Exhibit 10.1

 

 

 

CREDIT AGREEMENT

by and among

AMERICAN REPROGRAPHICS COMPANY,

ARC REPROGRAPHICS CANADA CORP.

and

ARC DIGITAL CANADA CORP.

as Borrowers,

THE LENDERS THAT ARE SIGNATORIES HERETO

as the Lenders,

WELLS FARGO BANK, NATIONAL ASSOCIATION

as the US Agent

and

WELLS FARGO CAPITAL FINANCE CORPORATION CANADA

as the Canadian Agent

Dated as of January 27, 2012

 

 

 

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TABLE OF CONTENTS

 

          Page  

1.

  

DEFINITIONS AND CONSTRUCTION

     1       1.1.   

Definitions

     1       1.2.   

Accounting Terms

     1       1.3.   

Code; PPSA

     2       1.4.   

Construction

     2       1.5.   

Schedules and Exhibits

     3   

2.

  

LOAN AND TERMS OF PAYMENT

     3       2.1.   

Revolver Advances

     3       2.2.   

Revolver Increase

     5       2.3.   

Borrowing Procedures and Settlements

     6       2.4.   

Payments; Reduction of Revolver Commitments; Prepayments

     16       2.5.   

Overadvances

     24       2.6.   

Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations

     25       2.7.   

Crediting Payments

     27       2.8.   

Designated Accounts

     27       2.9.   

Maintenance of Loan Account; Statements of Obligations

     28       2.10.   

Fees

     29       2.11.   

Letters of Credit

     29       2.12.   

LIBOR Option

     39       2.13.   

Capital Requirements

     41       2.14.   

Interest Act (Canada); Criminal Rate of Interest; Nominal Rate of Interest

     43       2.15.   

Currencies

     44       2.16.   

Joint and Several Liability of Canadian Borrowers

     44   

3.

  

CONDITIONS; TERM OF AGREEMENT

     47       3.1.   

Conditions Precedent to the Initial Extension of Credit

     47       3.2.   

Conditions Precedent to all Extensions of Credit

     47       3.3.   

Maturity

     47       3.4.   

Effect of Maturity

     48       3.5.   

Early Termination by Borrowers

     48       3.6.   

Conditions Subsequent

     48   

 

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TABLE OF CONTENTS

(continued)

 

          Page  

4.

  

REPRESENTATIONS AND WARRANTIES

     48       4.1.   

Legal Status; Subsidiaries

     49       4.2.   

Authorization and Validity

     49       4.3.   

No Violation

     50       4.4.   

[Reserved.]

     50       4.5.   

[Reserved.]

     50       4.6.   

[Reserved.]

     50       4.7.   

Litigation

     50       4.8.   

Compliance with Laws

     50       4.9.   

Correctness of Financial Statements

     50       4.10.   

[Reserved.]

     51       4.11.   

ERISA; Canadian Employee Plans

     51       4.12.   

Environmental Matters

     52       4.13.   

[Reserved.]

     53       4.14.   

[Reserved.]

     53       4.15.   

[Reserved.]

     53       4.16.   

Truth, Accuracy of Information

     53       4.17.   

[Reserved.]

     53       4.18.   

Patriot Act

     53       4.19.   

Indebtedness; Other Obligations

     54       4.20.   

Payment of Taxes; Income Tax Returns

     54       4.21.   

Margin Stock

     55       4.22.   

Governmental Regulation

     55       4.23.   

[Reserved.]

     55       4.24.   

Employee and Labor Matters

     55       4.25.   

No Subordination

     56       4.26.   

Permits; Franchises

     57       4.27.   

Fictitious Names

     57       4.28.   

Eligible Accounts

     57       4.29.   

Eligible Inventory

     57   

 

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TABLE OF CONTENTS

(continued)

 

          Page      4.30.   

Eligible Equipment

     57       4.31.   

Locations of Inventory and Equipment and Chief Executive Offices

     58       4.32.   

Inventory Records

     58       4.33.   

Real Property

     58       4.34.   

Solvency

     58       4.35   

Withholdings and Remittances

     59   

5.

  

AFFIRMATIVE COVENANTS

     59       5.1.   

Financial Statements, Reports, Certificates

     59       5.2.   

Collateral Reporting

     61       5.3.   

Compliance

     62       5.4.   

Facilities

     62       5.5.   

Taxes and other Liabilities

     62       5.6.   

Insurance

     62       5.7.   

Accounting Records; Inspection and Appraisals

     63       5.8.   

Litigation

     63       5.9.   

Environmental

     64       5.10.   

Disclosure Updates

     64       5.11.   

Subsidiaries

     64       5.12.   

Further Assurances

     65       5.13.   

[Reserved.]

     66       5.14.   

[Reserved.]

     66       5.15.   

Locations of Chief Executive Offices

     66       5.16.   

Notice to Agents

     66   

6.

  

NEGATIVE COVENANTS

     66       6.1.   

Indebtedness

     66       6.2.   

Liens

     67       6.3.   

Merger, Consolidation, Amalgamation, Permitted Acquisitions

     67       6.4.   

Transfer of Assets

     67       6.5.   

Change Name

     67       6.6.   

Reserved

     68   

 

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TABLE OF CONTENTS

(continued)

 

          Page      6.7.   

Senior Unsecured Notes; Amendments

     68       6.8.   

Sale and Leasebacks

     68       6.9.   

Restricted Payments

     68       6.10.   

Accounting Methods

     69       6.11.   

Investments; Controlled Investments

     69       6.12.   

Transactions with Affiliates

     70       6.13.   

Use of Proceeds

     70       6.14.   

Limitation on Issuance of Equity Interests

     71       6.15.   

Canadian Employee Plan

     71   

7.

  

FINANCIAL COVENANTS

     71   

8.

  

EVENTS OF DEFAULT

     71   

9.

  

RIGHTS AND REMEDIES

     73       9.1.   

Rights and Remedies

     73       9.2.   

Remedies Cumulative

     74   

10.

  

WAIVERS; INDEMNIFICATION

     74       10.1.   

Demand; Protest; etc.

     74       10.2.   

The Lender Group’s Liability for Collateral

     74       10.3.   

Indemnification

     74   

11.

  

NOTICES

     75   

12.

  

CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE PROVISION

     77   

13.

  

ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS

     81       13.1.   

Assignments and Participations

     81       13.2.   

Successors

     84   

14.

  

AMENDMENTS; WAIVERS

     85       14.1.   

Amendments and Waivers

     85       14.2.   

Replacement of Certain Lenders

     87       14.3.   

No Waivers; Cumulative Remedies

     87   

15.

  

AGENTS; THE LENDER GROUP

     88       15.1.   

Appointment and Authorization of Agent

     88   

 

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TABLE OF CONTENTS

(continued)

 

          Page      15.2.   

Delegation of Duties

     89       15.3.   

Liability of Agent

     89       15.4.   

Reliance by Agents

     89       15.5.   

Notice of Default or Event of Default

     90       15.6.   

Credit Decision

     90       15.7.   

Costs and Expenses; Indemnification

     91       15.8.   

Agent in Individual Capacity

     92       15.9.   

Successor Agent

     92       15.10.   

Lender in Individual Capacity

     93       15.11.   

Collateral Matters

     93       15.12.   

