Canadian Lenders, and the U.K. Lenders, respectively, in
respect thereof, each of which shall be allocated to such Lenders on a Pro Rata
basis at the time of such reduction) and (C) certify the satisfaction of the
foregoing conditions precedent (including calculations thereof in reasonable
detail) both as of the date of such certificate and as of the effective date of
any such proposed reduction. In addition to and without limiting the generality
of the foregoing, (1) each reduction in the Maximum U.S. Facility Amount and the
U.S. Revolver Commitments shall in no event exceed U.S. Availability and shall
be in a minimum amount of $5,000,000 and increments of $1,000,000 in excess
thereof, (2) each reduction in the Maximum Canadian Facility Amount and the
Canadian Revolver Commitments shall in no event exceed Canadian Availability and
shall be in a minimum amount of $5,000,000 and increments of $1,000,000 in
excess thereof, and (3) each reduction in the Maximum U.K. Facility Amount and
the U.K. Revolver Commitments shall in no event exceed U.K. Availability and
shall be in a minimum amount of $5,000,000 and increments of $1,000,000 in
excess thereof.

(c)    Intentionally Omitted.

(d)    Upon at least 10 days’ prior written notice to Agent from the Borrower
Agent, U.S. Borrowers may, at their option, permanently remove the U.S. Real
Estate Formula Amount from the calculation of the U.S. Borrowing Base, without
premium or penalty (other than funding losses payable pursuant to Section 3.9).
Any notice of removal given by Borrowers pursuant to this Section 2.1.4(d) shall
be irrevocable. Agent and the Lenders agree that Agent shall release any Liens
with respect to the Eligible Real Estate to the extent the U.S. Real Estate
Formula Amount is removed from the calculation of the U.S. Borrowing Base in
accordance with this Section 2.1.4(d) and so long as no Default or Event of
Default has occurred and is continuing.

2.1.5.    Overadvances. If the aggregate U.S. Revolver Loans exceed the U.S.
Borrowing Base (a “U.S. Overadvance”) at any time, the excess amount shall be
payable by U.S. Borrowers on demand by Agent, but all such U.S. Revolver Loans
shall nevertheless constitute U.S. Facility Obligations secured by the U.S.
Facility Collateral. If the aggregate Canadian Revolver Loans exceed the
Canadian Borrowing Base (a “Canadian Overadvance”) at any time, the excess
amount shall be payable by Canadian Borrower on demand by Agent, but all such
Canadian Revolver Loans shall nevertheless constitute Canadian Facility
Obligations secured by the Canadian Facility Collateral. If the aggregate U.K.
Revolver Loans exceed the U.K. Borrowing Base (a “U.K. Overadvance”) at any
time, the excess amount shall be payable by the U.K. Borrower on demand by
Agent, but all such U.K. Revolver Loans shall nevertheless constitute U.K.
Facility Obligations secured by the U.K. Facility Collateral. Agent may require
the Applicable Lenders to honor requests for Overadvance Loans and to forbear
from requiring the

 

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applicable Borrowers to cure an Overadvance, (a) when no other Event of Default
is known to Agent, as long as (i) the Overadvance does not continue for more
than 30 consecutive days (and no Overadvance may exist for at least five
consecutive days thereafter before further Overadvance Loans are required), and
(ii) the Overadvance is not known by Agent to exceed 7.5% of the U.S. Borrowing
Base with respect to the U.S. Borrowers, 7.5% of the Canadian Borrowing Base
with respect to the Canadian Borrower, or 7.5% of the U.K. Borrowing Base with
respect to the U.K. Borrower; and (b) regardless of whether an Event of Default
exists, if Agent discovers an Overadvance not previously known by it to exist,
as long as from the date of such discovery the Overadvance does not continue for
more than 30 consecutive days. In no event shall Overadvance Loans be required
that would cause the outstanding U.S. Revolver Exposure to exceed the aggregate
U.S. Revolver Commitments, the outstanding Canadian Revolver Exposure to exceed
the aggregate Canadian Revolver Commitments, or the outstanding U.K. Revolver
Exposure to exceed the aggregate U.K. Revolver Commitments. Any funding of an
Overadvance Loan or sufferance of an Overadvance shall not constitute a waiver
by Agent or Lenders of the Event of Default caused thereby. In no event shall
any Borrower or other Obligor be deemed a beneficiary of this Section nor
authorized to enforce any of its terms. Required Lenders may at any time revoke
Agent’s authority to knowingly make further Overadvance Loans by written notice
to Agent

2.1.6.    Protective Advances. Agent shall be authorized, in its discretion, at
any time that any conditions in Section 6 are not satisfied, and without regard
to the aggregate U.S. Revolver Commitments, the Canadian Revolver Commitments,
or the U.K. Revolver Commitments, to make U.S. Base Rate Revolver Loans,
Canadian Prime Rate Loans, and U.K. Base Rate Loans, as applicable (each a
“Protective Advance”) (a) up to an aggregate amount of (i) 10% of the aggregate
Canadian Revolver Commitments (minus the aggregate amount of any outstanding
Canadian Overadvances), with respect to the Canadian Borrower, (ii) 10% of the
aggregate U.S. Revolver Commitments (minus the aggregate amount of any
outstanding U.S. Overadvances), with respect to the U.S. Borrowers, or (iii) 10%
of the aggregate U.K. Revolver Commitments (minus the aggregate amount of any
outstanding U.K. Overadvances), with respect to the U.K. Borrower, in each case,
outstanding at any time, if Agent deems such Loans necessary or desirable to
preserve or protect Collateral, or to enhance the collectibility or repayment of
Obligations; or (b) to pay any other amounts chargeable to Obligors under any
Loan Documents, including costs, fees and expenses. Each Applicable Lender shall
participate in each Protective Advance on a Pro Rata basis. Required Lenders may
at any time revoke Agent’s authority to make further Protective Advances under
clause (a) by written notice to Agent. Absent such revocation, Agent’s
determination that funding of a Protective Advance is appropriate shall be
conclusive. All Protective Advances made by Agent with respect to U.S. Borrowers
shall be U.S. Facility Obligations, secured by the U.S. Facility Collateral and
shall be treated for all purposes as Extraordinary Expenses. All Protective
Advances made by Agent with respect to Canadian Borrower shall be Canadian
Facility Obligations, secured by the Canadian Facility Collateral and shall be
treated for all purposes as Extraordinary Expenses. All Protective Advances made
by Agent with respect to the U.K. Borrower shall be U.K. Facility Obligations,
secured by the U.K. Facility Collateral and shall be treated for all purposes as
Extraordinary Expenses. In no event shall Protective Advances be made by Agent
if it would cause the outstanding U.S. Revolver Exposure to exceed the aggregate
U.S. Revolver Commitments, the outstanding Canadian Revolver Exposure to exceed
the aggregate Canadian Revolver Commitments, or the outstanding U.K. Revolver
Exposure to exceed the aggregate U.K. Revolver Commitments.

 

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2.1.7.    Increase in U.S. Revolver Commitments. Borrowers may request an
increase in the aggregate U.S. Revolver Commitments from time to time upon
notice to Agent, as long as (a) the requested increase is in a minimum amount of
$10,000,000 and is offered on the same terms as the existing U.S. Revolver
Commitments, except for fees mutually agreed upon by Borrowers and Agent,
(b) increases under this Section do not exceed $150,000,000 in the aggregate and
no more than 3 increases are made, (c) no reduction in Revolver Commitments
pursuant to Section 2.1.4 has occurred prior to the requested increase, and
(d) no Default or Event of Default shall have occurred and be continuing at the
time of such increase or result therefrom. Agent shall promptly notify U.S.
Lenders of the requested increase and, within 10 Business Days thereafter, each
U.S. Lender shall notify Agent if and to what extent such Lender commits to
increase its U.S. Revolver Commitment. Any U.S. Lender not responding within
such period shall be deemed to have declined an increase. If U.S. Lenders fail
to commit to the full requested increase, Eligible Assignees may issue
additional U.S. Revolver Commitments and become U.S. Lenders hereunder. Agent
may allocate, in its discretion, the increased U.S. Revolver Commitments among
committing U.S. Lenders and, if necessary, Eligible Assignees. Provided the
conditions set forth in Section 6.2 are satisfied, total U.S. Revolver
Commitments shall be increased by the requested amount (or such lesser amount
committed by U.S. Lenders and Eligible Assignees) on a date agreed upon by Agent
and Borrower Agent, but no later than 45 days following Borrowers’ increase
request. Agent, Borrowers, and new and existing Lenders shall execute and
deliver such documents and agreements as Agent deems appropriate to evidence the
increase in and allocations of U.S. Revolver Commitments. On the effective date
of an increase, all outstanding U.S. Revolver Loans, U.S. LC Obligations and
other exposures under the U.S. Revolver Commitments shall be reallocated among
U.S. Lenders, and settled by Agent if necessary, in accordance with U.S.
Lenders’ adjusted shares of such U.S. Revolver Commitments.

2.2    U.K. Letter of Credit Facility.

2.2.1.    Issuance of U.K. Letters of Credit. U.K. Issuing Bank shall issue U.K.
Letters of Credit from time to time on and after the Closing Date until 30 days
prior to the Facility Termination Date (or until the U.K. Revolver Commitment
Termination Date, if earlier), on the terms set forth herein, including the
following:

(a)    The U.K. Borrower acknowledges that U.K. Issuing Bank’s issuance of any
U.K. Letter of Credit is conditioned upon U.K. Issuing Bank’s receipt of a LC
Application with respect to the requested U.K. Letter of Credit, as well as such
other instruments and agreements as U.K. Issuing Bank may customarily require
for issuance of a letter of credit of similar type and amount. U.K. Issuing Bank
shall have no obligation to issue any U.K. Letter of Credit unless (i) U.K.
Issuing Bank receives a LC Request and LC Application at least three Business
Days prior to the requested date of issuance; (ii) each LC Condition is
satisfied; and (iii) if a Defaulting Lender that is a U.K. Lender exists, such
Lender or the U.K. Borrower has entered into arrangements satisfactory to Agent
and U.K. Issuing Bank to eliminate any Fronting Exposure associated with such
Lender. If, in sufficient time to act, U.K. Issuing Bank receives written notice
from U.K. Required Lenders that a LC Condition has not been satisfied, U.K.
Issuing Bank shall not issue the requested U.K. Letter of Credit. Prior to
receipt of any such notice, U.K. Issuing Bank shall not be deemed to have
knowledge of any failure of LC Conditions.

 

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(b)    U.K. Letters of Credit may be requested by the U.K. Borrower to support
obligations incurred in the Ordinary Course of Business, or as otherwise
approved by Agent. The renewal or extension of any U.K. Letter of Credit shall
be treated as the issuance of a new U.K. Letter of Credit, except that delivery
of a new LC Application shall be required at the discretion of U.K. Issuing
Bank.

(c)    The U.K. Borrower assumes all risks of the acts, omissions or misuses of
any U.K. Letter of Credit by the beneficiary. In connection with issuance of any
U.K. Letter of Credit, none of Agent, Issuing Banks or any Lender shall be
responsible for the existence, character, quality, quantity, condition, packing,
value or delivery of any goods purported to be represented by any Documents; any
differences or variation in the character, quality, quantity, condition,
packing, value or delivery of any goods from that expressed in any Documents;
the form, validity, sufficiency, accuracy, genuineness or legal effect of any
Documents or of any endorsements thereon; the time, place, manner or order in
which shipment of goods is made; partial or incomplete shipment of, or failure
to ship, any goods referred to in a U.K. Letter of Credit or Documents; any
deviation from instructions, delay, default or fraud by any shipper or other
Person in connection with any goods, shipment or delivery; any breach of
contract between a shipper or vendor and the U.K. Borrower; errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex, telecopy, e-mail, telephone or otherwise; errors in
interpretation of technical terms; the misapplication by a beneficiary of any
U.K. Letter of Credit or the proceeds thereof; or any consequences arising from
causes beyond the control of Issuing Banks, Agent or any Lender, including any
act or omission of a Governmental Authority. The rights and remedies of U.K.
Issuing Bank under the Loan Documents shall be cumulative. U.K. Issuing Bank
shall be fully subrogated to the rights and remedies of each beneficiary whose
claims against the U.K. Borrower are discharged with proceeds of any U.K. Letter
of Credit.

(d)    In connection with its administration of and enforcement of rights or
remedies under any U.K. Letters of Credit or LC Documents, U.K. Issuing Bank
shall be entitled to act, and shall be fully protected in acting, upon any
certification, documentation or communication in whatever form believed by U.K.
Issuing Bank, in good faith, to be genuine and correct and to have been signed,
sent or made by a proper Person. U.K. Issuing Bank may consult with and employ
legal counsel, accountants and other experts to advise it concerning its
obligations, rights and remedies, and shall be entitled to act upon, and shall
be fully protected in any action taken in good faith reliance upon, any advice
given by such experts. U.K. Issuing Bank may employ agents and attorneys-in-fact
in connection with any matter relating to U.K. Letters of Credit or LC
Documents, and shall not be liable for the negligence or misconduct of agents
and attorneys-in-fact selected with reasonable care.

2.2.2.    Reimbursement; Participations.

(a)    If U.K. Issuing Bank honors any request for payment under a U.K. Letter
of Credit, the U.K. Borrower shall pay to U.K. Issuing Bank, on the same day
(“U.K. Reimbursement Date”), the amount paid by U.K. Issuing Bank under such
U.K. Letter of Credit in the same currency in which the Letter of Credit was
denominated unless otherwise specified by Agent or U.K. Issuing Bank (at their
respective option) that it requires payment in Dollars, British Pounds or Euros
calculated at the Spot Rate, together with interest at the interest rate for
U.K. Base Rate Loans from the U.K. Reimbursement Date until payment by the U.K.
Borrower. The

 

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obligation of the U.K. Borrower to reimburse U.K. Issuing Bank for any payment
made under a U.K. Letter of Credit shall be absolute, unconditional,
irrevocable, and joint and several, and shall be paid without regard to any lack
of validity or enforceability of any U.K. Letter of Credit or the existence of
any claim, setoff, defense or other right that the U.K. Borrower may have at any
time against the beneficiary. Whether or not Borrower Agent submits a Notice of
Borrowing, the U.K. Borrower shall be deemed to have requested a Borrowing of a
LIBOR Revolver Loan (the initial Interest Period of which shall be 30 days
commencing on the relevant Reimbursement Date) in an amount necessary to pay all
amounts due U.K. Issuing Bank on that U.K. Reimbursement Date and each U.K.
Lender agrees to fund its Pro Rata share of such Borrowing whether or not the
U.K. Revolver Commitments have terminated, a U.K. Overadvance exists or is
created thereby, or the conditions in Section 6 are satisfied. In the event that
(i) a drawing denominated in a foreign currency (other than Dollars, British
Pounds and Euros) (such foreign currency, a “U.K. Reimbursed Foreign Currency”)
is to be reimbursed in Dollars, British Pounds or Euros pursuant to the first
sentence in this Section 2.2.2(a); and (ii) the Dollars, British Pounds or Euros
amount, as applicable, paid by the U.K. Borrower shall not be adequate on the
date of that payment to purchase in accordance with normal banking procedures a
sum denominated in the U.K. Reimbursed Foreign Currency equal to the drawing,
the U.K. Borrower agrees, as a separate and independent obligation, to indemnify
U.K. Issuing Bank for the loss resulting from its inability on that date to
purchase the U.K. Reimbursed Foreign Currency in the full amount of the drawing.

(b)    Upon issuance of a U.K. Letter of Credit, each U.K. Lender shall be
deemed to have irrevocably and unconditionally purchased from U.K. Issuing Bank,
without recourse or warranty, an undivided Pro Rata interest and participation
in all U.K. LC Obligations relating to the U.K. Letter of Credit. If U.K.
Issuing Bank makes any payment under a U.K. Letter of Credit and the U.K.
Borrower does not reimburse such payment on the U.K. Reimbursement Date, Agent
shall promptly notify U.K. Lenders and each U.K. Lender shall promptly (within
one Business Day) and unconditionally pay to Agent, for the benefit of U.K.
Issuing Bank, the U.K. Lender’s Pro Rata share of such payment in the same
currency as required of the U.K. Borrower in accordance with Section 2.2.2(a).
Upon request by a U.K. Lender, U.K. Issuing Bank shall furnish copies of any
U.K. Letters of Credit and LC Documents in its possession at such time.

(c)    The obligation of each U.K. Lender to make payments to Agent for the
account of U.K. Issuing Bank in connection with U.K. Issuing Bank’s payment
under a U.K. Letter of Credit shall be absolute, unconditional and irrevocable,
not subject to any counterclaim, setoff, qualification or exception whatsoever,
and shall be made in accordance with this Agreement under all circumstances,
irrespective of any lack of validity or unenforceability of any Loan Documents;
any draft, certificate or other document presented under a U.K. Letter of Credit
having been determined to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect; or
the existence of any setoff or defense that any Obligor may have with respect to
any Obligations. U.K. Issuing Bank does not assume any responsibility for any
failure or delay in performance or any breach by the U.K. Borrower or other
Person of any obligations under any LC Documents. U.K. Issuing Bank does not
make to Lenders any express or implied warranty, representation or guaranty with
respect to the Collateral, LC Documents or any Obligor. U.K. Issuing Bank shall
not be responsible to any Lender for any recitals, statements, information,
representations or warranties contained in, or for the execution, validity,
genuineness, effectiveness or enforceability of any LC Documents; the validity,
genuineness, enforceability, collectibility, value or sufficiency of any
Collateral or the perfection of any Lien therein; or the

 

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assets, liabilities, financial condition, results of operations, business,
creditworthiness or legal status of any Obligor.

(d)    No Issuing Bank Indemnitee shall be liable to any Lender or other Person
for any action taken or omitted to be taken in connection with any LC Documents
except as a result of its actual gross negligence or willful misconduct. U.K.
Issuing Bank shall not have any liability to any Lender if U.K. Issuing Bank
refrains from any action under a Letter of Credit or LC Documents until it
receives written instructions from U.K. Required Lenders.

2.2.3.    Cash Collateral. If any U.K. LC Obligations, whether or not then due
or payable, shall for any reason be outstanding at any time (a) that an Event of
Default exists, (b) that U.K. Availability is less than zero, or (c) within 10
Business Days prior to the U.K. Revolver Commitment Termination Date, then the
U.K. Borrower shall, at U.K. Issuing Bank’s or Agent’s request, Cash
Collateralize the stated amount of all outstanding U.K. Letters of Credit and
pay to U.K. Issuing Bank the amount of all other U.K. LC Obligations. The U.K.
Borrower shall, on demand by U.K. Issuing Bank or Agent from time to time, Cash
Collateralize the Fronting Exposure of any Defaulting Lender which is a U.K.
Lender. If the U.K. Borrower fails to provide any Cash Collateral as required
hereunder, U.K. Lenders may (and shall upon direction of Agent) advance, as U.K.
Revolver Loans, the amount of the Cash Collateral required (whether or not the
U.K. Revolver Commitments have terminated, a U.K. Overadvance exists or the
conditions in Section 6 are satisfied).

2.2.4.    Resignation of U.K. Issuing Bank. U.K. Issuing Bank may resign at any
time upon notice to Agent and the U.K. Borrower. On the effective date of such
resignation, U.K. Issuing Bank shall have no further obligation to issue, amend,
renew, extend or otherwise modify any Letter of Credit, but shall continue to
have all rights and obligations of an Issuing Bank hereunder, including under
Sections 2.2, 12.6 and 14.2, relating to any Letter of Credit issued prior to
such date. Agent shall promptly appoint a replacement U.K. Issuing Bank, which,
as long as no Default or Event of Default exists, shall be reasonably acceptable
to the U.K. Borrower.

2.3    U.S. Letter of Credit Facility.

2.3.1.    Issuance of U.S. Letters of Credit. U.S. Issuing Bank shall issue U.S.
Letters of Credit from time to time until 30 days prior to the Facility
Termination Date (or until the U.S. Revolver Commitment Termination Date, if
earlier), on the terms set forth herein, including the following:

(a)    Each U.S. Borrower acknowledges that U.S. Issuing Bank’s issuance of any
U.S. Letter of Credit is conditioned upon U.S. Issuing Bank’s receipt of a LC
Application with respect to the requested U.S. Letter of Credit, as well as such
other instruments and agreements as U.S. Issuing Bank may customarily require
for issuance of a letter of credit of similar type and amount. U.S. Issuing Bank
shall have no obligation to issue any U.S. Letter of Credit unless (i) U.S.
Issuing Bank receives a LC Request and LC Application at least three Business
Days prior to the requested date of issuance; (ii) each LC Condition is
satisfied; and (iii) if a Defaulting Lender that is a U.S. Lender exists, such
Lender or U.S. Borrowers have entered into arrangements satisfactory to Agent
and U.S. Issuing Bank to eliminate any Fronting Exposure associated with such
Lender. If, in sufficient time to act, U.S. Issuing Bank receives written notice
from U.S.

 

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Required Lenders that a LC Condition has not been satisfied, U.S. Issuing Bank
shall not issue the requested U.S. Letter of Credit. Prior to receipt of any
such notice, U.S. Issuing Bank shall not be deemed to have knowledge of any
failure of LC Conditions.

(b)    U.S. Letters of Credit may be requested by a U.S. Borrower to support
obligations incurred in the Ordinary Course of Business, or as otherwise
approved by Agent. The renewal or extension of any U.S. Letter of Credit shall
be treated as the issuance of a new U.S. Letter of Credit, except that delivery
of a new LC Application shall be required at the discretion of U.S. Issuing
Bank.

(c)    U.S. Borrowers assume all risks of the acts, omissions or misuses of any
U.S. Letter of Credit by the beneficiary. In connection with issuance of any
U.S. Letter of Credit, none of Agent, Issuing Banks or any Lender shall be
responsible for the existence, character, quality, quantity, condition, packing,
value or delivery of any goods purported to be represented by any Documents; any
differences or variation in the character, quality, quantity, condition,
packing, value or delivery of any goods from that expressed in any Documents;
the form, validity, sufficiency, accuracy, genuineness or legal effect of any
Documents or of any endorsements thereon; the time, place, manner or order in
which shipment of goods is made; partial or incomplete shipment of, or failure
to ship, any goods referred to in a U.S. Letter of Credit or Documents; any
deviation from instructions, delay, default or fraud by any shipper or other
Person in connection with any goods, shipment or delivery; any breach of
contract between a shipper or vendor and a U.S. Borrower; errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex, telecopy, e-mail, telephone or otherwise; errors in
interpretation of technical terms; the misapplication by a beneficiary of any
U.S. Letter of Credit or the proceeds thereof; or any consequences arising from
causes beyond the control of Issuing Banks, Agent or any Lender, including any
act or omission of a Governmental Authority. The rights and remedies of U.S.
Issuing Bank under the Loan Documents shall be cumulative. U.S. Issuing Bank
shall be fully subrogated to the rights and remedies of each beneficiary whose
claims against U.S. Borrowers are discharged with proceeds of any U.S. Letter of
Credit.

(d)    In connection with its administration of and enforcement of rights or
remedies under any U.S. Letters of Credit or LC Documents, U.S. Issuing Bank
shall be entitled to act, and shall be fully protected in acting, upon any
certification, documentation or communication in whatever form believed by U.S.
Issuing Bank, in good faith, to be genuine and correct and to have been signed,
sent or made by a proper Person. U.S. Issuing Bank may consult with and employ
legal counsel, accountants and other experts to advise it concerning its
obligations, rights and remedies, and shall be entitled to act upon, and shall
be fully protected in any action taken in good faith reliance upon, any advice
given by such experts. U.S. Issuing Bank may employ agents and attorneys-in-fact
in connection with any matter relating to U.S. Letters of Credit or LC
Documents, and shall not be liable for the negligence or misconduct of agents
and attorneys-in-fact selected with reasonable care.

(e)    Obligors, Agent and Lenders hereby acknowledge and agree that all
Existing Letters of Credit shall constitute U.S. Letters of Credit under this
Agreement on and after the Original Agreement Closing Date with the same effect
as if such Existing Letters of Credit were issued by U.S. Issuing Bank at the
request of U.S. Borrowers on the Original Agreement Closing Date.

 

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2.3.2.    Reimbursement; Participations.

(a)    If U.S. Issuing Bank honors any request for payment under a U.S. Letter
of Credit, U.S. Borrowers shall pay to U.S. Issuing Bank, on the same day (“U.S.
Reimbursement Date”), the amount paid by U.S. Issuing Bank under such U.S.
Letter of Credit in the same currency in which the Letter of Credit was
denominated unless otherwise specified by Agent or U.S. Issuing Bank (at their
respective option) that it requires payment in Dollars calculated at the Spot
Rate, together with interest at the interest rate for U.S. Base Rate Revolver
Loans from the U.S. Reimbursement Date until payment by U.S. Borrowers. The
obligation of U.S. Borrowers to reimburse U.S. Issuing Bank for any payment made
under a U.S. Letter of Credit shall be absolute, unconditional, irrevocable, and
joint and several, and shall be paid without regard to any lack of validity or
enforceability of any U.S. Letter of Credit or the existence of any claim,
setoff, defense or other right that U.S. Borrowers may have at any time against
the beneficiary. Whether or not Borrower Agent submits a Notice of Borrowing,
U.S. Borrowers shall be deemed to have requested a Borrowing of U.S. Base Rate
Revolver Loans in an amount necessary to pay all amounts due U.S. Issuing Bank
on any U.S. Reimbursement Date and each U.S. Lender agrees to fund its Pro Rata
share of such Borrowing whether or not the U.S. Revolver Commitments have
terminated, a U.S. Overadvance exists or is created thereby, or the conditions
in Section 6 are satisfied. In the event that (i) a drawing denominated in a
foreign currency (such foreign currency, a “U.S. Reimbursed Foreign Currency”)
is to be reimbursed in Dollars pursuant to the first sentence in this
Section 2.3.2(a); and (ii) the Dollars amount paid by the U.S. Borrowers shall
not be adequate on the date of that payment to purchase in accordance with
normal banking procedures a sum denominated in the U.S. Reimbursed Foreign
Currency equal to the drawing, the U.S. Borrowers agree, as a separate and
independent obligation, to indemnify U.S. Issuing Bank for the loss resulting
from its inability on that date to purchase the U.S. Reimbursed Foreign Currency
in the full amount of the drawing.

(b)    Upon issuance of a U.S. Letter of Credit, each U.S. Lender shall be
deemed to have irrevocably and unconditionally purchased from U.S. Issuing Bank,
without recourse or warranty, an undivided Pro Rata interest and participation
in all U.S. LC Obligations relating to the U.S. Letter of Credit. If U.S.
Issuing Bank makes any payment under a U.S. Letter of Credit and U.S. Borrowers
do not reimburse such payment on the U.S. Reimbursement Date, Agent shall
promptly notify U.S. Lenders and each U.S. Lender shall promptly (within one
Business Day) and unconditionally pay to Agent, for the benefit of U.S. Issuing
Bank, the U.S. Lender’s Pro Rata share of such payment in the same currency as
required of the U.S. Borrowers in accordance with Section 2.3.2(a). Upon request
by a U.S. Lender, U.S. Issuing Bank shall furnish copies of any U.S. Letters of
Credit and LC Documents in its possession at such time.

(c)    The obligation of each U.S. Lender to make payments to Agent for the
account of U.S. Issuing Bank in connection with U.S. Issuing Bank’s payment
under a U.S. Letter of Credit shall be absolute, unconditional and irrevocable,
not subject to any counterclaim, setoff, qualification or exception whatsoever,
and shall be made in accordance with this Agreement under all circumstances,
irrespective of any lack of validity or unenforceability of any Loan Documents;
any draft, certificate or other document presented under a U.S. Letter of Credit
having been determined to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect; or
the existence of any setoff or defense that any Obligor may have with respect to
any Obligations. U.S. Issuing Bank does not assume any responsibility

 

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for any failure or delay in performance or any breach by any U.S. Borrower or
other Person of any obligations under any LC Documents. U.S. Issuing Bank does
not make to Lenders any express or implied warranty, representation or guaranty
with respect to the Collateral, LC Documents or any Obligor. U.S. Issuing Bank
shall not be responsible to any Lender for any recitals, statements,
information, representations or warranties contained in, or for the execution,
validity, genuineness, effectiveness or enforceability of any LC Documents; the
validity, genuineness, enforceability, collectibility, value or sufficiency of
any Collateral or the perfection of any Lien therein; or the assets,
liabilities, financial condition, results of operations, business,
creditworthiness or legal status of any Obligor.

(d)    No Issuing Bank Indemnitee shall be liable to any Lender or other Person
for any action taken or omitted to be taken in connection with any LC Documents
except as a result of its actual gross negligence or willful misconduct. U.S.
Issuing Bank shall not have any liability to any Lender if U.S. Issuing Bank
refrains from any action under a Letter of Credit or LC Documents until it
receives written instructions from U.S. Required Lenders.

2.3.3.    Cash Collateral. If any U.S. LC Obligations, whether or not then due
or payable, shall for any reason be outstanding at any time (a) that an Event of
Default exists, (b) that U.S. Availability is less than zero, or (c) within 10
Business Days prior to the U.S. Revolver Commitment Termination Date, then U.S.
Borrowers shall, at U.S. Issuing Bank’s or Agent’s request, Cash Collateralize
the stated amount of all outstanding U.S. Letters of Credit and pay to U.S.
Issuing Bank the amount of all other U.S. LC Obligations. U.S. Borrowers shall,
on demand by U.S. Issuing Bank or Agent from time to time, Cash Collateralize
the Fronting Exposure of any Defaulting Lender which is a U.S. Lender. If U.S.
Borrowers fail to provide any Cash Collateral as required hereunder, U.S.
Lenders may (and shall upon direction of Agent) advance, as U.S. Revolver Loans,
the amount of the Cash Collateral required (whether or not the U.S. Revolver
Commitments have terminated, a U.S. Overadvance exists or the conditions in
Section 6 are satisfied).

2.3.4.    Resignation of U.S. Issuing Bank. U.S. Issuing Bank may resign at any
time upon notice to Agent and U.S. Borrowers. On the effective date of such
resignation, U.S. Issuing Bank shall have no further obligation to issue, amend,
renew, extend or otherwise modify any Letter of Credit, but shall continue to
have all rights and obligations of an Issuing Bank hereunder, including under
Sections 2.3, 12.6 and 14.2, relating to any Letter of Credit issued prior to
such date. Agent shall promptly appoint a replacement U.S. Issuing Bank, which,
as long as no Default or Event of Default exists, shall be reasonably acceptable
to U.S. Borrowers.

2.4    Canadian Letter of Credit Facility.

2.4.1.    Issuance of Canadian Letters of Credit. Canadian Issuing Bank shall
issue Canadian Letters of Credit from time to time until 30 days prior to the
Facility Termination Date (or until the Canadian Revolver Commitment Termination
Date, if earlier), on the terms set forth herein, including the following:

(a)    Canadian Borrower acknowledges that Canadian Issuing Bank’s issuance of
any Canadian Letter of Credit is conditioned upon Canadian Issuing Bank’s
receipt of a LC Application with respect to the requested Canadian Letter of
Credit, as well as such other

 

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instruments and agreements as Canadian Issuing Bank may customarily require for
issuance of a letter of credit of similar type and amount. Canadian Issuing Bank
shall have no obligation to issue any Canadian Letter of Credit unless
(i) Canadian Issuing Bank receives a LC Request and LC Application at least
three Business Days prior to the requested date of issuance; (ii) each LC
Condition is satisfied; and (iii) if a Defaulting Lender that is a Canadian
Lender exists, such Lender or Canadian Borrower has entered into arrangements
satisfactory to Agent and Canadian Issuing Bank to eliminate any Fronting
Exposure associated with such Lender. If, in sufficient time to act, Canadian
Issuing Bank receives written notice from Canadian Required Lenders that a LC
Condition has not been satisfied, Canadian Issuing Bank shall not issue the
requested Canadian Letter of Credit. Prior to receipt of any such notice,
Canadian Issuing Bank shall not be deemed to have knowledge of any failure of LC
Conditions.

(b)    Canadian Letters of Credit may be requested by Canadian Borrower to
support obligations incurred in the Ordinary Course of Business, or as otherwise
approved by Agent. The renewal or extension of any Canadian Letter of Credit
shall be treated as the issuance of a new Canadian Letter of Credit, except that
delivery of a new LC Application shall be required at the discretion of Canadian
Issuing Bank.

(c)    Canadian Borrower assumes all risks of the acts, omissions or misuses of
any Canadian Letter of Credit by the beneficiary. In connection with issuance of
any Canadian Letter of Credit, none of Agent, Issuing Banks or any Lender shall
be responsible for the existence, character, quality, quantity, condition,
packing, value or delivery of any goods purported to be represented by any
Documents; any differences or variation in the character, quality, quantity,
condition, packing, value or delivery of any goods from that expressed in any
Documents; the form, validity, sufficiency, accuracy, genuineness or legal
effect of any Documents or of any endorsements thereon; the time, place, manner
or order in which shipment of goods is made; partial or incomplete shipment of,
or failure to ship, any goods referred to in a Canadian Letter of Credit or
Documents; any deviation from instructions, delay, default or fraud by any
shipper or other Person in connection with any goods, shipment or delivery; any
breach of contract between a shipper or vendor and Canadian Borrower; errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex, telecopy, e-mail, telephone or otherwise;
errors in interpretation of technical terms; the misapplication by a beneficiary
of any Canadian Letter of Credit or the proceeds thereof; or any consequences
arising from causes beyond the control of Issuing Banks, Agent or any Lender,
including any act or omission of a Governmental Authority. The rights and
remedies of Canadian Issuing Bank under the Loan Documents shall be cumulative.
Canadian Issuing Bank shall be fully subrogated to the rights and remedies of
each beneficiary whose claims against Canadian Borrower are discharged with
proceeds of any Canadian Letter of Credit.

(d)    In connection with its administration of and enforcement of rights or
remedies under any Canadian Letters of Credit or LC Documents, Canadian Issuing
Bank shall be entitled to act, and shall be fully protected in acting, upon any
certification, documentation or communication in whatever form believed by
Canadian Issuing Bank, in good faith, to be genuine and correct and to have been
signed, sent or made by a proper Person. Canadian Issuing Bank may consult with
and employ legal counsel, accountants and other experts to advise it concerning
its obligations, rights and remedies, and shall be entitled to act upon, and
shall be fully protected in any action taken in good faith reliance upon, any
advice given by such experts. Canadian Issuing

 

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Bank may employ agents and attorneys-in-fact in connection with any matter
relating to Canadian Letters of Credit or LC Documents, and shall not be liable
for the negligence or misconduct of agents and attorneys-in-fact selected with
reasonable care.

2.4.2.    Reimbursement; Participations.

(a)    If Canadian Issuing Bank honors any request for payment under a Canadian
Letter of Credit, Canadian Borrower shall pay to Canadian Issuing Bank, on the
same day (“Canadian Reimbursement Date”), the amount paid by Canadian Issuing
Bank under such Canadian Letter of Credit in the same currency in which the
Letter of Credit was denominated unless otherwise specified by Agent or Canadian
Issuing Bank (at their respective option) that it requires payment in Dollars or
Canadian Dollars calculated at the Spot Rate, together with interest at the
interest rate for Canadian Prime Rate Loans from the Canadian Reimbursement Date
until payment by Canadian Borrower. The obligation of Canadian Borrower to
reimburse Canadian Issuing Bank for any payment made under a Canadian Letter of
Credit shall be absolute, unconditional, irrevocable, and joint and several, and
shall be paid without regard to any lack of validity or enforceability of any
Canadian Letter of Credit or the existence of any claim, setoff, defense or
other right that Canadian Borrower may have at any time against the beneficiary.
Whether or not Borrower Agent submits a Notice of Borrowing, Canadian Borrower
shall be deemed to have requested a Borrowing of Canadian Prime Rate Loans in an
amount necessary to pay all amounts due Canadian Issuing Bank on any Canadian
Reimbursement Date and each Canadian Lender agrees to fund its Pro Rata share of
such Borrowing whether or not the Canadian Revolver Commitments have terminated,
a Canadian Overadvance exists or is created thereby, or the conditions in
Section 6 are satisfied. In the event that (i) a drawing denominated in a
foreign currency (other than Dollars or Canadian Dollars) (such foreign
currency, a “Canadian Reimbursed Foreign Currency”) is to be reimbursed in
Dollars or Canadian Dollars pursuant to the first sentence in this
Section 2.4.2(a); and (ii) the Dollars or Canadian Dollars amount, as
applicable, paid by Canadian Borrower shall not be adequate on the date of that
payment to purchase in accordance with normal banking procedures a sum
denominated in the Canadian Reimbursed Foreign Currency equal to the drawing,
Canadian Borrower agrees, as a separate and independent obligation, to indemnify
Canadian Issuing Bank for the loss resulting from its inability on that date to
purchase the Canadian Reimbursed Foreign Currency in the full amount of the
drawing.

(b)    Upon issuance of a Canadian Letter of Credit, each Canadian Lender shall
be deemed to have irrevocably and unconditionally purchased from Canadian
Issuing Bank, without recourse or warranty, an undivided Pro Rata interest and
participation in all Canadian LC Obligations relating to the Canadian Letter of
Credit. If Canadian Issuing Bank makes any payment under a Canadian Letter of
Credit and Canadian Borrower does not reimburse such payment on the Canadian
Reimbursement Date, Agent shall promptly notify Canadian Lenders and each
Canadian Lender shall promptly (within one Business Day) and unconditionally pay
to Agent, for the benefit of Canadian Issuing Bank, the Canadian Lender’s Pro
Rata share of such payment in the same currency as required of the Canadian
Borrower in accordance with Section 2.4.2(a). Upon request by a Canadian Lender,
Canadian Issuing Bank shall furnish copies of any Canadian Letters of Credit and
LC Documents in its possession at such time.

(c)    The obligation of each Canadian Lender to make payments to Agent for the
account of Canadian Issuing Bank in connection with Canadian Issuing Bank’s
payment under a

 

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Canadian Letter of Credit shall be absolute, unconditional and irrevocable, not
subject to any counterclaim, setoff, qualification or exception whatsoever, and
shall be made in accordance with this Agreement under all circumstances,
irrespective of any lack of validity or unenforceability of any Loan Documents;
any draft, certificate or other document presented under a Canadian Letter of
Credit having been determined to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect; or the existence of any setoff or defense that any Obligor may have
with respect to any Obligations. Canadian Issuing Bank does not assume any
responsibility for any failure or delay in performance or any breach by Canadian
Borrower or other Person of any obligations under any LC Documents. Canadian
Issuing Bank does not make to Lenders any express or implied warranty,
representation or guaranty with respect to the Collateral, LC Documents or any
Obligor. Canadian Issuing Bank shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties contained in,
or for the execution, validity, genuineness, effectiveness or enforceability of
any LC Documents; the validity, genuineness, enforceability, collectibility,
value or sufficiency of any Collateral or the perfection of any Lien therein; or
the assets, liabilities, financial condition, results of operations, business,
creditworthiness or legal status of any Obligor.

(d)    No Issuing Bank Indemnitee shall be liable to any Lender or other Person
for any action taken or omitted to be taken in connection with any LC Documents
except as a result of its actual gross negligence or willful misconduct.
Canadian Issuing Bank shall not have any liability to any Lender if Canadian
Issuing Bank refrains from any action under a Letter of Credit or LC Documents
until it receives written instructions from Canadian Required Lenders.

2.4.3.    Cash Collateral. If any Canadian LC Obligations, whether or not then
due or payable, shall for any reason be outstanding at any time (a) that an
Event of Default exists, (b) that Canadian Availability is less than zero, or
(c) within 10 Business Days prior to the Canadian Revolver Commitment
Termination Date, then Canadian Borrower shall, at Canadian Issuing Bank’s or
Agent’s request, Cash Collateralize the stated amount of all outstanding
Canadian Letters of Credit and pay to Canadian Issuing Bank the amount of all
other Canadian LC Obligations. Canadian Borrower shall, on demand by Canadian
Issuing Bank or Agent from time to time, Cash Collateralize the Fronting
Exposure of any Defaulting Lender which is a Canadian Lender. If Canadian
Borrower fails to provide any Cash Collateral as required hereunder, Canadian
Lenders may (and shall upon direction of Agent) advance, as Canadian Revolver
Loans, the amount of the Cash Collateral required (whether or not the Canadian
Revolver Commitments have terminated, a Canadian Overadvance exists or the
conditions in Section 6 are satisfied).

2.4.4.    Resignation of Canadian Issuing Bank. Canadian Issuing Bank may resign
at any time upon notice to Agent and Canadian Borrower. On the effective date of
such resignation, Canadian Issuing Bank shall have no further obligation to
issue, amend, renew, extend or otherwise modify any Letter of Credit, but shall
continue to have all rights and obligations of an Issuing Bank hereunder,
including under Sections 2.4, 12.6 and 14.2, relating to any Letter of Credit
issued prior to such date. Agent shall promptly appoint a replacement Canadian
Issuing Bank, which, as long as no Default or Event of Default exists, shall be
reasonably acceptable to Canadian Borrower.

 

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2.5    Term Loans.

2.5.1.    Term Loans to U.S. Borrowers. Each U.S. Lender agrees, severally (and
not jointly) on a Pro Rata basis up to its Term Loan Commitment, upon the terms
and subject to the conditions set forth herein, to make a one-time Term Loan to
the U.S. Borrowers on any Business Day during the period from the Closing Date
to the date that is six months after the Closing Date; provided, however, that
such U.S. Lenders shall have no obligation to the U.S. Borrowers whatsoever to
honor any request for a Term Loan on or after the Term Loan Commitment
Termination Date or to the extent the aggregate Term Loans will exceed the Term
Loan Cap on the proposed funding date of the Term Loans (in which case such U.S.
Lenders shall be obligated to fund the Term Loans in an amount up to the Term
Loan Cap). The Term Loans shall bear interest as set forth in Section 3.1. The
Term Loans shall, at the option of the Borrower Agent, be made or continued as,
or converted into, part of one or more Borrowings that, unless specifically
provided herein, shall consist entirely of Base Rate Term Loans or LIBOR Term
Loans. The Term Loans shall be repaid in accordance with the terms of this
Agreement and shall be secured by all of the U.S. Facility Collateral. U.S.
Borrowers shall be jointly and severally liable to pay all of the Term Loans.
The Term Loans shall be funded and repaid in Dollars. For clarification, once
repaid, the Term Loans may not be reborrowed.