Restrictions on Actions by Lenders; Sharing of Payments

     95       15.13.   

Agency for Perfection

     96       15.14.   

Payments by Agents to the Lenders

     96       15.15.   

Concerning the Collateral and Related Loan Documents

     96       15.16.   

Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other
Reports and Information

     96       15.17.   

Several Obligations; No Liability

     98   

16.

   WITHHOLDING TAXES      98   

17.

   GENERAL PROVISIONS      102       17.1.   

Effectiveness

     102       17.2.   

Section Headings

     102       17.3.   

Interpretation

     103       17.4.   

Severability of Provisions

     103       17.5.   

Bank Product Providers

     103       17.6.   

Debtor-Creditor Relationship

     104       17.7.   

Counterparts; Electronic Execution

     104       17.8.   

Revival and Reinstatement of Obligations

     104       17.9.   

Confidentiality

     105       17.10.   

Lender Group Expenses

     106       17.11.   

Survival

     106   

 

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TABLE OF CONTENTS

(continued)

 

          Page     

17.12.

  

Patriot Act; Anti Money Laundering Legislation

     106      

17.13.

  

Integration

     107      

17.14.

  

Determinations; Judgment Currency

     108   

 

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EXHIBITS AND SCHEDULES

 

Exhibit A-1    Form of Assignment and Acceptance Exhibit B-1    Form of
Borrowing Base Certificate Exhibit C-1    Form of Compliance Certificate Exhibit
D    Form of Seller Subordinated Note Subordination Agreement Exhibit L-1   
Form of LIBOR Notice Schedule A-1    Agent’s Account Schedule A-2    Authorized
Persons Schedule C-1    Commitments Schedule D-1    Designated Account Schedule
E    Existing Letters of Credit Schedule P-1    Permitted Investments Schedule
1.1    Definitions Schedule 3.1    Conditions Precedent Schedule 3.6   
Conditions Subsequent Schedule 4.1(a)    Jurisdictions of Organization Schedule
4.1(b)    Capitalization of Borrower’s Subsidiaries Schedule 4.7(A)   
Litigation Search Results Schedule 4.7    Litigation Schedule 4.12   
Environmental Matters Schedule 4.24    Employee and Labor Matters Schedule 4.27
   Fictitious Names Schedule 4.31    Locations of Inventory and Equipment and
Chief Executive Offices Schedule 4.33    Real Property Schedule 5.2   
Collateral Reporting Schedule 6.1    Existing Indebtedness Schedule 6.2   
Permitted Liens

 

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CREDIT AGREEMENT

THIS CREDIT AGREEMENT (this “Agreement”), is entered into as of January 27,
2012, by and among the lenders identified on the signature pages hereof (each of
such lenders, together with their respective successors and permitted assigns,
are referred to hereinafter as a “Lender”, as that term is hereinafter further
defined), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking
association, as administrative agent for the US Lenders (in such capacity,
together with its successors and assigns in such capacity, “US Agent”), WELLS
FARGO CAPITAL FINANCE CORPORATION CANADA, an Ontario Corporation, as
administrative agent for the Canadian Lenders (in such capacity, together with
its successors and assigns in such capacity, “Canadian Agent”) and AMERICAN
REPROGRAPHICS COMPANY, a Delaware corporation (“US Borrower”), ARC REPROGRAPHICS
CANADA CORP., a British Columbia corporation (“ARC Canada”) and ARC DIGITAL
CANADA CORP., a British Columbia corporation (“ARC Digital Canada”); and
together with ARC Canada, “Canadian Borrowers”), US Borrower and Canadian
Borrowers are collectively referred to as “Borrowers”).

The parties agree as follows:

 

1. DEFINITIONS AND CONSTRUCTION.

1.1. Definitions.

Capitalized terms used in this Agreement shall have the meanings specified
therefor on Schedule 1.1.

1.2. Accounting Terms.

All accounting terms not specifically defined herein shall be construed in
accordance with GAAP; provided, however, that if Borrowers notify Agent that
Borrowers request an amendment to any provision hereof to eliminate the effect
of any Accounting Change occurring after the Closing Date or in the application
thereof on the operation of such provision (or if Agent notifies Borrowers that
the Required Lenders request an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before or after such
Accounting Change or in the application thereof, then Agent and Borrowers agree
that they will negotiate in good faith amendments to the provisions of this
Agreement that are directly affected by such Accounting Change with the intent
of having the respective positions of the Lenders and Borrowers after such
Accounting Change conform as nearly as possible to their respective positions as
of the date of this Agreement and, until any such amendments have been agreed
upon and agreed to by the Required Lenders, the provisions in this Agreement
shall be calculated as if no such Accounting Change had occurred. When used
herein, the term “financial statements” shall include the notes and schedules
thereto. Whenever the term “Borrowers” is used in respect of a financial
covenant or a related definition, it shall be understood to mean US Borrower and
its Subsidiaries on a consolidated basis, unless the context clearly requires
otherwise.

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1.3. Code; PPSA.

Any terms used in this Agreement that are defined in (a) the Code shall be
construed and defined as set forth in the Code unless otherwise defined herein;
provided, however, that to the extent that the Code is used to define any term
herein and such term is defined differently in different Articles of the Code,
the definition of such term contained in Article 9 of the Code shall govern and
(b) the PPSA (which shall include the Civil Code of Quebec) shall be construed
and defined as set forth in the PPSA unless defined in the Code or otherwise
defined herein. Notwithstanding the foregoing, and where the context so
requires, (i) any term defined in this Agreement by reference to the “Code”, the
“UCC” or the “Uniform Commercial Code” shall also have any extended, alternative
or analogous meaning given to such term in the PPSA, the Bills of Exchange Act
(Canada) and the Depository Bills and Notes Act (Canada)), in all cases for the
extension, preservation or betterment of the security and rights of the Agent,
(ii) all references in this Agreement to “Article 8” shall be deemed to refer
also to applicable Canadian securities transfer laws (including, without
limitation, the Securities Transfer Act (British Columbia), Securities Transfer
Act, 2006 (Ontario), Securities Transfer Act (Alberta) and an Act Representing
the Transfer of Securities and the Establishment of Security Entitlements
(Quebec)), and (iii) all references in this Agreement to a financing statement,
continuation statement, amendment or termination statement shall be deemed to
refer also to the analogous documents used under applicable Canadian personal
property security laws.

1.4. Construction.

Unless the context of this Agreement or any other Loan Document clearly requires
otherwise, references to the plural include the singular, references to the
singular include the plural, the terms “includes” and “including” are not
limiting, and the term “or” has, except where otherwise indicated, the inclusive
meaning represented by the phrase “and/or.” The words “hereof,” “herein,”
“hereby,” “hereunder,” and similar terms in this Agreement or any other Loan
Document refer to this Agreement or such other Loan Document, as the case may
be, as a whole and not to any particular provision of this Agreement or such
other Loan Document, as the case may be. Section, subsection, clause, schedule,
and exhibit references herein are to this Agreement unless otherwise specified.
Any reference in this Agreement or in any other Loan Document to any agreement,
instrument, or document shall include all alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements, thereto and thereof, as applicable (subject to any restrictions on
such alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein). The
words “asset” and “property” shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties. Any reference herein or in any other Loan Document to the
satisfaction, repayment, or payment in full of the Obligations shall mean the
repayment in full in cash or immediately available funds (or, (a) in the case of
contingent reimbursement obligations with respect to Letters of Credit,
providing Letter of Credit Collateralization, and (b) in the case of obligations
with respect to Bank Products (other than Hedge Obligations), providing Bank
Product Collateralization) of all of the Obligations (including the payment of
any Lender

 

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Group Expenses that have accrued irrespective of whether demand has been made
therefor and the payment of any termination amount then applicable (or which
would or could become applicable as a result of the repayment of the other
Obligations) under Hedge Agreements provided by Hedge Providers) other than
(i) unasserted contingent indemnification Obligations, (ii) any Bank Product
Obligations (other than Hedge Obligations) that, at such time, are allowed by
the applicable Bank Product Provider to remain outstanding without being
required to be repaid or cash collateralized, and (iii) any Hedge Obligations
that, at such time, are allowed by the applicable Hedge Provider to remain
outstanding without being required to be repaid. Any reference herein to any
Person shall be construed to include such Person’s successors and assigns. Any
requirement of a writing contained herein or in any other Loan Document shall be
satisfied by the transmission of a Record.

1.5. Schedules and Exhibits.

All of the schedules and exhibits attached to this Agreement shall be deemed
incorporated herein by reference.

 

2. LOAN AND TERMS OF PAYMENT.

2.1. Revolver Advances.

(a) Subject to the terms and conditions of this Agreement, and during the term
of this Agreement, (i) each Lender with a US Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make revolving loans (“US
Advances”) to US Borrower in an amount at any one time outstanding not to exceed
the lesser of:

(A) such Lender’s US Revolver Commitment, or

(B) such Lender’s Pro Rata Share of an amount equal to the lesser of:

(x) the Maximum US Revolver Amount less the sum of (1) the US Letter of Credit
Usage at such time, plus (2) the principal amount of US Swing Loans outstanding
at such time, and

(y) the US Borrowing Base at such time less the sum of (1) the US Letter of
Credit Usage at such time, plus (2) the principal amount of US Swing Loans
outstanding at such time,

and (ii) each Lender with a Canadian Revolver Commitment agrees (severally, not
jointly or jointly and severally) to make revolving loans (“Canadian Advances”)
to Canadian Borrowers in an aggregate amount at any one time outstanding not to
exceed the lesser of:

(A) such Lender’s Canadian Revolver Commitment, or

(B) such Lender’s Pro Rata Share of an amount equal to the lesser of:

 

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(x) the Maximum Canadian Revolver Amount less the sum of (1) the Canadian Letter
of Credit Usage at such time, plus (2) the principal amount of Canadian Swing
Loans outstanding at such time, and

(y) the Canadian Borrowing Base at such time less the sum of (1) the Canadian
Letter of Credit Usage at such time, plus (2) the principal amount of Canadian
Swing Loans outstanding at such time;

provided, that in no event shall the aggregate Dollar Equivalent of the US
Advances and the Canadian Advances (the “Advances”) exceed the Maximum Revolver
Amount.

(b) Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to
the terms and conditions of this Agreement, reborrowed at any time during the
term of this Agreement. The outstanding principal amount of the Advances,
together with interest accrued and unpaid thereon, shall be due and payable on
the Maturity Date or, if earlier, on the date on which they are declared due and
payable pursuant to the terms of this Agreement.

(c) Anything to the contrary in Section 2.1(a) or Section 2.1(b)
notwithstanding, US Agent shall have the right (but not the obligation) to
establish, increase, reduce, eliminate, or otherwise adjust reserves from time
to time against the US Borrowing Base (or any component thereof) or the Maximum
US Revolver Amount and Canadian Agent shall have the right (but not the
obligation) to establish, increase, reduce, eliminate, or otherwise adjust
reserves from time to time against the Canadian Borrowing Base (or any component
thereof) or the Maximum Canadian Revolver Amount (including Canadian Inventory
Reserves and Canadian Priority Payables Reserves) in such amounts, and with
respect to such matters, as such Agent in its Permitted Discretion shall deem
necessary or appropriate, including (i) reserves in an amount equal to the US
Bank Product Reserve Amount and the Canadian Bank Product Reserve Amount,
respectively, (ii) reserves with respect to (A) sums that Loan Parties are
required to pay under this Agreement or any other Loan Document (such as taxes,
assessments, insurance premiums, or, in the case of leased assets, rents or
other amounts payable under such leases) and, subject to Section 5.5 has failed
to pay when due, and (B) amounts owing by Loan Parties to any Person to the
extent secured by a Lien on, or trust over, any of the Collateral (other than a
Permitted Lien which is a permitted purchase money Lien or the interest of a
lessor under a Capital Lease), which Lien or trust, in the Permitted Discretion
of such Agent likely would have a priority superior to such Agent’s Liens (such
as Liens or trusts in favor of landlords, warehousemen, carriers, mechanics,
materialmen, laborers, or suppliers, or Liens or trusts for ad valorem, excise,
sales, or other taxes where given priority under applicable law) in and to such
item of the Collateral and (iii) currency rate fluctuations. Notwithstanding the
foregoing, until a Borrowing Base Trigger Date has occurred, reserves shall be
limited to the matters described in clauses (i) through (iii) above, plus, with
respect to the Canadian Borrowing Base, Maximum Canadian Revolver Amount and
Maximum Revolving Amount, the Canadian Inventory Reserves and Canadian Priority
Payables Reserves. In addition, whether before or after the occurrence of the
Borrowing Base Trigger Date, the amount of any reserve established by an Agent
(x) shall have a reasonable relationship to the event, condition or

 

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other matter which is the basis for such reserve as determined by such Agent in
good faith in its Permitted Discretion and (y) shall not be duplicative of other
reserves then in effect. No reserve shall be established against the Maximum
Revolver Amount, the Maximum US Revolver Amount or the Maximum Canadian Revolver
Amount unless such reserve is also established against the US Borrowing Base or
Canadian Borrowing Base, as applicable.