2.5.2.    Term Notes. The Term Loans made by each U.S. Lender and interest
accruing thereon shall be evidenced by the records of Agent and such Lender. At
the request of any U.S. Lender, the U.S. Borrowers shall execute and deliver a
promissory note to such Lender, evidencing its Term Loans.

2.5.3.    Use of Term Loan Proceeds. The proceeds of the Term Loans shall be
used by U.S. Borrowers solely (a) to pay Obligations in accordance with this
Agreement; and (b) for working capital and other lawful corporate purposes of
U.S. Borrowers.

2.5.4.    Termination of Term Loan Commitments. The Term Loan Commitments shall
terminate on the Term Loan Commitment Termination Date unless sooner terminated
in accordance with this Agreement. Any unused Term Loan Commitment shall
terminate on the date of the making of the Term Loans. Upon at least 10 days’
prior written notice to Agent from the Borrower Agent, U.S. Borrowers may, at
their option, terminate the Term Loan Commitments without premium or penalty.
Any notice of termination given by Borrowers pursuant to this Section 2.5.4
shall be irrevocable but may be conditioned on a refinancing or another material
event.

 

SECTION 3.

INTEREST, FEES AND CHARGES

3.1    Interest.

3.1.1.    Rates and Payment of Interest.

(a)    The Obligations shall bear interest (i) if a U.S. Base Rate Revolver
Loan, at the U.S. Base Rate in effect from time to time, plus the Applicable
Margin, (ii) if a LIBOR Revolver Loan, at LIBOR for the applicable Interest
Period, plus the Applicable Margin plus with respect to any U.K. Revolver Loan
that is a LIBOR Loan, any Mandatory Costs; (iii) if a Canadian Prime Rate Loan,
at the Canadian Prime Rate in effect from time to time, plus the Applicable

 

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Margin, (iv) if a Canadian Base Rate Loan, at the Canadian Base Rate in effect
from time to time, plus the Applicable Margin, (v) if a Canadian BA Rate Loan,
at the Canadian BA Rate for the applicable Interest Period, plus the Applicable
Margin, (vi) if a U.K. Base Rate Loan, at the U.K. Base Rate in effect from time
to time, plus the Applicable Margin, (vii) if a Base Rate Term Loan, at the U.S.
Base Rate in effect from time to time, plus the Applicable Margin, (viii) if a
LIBOR Term Loan, at LIBOR for the applicable Interest Period, plus the
Applicable Margin, (ix) if any other U.S. Facility Obligation (including, to the
extent permitted by law, interest not paid when due), at the U.S. Base Rate in
effect from time to time, plus the Applicable Margin for U.S. Base Rate Revolver
Loans; (x) if any other Canadian Facility Obligation (including, to the extent
permitted by law, interest not paid when due), at the Canadian Prime Rate in
effect from time to time, plus the Applicable Margin for Canadian Prime Rate
Loans; and (xi) if any other U.K. Facility Obligation (including, to the extent
permitted by law, interest not paid when due), at the U.K. Base Rate in effect
from time to time, plus the Applicable Margin for U.K. Base Rate Loans. Interest
shall accrue from the date the Loan is advanced or the Obligation is incurred or
payable, until paid by the applicable Borrower(s). If a Loan is repaid on the
same day made, one day’s interest shall accrue.

(b)    Interest on the Revolver Loans shall be payable in the currency (i.e.,
Dollars, Canadian Dollars, British Pounds or Euro, as the case may be) of the
underlying Revolver Loan (which shall be Dollars only in the case of any U.K.
Base Rate Loan).

(c)    During an Insolvency Proceeding with respect to any Obligor, or during
any other Event of Default if Agent or Required Lenders in their discretion so
elect, Obligations shall bear interest at the Default Rate (whether before or
after any judgment). Each Obligor acknowledges that the cost and expense to
Agent and Lenders due to an Event of Default are difficult to ascertain and that
the Default Rate is a fair and reasonable estimate to compensate Agent and
Lenders for this.

(d)    Interest accrued on the Loans shall be due and payable (i) on the last
day of the relevant Interest Period with respect to Interest Period Loans (or in
the case of an Interest Period Loan with an Interest Period of more than 90
days’ duration, on each quarterly anniversary of the first day of such Interest
Period) or, in arrears on the first day of each month with respect to Base Rate
Loans, and (ii) on any date of prepayment, with respect to the principal amount
of Loans being prepaid. In addition, interest accrued on the Canadian Revolver
Loans shall be due and payable in arrears on the Canadian Revolver Commitment
Termination Date, interest accrued on the U.S. Revolver Loans shall be due and
payable in arrears on the U.S. Revolver Commitment Termination Date, and
interest accrued on the U.K. Revolver Loans shall be due and payable in arrears
on the U.K. Revolver Commitment Termination Date. Interest accrued on any other
Obligations shall be due and payable as provided in the Loan Documents and, if
no payment date is specified, shall be due and payable on demand.
Notwithstanding the foregoing, interest accrued at the Default Rate shall be due
and payable on demand.

3.1.2.    Application of LIBOR to Outstanding Loans.

(a)    Borrowers may on any Business Day, subject to delivery of a Notice of
Conversion/Continuation, elect to convert any portion of the U.S. Base Rate
Loans, the Canadian Base Rate Loans, or the U.K. Base Rate Loans, as applicable,
to, or to continue any LIBOR Loan

 

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at the end of its Interest Period as, a LIBOR Loan; provided that, in the case
of U.K. Base Rate Loans only, portions of such Loans may be converted to a LIBOR
Loan denominated in Dollars only. During any Default or Event of Default, Agent
may (and shall at the direction of Required Lenders) declare that no Loan may be
made, converted or continued as a LIBOR Loan.

(b)    Whenever Borrowers desire to convert or continue Loans as LIBOR Loans,
Borrower Agent shall give Agent a Notice of Conversion/Continuation, no later
than 11:00 a.m. at least three Business Days (and at least four Business Days in
the case of a U.K. Revolver Loan) before the requested conversion or
continuation date. Promptly after receiving any such notice, Agent shall notify
each Applicable Lender (or Lenders with outstanding Term Loans if related to the
Term Loans) thereof. Each Notice of Conversion/Continuation shall be
irrevocable, and shall specify the amount of Loans to be converted or continued,
the conversion or continuation date (which shall be a Business Day), and the
duration of the Interest Period (which shall be deemed to be 30 days if not
specified). If, upon the expiration of any Interest Period in respect of any
LIBOR Loans, Borrower Agent shall have failed to deliver a Notice of
Conversion/Continuation, Borrowers shall be deemed to have elected to convert
such Loans into U.S. Base Rate Loans (if owing by the U.S. Borrowers), Canadian
Base Rate Loans (if owing by the Canadian Borrower), or a U.K. Base Rate Loan
(if owing by the U.K. Borrower) if that LIBOR Loan was denominated in Dollars,
or (as the case may be) a LIBOR Loan (the initial Interest Period of which shall
be 30 days commencing on the date of expiration of the Interest Period
applicable to that LIBOR Loan) if that LIBOR Loan was denominated in British
Pounds or Euro.

3.1.3.    Application of Canadian BA Rate to Outstanding Loans.

(a)    Canadian Borrower may on any Business Day, subject to delivery of a
Notice of Conversion/Continuation and the other terms hereof, elect to convert
any portion of the Canadian Prime Rate Loans, or to continue any Canadian BA
Rate Loan at the end of its Interest Period as, a Canadian BA Rate Loan. During
any Default or Event of Default, Agent may (and shall at the direction of
Required Lenders) declare that no Loan may be made, converted or continued as a
Canadian BA Rate Loan.

(b)    Whenever Canadian Borrower desires to convert or continue Loans as
Canadian BA Rate Loans, Borrower Agent shall give Agent a Notice of
Conversion/Continuation, no later than 11:00 a.m. at least three Business Days
before the requested conversion or continuation date. Promptly after receiving
any such notice, Agent shall notify each Canadian Lender thereof. Each Notice of
Conversion/Continuation shall be irrevocable, and shall specify the amount of
Loans to be converted or continued, the conversion or continuation date (which
shall be a Business Day), and the duration of the Interest Period (which shall
be deemed to be one month if not specified). If, upon the expiration of any
Interest Period in respect of any Canadian BA Rate Loans, Borrower Agent shall
have failed to deliver a Notice of Conversion/Continuation with respect thereto
as required above, Canadian Borrower shall be deemed to have elected to convert
such Loans into Canadian Prime Rate Loans.

3.1.4.    Interest Periods. In connection with the making, conversion or
continuation of any LIBOR Loans or Canadian BA Rate Loans, Borrower Agent shall
select an interest period (“Interest Period”) to apply, which interest period
shall be 30, 60, 90 or 180 days; provided, however, that:

 

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(a)    the Interest Period shall commence on the date the Loan is made or
continued as, or converted into, a LIBOR Loan or Canadian BA Rate Loan, and
shall expire on the numerically corresponding day in the calendar month at its
end;

(b)    if any Interest Period commences on a day for which there is no
corresponding day in the calendar month at its end or if such corresponding day
falls after the last Business Day of such month, then the Interest Period shall
expire on the last Business Day of such month; and if any Interest Period would
expire on a day that is not a Business Day, the period shall expire on the next
Business Day; and

(c)    no Interest Period shall extend beyond: (i) the U.S. Revolver Commitment
Termination Date in the case of any Revolving Loan owing by the U.S. Borrowers,
(ii) the Canadian Revolver Commitment Termination Date in the case of any Loan
owing by the Canadian Borrower, (iii) the U.K. Revolver Commitment Termination
Date in the case of any Loan owing by the U.K. Borrower, and (iv) the Term Loan
Maturity Date in the case of any Term Loan owing by the U.S. Borrowers. No
Interest Period for a LIBOR Term Loan may be established that would require
repayment before the end of an Interest Period in order to make any scheduled
principal payment on Term Loans.

3.1.5.    Interest Rate Not Ascertainable. If Agent shall determine that, on any
date for determining LIBOR or the Canadian BA Rate, due to any circumstance
affecting the London interbank market or the Canadian interbank bankers’
acceptances market, respectively, adequate and fair means do not exist for
ascertaining such rate on the basis provided herein, then Agent shall
immediately notify the Borrower Agent of such determination. Until Agent
notifies the Borrower Agent that such circumstance no longer exists, the
obligation of the Lenders to make LIBOR Loans or Canadian BA Rate Loans, as
applicable, shall be suspended, and no further Loans may be converted into or
continued as LIBOR Loans or Canadian BA Rate Loans, as applicable.

3.2    Fees.

3.2.1.    Unused Line Fee.

(a)    U.S. Borrowers shall pay to Agent, for the Pro Rata benefit of U.S.
Lenders, a fee equal to the U.S. Unused Line Fee Rate times the amount by which
the U.S. Revolver Commitments exceed the average daily balance of U.S. Revolver
Loans and stated amount of U.S. Letters of Credit during any month. Such fee
shall be payable in arrears, on the first day of each month and on the U.S.
Revolver Commitment Termination Date.

(b)    Canadian Borrower shall pay to Agent, for the Pro Rata benefit of
Canadian Lenders, a fee equal to the Canadian Unused Line Fee Rate times the
amount by which the Canadian Revolver Commitments exceed the average daily
balance of Canadian Revolver Loans and stated amount of Canadian Letters of
Credit during any month. Such fee shall be payable in arrears, on the first day
of each month and on the Canadian Revolver Commitment Termination Date.

(c)    The U.K. Borrower shall pay to Agent, for the Pro Rata benefit of U.K.
Lenders, a fee equal to the U.K. Unused Line Fee Rate times the amount by which
the U.K. Revolver Commitments exceed the average daily balance of U.K. Revolver
Loans and stated

 

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amount of U.K. Letters of Credit during any month. Such fee shall be payable in
arrears, on the first day of each month and on the U.K. Revolver Commitment
Termination Date.

3.2.2.    U.S. LC Facility Fees. The U.S. Borrowers shall pay (a) to Agent, for
the Pro Rata benefit of the U.S. Lenders, a fee equal to the per annum rate of
the Applicable Margin in effect for LIBOR Revolver Loans times the average daily
stated amount of U.S. Letters of Credit, which fee shall be payable monthly in
arrears, on the first day of each month; (b) to Agent, for its own account, a
fronting fee equal to 0.125% per annum on the stated amount of each U.S. Letter
of Credit, which fee shall be payable monthly in arrears, on the first day of
each month; and (c) to the U.S. Issuing Bank, for its own account, all customary
charges associated with the issuance, amending, negotiating, payment,
processing, transfer and administration of U.S. Letters of Credit, which charges
shall be paid as and when incurred. At the election of Agent or the U.S.
Required Lenders, during an Event of Default, the fee payable under clause
(a) shall be increased by 2% per annum.

3.2.3.    Canadian LC Facility Fees. The Canadian Borrower shall pay (a) to
Agent, for the Pro Rata benefit of the Canadian Lenders, a fee equal to the per
annum rate of the Applicable Margin in effect for Canadian BA Rate Loans times
the average daily stated amount of Canadian Letters of Credit, which fee shall
be payable monthly in arrears, on the first day of each month; (b) to Agent, for
its own account, a fronting fee equal to 0.125% per annum on the stated amount
of each Canadian Letter of Credit, which fee shall be payable monthly in
arrears, on the first day of each month; and (c) to the Canadian Issuing Bank,
for its own account, all customary charges associated with the issuance,
amending, negotiating, payment, processing, transfer and administration of
Canadian Letters of Credit, which charges shall be paid as and when incurred. At
the election of Agent or the Canadian Required Lenders, during an Event of
Default, the fee payable under clause (a) shall be increased by 2% per annum.

3.2.4.    U.K. LC Facility Fees. The U.K. Borrower shall pay (a) to Agent, for
the Pro Rata benefit of the U.K. Lenders, a fee equal to the per annum rate of
the Applicable Margin in effect for LIBOR Revolver Loans times the average daily
stated amount of U.K. Letters of Credit, which fee shall be payable monthly in
arrears, on the first day of each month; (b) to Agent, for its own account, a
fronting fee equal to 0.125% per annum on the stated amount of each U.K. Letter
of Credit, which fee shall be payable monthly in arrears, on the first day of
each month; and (c) to the U.K. Issuing Bank, for its own account, all customary
charges associated with the issuance, amending, negotiating, payment,
processing, transfer and administration of U.K. Letters of Credit, which charges
shall be paid as and when incurred. At the election of Agent or the U.K.
Required Lenders, during an Event of Default, the fee payable under clause
(a) shall be increased by 2% per annum.

3.2.5.    U.S. Term Loan Fees. U.S. Borrowers shall pay to Agent, for the Pro
Rata benefit of U.S. Lenders with Term Loan Commitments, a fee equal to the Term
Loan Unused Commitment Fee Rate times the Term Loan Commitments during each
month from the Closing to the earlier of (a) date of the making of the Term
Loans or (b) Term Loan Commitment Termination Date. Such fee shall be payable in
arrears, on the first day of each month and on the earlier of (x) date of the
making of the Term Loans or (y) the Term Loan Commitment Termination Date.

 

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3.2.6.    Other Fees. Borrowers shall pay such other fees as described in the
Fee Letters.

3.3    Computation of Interest, Fees, Yield Protection. All interest, as well as
fees and other charges calculated on a per annum basis, shall be computed for
the actual days elapsed, based on a year of 360 days, or, in the case of
(a) interest based on the Canadian Prime Rate or Canadian BA Rate or (b) a
Revolver Loan made in British Pounds, on the basis of a 365 day year, as the
case may be. Each determination by Agent of any interest, fees or interest rate
hereunder shall be final, conclusive and binding for all purposes, absent
manifest error. All fees shall be fully earned when due and shall not be subject
to rebate, refund or proration. All fees payable under Section 3.2 are
compensation for services and are not, and shall not be deemed to be, interest
or any other charge for the use, forbearance or detention of money. A
certificate as to amounts payable by any Borrower under Section 3.4, 3.5, 3.7,
3.9 or 5.9, submitted to the Borrower Agent by Agent or the affected Lender or
Issuing Bank, as applicable, shall be final, conclusive and binding for all
purposes, absent manifest error, and the Borrowers shall pay such amounts to the
appropriate party within 10 days following receipt of the certificate. For the
purposes of the Interest Act (Canada), the yearly rate of interest to which any
rate calculated on the basis of a period of time different from the actual
number of days in the year (360 days, for example) is equivalent is the stated
rate multiplied by the actual number of days in the year (365 or 366, as
applicable) and divided by the number of days in the shorter period (360 days,
in the example), and the parties hereto acknowledge that there is a material
distinction between the nominal and effective rates of interest and that they
are capable of making the calculations necessary to compare such rates and that
the calculations herein are to be made using the nominal rate method and not on
any basis that gives effect to the principle of deemed reinvestment of interest.
Each Canadian Domiciled Obligor confirms that it fully understands and is able
to calculate the rate of interest applicable to Loans and other Obligations
based on the methodology for calculating per annum rates provided for in this
Agreement and each Canadian Domiciled Obligor hereby irrevocably agrees not to
plead or assert, whether by way of defense or otherwise, in any proceeding
relating to this Agreement or to any other Loan Documents, that the interest
payable under this Agreement and the calculation thereof has not been adequately
disclosed to the Canadian Domiciled Obligors as required pursuant to Section 4
of the Interest Act (Canada).

3.4    Reimbursement Obligations. Borrowers within each Borrower Group shall
reimburse Agent and each Lender for all Extraordinary Expenses incurred by Agent
or such Lender in reference to such Borrower Group or its related Obligations or
Collateral. In addition to such Extraordinary Expenses, such Borrowers shall
also reimburse Agent for all legal, accounting, appraisal, consulting, and other
fees, costs and expenses incurred by it in connection with (a) negotiation and
preparation of any Loan Documents, including any amendment or other modification
thereof; (b) administration of and actions relating to any Collateral for its
Obligations, Loan Documents and transactions contemplated thereby, including any
actions taken to perfect or maintain priority of Agent’s Liens on any such
Collateral, to maintain any insurance required hereunder or to verify such
Collateral; and (c) subject to any limits of Section 10.1.1(b), each inspection,
audit or appraisal with respect to any Obligor within such Borrowers’ related
Obligor Group or Collateral securing such Obligor Group’s Obligations, whether
prepared by Agent’s personnel or a third party. All legal, accounting and
consulting fees shall be charged to Borrowers by Agent’s professionals at their
full hourly rates, regardless of any reduced or alternative fee billing
arrangements that Agent, any Lender or any of their Affiliates may have with
such

 

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professionals with respect to this or any other transaction. If, for any reason
(including inaccurate reporting on financial statements, a Borrowing Base
Certificate, or a Compliance Certificate), it is determined that a higher
Applicable Margin, U.S. Unused Line Fee Rate, Canadian Unused Line Fee Rate, or
U.K. Unused Line Fee Rate should have applied to a period than was actually
applied, then the proper margin shall be applied retroactively and the
applicable Borrowers shall immediately pay to Agent, for the Pro Rata benefit of
Applicable Lenders (or Lenders with outstanding Term Loans in the case of
interest related to the Term Loans), an amount equal to the difference between
the amount of interest and fees that would have accrued using the proper margin
and the amount actually paid. All amounts payable by Borrowers under this
Section shall be due on demand.

3.5    Illegality. If any Lender determines that any Applicable Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund LIBOR
Loans or Canadian BA Rate Loans, or to determine or charge interest rates based
upon LIBOR or the Canadian BA Rate, or any Governmental Authority has imposed
material restrictions on the authority of such Lender to purchase or sell, or to
take deposits of, the applicable Available Currency in the London interbank
market, or Canadian Dollars through bankers’ acceptances, then, on notice
thereof by such Lender to Agent, any obligation of such Lender to make or
continue LIBOR Loans or Canadian BA Rate Loans, as applicable, or to convert
U.S. Base Rate Loans or Canadian Base Rate Loans to LIBOR Loans, or Canadian
Prime Rate Loans to Canadian BA Rate Loans, or U.K. Base Rate Loans to LIBOR
Loans, as applicable, shall be suspended until such Lender notifies Agent that
the circumstances giving rise to such determination no longer exist. Upon
delivery of such notice, the applicable Borrower(s) with respect to such Loans
shall prepay or, if applicable, convert all LIBOR Loans of such Lender to U.S.
Base Rate Loans, Canadian Base Rate Loans or U.K. Base Rate Loans (which
alternative to prepayment aforesaid shall only be applicable in relation to any
LIBOR Loans of such Lenders to the U.K. Borrower in the case of any such LIBOR
Loans denominated in Dollars), or all Canadian Prime Rate Loans to Canadian BA
Rate Loans, as applicable, either on the last day of the Interest Period
therefor, if such Lender may lawfully continue to maintain such LIBOR Loans or
Canadian BA Rate Loans to such day, or immediately, if such Lender may not
lawfully continue to maintain such LIBOR Loans or Canadian BA Rate Loans. Upon
any such prepayment or conversion, the applicable Borrower(s) with respect to
such Loans shall also pay accrued interest on the amount so prepaid or
converted.

3.6    Inability to Determine Rates. If the U.S. Required Lenders, with respect
to U.S. Revolver Loans, or the U.S. Required Term Lenders, with respect to Term
Loans, or the Canadian Required Lenders, with respect to Canadian Revolver
Loans, or the U.K. Required Lenders, with respect to U.K. Revolver Loans, notify
Agent for any reason in connection with a request for a Borrowing of, or
conversion to or continuation of, a LIBOR Loan or a Canadian BA Rate Loan that
(a) deposits or bankers’ acceptances in the relevant Available Currency are not
being offered to, as regards LIBOR, banks in the London interbank eurocurrency
market or, as regards Canadian BA Rate, Persons in Canada, for the applicable
amount and Interest Period of such Loan, (b) adequate and reasonable means do
not exist for determining LIBOR or the Canadian BA Rate for the requested
Interest Period, or (c) LIBOR or the Canadian BA Rate for the requested Interest
Period does not adequately and fairly reflect the cost to such Lenders of
funding such Loan, then Agent will promptly so notify the Borrower Agent and
each Applicable Lender (or Lenders with outstanding Term Loans if related to
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Lenders (or Lenders with Term Loan Commitments or outstanding Term Loans if
related to the Term Loans) to make or maintain the affected LIBOR Loans or
Canadian BA Rate Loans shall be suspended until Agent (upon instruction by the
U.S. Required Lenders, U.S. Required Term Lenders, Canadian Required Lenders or
U.K. Required Lenders, as applicable) revokes such notice. Upon receipt of such
notice, the Borrower Agent may revoke any pending request for a Borrowing of,
conversion to or continuation of a LIBOR Loan or a Canadian BA Rate Loan or,
failing that, will be deemed to have submitted a request for a U.S. Base Rate
Loan, a Canadian Prime Rate Loan or a U.K. Base Rate Loan (but in the case of
any such pending request in relation to a LIBOR Loan for the U.K. Borrower, if
(a) that LIBOR Loan was denominated in British Pounds or Euro, the Borrower
Agent shall be deemed to have revoked any such pending request for a Borrowing
of, conversion to or continuation of that LIBOR Loan, and the U.K. Borrower
shall repay any such outstanding LIBOR Loan which was the subject of a
continuation request, and (b) only if that LIBOR Loan was denominated in Dollars
shall the Borrower Agent be deemed to have submitted a request for a U.K. Base
Rate Loan).

3.7    Increased Costs; Capital Adequacy.

3.7.1.    Change in Law. If any Change in Law shall:

(a)    impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by,
any Lender (except any reserve requirement reflected in LIBOR or the Canadian BA
Rate or Mandatory Costs) or any Issuing Bank;

(b)    subject any Lender or any Issuing Bank to any Tax with respect to any
Loan, Loan Document, Letter of Credit or participation in LC Obligations, or
change the basis of taxation of payments to such Lender or such Issuing Bank in
respect thereof (except for Indemnified Taxes or Other Taxes covered by
Section 5.9 (or would be covered by Section 5.9 but for exclusions in Sections
5.9.2 and 5.9.13) and the imposition of, or any change in the rate of, any
Excluded Tax payable by such Lender or such Issuing Bank); or

(c)    impose on any Lender or any Issuing Bank or the London interbank market
or the Canadian bankers’ acceptances market any other condition, cost or expense
affecting any Loan, Loan Document, Letter of Credit, participation in LC
Obligations, or Commitment;

and the result thereof shall be to increase the cost to such Lender of making or
maintaining any LIBOR Loan or Canadian BA Rate Loan (or of maintaining its
obligation to make any such Loan), or to increase the cost to such Lender or
such Issuing Bank of participating in, issuing or maintaining any Letter of
Credit (or of maintaining its obligation to participate in or to issue any
Letter of Credit), or to reduce the amount of any sum received or receivable by
such Lender or such Issuing Bank hereunder (whether of principal, interest or
any other amount) then, upon request of such Lender or such Issuing Bank, the
Borrower(s) of any Borrower Group with respect to such Commitments, Loans,
Letters of Credit or participations in LC Obligations) will pay to such Lender
or such Issuing Bank, as applicable, such additional amount or amounts as will
compensate such Lender or such Issuing Bank, as applicable, for such additional
costs incurred or reduction suffered.

 

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3.7.2.    Capital Adequacy. If any Lender or any Issuing Bank determines that
any Change in Law affecting such Lender or such Issuing Bank or any Lending
Office of such Lender or such Lender’s or such Issuing Bank’s holding company,
if any, regarding capital or liquidity requirements has or would have the effect
of reducing the rate of return on such Lender’s, such Issuing Bank’s or holding
company’s capital as a consequence of this Agreement, or such Lender’s or such
Issuing Bank’s Commitments, Loans, Letters of Credit or participations in LC
Obligations, to a level below that which such Lender, such Issuing Bank or
holding company could have achieved but for such Change in Law (taking into
consideration such Lender’s, such Issuing Bank’s and holding company’s policies
with respect to capital adequacy), then from time to time the Borrowers (or the
applicable Borrower(s) of any Borrower Group with respect to such Commitments,
Loans, Letters of Credit or participations in LC Obligations) will pay to such
Lender or such Issuing Bank, as the case may be, such additional amount or
amounts as will compensate it or its holding company for any such reduction
suffered.

3.7.3.    Compensation. Failure or delay on the part of any Lender or any
Issuing Bank to demand compensation pursuant to this Section shall not
constitute a waiver of its right to demand such compensation, but the
Borrower(s) of any Borrower Group shall not be required to compensate a Lender
or an Issuing Bank for any increased costs incurred or reductions suffered more
than nine months prior to the date that such Lender or such Issuing Bank
notifies the Borrower Agent of the Change in Law giving rise to such increased
costs or reductions and of such Lender’s or such Issuing Bank’s intention to
claim compensation therefor (except that, if the Change in Law giving rise to
such increased costs or reductions is retroactive, then the nine-month period
referred to above shall be extended to include the period of retroactive effect
thereof).

3.8    Mitigation. If any Lender gives a notice under Section 3.5 or requests
compensation under Section 3.7, or if the Borrower(s) of any Borrower Group are
required to pay additional amounts with respect to a Lender under Section 5.9,
then such Lender shall use reasonable efforts to designate a different Lending
Office or to assign its rights and obligations hereunder to another of its
offices, branches or Affiliates, if, in the judgment of such Lender, such
designation or assignment (a) would eliminate the need for such notice or reduce
amounts payable or to be withheld in the future, as applicable; and (b) would
not subject such Lender to any unreimbursed cost or expense and would not
otherwise be disadvantageous to such Lender or unlawful. The Borrower(s) of each
affected Borrower Group shall pay all reasonable costs and expenses incurred by
any Lender that has issued a Commitment to such Borrower Group in connection
with any such designation or assignment.

3.9    Funding Losses. If for any reason (other than default by a Lender) (a)
any Borrowing of, or conversion to or continuation of, a LIBOR Loan or a
Canadian BA Rate Loan does not occur on the date specified therefor in a Notice
of Borrowing or Notice of Conversion/Continuation (whether or not withdrawn),
(b) any repayment or conversion of a LIBOR Loan or a Canadian BA Rate Loan
occurs on a day other than the end of its Interest Period, (c) a Lender (other
than a Defaulting Lender) is required to assign a LIBOR Loan or Canadian BA Rate
Loan prior to the end of its Interest Period pursuant to Section 13.4, or
(d) the Borrower(s) of any Borrower Group fail(s) to repay a LIBOR Loan or a
Canadian BA Rate Loan when required hereunder, then such applicable Borrower(s)
shall pay to Agent its customary administrative charge and to each Applicable
Lender all losses and expenses that it sustains as a consequence thereof,
including loss of anticipated profits and any loss or expense arising from
liquidation or

 

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redeployment of funds or from fees payable to terminate deposits of matching
funds but excluding the Applicable Margin and Mandatory Costs. The Lenders shall
not be required to purchase deposits in the London interbank market or any other
offshore market to fund any LIBOR Loan or to transact in bankers’ acceptances to
make any Canadian BA Rate Loan, but the provisions hereof shall be deemed to
apply as if each Applicable Lender had purchased such deposits to fund its LIBOR
Loans or Canadian BA Rate Loans, as applicable.

3.10    Maximum Interest. Notwithstanding anything to the contrary contained in
any Loan Document, the interest paid or agreed to be paid under the Loan
Documents shall not exceed the maximum rate of non-usurious interest permitted
by Applicable Law (“maximum rate”). If Agent or any Lender shall receive
interest in an amount that exceeds the maximum rate, the excess interest shall
be applied to the principal of the Obligations of the Borrower Group to which
such excess interest relates or, if it exceeds such unpaid principal, refunded
to such Borrower Group. In determining whether the interest contracted for,
charged or received by Agent or a Lender exceeds the maximum rate, such Person
may, to the extent permitted by Applicable Law, (a) characterize any payment
that is not principal as an expense, fee or premium rather than interest;
(b) exclude voluntary prepayments and the effects thereof; and (c) amortize,
prorate, allocate and spread in equal or unequal parts the total amount of
interest throughout the contemplated term of the Obligations hereunder. Without
limiting the generality of the foregoing provisions of this Section 3.10, if any
provision of any of the Loan Documents would obligate any Canadian Domiciled
Obligor to make any payment of interest with respect to the Canadian Facility
Obligations in an amount or calculated at a rate which would be prohibited by
Applicable Law or would result in the receipt of interest with respect to the
Canadian Facility Obligations at a criminal rate (as such terms are construed
under the Criminal Code (Canada)), then, notwithstanding such provision, such
amount or rates 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 law or so result in a receipt by the applicable recipient of
interest with respect to the Canadian Facility Obligations at a criminal rate,
such adjustment to be effected, to the extent necessary, as follows: (i) first,
by reducing the amount or rates of interest required to be paid by the Canadian
Domiciled Obligors to the applicable recipient under the Loan Documents; and
(ii) thereafter, by reducing any fees, commissions, premiums and other amounts
required to be paid by the Canadian Domiciled Obligors to the applicable
recipient which would constitute interest with respect to the Canadian Facility
Obligations for purposes of Section 347 of the Criminal Code (Canada).
Notwithstanding the foregoing, and after giving effect to all adjustments
contemplated thereby, if the applicable recipient shall have received an amount
in excess of the maximum permitted by that section of the Criminal Code
(Canada), then the Canadian Domiciled Obligors shall be entitled, by notice in
writing to Agent, to obtain reimbursement from the applicable recipient in an
amount equal to such excess, and, pending such reimbursement, such amount shall
be deemed to be an amount payable by the applicable recipient to the applicable
Canadian Domiciled Obligor. Any amount or rate of interest with respect to the
Canadian Facility Obligations referred to in this Section 3.10 shall be
determined in accordance with generally accepted actuarial practices and
principles as an effective annual rate of interest over the term that any Loans
to the Canadian Borrower remain outstanding on the assumption that any charges,
fees or expenses that fall within the meaning of “interest” (as defined in the
Criminal Code (Canada)) shall, if they relate to a specific period of time, be
pro rated over that period of time and otherwise be pro rated over the period
from the Original Agreement Closing Date to the date of Full Payment of the
Canadian Facility Obligations, and, in the event of a dispute, a certificate of
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Institute of Actuaries appointed by Agent shall be conclusive for the purposes
of such determination.

 

SECTION 4.

LOAN ADMINISTRATION

4.1    Manner of Borrowing and Funding Revolver Loans.

4.1.1.    Notice of Borrowing.

(a)    Whenever Borrowers within a Borrower Group desire funding of a Borrowing
of Revolver Loans, Borrower Agent shall give Agent a Notice of Borrowing. Such
notice must be received by Agent no later than 11:00 a.m. (i) on the Business
Day of the requested funding date, in the case of U.S. Base Rate Loans, Canadian
Prime Rate Loans, or Canadian Base Rate Loans, (ii) on the Business Day prior to
the requested funding date, in the case of U.K. Base Rate Loans, and (iii) at
least three Business Days prior (and at least four Business Days in the case of
a U.K. Revolver Loan) to the requested funding date, in the case of LIBOR Loans
or Canadian BA Rate Loans. Notices received after 11:00 a.m. shall be deemed
received on the next Business Day. Each Notice of Borrowing shall be irrevocable
and shall specify (A) the amount of the Borrowing, (B) the requested funding
date (which must be a Business Day), (C) whether the Borrowing is to be made as
a U.S. Base Rate Loan or a LIBOR Loan (in the case of a Borrowing by the U.S.
Borrowers), or as a Canadian Base Rate Loan, a Canadian Prime Rate Loan, LIBOR
Loan, or a Canadian BA Rate Loan (in the case of a Borrowing by the Canadian
Borrower) or as a U.K. Base Rate Loan or a LIBOR Loan (in the case of a
Borrowing by the U.K. Borrower), (D) in the case of LIBOR Loans or Canadian BA
Rate Loans, the duration of the applicable Interest Period (which shall be
deemed to be 30 days if not specified), (E) in the case of a Borrowing by the
Canadian Borrower, whether such Loan is to be denominated in Dollars or Canadian
Dollars, and (F) in the case of a Borrowing by the U.K. Borrower, in the case of
LIBOR Loans only, whether such Loan is to be denominated in Dollars, British
Pounds or Euro.

(b)    Unless payment is otherwise timely made by Borrowers within a Borrower
Group, the becoming due of any amount required to be paid with respect to any of
the Obligations of the Obligor Group to which such Borrower Group belongs
(whether principal, interest, fees or other charges, including Extraordinary
Expenses, LC Obligations, Cash Collateral and Secured Bank Product Obligations)
shall be deemed to be a request for Revolver Loans by such Borrower Group on the
due date, in the amount of such Obligations and shall bear interest at the per
annum rate applicable hereunder to U.S. Base Rate Revolver Loans, in the case of
such Obligations owing by any U.S. Facility Obligor, or to Canadian Prime Rate
Loans, in the case of such Obligations owing by a Canadian Domiciled Obligor, or
to U.K. Base Rate Loans, in the case of such Obligations owing by a U.K.
Domiciled Obligor. The proceeds of such Revolver Loans shall be disbursed as
direct payment of the relevant Obligation. In addition, Agent may, at its
option, charge such Obligations of an Obligor Group against any operating,
investment or other account of an Obligor within such Obligor Group maintained
with Agent or any of its Affiliates.

(c)    If Borrowers within a Borrower Group establish a controlled disbursement
account with Agent or any branch or Affiliate of Agent, then the presentation
for payment of any check, ACH or electronic debit, or other payment item at a
time when there are insufficient funds to cover it shall be deemed to be a
request for Revolver Loans by such Borrower Group on the

 

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date of such presentation, in the amount of such payment item, and shall bear
interest at the per annum rate applicable hereunder to U.S. Base Rate Revolver
Loans, in the case of insufficient funds owing by any U.S. Facility Obligor, or
to Canadian Prime Rate Loans, in the case of insufficient funds owing by a
Canadian Domiciled Obligor, or to U.K. Base Rate Loans, in the case of
insufficient funds owing by a U.K. Domiciled Obligor. The proceeds of such
Revolver Loans may be disbursed directly to the controlled disbursement account
or other appropriate account.

(d)    Whenever U.S. Borrowers desire funding of the Borrowing of the Term
Loans, Borrower Agent shall give Agent a Notice of Borrowing. Such notice must
be received by Agent no later than 11:00 a.m. (i) at least two (2) Business Days
prior to the requested funding date in the case of Base Rate Term Loans and
(ii) at least three (3) Business Days prior to the requested funding date in the
case of LIBOR Term Loans. Notices received after 11:00 a.m. shall be deemed
received on the next Business Day. Any such Notice of Borrowing shall be
irrevocable (subject to the last sentence of this Section 4.1.1(d)) and shall
specify (A) the amount of the Term Loans to be borrowed (subject to the limits
set forth herein), (B) the requested funding date (which must be a Business
Day), (C) whether the Borrowing is to be made as a Base Rate Term Loan or a
LIBOR Term Loan, and (D) in the case of LIBOR Term Loans, the duration of the
applicable Interest Period (which shall be deemed to be 30 days if not
specified). Notwithstanding the foregoing, a request for a Base Rate Term Loan
(a “Base Rate Term Loan Request”) meeting the foregoing requirements may be
conditioned by U.S. Borrowers on a material event occurring, provided, that,
Agent must receive notice no later than 11:00 a.m. on the requested funding date
on whether such material event has, or shall be deemed to have, occurred (a
“Material Event Confirmation”) (it being understood that to the extent Agent
does not receive a Material Event Confirmation by such time, the corresponding
Base Rate Term Loan Request shall be deemed null and void).

4.1.2.    Fundings by Lenders.

(a)    Each Applicable Lender shall timely honor its Revolver Commitment by
funding its Pro Rata share of each Borrowing of Revolver Loans that is properly
requested hereunder. Except for Borrowings to be made as Swingline Loans, Agent
shall endeavor to notify the Applicable Lenders of each Notice of Borrowing (or
deemed request for a Borrowing) by 12:00 noon (Applicable Time Zone) on the
proposed funding date (and by 12:00 p.m. (Applicable Time Zone) on the Business
Day prior to the proposed funding date, in the case of U.K. Base Rate Loans) for
U.S. Base Rate Loans, Canadian Base Rate Loans, Canadian Prime Rate Loans or
U.K. Base Rate Loans, or by 3:00 p.m. (Applicable Time Zone) at least two
Business Days before any proposed funding of LIBOR Loans or Canadian BA Rate
Loans. Each Applicable Lender shall fund to Agent such Lender’s Pro Rata share
of the Borrowing to the account specified by Agent in immediately available
funds not later than 2:00 p.m. (Applicable Time Zone) on the requested funding
date, unless Agent’s notice is received after the times provided above, in which
case Lender shall fund its Pro Rata share by 11:00 a.m. (Applicable Time Zone)
on the next Business Day. Subject to its receipt of such amounts from the
Applicable Lenders, Agent shall disburse the proceeds of the Revolver Loans as
directed by Borrower Agent. Unless Agent shall have received (in sufficient time
to act) written notice from an Applicable Lender that it does not intend to fund
its Pro Rata share of a Borrowing, Agent may assume that such Lender has
deposited or promptly will deposit its share with Agent, and Agent may disburse
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Borrower(s). If an Applicable Lender’s share of any Borrowing or of any
settlement pursuant to Section 4.1.3(b) is not received by Agent, then the
Borrowers within the applicable Borrower Group agree to repay to Agent on demand
the amount of such share, together with interest thereon from the date disbursed
until repaid, at the rate applicable to such Borrowing.

(b)    Each U.S. Lender shall timely honor its Term Loan Commitment by funding
its Pro Rata share of the Term Loans that are properly requested hereunder.
Agent shall endeavor to notify the U.S. Lenders with Term Loan Commitments of
any Notice of Borrowing to request the Term Loans by 12:00 noon (Pacific time)
at least three (3) Business Days prior to the proposed funding date. Each U.S.
Lender with a Term Loan Commitment shall fund to Agent such Lender’s Pro Rata
share of the Borrowing to the account specified by Agent in immediately
available funds not later than 2:00 p.m. (Pacific time) on the requested funding
date. Subject to its receipt of such amounts from such U.S. Lenders, Agent shall
disburse the proceeds of the Term Loans as directed by Borrower Agent. Unless
Agent shall have received (in sufficient time to act) written notice from a U.S.
Lender with a Term Loan Commitment that it does not intend to fund its Pro Rata
share of such Borrowing, Agent may assume that such U.S. Lender has deposited or
promptly will deposit its share with Agent, and Agent may disburse a
corresponding amount to the applicable U.S. Borrower(s). If a U.S. Lender’s
share of any such Borrowing is not received by Agent, then the U.S. Borrowers
agree to repay to Agent on demand the amount of such share, together with
interest thereon from the date disbursed until repaid, at the rate applicable to
such Borrowing.