2.2. Revolver Increase.

Borrowers may, by written notice by Borrowers to Agent (whereupon Agent shall
promptly deliver a copy to each of the Lenders), request that the amount of the
Maximum Revolver Amount be increased by an amount of up to $10,000,000 (any such
increase, a “Revolver Increase”), with increases attributed to the Maximum
Canadian Revolver Amount and the Maximum US Revolver Amount as requested by
Borrowers; provided, that no such Revolver Increase shall be made if (i) at the
time that such Revolver Increase is to be made (and after giving effect thereto)
a Default or Event of Default shall exist or would occur as a result of such
Revolver Increase, (ii) Borrowers are not in compliance with the financial
covenants set forth in Section 7 as of the most recent month-end on a pro forma
basis after giving effect to such increase, whether or not such covenants are
then in effect, or (iii) the applicable Agent(s) has or have not received
additional Revolver Commitments (reasonably satisfactory to such Agent) from
Lenders (or their Affiliates) or other Persons reasonably acceptable to such
Agent to provide the requested Revolver Increase. Any such Revolver Increase
shall be in a minimum aggregate amount of $5,000,000 and the aggregate amount of
all Revolver Increases shall not exceed $10,000,000. No Revolver Increases may
be requested or made after the three year anniversary of the Closing Date.
Notwithstanding anything to the contrary herein, no Lender shall have any
obligation to increase its Revolver Commitment to provide all or any portion of
a Revolver Increase. The notice from Borrowers pursuant to this Section shall
set forth the requested amount and allocation to the Maximum Canadian Revolver
Amount and/or Maximum US Revolver Amount of such Revolver Increase. If
Borrowers’ request for the Revolver Increase satisfies all of the terms and
conditions set forth herein, the applicable Agent(s) shall notify Borrowers and
each Lender of the date such Revolver Increase is to be made, which date shall
be on or after delivery to Agents of each of the following documents: (1) a
joinder agreement signed by a duly authorized representative of any Person that
becomes a Lender, (2) an officers’ certificate of each Borrower, in form and
substance reasonably acceptable to Agent, confirming compliance with all
conditions precedent set forth herein; (3) an amendment to this Agreement, as
appropriate, and the other Loan Documents, to effectuate the terms of this
Section and the Revolver Increase, executed by Borrowers, each Lender, and
Agents; and (4) any other customary documents (including, if requested by
Agents, opinions of counsel) reasonably requested by Agents, in each case all in
form and substance reasonably acceptable to Agents (it being understood and
agreed that, notwithstanding Section 14.1, any such amendments and supplements
shall be effective without further consent of any Lender).

 

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2.3. Borrowing Procedures and Settlements.

(a) Procedure for Borrowing.

(i) Each US Borrowing shall be made by a written request by an Authorized Person
of US Borrower delivered to US Agent. Unless US Swing Lender is not obligated to
make a US Swing Loan pursuant to Section 2.3(b) below, such notice must be
received by US Agent no later than 10:00 a.m. (California time) on the Business
Day that is the requested Funding Date specifying (i) the amount of such US
Borrowing, and (ii) the requested Funding Date, which shall be a Business Day;
provided, however, that if US Swing Lender is not obligated to make a US Swing
Loan as to a requested US Borrowing, such notice must be received by US Agent no
later than 10:00 a.m. (California time) on the Business Day prior to the date
that is the requested Funding Date. At US Agent’s election, in lieu of
delivering the above-described written request, any Authorized Person of US
Borrower may give US Agent telephonic notice of such request by the required
time. In such circumstances, each US Borrower agrees that any such telephonic
notice will be confirmed in writing within 24 hours of the giving of such
telephonic notice, but the failure to provide such written confirmation shall
not affect the validity of the request.

(ii) Each Canadian Borrowing shall be made by a written request by an Authorized
Person delivered to Canadian Agent. Unless Canadian Swing Lender is not
obligated to make a Canadian Swing Loan pursuant to Section 2.3(b) below, such
notice must be received by Canadian Agent no later than 10:00 a.m. (California
time) on the Business Day that is the requested Funding Date specifying (i) the
amount of such Canadian Borrowing, and (ii) the requested Funding Date, which
shall be a Business Day; provided, however, that if Canadian Swing Lender is not
obligated to make a Canadian Swing Loan as to a requested Canadian Borrowing,
such notice must be received by Canadian Agent no later than 10:00 a.m.
(California time) on the Business Day prior to the date that is the requested
Funding Date. At Canadian Agent’s election, in lieu of delivering the
above-described written request, any Authorized Person of a Canadian Borrower
may give Canadian Agent telephonic notice of such request by the required time.
In such circumstances, each Canadian Borrower agrees that any such telephonic
notice will be confirmed in writing within 24 hours of the giving of such
telephonic notice, but the failure to provide such written confirmation shall
not affect the validity of the request.

(b) Making of Swing Loans.

(i) In the case of a request for a US Advance and so long as either (i) the
aggregate amount of US Swing Loans made since the last Settlement Date, minus
the amount of Collections or payments applied to US Swing Loans since the last
Settlement Date, plus the amount of the requested US Advance does not exceed 10%
of the Maximum Revolver Amount, or (ii) US Swing Lender, in its sole discretion,
shall agree to make a US Swing Loan notwithstanding the foregoing limitation, US
Swing Lender shall make a US Advance in the amount of such requested US
Borrowing (any such US Advance made solely by US Swing Lender pursuant to this
Section 2.3(b)(i) being referred to as a “US Swing Loan” and such Advances being
referred to as “US Swing Loans”) available to US Borrower

 

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on the Funding Date applicable thereto by transferring immediately available
funds to the US Designated Account. Anything contained herein to the contrary
notwithstanding, the US Swing Lender may, but shall not be obligated to, make US
Swing Loans at any time that one or more of the Lenders is a Defaulting Lender.
Each US Swing Loan shall be deemed to be a US Advance hereunder and shall be
subject to all the terms and conditions (including Section 3) applicable to
other Advances, except that all payments on any US Swing Loan shall be payable
to US Swing Lender solely for its own account. Subject to the provisions of
Section 2.3(d)(ii), US Swing Lender shall not make and shall not be obligated to
make any US Swing Loan if US Swing Lender has actual knowledge that (i) one or
more of the applicable conditions precedent set forth in Section 3 will not be
satisfied on the requested Funding Date for the applicable US Borrowing, or
(ii) the requested US Borrowing would exceed the US Availability on such Funding
Date. US Swing Lender shall not otherwise be required to determine whether the
applicable conditions precedent set forth in Section 3 have been satisfied on
the Funding Date applicable thereto prior to making any US Swing Loan. The US
Swing Loans shall be secured by US Agent’s Liens, constitute US Advances and US
Obligations hereunder, and bear interest at the rate applicable from time to
time to US Advances that are Base Rate Loans.

(ii) In the case of a request for a Canadian Advance and so long as either
(i) the aggregate amount of Canadian Swing Loans made since the last Settlement
Date, minus the amount of Collections or payments applied to Canadian Swing
Loans since the last Settlement Date, plus the amount of the requested Canadian
Advance does not exceed 10% of the Maximum Revolver Amount, or (ii) Canadian
Swing Lender, in its sole discretion, shall agree to make a Canadian Swing Loan
notwithstanding the foregoing limitation, Canadian Swing Lender shall make a
Canadian Advance in the amount of such requested Canadian Borrowing (any such
Canadian Advance made solely by Canadian Swing Lender pursuant to this
Section 2.3(b)(ii) being referred to as a “Canadian Swing Loan” and such
Canadian Advances being referred to as “Canadian Swing Loans”) available to
Canadian Borrowers on the Funding Date applicable thereto by transferring
immediately available funds to the Canadian Designated Account. Anything
contained herein to the contrary notwithstanding, the Canadian Swing Lender may,
but shall not be obligated to, make Canadian Swing Loans at any time that one or
more of the Lenders is a Defaulting Lender. Each Canadian Swing Loan shall be
deemed to be a Canadian Advance hereunder and shall be subject to all the terms
and conditions (including Section 3) applicable to other Advances, except that
all payments on any Canadian Swing Loan shall be payable to Canadian Swing
Lender solely for its own account. Subject to the provisions of
Section 2.3(d)(ii), Canadian Swing Lender shall not make and shall not be
obligated to make any Canadian Swing Loan if Canadian Swing Lender has actual
knowledge that (i) one or more of the applicable conditions precedent set forth
in Section 3 will not be satisfied on the requested Funding Date for the
applicable Canadian Borrowing, or (ii) the requested Canadian Borrowing would
exceed the Canadian Availability on such Funding Date. Canadian Swing Lender
shall not otherwise be required to determine whether the applicable conditions
precedent set forth in Section 3 have been satisfied on the Funding Date
applicable thereto prior to making any Canadian Swing Loan. The Canadian Swing
Loans shall be secured by Canadian Agent’s Liens, constitute Canadian Advances
and Canadian Obligations hereunder, and bear interest at the rate applicable
from time to time to Canadian Advances that are Base Rate Loans.

 

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(c) Making of Loans.

(i) In the event that US Swing Lender is not obligated to make a US Swing Loan,
then promptly after receipt of a request for a US Borrowing pursuant to
Section 2.3(a)(i), Agent shall notify the Lenders, not later than 1:00 p.m.
(California time) on the Business Day immediately preceding the Funding Date
applicable thereto, by telecopy, telephone, or other similar form of
transmission, of the requested US Borrowing. Each Lender having a US Revolver
Commitment shall make the amount of such Lender’s Pro Rata Share of the
requested US Borrowing available to US Agent in immediately available funds, to
US Agent’s Account, not later than 10:00 a.m. (California time) on the Funding
Date applicable thereto. After US Agent’s receipt of the proceeds of such US
Advances, US Agent shall make the proceeds thereof available to US Borrower on
the applicable Funding Date by transferring immediately available funds equal to
such proceeds received by US Agent to the US Designated Account; provided,
however, that, subject to the provisions of Section 2.3(d)(ii), Agent shall not
request any Lender to make any US Advance if it has knowledge that, and no
Lender shall have the obligation to make any US Advance, if (1) one or more of
the applicable conditions precedent set forth in Section 3 will not be satisfied
on the requested Funding Date for the applicable US Borrowing unless such
condition has been waived, or (2) the requested US Borrowing would exceed the US
Availability on such Funding Date. In the event that Canadian Swing Lender is
not obligated to make a Canadian Swing Loan, then promptly after receipt of a
request for a Canadian Borrowing pursuant to Section 2.3(a)(ii), Canadian Agent
shall notify the Lenders, not later than 1:00 p.m. (California time) on the
Business Day immediately preceding the Funding Date applicable thereto, by
telecopy, telephone, or other similar form of transmission, of the requested
Canadian Borrowing. Each Lender having a Canadian Revolver Commitment shall make
the amount of such Lender’s Pro Rata Share of the requested Canadian Borrowing
available to Canadian Agent in immediately available funds, to Canadian Agent’s
Account, not later than 10:00 a.m. (California time) on the Funding Date
applicable thereto. After Canadian Agent’s receipt of the proceeds of such
Canadian Advances, Canadian Agent shall make the proceeds thereof available to
the applicable Canadian Borrower on the applicable Funding Date by transferring
immediately available funds equal to such proceeds received by Canadian Agent to
the Canadian Designated Account; provided, however, that, subject to the
provisions of Section 2.3(d)(ii), Canadian Agent shall not request any Lender to
make any Canadian Advance if it has knowledge that, and no Lender shall have the
obligation to make any Canadian Advance, if (1) one or more of the applicable
conditions precedent set forth in Section 3 will not be satisfied on the
requested Funding Date for the applicable Canadian Borrowing unless such
condition has been waived, or (2) the requested Canadian Borrowing would exceed
the Canadian Availability on such Funding Date.

(ii) Unless an Agent receives notice from a Lender prior to 9:00 a.m.
(California time) on the date of a Borrowing, that such Lender will not make
available as and when required hereunder to such Agent for the account of the
applicable Borrower the amount of that Lender’s Pro Rata Share of the Borrowing,
each Agent may

 

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assume that each Lender has made or will make such amount available to such
Agent in immediately available funds on the Funding Date and each Agent may (but
shall not be so required), in reliance upon such assumption, make available to
the applicable Borrowers on such date a corresponding amount. If any Lender
shall not have made its full amount available to the applicable Agent in
immediately available funds and if such Agent in such circumstances has made
available to the applicable Borrower such amount, that Lender shall on the
Business Day following such Funding Date make such amount available to such
Agent, together with interest at the Defaulting Lender Rate for each day during
such period. A notice submitted by Agent to any Lender with respect to amounts
owing under this Section 2.3(c)(ii) shall be conclusive, absent manifest error.
If such amount is so made available, such payment to such Agent shall constitute
such Lender’s Advance on the date of the Borrowing for all purposes of this
Agreement. If such amount is not made available to such Agent on the Business
Day following the Funding Date, such Agent will notify the applicable Borrowers
of such failure to fund and, upon demand by such Agent, the applicable Borrowers
shall pay such amount to such Agent for such Agent’s account, together with
interest thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the interest rate applicable at the time to the Advances
composing such Borrowing.

(d) Protective Advances and Optional Overadvances.

(i) Any contrary provision of this Agreement or any other Loan Document
notwithstanding, US Agent hereby is authorized by US Borrower and the Lenders,
from time to time in US Agent’s sole discretion, (A) after the occurrence and
during the continuance of a Default or an Event of Default, or (B) at any time
that any of the other applicable conditions precedent set forth in Section 3 are
not satisfied, to make US Advances to, or for the benefit of, US Borrower on
behalf of the Lenders that US Agent, in its Permitted Discretion deems necessary
or desirable (1) to preserve or protect the Collateral, or any portion thereof,
or (2) to enhance the likelihood of repayment of the Obligations (other than the
Bank Product Obligations) (any of the Advances described in this
Section 2.3(d)(i) shall be referred to as “US Protective Advances”). Any
contrary provision of this Agreement or any other Loan Document notwithstanding,
Canadian Agent hereby is authorized by each Canadian Borrower and the Lenders,
from time to time in Canadian Agent’s sole discretion, (A) after the occurrence
and during the continuance of a Default or an Event of Default, or (B) at any
time that any of the other applicable conditions precedent set forth in
Section 3 are not satisfied, to make Canadian Advances to, or for the benefit
of, any Canadian Borrower on behalf of the Lenders that Canadian Agent, in its
Permitted Discretion deems necessary or desirable (1) to preserve or protect the
Collateral, or any portion thereof, or (2) to enhance the likelihood of
repayment of the Canadian Obligations (other than the Canadian Bank Product
Obligations) (any of the Canadian Advances described in this Section 2.3(d)(i)
shall be referred to as “Canadian Protective Advances”).