4.1.3.    Swingline Loans; Settlement.

(a)    Agent may, but shall not be obligated to, advance U.S. Swingline Loans to
the U.S. Borrowers, up to an aggregate outstanding amount equal to 10% of the
aggregate U.S. Revolver Commitments, unless the funding is specifically required
to be made by all U.S. Lenders hereunder. Each U.S. Swingline Loan shall
constitute a U.S. Base Rate Revolver Loan for all purposes, except that payments
thereon shall be made to Agent for its own account. The obligation of the U.S.
Borrowers to repay U.S. Swingline Loans shall be evidenced by the records of
Agent and need not be evidenced by any promissory note. Agent (acting through
its Canada branch) may, but shall not be obligated to, advance Canadian
Swingline Loans to the Canadian Borrower, up to an aggregate outstanding amount
equal to 10% of the aggregate Canadian Revolver Commitments, unless the funding
is specifically required to be made by all Canadian Lenders hereunder. Each
Canadian Swingline Loan shall constitute a Canadian Prime Rate Revolver Loan or
a Canadian Base Rate Loan, as applicable, for all purposes, except that payments
thereon shall be made to Agent (acting through its Canada branch) for its own
account. The obligation of the Canadian Borrower to repay Canadian Swingline
Loans shall be evidenced by the records of Agent (acting through its Canada
branch) and need not be evidenced by any promissory note. Agent may, but shall
not be obligated to, advance U.K. Swingline Loans to the U.K. Borrower, up to an
aggregate outstanding amount equal to 10% of the aggregate U.K. Revolver
Commitments, unless the funding is specifically required to be made by all U.K.
Lenders hereunder. Each U.K. Swingline Loan shall be made in and denominated
only in Dollars, and shall constitute a U.K. Base Rate Loan for all purposes,
except that payments thereon shall be made to Agent for its own account. The
obligation of the U.K. Borrower to repay U.K. Swingline Loans shall be evidenced
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(b)    Settlement of Swingline Loans and other Revolver Loans among Lenders and
Agent shall take place on a date determined from time to time by Agent (but at
least weekly), in accordance with the Settlement Report delivered by Agent to
Lenders. Between settlement dates, Agent may in its discretion apply payments on
Revolver Loans to Swingline Loans, regardless of any designation by any Borrower
or any provision herein to the contrary. Each Lender’s obligation to make
settlements with Agent is absolute and unconditional, without offset,
counterclaim or other defense, and whether or not the Commitments have
terminated, an Overadvance exists or the conditions in Section 6 are satisfied.
If, due to an Insolvency Proceeding with respect to a Borrower or otherwise, any
U.S. Swingline Loan may not be settled among the U.S. Lenders hereunder, then
each U.S. Lender shall be deemed to have purchased from Agent a Pro Rata
participation in such Loan and shall transfer the amount of such participation
to Agent, in immediately available funds, within one Business Day after Agent’s
request therefor. If, due to an Insolvency Proceeding with respect to a Borrower
or otherwise, any Canadian Swingline Loan may not be settled among the Canadian
Lenders hereunder, then each Canadian Lender shall be deemed to have purchased
from Agent a Pro Rata participation in such Loan and shall transfer the amount
of such participation to Agent, in immediately available funds, within one
Business Day after Agent’s request therefore. If, due to an Insolvency
Proceeding with respect to a Borrower or otherwise, any U.K. Swingline Loan may
not be settled among the U.K. Lenders hereunder, then each U.K. Lender shall be
deemed to have purchased from Agent a Pro Rata participation in such Loan and
shall transfer the amount of such participation to Agent, in immediately
available funds, within one Business Day after Agent’s request therefore

4.1.4.    Notices. Borrowers may request, convert or continue Loans, select
interest rates and transfer funds based on telephonic or e-mailed instructions
to Agent. Borrowers shall confirm each such request by prompt delivery to Agent
of a Notice of Borrowing or Notice of Conversion/Continuation, if applicable,
but if it differs materially from the action taken by Agent or Lenders, the
records of Agent and Lenders shall govern. Neither Agent nor any Lender shall
have any liability for any loss suffered by a Borrower as a result of Agent or
any Lender acting upon its understanding of telephonic or e-mailed instructions
from a person believed in good faith by Agent or any Lender to be a person
authorized to give such instructions on a Borrower’s behalf.

4.2    Defaulting Lender.

4.2.1.    Reallocation of Pro Rata Share; Amendments. For purposes of
determining Lenders’ obligations to fund or participate in Loans or Letters of
Credit, Agent may exclude the Commitments and Loans of any Defaulting Lender(s)
from the calculation of Pro Rata shares. A Defaulting Lender shall have no right
to vote on any amendment, waiver or other modification of a Loan Document,
except as provided in Section 14.1.1(c).

4.2.2.    Payments; Fees. Agent may, in its discretion, receive and retain any
amounts payable to a Defaulting Lender under the Loan Documents, and a
Defaulting Lender shall be deemed to have assigned to Agent such amounts until
all Obligations owing to Agent, non-Defaulting Lenders and other Secured Parties
have been paid in full. Agent may apply such amounts to the Defaulting Lender’s
defaulted obligations, use the funds to Cash Collateralize such Lender’s
Fronting Exposure, or readvance the amounts, in accordance with this Agreement,
to the Borrowers of the Borrower Group to which such defaulted obligations
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be entitled to receive any fees accruing hereunder during the period in which it
is a Defaulting Lender, and the unfunded portion of its Commitment shall be
disregarded for purposes of calculating the unused line fees under
Section 3.2.1. If any LC Obligations owing to a Defaulted Lender are reallocated
to other Lenders, fees attributable to such LC Obligations under Section 3.2.2,
Section 3.2.3, and Section 3.2.4, as applicable, shall be paid to such Lenders.
Agent shall be paid all fees attributable to LC Obligations that are not
reallocated.

4.2.3.    Cure. Borrowers, Agent and Issuing Banks may agree in writing that a
Lender is no longer a Defaulting Lender. At such time, Pro Rata shares shall be
reallocated without exclusion of such Lender’s Commitments and Loans, and all
outstanding Revolver Loans, LC Obligations and other exposures under the
Revolver Commitments shall be reallocated among Lenders and settled by Agent
(with appropriate payments by the reinstated Lender) in accordance with the
readjusted Pro Rata shares. Unless expressly agreed by Borrowers, Agent and
Issuing Banks, or as expressly provided herein with respect to Bail-In Actions
and related matters, no reinstatement of a Defaulting Lender shall constitute a
waiver or release of claims against such Lender. The failure of any Lender to
fund a Loan, to make a payment in respect of LC Obligations or otherwise to
perform its obligations hereunder shall not relieve any other Lender of its
obligations, and no Lender shall be responsible for default by another Lender.

4.3    Number and Amount of LIBOR Loans and Canadian BA Rate Loans;
Determination of Rate. With respect to the U.S. Borrowers, (i) no more than 10
Borrowings of LIBOR Loans may be outstanding at any time, and all LIBOR Loans to
U.S. Borrowers having the same length and beginning date of their Interest
Periods shall be aggregated together and considered one Borrowing for this
purpose, and (ii) each Borrowing of LIBOR Loans when made, continued or
converted shall be in a minimum amount of $1,000,000 or an increment of
$1,000,000, in excess thereof. With respect to the Canadian Borrower, (x) no
more than 5 Borrowings of LIBOR Loans may be outstanding at any time, and all
LIBOR Loans having the same length and beginning date of their Interest Periods
shall be aggregated together and considered one Borrowing for this purpose,
(y) no more than 5 Borrowings of Canadian BA Rate Loans may be outstanding at
any time, and all Canadian BA Rate Loans having the same length and beginning
date of their Interest Periods shall be aggregated together and considered one
Borrowing for this purpose, and (z) each Borrowing of such Loans when made,
continued or converted shall be in a minimum amount of $1,000,000 (or, in the
case of Canadian BA Rate Loans, Cdn$1,000,000) or an increment of $1,000,000
(or, in the case of Canadian BA Rate Loans, Cdn$1,000,000), in excess thereof.
With respect to the U.K. Borrower, (1) no more than 5 Borrowings of LIBOR Loans
may be outstanding at any time, and all LIBOR Loans having the same length and
beginning date of their Interest Periods and in the same Available Currency
shall be aggregated together and considered one Borrowing for this purpose, and
(2) each Borrowing of such Loans when made, continued or converted shall be in a
minimum amount of $1,000,000 (or, in the case of LIBOR Loans denominated in
British Pounds, £1,000,000 or, in the case of LIBOR Loans denominated in Euros,
Euros 1,000,000) or an increment of $1,000,000 (or, in the case of LIBOR Loans
denominated in British Pounds, £1,000,000 or, in the case of LIBOR Loans
denominated in Euros, Euros 1,000,000), in excess thereof. Upon determining
LIBOR or the Canadian BA Rate for any Interest Period requested by the Borrower
Agent on behalf of a Borrower Group, Agent shall promptly notify the Borrower
Agent thereof by telephone or electronically and, if requested by the Borrower
Agent, shall confirm any telephonic notice in writing.

 

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4.4    Borrower Agent. Each Borrower and other Obligor hereby designates
Callaway Golf Company, a Delaware corporation (“Borrower Agent”) as its
representative and agent for all purposes under the Loan Documents, including
requests for Loans and Letters of Credit, designation of interest rates,
delivery or receipt of communications, preparation and delivery of Borrowing
Base and financial reports, receipt and payment of Obligations, requests for
waivers, amendments or other accommodations, actions under the Loan Documents
(including in respect of compliance with covenants), and all other dealings with
Agent, any Issuing Bank or any Lender. Borrower Agent hereby accepts such
appointment. Agent and Lenders shall be entitled to rely upon, and shall be
fully protected in relying upon, any notice or communication (including any
notice of borrowing) delivered by Borrower Agent on behalf of any Borrower.
Agent and Lenders may give any notice or communication with a Borrower or other
Obligor hereunder to Borrower Agent on behalf of such Borrower or other Obligor.
Each of Agent, Issuing Banks and Lenders shall have the right, in its
discretion, to deal exclusively with Borrower Agent for any or all purposes
under the Loan Documents. Each Borrower and other Obligor agrees that any
notice, election, communication, representation, agreement or undertaking made
on its behalf by Borrower Agent shall be binding upon and enforceable against
it.

4.5    One Obligation. The Loans, LC Obligations and other Obligations of the
applicable Borrower(s) of each Borrower Group and their respective Guarantors
shall constitute one general obligation of such Borrower(s) of such Borrower
Group and their respective Guarantors and (unless otherwise expressly provided
in any Loan Document) shall be secured by Agent’s Lien upon all Collateral of
such Borrower(s) of such Borrower Group and their respective Guarantors;
provided, however, that each Credit Party shall be deemed to be a creditor of,
and the holder of a separate claim against, each Borrower or other Obligor to
the extent of any Obligations jointly or severally owed by such Borrower or
other Obligor to such Credit Party.

4.6    Effect of Termination. On the effective date of any termination of any of
the Revolver Commitments, all Obligations with respect thereto shall be
immediately due and payable, and any Lender may terminate its and its
Affiliates’ Bank Products. All undertakings of Borrowers contained in the Loan
Documents shall survive any termination, and Agent shall retain its Liens in the
Collateral and all of its rights and remedies under the Loan Documents until
Full Payment of the Obligations. Notwithstanding Full Payment of the
Obligations, Agent shall not be required to terminate its Liens in any
Collateral unless, with respect to any damages Agent may incur as a result of
the dishonor or return of Payment Items applied to Obligations, Agent receives
(a) a written agreement satisfactory to Agent, executed by Borrowers and any
Person whose advances are used in whole or in part to satisfy the Obligations,
indemnifying Agent and Lenders from such damages; and (b) such Cash Collateral
as Agent, in its discretion, deems appropriate to protect against such damages.
Sections 2.2, 2.3, 2.4, 3.4, 3.6, 3.7, 3.9, 5.5, 5.9, 5.10, 12, 14.2 and this
Section, and the obligation of each Obligor and Lender with respect to each
indemnity given by it in any Loan Document, shall survive Full Payment of the
Obligations and any release relating to this credit facility.

 

SECTION 5.

PAYMENTS

5.1    General Payment Provisions. All payments of Obligations shall be made
without offset, counterclaim or defense of any kind, free of (and without
deduction for) any Taxes, and in immediately available funds, not later than
12:00 noon (Applicable Time Zone) on the due date.

 

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Any payment after such time shall be deemed made on the next Business Day. Any
payment of a LIBOR Loan or a Canadian BA Rate Loan prior to the end of its
Interest Period shall be accompanied by all amounts due under Section 3.9. Any
prepayment of Loans by a Borrower Group shall be applied first to U.S. Base Rate
Loans, Canadian Base Rate Loans, Canadian Prime Rate Loans or U.K. Base Rate
Loans, as applicable, of such Borrower Group and then to LIBOR Loans or Canadian
BA Rate Loans, as applicable, of such Borrower Group. All payments with respect
to any U.S. Facility Obligations shall be made in Dollars and all payments with
respect to any Canadian Facility Obligations shall be made in Canadian Dollars
or, if any portion of such Canadian Facility Obligations is denominated in
Dollars, then in Dollars and all payments with respect to any U.K. Facility
Obligations shall be made in British Pounds or, if any portion of such U.K.
Facility Obligations is denominated in Euro, then in Euro or, if any portion of
such U.K. Facility Obligations is denominated in Dollars, then in Dollars.

5.2    Repayment of Revolver Loans. All U.S. Revolver Loans shall be due and
payable in full on the U.S. Revolver Commitment Termination Date, all Canadian
Revolver Loans shall be due and payable in full on the Canadian Revolver
Commitment Termination Date, and all U.K. Revolver Loans shall be due and
payable in full on the U.K. Revolver Commitment Termination Date, in each case
unless payment is sooner required hereunder. Revolver Loans may be prepaid from
time to time, without penalty or premium, subject to, in the case of LIBOR Loans
and Canadian BA Rate Loans, Section 3.9. If any Asset Disposition includes the
disposition of Accounts or Inventory of an Obligor, then Net Proceeds equal to
the greater of (a) the net book value of such Accounts and Inventory, or (b) the
reduction in the applicable Borrowing Base (i.e., the U.S. Borrowing Base in the
case of an Asset Disposition with respect to Accounts or Inventory of the U.S.
Borrowers, the Canadian Borrowing Base in the case of an Asset Disposition with
respect to Accounts or Inventory of the Canadian Borrower, and the U.K.
Borrowing Base in the case of an Asset Disposition with respect to Accounts or
Inventory of the U.K. Borrower) upon giving effect to such disposition, shall be
applied to the applicable Revolver Loans (i.e., the U.S. Revolver Loans in the
case of an Asset Disposition of Accounts or Inventory of the U.S. Borrowers, the
Canadian Revolver Loans in the case of an Asset Disposition with respect to the
Accounts or Inventory of the Canadian Borrower, and the U.K. Revolver Loans in
the case of an Asset Disposition with respect to the Accounts or Inventory of
the U.K. Borrower). Notwithstanding anything herein to the contrary, if an
Overadvance exists (including as a result of any Asset Disposition), the
applicable Borrower(s) (i.e., the U.S. Borrowers in the case of a U.S.
Overadvance, the Canadian Borrower in the case of a Canadian Overadvance, and
the U.K. Borrower in the case of a U.K. Overadvance) shall, on the sooner of
Agent’s demand or the first Business Day after any such Borrower has knowledge
thereof, repay the outstanding applicable Revolver Loans (i.e., the U.S.
Revolver Loans in the case of a U.S. Overadvance, the Canadian Revolver Loans in
the case of a Canadian Overadvance, and the U.K. Revolver Loans in the case of a
U.K. Overadvance) in an amount sufficient to reduce the principal balance of
such Revolver Loans to the applicable Borrowing Base (i.e., the U.S. Borrowing
Base in the case of a U.S. Revolver Loans, the Canadian Borrowing Base in the
case of Canadian Revolver Loans, and the U.K. Borrowing Base in the case of U.K.
Revolver Loans).

5.3    Repayment of Term Loans.

5.3.1.    Payment of Principal. Commencing on the first day of the month
immediately following the date that is fifteen (15) months after the date the
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(such month, the “First Term Loan Repayment Month”), and on the first day of
each third month ending after the First Term Loan Repayment Month, the principal
amount of the Term Loans shall be repaid by an amount equal to 1/12th of the
original principal aggregate amount of the Term Loans. In addition to the
foregoing, on the earlier of the Term Loan Maturity Date and the U.S. Revolver
Commitment Termination Date, all principal, interest and other amounts owing
with respect to the Term Loans shall be due and payable in full. Each
installment shall be paid to Agent for the Pro Rata benefit of Lenders. Once
repaid, whether such repayment is voluntary or required, Term Loans may not be
reborrowed. Any prepayment of Term Loans shall be accompanied by all interest
accrued thereon and any amounts payable under Section 3.9.

5.3.2.    Mandatory Prepayments.

(a)    Within sixty days after delivery to Agent of Borrowers’ audited annual
financial statements (and accompanying Compliance Certificate) for the Fiscal
Year ending on December 31, 2018, U.S. Borrowers shall (a) deliver to Agent a
written calculation of Excess Cash Flow for such Fiscal Year, certified by a
Senior Officer of Borrower Agent, and (b) prepay Term Loans in an amount equal
to the least of: (i) 50% of such Excess Cash Flow; (ii) $10,000,000; and
(iii) the greatest amount available such that after giving effect to the payment
of such amount, the sum of Net Excess Availability plus unrestricted cash and
cash equivalents of the Obligors is not less than an amount equal to 15% of the
Maximum Facility Amount. Any such prepayment of the Term Loans shall be applied
to principal in inverse order of maturity.

(b)    Concurrently with any Asset Disposition by any U.S. Facility Obligor of
any Real Estate, Intellectual Property, or Equity Interests of Top Golf, U.S.
Borrowers shall prepay Term Loans in an amount equal to the Net Proceeds of such
disposition. Any such prepayment of the Term Loans shall be applied to principal
in inverse order of maturity.

5.3.3.    Optional Prepayments. U.S. Borrowers may, at their option from time to
time, prepay Term Loans, which prepayment must be at least $5,000,000, plus any
increment of $1,000,000 in excess thereof. Borrower Agent shall give written
notice to Agent of an intended prepayment of Term Loans, which notice shall
specify the amount of the prepayment and the date of such prepayment (which must
be a Business Day), shall be irrevocable once given, and shall be given at least
3 Business Days prior to the date of such prepayment. Any such voluntary
prepayment of the Term Loans shall be applied to principal in inverse order of
maturity.

5.4    Payment of Other Obligations. Obligations other than Loans, including LC
Obligations and Extraordinary Expenses, shall be paid by Borrowers as provided
in the Loan Documents or, if no payment date is specified, on demand.

5.5    Marshaling; Payments Set Aside. None of Agent or Lenders shall be under
any obligation to marshal any assets in favor of any Obligor or against any
Obligations. If any payment by or on behalf of Borrowers or any other Obligor is
made to Agent, any Issuing Bank or any Lender, or Agent, any Issuing Bank or any
Lender exercises a right of setoff, and such payment or the proceeds of such
setoff or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by Agent, such Issuing Bank or such Lender in its
discretion) to be repaid to a Creditor Representative or any other Person, then
to the extent of such recovery, the Obligation originally intended to be
satisfied,

 

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and all Liens, rights and remedies relating thereto, shall be revived and
continued in full force and effect as if such payment had not been made or such
setoff had not occurred.

5.6    Post-Default Allocation of Payments.

5.6.1.    Allocation. Notwithstanding anything herein to the contrary, during an
Event of Default, monies to be applied to the Obligations, whether arising from
payments by or on behalf of any Obligor, realization on Collateral, setoff or
otherwise, shall be allocated as follows:

(a)    with respect to monies, payments, Property or Collateral of or from any
U.S. Domiciled Obligor:

(i)    first, to all costs and expenses, including Extraordinary Expenses, owing
to Agent;

(ii)    second, to all Extraordinary Expenses owing to any U.S. Lender;

(iii)    third, to all amounts owing to Agent on U.S. Swingline Loans;

(iv)    fourth, to all amounts owing to U.S. Issuing Bank on account of U.S. LC
Obligations;

(v)    fifth, to all Obligations constituting fees (other than Secured Bank
Product Obligations) owing by any U.S. Domiciled Obligor (exclusive of any such
amounts owing by the Canadian Domiciled Obligors or U.K. Domiciled Obligors
which are guaranteed by the U.S. Domiciled Obligors);

(vi)    sixth, to all U.S. Facility Obligations constituting interest (other
than Secured Bank Product Obligations and other than on account of the Term
Loans) owing by any U.S. Domiciled Obligor (exclusive of any such amounts owing
by the Canadian Domiciled Obligors or U.K. Domiciled Obligors which are
guaranteed by the U.S. Domiciled Obligors);

(vii)    seventh, to Cash Collateralize the U.S. LC Obligations;

(viii)    eighth, to all U.S. Revolver Loans and Noticed Hedges (solely to the
extent such Noticed Hedges were reserved for by Agent under the U.S. Borrowing
Base immediately prior to the time of such allocation) of any U.S. Domiciled
Obligor, including Cash Collateralization of Noticed Hedges (solely to the
extent such Noticed Hedges were reserved for by Agent under the U.S. Borrowing
Base immediately prior to the time of such allocation) of any U.S. Domiciled
Obligor;

(ix)    ninth, to all other U.S. Facility Obligations (exclusive of any such
amounts owing by the Canadian Domiciled Obligors or U.K. Domiciled Obligors
which are guaranteed by the U.S. Domiciled Obligors);

 

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(x)    tenth, ratably: (i) to be applied in accordance with clause (b) below, to
the extent there are insufficient funds for the Full Payment of all Obligations
owing by any Canadian Domiciled Obligor, and (ii) to be applied in accordance
with clause (c) below, to the extent there are insufficient funds for the Full
Payment of all Obligations owing by any U.K. Domiciled Obligor;

(xi)    eleventh, to all interest owing by any U.S. Domiciled Obligor on account
of the Term Loans; and

(xii)    twelfth, to all Term Loans.

(b)    with respect to monies, payments, Property or Collateral of or from any
Canadian Domiciled Obligor, together with any allocations pursuant to subclause
(x) of clause (a) above and subclause (x) of clause (c) below:

(i)    first, to all costs and expenses, including Extraordinary Expenses, owing
to Agent, to the extent owing by any Canadian Domiciled Obligor;

(ii)    second, to all Extraordinary Expenses owing to any Canadian Lender;

(iii)    third, to all amounts owing to Agent (acting through its Canada branch)
on Canadian Swingline Loans;

(iv)    fourth, to all amounts owing to the Canadian Issuing Bank on account of
Canadian LC Obligations;

(v)    fifth, to all Canadian Facility Obligations constituting fees (other than
Secured Bank Product Obligations) owing by any Canadian Domiciled Obligor
(exclusive of any such amounts owing by the U.K. Domiciled Obligors which are
guaranteed by the Canadian Domiciled Obligors);

(vi)    sixth, to all Canadian Facility Obligations constituting interest (other
than Secured Bank Product Obligations) owing by any Canadian Domiciled Obligor
(exclusive of any such amounts owing by the U.K. Domiciled Obligors which are
guaranteed by the Canadian Domiciled Obligors);

(vii)    seventh, to Cash Collateralize the Canadian LC Obligations;

(viii)    eighth, to all Canadian Revolver Loans and Noticed Hedges of any
Canadian Domiciled Obligor (solely to the extent such Noticed Hedges were
reserved for by Agent under the Canadian Borrowing Base immediately prior to the
time of such allocation), including Cash Collateralization of Noticed Hedges
(solely to the extent such Noticed Hedges were reserved for by Agent under the
Canadian Borrowing Base immediately prior to the time of such allocation) of any
Canadian Domiciled Obligor;

 

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(ix)    ninth, to all other Canadian Facility Obligations (exclusive of any such
amounts owing by the U.K. Domiciled Obligors which are guaranteed by the
Canadian Domiciled Obligors); and

(x)    tenth, to be applied in accordance with clause (c) below, to the extent
there are insufficient funds for the Full Payment of all Obligations owing by
any U.K. Domiciled Obligor.

(c)    with respect to monies, payments, Property or Collateral of or from any
U.K. Domiciled Obligor, together with any allocations pursuant to subclause
(x) of clause (a) above and subclause (x) of clause (b) above:

(i)    first, to all costs and expenses, including Extraordinary Expenses, owing
to Agent, to the extent owing by any U.K. Domiciled Obligor;

(ii)    second, to all Extraordinary Expenses owing to any U.K. Lender;

(iii)    third, to all amounts owing to Agent on U.K. Swingline Loans;

(iv)    fourth, to all amounts owing to the U.K. Issuing Bank on account of U.K.
LC Obligations;

(v)    fifth, to all U.K. Facility Obligations constituting fees (other than
Secured Bank Product Obligations) owing by any U.K. Domiciled Obligor (exclusive
of any such amounts owing by the Canadian Domiciled Obligors which are
guaranteed by the U.K. Domiciled Obligors);

(vi)    sixth, to all U.K. Facility Obligations constituting interest (other
than Secured Bank Product Obligations) owing by any U.K. Domiciled Obligor
(exclusive of any such amounts owing by the Canadian Domiciled Obligors which
are guaranteed by the U.K. Domiciled Obligors);

(vii)    seventh, to Cash Collateralize the U.K. LC Obligations;

(viii)    eighth, to all U.K. Revolver Loans and Noticed Hedges of any U.K.
Domiciled Obligor (solely to the extent such Noticed Hedges were reserved for by
Agent under the U.K. Borrowing Base immediately prior to the time of such
allocation), including Cash Collateralization of Noticed Hedges (solely to the
extent such Noticed Hedges were reserved for by Agent under the U.K. Borrowing
Base immediately prior to the time of such allocation) of any U.K. Domiciled
Obligor;

(ix)    ninth, to all other U.K. Facility Obligations (exclusive of any such
amounts owing by the Canadian Domiciled Obligors which are guaranteed by the
U.K. Domiciled Obligors); and

(x)    tenth, to be applied in accordance with clause (b) above, to the extent
there are insufficient funds for the Full Payment of all Obligations owing by
any Canadian Domiciled Obligor.

 

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Amounts shall be applied to each category of Obligations set forth above until
Full Payment thereof and then to the next category. If amounts are insufficient
to satisfy a category, they shall be applied on a pro rata basis among the
Obligations in the category. Amounts distributed with respect to any Secured
Bank Product Obligations shall be the lesser of the maximum Secured Bank Product
Obligations last reported to Agent or the actual Secured Bank Product
Obligations as calculated by the methodology reported to Agent for determining
the amount due. Monies and proceeds obtained from an Obligor shall not be
applied to its Excluded Swap Obligations, but appropriate adjustments shall be
made with respect to amounts obtained from other Obligors to preserve the
allocations in any applicable category. Agent shall have no obligation to
calculate the amount to be distributed with respect to any Secured Bank Product
Obligations, and may request a reasonably detailed calculation of such amount
from the applicable Secured Party. If a Secured Party fails to deliver such
calculation within five days following request by Agent, Agent may assume the
amount to be distributed is the last reported amount. The allocations set forth
in this Section are solely to determine the rights and priorities of Agent and
Secured Parties as among themselves, and may be changed by agreement among them
without the consent of any Obligor. This Section is not for the benefit of or
enforceable by any Borrower.

5.6.2.    Erroneous Application. Agent shall not be liable for any application
of amounts made by it in good faith and, if any such application is subsequently
determined to have been made in error, the sole recourse of any Lender or other
Person to which such amount should have been made shall be to recover the amount
from the Person that actually received it (and, if such amount was received by
any Lender, such Lender hereby agrees to return it).

5.7    Application of Payments.

5.7.1.    Dominion Account(s) of U.S. Borrowers. The ledger balance in the main
Dominion Account of the U.S. Borrowers as of the end of a Business Day shall be
applied to the Obligations of the U.S. Borrowers at the beginning of the next
Business Day, during any Dominion Trigger Period. If, at the end of a Business
Day, after giving effect to such application, if any, a credit balance exists,
the balance shall not accrue interest in favor of the U.S. Borrowers and shall
be made available to the U.S. Borrowers as long as the Obligations have not been
accelerated on account of an Event of Default. During any Dominion Trigger
Period, each U.S. Borrower and other Obligor irrevocably waive the right to
direct the application of any payments or Collateral proceeds, and agree that
Agent shall have the continuing, exclusive right to apply and reapply same
against the Obligations, in such manner as Agent deems advisable.

5.7.2.    Dominion Account(s) of Canadian Borrower. The ledger balance in the
main Dominion Account of the Canadian Borrower as of the end of a Business Day
shall be applied to the Obligations of the Canadian Borrower at the beginning of
the next Business Day, during any Dominion Trigger Period. If, at the end of a
Business Day, after giving effect to such application, if any, a credit balance
exists, the balance shall not accrue interest in favor of the Canadian Borrower
and shall be made available to the Canadian Borrower as long as the Obligations
have not been accelerated on account of an Event of Default. During any Dominion
Trigger Period, the Canadian Borrower and each other Obligor irrevocably waive
the right to direct the application of any payments or Collateral proceeds, and
agree that Agent shall have the continuing, exclusive right to apply and reapply
same against the Obligations, in such manner as Agent deems advisable.

 

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5.7.3.    Dominion Account(s) of U.K. Borrower. The ledger balance in the main
Dominion Account of the U.K. Borrower as of the end of a Business Day occurring
on and after the Closing Date shall be applied to the Obligations of the U.K.
Borrower at the beginning of the next Business Day. If, at the end of a Business
Day occurring after the Closing Date, after giving effect to such application,
if any, a credit balance exists, the balance shall not accrue interest in favor
of the U.K. Borrower and shall be made available to the U.K. Borrower as long as
the Obligations have not been accelerated on account of an Event of Default and
in any event subject to the terms of the U.K. Security Agreements. The U.K.
Borrower and each other Obligor irrevocably waive the right to direct the
application of any payments or Collateral proceeds, and agree that Agent shall
have the continuing, exclusive right to apply and reapply same against the
Obligations, in such manner as Agent deems advisable.

5.8    Loan Account; Account Stated.

5.8.1.    Loan Account. Agent shall maintain, in accordance with its usual and
customary practices, an account or accounts (“Loan Account”) evidencing the Debt
of each of the Borrower(s) within each Borrower Group resulting from each Loan
made to such Borrower Group or issuance of a Letter of Credit for the account of
such Borrower(s) from time to time. Any failure of Agent to record anything in
any Loan Account, or any error in doing so, shall not limit or otherwise affect
the obligations of the applicable Borrower(s) to pay any amount owing hereunder.
Agent may maintain a single Loan Account in the name of the Borrower Agent, and
each Borrower and other Obligor confirms that such arrangement shall have no
effect on the joint and several character of its liability for the Obligations
as and to the extent provided herein or in the other Loan Documents.

5.8.2.    Entries Binding. Entries made in any Loan Account shall constitute
presumptive evidence of the information contained therein. If any information
contained in the Loan Account is provided to or inspected by any Person, then
such information shall be conclusive and binding on such Person for all purposes
absent manifest error, except to the extent such Person notifies Agent in
writing within 30 days after receipt or inspection that specific information is
subject to dispute.

5.9    Taxes.

5.9.1.    Payments Free of Taxes. All payments by or on behalf of any Obligor
hereunder shall be free and clear of and without withholding or deduction for
any Taxes. If Applicable Law requires any Obligor or Agent to withhold or deduct
any Tax (including backup withholding or withholding Tax), the withholding or
deduction shall be based on information provided pursuant to Section 5.10 and
Agent shall pay the amount withheld or deducted to the relevant Governmental
Authority. If the withholding or deduction is made on account of Indemnified
Taxes or Other Taxes, the sum payable by the applicable Borrowers or other
Obligors shall be increased so that Agent, each Lender and each Issuing Bank, as
applicable, receives an amount equal to the sum it would have received if no
such withholding or deduction (including withholdings or deductions applicable
to additional sums payable under this Section) had been made. In addition,
Borrowers and the other Obligors shall timely pay all Other Taxes to the
relevant Governmental Authorities.

 

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5.9.2.    Payments Free of Tax by the U.K. Borrower. A payment by the U.K.
Borrower under this Agreement shall not be increased under Section 5.9.1 above
by reason of a withholding or deduction on account of Tax imposed by the United
Kingdom (“Tax Deduction”), if on the date on which the payment falls due:

(a)    the payment could have been made to the relevant Lender without a Tax
Deduction if the Lender had been a U.K. Qualified Lender, but on that date that
Lender is not or has ceased to be a U.K. Qualified Lender other than as a result
of any change after the date it became a Lender under this Agreement in (or in
the interpretation, administration, or application of) any law or Treaty or any
published practice or published concession of any relevant taxing authority; or

(b)    the relevant Lender is a U.K. Qualified Lender solely by virtue of
paragraph (i)(B) of the definition of U.K. Qualified Lender; and:

(i)    an officer of H.M. Revenue & Customs has given (and not revoked) a
direction (a “Direction”) under section 931 of ITA which relates to the payment
and that Lender has received from the U.K. Borrower making the payment a
certified copy of that Direction; and

(ii)    the payment could have been made to the Lender without any Tax Deduction
if that Direction had not been made; or

(c)    the Lender is a U.K. Qualified Lender solely by virtue of paragraph
(i)(B) of the definition of U.K. Qualified Lender and:

(i)    the Lender has not given a U.K. Tax Confirmation to the U.K. Borrower;
and

(ii)    the payment could have been made to the Lender without any Tax Deduction
if the Lender had given a U.K. Tax Confirmation to the U.K. Borrower, on the
basis that the U.K. Tax Confirmation would have enabled the U.K. Borrower to
have formed a reasonable belief that the payment was an “excepted payment” for
the purposes of Section 930 of ITA; or

(d)    the relevant Lender is a Treaty Lender and the U.K. Borrower making the
payment is able to demonstrate that the payment could have been made to the
Lender without the Tax Deduction had that Lender complied with its obligations
under Section 5.9.5 below.

5.9.3.    Timing and Amount. If the U.K. Borrower is required to make a Tax
Deduction, the U.K. Borrower shall make that Tax Deduction and any payment
required in connection with that Tax Deduction within the time allowed and in
the minimum amount required by law.

5.9.4.    Evidence of Payment. Within 30 days of making either a Tax Deduction
or any payment required in connection with that Tax Deduction, the U.K. Borrower
shall deliver to the Agent for the Lender or the Agent entitled to the payment a
statement under Section 975 of

 

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ITA or other evidence reasonably satisfactory to that Lender or the Agent that
the Tax Deduction has been made or (as applicable) any appropriate payment paid
to the relevant taxing authority.

5.9.5.    Co-operation between a Treaty Lender and the U.K. Borrower. A Treaty
Lender and the U.K. Borrower making a payment to which that Treaty Lender is
entitled shall co-operate in completing any procedural formalities necessary for
U.K. Borrower to obtain authorization to make that payment without a Tax
Deduction.

5.9.6.    Exceptions. Nothing in Section 5.9.5 above shall require a Treaty
Lender to: (a) register under the HMRC DT Treaty Passport scheme; (b) apply the
HMRC DT Treaty Passport scheme to any Loan if it has so registered; or (c) file
Treaty forms if it has included an indication to the effect that it wishes the
HMRC DT Treaty Passport scheme to apply to this Agreement in accordance with
Section 5.9.9 below or Section 5.9.16 below and the Obligor making that payment
has complied with its obligations under Section 5.9.10 below or Section 5.9.17
below.

5.9.7.    Existing Lenders. A U.K. Non-Bank Lender which becomes a Lender on the
day on which this Agreement is entered into gives a U.K. Tax Confirmation to the
U.K. Borrower by entering into this Agreement.

5.9.8.    Notice. A U.K. Non-Bank Lender shall promptly notify the U.K. Borrower
and the Agent if there is any change in the position from that set out in the
U.K. Tax Confirmation.

5.9.9.    HMRC DT Treaty Passport schemes. A Treaty Lender which becomes a party
to this Agreement on the day on which this Agreement is entered into that holds
a passport under the HMRC DT Treaty Passport scheme, and which then wishes that
scheme to apply to this Agreement, shall include an indication to that effect
(for the benefit of the Agent and without liability to any Obligor) by including
its scheme reference number and its jurisdiction of tax residence opposite its
name in Schedule 5.9.9.

5.9.10.    Form DTTP2. Where a Lender includes the indication described in
Section 5.9.9 above in Schedule 5.9.9, the U.K. Borrower shall, to the extent
that such Lender is a Lender under the facilities made available to the U.K.
Borrower pursuant to Section 2.1 or Section 2.2, file a duly completed form
DTTP2 in respect of such Lender with HM Revenue & Customs within 30 days of the
date of this Agreement and shall promptly provide such Lender with a copy of
that filing.

5.9.11.    No Filings. If a Lender has not included an indication to the effect
that it wishes the HMRC DT Treaty Passport scheme to apply to this Agreement in
accordance with Section 5.9.9 above or Section 5.9.16 below, no Obligor shall
file a form DTTP2 or any other form relating to the HMRC DT Treaty Passport
scheme in respect of that Lender’s commitment(s) or its participation in any
facility made available under this Agreement.

5.9.12.    Payment. Obligors shall indemnify, hold harmless and reimburse
(within 10 days after demand therefor) Agent, Lenders and Issuing Banks for any
Indemnified Taxes or Other Taxes (including those attributable to amounts
payable under this Section) paid by Agent, any Lender or any Issuing Bank, with
respect to any Obligations of such Borrower’s Borrower

 

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Group, Letters of Credit of such Borrower’s Borrower Group or Loan Documents,
whether or not such Taxes were properly asserted by the relevant Governmental
Authority, and including all penalties, interest and reasonable expenses
relating thereto, as well as any amount that a Lender or an Issuing Bank fails
to pay indefeasibly to Agent under Section 5.10. A certificate as to the amount
of any such payment or liability delivered to Borrower Agent by Agent, or by a
Lender or an Issuing Bank (with a copy to Agent), shall be conclusive, absent
manifest error. As soon as practicable after any payment of Taxes by any
Obligor, Borrower Agent shall deliver to Agent a receipt from the Governmental
Authority or other evidence of payment satisfactory to Agent.

5.9.13.    Payment by the U.K. Borrower. Section 5.9.12 shall not apply:

 

  (a)

with respect to any Tax assessed on a Lender or the Agent:

(i)    under the law of the jurisdiction in which that Lender or the Agent is
incorporated or, if different, the jurisdiction (or jurisdictions) in which that
Lender or the Agent is treated as resident for tax purposes; or

(ii)    under the law of the jurisdiction in which that Lender’s or the Agent’s
lending office is located in respect of amounts received or receivable in that
jurisdiction,

if that Tax is imposed on or calculated by reference to the net income received
or receivable (but not any sum deemed to be received or receivable) by that
Lender or the Agent; or

 

  (b)

to the extent a loss, liability or cost:

(i)    is compensated for by an increased payment under Section 5.9.1; or

(ii)    would have been compensated for by an increased payment under
Section 5.9.1 but was not so compensated solely because one of the exclusions in
Section 5.9.2 applied.

5.9.14.    Tax Credit. If the U.K. Borrower makes a payment under Section 5.9.1
or Section 5.9.12 (a “U.K. Tax Payment”) and either a Lender or the Agent
determines that:

(a)    a Tax Credit is attributable either to an increased payment of which that
U.K. Tax Payment forms part, or to that U.K. Tax Payment; and

(b)    that Lender or the Agent has obtained, utilized and retained that Tax
Credit,

that Lender or the Agent shall pay an amount to the U.K. Borrower which that
Lender or the Agent determines will leave it (after that payment) in the same
after-Tax position as it would have been in had the U.K. Tax Payment not been
required to be made by the U.K. Borrower.

5.9.15.    New Lenders. Each Lender which becomes a party to this Agreement in
the capacity of a U.K. Lender after the date of this Agreement (“New Lender”)
shall indicate, at

 

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the time it becomes a New Lender, on and for the benefit of the Agent and
without liability to the U.K. Borrower, which of the following categories it
falls in:

 

  (a)

not a U.K. Qualified Lender;

 

  (b)

a U.K. Qualified Lender (other than a Treaty Lender); or

 

  (c)

a Treaty Lender.

If a New Lender fails to indicate its status in accordance with this
Section 5.9.15 then such New Lender shall be treated for the purposes of this
Agreement (including by each Obligor) as if it is not a U.K. Qualified Lender
until such time as it notifies the Agent which category applies (and the Agent,
upon receipt of such notification, shall inform the U.K. Borrower). For the
avoidance of doubt, an assignment in accordance with Section 13.3 shall not be
invalidated by any failure of a New Lender to comply with this Section 5.9.15.

5.9.16.    HMRC DT Treaty Passport schemes – New Lenders. A New Lender that is a
Treaty Lender that holds a passport under the HMRC DT Treaty Passport scheme,
and which then wishes that scheme to apply to this Agreement, shall include an
indication to that effect (for the benefit of the Agent and without liability to
any Obligor) in the assignment notice which it executes pursuant to, or in
connection with, Section 13.3 below by including its scheme reference number and
its jurisdiction of tax residence in that assignment notice.

5.9.17.    Form DTTP2 – New Lenders. Where a New Lender includes the indication
described in Section 5.9.16 above in the relevant assignment notice the U.K.
Borrower shall, to the extent that that New Lender becomes a Lender under a
facility which is made available to the U.K. Borrower pursuant to pursuant to
Section 2.1 or Section 2.2, file a duly completed form DTTP2 in respect of such
Lender with HM Revenue & Customs within 30 days of the date of that assignment
and shall promptly provide the Lender with a copy of that filing.

5.9.18.    FATCA Grandfathering. For purposes of determining withholding Taxes
imposed under FATCA, from and after the effective date of this Agreement, the
Borrowers and the Agent shall treat (and the Lenders hereby authorize the Agent
to treat) this Agreement as not qualifying as a “grandfathered obligation”
within the meaning of Treasury Regulation Section 1.1471-2(b)(2)(i).

5.10    Lender Tax Information.

5.10.1.    Status of Lenders. Each Lender shall deliver documentation and
information to Agent and Borrower Agent, at the times and in form required by
Applicable Law or reasonably requested by Agent or Borrower Agent, sufficient to
permit Agent or Borrowers to determine (a) whether or not payments made with
respect to Obligations are subject to Taxes, (b) if applicable, the required
rate of withholding or deduction, and (c) such Lender’s entitlement to any
available exemption from, or reduction of, applicable Taxes for such payments or
otherwise to establish such Lender’s status for withholding tax purposes in the
applicable jurisdiction.