(ii) Any contrary provision of this Agreement or any other Loan Document
notwithstanding, the Lenders hereby authorize US Agent or US Swing Lender, as
applicable, and either US Agent or US Swing Lender, as applicable, may, but is
not obligated to, knowingly and intentionally, continue to make US Advances
(including US Swing Loans) to US Borrower notwithstanding that a US Overadvance
exists or would be created thereby,

 

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so long as (A) after giving effect to such Advances, the outstanding US Revolver
Usage does not exceed the US Borrowing Base by more than 10% of the Maximum US
Revolver Amount, and (B) after giving effect to such US Advances, the
outstanding US Revolver Usage (except for and excluding amounts charged to the
US Loan Account for interest, fees, or Lender Group Expenses) does not exceed
the Maximum US Revolver Amount. In the event US Agent obtains actual knowledge
that the US Revolver Usage exceeds the amounts permitted by the immediately
foregoing provisions, regardless of the amount of, or reason for, such excess,
US Agent shall notify the Lenders as soon as practicable (and prior to making
any (or any additional) intentional US Overadvances (except for and excluding
amounts charged to the US Loan Account for interest, fees, or Lender Group
Expenses) unless US Agent determines that prior notice would result in imminent
harm to the Collateral or its value, in which case US Agent may make such US
Overadvances and provide notice as promptly as practicable thereafter), and the
Lenders with US Revolver Commitments thereupon shall, together with US Agent,
jointly determine the terms of arrangements that shall be implemented with US
Borrower intended to reduce, within a reasonable time, the outstanding principal
amount of the US Advances to US Borrower to an amount permitted by the preceding
sentence. In such circumstances, if any Lender with a US Revolver Commitment
objects to the proposed terms of reduction or repayment of any US Overadvance,
the terms of reduction or repayment thereof shall be implemented according to
the determination of the Required Lenders. In any event: (x) if any
unintentional US Overadvance remains outstanding for more than 30 days, unless
otherwise agreed to by the Required Lenders, US Borrower shall immediately repay
US Advances in an amount sufficient to eliminate all such unintentional US
Overadvances, and (y) after the date all such US Overadvances have been
eliminated, there must be at least 5 consecutive days before intentional US
Overadvances are made. The foregoing provisions are meant for the benefit of the
Lenders and US Agent and are not meant for the benefit of Borrowers, which shall
continue to be bound by the provisions of Section 2.5. Each Lender with a US
Revolver Commitment shall be obligated to settle with US Agent as provided in
Section 2.3(e) for the amount of such Lender’s Pro Rata Share of any
unintentional US Overadvances by US Agent reported to such Lender, any
intentional US Overadvances made as permitted under this Section 2.3(d)(ii), and
any US Overadvances resulting from the charging to the US Loan Account of
interest, fees, or Lender Group Expenses. Any contrary provision of this
Agreement or any other Loan Document notwithstanding, the Lenders hereby
authorize Canadian Agent or Canadian Swing Lender, as applicable, and either
Canadian Agent or Canadian Swing Lender, as applicable, may, but is not
obligated to, knowingly and intentionally, continue to make Canadian Advances
(including Canadian Swing Loans) to Canadian Borrowers notwithstanding that a
Canadian Overadvance exists or would be created thereby, so long as (A) after
giving effect to such Canadian Advances, the outstanding Canadian Revolver Usage
does not exceed the Canadian Borrowing Base by more than 10% of the Maximum
Canadian Revolver Amount, and (B) after giving effect to such Canadian Advances,
the outstanding Canadian Revolver Usage (except for and excluding amounts
charged to the Canadian Loan Account for interest, fees, or Lender Group
Expenses) does not exceed the Maximum Canadian Revolver Amount. In the event
Canadian Agent obtains actual knowledge that the Canadian Revolver Usage exceeds
the amounts permitted by the immediately foregoing provisions, regardless of the
amount of, or

 

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reason for, such excess, Canadian Agent shall notify the Lenders as soon as
practicable (and prior to making any (or any additional) intentional Canadian
Overadvances (except for and excluding amounts charged to the Canadian Loan
Account for interest, fees, or Lender Group Expenses) unless Canadian Agent
determines that prior notice would result in imminent harm to the Collateral or
its value, in which case Canadian Agent may make such Canadian Overadvances and
provide notice as promptly as practicable thereafter), and the Lenders with
Canadian Revolver Commitments thereupon shall, together with Canadian Agent,
jointly determine the terms of arrangements that shall be implemented with
Canadian Borrowers intended to reduce, within a reasonable time, the outstanding
principal amount of the Canadian Advances to Canadian Borrowers or any
individual Canadian Borrower to an amount permitted by the preceding sentence.
In such circumstances, if any Lender with a Canadian Revolver Commitment objects
to the proposed terms of reduction or repayment of any Canadian Overadvance, the
terms of reduction or repayment thereof shall be implemented according to the
determination of the Required Lenders. In any event: (x) if any unintentional
Canadian Overadvance remains outstanding for more than 30 days, unless otherwise
agreed to by the Required Lenders, the applicable Canadian Borrower(s) shall
immediately repay Canadian Advances in an amount sufficient to eliminate all
such unintentional Canadian Overadvances, and (y) after the date all such
Canadian Overadvances have been eliminated, there must be at least 5 consecutive
days before intentional Canadian Overadvances are made. The foregoing provisions
are meant for the benefit of the Lenders and Canadian Agent and are not meant
for the benefit of Borrowers, which shall continue to be bound by the provisions
of Section 2.5. Each Lender with a Canadian Revolver Commitment shall be
obligated to settle with Canadian Agent as provided in Section 2.3(e) for the
amount of such Lender’s Pro Rata Share of any unintentional Canadian
Overadvances by Canadian Agent reported to such Lender, any intentional Canadian
Overadvances made as permitted under this Section 2.3(d)(ii), and any Canadian
Overadvances resulting from the charging to the Canadian Loan Account of
interest, fees, or Lender Group Expenses.

(iii) Each Protective Advance and each Overadvance shall be deemed to be an
Advance hereunder, except that no Protective Advance or Overadvance shall be
eligible to be a LIBOR Rate Loan and, prior to Settlement therefor, all payments
on the Protective Advances shall be payable to the applicable Agent solely for
its own account. The US Protective Advances and US Overadvances shall be
repayable on demand, secured by US Agent’s Liens, constitute US Obligations
hereunder, and bear interest at the rate applicable from time to time to US
Advances that are Base Rate Loans. The Canadian Protective Advances and Canadian
Overadvances shall be repayable on demand, secured by Canadian Agent’s Liens,
constitute Canadian Obligations hereunder, and bear interest at the rate
applicable from time to time to Canadian Advances that are Base Rate Loans. The
ability of an Agent to make Protective Advances is separate and distinct from
its ability to make Overadvances and its ability to make Overadvances is
separate and distinct from its ability to make Protective Advances. For the
avoidance of doubt, the limitations on each Agent’s ability to make Protective
Advances do not apply to Overadvances and the limitations on each Agent’s
ability to make Overadvances do not apply to Protective Advances. The provisions
of this Section 2.3(d) are for the exclusive benefit of Agents, Swing Lenders,
and the Lenders and are not intended to benefit Borrowers in any way.

 

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(e) Settlement. It is agreed that each Lender’s funded portion of the Advances
to the applicable Borrower(s) is intended by the Lenders to equal, at all times,
such Lender’s Pro Rata Share of the outstanding Advances to the applicable
Borrower(s). Such agreement notwithstanding, Agents, Swing Lenders, and the
other Lenders agree (which agreement shall not be for the benefit of Borrowers)
that in order to facilitate the administration of this Agreement and the other
Loan Documents, settlement among the Lenders as to the Advances, the Swing
Loans, and the Protective Advances shall take place on a periodic basis in
accordance with the following provisions:

(i) Each Agent shall request settlement (“Settlement”) with the Lenders on a
weekly basis, or on a more frequent basis if so determined by any Agent (1) on
behalf of the applicable Swing Lender, with respect to the outstanding Swing
Loans of such Swing Lender, (2) for itself, with respect to the outstanding
Protective Advances or Overadvances, and (3) with respect to each Borrower’s or
its Domestic Subsidiaries’ Collections or payments received, as to each by
notifying the Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 2:00 p.m. (California
time) on the Business Day immediately prior to the date of such requested
Settlement (the date of such requested Settlement being the “Settlement Date”).
Such notice of a Settlement Date shall include a summary statement of the amount
of outstanding Advances, Swing Loans, Overadvances, and Protective Advances with
respect to the applicable Borrower(s) for the period since the prior Settlement
Date. Subject to the terms and conditions contained herein (including
Section 2.3(g)): (y) if the amount of the Advances (including Swing Loans,
Overadvances, and Protective Advances) to the applicable Borrower(s) made by a
Lender that is not a Defaulting Lender exceeds such Lender’s Pro Rata Share of
the Advances (including Swing Loans, Overadvances, and Protective Advances) to
such Borrower(s) as of a Settlement Date, then the applicable Agent shall, by no
later than 12:00 p.m. (California time) on the Settlement Date, transfer in
immediately available funds to a Deposit Account of such Lender (as such Lender
may designate), an amount such that each such Lender shall, upon receipt of such
amount, have as of the Settlement Date, its Pro Rata Share of the Advances
(including Swing Loans, Overadvances, and Protective Advances) to the applicable
Borrower(s), and (z) if the amount of the Advances (including Swing Loans,
Overadvances, and Protective Advances) to the applicable Borrower(s) made by a
Lender is less than such Lender’s Pro Rata Share of the Advances (including
Swing Loans, Overadvances, and Protective Advances) made to the applicable
Borrower(s) as of a Settlement Date, such Lender shall no later than 12:00 p.m.
(California time) on the Settlement Date transfer in immediately available funds
to the applicable Agent’s Account, an amount such that each such Lender shall,
upon transfer of such amount, have as of the Settlement Date, its Pro Rata Share
of the Advances (including Swing Loans, Overadvances, and Protective Advances)
to the applicable Borrower(s). Such amounts made available to the applicable
Agent under clause (z) of the immediately preceding sentence shall be applied
against the amounts of the applicable Swing Loans, Overadvances, or Protective
Advances and, together with the portion of such Swing Loans, Overadvances, or
Protective Advances representing the applicable Swing Lender’s Pro Rata Share
thereof, shall constitute Advances of such Lenders. If any such amount is not
made available to the applicable Agent by any Lender on the Settlement Date
applicable thereto to

 

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the extent required by the terms hereof, the applicable Agent shall be entitled
to recover for its account such amount on demand from such Lender together with
interest thereon at the Defaulting Lender Rate.

(ii) In determining whether a Lender’s balance of the Advances, Swing Loans,
Overadvances, and Protective Advances to the applicable Borrower(s) is less
than, equal to, or greater than such Lender’s Pro Rata Share of the Advances,
Swing Loans, Overadvances, and Protective Advances to such Borrower(s) as of a
Settlement Date, the applicable Agent shall, as part of the relevant Settlement,
apply to such balance the portion of payments actually received in good funds by
such Agent with respect to principal, interest, fees payable by the applicable
Borrower(s) and allocable to the Lenders hereunder, and proceeds of Collateral.

(iii) Between Settlement Dates, US Agent, to the extent US Protective Advances,
US Overadvances, or US Swing Loans are outstanding, may pay over to US Agent or
US Swing Lender, as applicable, any Collections or payments received by US
Agent, that in accordance with the terms of this Agreement would be applied to
the reduction of the US Advances, for application to the US Protective Advances,
US Overadvances, or US Swing Loans. Between Settlement Dates, US Agent, to the
extent no US Protective Advances, US Overadvances, or US Swing Loans are
outstanding, may pay over to US Swing Lender any Collections or payments
received by US Agent, that in accordance with the terms of this Agreement would
be applied to the reduction of the US Advances, for application to US Swing
Lender’s Pro Rata Share of the US Advances. If, as of any Settlement Date,
Collections or payments of US Borrower or its Domestic Subsidiaries received
since the then immediately preceding Settlement Date have been applied to US
Swing Lender’s Pro Rata Share of the US Advances other than to US Swing Loans,
as provided for in the previous sentence, US Swing Lender shall pay to US Agent
for the accounts of the Lenders, and US Agent shall pay to the Lenders (other
than a Defaulting Lender if US Agent has implemented the provisions of
Section 2.3(g)), to be applied to the outstanding Advances of such Lenders, an
amount such that each such Lender shall, upon receipt of such amount, have, as
of such Settlement Date, its Pro Rata Share of the US Advances. During the
period between Settlement Dates, US Swing Lender with respect to US Swing Loans,
US Agent with respect to US Protective Advances and US Overadvances, and each
Lender with respect to the US Advances other than US Swing Loans, US
Overadvances, and US Protective Advances, shall be entitled to interest at the
applicable rate or rates payable under this Agreement on the daily amount of
funds employed by US Swing Lender, US Agent, or the Lenders, as applicable.
Between Settlement Dates, Canadian Agent, to the extent Canadian Protective
Advances, Canadian Overadvances, or Canadian Swing Loans are outstanding, may
pay over to Canadian Agent or Canadian Swing Lender, as applicable, any
Collections or payments received by Canadian Agent, that in accordance with the
terms of this Agreement would be applied to the reduction of the Canadian
Advances, for application to the Canadian Protective Advances, Canadian
Overadvances, or Canadian Swing Loans. Between Settlement Dates, Canadian Agent,
to the extent no Canadian Protective Advances, Canadian Overadvances, or
Canadian Swing Loans are outstanding, may pay over to Canadian Swing Lender any
Collections or payments received

 

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by Canadian Agent, that in accordance with the terms of this Agreement would be
applied to the reduction of the Canadian Advances, for application to Canadian
Swing Lender’s Pro Rata Share of the Canadian Advances. If, as of any Settlement
Date, Collections or payments of any Canadian Borrower or its Domestic
Subsidiaries received since the then immediately preceding Settlement Date have
been applied to Canadian Swing Lender’s Pro Rata Share of the Canadian Advances
other than to Canadian Swing Loans, as provided for in the previous sentence,
Canadian Swing Lender shall pay to Canadian Agent for the accounts of the
Lenders, and Canadian Agent shall pay to the Lenders (other than a Defaulting
Lender if Canadian Agent has implemented the provisions of Section 2.3(g)), to
be applied to the outstanding Canadian Advances of such Lenders, an amount such
that each such Lender shall, upon receipt of such amount, have, as of such
Settlement Date, its Pro Rata Share of the Canadian Advances. During the period
between Settlement Dates, Canadian Swing Lender with respect to Canadian Swing
Loans, Canadian Agent with respect to Canadian Protective Advances and Canadian
Overadvances, and each Lender with respect to the Canadian Advances other than
Canadian Swing Loans, Canadian Overadvances, and Canadian Protective Advances,
shall be entitled to interest at the applicable rate or rates payable under this
Agreement on the daily amount of funds employed by Canadian Swing Lender,
Canadian Agent, or the Lenders, as applicable.

(iv) Anything in this Section 2.3(e) to the contrary notwithstanding, in the
event that a Lender is a Defaulting Lender, the applicable Agent shall be
entitled to refrain from remitting settlement amounts to the Defaulting Lender
and, instead, shall be entitled to elect to implement the provisions set forth
in Section 2.3(g).