5.10.2.    Documentation. If a Borrower is resident for tax purposes in the
United States, any Lender that is a “United States person” within the meaning of
section 7701(a)(30) of

 

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the Code shall deliver to Agent and Borrower Agent IRS Form W-9 or such other
documentation or information prescribed by Applicable Law or reasonably
requested by Agent or Borrower Agent to determine whether such Lender is subject
to backup withholding or information reporting requirements. If any Foreign
Lender is entitled to any exemption from or reduction of withholding tax for
payments with respect to the U.S. Facility Obligations, it shall deliver to
Agent and Borrower Agent, on or prior to the date on which it becomes a Lender
hereunder (and from time to time thereafter upon request by Agent or Borrower
Agent, but only if such Foreign Lender is legally entitled to do so), (a) IRS
Form W-8BEN-E claiming eligibility for benefits of an income tax treaty to which
the United States is a party; (b) IRS Form W-8ECI; (c) IRS Form W-8IMY and all
required supporting documentation; (d) in the case of a Foreign Lender claiming
the benefits of the exemption for portfolio interest under section 881(c) of the
Code, IRS Form W-8BEN-E and a certificate showing such Foreign Lender is not
(i) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (ii) a
“10 percent shareholder” of any Obligor within the meaning of section
881(c)(3)(B) of the Code, or (iii) a “controlled foreign corporation” described
in section 881(c)(3)(C) of the Code; or (e) any other form prescribed by
Applicable Law as a basis for claiming exemption from or a reduction in
withholding tax, together with such supplementary documentation necessary to
allow Agent and Borrowers to determine the withholding or deduction required to
be made.

5.10.3.    Lender Obligations. Each Lender and each Issuing Bank shall promptly
notify Borrower Agent and Agent of any change in circumstances that would change
any claimed Tax exemption or reduction. Each Lender and each Issuing Bank, in
each case severally and not jointly with the other Lenders and/or applicable
Issuing Bank, shall indemnify, hold harmless and reimburse (within 10 days after
demand therefor) the affected Borrower to which such Lender or such Issuing Bank
(as applicable) has issued a Commitment and Agent for any Taxes, losses, claims,
liabilities, penalties, interest and expenses (including reasonable attorneys’
fees) incurred by or asserted against such affected Borrower or Agent by any
Governmental Authority due to such Lender’s or such Issuing Bank’s failure to
deliver, or inaccuracy or deficiency in, any documentation required to be
delivered by it pursuant to this Section. Each Lender and each Issuing Bank
authorizes Agent to set off any amounts due to Agent under this Section against
any amounts payable to such Lender or such Issuing Bank under any Loan Document.

5.11    Guarantee by Obligors.

5.11.1.    Guarantee by U.S. Domiciled Obligors.

(a)    Joint and Several Liability. Each U.S. Domiciled Obligor agrees that it
is jointly and severally liable for, and absolutely and unconditionally
guarantees to the Secured Parties the prompt payment and performance of, all
Obligations and all agreements of each other Obligor under the Loan Documents,
except its Excluded Swap Obligations, and that it is a U.S. Facility Guarantor,
a Canadian Facility Guarantor, and a U.K. Facility Guarantor hereunder. Each
U.S. Domiciled Obligor agrees that its guaranty or guarantee of obligations as a
U.S. Facility Guarantor, a Canadian Facility Guarantor, and a U.K. Facility
Guarantor hereunder, as applicable, constitute a continuing guaranty or
guarantee of payment and not of collection, that such obligations shall not be
discharged until Full Payment of all Obligations, and that such obligations are
absolute and unconditional, irrespective of (a) the genuineness, validity,
regularity, enforceability, subordination or any future modification of, or
change in, any Obligations or Loan

 

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Document, or any other document, instrument or agreement to which any Obligor is
or may become a party or be bound; (b) the absence of any action to enforce this
Agreement (including this Section) or any other Loan Document, or any waiver,
consent or indulgence of any kind by any Secured Party with respect thereto;
(c) the existence, value or condition of, or failure to perfect a Lien or to
preserve rights against, any security or guaranty or guarantee for the
Obligations or any action, or the absence of any action, by any Secured Party in
respect thereof (including the release of any security or guaranty or
guarantee); (d) the insolvency of any Obligor; (e) any election by Agent or any
Lender in an Insolvency Proceeding for the application of Section 1111(b)(2) of
the U.S. Bankruptcy Code or similar provision of other Applicable Law; (f) any
borrowing or grant of a Lien by any other Obligor, as debtor-in-possession under
Section 364 of the U.S. Bankruptcy Code, under other Applicable Law or
otherwise; (g) the disallowance of any claims of any Secured Party against any
Obligor for the repayment of any Obligations under Section 502 of the U.S.
Bankruptcy Code, under other Applicable Law or otherwise; (h) any other
insolvency, debtor relief or debt adjustment law (whether state, provincial,
federal or foreign, including the Bankruptcy and Insolvency Act (Canada), the
Companies’ Creditors Arrangement Act (Canada), and the Insolvency Act 1986 of
the United Kingdom and the Enterprise Act 2002 of the United Kingdom); (i) any
change in the ownership, control, name, objects, businesses, assets, capital
structure or constitution of any Obligor or any other person; (j) any merger,
amalgamation or consolidation of any Obligor with any person or persons; (k) the
occurrence of any change in the laws, rules, regulations or ordinances of any
jurisdiction or by any present or future action of any governmental body or
court amending, varying, reducing or otherwise affecting, or purporting to
amend, vary, reduce or otherwise affect, any of the Obligations under the Loan
Documents; (l) the existence of any claim, set-off, compensation or other rights
which any Obligor may have at any time against any other Obligor or any other
person, or which any Obligor may have at any time against the Secured Parties,
whether in connection with the Loan Documents or otherwise; or (m) any other
action or circumstances that might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, except Full Payment of all
Obligations.

(b)    Waivers.

(i)    Each U.S. Domiciled Obligor expressly waives all rights that it may have
now or in the future under any statute, at common law, in equity or otherwise,
to compel Agent or Lenders to marshal assets or to proceed against any Obligor,
other Person or security for the payment or performance of any Obligations
before, or as a condition to, proceeding against such Obligor. Each U.S.
Domiciled Obligor waives all defenses available to a surety, guarantor or
accommodation co-obligor other than Full Payment of all Obligations. It is
agreed among each U.S. Domiciled Obligor, Agent and Lenders that the provisions
of this Section 5.11 are of the essence of the transaction contemplated by the
Loan Documents and that, but for such provisions, Agent and Lenders would
decline to make Loans and issue Letters of Credit. Each U.S. Domiciled Obligor
acknowledges that its guaranty pursuant to this Section is necessary to the
conduct and promotion of its business, and can be expected to benefit such
business.

(ii)    Agent and Lenders may, in their discretion, pursue such rights and
remedies as they deem appropriate, including realization upon Collateral
(including any Real Estate owned by any Obligor) by judicial foreclosure or
non-judicial sale or enforcement, without affecting any rights and remedies
under this Section 5.11. If, in

 

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taking any action in connection with the exercise of any rights or remedies,
Agent or any Lender shall forfeit any other rights or remedies, including the
right to enter a deficiency judgment against any U.S. Domiciled Obligor or other
Person, whether because of any Applicable Laws pertaining to “election of
remedies” or otherwise, each U.S. Domiciled Obligor consents to such action and
waives any claim based upon it, even if the action may result in loss of any
rights of subrogation that any U.S. Domiciled Obligor might otherwise have had.
Any election of remedies that results in denial or impairment of the right of
Agent or any Lender to seek a deficiency judgment against any U.S. Domiciled
Obligor shall not impair any other U.S. Domiciled Obligor’s obligation to pay
the full amount of the Obligations. Each U.S. Domiciled Obligor waives all
rights and defenses arising out of an election of remedies, such as nonjudicial
foreclosure with respect to any security for the Obligations, even though that
election of remedies destroys such U.S. Domiciled Obligor’s rights of
subrogation against any other Person. Agent may bid all or a portion of the
Obligations at any foreclosure or trustee’s sale or at any private sale, and the
amount of such bid need not be paid by Agent but shall be credited against the
Obligations. The amount of the successful bid at any such sale, whether Agent or
any other Person is the successful bidder, shall be conclusively deemed to be
the fair market value of the Collateral, and the difference between such bid
amount and the remaining balance of the Obligations shall be conclusively deemed
to be the amount of the Obligations guaranteed under this Section 5.11,
notwithstanding that any present or future law or court decision may have the
effect of reducing the amount of any deficiency claim to which Agent or any
Lender might otherwise be entitled but for such bidding at any such sale.

(c)    Extent of Liability; Contribution.

(i)    Notwithstanding anything herein to the contrary, each U.S. Domiciled
Obligor’s liability under this Section 5.11 shall be limited to the greater of
(i) all amounts for which such U.S. Domiciled Obligor is primarily liable, as
described below, and (ii) such U.S. Domiciled Obligor’s Allocable Amount.

(ii)    If any U.S. Domiciled Obligor makes a payment under this Section 5.11 of
any Obligations (other than amounts for which such U.S. Domiciled Obligor is
primarily liable) (a “Guarantor Payment”) that, taking into account all other
Guarantor Payments previously or concurrently made by any other U.S. Domiciled
Obligor, exceeds the amount that such U.S. Domiciled Obligor would otherwise
have paid if each U.S. Domiciled Obligor had paid the aggregate Obligations
satisfied by such Guarantor Payments in the same proportion that such U.S.
Domiciled Obligor’s Allocable Amount bore to the total Allocable Amounts of all
U.S. Domiciled Obligors, then such U.S. Domiciled Obligor shall be entitled to
receive contribution and indemnification payments from, and to be reimbursed by,
each other U.S. Domiciled Obligor for the amount of such excess, pro rata based
upon their respective Allocable Amounts in effect immediately prior to such
Guarantor Payment. The “Allocable Amount” for any U.S. Domiciled Obligor shall
be the maximum amount that could then be recovered from such U.S. Domiciled
Obligor under this Section 5.11 without rendering such payment voidable under
Section 548 of the U.S. Bankruptcy Code or under any similar applicable
fraudulent transfer or conveyance Applicable Law, or the Applicable Law in
Canada or any province or territory thereof, or in England.

 

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(iii)    Each U.S. Domiciled Obligor that is a Qualified ECP when its guaranty
of or grant of Lien as security for a Swap Obligation becomes effective hereby
jointly and severally, absolutely, unconditionally and irrevocably undertakes to
provide funds or other support to each other U.S. Domiciled Obligor that is a
Specified Obligor with respect to such Swap Obligation as may be needed by such
Specified Obligor from time to time to honor all of its obligations under the
Loan Documents in respect of such Swap Obligation (but, in each case, only up to
the maximum amount of such liability that can be hereby incurred without
rendering such Qualified ECP’s obligations and undertakings under this
Section 5.11 voidable under any applicable fraudulent transfer or conveyance
act). The obligations and undertakings of each Qualified ECP under this Section
shall remain in full force and effect until Full Payment of all Obligations.
Each U.S. Domiciled Obligor intends this Section to constitute, and this Section
shall be deemed to constitute, a guarantee of the obligations of, and a
“keepwell, support or other agreement” for the benefit of, each Obligor for all
purposes of the Commodity Exchange Act.

5.11.2.    Guarantee by Canadian Domiciled Obligors and U.K. Domiciled Obligors.

(a)    Joint and Several Liability. Each Canadian Domiciled Obligor and U.K.
Domiciled Obligor agrees that it is jointly and severally liable for, and
absolutely and unconditionally guarantees to the Secured Parties the prompt
payment and performance of, all Canadian Facility Obligations, U.K. Facility
Obligations, and all agreements of each other Canadian Domiciled Obligor and
U.K. Domiciled Obligor under the Loan Documents, except its Excluded Swap
Obligations, and that it is a Canadian Facility Guarantor and a U.K. Facility
Guarantor hereunder. Each Canadian Domiciled Obligor and U.K. Domiciled Obligor
agrees that its guaranty or guarantee of obligations as a Canadian Facility
Guarantor and a U.K. Facility Guarantor hereunder, as applicable, constitute a
continuing guaranty or guarantee of payment and not of collection, that such
obligations shall not be discharged until Full Payment of all Obligations, and
that such obligations are absolute and unconditional, irrespective of (a) the
genuineness, validity, regularity, enforceability, subordination or any future
modification of, or change in, any Obligations or Loan Document, or any other
document, instrument or agreement to which any Obligor is or may become a party
or be bound; (b) the absence of any action to enforce this Agreement (including
this Section) or any other Loan Document, or any waiver, consent or indulgence
of any kind by any Secured Party with respect thereto; (c) the existence, value
or condition of, or failure to perfect a Lien or to preserve rights against, any
security or guaranty or guarantee for the Obligations or any action, or the
absence of any action, by any Secured Party in respect thereof (including the
release of any security or guaranty or guarantee); (d) the insolvency of any
Obligor; (e) any election by Agent or any Lender in an Insolvency Proceeding for
the application of Section 1111(b)(2) of the U.S. Bankruptcy Code or similar
provision of other Applicable Law; (f) any borrowing or grant of a Lien by any
other Obligor, as debtor-in-possession under Section 364 of the U.S. Bankruptcy
Code, under other Applicable Law or otherwise; (g) the disallowance of any
claims of any Secured Party against any Obligor for the repayment of any
Obligations under Section 502 of the U.S. Bankruptcy Code, under other
Applicable Law or otherwise; (h) any other insolvency, debtor relief or debt
adjustment law (whether state, provincial, federal or foreign, including the
Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act
(Canada), and the Insolvency Act 1986 of England and the Enterprise

 

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Act 2002 of England); (i) any change in the ownership, control, name, objects,
businesses, assets, capital structure or constitution of any Obligor or any
other person; (j) any merger, amalgamation or consolidation of any Obligor with
any person or persons; (k) the occurrence of any change in the laws, rules,
regulations or ordinances of any jurisdiction or by any present or future action
of any governmental body or court amending, varying, reducing or otherwise
affecting, or purporting to amend, vary, reduce or otherwise affect, any of the
Obligations under the Loan Documents; (l) the existence of any claim, set-off,
compensation or other rights which any Obligor may have at any time against any
other Obligor or any other person, or which any Obligor may have at any time
against the Secured Parties, whether in connection with the Loan Documents or
otherwise; or (m) any other action or circumstances that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
except Full Payment of all Obligations.

(b)    Waivers.

(i)    Each Canadian Domiciled Obligor and U.K. Domiciled Obligor expressly
waives all rights that it may have now or in the future under any statute, at
common law, in equity or otherwise, to compel Agent or Lenders to marshal assets
or to proceed against any Obligor, other Person or security for the payment or
performance of any Obligations before, or as a condition to, proceeding against
such Obligor. Each Canadian Domiciled Obligor and U.K. Domiciled Obligor waives
all defenses available to a surety, guarantor or accommodation co-obligor other
than Full Payment of all Obligations. It is agreed among each Canadian Domiciled
Obligor and U.K. Domiciled Obligor, Agent and Lenders that the provisions of
this Section 5.11 are of the essence of the transaction contemplated by the Loan
Documents and that, but for such provisions, Agent and Lenders would decline to
make Loans and issue Letters of Credit. Each Canadian Domiciled Obligor and U.K.
Domiciled Obligor acknowledges that its guaranty pursuant to this Section is
necessary to the conduct and promotion of its business, and can be expected to
benefit such business.

(ii)    Agent and Lenders may, in their discretion, pursue such rights and
remedies as they deem appropriate, including realization upon Collateral
(including any Real Estate owned by any Obligor) by judicial foreclosure or
non-judicial sale or enforcement, without affecting any rights and remedies
under this Section 5.11. If, in taking any action in connection with the
exercise of any rights or remedies, Agent or any Lender shall forfeit any other
rights or remedies, including the right to enter a deficiency judgment against
any Canadian Domiciled Obligor or U.K. Domiciled Obligor or other Person,
whether because of any Applicable Laws pertaining to “election of remedies” or
otherwise, each Canadian Domiciled Obligor and U.K. Domiciled Obligor consents
to such action and waives any claim based upon it, even if the action may result
in loss of any rights of subrogation that any Canadian Domiciled Obligor or U.K.
Domiciled Obligor might otherwise have had. Any election of remedies that
results in denial or impairment of the right of Agent or any Lender to seek a
deficiency judgment against any Canadian Domiciled Obligor or U.K. Domiciled
Obligor shall not impair any other Canadian Domiciled Obligor’s or U.K.
Domiciled Obligor’s obligation to pay the full amount of the Obligations it is
jointly and severally liable for and has guaranteed under the Loan Documents.
Each Canadian Domiciled Obligor and U.K. Domiciled Obligor waives all rights and
defenses arising out of an election of remedies, such as nonjudicial foreclosure

 

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with respect to any security for the Obligations, even though that election of
remedies destroys such Canadian Domiciled Obligor’s or U.K. Domiciled Obligor’s
rights of subrogation against any other Person. Agent may bid all or a portion
of the Obligations at any foreclosure or trustee’s sale or at any private sale,
and the amount of such bid need not be paid by Agent but shall be credited
against the Obligations. The amount of the successful bid at any such sale,
whether Agent or any other Person is the successful bidder, shall be
conclusively deemed to be the fair market value of the Collateral, and the
difference between such bid amount and the remaining balance of the Obligations
shall be conclusively deemed to be the amount of the Obligations guaranteed
under this Section 5.11, notwithstanding that any present or future law or court
decision may have the effect of reducing the amount of any deficiency claim to
which Agent or any Lender might otherwise be entitled but for such bidding at
any such sale.

(c)    Extent of Liability; Contribution.

(i)    Notwithstanding anything herein to the contrary, each Canadian Domiciled
Obligor’s and U.K. Domiciled Obligor’s liability under this Section 5.11 shall
be limited to the greater of (i) all amounts for which such Canadian Domiciled
Obligor or U.K. Domiciled Obligor is primarily liable, as described below, and
(ii) such Canadian Domiciled Obligor’ and U.K. Domiciled Obligor’s U.K./Canadian
Allocable Amount.

(ii)    If any Canadian Domiciled Obligor or U.K. Domiciled Obligor makes a
payment under this Section 5.11 of any Obligations (other than amounts for which
such Canadian Domiciled Obligor or U.K. Domiciled Obligor is primarily liable)
(a “U.K./Canadian Guarantor Payment”) that, taking into account all other
U.K./Canadian Guarantor Payments previously or concurrently made by any other
Canadian Domiciled Obligor or U.K. Domiciled Obligor, exceeds the amount that
such Canadian Domiciled Obligor or U.K. Domiciled Obligor would otherwise have
paid if each Canadian Domiciled Obligor and U.K. Domiciled Obligor had paid the
aggregate Obligations satisfied by such U.K./Canadian Guarantor Payments in the
same proportion that such Canadian Domiciled Obligor’s or U.K. Domiciled
Obligor’s U.K./Canadian Allocable Amount bore to the total U.K./Canadian
Allocable Amounts of all Canadian Domiciled Obligors and U.K. Domiciled
Obligors, then such Canadian Domiciled Obligor or U.K. Domiciled Obligor shall
be entitled to receive contribution and indemnification payments from, and to be
reimbursed by, each other Canadian Domiciled Obligor and U.K. Domiciled Obligor
for the amount of such excess, pro rata based upon their respective
U.K./Canadian Allocable Amounts in effect immediately prior to such
U.K./Canadian Guarantor Payment. The “U.K./Canadian Allocable Amount” for any
Canadian Domiciled Obligor or U.K. Domiciled Obligor shall be the maximum amount
that could then be recovered from such Canadian Domiciled Obligor or U.K.
Domiciled Obligor under this Section 5.11 without rendering such payment
voidable under Section 548 of the U.S. Bankruptcy Code or under any similar
applicable fraudulent transfer or conveyance Applicable Law, or the Applicable
Law in Canada or any province or territory thereof, or in England.

(iii)    Each Canadian Domiciled Obligor and each U.K. Domiciled Obligor that is
a Qualified ECP when its guaranty of or grant of Lien as security for a Swap
Obligation becomes effective hereby jointly and severally, absolutely,
unconditionally and

 

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irrevocably undertakes to provide funds or other support to each Canadian
Domiciled Obligor and U.K. Domiciled Obligor that is a Specified Obligor with
respect to such Swap Obligation as may be needed by such Specified Obligor from
time to time to honor all of its obligations under the Loan Documents in respect
of such Swap Obligation (but, in each case, only up to the maximum amount of
such liability that can be hereby incurred without rendering such Qualified
ECP’s obligations and undertakings under this Section 5.11 voidable under any
applicable fraudulent transfer or conveyance act). The obligations and
undertakings of each Qualified ECP under this Section shall remain in full force
and effect until Full Payment of all Obligations. Each Canadian Domiciled
Obligor and each U.K. Domiciled Obligor intends this Section to constitute, and
this Section shall be deemed to constitute, a guarantee of the obligations of,
and a “keepwell, support or other agreement” for the benefit of, each Obligor
for all purposes of the Commodity Exchange Act.

5.11.3.    No Limitation. Nothing contained in this Section 5.11 shall limit the
liability of any Obligor to pay Loans made directly or indirectly to that
Obligor (including Loans advanced to any other Obligor and then re-loaned or
otherwise transferred to, or for the benefit of, such Obligor), LC Obligations
relating to Letters of Credit issued to support such Obligor’s business, and all
accrued interest, fees, expenses and other related Obligations with respect
thereto, for which such Obligor shall be primarily liable for all purposes
hereunder. Agent and Lenders shall have the right, at any time in their
discretion, to condition Loans and Letters of Credit upon a separate calculation
of borrowing availability for each Borrower and to restrict the disbursement and
use of such Loans and Letters of Credit to such Borrower.

5.11.4.    Joint Enterprise. Each Obligor has requested that Agent and Lenders
make the credit facilities available to the applicable Borrowers on a combined
basis, in order to finance Borrowers’ business most efficiently and
economically. Obligors’ business is a mutual and collective enterprise, and the
successful operation of each Obligor is dependent upon the successful
performance of the integrated group. The Obligors believe that the credit
facilities provided to the applicable Borrowers under this Agreement will
enhance the borrowing power of each Borrower and ease administration of such
credit facilities, all to their mutual advantage. Obligors acknowledge that
Agent’s and Lenders’ willingness to extend credit and to administer the
Collateral as provided under the Loan Documents is done solely as an
accommodation to Obligors and at Obligors’ request.

5.11.5.    California Waivers.

(a)    Notwithstanding anything to the contrary set forth in this Agreement or
any of the Loan Documents, each of the Obligors hereby understands and
acknowledges that if Agent forecloses judicially or nonjudicially against any
Collateral consisting of Real Estate located in California for the Obligations,
that foreclosure could impair or destroy any ability that the Obligors may have
to seek reimbursement, contribution, or indemnification from one another based
on any right any Obligor may have of subrogation, reimbursement, contribution,
or indemnification for any amounts paid by the Obligors under this Agreement.
Each of the Obligors further understands and acknowledges that in the absence of
this paragraph, such potential impairment or destruction of the Obligors’
rights, if any, may entitle the Obligors to assert a defense to this Agreement
based on Section 580d of the California Code of Civil Procedure as interpreted
in Union Bank v. Gradsky, 265 Cal. App. 2d 40 (1968). By executing this
Agreement, each Obligor freely,

 

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irrevocably, and unconditionally: (i) waives and relinquishes that defense and
agrees that the Obligors will be fully liable under this Agreement even though
Agent may foreclose, either by judicial foreclosure or by exercise of power of
sale, any deed of trust securing the Obligations; (ii) agrees that the Obligors
will not assert that defense in any action or proceeding which Agent may
commence to enforce this Agreement or any other Loan Document;
(iii) acknowledges and agrees that the rights and defenses waived by the
Obligors in this Agreement include any right or defense that the Obligors may
have or be entitled to assert based upon or arising out of any one or more of
Sections 580a, 580b, 580d, or 726 of the California Code of Civil Procedure or
Section 2848 of the California Civil Code; and (iv) acknowledges and agrees that
Agent and the Lenders are relying on this waiver in creating the Obligations,
and that this waiver is a material part of the consideration which Agent and the
Lenders are receiving for creating the Obligations.

(b)    Each of the Obligors waives all rights and defenses that each Obligor may
have because of any of the Obligations is secured by Real Estate. This means,
among other things: (i) Agent may collect from the Obligors without first
foreclosing on any real or personal property collateral pledged by the Obligors;
and (ii) if Agent forecloses on any Collateral consisting of Real Estate pledged
by the Obligors: (A) the amount of the Obligations may be reduced only by the
price for which that Collateral is sold at the foreclosure sale, even if the
Collateral is worth more than the sale price, and (B) Agent may collect from the
Obligors even if Agent, by foreclosing on the Collateral consisting of Real
Estate, has destroyed any right the Obligors may have to collect from one
another. This is an unconditional and irrevocable waiver of any rights and
defenses the Obligors may have because any of the Obligations are secured by
real property. These rights and defenses include, but are not limited to, any
rights or defenses based upon Section 580a, 580b, 580d, or 726 of the California
Code of Civil Procedure.

(c)    Each of the Obligors waives any right or defense it may have at law or
equity, including California Code of Civil Procedure Section 580a, to a fair
market value hearing or action to determine a deficiency judgment after a
foreclosure.

5.11.6.    Subordination. Each Obligor hereby subordinates any claims, including
any rights at law or in equity to payment, subrogation, reimbursement,
exoneration, contribution, indemnification or set off, that it may have at any
time against any other Obligor, howsoever arising, to the Full Payment of all
Obligations.

5.12    Currency Matters. Dollars are the currency of account and payment for
each and every sum at any time due from Borrowers hereunder unless otherwise
specifically provided in this Agreement, any other Loan Document or otherwise
agreed to by Agent. The parties hereto hereby agree as follows:

(a)    Each repayment of a Loan or LC Obligation or a part thereof shall be made
in the currency in which such Loan or LC Obligation is denominated at the time
of that repayment;

(b)    Each payment of interest shall be made in the currency in which the
principal or other sum in respect of which such interest is denominated;

(c)    Each payment of fees by a U.S. Borrower pursuant to Section 3.2 shall be
in Dollars;

 

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(d)    Each payment of fees by Canadian Borrower pursuant to Section 3.2 shall
be in Dollars;

(e)    Each payment of fees by U.K. Borrower pursuant to Section 3.2 shall be in
Dollars;

(f)    Each payment in respect of Extraordinary Expenses and any other costs,
expenses and indemnities shall be made in the currency in which the same were
incurred by the party to whom payment is to be made;

(g)    Any amount expressed to be payable in Canadian Dollars shall be paid in
Canadian Dollars;

(h)    Any amount expressed to be payable in British Pounds shall be paid in
British Pounds; and

(i)    Any amount expressed to be payable in Euro shall be paid in Euro.

No payment to any Credit Party (whether under any judgment or court order or
otherwise) shall discharge the obligation or liability of the Obligor in respect
of which it was made unless and until such Credit Party shall have received Full
Payment in the currency in which such obligation or liability is payable
pursuant to the above provisions of this Section 5.12. To the extent that the
amount of any such payment shall, on actual conversion into such currency, be
less than the full amount of such obligation or liability (actual or contingent)
expressed in that currency, such Obligor (together with the other Obligors who
are liable thereunder or obligated therefor) agrees to indemnify and hold
harmless such Credit Party with respect to the amount of such deficiency, with
such indemnity surviving the termination of this Agreement and any legal
proceeding, judgment or court order pursuant to which the original payment was
made which resulted in such deficiency. To the extent that the amount of any
such payment to a Credit Party shall, upon an actual conversion into such
currency, exceed such obligation or liability, actual or contingent, expressed
in that currency, such Credit Party shall return such excess to the Borrower
Agent.

5.13    Currency Fluctuations. On each Business Day or such other date
determined by Agent (the “Calculation Date”), Agent shall determine the Exchange
Rate as of such date. The Exchange Rate so determined shall become effective on
the first Business Day immediately following such determination (a “Reset Date”)
and shall remain effective until the next succeeding Reset Date. On each Reset
Date, Agent shall determine the Dollar Equivalent of the Canadian Revolver
Exposure and the U.K. Revolver Exposure. If, on any Reset Date: (a) the Total
Revolver Exposure exceeds the total amount of the Revolver Commitments on such
date, (b) the Canadian Revolver Exposure on such date exceeds the lesser of the
Canadian Borrowing Base or the Canadian Revolver Commitments on such date, or
(c) the U.K. Revolver Exposure on such date exceeds the lesser of the U.K.
Borrowing Base or the U.K. Revolver Commitments on such date (in any case, the
amount of any such excess referred to herein as the “Excess Amount”) then
(i) Agent shall give notice thereof to Borrower Agent and Lenders and
(ii) within one (1) Business Day thereafter, Borrowers shall cause such excess
to be eliminated, either by repayment of Revolver Loans or depositing of Cash
Collateral with Agent with respect to LC Obligations and

 

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until such Excess Amount is repaid, Lenders shall not have any obligation to
make any Loans and the Issuing Banks shall not have any obligation to issue any
Letters of Credit.

 

SECTION 6.

CONDITIONS PRECEDENT

6.1    Conditions Precedent to Effectiveness and Loans. In addition to the
conditions set forth in Section 6.2, this Agreement shall not become effective
and Agent, the Issuing Banks and the Lenders shall not be required to fund any
requested Loans, issue any Letter of Credit for the benefit of the Borrowers or
otherwise extend credit to the Borrowers hereunder, until the date (“Closing
Date”) that each of the following conditions has been satisfied:

(a)    Notes shall have been executed by each Borrower and delivered to each
Applicable Lender that requests issuance of a Note. Each other Loan Document to
which any Obligor is a party shall have been duly executed and delivered to
Agent by each of the signatories thereto, and each such Obligor shall be in
compliance with all terms thereof.

(b)    U.S. Borrowers shall have paid all fees and expenses to be paid to Agent
and Lenders on the Closing Date.

(c)    Agent shall have received certificates, in form and substance
satisfactory to it, from a knowledgeable Senior Officer of each Obligor
certifying that, after giving effect to the initial Loans and transactions
hereunder, (i) such Obligor is Solvent; (ii) no Default or Event of Default
exists; (iii) the representations and warranties set forth in Section 9 are true
and correct; and (iv) such Obligor has complied with all agreements and
conditions to be satisfied by it under the Loan Documents to which such Obligor
is a party.

(d)    Agent shall have received a certificate of a duly authorized officer of
each Obligor certifying (i) that attached copies of such Obligor’s Organic
Documents are true and complete, and in full force and effect, without amendment
except as shown; (ii) that an attached copy of resolutions authorizing execution
and delivery of the Loan Documents to which such Obligor is a party is true and
complete, and that such resolutions are in full force and effect, were duly
adopted, have not been amended, modified or revoked, and constitute all
resolutions adopted with respect to this credit facility; and (iii) to the
title, name and signature of each Person authorized to sign the Loan Documents
to which such Obligor is a party. Agent may conclusively rely on this
certificate until it is otherwise notified by the applicable Obligor in writing.

(e)    Agent shall have received a written opinion of Gibson, Dunn & Crutcher
LLP, Durham Jones & Pinegar, P.C., McMillan LLP, and CMS Cameron McKenna Nabarro
Olswang LLP, in form and substance satisfactory to Agent.

(f)    Agent shall have received good standing certificates for each Obligor
(other than the U.K. Borrower and the U.K. Subsidiaries), issued by the
Secretary of State or other appropriate official of such Obligor’s jurisdiction
of organization.

(g)    There shall exist no action, suit, investigation, litigation or
proceeding pending or threatened in any court or before any arbitrator or
governmental instrumentality that in Agent’s judgment (i) could reasonably be
expected to have a material adverse effect on any Obligor’s business, assets,
properties, liabilities, operations, condition or prospects, or could

 

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impair any Obligor’s ability to perform satisfactorily under this Agreement and
the other Loan Documents; or (ii) could reasonably be expected to materially and
adversely affect this Agreement or the transactions contemplated hereby.

(h)    (i) Each Canadian Security Agreement (amended as required) shall have
been duly executed and delivered to Agent by each of the signatories thereto,
and each signatory thereto shall be in compliance with all terms thereof,
(ii) all PPSA and other Lien filings or recordations necessary to perfect
Agent’s Liens on the Collateral of each signatory to the Canadian Security
Agreement shall have been filed, and (iii) Agent shall have received PPSA and
Lien searches and other evidence satisfactory to Agent that such Liens are the
only Liens upon the Collateral of each signatory to the Canadian Security
Agreement (including estoppel letters), except Permitted Liens.

(i)    Each document listed in paragraph (a) of the definition of U.K. Security
Agreement shall have been duly executed and delivered to the Agent by each of
the signatories thereto, and each U.K. Domiciled Obligor shall be in compliance
with all terms thereof.

6.2    Conditions Precedent to All Credit Extensions. Agent, Issuing Banks and
Lenders shall not be required to fund any Loans, arrange for issuance of any
Letters of Credit or grant any other accommodation to or for the benefit of
Borrowers, unless the following conditions are satisfied:

(a)    No Default or Event of Default shall exist at the time of, or result
from, such funding, issuance or grant;

(b)    The representations and warranties of each Obligor in the Loan Documents
shall be true and correct on the date of, and upon giving effect to, such
funding, issuance or grant (except for representations and warranties that
expressly relate to an earlier date);

(c)    All conditions precedent in any other Loan Document shall be satisfied;
and

(d)    With respect to issuance of a Letter of Credit, the LC Conditions shall
be satisfied.

Each request (or deemed request) by Borrower Agent or any Borrower for funding
of a Loan, issuance of a Letter of Credit or grant of an accommodation shall
constitute a representation by Borrowers that the foregoing conditions are
satisfied on the date of such request and on the date of such funding, issuance
or grant. As an additional condition to any funding, issuance or grant, Agent
shall have received such other information, documents, instruments and
agreements as it deems appropriate in connection therewith.

 

SECTION 7.

COLLATERAL

7.1    Grant of Security Interest.

7.1.1.    (a) To secure the prompt payment and performance of all Obligations
(including, without limitation, all Obligations of the Guarantors), each U.S.
Domiciled Obligor hereby grants to Agent, for the benefit of the Secured
Parties, a continuing security interest in and

 

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Lien upon all Property of such Obligor, in which such Obligor has rights, or the
power to transfer rights, including all of the following Property of such
Obligor, whether now or in the future, and wherever located:

(i)    all Accounts;

(ii)    all Goods, including Inventory, Equipment and fixtures;

(iii)    all Deposit Accounts (including all cash, cash equivalents, financial
assets, negotiable instruments and other evidence of payment, and other funds on
deposit therein or credited thereto);

(iv)    all securities accounts (including any and all Investment Property held
therein or credited thereto);

(v)    all General Intangibles, including Intellectual Property (including the
right to sue and recover for any and all past, present or future infringements
of, violations of, dilution of or other damages or injuries to any Intellectual
Property);

(vi)    all monies, whether or not in the possession or under the control of
Agent, a Lender, or a bailee or Affiliate of Agent or a Lender, and any Cash
Collateral;

(vii)    all Supporting Obligations;

(viii)    all Instruments, Documents and Chattel Paper;

(ix)    all Investment Property

(x)    all Letters of Credit (as defined in the UCC) and Letter-of-Credit
Rights;

(xi)    all Commercial Tort Claims, including those shown on Schedule 9.1.24;

(xii)    all accessions to, substitutions for, and all replacements, products,
and cash and non-cash proceeds of the foregoing, including proceeds of and
unearned premiums with respect to insurance policies, and claims against any
Person for loss, damage or destruction of any of the Property described in this
Section 7.1.1(a) (the “Proceeds”); and

(xiii)    all books and records (including customer lists, files,
correspondence, tapes, computer programs, print-outs and computer records)
pertaining to any of the Property described in this Section 7.1.1(a).

Notwithstanding anything to the contrary contained in clauses (i) through (xiii)
above, the security interest granted by the U.S. Domiciled Obligors pursuant to
this Agreement shall not extend to, and the “Collateral” of the U.S. Domiciled
Obligors shall not include, any Excluded Property.

 

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(b)    To secure the prompt payment and performance of: (i) all Canadian
Facility Obligations (including, without limitation, all Canadian Facility
Obligations of each Canadian Facility Guarantor), each Canadian Domiciled
Obligor hereby grants to Agent, for the benefit of the Canadian Facility Secured
Parties and the U.K. Facility Secured Parties and (ii) all U.K. Facility
Obligations (including, without limitation, all U.K. Facility Obligations of
each U.K. Facility Guarantor) each U.K. Domiciled Obligor hereby grants to
Agent, for the benefit of the U.K. Facility Secured Parties and the Canadian
Facility Secured Parties, in each case of clause (i) and (ii), a continuing
security interest in and Lien upon all of the following Property of such
Obligor, in which such Obligor has rights, or the power to transfer rights,
whether now or in the future, and wherever located:

(i)    all Accounts;

(ii)    all Inventory;

(iii)    all Deposit Accounts (including all cash, cash equivalents, financial
assets, negotiable instruments and other evidence of payment, and other funds on
deposit therein or credited thereto);

(iv)    all securities accounts (including any and all Investment Property held
therein or credited thereto);

(v)    all Intellectual Property (including the right to sue and recover for any
and all past, present or future infringements of, violations of, dilution of or
other damages or injuries to any Intellectual Property);

(vi)    all monies, whether or not in the possession or under the control of
Agent, a Lender, or a bailee or Affiliate of Agent or a Lender that were derived
from or consist of any of the Property described in this Section 7.1.1(b), and
any Cash Collateral;

(vii)    all Supporting Obligations of any of the Property described in this
Section 7.1.1(b);

(viii)    all Instruments, Documents and Chattel Paper, in each case only to the
extent evidencing or governing any of the Property described in this
Section 7.1.1(b);

(ix)    all accessions to, substitutions for, and all replacements, products,
and cash and non-cash proceeds of the foregoing, including proceeds of and
unearned premiums with respect to insurance policies, and claims against any
Person for loss, damage or destruction of any of the Property described in this
Section 7.1.1(b) (the “Proceeds”); and

(x)    all books and records (including customer lists, files, correspondence,
tapes, computer programs, print-outs and computer records) pertaining to any of
the Property described in this Section 7.1.1(b), and any General Intangibles to
the extent evidencing or governing any of the Property described in this
Section 7.1.1(b).

 

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In the case of each U.K. Domiciled Obligor, the continuing security interest in
and Lien upon all of the above Property of such U.K. Domiciled Obligor granted
above is limited to the Property of that U.K. Domiciled Obligor which is
expressed to be subject to a security interest under the U.K. Security
Agreements to which that U.K. Obligor is expressed to be a party.

7.2    Lien on Deposit Accounts; Cash Collateral.

7.2.1.    Deposit Accounts. To further secure the prompt payment and performance
of: (a) all Obligations (including, without limitation, all Obligations of the
Guarantors), each U.S. Domiciled Obligor hereby grants to Agent, for the benefit
of the Secured Parties, (b) all Canadian Facility Obligations (including,
without limitation, all Canadian Facility Obligations of each Canadian Facility
Guarantor), each Canadian Domiciled Obligor hereby grants to Agent, for the
benefit of the Canadian Facility Secured Parties and the U.K. Facility Secured
Parties, and (c) all U.K. Facility Obligations (including, without limitation,
all U.K. Facility Obligations of each U.K. Facility Guarantor), each U.K.
Domiciled Obligor hereby grants to Agent, for the benefit of the U.K. Facility
Secured Parties and the Canadian Facility Secured Parties, in each case of
clause (a), (b), and (c), a continuing security interest in and Lien on all
amounts credited to any Deposit Account of such Obligor, including any sums in
any blocked or lockbox accounts or in any accounts into which such sums are
swept. Each Obligor hereby authorizes and directs each bank or other depository
to deliver to Agent, upon request, all balances in any Deposit Account
maintained by such Obligor, without inquiry into the authority or right of Agent
to make such request. In the case of each U.K. Domiciled Obligor, the continuing
security interest in and Lien upon all amounts credited to any Deposit Accounts
of such U.K. Domiciled Obligor, and any sums in any blocked or lockbox accounts
or in any accounts into which such sums are swept, granted above is limited to
the sums in the Deposit Accounts of that U.K. Domiciled Obligor, and any sums in
any blocked or lockbox accounts or in any accounts into which such sums are
swept, which are expressed to be subject to a security interest under the U.K.
Security Agreements to which that U.K. Obligor is expressed to be a party.

7.2.2.    Cash Collateral. Any Cash Collateral may be invested, at Agent’s
discretion (and with the consent of Borrowers, as long as no Event of Default
exists), but Agent shall have no duty to do so, regardless of any agreement or
course of dealing with any Obligor, and shall have no responsibility for any
investment or loss. To further secure the prompt payment and performance of all:
(a) Obligations (including, without limitation, all Obligations of the
Guarantors), each U.S. Domiciled Obligor hereby grants to Agent, for the benefit
of the Secured Parties, (b) Canadian Facility Obligations (including, without
limitation, all Canadian Facility Obligations of each Canadian Facility
Guarantor), each Canadian Domiciled Obligor hereby grants to Agent, for the
benefit of the Canadian Facility Secured Parties and the U.K. Facility Secured
Parties, and (c) U.K. Facility Obligations (including, without limitation, all
U.K. Facility Obligations of each U.K. Facility Guarantor), each U.K. Domiciled
Obligor hereby grants to Agent, for the benefit of the U.K. Facility Secured
Parties and the Canadian Facility Secured Parties, in each case of clause (a),
(b), and (c), a continuing security interest in and Lien on all Cash Collateral
held from time to time and all proceeds thereof, whether such Cash Collateral is
held in a Cash Collateral Account or elsewhere. Agent may apply Cash Collateral
of a U.S. Domiciled Obligor to the payment of any Obligations, may apply Cash
Collateral of a Canadian Domiciled Obligor to the payment of any Canadian
Facility Obligations, and may apply Cash Collateral of a U.K. Domiciled Obligor
to the payment of any U.K. Facility Obligations, in each

 

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case, in such order as Agent may elect, as they become due and payable. Each
Cash Collateral Account and all Cash Collateral shall be under the sole dominion
and control of Agent. No U.S. Domiciled Obligor or other Person claiming through
or on behalf of any U.S. Domiciled Obligor shall have any right to any Cash
Collateral, until Full Payment of all Obligations. No Canadian Domiciled Obligor
or other Person claiming through or on behalf of any Canadian Domiciled Obligor
shall have any right to any Cash Collateral, until Full Payment of all Canadian
Facility Obligations. No U.K. Domiciled Obligor or other Person claiming through
or on behalf of any U.K. Domiciled Obligor shall have any right to any Cash
Collateral, until Full Payment of all U.K. Facility Obligations

7.3    Real Estate Collateral. If any U.S. Domiciled Obligor owns any Material
Real Property as of the Second Amendment to Third Amended and Restated Effective
Date, Borrowers shall, within 120 days of the Second Amendment to Third Amended
and Restated Effective Date, execute, deliver and record a first priority
(subject to the terms of the Intercreditor Agreement) Mortgage, in form and
substance satisfactory to Agent, together with all Related Real Estate
Documents. If any U.S. Domiciled Obligor acquires Material Real Property after
the Second Amendment to Third Amended and Restated Effective Date, Borrowers
shall promptly notify Agent and, within 120 days, execute, deliver and record a
first priority (subject to the terms of the Intercreditor Agreement) Mortgage,
in form and substance satisfactory to Agent, together with all Related Real
Estate Documents. Notwithstanding anything contained in this Agreement to the
contrary, no Mortgage shall be executed and delivered with respect to any real
property unless and until each Lender has received, at least twenty Business
Days prior to such execution and delivery, a life of loan flood zone
determination and such other documents as it may reasonably request to complete
its flood insurance due diligence and has confirmed to the Agent that flood
insurance due diligence and flood insurance compliance has been completed to its
satisfaction.

7.4    Other Collateral

7.4.1.    Commercial Tort Claims. U.S. Borrowers shall promptly notify Agent in
writing if any U.S. Domiciled Obligor has a Commercial Tort Claim (other than a
Commercial Tort Claim for less than $1,000,000), shall promptly amend Schedule
9.1.24 to include such claim, and shall take such actions as Agent deems
appropriate to subject such claim to a duly perfected, first priority (subject
to the terms of the Intercreditor Agreement) Lien in favor of Agent.

7.4.2.    Certain After-Acquired Collateral. Borrowers shall promptly notify
Agent in writing if, after the Original Agreement Closing Date, any Obligor
obtains any interest in any Collateral consisting of Deposit Accounts, Chattel
Paper, Documents, Instruments, Intellectual Property, Investment Property or
Letter-of-Credit Rights and, upon Agent’s request, shall promptly take such
actions as Agent deems appropriate to effect Agent’s duly perfected, first
priority Lien upon such Collateral, including obtaining any appropriate
possession, control agreement or Lien Waiver. If any Collateral is in the
possession of a third party, at Agent’s request, Borrowers shall obtain an
acknowledgment that such third party holds the Collateral for the benefit of
Agent.

7.5    No Assumption of Liability. The Liens on the Collateral granted hereunder
are given as security only and shall not subject Agent or any Lender to, or in
any way modify, any obligation or liability of any Obligor relating to any
Collateral. In no event shall the grant of any Lien under any Loan Document
secure an Excluded Swap Obligation of the granting Obligor.

7.6    Further Assurances. Promptly upon request, Obligors shall deliver such
instruments, assignments, title certificates, or other documents or agreements,
and shall take such

 

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actions, as Agent deems appropriate under Applicable Law to evidence or perfect
its Lien on any Collateral, or otherwise to give effect to the intent of this
Agreement. Each Obligor authorizes Agent to file any financing statement that
Agent deems desirable to preserve and perfect Agent’s security interest in the
Collateral of such Obligor, and ratifies any action taken by Agent before the
Closing Date to effect or perfect its Lien on any Collateral.

 

SECTION 8.

COLLATERAL ADMINISTRATION

8.1    Borrowing Base Certificates. By the 20th day of each month, Borrower
Agent shall deliver to Agent (and Agent shall promptly deliver same to Lenders)
a U.S. Borrowing Base Certificate, Canadian Borrowing Base Certificate, and a
U.K. Borrowing Base Certificate, in each case, prepared as of the close of
business of the previous month, and at such other times as Agent may request;
provided that during any Reporting Trigger Period, Borrower Agent shall also be
required to deliver to Agent weekly U.S. Borrowing Base Certificates, Canadian
Borrowing Base Certificates, and U.K. Borrowing Base Certificates by the 3rd
Business Day of each week which begins during such Reporting Trigger Period, in
each case, prepared as of the close of business on the last Business Day of the
previous week (in the case of matters other than those related to Inventory) or
of the close of business of the previous month (in the case of matters relating
to Inventory). All calculations of U.S. Availability, Canadian Availability, or
U.K. Availability in any Borrowing Base Certificate shall originally be made by
Borrower Agent and certified by a Senior Officer of Borrower Agent; provided,
that Agent may from time to time review and adjust any such calculation (a) to
reflect its reasonable estimate of declines in value of any Collateral, due to
collections received in any Dominion Account or otherwise; (b) to adjust advance
rates to reflect changes in dilution, quality, mix and other factors affecting
Collateral; and (c) to the extent the calculation is not made in accordance with
this Agreement or does not accurately reflect the U.S. Availability Reserve
and/or the Canadian Availability Reserve and/or the U.K. Availability Reserve.
The U.S. Borrowing Base Certificate shall set forth the calculation of the U.S.
Borrowing Base in Dollars. The Canadian Borrowing Base shall set forth the
calculation of the Canadian Borrowing Base in both Canadian Dollars and the
Dollar Equivalent thereof along with the Exchange Rate used to determine such
Dollar Equivalent. The U.K. Borrowing Base shall set forth the calculation of
the U.K. Borrowing Base in each of British Pounds, Dollars and Euros and the
Dollar Equivalent thereof along with the Exchange Rate used to determine such
Dollar Equivalent.

8.2    Administration of Accounts.

8.2.1.    Records and Schedules of Accounts. Each Obligor shall keep accurate
and complete records of its Accounts, including all payments and collections
thereon, and shall submit to Agent sales, collection, reconciliation and other
reports in form satisfactory to Agent, on such periodic basis as Agent may
request. Borrower Agent shall also provide to Agent, on or before the 20th day
of each month, a detailed aged trial balance of all Accounts of each Borrower as
of the end of the preceding month, specifying each Account’s Account Debtor name
and address, amount, invoice date and due date, showing any discount, allowance,
credit, authorized return or dispute, and including such proof of delivery,
copies of invoices and invoice registers, copies of related documents, repayment
histories, status reports and other information as Agent may reasonably request.
If Accounts of any Borrower Group in an aggregate face amount of $2,500,000 or
more cease to be Eligible Accounts, Borrower Agent shall notify Agent of such

 

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occurrence promptly (and in any event within one Business Day) after any Obligor
has knowledge thereof.

8.2.2.    Taxes. If an Account of any Obligor includes a charge for any Taxes,
Agent is authorized, in its discretion, to pay the amount thereof to the proper
taxing authority for the account of such Obligor and to charge the Borrowers of
the applicable Borrower Group therefor; provided, however, that neither Agent
nor Lenders shall be liable for any Taxes that may be due from any Obligor or
with respect to any Collateral.

8.2.3.    Account Verification. Whether or not a Default or Event of Default
exists, Agent shall have the right at any time, in the name of Agent, any
designee of Agent or any Obligor, to verify the validity, amount or any other
matter relating to any Accounts of Obligors by mail, telephone or otherwise.
Obligors shall cooperate fully with Agent in an effort to facilitate and
promptly conclude any such verification process.

8.2.4.    Maintenance of Dominion Accounts.

(a)    U.S. Domiciled Obligors and Canadian Domiciled Obligors shall maintain
Dominion Accounts pursuant to lockbox or other arrangements acceptable to Agent.
U.S. Domiciled Obligors and Canadian Domiciled Obligors shall obtain an
agreement (in form and substance satisfactory to Agent) from each lockbox
servicer and Dominion Account bank, establishing Agent’s control over and Lien
in the lockbox or Dominion Account, which may be exercised by Agent during any
Dominion Trigger Period, requiring immediate deposit of all remittances received
in the lockbox to a Dominion Account, and waiving offset rights of such servicer
or bank, except for customary administrative charges. If a Dominion Account of a
U.S. Domiciled Obligor or Canadian Domiciled Obligor is not maintained with Bank
of America or Bank of America (Canada), as applicable, Agent may, during any
Dominion Trigger Period, require immediate transfer of all funds in such account
to a Dominion Account maintained with Bank of America or Bank of America
(Canada), as applicable.

(b)    U.K. Domiciled Obligors shall maintain Dominion Accounts at all times
pursuant to lockbox or other arrangements acceptable to Agent. U.K. Domiciled
Obligors shall obtain an agreement (in form and substance satisfactory to Agent)
from each lockbox servicer and Dominion Account bank, establishing Agent’s
control over and Lien in the lockbox or Dominion Account at all times, requiring
immediate deposit of all remittances received in the lockbox to a Dominion
Account, and waiving offset rights of such servicer or bank, except for
customary administrative charges. If a Dominion Account of a U.K. Domiciled
Obligor is not maintained with Bank of America, N.A., London Branch, Agent may
require immediate transfer of all funds in such account to a Dominion Account
maintained with Bank of America, N.A., London Branch.

(c)    Agent and Lenders assume no responsibility to any Obligor for any lockbox
arrangement or Dominion Account, including any claim of accord and satisfaction
or release with respect to any Payment Items accepted by any bank.

8.2.5.    Proceeds of Collateral. Obligors (other than U.K. Domiciled Obligors)
shall request in writing and otherwise take all necessary steps to ensure that
all payments on Accounts or otherwise relating to Collateral are made directly
to a Dominion Account (or a

 

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lockbox relating to a Dominion Account). U.K. Domiciled Obligors shall request
in writing and otherwise take all necessary steps to ensure that all payments on
Accounts or otherwise relating to Collateral are made directly to a Dominion
Account (or a lockbox relating to a Dominion Account). If any Obligor receives
cash or Payment Items with respect to any Collateral, it shall hold same in
trust for Agent and promptly (not later than the next Business Day) deposit same
into a Dominion Account.

8.3    Administration of Inventory.

8.3.1.    Records and Reports of Inventory. Each Obligor shall keep accurate and
complete records of its Inventory, including costs and daily withdrawals and
additions, and shall submit to Agent inventory and reconciliation reports in
form satisfactory to Agent, on such periodic basis as Agent may request. Each
Obligor shall conduct periodic cycle counts consistent with historical
practices, and shall provide to Agent a report based on each such count promptly
upon completion thereof, together with such supporting information as Agent may
request.

8.3.2.    Returns of Inventory. No Obligor shall return any Inventory to a
supplier, vendor or other Person, whether for cash, credit or otherwise, unless
(a) such return is in the Ordinary Course of Business; (b) no Default, Event of
Default or Overadvance exists or would result therefrom; (c) Agent is promptly
notified if the aggregate Value of all Inventory returned in any month exceeds
$5,000,000; and (d) any payment received by an Obligor for a return during any
Dominion Trigger Period is promptly remitted to Agent for application to the
Obligations.

8.3.3.    Acquisition, Sale and Maintenance. No Obligor shall acquire or accept
any Inventory on consignment or approval, and each Obligor shall take all steps
to assure that all Inventory is produced in accordance with Applicable Law,
including the FLSA. Except to the extent permitted by Section 10.2.5(b) in the
case of consignments, no Obligor shall sell any Inventory on consignment or
approval or any other basis under which the customer may return or require an
Obligor to repurchase such Inventory. Each Obligor shall use, store and maintain
all Inventory with reasonable care and caution, in accordance with applicable
standards of any insurance and in conformity with all Applicable Law, and,
except in cases of good faith disputes, shall make current rent payments (within
applicable grace and cure periods provided for in leases) at all locations where
any Collateral is located.

8.4    Intentionally Omitted.

8.5    Administration of Deposit Accounts. Each Obligor shall take all actions
necessary to establish Agent’s control of all Deposit Accounts (including
Dominion Accounts) and securities accounts maintained by such Obligor; provided,
however, that such control shall not be required for the following
(collectively, the “Excluded Deposit Accounts”): (a) an account exclusively used
for payroll, payroll taxes or employee benefits, and (b) at any time during
which an Event of Default does not exist, an account containing not more than
$250,000, provided, that the aggregate amounts contained in all such accounts
referred to in this clause (b) for which Agent does not have control at any time
shall not exceed $1,000,000. The applicable Obligor shall be the sole account
holder of each Deposit Account or securities account and shall not allow any
other Person (other than Agent) to have control over a Deposit Account,
securities account or any Property deposited therein. Each of the Obligors shall
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opening or closing of a Deposit Account or securities account and, concurrently
with the opening thereof, shall ensure that such account (except an Excluded
Deposit Account) is subject to a fully executed Deposit Account Control
Agreement or, in the case of a securities account, similar control agreement in
favor of Agent and acceptable to Agent.

8.6    General Provisions.

8.6.1.    Location of Collateral. All tangible items of Collateral, other than
Inventory in transit (including in transit to or from a manufacturing facility),
shall at all times be kept by Obligors at the business locations for such
Obligors set forth in Schedule 8.6.1, except that Obligors may (a) make sales or
other dispositions of Collateral in accordance with Section 10.2.5; and (b) move
Collateral to another location in the United States or, in the case of: (i) a
Canadian Domiciled Obligor, in Canada, or (ii) a U.K. Domiciled Obligor, in
England, Wales, Scotland or Northern Ireland (subject, in each case, to Agent
being granted a first priority Lien (subject to Permitted Liens) if none has
been previously granted in such province or territory), in each case, upon 15
Business Days’ prior written notice to Agent.

8.6.2.    Insurance of Collateral; Condemnation Proceeds.

(a)    Each Obligor shall maintain insurance with respect to the Collateral,
covering casualty, hazard, theft, malicious mischief, flood and other risks, in
amounts, with endorsements and with insurers (with a Best’s Financial Strength
Rating of at least A_ VII, unless otherwise approved by Agent) satisfactory to
Agent; provided, that if Real Estate secures any Obligations, flood hazard
diligence, documentation and insurance for such Real Estate shall comply with
all Flood Laws or shall otherwise be satisfactory to all Lenders. From time to
time upon request, Borrower Agent shall deliver to Agent the originals or
certified copies of its insurance policies and updated flood plain searches.
Unless Agent shall agree otherwise, each policy shall include satisfactory
endorsements (i) showing Agent as lender first loss payee (with respect to
property policies only); (ii) requiring at least 30 days prior written notice to
Agent in the event of cancellation of the policy for any reason whatsoever; and
(iii) specifying that the interest of Agent shall not be impaired or invalidated
by any act or neglect of any Obligor or the owner of the Property, nor by the
occupation of the premises for purposes more hazardous than are permitted by the
policy. If any Obligor fails to provide and pay for any insurance, Agent may, at
its option, but shall not be required to, procure the insurance and charge
Borrowers therefor. Each Obligor agrees to deliver to Agent, promptly as
rendered, copies of all reports made to insurance companies. While no Event of
Default exists, Obligors may settle, adjust or compromise any insurance claim,
as long as the proceeds are delivered to Agent in accordance with
Section 8.6.2(b). If an Event of Default exists, only Agent shall be authorized
to settle, adjust and compromise any claims involving any Collateral.

(b)    Any proceeds of insurance relating to the Collateral and any awards
arising from condemnation of any Collateral shall be paid to Agent for
application to the Obligations in accordance with the terms hereof.

8.6.3.    Protection of Collateral. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping any Collateral, all
Taxes payable with respect to any Collateral (including any sale thereof), and
all other payments required to be made by Agent to

 

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any Person to realize upon any Collateral, shall be borne and paid by Borrowers.
Agent shall not be liable or responsible in any way for the safekeeping of any
Collateral, for any loss or damage thereto (except for reasonable care in its
custody while Collateral is in Agent’s actual possession), for any diminution in
the value thereof, or for any act or default of any warehouseman, carrier,
forwarding agency or other Person whatsoever, but the same shall be at Obligors’
sole risk.

8.6.4.    Defense of Title to Collateral. Each Obligor shall at all times defend
its title to Collateral and Agent’s Liens therein against all Persons, claims
and demands whatsoever, except Permitted Liens.

8.7    Power of Attorney. Each Obligor hereby irrevocably constitutes and
appoints Agent (and all Persons designated by Agent) as such Obligor’s true and
lawful attorney (and agent-in-fact), coupled with an interest, for the purposes
provided in this Section. Agent, or Agent’s designee, may, without notice and in
either its or a an Obligor’s name, but at the cost and expense of the Borrowers:

(a)    Endorse an Obligor’s name on any Payment Item or other proceeds of
Collateral (including proceeds of insurance) that come into Agent’s possession
or control; and

(b)    During an Event of Default, (i) notify any Account Debtors of the
assignment of their Accounts, demand and enforce payment of Accounts, by legal
proceedings or otherwise, and generally exercise any rights and remedies with
respect to Accounts; (ii) settle, adjust, modify, compromise, discharge or
release any Accounts or other Collateral, or any legal proceedings brought to
collect Accounts or Collateral; (iii) sell or assign any Accounts and other
Collateral upon such terms, for such amounts and at such times as Agent deems
advisable; (iv) collect, liquidate and receive balances in Deposit Accounts or
securities accounts, and take control, in any manner, of any proceeds of
Collateral; (v) prepare, file and sign an Obligor’s name to a proof of claim or
other document in a bankruptcy or other Insolvency Proceeding of an Account
Debtor, or to any notice, assignment or satisfaction of Lien or similar
document; (vi) receive, open and dispose of mail addressed to an Obligor where
the addressor is any Account Debtor or where the addressor is not identifiable
with certainty, and notify postal authorities to deliver any such mail to an
address designated by Agent; (vii) endorse any Chattel Paper, Document,
Instrument, invoice, freight bill, bill of lading, or other document or
agreement relating to any Accounts, Inventory or other Collateral; (viii) use an
Obligor’s stationery and sign its name to verifications of Accounts and notices
to Account Debtors; (ix) use the information recorded on or contained in any
data processing, electronic or information systems relating to any Collateral;
(x) make and adjust claims under insurance policies; (xi) take any action as may
be necessary or appropriate to obtain payment under any letter of credit,
banker’s acceptance or other instrument for which an Obligor is a beneficiary;
(xii) exercise any voting or other rights under or with respect to any
Investment Property; and (xiii) take all other actions as Agent deems
appropriate to fulfill any Obligor’s obligations under the Loan Documents.

 

SECTION 9.

REPRESENTATIONS AND WARRANTIES

9.1    General Representations and Warranties. To induce Agent and Lenders to
enter into this Agreement and to make available the Commitments, Loans and
Letters of Credit, each Obligor represents and warrants that:

 

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9.1.1.    Existence, Qualification and Power; Compliance with Applicable Laws.
Each Obligor and each Subsidiary (a) is duly organized or formed, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, (b) has all requisite power and authority and all
requisite governmental licenses, authorizations, consents and approvals to
(i) own its assets and carry on its business and (ii) execute, deliver and
perform its obligations under the Loan Documents to which it is a party, (c) is
duly qualified and is licensed and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification or license, and (d) is in
compliance with all Applicable Laws; except in each case referred to in clause
(b)(i), (c) or (d), to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect. No Obligor is an EEA Financial
Institution.

9.1.2.    Authorization; No Contravention. The execution, delivery and
performance by each Obligor of each Loan Document to which such Person is party,
have been duly authorized by all necessary corporate or other organizational
action, and do not and will not (a) contravene the terms of any of such Person’s
Organic Documents; (b) conflict with or result in any breach of or contravention
under (i) any Contractual Obligation to which such Person is a party or by which
it is bound, the termination or adverse modification of which could reasonably
be expected to have a Material Adverse Effect, or (ii) any order, injunction,
writ or decree of any Governmental Authority or any arbitral award to which such
Person or its property is subject; (c) result in the creation of any Lien (other
than Permitted Liens), or (d) violate any Applicable Law.

9.1.3.    Governmental Authorization; Other Consents. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, any Obligor of
this Agreement or any other Loan Document except for such approvals, consents,
exemptions, authorizations, actions, notices and filings which have been
obtained, taken, given or made and are in full force and effect. All necessary
import, export or other licenses, permits or certificates for the import or
handling of any goods or other Collateral have been procured and are in effect,
and Obligors and Subsidiaries have complied with all foreign and domestic laws
with respect to the shipment and importation of any goods or Collateral, except
where noncompliance could not reasonably be expected to have a Material Adverse
Effect.

9.1.4.    Binding Effect. This Agreement has been, and each other Loan Document,
when delivered hereunder, will have been, duly executed and delivered by each
Obligor that is party thereto. This Agreement constitutes, and each other Loan
Document when so delivered will constitute, a legal, valid and binding
obligation of such Obligor, enforceable against each Obligor that is party
thereto in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors’ rights generally or by equitable principles relating to
enforceability.

9.1.5.    Financial Statements; No Material Adverse Effect.

(a)    The consolidated and consolidating balance sheets, and related statements
of income, cash flow and shareholder’s equity, of Parent and its Subsidiaries
that have been and are hereafter delivered to Agent and Lenders (i) are prepared
in accordance with GAAP consistently applied throughout the period covered
thereby, except as otherwise expressly noted

 

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therein; (ii) fairly present the financial positions and results of operations
of Parent and Subsidiaries at the dates and for the periods indicated, except as
otherwise expressly noted therein; and (iii) show all material indebtedness and
other liabilities, direct or contingent, of Parent and its Subsidiaries as of
the date thereof, including liabilities for taxes, material commitments and
Debt, to the extent required by GAAP to be shown on such financial statements.

(b)    Since December 31, 2010, there has been no change in the condition,
financial or otherwise, of any Borrower or any Subsidiary that could reasonably
be expected to have a Material Adverse Effect.

(c)    Each Borrower is Solvent and Parent and the Subsidiaries on a
consolidated basis are Solvent.

9.1.6.    Litigation. There are no actions, suits, proceedings, claims or
disputes pending or, to the knowledge of any Obligor, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, by or against any Borrower or any Subsidiaries or against any of
their properties or revenues that (a) purport to affect or pertain to this
Agreement or any other Loan Document, or any of the transactions contemplated
hereby, or (b) either individually or in the aggregate, if determined adversely,
could reasonably be expected to have a Material Adverse Effect.

9.1.7.    No Default. No Borrower or Subsidiary is in default under or with
respect to any Contractual Obligation that could, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. No Default
or Event of Default has occurred and is continuing or would result from the
consummation of the transactions contemplated by this Agreement or any other
Loan Document.

9.1.8.    Ownership of Property; Liens. Each Borrower and each Subsidiary has
good record and marketable title in fee simple to, or valid leasehold interests
in, all Real Estate necessary or used in the ordinary conduct of its business
(other than minor defects in title as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect), and all
personal Property, including all Property reflected in any financial statements
delivered to Agent or Lenders, in each case free of Liens except Permitted
Liens. Except disclosed on the survey delivered to Agent as part of the Related
Real Estate Documents, no Real Estate is located in a special flood hazard zone,
except as disclosed on Schedule 9.1.8. Each Borrower and each Subsidiary has
paid and discharged all lawful claims that, if unpaid, could become a Lien on
its Properties, other than Permitted Liens. All Liens of Agent in the Collateral
are duly perfected, first priority Liens, subject only to Permitted Liens that
are expressly allowed to have priority over Agent’s Liens.

9.1.9.    Environmental Compliance. Borrowers and Subsidiaries conduct in the
Ordinary Course of Business a review of the effect of existing Environmental
Laws and claims alleging potential liability or responsibility for violation of
any Environmental Law on their respective businesses, operations and properties
(including Real Estate), and as a result thereof the Obligors have reasonably
concluded that, except as specifically disclosed on Schedule 9.1.9, such
Environmental Laws and claims could not, individually or in the aggregate
reasonably be expected to have a Material Adverse Effect. No Borrower or
Subsidiary has any contingent liability with

 

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respect to any Environmental Release, environmental pollution or hazardous
material on any Real Estate now or previously owned, leased or operated by it.

9.1.10.    Insurance. The properties of Borrowers and Subsidiaries are insured
with financially sound and reputable insurance companies not Affiliates of any
Obligor, in such amounts (after giving effect to any self-insurance compatible
with the following standards), with such deductibles and covering such risks as
are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the applicable Borrower or the applicable
Subsidiary operates.

9.1.11.    Taxes. Each Borrower and each Subsidiary has filed all federal, state
and material local tax returns and other material reports that it is required by
law to file, and has paid, or made proper provision in accordance with relevant
accounting standards for the payment of, all Taxes upon it, its income and its
Properties that are due and payable, except to the extent being Properly
Contested.

9.1.12.    ERISA; Canadian Pension Plan Compliance. Except as disclosed on
Schedule 9.1.12:

(a)    Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is
intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS or an application for such a letter is
currently being processed by the IRS with respect thereto and, to the best
knowledge of Obligors, nothing has occurred which would prevent, or cause the
loss of, such qualification. Parent and each ERISA Affiliate has made all
required contributions to each Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.

(b)    There are no pending or, to the best knowledge of Obligors, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan that could be reasonably be expected to have a Material
Adverse Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.

(c)    No Canadian Borrower or any Canadian Subsidiary provides benefits to
retired Canadian Employees or to beneficiaries or dependents of retired Canadian
Employees. Except as would not reasonably be expected to result in a Material
Adverse Effect, Canadian Borrower and each Canadian Subsidiary is in compliance
with all Requirements of Law and all Canadian Employee Benefits Legislation and
health and safety, workers compensation, employment standards, labor relations,
health insurance, employment insurance, protection of personal information,
human rights laws and any Canadian federal, provincial or local counterparts or
equivalents in each case, as applicable to the Canadian Employees and as amended
from time to time.

(d)    (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither Parent
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has incurred, or reasonably expects to incur, any liability under Title IV of
ERISA with respect to any Pension Plan (other than premiums due and not
delinquent under Section 4007 of ERISA); (iv) neither Parent nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any liability (and no
event has occurred which, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Sections 4201 or 4243 of ERISA with
respect to a Multiemployer Plan; and (v) neither Parent nor any ERISA Affiliate
has engaged in a transaction that could be subject to Sections 4069 or 4212(c)
of ERISA.

(e)    Canadian Borrower and Canadian Subsidiaries are in compliance with the
requirements of the PBA and other federal, provincial or state laws with respect
to each Canadian Pension Plan, except where the failure to so comply would not
reasonably be expected to have a Material Adverse Effect. No fact or situation
that may reasonably be expected to result in a Material Adverse Effect exists in
connection with any Canadian Pension Plan. Neither Canadian Borrower nor any of
Canadian Subsidiary has any material withdrawal liability in connection with a
Plan. No Termination Event has occurred. Each Canadian Pension Plan has no
solvency deficiency and is fully funded as required under the most recent
actuarial valuation filed with the applicable Governmental Authority pursuant to
generally accepted actuarial practices and principles. No fact or circumstance
exists that could adversely affect the tax-exempt status of a Canadian Pension
Plan. No Lien has arisen, choate or inchoate, in respect of Canadian Borrower or
Canadian Subsidiaries or their property in connection with any Canadian Pension
Plan (save for contribution amounts not yet due). No Canadian Pension Plan
provides benefits on a defined benefit basis.

(f)    With respect to any Foreign Plan, except as could not reasonably be
expected to have a Material Adverse Effect, (i) all employer and employee
contributions required by law or by the terms of the Foreign Plan have been
made, or, if applicable, accrued, in accordance with normal accounting
practices; (ii) the fair market value of the assets of each funded Foreign Plan,
the liability of each insurer for any Foreign Plan funded through insurance, or
the book reserve established for any Foreign Plan, together with any accrued
contributions, is sufficient to procure or provide for the accrued benefit
obligations with respect to all current and former participants in such Foreign
Plan according to the actuarial assumptions and valuations most recently used to
account for such obligations in accordance with applicable generally accepted
accounting principles; and (iii) it has been registered as required and has been
maintained in good standing with applicable regulatory authorities.

(g)    No U.K. Domiciled Obligor nor any of its U.K. subsidiaries is nor has at
any time been: (i) an employer (for the purposes of Sections 38 to 51 of the
Pensions Act 2004 of the United Kingdom) of an occupational pension scheme which
is not a money purchase scheme (as those terms are defined in the Pension
Schemes Act 1993 of the United Kingdom); or (ii) “connected” with or an
“associate” of the Parent or any of its Subsidiaries which is such an employer
(as those terms are used in Sections 38 and 43 of the Pensions Act 2004 of the
United Kingdom) in relation to an occupational pension scheme in the
United Kingdom which is not a money purchase scheme.

9.1.13.    Subsidiaries. Schedule 9.1.13 shows, for each Borrower and each
Subsidiary, its name and its jurisdiction of organization. Schedule 9.1.13
shows, for each Subsidiary of Parent, its authorized and issued Equity
Interests, the holders of its Equity Interests,

 

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and all agreements binding on such holders with respect to their Equity
Interests. Except as disclosed on Schedule 9.1.13, in the five years preceding
the Closing Date, no Borrower or Subsidiary has acquired any substantial assets
from any other Person nor been the surviving entity in a merger, amalgamation or
combination. Each Borrower has good title to its Equity Interests in its
Subsidiaries, and all such Equity Interests are duly issued, fully paid and
non-assessable. There are no outstanding purchase options, warrants,
subscription rights, agreements to issue or sell, convertible interests, phantom
rights or powers of attorney relating to Equity Interests of any Subsidiary of
Parent.

9.1.14.    Margin Regulations; Investment Company Act.

(a)    No Borrower or Subsidiary is engaged, principally or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any Margin Stock. No Loan proceeds or Letters of Credit
will be used by Borrowers to purchase or carry, or to reduce or refinance any
Debt incurred to purchase or carry, any Margin Stock or for any related purpose,
in each case, in violation of Regulations T, U or X of the Board of Governors.

(b)    None of the Borrowers is or is required to be registered as an
“investment company” under the Investment Company Act of 1940.

9.1.15.    Disclosure. No written report, financial statement, certificate or
other written information furnished by or on behalf of any Obligor to Agent or
any Lender in connection with the transactions contemplated hereby and the
negotiation of this Agreement or delivered hereunder (as modified or
supplemented by other information so furnished) taken as a whole contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected financial
information, the Borrowers represent only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time (it
being understood that projections are subject to significant uncertainties and
contingencies, many of which are beyond the Borrowers’ control, and that no
assurance can be given the projections will be realized).

9.1.16.    Compliance with Laws. Each Borrower and each Subsidiary is in
compliance in all material respects with the requirements of all Applicable Laws
and all orders, writs, injunctions and decrees applicable to it or to its
Properties, except in such instances in which (a) such requirement of Applicable
Law or order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply
therewith, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. Except as would not reasonably be
expected to have a Material Adverse Effect, no Inventory has been produced in
violation of the FLSA.

9.1.17.     Intellectual Property; Licenses, Etc. To the best knowledge of
Obligors, or as could not reasonably be expected to have a Material Adverse
Effect, Borrowers and Subsidiaries own, or possess the lawful right to use, all
Intellectual Property necessary for the conduct of its business, without
conflict with the rights of any other Person. To the best knowledge of Obligors,
no slogan or other advertising device, product, process, method, substance, part
or other material now employed by any Borrower or any Subsidiary infringes upon
any valid,

 

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proprietary rights held by any other Person that could result in a claim, that,
if successful, could reasonably be expected to have a Material Adverse Effect.
No claim or litigation regarding any of the foregoing is pending or, to the best
knowledge of the Obligors, threatened, which, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
Borrower Agent has disclosed on Schedule 9.1.17 (i) all Royalties or other
compensation paid by any Borrower or Subsidiary to any Person with respect to
any Intellectual Property and (ii) all Intellectual Property registrations,
filings and applications for registration owned by any Obligor.

9.1.18.    Accounts. Agent may rely, in determining which Accounts are Eligible
Accounts, on all statements and representations made by Borrowers with respect
thereto. Borrowers warrant, with respect to each Account at the time it is shown
as an Eligible Account in a Borrowing Base Certificate, that:

(a)    it is genuine and in all respects what it purports to be, and is not
evidenced by a judgment;

(b)    it arises out of a completed, bona fide sale and delivery of goods or
rendition of services in the Ordinary Course of Business, and substantially in
accordance with any purchase order, contract or other document relating thereto;

(c)    it is for a sum certain, maturing as stated in the invoice covering such
sale or rendition of services, a copy of which has been furnished or is
available to Agent on request;

(d)    it is not subject to any offset, Lien (other than Agent’s Lien),
deduction, defense, dispute, counterclaim or other adverse condition except as
arising in the Ordinary Course of Business and disclosed to Agent; and it is
absolutely owing by the Account Debtor, without contingency in any respect;

(e)    no purchase order, agreement, document or Applicable Law restricts
assignment of the Account to Agent (regardless of whether, under the UCC or
PPSA, the restriction is ineffective), and the applicable Borrower is the sole
payee or remittance party shown on the invoice;

(f)    no extension, compromise, settlement, modification, credit, deduction or
return has been authorized with respect to the Account, except discounts or
allowances granted in the Ordinary Course of Business for prompt payment that
are reflected on the face of the invoice related thereto and in the reports
submitted to Agent hereunder; and

(g)    to the best of Borrowers’ knowledge, (i) there are no facts or
circumstances that are reasonably likely to impair the enforceability or
collectibility of such Account; (ii) the Account Debtor had the capacity to
contract when the Account arose, continues to meet the applicable Borrower’s
customary credit standards, is Solvent, is not contemplating or subject to an
Insolvency Proceeding, and has not failed, or suspended or ceased doing
business; and (iii) there are no proceedings or actions threatened or pending
against any Account Debtor that could reasonably be expected to have a material
adverse effect on the Account Debtor’s financial condition.

 

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9.1.19.    Brokers. There are no brokerage commissions, finder’s fees or
investment banking fees payable in connection with any transactions contemplated
by the Loan Documents.

9.1.20.    Trade Relations. Except as would not reasonably be expected to have a
Material Adverse Effect, there exists no actual or threatened termination,
limitation or modification of any business relationship between any Borrower or
Subsidiary and any customer or supplier, or any group of customers or suppliers,
who individually or in the aggregate are material to the business of such
Borrower or Subsidiary.

9.1.21.    Labor Relations. Except as described on Schedule 9.1.21, no Obligor
is party to or bound by any collective bargaining agreement. Except as would not
reasonably be expected to have a Material Adverse Effect, there are no material
grievances, disputes or controversies with any union or other organization of
any Borrower’s or Subsidiary’s employees, or, to any Obligor’s knowledge, any
asserted or threatened strikes, work stoppages or demands for collective
bargaining.

9.1.22.    OFAC. No Obligor (i) or (to the knowledge of any Obligor) any
director, officer, employee, agent, affiliate or representative thereof, is or
is owned or controlled by any individual or entity that is currently the target
of any Sanction or is located, organized or resident in a Designated
Jurisdiction, (ii) is a person whose property or interest in property is blocked
or subject to blocking pursuant to (A) Section 1 of Executive Order 13224 of
September 23, 2001 Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079
(2001)), (B) the United Nations Act (Canada), the Special Economic Measures Act
(Canada), the Export and Import Permits Act (Canada), the Freezing Assets of
Corrupt Foreign Officials Act (Canada), the Criminal Code (Canada), the Defence
Production Act (Canada), the Proceeds of Crime Act, the Anti-terrorism Act
(Canada) or the Foreign Extraterritorial Measures Act (Canada) (together with
and all regulations and orders made thereunder, collectively, “Canadian
Sanctions Laws”), or (C) the Proceeds of Crime Act 2002, the Counter-Terrorism
Act 2008 and Export Control Order 2008, the Export Control Act 2002, the Export
Control (Al-Qaida and Taliban Sanctions) Regulations 2011, the Terrorist
Asset-Freezing etc. Act 2010 and the Consolidated List of Financial Sanctions
Targets administered by HM Treasury through the Office of Financial Sanctions
Implementations, EU Council Regulation 2580/2001 and all supplementary
instruments thereto including Implementing Resolution 1169/2012 and EU (EC)
Regulation 881/2002, (EU) 753/2011, (EU) 754/2011 and (EU) 2017/1411
(collectively, the “U.K. Sanctions Laws”), (iii) engages in any dealings or
transactions prohibited by (A) Section 2 of such executive order, (B) Canadian
Sanctions Laws or (C) U.K. Sanctions Laws, or is otherwise associated with any
such person in any manner violative of Section 2 of such executive order or by
Canadian Sanctions Laws or U.K. Sanctions Laws, or (iv) is a person (A) on the
list of Specially Designated Nationals and Blocked Persons or subject to the
limitations or prohibitions under any other OFAC regulation or executive order,
(B) on the list of names subject to the Regulations Establishing a List of
Entities made under subsection 83.05(1) of the Criminal Code, and/or
the Regulations Implementing the United Nations Resolutions on the Suppression
of Terrorism (RIUNRST) and/or United Nations Al-Qaida and Taliban
Regulations (UNAQTR), or (C) is a person included on the UK’s Consolidated List
of Financial Sanctions Targets.

 

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9.1.23.    Anti-Corruption Laws. Each Obligor has implemented and maintains in
effect policies and procedures designed to ensure compliance by such Obligor,
its Subsidiaries and their respective directors, officers, employees and agents
with Anti-Corruption Laws of Canada, United Kingdom, United States, and any of
the member states of the European Union and applicable Sanctions, and such
Obligor, its Subsidiaries and their respective officers and directors and, to
the knowledge of such Loan Party, its employees and agents, are in compliance
with Anti-Corruption Laws of Canada, United Kingdom, United States, and any of
the member states of the European Union and applicable Sanctions in all material
respects.

9.1.24.    Commercial Tort Claims. Except as shown on Schedule 9.1.24, no U.S.
Domiciled Obligor has a Commercial Tort Claim (other than a Commercial Tort
Claim for less than $1,000,000).

 

SECTION 10.

COVENANTS AND CONTINUING AGREEMENTS

10.1    Affirmative Covenants. As long as any Commitments or Obligations are
outstanding, each Obligor shall, and shall cause each Subsidiary to:

10.1.1.    Financial Statements. Deliver to Agent (with sufficient copies for
each Lender), in form and detail satisfactory to Agent and the Required Lenders:

(a)    as soon as available, but in any event within 90 days after the end of
each Fiscal Year of Parent, balance sheets as at the end of such Fiscal Year,
and the related statements of income or operations, shareholders’ equity and
cash flows for such Fiscal Year, on a consolidated and consolidating basis for
Parent and its Subsidiaries, setting forth in each case in comparative form the
figures for the previous Fiscal Year, all in reasonable detail and prepared in
accordance with GAAP, which consolidated statements shall be audited and
accompanied by a report and opinion of an independent certified public
accountant or chartered accountant, as applicable, of nationally recognized
standing, which report and opinion shall be prepared in accordance with
generally accepted auditing standards and shall not be subject to any “going
concern” or like qualification or exception or any qualification or exception as
to the scope of such audit;

(b)    as soon as available, but in any event within 45 days after the end of
each of the first three fiscal quarters of each Fiscal Year of Parent, unaudited
balance sheets as at the end of such fiscal quarter, and the related statements
of income or operations, shareholders’ equity and cash flows for such fiscal
quarter and for the portion of Parent’s fiscal year then ended, on a
consolidated and consolidating basis for Parent and its Subsidiaries, setting
forth in each case in comparative form the figures for the corresponding fiscal
quarter of the previous fiscal year and the corresponding portion of the
previous fiscal year, all in reasonable detail, certified by the chief financial
officer of Borrower Agent as fairly presenting the financial condition, results
of operations, shareholders’ equity and cash flows of Parent and its
Subsidiaries in accordance with GAAP, subject only to normal year-end audit
adjustments and the absence of footnotes; and

(c)    as soon as available, and in any event within 30 days after the end of
each month other than the last month of each fiscal quarter of Parent, unaudited
balance sheets as at the

 

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end of such month, and the related statements of income or operations for such
month and for the portion of Parent’s fiscal year then ended, on a consolidated
basis for Parent and its Subsidiaries, setting forth in each case in comparative
form the figures for the corresponding month of the previous fiscal year and the
corresponding portion of the previous fiscal year, all in reasonable detail,
certified by the chief financial officer of Borrower Agent as fairly presenting
the financial condition, results of operations, shareholders’ equity and cash
flows of Parent and its Subsidiaries in accordance with historical practices.

10.1.2.    Certificates; Other Information. Deliver to Agent, for delivery to
each Lender, in form and detail satisfactory to Agent and the Required Lenders:

(a)    concurrently with the delivery of the financial statements referred to in
Sections 10.1.1(a), (b) and (c), or more frequently if requested by Agent when a
Default or Event of Default exists, a duly completed Compliance Certificate
signed by the chief financial officer of the Borrower Agent;

(b)    concurrently with the delivery of financial statements under
Section 10.1.1(a), copies of any detailed audit reports, management letters or
recommendations submitted to the board of directors (or the audit committee of
the board of directors) of Parent by independent accountants in connection with
the accounts or books of Borrowers or any Subsidiary, or any audit of any of
them;

(c)    promptly after the same are available, copies of each annual report,
proxy or financial statement or other report or communication sent to the
stockholders of Parent, and copies of all annual, regular, periodic and special
reports and registration statements which any Obligor may file or be required to
file with the Securities and Exchange Commission or any provincial securities
commission or regulator, and not otherwise required to be delivered to Agent
pursuant hereto;

(d)    promptly following the Agent’s request therefor, all documentation and
other information that the Agent reasonably requests on its behalf or on behalf
of any Lender in order to comply with its ongoing obligations under applicable
“know your customer” and anti-money laundering rules and regulations, including
the Patriot Act and the Proceeds of Crime Act;

(e)    promptly following the Agent’s request therefor, copies of (i) any
documents described in Section 101(k)(1) of ERISA that any Borrower or any of
its ERISA Affiliates may request with respect to any Multiemployer Plan and
(ii) any notices described in Section 101(l)(1) of ERISA that any Borrower or
any of its ERISA Affiliates may request with respect to any Plan or
Multiemployer Plan; provided that if any Borrower or any of its ERISA Affiliates
have not requested such documents or notices from the administrator or sponsor
of the applicable Plan or Multiemployer Plan prior to the Agent’s request
therefor, a Borrower or one of its ERISA Affiliates shall promptly make a
request for such documents or notices from such administrator or sponsor and
shall provide copies of such documents and notices promptly after receipt
thereof and promptly after the sending or filing thereof, copies of any annual
report to be filed in connection with any Canadian Pension Plan or any Foreign
Plan of any Obligor incorporated in the U.K.;

 

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(f)    promptly after Borrower Agent has notified Agent of any intention by
Borrowers to treat the Loans and/or Letters of Credit and related transactions
as being a “reportable transaction” (within the meaning of Treasury Regulation
Section 1.6011-4), a duly completed copy of IRS Form 8886 or any successor form;

(g)    not later than 30 days after the end of each Fiscal Year, projections of
Parent’s consolidated balance sheets, results of operations, cash flow, U.S.
Availability, U.K. Availability and Canadian Availability for the next Fiscal
Year, month by month;

(h)    at Agent’s request, a listing of each Obligor’s trade payables,
specifying the trade creditor and balance due, and a detailed trade payable
aging, all in form satisfactory to Agent;

(i)    within 45 days of the end of each fiscal quarter of Parent, or more
frequently if requested by Agent when a Default or Event of Default exists:
(i) all Royalties or other compensation (to the extent not previously disclosed
to Agent in writing) paid by any Borrower or Subsidiary to any Person with
respect to any Intellectual Property, and (ii) all Intellectual Property (to the
extent not previously disclosed to Agent in writing) owned, used or licensed by,
or otherwise subject to any interests of, any Borrower or Subsidiary; and

(j)    promptly, such additional information regarding the Collateral or the
business, financial or corporate affairs of Borrowers or any Subsidiary, or
compliance with the terms of the Loan Documents, as Agent or any Lender may from
time to time reasonably request.

Documents required to be delivered pursuant to Section 10.1.1(a) or (b) or
Section 10.1.2(c) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which
Borrower Agent posts such documents, or provides a link thereto on Borrower
Agent’s website; or (ii) on which such documents are posted on Borrower Agent’s
behalf on IntraLinks/IntraAgency or another relevant website, if any, to which
Agent and each Lender have access (whether a commercial, third-party website or
whether sponsored by Agent); provided that: (i) if any Lender so requests, the
Borrower Agent shall deliver paper copies or electronic copies via electronic
mail of such documents to Agent or any Lender that requests Borrower Agent to
deliver such paper or electronic copies until a written request to cease
delivering paper or electronic copies is given by Agent or such Lender and
(ii) Borrower Agent shall notify (which may be by facsimile or electronic mail)
Agent and each Lender of the posting of any such documents. Notwithstanding
anything contained herein, in every instance Borrower Agent shall be required to
provide paper copies of the Compliance Certificates required by
Section 10.1.2(a) to Agent and each of the Lenders. Except for such Compliance
Certificates, Agent shall have no obligation to request the delivery or to
maintain copies of the documents referred to above, and in any event shall have
no responsibility to monitor compliance by Borrower Agent with any such request
for delivery, and each Lender shall be solely responsible for requesting
delivery to it or maintaining its copies of such documents.

10.1.3.    Notices. Notify Agent and each Lender:

 

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(a)    Within five (5) Business Days after the occurrence of a Default or Event
of Default under Section 11.1(f) and promptly after the occurrence of any other
Default or Event of Default;

(b)    Promptly of any matter that has resulted or could reasonably be expected
to result in a Material Adverse Effect, including, if applicable (i) breach or
non-performance of, or any default under, a Contractual Obligation of any
Borrower or any Subsidiary; (ii) any dispute, litigation, investigation,
proceeding or suspension between any Borrower or any Subsidiary and any
Governmental Authority; (iii) the commencement of, or any material development
in, any litigation or proceeding affecting any Borrower or any Subsidiary,
including pursuant to any applicable Environmental Laws; or (iv) the assertion
of any Intellectual Property Claim;

(c)    Promptly of the occurrence of any ERISA Event or Termination Event;

(d)    Promptly of any material change in accounting policies or financial
reporting practices by any Borrower or any Subsidiary;

(e)    Promptly after obtaining knowledge of any pending or threatened labor
dispute, strike or walkout, or the expiration of any material labor contract
that, in each case, materially and adversely affects any Obligor or any
Subsidiary;

(f)    Promptly of any judgment affecting any Obligor in an amount exceeding the
Dollar Equivalent of $5,000,000;

(g)    Promptly after the discharge or any withdrawal or resignation by
Borrowers’ accountants; and

(h)    At least 30 days prior to any opening of a new office or place of
business where Collateral will be located.

Each notice pursuant to this Section shall be accompanied by a statement of a
Senior Officer of Borrower Agent setting forth details of the occurrence
referred to therein and stating what action Borrowers have taken and proposes to
take with respect thereto. Each notice pursuant to Section 10.1.3 shall describe
with particularity any and all provisions of this Agreement and any other Loan
Document that have been breached.

10.1.4.    Payment of Obligations. Pay and discharge as the same shall become
due and payable, all its obligations and liabilities in an aggregate amount in
excess of $10,000,000, including (a) all Taxes and tax liabilities, assessments
and governmental charges or levies upon it or its Properties, unless such Taxes
are being Properly Contested; provided, that all such Taxes, tax liabilities,
assessments, governmental charges and levies shall be paid and discharged prior
to the date on which a Lien on any Collateral shall attach in an aggregate
amount in excess of $250,000 for all federal tax liens and $2,500,000 for all
other liens which is senior to Agent’s Lien; (b) all lawful claims which, if
unpaid, would by law become a Lien upon its property; and (c) all Debt, as and
when due and payable, but subject to any subordination provisions contained in
any instrument or agreement evidencing such Debt.

10.1.5.    Preservation of Existence, Etc. (a) Preserve, renew and maintain in
full

 

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force and effect its legal existence and good standing under the laws of the
jurisdiction of its organization except in a transaction permitted by
Section 10.2.4 or 10.2.5; (b) take all reasonable action to maintain all rights,
privileges, permits, licenses and franchises necessary or desirable in the
normal conduct of its business, except to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Effect; and (c) preserve
or renew all of its registered patents, trademarks, trade names and service
marks, the non-preservation of which could reasonably be expected to have a
Material Adverse Effect.

10.1.6.    Maintenance of Properties. (a) Except for any downsizing,
restructuring, closure or partial closure of the golf ball manufacturing
operations of Borrowers in existence on the Original Agreement Closing Date,
maintain, preserve and protect all of its material properties and material
equipment necessary in the operation of its business in good working order and
condition, ordinary wear and tear excepted; and (b) make all necessary repairs
thereto and renewals and replacements thereof except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect.

10.1.7.    Maintenance of Insurance. In addition to the insurance required
hereunder with respect to Collateral, maintain insurance with insurers (with a
Best Rating of at least A7, unless otherwise approved by Agent) satisfactory to
Agent, with respect to the Properties and business of Borrowers and Subsidiaries
of such type (including product liability, workers’ compensation, larceny,
embezzlement, or other criminal misappropriation insurance), in such amounts,
and with such coverages and deductibles as are customary for companies similarly
situated.

10.1.8.    Compliance with Laws. Comply in all material respects with the
requirements of all Applicable Laws and all orders, writs, injunctions and
decrees applicable to it or to its business or property, except in such
instances in which (a) such requirement of Applicable Law or order, write,
injunction or decree is being contested in good faith by appropriate proceedings
diligently conducted; or (b) the failure to comply therewith could not
reasonably be expected to have a Material Adverse Effect. Materially comply with
all Anti-Terrorism Laws.

10.1.9.    Books and Records. Maintain proper books of record and account, in
which full, true and correct entries in conformity with GAAP consistently
applied shall be made of all financial transactions and matters involving the
assets and business of each Borrower and each Subsidiary, as the case may be;
and (b) maintain such books of record and account in material conformity with
all applicable requirements of any Governmental Authority having regulatory
jurisdiction over each Borrower and each Subsidiary, as the case may be.

10.1.10.    Inspections; Appraisals.

(a)    Permit Agent from time to time, subject (except when a Default or Event
of Default exists) to reasonable notice and normal business hours, to visit and
inspect the Properties of any Borrower or Subsidiary, inspect, audit and make
extracts from any Borrower’s or Subsidiary’s books and records, and discuss with
its officers, employees, agents, advisors and independent accountants such
Borrower’s or Subsidiary’s business, financial condition, assets, prospects and
results of operations. For each calendar year, at least one examination will be
held by Agent during such calendar year and at least two examinations will be
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such calendar year if Availability on any day during such year is less than
$35,000,000. Lenders may participate in any such visit or inspection, at their
own expense. Neither Agent nor any Lender shall have any duty to any Borrower to
make any inspection, nor to share any results of any inspection, appraisal or
report with any Borrower. Borrowers acknowledge that all inspections, appraisals
and reports are prepared by Agent and Lenders for their purposes, and Borrowers
shall not be entitled to rely upon them.

(b)    Reimburse Agent for all charges, costs and expenses of Agent in
connection with (i) examinations of any Obligor’s books and records or any other
financial or Collateral matters as Agent deems appropriate, up to two times per
calendar year; (ii) appraisals of Inventory, up to two times per calendar year
and (iii) appraisals of Intellectual Property (other than Excluded Intellectual
Property), up to one time per calendar year; provided, however, that:
(A) Borrowers shall reimburse Agent for all charges, costs and expenses in
connection with a third appraisal of Inventory or second appraisal of
Intellectual Property (other than Excluded Intellectual Property) in any
calendar year if such appraisal is commenced during any Reporting Trigger
Period; (B) Borrowers shall reimburse Agent for all charges, costs and expenses
in connection with a third examination in any calendar year if such examination
is commenced during any Reporting Trigger Period; and (C) if an examination or
appraisal is initiated during a Default or Event of Default, all charges, costs
and expenses therefor shall be reimbursed by Borrowers without regard to such
limits. Borrowers agree to pay Agent’s then standard charges for examination
activities, including the standard charges of Agent’s internal examination and
appraisal groups, as well as the charges of any third party used for such
purposes.

10.1.11.    Use of Proceeds. Use the proceeds of the Loans or other extensions
of credit (a) to refinance existing indebtedness, (b) to issue standby or
commercial letters of credit and (c) to finance ongoing working capital needs
and for general corporate purposes (including Permitted Acquisitions) not in
contravention of any Applicable Law or of any Loan Document.

10.1.12.    Additional Guarantors. Promptly notify Agent upon any Person
becoming a Subsidiary and (a) cause (i)(A) each U.S. Subsidiary and (B) any
Foreign Subsidiary that loses its status as a “controlled foreign corporation”
under Section 957 of the Code promptly to execute and deliver to Agent a
Guarantee (including, if requested by Agent, a joinder to this Agreement in form
and substance satisfactory to Agent) in favor of Agent for the benefit of the
Secured Parties, and (ii) each Canadian Subsidiary and U.K. Subsidiary to
execute and deliver to Agent a Canadian Facility Guarantee and U.K. Facility
Guarantee (including, if requested by Agent, a joinder to this Agreement in form
and substance satisfactory to Agent) in favor of Agent for the benefit of the
Canadian Secured Parties and U.K. Secured Parties, (b) cause such Guarantor to
deliver to the Agent such certificates of resolutions or other action,
incumbency certificates and/or other certificates of Senior Officers or other
authorized Persons of such Subsidiary as Agent may require evidencing the
identity, authority and capacity of each Senior Officer or other authorized
Person thereof in connection with the Guarantee, Canadian Facility Guarantee, or
U.K. Facility Guarantee, as applicable, to which such Subsidiary is a party and
such additional and other documents and certifications as Agent may reasonably
require to evidence that such Subsidiary is duly organized or formed and is
validly existing, in good standing and qualified to engage in business, in each
case to the extent applicable, in jurisdictions reasonably identified by Agent,
and (c) cause such Guarantor to execute and deliver such documents, instruments
and agreements and to take such other actions as Agent shall require to evidence
and perfect a Lien in favor of Agent (for the benefit

 

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of Secured Parties (in the case of a Subsidiary described in clause (a)(i)
above) and the Canadian Secured Parties and U.K. Secured Parties (in the case of
a Subsidiary described in clause (a)(ii) above)) on all assets of such Person
which are the same type as the Collateral, including delivery of legal opinions,
in form and substance satisfactory to Agent, as it shall deem appropriate.

10.1.13.    Landlord and Storage Agreements. Upon request, provide Agent with
copies of all existing agreements, and promptly after execution thereof provide
Agent with copies of all future agreements, between an Obligor and any landlord,
warehouseman, processor, shipper, bailee or other Person that owns any premises
at which any Collateral may be kept or that otherwise may possess or handle any
Collateral.

10.1.14.    Licenses. (a) Keep each License affecting any Collateral (including
the manufacture, distribution or disposition of Inventory) or any other material
Property of Borrowers and Subsidiaries in full force and effect except to the
extent that failure to do so could not reasonably be expected to have a Material
Adverse Effect; (b) pay all Royalties when due except as would not materially
adversely affect the value of the Collateral; and (d) notify Agent of any
default or breach asserted by any Person to have occurred under any License
which breach would materially adversely affect the value of the Collateral.

10.1.15.    U.K. Pension Plans. Each U.K. Domiciled Obligor shall ensure that it
is not and will not be and none of its U.K. subsidiaries will be at any time:
(i) an employer (for the purposes of Sections 38 to 51 of the Pensions Act 2004
of the United Kingdom) of an occupational pension scheme which is not a money
purchase scheme (as those terms are defined in the Pension Schemes Act 1993 of
the United Kingdom); or (ii) “connected” with or an “associate” of the Parent or
any of its Subsidiaries which is an employer (as those terms are used in
Sections 38 or 43 of the Pensions Act 2004 of the United Kingdom) in relation to
an occupational pension scheme in the United Kingdom which is not a money
purchase scheme.

10.1.16.    Anti-Corruption Laws. Each Obligor will maintain in effect and
enforce policies and procedures designed to ensure compliance by such Obligor,
its Subsidiaries and their respective directors, officers, employees and agents
with Anti-Corruption Laws of Canada, United Kingdom, United States, and any of
the member states of the European Union and applicable Sanctions.

10.1.17.    Post-Closing.

(a)    In order to include the U.S. Real Estate Formula Amount in the
calculation of the U.S. Borrowing Base, deliver to Agent the Related Real Estate
Documents and Mortgage for the Real Estate located at 2180 Rutherford Road,
Carlsbad, CA 92008.

(b)    Within 60 days of the date of this Agreement, Ogio shall close all
Deposit Accounts and securities accounts maintained at Wells Fargo and each
Obligor shall take all other necessary steps to be in compliance of Sections
8.2.4, 8.2.5, and 8.5 of this Agreement.

10.2    Negative Covenants. As long as any Commitments or Obligations are
outstanding, each Obligor shall not, and shall cause each Subsidiary not to:

 

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10.2.1.    Liens. Create, incur, assume or suffer to exist any Lien upon any of
its Property, whether now owned or hereafter acquired, other than the following
(collectively, “Permitted Liens”):

(a)    Liens in favor of Agent;

(b)    Liens existing on the Closing Date that are listed on Schedule 10.2.1;

(c)    Liens for taxes, fees, assessments or other governmental charges not yet
delinquent or being Properly Contested;

(d)    carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or
other like Liens arising in the Ordinary Course of Business which are not
overdue for a period of more than 30 days or which are being Properly Contested;

(e)    pledges or deposits in the Ordinary Course of Business in connection with
workers’ compensation, unemployment insurance and other social security
legislation, other than any Lien imposed by ERISA;

(f)    deposits or other Liens to secure the performance of bids, trade
contracts and leases (other than Debt), statutory obligations, surety bonds
(other than bonds related to judgments or litigation), performance bonds and
other obligations of a like nature incurred in the Ordinary Course of Business;

(g)    easements, rights-of-way, restrictions and other similar encumbrances
affecting Real Estate which, are (i) shown in any lender’s policy of title
insurance insuring any Mortgage, or (ii) in the aggregate, are not substantial
in amount, and which do not in any case materially detract from the value of the
property subject thereto or materially interfere with the ordinary conduct of
the business of the applicable Person;

(h)    Liens arising solely by virtue of any statutory or common law provision
relating to banker’s liens, rights of set-off or similar rights and remedies as
to deposit accounts or other funds maintained with a creditor depository
institution;

(i)    Liens securing judgments for the payment of money not constituting an
Event of Default under Section 11.1(g) or securing appeal or other surety bonds
related to such judgments (so long as such judgments do not constitute an Event
of Default under Section 11.1(g));

(j)    Liens securing Debt permitted under Section 10.2.3(e); provided that
(i) such Liens do not at any time encumber any property other than the property
financed by such Debt and (ii) the Debt secured thereby does not exceed, on the
date of acquisition, the cost or fair market value, whichever is lower, of the
property being acquired;

(k)    any Lien existing on any property or asset (other than Accounts,
Inventory, Dominion Accounts, Restricted Assets, the Company Trademark, and
Eligible Real Estate) prior to the acquisition thereof by any Obligor or any
Subsidiary or existing on any property or asset (other than Accounts, Inventory,
Dominion Accounts, Restricted Assets, the Company Trademark, and Eligible Real
Estate) of any Person that becomes an Obligor or Subsidiary after the date
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prior to the time such Person becomes an Obligor or Subsidiary; provided that
(i) such Lien is not created in contemplation of or in connection with such
acquisition or such Person becoming an Obligor or Subsidiary, as the case may
be, (ii) such Lien shall not apply to any other property or assets of the
Obligor or Subsidiary, (iii) such Lien shall secure only those obligations which
it secures on the date of such acquisition or the date such Person becomes an
Obligor or Subsidiary, as the case may be, (iv) all obligations secured by a
Lien permitted under this clause (k) shall not exceed an aggregate amount of
$25,000,000 at any one time outstanding, and (v) if requested by Agent, such
Liens will be subject to an intercreditor agreement, in form and substance
satisfactory to Agent;

(l)    extensions, renewals and replacements of Liens referred to in clauses
(a) through (k) above, provided that the property covered thereby is not
increased and any renewal or extension of the obligations secured or benefited
thereby is permitted by Section 10.2.3;

(m)    Liens (other than on: (i) Accounts, Inventory, Dominion Accounts, and
Restricted Assets of a Borrower or Guarantor; and (ii) the Company Trademark and
Eligible Real Estate) arising under leases, subleases, licenses and rights to
use granted to others and permitted under Section 10.2.5(f);

(n)    Liens (other than on: (i) Accounts, Inventory, Dominion Accounts, and
Restricted Assets of a Borrower or Guarantor; and (ii) the Company Trademark and
Eligible Real Estate) not expressly permitted by clauses (a) through (m) above
and as to which the aggregate amount of obligations secured thereby does not
exceed $50,000,000 at any one time;

(o)    Liens securing Debt permitted under Section 10.2.3(q) or (s) so long:
(i) such Liens will be subject to an intercreditor agreement, in form and
substance satisfactory to Agent; (ii) to the extent any such Liens are on any
Collateral (as defined on the First Amendment to Third Amended and Restated
Effective Date), such Liens are subordinated to the Liens of Agent pursuant to
such intercreditor agreement (provided that, in the case of any Liens securing
Debt permitted under Section 10.2.3(s), any such Liens on Term Loan Priority
Intellectual Property (as defined in the Project Max Commitment Letter as in
effect on the First Amendment to Third Amended and Restated Effective Date)
shall be senior to the Liens of Agent hereunder and shall not be subordinated to
the Liens of Agent); and (iii) to the extent such Liens extend to Property which
does not (or would not) constitute Collateral (as defined on the First Amendment
to Third Amended and Restated Effective Date) (“Additional Collateral”), at the
request of the Required Lenders, the Obligors and their Subsidiaries shall
execute and deliver such documents, instruments and agreements and take such
other actions as Agent shall require to evidence and perfect a Lien in favor of
Agent (for the benefit of Secured Parties) on all Additional Collateral (it
being understood that any such Liens held by Agent on Additional Collateral
shall be junior to the Liens permitted under this Section 10.2.1(o) as set forth
in an intercreditor agreement in form and substance satisfactory to Agent); and

(p)    Liens securing Debt permitted under Section 10.2.3.(r); provided that
such Liens do not at any time encumber any property other than the property
financed or leased by such Debt.

 

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10.2.2.    Investments. Make any Investments, except:

(a)    advances to officers, directors and employees of the Obligors and
Subsidiaries for travel, entertainment, relocation and analogous ordinary
business purposes;

(b)    Investments in Subsidiaries to the extent existing on the Closing Date
and other Investments in existence on the Closing Date and set forth on Schedule
10.2.2;

(c)    Investments by: (i) a U.S. Borrower in another U.S. Borrower; (ii) a U.S.
Domiciled Obligor (other than a U.S. Borrower) in another U.S. Domiciled
Obligor; (iii) a U.S. Domiciled Obligor in the Canadian Borrower so long as:
(A) the aggregate amount of such Investments shall not exceed $10,000,000 at any
time outstanding, and (B) no Event of Default has occurred and is continuing at
the time of such Investment, or would result therefrom; (iv) a U.S. Domiciled
Obligor in Callaway de México, S.A. de C.V. so long as such Investments are in
the Ordinary Course of Business and consistent with historical practices;
(v) any Canadian Domiciled Obligor or U.K. Domiciled Obligor in a Borrower;
(vi) a Borrower in a Guarantor or Subsidiary that is not a Borrower or Guarantor
so long as: (A) the aggregate amount of such Investments shall not exceed: (I)
$3,000,000 in any calendar year, and (II) $10,000,000 at any time outstanding,
and (B) no Event of Default has occurred and is continuing at the time of such
Investment, or would result therefrom; and (vii) a Subsidiary that is not a
Borrower or Guarantor in any other Subsidiary;

(d)    Investments consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade credit in the
Ordinary Course of Business, and Investments received in satisfaction or partial
satisfaction thereof from financially troubled account debtors to the extent
reasonably necessary in order to prevent or limit loss;

(e)    Investments consisting of Permitted Acquisitions;

(f)    Investments pursuant to Hedging Agreements otherwise permitted hereunder;

(g)    Investments in Cash Equivalents;

(h)    so long as no Event of Default has occurred and is continuing or would
result therefrom, any other Investments (other than an Acquisition) made after
the Third Amendment to Second Amended and Restated Effective Date in an
aggregate amount not to exceed $30,000,000 (such limitation, the “Investment
Cap”); provided, however, that no such Investment shall count against the
Investment Cap if either: (i) (A) on a pro forma basis after giving effect to
such Investment, Net Excess Availability has been greater than an amount equal
to the Threshold Percentage of the Maximum Facility Amount at all times during
the thirty (30) day period immediately prior to the consummation of such
Investment, (B) Net Excess Availability is greater than an amount equal to the
Threshold Percentage of the Maximum Facility Amount after giving effect to such
Investment, and (C) the Fixed Charge Coverage Ratio, on a pro forma basis after
giving effect to such Investment (calculated on a trailing twelve month basis
recomputed for the most recent month for which financial statements have been
delivered) is not less than 1.0 to 1.0; or (ii) (A) average daily Net Excess
Availability, on a pro forma basis after giving effect to such Investment, has
been greater than an amount equal to 20% of the Maximum Facility Amount

 

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for the ninety (90) day period immediately prior to the consummation of such
Investment, (B) Net Excess Availability is greater than an amount equal to 20%
of the Maximum Facility Amount after giving effect to such Investment, and
(C) no Term Loans are outstanding at the time such Investment is consummated and
after giving effect to the payment of any consideration in connection with such
Investment;

(i)    Investments by a U.S. Domiciled Obligor in any Subsidiary that is not a
Borrower or Guarantor to the extent such Investments are in the form of a
transfer of assets (other than any Collateral) of such U.S. Domiciled Obligor so
long as: (A) such assets are in existence as of the First Amendment to Second
Amended and Restated Effective Date, and (B) such assets are predominantly used
in connection with the golf ball manufacturing operations of Parent;

(j)    [Reserved];

(k)    Investments, so long as: (i) no Default or Event of Default has occurred
and is continuing or would result therefrom; (ii) the amount expended in
connection with any such Investment either (at the written election of Parent in
accordance with the definition of Top Golf Proceeds): (A) is made solely using
Top Golf Proceeds contained in the Top Golf Blocked Account, (B) does not exceed
the U.S. Top Golf Reserve in effect immediately prior to giving effect to any
such expenditures, (C)(1) is made solely using cash proceeds of a substantially
contemporaneous (I) dividend from the Canadian Borrower to Parent, or
(II) repayment by the Canadian Borrower of an intercompany obligation owing to
Parent, and (2) does not exceed the Canadian Top Golf Reserve in effect
immediately prior to giving effect to any such expenditures, or (D)(1) is made
solely using cash proceeds of a substantially contemporaneous (I) dividend from
the U.K. Borrower to Parent, or (II) repayment by the U.K. Borrower of an
intercompany obligation owing to Parent, and (2) does not exceed the U.K. Top
Golf Reserve in effect immediately prior to giving effect to any such
expenditures; (iii) the aggregate amount expended in connection with all such
Investments consummated under this clause (k) and transactions consummated under
clause 10.2.6(g) does not exceed $150,000,000 in the aggregate; (iv) Parent
provides Agent with at least 7 days prior written notice of any such Investment
(which notice shall contain the amount to be expended in such transaction and
evidence of the source of funds for such expenditure); (v) Parent provides Agent
with evidence of the making of any Investment under this clause (k), and (vi) no
Term Loans are outstanding at the time such Investment is made; and

(l)    additional Investments in Top Golf in an amount not to exceed $30,000,000
in the aggregate at any time so long as at the time of any such Investment, no
Default or Event of Default has occurred and is continuing or would result
therefrom.

10.2.3.    Debt. Create, incur, guarantee or suffer to exist any Debt, except:

(a)    the Obligations;

(b)    Debt outstanding on the Closing Date and listed on Schedule 10.2.3;

(c)    Debt consisting of unsecured intercompany loans among Parent and any
Subsidiary or unsecured guarantees of Parent or any Subsidiary in respect of
Debt of Parent or any Subsidiary so long as, in each case, the corresponding
Investment is permitted under Section 10.2.2;

 

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(d)    Debt of Parent or any Subsidiary existing or arising under any Hedging
Agreement, provided that such Hedging Agreement was entered into by such Person
to hedge risks arising in the Ordinary Course of Business and not for
speculative purposes;

(e)    Debt in respect of Capital Leases, Off-Balance Sheet Liabilities and
purchase money obligations for fixed or capital assets (other than Eligible Real
Estate); provided, however, that the aggregate amount of all such Debt at any
one time outstanding shall not exceed $25,000,000;

(f)    Debt that is in existence when a Person becomes a Subsidiary or that is
secured by an asset when acquired by a Borrower or Subsidiary, as long as such
Debt was not incurred in contemplation of such Person becoming a Subsidiary or
such acquisition, and does not exceed $25,000,000 in the aggregate at any time;

(g)    Debt of any wholly owned Subsidiary to Parent or another wholly owned
Subsidiary constituting the purchase price in respect of intercompany transfers
of goods and services made in the Ordinary Course of Business to the extent
otherwise permitted by Section 10.2.8 and not constituting Debt for borrowed
money;

(h)    Debt of Parent or any Subsidiary in connection with guaranties resulting
from endorsement of negotiable instruments in the Ordinary Course of Business;

(i)    Debt on account of surety bonds and appeal bonds in connection with the
enforcement of rights or claims of Parent or its Subsidiaries or in connection
with judgments not resulting in an Event of Default under Section 11.1(g);

(j)    any refinancings, refundings, renewals or extensions of Debt permitted
pursuant to Sections 10.2.3(b) and (e); provided that (i) the amount of such
Debt is not increased at the time of such refinancing, refunding, renewal or
extension except by an amount equal to a reasonable premium or other reasonable
amount paid, and fees and expenses reasonably incurred, in connection with such
refinancing and by an amount equal to any existing commitments unutilized
thereunder, and (ii) Debt subordinated to the Obligations is not refinanced
except on subordination terms at least as favorable to Agent and the Lenders and
no more restrictive on Parent and its Subsidiaries than the subordinated Debt
being refinanced;

(k)    Bank Product Debt (other than Debt arising under Hedging Agreements);

(l)    [Reserved];

(m)    [Reserved];

(n)    Debt that is not included in any of the preceding clauses of this
Section, is not secured by a Lien, or is secured by a lien permitted by
Section 10.2.1(n), and does not exceed $50,000,000 in the aggregate at any time;

(o)    other Debt that is not included in any of the preceding clauses of this
Section so long as such Debt: (i) is not secured by a Lien, (ii) has a maturity
date that is at least 6 months

 

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after the Facility Termination Date, and (iii) does not have scheduled
amortization in excess of 10% per year;

(p)    Debt to the Person, or the beneficial holders of Equity Interests in the
Person, whose assets or Equity Interests are acquired in a Permitted Acquisition
where such Debt (i) is payable in full no sooner than three years from the date
of such Acquisition, (ii) is repayable in installments of no more than one-third
of the initial amount in any year after the date of such Permitted Acquisition,
(iii) bears interest and fees that are consistent with then available market
rates for such Debt, (iv) is not secured by a Lien and (v) does not exceed
(together with all other Debt incurred under this clause (p)) $25,000,000 in the
aggregate at any time;

(q)    other Debt that is not included in any of the preceding clauses of this
Section so long as: (i) such Debt does not exceed $250,000,000 in the aggregate
at any one time outstanding, (ii) such Debt is not secured by a Lien, or is
secured by a lien permitted by Section 10.2.1(o), (iii) such Debt has a maturity
date that is at least 6 months after the Facility Termination Date, (iv) such
Debt does not have scheduled amortization in excess of 15% per year, and
(v) immediately upon and after giving effect to such Debt, the Leverage Ratio is
not greater than 4.5 to 1.0;

(r)    Debt pursuant to equipment financing and/or leases entered into among one
or more Obligors and Banc of America Leasing & Capital, LLC, in an aggregate
amount not to exceed $50,000,000 at any time outstanding; and

(s)    Debt (i) as described in the Project Max Commitment Letter, as may be
modified by the market flex conditions referenced in the Fee Letter (as defined
in the Project Max Commitment Letter), as disclosed to Agent prior to the First
Amendment to Third Amended and Restated Effective Date, so long as: (A) the
aggregate outstanding principal amount of such Debt at any one time does not
exceed the amount incurred in connection with the consummation of the
Acquisition (as defined in the Project Max Commitment Letter) in accordance with
the terms of the Project Max Commitment Letter, less any principal payments made
on account of such Debt, (B) any Liens securing such Debt are permitted by
Section 10.2.1(o), (C) such Debt has a maturity date that is at least 6 months
after the Facility Termination Date; and (D) such Debt is incurred in accordance
with the terms of the Project Max Commitment Letter as in effect on the First
Amendment to Third Amended and Restated Effective Date, or as amended from time
to time thereafter so long as such amendments are not materially adverse to the
interest of the Lenders and (ii) any refinancings, refundings, renewals or
extensions of such Debt permitted in clause (i) hereto, so long as (A) the
amount of such Debt is not increased at the time of such refinancing, refunding,
renewal or extension except by an amount equal to a reasonable premium or other
reasonable amount paid, and fees and expenses reasonably incurred, in connection
with such refinancing, (B) such Debt has a maturity date that is at least 6
months after the Facility Termination Date, (C) such Debt does not have
scheduled amortization in excess of 15% per year, (D) any Liens securing such
Debt are permitted by Section 10.2.1(o), and (E) upon giving effect to it, no
Default or Event of Default exists.

10.2.4.    Fundamental Changes.

 

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(a)    Merge, amalgamate, dissolve, liquidate, consolidate with or into another
Person, or dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except that, so long as no
Default exists or would result therefrom:

(i)    Travis Mathew Retail may be dissolved, so long as (A) such dissolution is
completed within 30 days of the Second Amendment to Third Amended and Restated
Effective Date, and (B) all assets of Travis Mathew Retail are distributed to
travisMathew in connection with such dissolution;

(ii)    any Subsidiary may merge or amalgamate with Parent or any other
Subsidiary, provided that (A) in such a merger in which a U.S. Borrower is
involved, such U.S. Borrower is the continuing or surviving Person, (B) in such
a merger or amalgamation in which the Canadian Borrower is involved (other than
with a U.S. Borrower or the U.K. Borrower), the Canadian Borrower is the
continuing or surviving Person, (C) in such a merger or amalgamation in which
the U.K. Borrower is involved (other than with a U.S. Borrower or the Canadian
Borrower), the U.K. Borrower is the continuing or surviving Person, (D) in such
a merger in which a U.S. Domiciled Obligor (other than a U.S. Borrower) is
involved (other than with a Borrower), the U.S. Domiciled Obligor is the
continuing or surviving Person, (E) in such a merger or amalgamation in which a
U.K. Domiciled Obligor (other than the U.K. Borrower) is involved (other than
with a U.S. Domiciled Obligor, a Canadian Domiciled Obligor, or the U.K.
Borrower), the U.K. Domiciled Obligor is the continuing or surviving Person, and
(F) in such a merger or amalgamation in which a Canadian Domiciled Obligor
(other than the Canadian Borrower) is involved (other than with a U.S. Domiciled
Obligor, a U.K. Domiciled Obligor, or the Canadian Borrower), the Canadian
Domiciled Obligor is the continuing or surviving Person;

(iii)    any Subsidiary which is not an Obligor may dispose of all or
substantially all of its assets (upon voluntary liquidation or otherwise) to its
immediate parent or another Obligor;

(iv)    any Immaterial Subsidiary may be wound up, liquidated or dissolved; and

(v)     Parent and its Subsidiaries may make those Asset Dispositions permitted
by Section 10.2.5; or

(b)    Change its name; change its tax, charter or other organizational
identification number; or change its form or state of organization without 10
Business Days’ prior written notice to Agent.

10.2.5.    Disposition of Assets. Make any Asset Disposition or enter into any
agreement to make any Asset Disposition, except:

(a)    Asset Dispositions of obsolete or worn out property, whether now owned or
hereafter acquired, in the Ordinary Course of Business;

 

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(b)    sales of Inventory in the Ordinary Course of Business, and consignments
of Inventory in the Ordinary Course of Business so long as the aggregate Value
of all such consigned Inventory at any one time does not exceed $15,000,000;

(c)    Asset Dispositions of Equipment or Real Estate (other than Eligible Real
Estate unless the U.S. Real Estate Formula Amount has been removed from the U.S.
Borrowing Base in accordance with Sections 2.1.4(d)) to the extent that (i) such
property is exchanged for credit against the purchase price of similar
replacement property or (ii) the proceeds of such disposition are reasonably
promptly applied to the purchase price of such replacement property;

(d)    Asset Dispositions by (i) any U.S. Borrower to any other U.S. Borrower,
(ii) any U.S. Domiciled Obligor (other than a U.S. Borrower) to any other U.S.
Domiciled Obligor, (iii) any Canadian Domiciled Obligor or U.K. Domiciled
Obligor to any U.S. Borrower, and (iv) any Subsidiary that is not a Borrower or
Guarantor to any other Subsidiary;

(e)    (i) Asset Dispositions permitted by Section 10.2.4, (ii) Investments
permitted by Section 10.2.2, and (iii) Distributions permitted by
Section 10.2.6;

(f)    leases, subleases, licenses and rights to use granted to others in the
Ordinary Course of Business and not otherwise prohibited by this Agreement so
long as such leases, subleases, licenses and rights to use do not materially
adversely affect the conduct by Parent and its Subsidiaries of their core golf
products business or the value of the Collateral;

(g)    Asset Dispositions made in connection with the closure, downsizing,
restructuring, closure or partial closure of the golf ball manufacturing
operations of Parent;

(h)    (i) Asset Dispositions of excess Real Estate (other than Eligible Real
Estate) and related assets made in connection with the consolidation of business
activities in other locations and (ii) sale and leaseback transactions involving
Real Estate (other than Eligible Real Estate unless the U.S. Real Estate Formula
Amount has been removed from the U.S. Borrowing Base in accordance with Sections
2.1.4(d)) and related assets;

(i)    Asset Dispositions consisting of Intellectual Property (other than the
Company Trademark), manufacturing assets, inventory, accounts, contracts, domain
names, marketing materials and marketing related assets related to the brands
disclosed to the Agent and the Lenders on the Business Day prior to the Second
Amended Original Closing Date; provided, in each case, that (i) at the time of
such Asset Disposition, no Event of Default has occurred or is continuing or
would result therefrom, (ii) the Borrowers shall have provided Agent with three
(3) Business Days prior written notice of any such Asset Disposition, (iii) if
any such Asset Disposition includes the disposition of Accounts or Inventory of
an Obligor, the Borrowers shall have complied with Section 5.2, and (iv) if any
such Asset Disposition includes the disposition of any Eligible Accounts or
Eligible Inventory, the Borrowers shall have delivered pro forma Borrowing Base
Certificates on or prior to the consummation of such Asset Disposition which
give effect to such Asset Disposition; and

(j)    other Asset Dispositions (other than with respect to Accounts, Inventory,
the Company Trademark (unless the U.S. Trademark Formula Amount has been removed
from the U.S. Borrowing Base in accordance with Sections 2.1.4(c)) and Eligible
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U.S. Real Estate Formula Amount has been removed from the U.S. Borrowing Base in
accordance with Sections 2.1.4(d))) in an aggregate amount in any fiscal year
not to exceed 5% of the Consolidated Tangible Assets of Parent and its
Subsidiaries as of the end of the most recently ended fiscal year of Parent;

provided, however, that any Asset Disposition pursuant to clauses (a) through
(i) shall be for fair market value; provided, further, that Parent or any of its
Subsidiaries may enter into an agreement to make an Asset Disposition otherwise
prohibited by this Section 10.2.5 if failure to consummate such Asset
Disposition would not result in a liability or Debt otherwise prohibited by this
Agreement and the consummation of the Asset Disposition contemplated by such
agreement is conditioned upon either the termination of this Agreement or
receipt of the prior written consent of the Agent and the Required Lenders.

10.2.6.    Distributions. Declare or make, directly or indirectly, any
Distribution, or incur any obligation (contingent or otherwise) to do so, except
that:

(a)    (i) a U.S. Borrower may make Distributions to another U.S. Borrower;
(ii) a U.S. Domiciled Obligor (other than a U.S. Borrower) may make
Distributions to another U.S. Domiciled Obligor; (iii) a Canadian Domiciled
Obligor may make Distributions to a U.S. Borrower, the Canadian Borrower, and
the U.K. Borrower; (iv) a U.K. Domiciled Obligor may make Distributions to a
Borrower; and (v) a Subsidiary that is not a Borrower or Guarantor may make
Distributions to Parent or any Subsidiary;

(b)    Parent and each Subsidiary may declare and make dividend payments or
other distributions payable solely in the common stock or other Equity Interests
of such Person;

(c)    so long as no Event of Default has occurred and is continuing or would
result therefrom, Parent and each Subsidiary may purchase, redeem or otherwise
acquire shares of its common stock or other Equity Interests or warrants or
options to acquire any such Equity Interests with the proceeds received from the
substantially concurrent issue of new shares of its common stock or other Equity
Interests;

(d)    Parent may purchase Equity Interests in any Obligor or options with
respect to Equity Interests in any Obligor held by employees or management of
any Obligor in connection with the termination of employment of such employees
or management so long as: (i) the aggregate amount of such purchases do not
exceed $5,000,000 in any fiscal year of Parent, and (ii) no Event of Default has
occurred and is continuing at the time of any such purchase or would result
therefrom; and

(e)    so long as no Event of Default has occurred and is continuing or would
result therefrom, Parent and its Subsidiaries may make other Distributions in an
aggregate amount not to exceed $20,000,000 during each year (the “Distributions
Cap”); provided, however, that no such Distribution shall count against the
Distributions Cap if at the time such Distribution is declared (subject to the
last sentence of this clause (e)) either: (i) (A) on a pro forma basis after
giving effect to such Distribution, Net Excess Availability has been greater
than an amount equal to the Threshold Percentage of the Maximum Facility Amount
at all times during the thirty (30) day period immediately prior to the making
of such Distribution, (B) Net Excess Availability is

 

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greater than an amount equal to the Threshold Percentage of the Maximum Facility
Amount after giving effect to such Distribution, and (C) the Fixed Charge
Coverage Ratio, on a pro forma basis after giving effect to such Distribution
(calculated on a trailing twelve month basis recomputed for the most recent
month for which financial statements have been delivered) is not less than 1.0
to 1.0; or (ii) (A) average daily Net Excess Availability, on a pro forma basis
after giving effect to such Distribution, has been greater than an amount equal
to 20% of the Maximum Facility Amount for the ninety (90) day period immediately
prior to the making of such Distribution, (B) Net Excess Availability is greater
than an amount equal to 20% of the Maximum Facility Amount after giving effect
to such Distribution, and (C) no Term Loans are outstanding at the time such
Distribution is consummated.

(f)    so long as no Event of Default has occurred and is continuing or would
result therefrom, Parent may make cash payments in lieu of issuance of
fractional shares in connection with the conversion of any convertible stock or
debt securities of Parent, in an aggregate amount not to exceed $5,000,000 for
all such payments; and

(g)    Parent may make Common Stock Repurchases and pay dividends on Parent’s
common stock so long as: (i) no Default or Event of Default has occurred and is
continuing or would result therefrom; (ii) the amount expended in connection
with any such transaction either (at the written election of Parent in
accordance with the definition of Top Golf Proceeds): (A) is made solely using
Top Golf Proceeds contained in the Top Golf Blocked Account, (B) does not exceed
the U.S. Top Golf Reserve in effect immediately prior to giving effect to any
such expenditures, (C)(1) is made solely using cash proceeds of a substantially
contemporaneous (I) dividend from the Canadian Borrower to Parent, or
(II) repayment by the Canadian Borrower of an intercompany obligation owing to
Parent, and (2) does not exceed the Canadian Top Golf Reserve in effect
immediately prior to giving effect to any such expenditures, or (D)(1) is made
solely using cash proceeds of a substantially contemporaneous (I) dividend from
the U.K. Borrower to Parent, or (II) repayment by the U.K. Borrower of an
intercompany obligation owing to Parent, and (2) does not exceed the U.K. Top
Golf Reserve in effect immediately prior to giving effect to any such
expenditures; (iii) the aggregate amount expended in connection with all such
transactions consummated under this clause (g) and Investments made under clause
10.2.2(k) does not exceed $150,000,000 in the aggregate; (iv) Parent provides
Agent with at least 7 days prior written notice of any such transaction (which
notice shall contain the amount to be expended in such transaction and evidence
of the source of funds for such expenditure); (v) Parent provides Agent with
evidence of the completion of any such transaction under this clause (g), and
(vi) no Term Loans are outstanding at the time any such transaction is
consummated.

10.2.7.    Change in Nature of Business. Engage in any material line of business
substantially different from those lines of business conducted by Parent and its
Subsidiaries on the date hereof, one or more of the leisure goods, products and
services businesses generally or, in each case, any business substantially
related or incidental thereto.

10.2.8.    Affiliate Transactions. Enter into any transaction of any kind with
any Affiliate of Parent, except (a) transactions between or among: (i) the U.S.
Borrowers, (ii) the U.S. Domiciled Obligors (other than any U.S. Borrower),
(iii) the Canadian Domiciled Obligors, (iv) the U.K. Domiciled Obligors, and
(v) Subsidiaries that are not Borrowers or Guarantors; (b)

 

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transactions constituting Investments in Subsidiaries as permitted by
Section 10.2.2, (c) transactions constituting Debt among Parent or any of its
Subsidiaries, in each case as permitted by Section 10.2.3; (d) transactions
among Parent or any of its Subsidiaries, in each case as permitted by
Section 10.2.4 or Section 10.2.5, (e) transactions constituting Distributions
permitted by Section 10.2.6, (f) transactions constituting reasonable fees and
compensation paid to (including issuance and grants of securities and stock
options, employment agreements and stock option and ownership plans for the
benefit of, and indemnities provided on behalf of) officers, directors,
employees and consultants of Parent or any Subsidiary, (g) constituting loans or
advances to employees and officers of Parent and its Subsidiaries to the extent
permitted by Section 10.2.2(a), and (h) transactions with Affiliates in the
Ordinary Course of Business, upon fair and reasonable terms fully disclosed to
Agent and no less favorable than would be obtained in a comparable arm’s-length
transaction with a non-Affiliate.

10.2.9.    Burdensome Agreements. Enter into any Contractual Obligation (other
than this Agreement or any other Loan Document) that limits the ability (a) of
any Subsidiary to make Distributions to any Borrower or any Guarantor or to
otherwise transfer property to any Borrower or any Guarantor, (b) of Parent or
any Subsidiary to incur or repay the Obligations, (c) of Parent or any
Subsidiary to grant Liens on any Collateral in favor of the Agent for the
benefit of the Lenders, or (d) of any U.S. Subsidiary, U.K. Subsidiary, or
Canadian Subsidiary to guarantee the Obligations; provided, that the
restrictions set forth herein shall not apply to (i) customary restrictions on
transfers of property subject to a capital lease as set forth in such capital
lease; (ii) customary restrictions with respect to a Subsidiary (other than a
Borrower) pursuant to an agreement that has been entered into for the sale or
disposition (not otherwise prohibited by this Agreement or any other Loan
Document) of all or substantially all of the capital stock or assets of such
Subsidiary; (iii) customary prohibitions on assignment in any contract or lease;
(iv) customary net worth provisions contained in leases and other agreements
entered into by a Subsidiary in the Ordinary Course of Business; and
(v) customary restrictions with respect to Debt permitted under
Section 10.2.3(s).

10.2.10.    Restrictions on Payment of Certain Debt. Make any (a) payments
(whether voluntary or mandatory, or a prepayment, redemption, retirement,
defeasance or acquisition) with respect to any Debt which is subordinated to the
Obligations (which, for the avoidance of doubt, does not include any Debt
permitted under Section 10.2.3(s)), except regularly scheduled payments of
principal, interest and fees, but only to the extent permitted under any
subordination agreement relating to such Debt (and a Senior Officer of Borrower
Agent shall certify to Agent, not less than five Business Days prior to the date
of payment, that all conditions under such agreement have been satisfied); (b)
any voluntary payments with respect to any Borrowed Money (other than the
Obligations and any intercompany obligations) prior to its due date; provided,
however, that the restriction set forth in clause (b) shall not apply to:
(x) any voluntary payments made to consummate a refinancing in full of the Debt
permitted under Section 10.2.3(s) to the extent such refinancing is permitted
under the terms of Section 10.2.3(s); and (y) any payment if either: (A) (1) on
a pro forma basis after giving effect to such payment, Net Excess Availability
has been greater than an amount equal to 15% of the Maximum Facility Amount at
all times during the thirty (30) day period immediately prior to the making of
such payment, (2) Net Excess Availability is greater than an amount equal to 15%
of the Maximum Facility Amount after giving effect to such payment, and (3) the
Fixed Charge Coverage Ratio, on a pro forma basis after giving effect to such
payment (calculated on a trailing twelve month basis recomputed for the

 

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most recent month for which financial statements have been delivered) is not
less than 1.0 to 1.0; or (B) (1) average daily Net Excess Availability, on a pro
forma basis after giving effect to such payment, has been greater than an amount
equal to 20% of the Maximum Facility Amount for the ninety (90) day period
immediately prior to the making of such payment, (2) Net Excess Availability is
greater than an amount equal to 20% of the Maximum Facility Amount after giving
effect to such payment, and (3) no Term Loans are outstanding at the time such
payment is made.

10.2.11.    Organic Documents. Amend, modify or otherwise change any of its
Organic Documents as in effect on the Original Agreement Closing Date where such
amendment, modification or other change would have a Material Adverse Effect.

10.2.12.    Tax Consolidation. File or consent to the filing of any consolidated
income tax return with any Person other than Borrowers and Subsidiaries.

10.2.13.    Accounting Changes. Make any material change in accounting treatment
or reporting practices, except as required by GAAP and in accordance with
Section 1.2; or change its Fiscal Year.

10.2.14.    Activities of uPlay. Unless Borrowers cause uPlay to become a
Guarantor hereunder in accordance with Section 10.1.12, uPlay will not
(a) engage in any business or activity or (b) own any assets or have any
liabilities (other than liabilities reasonably incurred in connection with its
maintenance of its existence).

10.2.15.    Canadian Pension Plans. Without the prior written consent of Agent,
no Obligor shall establish, or otherwise incur any obligations or liabilities
under or in connection with any Canadian Pension Plan that provides benefits on
a defined benefit basis.

10.3    Financial Covenants. As long as any Commitments or Obligations are
outstanding, Borrowers shall:

(a)    At any time the Term Loans or Term Loan Commitments are outstanding as of
the last day of any Fiscal Quarter:

(i)    Fixed Charge Coverage Ratio. Maintain a Fixed Charge Coverage Ratio,
measured at the end of each such Fiscal Quarter, of at least 1.25 to 1.0; and

(ii)    Leverage Ratio. Maintain a Leverage Ratio, measured at the end of each
such Fiscal Quarter, of not greater than 4.0 to 1.0.

(b)    At any time there are no Term Loans or Term Loan Commitment outstanding,
maintain a Fixed Charge Coverage Ratio, measured on a Fiscal Quarter-end basis,
of at least 1.0 to 1.0 as of (a) the end of the last Fiscal Quarter immediately
preceding the occurrence of any Covenant Trigger Period for which financial
statements have most recently been delivered pursuant to Section 10.1.1, and
(b) the end of each Fiscal Quarter for which financial statements are delivered
pursuant to Section 10.1.1 during any Covenant Trigger Period.

10.4    Company Trademark. The Obligors shall maintain, defend and preserve the
Company Trademark and its value, usefulness, merchantability and marketability
in a manner

 

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consistent with past practices, and shall not sell, assign, transfer, encumber
or license the Company Trademark to any Person (other than Liens created
pursuant to the Loan Documents) to the extent that doing so would cause (i) the
amount specified in clause (a) of the definition of “U.S. Trademark Formula
Amount” to be less than the amount specified in clause (b) of the definition of
“U.S. Trademark Formula Amount” or (ii) the amount of outstanding Term Loans to
exceed the Term Loan Cap, in each case without the prior written consent of the
U.S. Required Lenders.

 

SECTION 11.

EVENTS OF DEFAULT; REMEDIES ON DEFAULT

11.1    Events of Default. Each of the following shall be an “Event of Default”
hereunder, if the same shall occur for any reason whatsoever, whether voluntary
or involuntary, by operation of law or otherwise:

(a)    An Obligor fails to pay (i) when due (whether at stated maturity, on
demand, upon acceleration or otherwise) any amount of principal of any Loan or
any reimbursement obligation in respect of any LC Obligation, or (ii) any
interest on any Loan or any fee or any other amount (other than an amount
referred to in clause (a)(i) above), when and as the same shall become due and
payable hereunder or under any other Loan Document (whether at stated maturity,
on demand, upon acceleration or otherwise), and such failure shall continue
unremedied for a period of three Business Days;

(b)    Any representation, warranty or other written statement of an Obligor
made in connection with any Loan Documents or transactions contemplated thereby
is incorrect or misleading in any material respect when given;

(c)    An Obligor breaches or fail to perform any covenant contained in
Section 7.2, 7.4, 7.6, 8.1, 8.2.4, 8.2.5, 8.6.2, 10.1.1, 10.1.2, 10.1.10, 10.2
or 10.3;

(d)    An Obligor breaches or fails to perform any other covenant contained in
any Loan Documents, and such breach or failure is not cured within 30 days after
a Senior Officer of such Obligor has knowledge thereof or receives notice
thereof from Agent, whichever is sooner; provided, however, that such notice and
opportunity to cure shall not apply if the breach or failure to perform is not
capable of being cured within such period;

(e)    A Guarantor repudiates, revokes or attempts to revoke its Guarantee; an
Obligor or third party denies or contests the validity or enforceability of any
Loan Documents or Obligations, or the perfection or priority of any Lien granted
to Agent; or any Loan Document ceases to be in full force or effect for any
reason (other than a waiver or release by Agent and Lenders);

(f)    Any breach or default of an Obligor occurs under any Hedging Agreement,
or any document, instrument or agreement to which it is a party or by which it
or any of its Properties is bound, relating to any Debt (other than the
Obligations) in excess of the Dollar Equivalent of $10,000,000, if the maturity
of or any payment with respect to such Debt may be accelerated or demanded due
to such breach;

(g)    Any judgment or order for the payment of money is entered against an
Obligor and is unsatisfied for a period of more than 30 days in an amount that
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or cumulatively with all other unsatisfied judgments or orders against all
Obligors, the Dollar Equivalent of $5,000,000 (net of any insurance coverage
therefor acknowledged in writing by the insurer), unless a stay of enforcement
of such judgment or order is in effect, by reason of a pending appeal or
otherwise;

(h)    A loss, theft, damage or destruction occurs with respect to any
Collateral if the amount not covered by insurance (either individually or in the
aggregate) exceeds the Dollar Equivalent of $2,500,000;

(i)    An Obligor is enjoined, restrained or in any way prevented by any
Governmental Authority from conducting any material part of its business and
such enjoinment, restraint or prevention could reasonably be expected to have a
Material Adverse Effect; an Obligor suffers the loss, revocation or termination
of any material license, permit, lease or agreement necessary to its business
and such loss, revocation or termination could reasonably be expected to have a
Material Adverse Effect; there is a cessation of any material part of an
Obligor’s business for a material period of time and such cessation could
reasonably be expected to have a Material Adverse Effect; any material
Collateral or Property of an Obligor is taken or impaired through condemnation
and such taking or impairment could reasonably be expected to have a Material
Adverse Effect; a Borrower agrees to or commences any liquidation, dissolution
or winding up of its affairs; or a Borrower is not Solvent;

(j)    Any Obligor generally fails to pay, or admits in writing its inability or
refusal to pay, its debts as they become due; or an Insolvency Proceeding is
commenced by any Obligor; any Obligor agrees to, commences or is subject to a
liquidation, dissolution or winding up of its affairs; any Obligor makes an
offer of settlement, extension, proposal (or files a notice of intention to make
a proposal), plan of arrangement or composition to its unsecured creditors
generally; a Creditor Representative is appointed to take possession of any
substantial Property of or to operate or sell any of the business of any
Obligor; or an Insolvency Proceeding is commenced against any Obligor and such
Obligor consents to the institution of the proceeding against it, such petition
commencing the proceeding is not timely contested by such Obligor, such petition
is not dismissed within 30 days after its filing, or an order for relief is
entered in the proceeding;

(k)    An ERISA Event occurs with respect to a Pension Plan or Multiemployer
Plan that has resulted or could reasonably be expected to result in liability of
an Obligor to a Pension Plan, Multiemployer Plan or PBGC in an aggregate amount
in excess of $10,000,000, or that constitutes grounds for appointment of a
trustee for or termination by the PBGC of any Pension Plan or Multiemployer
Plan; an Obligor or ERISA Affiliate fails to pay when due any installment
payment with respect to its withdrawal liability under Section 4201 of ERISA
under a Multiemployer Plan in an aggregate amount in excess of $10,000,000; or
any event similar to the foregoing occurs or exists with respect to a Foreign
Plan;

(l)    (A) a Termination Event shall occur or any Canadian Multi-Employer Plan
shall be terminated, in each case, in circumstances which would result or could
reasonably be expected to result in a Canadian Facility Obligor required to make
a contribution to or in respect of a Canadian Pension Plan or a Canadian
Multi-Employer Plan in an aggregate amount in excess of $2,500,000 or results in
the appointment, by FSCO, of an administrator to wind up a Canadian Pension
Plan, (B) any Canadian Domiciled Obligor is in default with respect to any
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contributions to a Canadian Pension Plan or fails to eliminate a solvency
deficiency or keep such plan fully funded; or (C) any Lien arises (save for
contribution amounts not yet due) in connection with any Canadian Pension Plan;
or

(m)    A Change of Control occurs.

11.2    Remedies upon Default. If an Event of Default described in
Section 11.1(j) occurs with respect to any Obligor, then to the extent permitted
by Applicable Law, all Obligations (other than Secured Bank Product Obligations)
shall become automatically due and payable and all Commitments shall terminate,
without any action by Agent or notice of any kind. In addition, or if any other
Event of Default exists, Agent may in its discretion (and shall upon written
direction of Required Lenders) do any one or more of the following from time to
time:

(a)    declare any Obligations (other than Secured Bank Product Obligations)
immediately due and payable, whereupon they shall be due and payable without
diligence, presentment, demand, protest or notice of any kind, all of which are
hereby waived by Borrowers to the fullest extent permitted by law;

(b)    terminate, reduce or condition any Commitment, or make any adjustment to
the Borrowing Base;

(c)    require Obligors to Cash Collateralize LC Obligations, Secured Bank
Product Obligations and other Obligations that are contingent or not yet due and
payable, and, if Obligors fail promptly to deposit such Cash Collateral, Agent
may (and shall upon the direction of Required Lenders) advance the required Cash
Collateral as Revolver Loans (whether or not an Overadvance exists or is created
thereby, or the conditions in Section 6 are satisfied); and

(d)    exercise any other rights or remedies afforded under any agreement, by
law, at equity or otherwise, including the rights and remedies of a secured
party under the UCC and the PPSA. Such rights and remedies include the rights to
(i) take possession of any Collateral; (ii) require Obligors to assemble
Collateral, at Obligors’ expense, and make it available to Agent at a place
designated by Agent; (iii) enter any premises where Collateral is located and
store Collateral on such premises until sold (and if the premises are owned or
leased by an Obligor, Obligors agree not to charge for such storage); and
(iv) sell or otherwise dispose of any Collateral in its then condition, or after
any further manufacturing or processing thereof, at public or private sale, with
such notice as may be required by Applicable Law, in lots or in bulk, at such
locations, all as Agent, in its discretion, deems advisable. Each Obligor agrees
that 10 days’ notice of any proposed sale or other disposition of Collateral by
Agent shall be reasonable. Agent shall have the right to conduct such sales on
any Obligor’s premises, without charge, and such sales may be adjourned from
time to time in accordance with Applicable Law. Agent shall have the right to
sell, lease or otherwise dispose of any Collateral for cash, credit or any
combination thereof, and Agent may purchase any Collateral at public or, if
permitted by law, private sale and, in lieu of actual payment of the purchase
price, may credit bid and set off the amount of such price against the
Obligations.

11.3    License. Agent is hereby granted an irrevocable, non-exclusive license
or other right to use, license or sub-license (without payment of royalty or
other compensation to any Person), exercisable at any time following the
occurrence and during the continuation of an Event

 

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of Default, any or all Intellectual Property of Obligors, computer hardware and
software, trade secrets, brochures, customer lists, promotional and advertising
materials, labels, packaging materials and other Property, in advertising for
sale, marketing, selling, collecting, completing manufacture of, or otherwise
exercising any rights or remedies with respect to, any Collateral. Each
Obligor’s rights and interests under Intellectual Property shall inure to
Agent’s benefit.

11.4    Setoff. At any time during an Event of Default, Agent, Issuing Banks,
Lenders, and any of their Affiliates are authorized, 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, in whatever currency) at any
time held and other obligations (in whatever currency) at any time owing by
Agent, such Issuing Bank, such Lender or such Affiliate to or for the credit or
the account of an Obligor against any Obligations, irrespective of whether or
not Agent, such Issuing Bank, such Lender or such Affiliate shall have made any
demand under this Agreement or any other Loan Document and although such
Obligations may be contingent or unmatured or are owed to a branch or office of
Agent, such Issuing Bank, such Lender or such Affiliate different from the
branch or office holding such deposit or obligated on such indebtedness. The
rights of Agent, each Issuing Bank, each Lender and each such Affiliate under
this Section are in addition to other rights and remedies (including other
rights of setoff) that such Person may have.

11.5    Remedies Cumulative; No Waiver.

11.5.1.    Cumulative Rights. All agreements, warranties, guaranties,
indemnities and other undertakings of Obligors under the Loan Documents are
cumulative and not in derogation of each other. The rights and remedies of Agent
and Lenders are cumulative, may be exercised at any time and from time to time,
concurrently or in any order, and are not exclusive of any other rights or
remedies available by agreement, by law, at equity or otherwise. All such rights
and remedies shall continue in full force and effect until Full Payment of all
Obligations.

11.5.2.    Waivers. No waiver or course of dealing shall be established by
(a) the failure or delay of Agent or any Lender to require strict performance by
Obligors with any terms of the Loan Documents, or to exercise any rights or
remedies with respect to Collateral or otherwise; (b) the making of any Loan or
issuance of any Letter of Credit during a Default, Event of Default or other
failure to satisfy any conditions precedent; or (c) acceptance by Agent or any
Lender of any payment or performance by an Obligor under any Loan Documents in a
manner other than that specified therein. It is expressly acknowledged by
Obligors that any failure to satisfy a financial covenant on a measurement date
shall not be cured or remedied by satisfaction of such covenant on a subsequent
date.

11.6    Judgment Currency. If, for purposes of obtaining judgment in any court,
it is necessary to convert a sum from the currency provided under a Loan
Document (“Agreement Currency”) into another currency, the Spot Rate shall be
used as the rate of exchange. Notwithstanding any judgment in a currency
(“Judgment Currency”) other than the Agreement Currency, an Obligor shall
discharge its obligation in respect of any sum due under a Loan Document only
if, on the Business Day following receipt by Agent or any Secured Party of
payment in the Judgment Currency, Agent or such Secured Party can use the amount
paid to purchase the sum originally due in the Agreement Currency. If the
purchased amount is less than the sum originally due, such Obligor agrees, as a
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judgment, to indemnify Agent and Secured Parties against such loss. If the
purchased amount is greater than the sum originally due, Agent or such Secured
Party shall return the excess amount to such Obligor (or to the Person legally
entitled thereto).

 

SECTION 12.

AGENT

12.1    Appointment, Authority and Duties of Agent.

12.1.1.    Appointment and Authority.

(a)    Each Secured Party appoints and designates Bank of America as Agent under
all Loan Documents. Agent may, and each Secured Party authorizes Agent to, enter
into all Loan Documents to which Agent is intended to be a party and accept all
Security Documents, for the benefit of Secured Parties. Each Secured Party
agrees that any action taken by Agent, Required Lenders, U.S. Required Lenders,
U.S. Required Term Lenders, U.K. Required Lenders, or Canadian Required Lenders
in accordance with the provisions of the Loan Documents, and the exercise by
Agent or Required Lenders of any rights or remedies set forth therein, together
with all other powers reasonably incidental thereto, shall be authorized by and
binding upon all Secured Parties. Without limiting the generality of the
foregoing, Agent shall have the sole and exclusive authority to (a) act as the
disbursing and collecting agent for Lenders with respect to all payments and
collections arising in connection with the Loan Documents; (b) execute and
deliver as Agent each Loan Document, including any intercreditor or
subordination agreement, and accept delivery of each Loan Document from any
Obligor or other Person; (c) act as collateral agent for Secured Parties for
purposes of perfecting and administering Liens under the Loan Documents, and for
all other purposes stated therein; (d) manage, supervise or otherwise deal with
Collateral; and (e) take any Enforcement Action or otherwise exercise any rights
or remedies with respect to any Collateral under the Loan Documents, Applicable
Law or otherwise. The duties of Agent shall be ministerial and administrative in
nature, and Agent shall not have a fiduciary relationship with any Secured
Party, Participant or other Person, by reason of any Loan Document or any
transaction relating thereto. Agent alone shall be authorized to determine
whether any Accounts or Inventory constitute Eligible Accounts, Eligible
Inventory or Eligible In-Transit Inventory, whether to impose or release any
reserve, or whether any conditions to funding or to issuance of a Letter of
Credit have been satisfied, which determinations and judgments, if exercised in
good faith, shall exonerate Agent from liability to any Lender or other Person
for any error in judgment.

(b)    For the purposes of creating a solidarité active in accordance with
Article 1541 of the Civil Code of Quebec between each Secured Party, taken
individually, on the one hand, and the Agent, on the other hand, each Obligor
and each such Secured Party acknowledge and agree with the Agent that such
Secured Party and the Agent are hereby conferred the legal status of solidary
creditors of each such Obligor in respect of all Obligations owed by each
such Obligor to the Agent and such Secured Party hereunder and under the other
Loan Documents (collectively, the “Solidary Claim”) and that, accordingly, but
subject (for the avoidance of doubt) to Article 1542 of the Civil Code of
Quebec, each such Obligor is irrevocably bound towards the Agent and each
Secured Party in respect of the entire Solidary Claim of the Agent and such
Secured Party. As a result of the foregoing, the parties hereto acknowledge that
the Agent and each Secured Party shall at all times have a valid and effective
right of action for the entire Solidary Claim of the Agent and such Secured
Party and the right to give full acquittance for it.

 

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Accordingly, and without limiting the generality of the foregoing, the Agent, as
solidary creditor with each Secured Party, shall at all times have a valid and
effective right of action in respect of the Solidary Claim and the right to give
a full acquittance for same. By its execution of the Loan Documents to which it
is a party, each such Obligor not a party hereto shall also be deemed to have
accepted the stipulations hereinabove provided. The parties further agree and
acknowledge that such Liens (hypothecs) under the Security Documents and the
other Loan Documents shall be granted to the Agent, for its own benefit and for
the benefit of the Secured Parties, as solidary creditor as hereinabove set
forth.

(c)    Without limiting the foregoing or any powers of Agent, for the purposes
of holding any hypothec granted to the Attorney (as defined below) pursuant to
the laws of the Province of Québec to secure the prompt payment and performance
of any and all Obligations by any Obligor, each of the Secured Parties hereby
irrevocably appoints and authorizes Agent and, to the extent necessary, ratifies
the appointment and authorization of Agent, to act as the hypothecary
representative of the present and future creditors as contemplated under Article
2692 of the Civil Code (in such capacity, the “Attorney”), and to enter into, to
take and to hold on their behalf, and for their benefit, any hypothec, and to
exercise such powers and duties that are conferred upon the Attorney under any
related deed of hypothec. The Attorney shall: (i) have the sole and exclusive
right and authority to exercise, except as may be otherwise specifically
restricted by the terms hereof, all rights and remedies given to the Attorney
pursuant to any such deed of hypothec and applicable law, and (ii) benefit from
and be subject to all provisions hereof with respect to Agent mutatis mutandis,
including, without limitation, all such provisions with respect to the liability
or responsibility to and indemnification by the Secured Parties and Obligors.
Any person who becomes a Secured Party shall, by its execution of an Assignment
and Acceptance, be deemed to have consented to and confirmed the Attorney as the
person acting as hypothecary representative holding the aforesaid hypothecs as
aforesaid and to have ratified, as of the date it becomes a Secured Party, all
actions taken by the Attorney in such capacity. The substitution of Agent
pursuant to the provisions of this Section 12 also constitutes the substitution
of the Attorney.

12.1.2.    Duties. Agent shall not have any duties except those expressly set
forth in the Loan Documents. The conferral upon Agent of any right shall not
imply a duty to exercise such right, unless instructed to do so by Lenders in
accordance with this Agreement.

12.1.3.    Agent Professionals. Agent may perform its duties through agents and
employees. Agent may consult with and employ Agent Professionals, and shall be
entitled to act upon, and shall be fully protected in any action taken in good
faith reliance upon, any advice given by an Agent Professional. Agent shall not
be responsible for the negligence or misconduct of any agents, employees or
Agent Professionals selected by it with reasonable care.

12.1.4.    Instructions of Required Lenders. The rights and remedies conferred
upon Agent under the Loan Documents may be exercised without the necessity of
joinder of any other party, unless required by Applicable Law. Agent may request
instructions from Required Lenders or other Secured Parties with respect to any
act (including the failure to act) in connection with any Loan Documents, and
may seek assurances to its satisfaction from Secured Parties of their
indemnification obligations against all Claims that could be incurred by Agent
in connection with any act. Agent shall be entitled to refrain from any act
until it has received such instructions or assurances, and Agent shall not incur
liability to any Person by reason of so refraining.

 

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Instructions of Required Lenders shall be binding upon all Secured Parties, and
no Secured Party shall have any right of action whatsoever against Agent as a
result of Agent acting or refraining from acting in accordance with the
instructions of Required Lenders. Notwithstanding the foregoing, instructions by
and consent of specific parties shall be required to the extent provided in
Section 14.1.1. In no event shall Agent be required to take any action that, in
its opinion, is contrary to Applicable Law or any Loan Documents or could
subject any Agent Indemnitee to personal liability.

12.1.5.    Agent as Security Trustee. In this Agreement and the U.K. Security
Agreement, any rights and remedies exercisable by, any documents to be delivered
to, or any other indemnities or obligations in favor of Agent shall be, as the
case may be, exercisable by, delivered to, or be indemnities or other
obligations in favor of, Agent (or any other Person acting in such capacity) in
its capacity as security trustee of Secured Parties to the extent that the
rights, deliveries, indemnities or other obligations relate to the U.K. Security
Agreement or the security thereby created. Any obligations of Agent (or any
other Person acting in such capacity) in this Agreement and U.K. Security
Agreement shall be obligations of Agent in its capacity as security trustee of
Secured Parties to the extent that the obligations relate to the U.K. Security
Agreement or the security thereby created. Additionally, in its capacity as
security trustee of Secured Parties Agent (or any other Person acting in such
capacity) shall have (i) all the rights, remedies and benefits in favor of Agent
contained in the provisions of the whole of this Section 12; (ii) all the powers
of an absolute owner of the security constituted by the U.K. Security Agreement
and (iii) all the rights, remedies and powers granted to it and be subject to
all the obligations and duties owed by it under the U.K. Security Agreement
and/or any of the Loan Documents.

12.1.6.    Appointment of Agent as Security Trustee. Each Secured Party hereby
appoints Agent to act as its trustee under and in relation to the U.K. Security
Agreement and to hold the assets subject to the security thereby created as
trustee for Secured Parties on the trusts and other terms contained in the U.K.
Security Agreement and each Secured Party hereby irrevocably authorizes Agent in
its capacity as security trustee of Secured Parties to exercise such rights,
remedies, powers and discretions as are specifically delegated to Agent as
security trustee of Secured Parties by the terms of the U.K. Security Agreement
together with all such rights, remedies, powers and discretions as are
reasonably incidental thereto.

12.1.7.    Liens. Any reference in this Agreement to Liens stated to be in favor
of Agent shall be construed so as to include a reference to Liens granted in
favor of Agent in its capacity as security trustee of Secured Parties.

12.1.8.    Successors. Secured Parties agree that, if at any time that the
Person acting as security trustee of Secured Parties in respect of the U.K.
Security Agreement shall be a Person other than Agent, such other Person shall
have the rights, remedies, benefits and powers granted to Agent in its capacity
as security trustee of Secured Parties under this Agreement and the U.K.
Security Agreement.

12.1.9.    Capacity. Nothing in Sections 12.1.5 to 12.1.8 shall require Agent in
its capacity as security trustee of Secured Parties under this Agreement and the
U.K. Security Agreement to act as a trustee at common law or to be holding any
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jurisdiction outside the United States or the U.K. which may not operate under
principles of trust or where such trust would not be recognized or its effects
would not be enforceable.

12.2    Agreements Regarding Collateral and Field Examination Reports.

12.2.1.    Lien Releases; Care of Collateral. Secured Parties authorize Agent to
release any Lien with respect to any Collateral (a) upon Full Payment of the
Obligations; (b) that is the subject of an Asset Disposition which Borrowers
certify in writing to Agent is a disposition permitted hereunder or a Lien which
Borrowers certify is a Permitted Lien entitled to priority over Agent’s Liens
(and Agent may rely conclusively on any such certificate without further
inquiry); (c) that does not have, when aggregated with all other released
Collateral under this clause (c) in any calendar year, a book value greater than
$5,000,000; or (d) with the written consent of all Lenders. Secured Parties
authorize Agent to subordinate its Liens to any Lien permitted under
Section 10.2.1(j). Agent shall have no obligation to assure that any Collateral
exists or is owned by a Borrower, or is cared for, protected, insured or
encumbered, nor to assure that Agent’s Liens have been properly created,
perfected or enforced, or are entitled to any particular priority, nor to
exercise any duty of care with respect to any Collateral.

12.2.2.    Possession of Collateral. Agent and Secured Parties appoint each
Lender as agent (for the benefit of Secured Parties) for the purpose of
perfecting Liens in any Collateral held or controlled by such Lender, to the
extent such Liens are perfected by possession or control. If any Lender obtains
possession or control of any Collateral, it shall notify Agent thereof and,
promptly upon Agent’s request, deliver such Collateral to Agent or otherwise
deal with it in accordance with Agent’s instructions.

12.2.3.    Reports. Agent shall promptly forward to each Lender, when complete,
copies of any field audit, examination or appraisal report prepared by or for
Agent with respect to any Obligor or Collateral (“Report”). Each Lender agrees
(a) that neither Bank of America nor Agent makes any representation or warranty
as to the accuracy or completeness of any Report, and shall not be liable for
any information contained in or omitted from any Report; (b) that the Reports
are not intended to be comprehensive audits or examinations, and that Agent or
any other Person performing any audit or examination will inspect only specific
information regarding Obligations or the Collateral and will rely significantly
upon the applicable Obligors’ books and records as well as upon representations
of the applicable Obligors’ officers and employees; and (c) to keep all Reports
confidential and strictly for such Lender’s internal use, and not to distribute
any Report (or the contents thereof) to any Person (except: (i) to such Lender’s
Participants, attorneys and accountants, (ii) to the extent requested by any
governmental, regulatory or self-regulatory authority purporting to have
jurisdiction over it or its Affiliates, or (iii) to the extent required by
Applicable Law or by any subpoena or other legal process) or use any Report in
any manner other than administration of the Loans and other Obligations. Each
Lender shall indemnify and hold harmless Agent and any other Person preparing a
Report from any action such Lender may take as a result of or any conclusion it
may draw from any Report, as well as from any Claims arising as a direct or
indirect result of Agent furnishing a Report to such Lender.

12.3    Reliance By Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any certification, notice or other communication
(including those by telephone, telex, telegram, telecopy or e-mail) believed by
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or made by the proper Person, and upon the advice and statements of Agent
Professionals. Agent shall have a reasonable and practicable amount of time to
act upon any instruction, notice or other communication under any Loan Document,
and shall not be liable for any delay in acting.

12.4    Action Upon Default. Agent shall not be deemed to have knowledge of any
Default or Event of Default, or of any failure to satisfy any conditions in
Section 6, unless it has received written notice from a Borrower or Required
Lenders specifying the occurrence and nature thereof. If any Lender acquires
knowledge of a Default, Event of Default or failure of such conditions, it shall
promptly notify Agent and the other Lenders thereof in writing. Each Secured
Party agrees that, except as otherwise provided in any Loan Documents or with
the written consent of Agent and Required Lenders, it will not take any
Enforcement Action, accelerate Obligations (other than Secured Bank Product
Obligations), or exercise any right that it might otherwise have under
Applicable Law to credit bid at foreclosure sales, UCC or PPSA sales or other
similar dispositions of Collateral or to assert any rights relating to any
Collateral.

12.5    Ratable Sharing. No Lender shall set off against any Dominion Account
without the prior consent of Agent. If any Lender shall obtain any payment or
reduction of any Obligation, whether through set-off or otherwise, in excess of
its share of such Obligation, determined on a Pro Rata basis or in accordance
with Section 5.6.1, as applicable, such Lender shall forthwith purchase from
Agent, the U.S. Issuing Bank (if such Obligation is a U.S. Facility Obligation),
the Canadian Issuing Bank (if such Obligation is a Canadian Facility
Obligation), the U.K. Issuing Bank (if such Obligation is a U.K. Facility
Obligation), and the other Lenders such participations in the affected
Obligation as are necessary to cause the purchasing Lender to share the excess
payment or reduction on a Pro Rata basis or in accordance with Section 5.6.1, as
applicable. If any of such payment or reduction is thereafter recovered from the
purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest. Notwithstanding
the foregoing, if a Defaulting Lender obtains a payment or reduction of any
Obligation, it shall immediately turn over the amount thereof to Agent for
application under Section 4.2.2 and it shall provide a written statement to
Agent describing the Obligation affected by such payment or reduction. No Lender
shall set off against any Dominion Account without the prior consent of the
Agent

12.6    Indemnification. EACH LENDER SHALL INDEMNIFY AND HOLD HARMLESS AGENT
INDEMNITEES AND ISSUING BANK INDEMNITEES, TO THE EXTENT NOT REIMBURSED BY
OBLIGORS, ON A PRO RATA BASIS, AGAINST ALL CLAIMS THAT MAY BE INCURRED BY OR
ASSERTED AGAINST ANY SUCH INDEMNITEE (OTHER THAN CLAIMS THAT ARE CAUSED BY THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE), PROVIDED THAT ANY
CLAIM AGAINST AN AGENT INDEMNITEE RELATES TO OR ARISES FROM ITS ACTING AS OR FOR
AGENT (IN THE CAPACITY OF AGENT). In Agent’s discretion, it may reserve for any
Claims made against an Agent Indemnitee or Issuing Bank Indemnitee, and may
satisfy any judgment, order or settlement relating thereto, from proceeds of
Collateral prior to making any distribution of Collateral proceeds to Secured
Parties. If Agent is sued by any Creditor Representative, debtor-in-possession
or other Person for any alleged preference or fraudulent transfer, then any
monies paid by Agent in settlement or satisfaction of such proceeding, together
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in the defense of same, shall be promptly reimbursed to Agent by each Lender to
the extent of its Pro Rata share.

12.7    Limitation on Responsibilities of Agent. Agent shall not be liable to
any Secured Party for any action taken or omitted to be taken under the Loan
Documents, except for losses directly and solely caused by Agent’s gross
negligence or willful misconduct. Agent does not assume any responsibility for
any failure or delay in performance or any breach by any Obligor, Lender or
other Secured Party of any obligations under the Loan Documents. Agent does not
make any express or implied representation, warranty or guarantee to Secured
Parties with respect to any Obligations, Collateral, Loan Documents or Obligor.
No Agent Indemnitee shall be responsible to Secured Parties for any recitals,
statements, information, representations or warranties contained in any Loan
Documents; the execution, validity, genuineness, effectiveness or enforceability
of any Loan Documents; the genuineness, enforceability, collectability, value,
sufficiency, location or existence of any Collateral, or the validity, extent,
perfection or priority of any Lien therein; the validity, enforceability or
collectability of any Obligations; or the assets, liabilities, financial
condition, results of operations, business, creditworthiness or legal status of
any Obligor or Account Debtor. No Agent Indemnitee shall have any obligation to
any Secured Party to ascertain or inquire into the existence of any Default or
Event of Default, the observance or performance by any Obligor of any terms of
the Loan Documents, or the satisfaction of any conditions precedent contained in
any Loan Documents.

12.8    Successor Agent and Co-Agents.

12.8.1.    Resignation; Successor Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, Agent may resign at any time
by giving at least 30 days written notice thereof to Lenders and Borrower Agent.
Upon receipt of such notice, Required Lenders shall have the right to appoint a
successor Agent which shall be (a) a U.S. Lender or an Affiliate of a U.S.
Lender; or (b) a commercial bank that is organized under the laws of the United
States or any state or district thereof, has a combined capital surplus of at
least $200,000,000 and (provided no Default or Event of Default exists) is
reasonably acceptable to Borrower Agent. If no successor agent is appointed
prior to the effective date of the resignation of Agent, then Agent may appoint
a successor agent from among Lenders or, if no Lender accepts such role, Agent
may appoint Required Lenders as successor Agent. Upon acceptance by a successor
Agent of an appointment to serve as Agent hereunder, or upon appointment of
Required Lenders as successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the powers and duties of the retiring
Agent (including as security trustee of Secured Parties under the U.K. Security
Agreements) without further act, and the retiring Agent shall be discharged from
its duties and obligations hereunder but shall continue to have the benefits of
the indemnification set forth in Sections 12.6 and 14.2. Notwithstanding any
Agent’s resignation, the provisions of this Section 12 shall continue in effect
for its benefit with respect to any actions taken or omitted to be taken by it
while Agent. Any successor to Bank of America by merger or acquisition of stock
or this loan shall continue to be Agent (including as security trustee of
Secured Parties under the U.K. Security Agreements) hereunder without further
act on the part of the parties hereto, unless such successor resigns as provided
above.

12.8.2.    Separate Collateral Agent. It is the intent of the parties that there
shall be no violation of any Applicable Law denying or restricting the right of
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transact business in any jurisdiction. If Agent believes that it may be limited
in the exercise of any rights or remedies under the Loan Documents due to any
Applicable Law, Agent may appoint an additional Person who is not so limited, as
a separate collateral agent or co-collateral agent. If Agent so appoints a
collateral agent or co-collateral agent, each right and remedy intended to be
available to Agent under the Loan Documents shall also be vested in such
separate agent. Secured Parties shall execute and deliver such documents as
Agent deems appropriate to vest any rights or remedies in such agent. If any
collateral agent or co-collateral agent shall die or dissolve, become incapable
of acting, resign or be removed, then all the rights and remedies of such agent,
to the extent permitted by Applicable Law, shall vest in and be exercised by
Agent until appointment of a new agent.

12.9    Due Diligence and Non-Reliance. Each Lender acknowledges and agrees that
it has, independently and without reliance upon Agent or any other Lenders, and
based upon such documents, information and analyses as it has deemed
appropriate, made its own credit analysis of each Obligor and its own decision
to enter into this Agreement and to fund Loans and participate in LC Obligations
hereunder. Each Secured Party has made such inquiries as it feels necessary
concerning the Loan Documents, Collateral and Obligors. Each Secured Party
acknowledges and agrees that the other Secured Parties have made no
representations or warranties concerning any Obligor, any Collateral or the
legality, validity, sufficiency or enforceability of any Loan Documents or
Obligations. Each Secured Party will, independently and without reliance upon
any other Secured Party, and based upon such financial statements, documents and
information as it deems appropriate at the time, continue to make and rely upon
its own credit decisions in making Loans and participating in LC Obligations,
and in taking or refraining from any action under any Loan Documents. Except for
notices, reports and other information expressly requested by a Lender, Agent
shall have no duty or responsibility to provide any Secured Party with any
notices, reports or certificates furnished to Agent by any Obligor or any credit
or other information concerning the affairs, financial condition, business or
Properties of any Obligor (or any of its Affiliates) which may come into
possession of Agent or its Affiliates.

12.10    Remittance of Payments and Collections.

12.10.1.    Remittances Generally. All payments by any Lender to Agent shall be
made by the time and on the day set forth in this Agreement, in immediately
available funds. If no time for payment is specified or if payment is due on
demand by Agent and request for payment is made by Agent by 11:00 a.m.
(Applicable Time Zone) on a Business Day, payment shall be made by Lender not
later than 2:00 p.m. (Applicable Time Zone) on such day, and if request is made
after 11:00 a.m. (Applicable Time Zone), then payment shall be made by 11:00
a.m. (Applicable Time Zone) on the next Business Day. Payment by Agent to any
Secured Party shall be made by wire transfer, in the type of funds received by
Agent. Any such payment shall be subject to Agent’s right of offset for any
amounts due from such payee under the Loan Documents.

12.10.2.    Failure to Pay. If any Secured Party fails to pay any amount when
due by it to Agent pursuant to the terms hereof, such amount shall bear interest
from the due date until paid at the rate determined by Agent as customary in the
banking industry for interbank compensation. In no event shall Obligors be
entitled to receive credit for any interest paid by a Secured Party to Agent,
nor shall any Defaulting Lender be entitled to interest on any amounts held by
Agent pursuant to Section 4.2.

 

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12.10.3.    Recovery of Payments. If Agent pays any amount to a Secured Party in
the expectation that a related payment will be received by Agent from an Obligor
and such related payment is not received, then Agent may recover such amount
from each Secured Party that received it. If Agent determines at any time that
an amount received under any Loan Document must be returned to an Obligor or
paid to any other Person pursuant to Applicable Law or otherwise, then,
notwithstanding any other term of any Loan Document, Agent shall not be required
to distribute such amount to any Lender. If any amounts received and applied by
Agent to any Obligations are later required to be returned by Agent pursuant to
Applicable Law, each Lender shall pay to Agent, on demand, such Lender’s Pro
Rata share of the amounts required to be returned.

12.11    Agent in its Individual Capacity. As a Lender, Bank of America shall
have the same rights and remedies under the other Loan Documents as any other
Lender, and the terms “Lenders,” “Required Lenders,” “U.S. Required Lenders,”
“U.S. Required Term Lenders,” “U.K. Required Lenders,” “Canadian Required
Lenders” or any similar term shall include Bank of America, if applicable, in
its capacity as a Lender. Bank of America and its Affiliates may accept deposits
from, lend money to, provide Bank Products to, act as financial or other advisor
to, and generally engage in any kind of business with, Obligors and their
Affiliates, as if Bank of America were not Agent hereunder, without any duty to
account therefor to Lenders. In their individual capacities, Bank of America and
its Affiliates may receive information regarding Obligors, their Affiliates and
their Account Debtors (including information subject to confidentiality
obligations), and each Secured Party agrees that Bank of America and its
Affiliates shall be under no obligation to provide such information to any
Secured Party, if acquired in such individual capacity.

12.12    Agent Titles. Each Lender, other than Bank of America, that is
designated (on the cover page of this Agreement or otherwise) by Bank of America
as an “Agent” or “Arranger” of any type shall not have any right, power,
responsibility or duty under any Loan Documents other than those applicable to
all Lenders, and shall in no event be deemed to have any fiduciary relationship
with any other Lender.

12.13    Bank Product Providers. Each Secured Bank Product Provider, by delivery
of a notice to Agent of a Bank Product, agrees to be bound by Section 5.6 and
this Section 12. Each Secured Bank Product Provider shall indemnify and hold
harmless Agent Indemnitees, to the extent not reimbursed by Obligors, against
all Claims that may be incurred by or asserted against any Agent Indemnitee in
connection with such provider’s Secured Bank Product Obligations, unless such
Claim is caused by the gross negligence or willful misconduct of such Agent
Indemnitee.

12.14    No Third Party Beneficiaries. This Section 12 is an agreement solely
among Secured Parties and Agent, and shall survive Full Payment of the
Obligations. This Section 12 does not confer any rights or benefits upon
Obligors or any other Person. As between Obligors and Agent, any action that
Agent may take under any Loan Documents or with respect to any Obligations shall
be conclusively presumed to have been authorized and directed by Secured
Parties.

 

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SECTION 13.

BENEFIT OF AGREEMENT; ASSIGNMENTS

13.1    Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of Obligors, Agent, Lenders, Secured Parties, and their
respective successors and assigns, except that (a) no Obligor shall have the
right to assign its rights or delegate its obligations under any Loan Documents;
and (b) any assignment by a Lender must be made in compliance with Section 13.3.
Agent may treat the Person which made any Loan as the owner thereof for all
purposes until such Person makes an assignment in accordance with Section 13.3.
Any authorization or consent of a Lender shall be conclusive and binding on any
subsequent transferee or assignee of such Lender.

13.2    Participations.

13.2.1.    Permitted Participants; Effect. Any Lender may, in the Ordinary
Course of Business and in accordance with Applicable Law, at any time sell to a
financial institution (“Participant”) a participating interest in the rights and
obligations of such Lender under any Loan Documents. Despite any sale by a
Lender of participating interests to a Participant, such Lender’s obligations
under the Loan Documents shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for performance of such obligations,
such Lender shall remain the holder of its Loans and Commitments for all
purposes, all amounts payable by Obligors shall be determined as if such Lender
had not sold such participating interests, and Obligors and Agent shall continue
to deal solely and directly with such Lender in connection with the Loan
Documents. Each Lender shall be solely responsible for notifying its
Participants of any matters under the Loan Documents, and Agent and the other
Lenders shall not have any obligation or liability to any such Participant. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 5.9 unless Borrower Agent agrees otherwise
in writing.

13.2.2.    Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, waiver or other
modification of any Loan Documents other than that which forgives principal,
interest or fees, reduces the stated interest rate or fees payable with respect
to any Loan or Commitment in which such Participant has an interest, postpones
the Canadian Revolver Commitment Termination Date (if such Participant has an
interest in the Canadian Revolver Commitments), U.K. Revolver Commitment
Termination Date (if such Participant has an interest in the U.K. Revolver
Commitments), or U.S. Revolver Commitment Termination Date (if such Participant
has an interest in the U.S. Revolver Commitments), or any date fixed for any
regularly scheduled payment of principal, interest or fees on such Loan or
Commitment, or releases any Borrower, Guarantor or substantial portion of the
Collateral.

13.2.3.    Benefit of Set-Off. Obligors agree that each Participant shall have a
right of set-off in respect of its participating interest to the same extent as
if such interest were owing directly to a Lender, and each Lender shall also
retain the right of set-off with respect to any participating interests sold by
it. By exercising any right of set-off, a Participant agrees to share with
Lenders all amounts received through its set-off, in accordance with
Section 12.5 as if such Participant were a Lender.

 

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13.3    Assignments.

13.3.1.    Permitted Assignments. A Lender may assign to an Eligible Assignee
any of its rights and obligations under the Loan Documents, as long as (a) each
assignment is of a constant, and not a varying, percentage of the transferor
Lender’s rights and obligations under the Loan Documents and, in the case of a
partial assignment, is in a minimum principal amount of $10,000,000 (unless
otherwise agreed by Agent in its discretion) and integral multiples of
$1,000,000 in excess of that amount; (b) except in the case of an assignment in
whole of a Lender’s rights and obligations, the aggregate amount of the
Commitments retained by the transferor Lender is at least $10,000,000 (unless
otherwise agreed by Agent in its discretion); and (c) the parties to each such
assignment shall execute and deliver to Agent, for its acceptance and recording,
an Assignment and Acceptance. Nothing herein shall limit the right of a Lender
to pledge or assign any rights under the Loan Documents to (i) any Federal
Reserve Bank or the United States Treasury as collateral security pursuant to
Regulation A of the Board of Governors and any Operating Circular issued by such
Federal Reserve Bank, or (ii) counterparties to swap agreements relating to any
Loans; provided, however, that any payment by Obligors to the assigning Lender
in respect of any Obligations assigned as described in this sentence shall
satisfy Obligors’ obligations hereunder to the extent of such payment, and no
such assignment shall release the assigning Lender from its obligations
hereunder.

13.3.2.    Effect; Effective Date. Upon delivery to Agent of an assignment
notice in the form of Exhibit C and a processing fee of $3,500 (unless otherwise
agreed by Agent in its discretion), the assignment shall become effective as
specified in the notice, if it complies with this Section 13.3. From such
effective date, the Eligible Assignee shall for all purposes be a Lender under
the Loan Documents, and shall have all rights and obligations of a Lender
thereunder. Upon consummation of an assignment, the transferor Lender, Agent and
Borrowers shall make appropriate arrangements for issuance of replacement and/or
new Notes, as applicable. The transferee Lender shall comply with Section 5.10
and deliver, upon request, an administrative questionnaire satisfactory to
Agent.

13.3.3.    Certain Assignees. No assignment or participation may be made to an
Obligor, Affiliate of an Obligor, Defaulting Lender or natural person. In
connection with any assignment by a Defaulting Lender, such assignment shall be
effective only upon payment by the Eligible Assignee or Defaulting Lender to
Agent of an aggregate amount sufficient, upon distribution (through direct
payment, purchases of participations or other compensating actions as Agent
deems appropriate), (a) to satisfy all funding and payment liabilities then
owing by the Defaulting Lender hereunder, and (b) to acquire its Pro Rata share
of all Loans and LC Obligations. If an assignment by a Defaulting Lender shall
become effective under Applicable Law for any reason without compliance with the
foregoing sentence, then the assignee shall be deemed a Defaulting Lender for
all purposes until such compliance occurs.

13.4    Replacement of Certain Lenders. If a Lender (a) fails to give its
consent to any amendment, waiver or action for which consent of all Lenders was
required and Required Lenders consented, or (b) is a Defaulting Lender, then, in
addition to any other rights and remedies that any Person may have, Agent or
Borrower Agent may, by notice to such Lender within 120 days after such event,
require such Lender to assign all of its rights and obligations under the Loan
Documents to Eligible Assignee(s), pursuant to appropriate Assignment and
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20 days after the notice. Agent is irrevocably appointed as attorney-in-fact to
execute any such Assignment and Acceptance if the Lender fails to execute it.
Such Lender shall be entitled to receive, in cash, concurrently with such
assignment, all amounts owed to it under the Loan Documents, including all
principal, interest and fees through the date of assignment (but excluding any
prepayment charge).

 

SECTION 14.

MISCELLANEOUS

14.1    Consents, Amendments and Waivers.

14.1.1.    Amendment. No modification of any Loan Document, including any
extension or amendment of a Loan Document or any waiver of a Default or Event of
Default, shall be effective without the prior written agreement of the Required
Lenders or of Agent (with the consent of Required Lenders) and each Obligor
party to such Loan Document; provided, however, that

(a)    without the prior written consent of Agent, no modification shall be
effective with respect to any provision in a Loan Document that relates to any
rights, duties or discretion of Agent;

(b)    without the prior written consent of each affected Issuing Bank, no
modification shall be effective with respect to any LC Obligations, Section 2.2,
Section 2.3, Section 2.4, or any other provision in a Loan Document that relates
to any rights, duties or discretion of such affected Issuing Bank;

(c)    without the prior written consent of each affected Lender, including a
Defaulting Lender, no modification shall be effective that would (i) increase
the Commitment of such Lender; (ii) reduce the amount of, or waive or delay
payment of, any principal, interest or fees payable to such Lender (except as
provided in Section 4.2); (iii) extend the Commitment of such Lender, or
(iv) amend this clause (c);

(d)    without the prior written consent of all Lenders (except any Defaulting
Lender), no modification shall be effective that would (i) extend the U.S.
Revolver Commitment Termination Date, the U.K. Revolver Commitment Termination
Date, the Canadian Revolver Commitment Termination Date, the Term Loan Maturity
Date, or the Facility Termination Date, (ii) alter Section 5.6, 7.1 (except to
add Collateral), 12.5 or 14.1.1; (iii) amend the definition of Pro Rata,
Supermajority Lenders, or Required Lenders; (iv) increase any advance rate;
(v) release Collateral with a book value greater than $5,000,000 during any
calendar year, except as currently contemplated by the Loan Documents; or
(vi) release any Obligor from liability for any Obligations;

(e)    without the prior written consent of the Supermajority Lenders, no
modification shall be effective that would amend the definition of U.S.
Borrowing Base (or any defined term used in such definition, including any
defined term used therein) to the extent that any such amendment results in more
credit being made available to U.S. Borrowers, the Canadian Borrowing Base (or
any defined term used in such definition, including any defined term used
therein) to the extent that any such amendment results in more credit being made
available to the Canadian Borrower, or the U.K. Borrowing Base (or any defined
term used in such definition,

 

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including any defined term used therein) to the extent that any such amendment
results in more credit being made available to the U.K. Borrower;

(f)    without the prior written consent of a Secured Bank Product Provider, no
modification shall be effective that affects its relative payment priority under
Section 5.6;

(g)    without the prior written consent of all Lenders, (i) the Obligations
shall not be subordinated to any other obligations, and (ii) Agent shall not
agree to subordinate its Liens in the Collateral to any other Liens except to
the extent contemplated by Section 12.2.1;

(h)    without the prior written consent of all: (i) U.S. Lenders, amend the
definition of U.S. Required Lenders, (ii) Canadian Lenders, amend the definition
of Canadian Required Lenders, (iii) U.K. Lenders, amend the definition of U.K.
Required Lenders, and (iv) Term Lenders, amend the definition of U.S. Required
Term Lenders; and

(i)    if Real Estate secures any Obligations, no modification of a Loan
Document shall add, increase, renew or extend any credit line hereunder until
the completion of flood diligence and documentation as required by all Flood
Laws.

14.1.2.    Limitations. The agreement of Obligors shall not be necessary to the
effectiveness of any modification of a Loan Document that deals solely with the
rights and duties of Lenders, Agent and/or Issuing Banks as among themselves.
Only the consent of the parties to the Fee Letters or any agreement relating to
a Bank Product shall be required for any modification of such agreement, and any
non-Lender that is party to a Bank Product agreement shall have no right to
participate in any manner in modification of any other Loan Document. Any waiver
or consent granted by Agent or Lenders hereunder shall be effective only if in
writing and only for the matter specified.

14.1.3.    Payment for Consents. No Obligor will, directly or indirectly, pay
any remuneration or other thing of value, whether by way of additional interest,
fee or otherwise, to any Lender (in its capacity as a Lender hereunder) as
consideration for agreement by such Lender with any modification of any Loan
Documents, unless such remuneration or value is concurrently paid, on the same
terms, on a Pro Rata basis to all Lenders providing their consent.

14.2    Indemnity. EACH OBLIGOR SHALL INDEMNIFY AND HOLD HARMLESS THE
INDEMNITEES AGAINST ANY CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY
INDEMNITEE, INCLUDING CLAIMS ASSERTED BY ANY OBLIGOR OR OTHER PERSON OR ARISING
FROM THE NEGLIGENCE OF AN INDEMNITEE. In no event shall any party to a Loan
Document have any obligation thereunder to indemnify or hold harmless an
Indemnitee with respect to a Claim that is determined in a final, non-appealable
judgment by a court of competent jurisdiction to result from the gross
negligence or willful misconduct of such Indemnitee.

14.3    Notices and Communications.

14.3.1.    Notice Address. Subject to Section 4.1.4, all notices and other
communications by or to a party hereto shall be in writing and shall be given to
any Obligor, at Borrower Agent’s address shown on the signature pages hereof,
and to any other Person at its

 

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address shown on the signature pages hereof (or, in the case of a Person who
becomes a Lender after the Closing Date, at the address shown on its Assignment
and Acceptance), or at such other address as a party may hereafter specify by
notice in accordance with this Section 14.3. Each such notice or other
communication shall be effective only (a) if given by facsimile transmission,
when transmitted to the applicable facsimile number, if confirmation of receipt
is received; (b) if given by mail, three Business Days after deposit in the
mail, with first-class postage pre-paid, addressed to the applicable address; or
(c) if given by personal delivery, when duly delivered to the notice address
with receipt acknowledged. Notwithstanding the foregoing, no notice to Agent
pursuant to Section 2.1.4, 2.2, 2.3, 2.4, 3.1.2, 4.1.1 or 5.3.3 shall be
effective until actually received by the individual to whose attention at Agent
such notice is required to be sent. Any written notice or other communication
that is not sent in conformity with the foregoing provisions shall nevertheless
be effective on the date actually received by the noticed party. Any notice
received by Borrower Agent shall be deemed received by all Obligors.

14.3.2.    Electronic Communications; Voice Mail. Electronic mail and internet
websites may be used only for routine communications, such as financial
statements, Borrowing Base Certificates and other information required by
Section 10.1.2, administrative matters, distribution of Loan Documents, and
matters permitted under Section 4.1.4. Agent and Lenders make no assurances as
to the privacy and security of electronic communications. Electronic and voice
mail may not be used as effective notice under the Loan Documents.

14.3.3.    Non-Conforming Communications. Agent and Lenders may rely upon any
notices purportedly given by or on behalf of any Obligor even if such notices
were not made in a manner specified herein, were incomplete or were not
confirmed, or if the terms thereof, as understood by the recipient, varied from
a later confirmation. Each Obligor shall indemnify and hold harmless each
Indemnitee from any liabilities, losses, costs and expenses arising from any
telephonic communication purportedly given by or on behalf of an Obligor.

14.4    Performance of Obligors’ Obligations. Agent may, in its discretion at
any time and from time to time, at the applicable Borrowers’ expense, pay any
amount or do any act required of an Obligor under any Loan Documents or
otherwise lawfully requested by Agent to (a) enforce any Loan Documents or
collect any Obligations; (b) protect, insure, maintain or realize upon any
Collateral; or (c) defend or maintain the validity or priority of Agent’s Liens
in any Collateral, including any payment of a judgment, insurance premium,
warehouse charge, finishing or processing charge, or landlord claim, or any
discharge of a Lien. All payments, costs and expenses (including Extraordinary
Expenses) of Agent under this Section shall be reimbursed to Agent by Borrowers,
on demand, with interest from the date incurred to the date of payment thereof
at the Default Rate applicable to U.S. Base Rate Revolver Loans. Any payment
made or action taken by Agent under this Section shall be without prejudice to
any right to assert an Event of Default or to exercise any other rights or
remedies under the Loan Documents.

14.5    Credit Inquiries. Each Obligor hereby authorizes Agent and Lenders (but
they shall have no obligation) to respond to usual and customary credit
inquiries from third parties concerning any Obligor or Subsidiary.

14.6    Severability. Wherever possible, each provision of the Loan Documents
shall be interpreted in such manner as to be valid under Applicable Law. If any
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invalid under Applicable Law, it shall be ineffective only to the extent of such
invalidity and the remaining provisions of the Loan Documents shall remain in
full force and effect.

14.7    Cumulative Effect; Conflict of Terms. The provisions of the Loan
Documents are cumulative. The parties acknowledge that the Loan Documents may
use several limitations, tests or measurements to regulate similar matters, and
they agree that these are cumulative and that each must be performed as
provided. Except as otherwise provided in another Loan Document (by specific
reference to the applicable provision of this Agreement), if any provision
contained herein is in direct conflict with any provision in another Loan
Document, the provision herein shall govern and control.

14.8    Counterparts. Any Loan Document may be executed in counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute a single contract. This Agreement shall become effective when Agent
has received counterparts bearing the signatures of all parties hereto. Delivery
of a signature page of any Loan Document by telecopy or other electronic means
shall be effective as delivery of a manually executed counterpart of such
agreement.

14.9    Entire Agreement. Time is of the essence of the Loan Documents. The Loan
Documents 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.

14.10    Relationship with Lenders. The obligations of each Lender hereunder are
several, and no Lender shall be responsible for the obligations or Commitments
of any other Lender. Amounts payable hereunder to each Lender shall be a
separate and independent debt. It shall not be necessary for Agent or any other
Lender to be joined as an additional party in any proceeding for such purposes.
Nothing in this Agreement and no action of Agent, Lenders or any other Secured
Party pursuant to the Loan Documents or otherwise shall be deemed to constitute
Agent and any Secured Party to be a partnership, association, joint venture or
any other kind of entity, nor to constitute control of any Obligor.

14.11    Lender Loss Sharing Agreement.

(a)    Definitions. As used in this Section 14.11, the following terms shall
have the following meanings:

(i)    CAM: the mechanism for the allocation and exchange of interests in the
Loans, participations in Letters of Credit and collections thereunder
established under Section 14.11(b).

(ii)    CAM Exchange: the exchange of the U.S. Lenders’ interests, U.K. Lenders’
interests, and the Canadian Lenders’ interests provided for in Section 14.11(b).

(iii)    CAM Exchange Date: the first date after the Closing Date on which there
shall occur (a) any event described in Section 11.1(j) with respect to any
Borrower, or (b) an acceleration of Loans and termination of the Commitments
pursuant to Section 11.2.

 

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(iv)    CAM Percentage: as to each Lender, a fraction, (a) the numerator of
which shall be the aggregate amount of such Lender’s Revolver Commitments
immediately prior to the CAM Exchange Date and the termination of the Revolver
Commitments, and (b) the denominator of which shall be the amount of the
Revolver Commitments of all the Lenders immediately prior to the CAM Exchange
Date and the termination of the Revolver Commitments.

(v)    Designated Obligations: all Obligations of the Borrowers with respect to
(a) principal and interest under the U.S. Revolver Loans, U.K. Revolver Loans,
Canadian Revolver Loans, Overadvance Loans and Protective Advances,
(b) unreimbursed drawings under Letters of Credit and interest thereon, and
(c) fees under Sections 3.2.1, 3.2.2(a), 3.2.3(a), and 3.2.4(a).

(vi)    Revolver Facilities: the facility established under the U.S. Revolver
Commitments, the U.K. Revolver Commitments, and the Canadian Revolver
Commitments, and Revolver Facility means any one of such Revolver Facilities.

(b)    CAM Exchange.

(i)    On the CAM Exchange Date,

(A)    the U.S. Revolver Commitments, the U.K. Revolver Commitments, and the
Canadian Revolver Commitments shall have terminated in accordance with
Section 11.2,

(B)    each U.S. Lender shall fund its participation in any outstanding
Protective Advances in accordance with Section 2.1.6, each U.K. Lender shall
fund its participation in any outstanding Protective Advances in accordance with
Section 2.1.6, and each Canadian Lender shall fund its participation in any
outstanding Protective Advances in accordance with Section 2.1.6

(C)    each U.S. Lender shall fund its participation in any unreimbursed
drawings made under the applicable Letters of Credit pursuant to
Section 2.3.2(b), each Canadian Lender shall fund its participation in any
unreimbursed drawings made under the applicable Letters of Credit pursuant to
Section 2.4.2(b), and each U.K. Lender shall fund its participation in any
unreimbursed drawings made under the applicable Letters of Credit pursuant to
Section 2.2.2(b), and

(D)    the Lenders shall purchase at par interests (in Dollars) in the
Designated Obligations under each Revolver Facility (and shall make payments to
Agent for reallocation to other Lenders to the extent necessary to give effect
to such purchases) and shall assume the obligations to reimburse the applicable
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outstanding Letters of Credit under such Revolver Facility such that, in lieu of
the interests of each Lender in the Designated Obligations under the U.S.
Revolver Commitments, the U.K. Revolver Commitments, and the Canadian Revolver
Commitments in which it shall participate immediately prior to the CAM Exchange
Date, such Lender shall own an interest equal to such Lender’s CAM Percentage in
each component of the Designated Obligations immediately following the CAM
Exchange.

(ii)    Each Lender and each Person acquiring a participation from any Lender as
contemplated by Section 13.2 hereby consents and agrees to the CAM Exchange.
Each Borrower agrees from time to time to execute and deliver to Lenders all
such promissory notes and other instruments and documents as Agent shall
reasonably request to evidence and confirm the respective interests and
obligations of Lenders after giving effect to the CAM Exchange, and each Lender
agrees to surrender any promissory notes originally received by it in connection
with its Loans under this Agreement to Agent against delivery of any promissory
notes so executed and delivered; provided that the failure of any Lender to
deliver or accept any such promissory note, instrument or document shall not
affect the validity or effectiveness of the CAM Exchange.

(iii)    As a result of the CAM Exchange, from and after the CAM Exchange Date,
each payment received by Agent pursuant to any Loan Document in respect of any
of the Designated Obligations shall be distributed to Lenders, pro rata in
accordance with their respective CAM Percentages.

(iv)    In the event that on or after the CAM Exchange Date, the aggregate
amount of the Designated Obligations shall change as a result of the making of a
disbursement under a Letter of Credit by any Issuing Bank that is not reimbursed
by the applicable Borrowers, then each Lender shall promptly reimburse such
Issuing Bank for its CAM Percentage of such unreimbursed payment.

(c)    Notwithstanding any other provision of this Section 14.11, Agent and each
Lender agree that if Agent or a Lender is required under Applicable Law to
withhold or deduct any taxes or other amounts from payments made by it hereunder
or as a result hereof, such Person shall be entitled to withhold or deduct such
amounts and pay over such taxes or other amounts to the applicable Governmental
Authority imposing such tax without any obligation to indemnify Agent or any
Lender with respect to such amounts and without any other obligation of gross up
or offset with respect thereto and there shall be no recourse whatsoever by
Agent or any Lender subject to such withholding to Agent or any other Lender
making such withholding and paying over such amounts, but without diminution of
the rights of Agent or such Lender subject to such withholding as against
Borrowers and the other Obligors to the extent (if any) provided in this
Agreement and the other Loan Documents. Any amounts so withheld or deducted
shall be treated as, for the purpose of this Section 14.11, having been paid to
Agent or such Lender with respect to which such withholding or deduction was
made.

 

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14.12    No Advisory or Fiduciary Responsibility. In connection with all aspects
of each transaction contemplated by any Loan Document, Obligors acknowledge and
agree that (a)(i) this credit facility and any related arranging or other
services by Agent, any Lender, any of their Affiliates or any arranger are
arm’s-length commercial transactions between Obligors and such Person;
(ii) Obligors have consulted their own legal, accounting, regulatory and tax
advisors to the extent they have deemed appropriate; and (iii) Obligors are
capable of evaluating, and understand and accept, the terms, risks and
conditions of the transactions contemplated by the Loan Documents; (b) each of
Agent, Lenders, their Affiliates and any arranger is and has been acting solely
as a principal and, except as expressly agreed in writing by the relevant
parties, has not been, is not, and will not be acting as an advisor, agent or
fiduciary for Obligors, any of their Affiliates or any other Person, and has no
obligation with respect to the transactions contemplated by the Loan Documents
except as expressly set forth therein; and (c) Agent, Lenders, their Affiliates
and any arranger may be engaged in a broad range of transactions that involve
interests that differ from those of Obligors and their Affiliates, and have no
obligation to disclose any of such interests to Obligors or their Affiliates. To
the fullest extent permitted by Applicable Law, each Obligor hereby waives and
releases any claims that it may have against Agent, Lenders, their Affiliates
and any arranger with respect to any breach of agency or fiduciary duty in
connection with any transaction contemplated by a Loan Document.

14.13    Confidentiality. Each of Agent, Lenders and Issuing Banks shall
maintain the confidentiality of all Information (as defined below), except that
Information may be disclosed (a) to its Affiliates, and to its and their
partners, directors, officers, employees, agents, advisors and representatives
(provided such Persons are informed of the confidential nature of the
Information and instructed to keep it confidential); (b) to the extent requested
by any governmental, regulatory or self-regulatory authority purporting to have
jurisdiction over it or its Affiliates; (c) to the extent required by Applicable
Law or by any subpoena or other legal process; (d) to any other party hereto;
(e) in connection with any action or proceeding, or other exercise of rights or
remedies, relating to any Loan Documents or Obligations; (f) subject to an
agreement containing provisions substantially the same as this Section, to any
Transferee or any actual or prospective party (or its advisors) to any Bank
Product; (g) with the consent of Borrower Agent; or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) is available to Agent, any Lender, any Issuing Bank or any
of their Affiliates on a nonconfidential basis from a source other than
Obligors. Notwithstanding the foregoing, Agent and Lenders may publish or
disseminate general information describing this credit facility, including the
names and addresses of Obligors and a general description of Obligors’
businesses, and may use Obligors’ logos, trademarks or product photographs in
advertising materials. As used herein, “Information” means all information
received from an Obligor or Subsidiary relating to it or its business that is
identified as confidential when delivered. Any Person required to maintain the
confidentiality of Information pursuant to this Section shall be deemed to have
complied if it exercises the same degree of care that it accords its own
confidential information. Each of Agent, Lenders and Issuing Banks acknowledges
that (i) Information may include material non-public information concerning an
Obligor or Subsidiary; (ii) it has developed compliance procedures regarding the
use of material non-public information; and (iii) it will handle such material
non-public information in accordance with Applicable Law, including federal,
state, provincial and territorial securities laws.

14.14    GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, UNLESS
OTHERWISE SPECIFIED, SHALL BE GOVERNED BY THE

 

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LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW
PRINCIPLES (BUT GIVING EFFECT TO SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATION LAW AND FEDERAL LAWS RELATING TO NATIONAL BANKS).

14.15    Consent to Forum; Judicial Reference; Bail-In of EEA Financial
Institutions.

14.15.1.    Forum. EACH OBLIGOR HEREBY CONSENTS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY FEDERAL OR STATE COURT SITTING IN OR WITH JURISDICTION OVER
NEW YORK, NEW YORK, IN ANY PROCEEDING OR DISPUTE RELATING IN ANY WAY TO ANY LOAN
DOCUMENTS, AND AGREES THAT ANY SUCH PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN
ANY SUCH COURT. EACH OBLIGOR IRREVOCABLY WAIVES ALL CLAIMS, OBJECTIONS AND
DEFENSES THAT IT MAY HAVE REGARDING SUCH COURT’S PERSONAL OR SUBJECT MATTER
JURISDICTION, VENUE OR INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY
CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION
14.3.1. Nothing herein shall limit the right of Agent or any Lender to bring
proceedings against any Obligor in any other court, nor limit the right of any
party to serve process in any other manner permitted by Applicable Law. Nothing
in this Agreement shall be deemed to preclude enforcement by Agent of any
judgment or order obtained in any forum or jurisdiction.

14.15.2.    Judicial Reference. If any controversy or claim among the parties
relating in any way to any Obligations or Loan Documents, including any alleged
tort, shall be pending before any court sitting in or with jurisdiction over
California or applying California law, then at the request of any party such
proceeding shall be referred by the court to a referee (who shall be an active
or retired judge) to hear and determine all issues in such proceeding (whether
of fact or law) and to report a statement of decision for adoption by the court.
Nothing in this Section shall limit any right of Agent or any other Secured
Party to exercise self-help remedies, such as setoff, foreclosure or sale of any
Collateral, or to obtain provisional or ancillary remedies from a court of
competent jurisdiction before, during or after any judicial reference. The
exercise of a remedy does not waive the right of any party to resort to judicial
reference. At Agent’s option, foreclosure under a mortgage or deed of trust may
be accomplished either by exercise of power of sale thereunder or by judicial
foreclosure.

14.15.3.    Acknowledgement and Consent to Bail-In of EEA Financial
Institutions. Notwithstanding anything to the contrary in any Loan Document or
in any other agreement, arrangement or understanding among the parties, each
party hereto (including each Secured Party) acknowledges that, with respect to
any Secured Party that is an EEA Financial Institution, any unsecured liability
of such Secured Party arising under a Loan Document may be subject to the
write-down and conversion powers of an EEA Resolution Authority, and each party
hereto agrees and consents to, and acknowledges and agrees to be bound by,
(a) the application of any Write-Down and Conversion Powers by an EEA Resolution
Authority to any such liability which may be payable to it by such Secured
Party; and (b) the effects of any Bail-in Action on any such liability,
including (i) a reduction in full or in part or cancellation of any such
liability; (ii) a conversion of all, or a portion of, such liability into shares
or other instruments of ownership in such EEA Financial Institution, its parent,
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otherwise conferred on it, and that such shares or other instruments of
ownership will be accepted by it in lieu of any rights with respect to any such
liability under any Loan Document; or (iii) the variation of the terms of such
liability in connection with the exercise of any Write-Down and Conversion
Powers.

14.16    Waivers by Obligors. To the fullest extent permitted by Applicable Law,
each Obligor waives (a) the right to trial by jury (which Agent and each Lender
hereby also waives) in any proceeding or dispute of any kind relating in any way
to any Loan Documents, Obligations or Collateral; (b) presentment, demand,
protest, notice of presentment, default, non-payment, maturity, release,
compromise, settlement, extension or renewal of any commercial paper, accounts,
documents, instruments, chattel paper and guaranties at any time held by Agent
on which an Obligor may in any way be liable, and hereby ratifies anything Agent
may do in this regard; (c) notice prior to taking possession or control of any
Collateral; (d) any bond or security that might be required by a court prior to
allowing Agent to exercise any rights or remedies; (e) the benefit of all
valuation, appraisement and exemption laws; (f) any claim against Agent, any
Issuing Bank or any Lender, on any theory of liability, for special, indirect,
consequential, exemplary or punitive damages (as opposed to direct or actual
damages) in any way relating to any Enforcement Action, Obligations, Loan
Documents or transactions relating thereto; and (g) notice of acceptance hereof.
Each Obligor acknowledges that the foregoing waivers are a material inducement
to Agent, Issuing Banks and Lenders entering into this Agreement and that they
are relying upon the foregoing in their dealings with Obligors. Each Obligor has
reviewed the foregoing waivers with its legal counsel and has knowingly and
voluntarily waived its jury trial and other rights following consultation with
legal counsel. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.

14.17    Patriot Act Notice. Agent and Lenders hereby notify Obligors that
pursuant to the requirements of the Patriot Act, the Proceeds of Crime Act and
other applicable anti-money laundering, anti-terrorist financing, government
sanction and “know your client” policies, regulations, laws or rules (the
Proceeds of Crime Act and such other applicable policies, regulations, laws or
rules, collectively, including any guidelines or orders thereunder, “AML
Legislation”), Agent and Lenders are required to obtain, verify and record
information that identifies each Obligor, including its legal name, address, tax
ID number and other information that will allow Agent and Lenders to identify it
in accordance with the Patriot Act and the AML Legislation. Agent and Lenders
will also require information regarding each personal guarantor, if any, and may
require information regarding Obligors’ management and owners, such as legal
name, address, social security number and date of birth. Each Obligor shall
promptly provide all such information, including supporting documentation and
other evidence, as may be reasonably requested by any Lender or any prospective
assignee or participant of a Lender, in order to comply with the Patriot Act
and/or the applicable AML Legislation, whether now or hereafter in existence.

14.18    Canadian Anti-Money Laundering Legislation. If the Agent has
ascertained the identity of any Canadian Facility Obligor or any authorized
signatories of any Canadian Facility Obligor for the purposes of applicable AML
Legislation, then the Agent: (a) shall be deemed to have done so as an agent for
each Canadian Lender, and this Agreement shall constitute a “written agreement”
in such regard between each Canadian Lender and the Agent within the meaning of
the applicable AML Legislation; and (b) shall provide to each Canadian Lender
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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 Canadian Lenders agrees that
Agent has no obligation to ascertain the identity of the Canadian Facility
Obligors or any authorized signatories of the Canadian Facility Obligors on
behalf of any Canadian Lender, or to confirm the completeness or accuracy of any
information it obtains from any Canadian Facility Obligor or any such authorized
signatory in doing so.

14.19    Reinstatement. This Agreement shall remain in full force and effect and
continue to be effective should any petition be filed by or against any Obligor
for liquidation or reorganization, should any Obligor become insolvent or make
an assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of such Obligor’s assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Obligations, or any part thereof, is, pursuant to
Applicable Law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Obligations, whether as a “voidable preference”,
“fraudulent conveyance” or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Obligations shall be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.

14.20    Nonliability of Lenders. Neither the Agent, any Issuing Bank nor any
Lender undertakes any responsibility to any Obligor to review or inform any
Obligor of any matter in connection with any phase of any Obligor’s business or
operations. Each Obligor agrees, on behalf of itself and each other Obligor,
that neither the Agent, any Issuing Bank nor any Lender shall have liability to
any Obligor (whether sounding in tort, contract or otherwise) for losses
suffered by any Obligor in connection with, arising out of or in any way related
to any of the transactions contemplated and the relationship established by the
Loan Documents, or any act, omission or event occurring in connection therewith,
unless it is determined in a final, non-appealable judgment by a court of
competent jurisdiction that such losses resulted from the gross negligence or
willful misconduct of the party from which recovery is sought or a breach of
obligations under this Agreement by the party from which recovery is sought.
NEITHER THE AGENT NOR ANY LENDER SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM
THE USE BY OTHERS OF ANY INFORMATION OR OTHER MATERIALS OBTAINED THROUGH
INTRALINKS OR OTHER SIMILAR INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH
THIS AGREEMENT.

14.21    Know Your Customer. Nothing in this Agreement shall oblige the Agent to
carry out any “know your customer” or other checks in relation to any person on
behalf of any Lender and each Lender confirms to the Agent that it is solely
responsible for any such checks it is required to carry out and that it may not
rely on any statement in relation to such checks made by the Agent.

14.22    Amendment and Restatement.

14.22.1.    This Agreement amends and restates in its entirety the Second
Amended and Restated Loan Agreement and, upon the effectiveness of this
Agreement, the terms and provisions of the Second Amended and Restated Loan
Agreement shall, subject to Section 14.22.3, be superseded hereby.

 

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14.22.2.    Notwithstanding the amendment and restatement of the Second Amended
and Restated Loan Agreement by this Agreement, all of the Obligations under the
Second Amended and Restated Loan Agreement which remain outstanding as of the
date hereof, shall constitute Obligations owing hereunder. This Agreement is
given in substitution for the Second Amended and Restated Loan Agreement, and
not as payment of the Obligations of the Borrowers thereunder, and is in no way
intended to constitute a novation of the Second Amended and Restated Loan
Agreement.

14.22.3.    Upon the effectiveness of this Agreement, unless the context
otherwise requires, each reference to the Second Amended and Restated Loan
Agreement in any of the Loan Documents and in each document, instrument or
agreement executed and/or delivered in connection therewith shall mean and be a
reference to this Agreement. Except as expressly modified as of the Closing
Date, all of the other Loan Documents shall remain in full force and effect and
are hereby ratified and confirmed. Without limiting the generality of the
foregoing, all security interests, pledges, assignments and other Liens and
Guarantees previously granted by any Obligor pursuant to the Loan Documents
executed and delivered in connection with the Original Loan Agreement, the
Original Amended and Restated Loan Agreement or the Second Amended and Restated
Loan Agreement are hereby reaffirmed, ratified, renewed and continued, and all
such security interests, pledges, assignments and other Liens and Guarantees
shall remain in full force and effect as security for the Obligations on and
after the Closing Date.

14.23    Intercreditor Agreement. Notwithstanding anything herein to the
contrary, the priority of the Lien and security interest granted to the Agent
pursuant to any Loan Document and the exercise of any right or remedy in respect
of the Collateral by the Agent (or any Secured Party) hereunder or under any
other Loan Document are subject to the provisions of the Intercreditor Agreement
and in the event of any conflict between the terms of the Intercreditor
Agreement and any Loan Document, the terms of the Intercreditor Agreement shall
govern and control. Notwithstanding anything herein to the contrary, prior to
the Discharge of Term Loan Obligations (as defined in the Intercreditor
Agreement), (i) the delivery or granting of “control” (as defined in the UCC) to
the extent only one Person can be granted “control” therein under applicable law
of any Term Loan Collateral (as defined in the Intercreditor Agreement) by the
Term Loan Collateral Agent pursuant to the terms of the Term Loan Collateral
Documents (as defined in the Intercreditor Agreement) shall satisfy any such
“control” requirement hereunder or under any other Loan Document with respect to
any Term Loan Collateral to the extent that such “control” is consistent with
the terms of the Intercreditor Agreement and (ii) the possession of any Term
Loan Collateral by the Term Loan Collateral Agent pursuant to the terms of the
Term Loan Collateral Documents shall satisfy any such possession requirement
hereunder or under any other Loan Document with respect to Term Loan Collateral
to the extent that such possession is consistent with the terms of the
Intercreditor Agreement.

[Remainder of page intentionally left blank; signatures begin on following page]

 

175

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IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date
first above written.

 

OBLIGORS:

CALLAWAY GOLF COMPANY,

a Delaware corporation

By:  

                     

Name:  

 

Title:  

 

CALLAWAY GOLF SALES COMPANY,

a California corporation

By:  

 

Name:  

 

Title:  

 

CALLAWAY GOLF BALL OPERATIONS, INC.,

a Delaware corporation

By:  

 

Name:  

 

Title:  

 

CALLAWAY GOLF CANADA LTD.,

a Canada corporation

By:  

 

Name:  

 

Title:  

 

CALLAWAY GOLF EUROPE LTD.,

a company organized under the laws of England and Wales

By:  

 

Name:  

 

Title:  

 

 

[Signature Page to Third Amended and Restated Loan and Security Agreement]

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CALLAWAY GOLF INTERACTIVE, INC.

a Texas corporation

By:  

                     

Name:  

 

Title:  

 

CALLAWAY GOLF INTERNATIONAL SALES COMPANY,

a California corporation

By:  

 

Name:  

 

Title:  

 

CALLAWAY GOLF EUROPEAN HOLDING COMPANY LIMITED,

a company limited by shares incorporated under the laws of England and Wales

By:  

 

Name:  

 

Title:  

 

OGIO INTERNATIONAL, INC.,

a Utah corporation

By:  

 

Name:  

 

Title:  

 

TRAVISMATHEW, LLC,

a California limited liability company

By:  

 

Name:  

 

Title:  

 

 

[Signature Page to Third Amended and Restated Loan and Security Agreement]

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AGENT AND LENDERS BANK OF AMERICA, N.A., as Agent and as a U.S. Lender By:  

                     

Name:   Title:   BANK OF AMERICA, N.A. (acting through its Canada branch), as a
Canadian Lender By:  

 

Name:  

 

Title:  

 

BANK OF AMERICA, N.A. (acting through its London branch), as a U.K. Lender By:  

 

Name:  

 

Title:  

 

 

[Signature Page to Third Amended and Restated Loan and Security Agreement]

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[Additional Lender sig pages to be provided]

 

[Signature Page to Third Amended and Restated Loan and Security Agreement]