(f) Notation. US Agent, as a non-fiduciary agent for US Borrower, shall maintain
a register showing the principal amount of the US Advances, owing to each
Lender, including the US Swing Loans owing to US Swing Lender, and US Protective
Advances and US Overadvances owing to US Agent, and the interests therein of
each Lender, from time to time and such register shall, absent manifest error,
conclusively be presumed to be correct and accurate. Canadian Agent, as a
non-fiduciary agent for Canadian Borrowers, shall maintain a register showing
the principal amount of the Canadian Advances, owing to each Lender, including
the Canadian Swing Loans owing to Canadian Swing Lender, and Canadian Protective
Advances and Canadian Overadvances owing to Canadian Agent, and the interests
therein of each Lender, from time to time and such register shall, absent
manifest error, conclusively be presumed to be correct and accurate.

(g) Defaulting Lenders.

(i) US Agent shall not be obligated to transfer to a Defaulting Lender any
payments made by US Borrower to US Agent for the Defaulting Lender’s benefit or
any Collections or proceeds of Collateral that would otherwise be remitted
hereunder to the Defaulting Lender, and, in the absence of such transfer to the
Defaulting Lender, US Agent shall transfer any such payments (A) first, to US
Swing Lender to the extent of any US Swing Loans that were made by US Swing
Lender and that were required to be, but were not, paid by the Defaulting
Lender, (B) second, to the US Issuing Lender, to the extent of the portion of a
US Letter of Credit Disbursement that was required to be, but was not, paid by

 

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the Defaulting Lender, (C) third, to each non-Defaulting Lender ratably in
accordance with their US Revolver Commitments (but, in each case, only to the
extent that such Defaulting Lender’s portion of a US Advance (or other funding
obligation) was funded by such other non-Defaulting Lender), (D) to a suspense
account maintained by US Agent, the proceeds of which shall be retained by US
Agent and may be made available to be re-advanced to or for the benefit of US
Borrower as if such Defaulting Lender had made its portion of US Advances (or
other funding obligations) hereunder, and (E) from and after the date on which
all other US Obligations have been paid in full, to such Defaulting Lender in
accordance with tier (13) of Section 2.4(b)(ii)(A). Subject to the foregoing, US
Agent may hold and, in its discretion, re-lend to US Borrower for the account of
such Defaulting Lender the amount of all such payments received and retained by
US Agent for the account of such Defaulting Lender.

(ii) Canadian Agent shall not be obligated to transfer to a Defaulting Lender
any payments made by any Canadian Borrower to Canadian Agent for the Defaulting
Lender’s benefit or any Collections or proceeds of Collateral that would
otherwise be remitted hereunder to the Defaulting Lender, and, in the absence of
such transfer to the Defaulting Lender, Canadian Agent shall transfer any such
payments (A) first, to Canadian Swing Lender to the extent of any Canadian Swing
Loans that were made by Canadian Swing Lender and that were required to be, but
were not, paid by the Defaulting Lender, (B) second, to the Canadian Issuing
Lender, to the extent of the portion of a Canadian Letter of Credit Disbursement
that was required to be, but was not, paid by the Defaulting Lender, (C) third,
to each non-Defaulting Lender ratably in accordance with their Canadian Revolver
Commitments (but, in each case, only to the extent that such Defaulting Lender’s
portion of a Canadian Advance (or other funding obligation) was funded by such
other non-Defaulting Lender), (D) to a suspense account maintained by Canadian
Agent, the proceeds of which shall be retained by Canadian Agent and may be made
available to be re-advanced to or for the benefit of Canadian Borrowers as if
such Defaulting Lender had made its portion of Canadian Advances (or other
funding obligations) hereunder, and (E) from and after the date on which all
other Canadian Obligations have been paid in full, to such Defaulting Lender in
accordance with tier (12) of Section 2.4(b)(ii)(B). Subject to the foregoing,
Agent may hold and, in its discretion, re-lend to Canadian Borrowers for the
account of such Defaulting Lender the amount of all such payments received and
retained by Canadian Agent for the account of such Defaulting Lender.

(iii) Solely for the purposes of voting or consenting to matters with respect to
the Loan Documents (including the calculation of Pro Rata Share in connection
therewith) and for the purpose of calculating the fee payable under
Section 2.10(b), such Defaulting Lender shall be deemed not to be a “Lender” and
such Lender’s Revolver Commitment shall be deemed to be zero. The provisions of
this Section 2.3(g) shall remain effective with respect to such Defaulting
Lender until the earlier of (y) the date on which all of the non-Defaulting
Lenders, Agent, Issuing Lender, and Borrowers shall have waived, in writing, the
application of this Section 2.3(g) to such Defaulting Lender, or (z) the date on
which such Defaulting Lender makes payment of all amounts that it was obligated
to fund hereunder, pays to the applicable Agent all amounts owing by Defaulting
Lender in respect

 

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of the amounts that it was obligated to fund hereunder, and, if requested by
such Agent, provides adequate assurance of its ability to perform its future
obligations hereunder. The operation of this Section 2.3(g) shall not be
construed to increase or otherwise affect the Revolver Commitment of any Lender,
to relieve or excuse the performance by such Defaulting Lender or any other
Lender of its duties and obligations hereunder, or to relieve or excuse the
performance by any Borrower of its duties and obligations hereunder to Agents,
Issuing Lenders, or to the Lenders other than such Defaulting Lender. Any
failure by a Defaulting Lender to fund amounts that it was obligated to fund
hereunder shall constitute a material breach by such Defaulting Lender of this
Agreement and shall entitle Borrowers, at their option, upon written notice to
Agents, to arrange for a substitute Lender to assume the Revolver Commitment of
such Defaulting Lender, such substitute Lender to be reasonably acceptable to
Agents. In connection with the arrangement of such a substitute Lender, the
Defaulting Lender shall have no right to refuse to be replaced hereunder, and
agrees to execute and deliver a completed form of Assignment and Acceptance in
favor of the substitute Lender (and agrees that it shall be deemed to have
executed and delivered such document if it fails to do so) subject only to being
paid its share of the applicable outstanding Obligations owing to such
Defaulting Lender (other than Bank Product Obligations, but including (1) all
interest, fees, and other amounts that may be due and payable in respect
thereof, and (2) an assumption of its Pro Rata Share of its participation in the
applicable Letters of Credit); provided, however, that any such assumption of
the Revolver Commitment of such Defaulting Lender shall not be deemed to
constitute a waiver of any of the Lender Groups’ or Borrowers’ rights or
remedies against any such Defaulting Lender arising out of or in relation to
such failure to fund. In the event of a direct conflict between the priority
provisions of this Section 2.3(g) and any other provision contained in this
Agreement or any other Loan Document, it is the intention of the parties hereto
that such provisions be read together and construed, to the fullest extent
possible, to be in concert with each other. In the event of any actual,
irreconcilable conflict that cannot be resolved as aforesaid, the terms and
provisions of this Section 2.2(i) shall control and govern.

(h) Independent Obligations. All applicable Advances (other than Swing Loans,
Overadvances, and Protective Advances) shall be made by the Lenders
contemporaneously and in accordance with their Pro Rata Shares. It is understood
that (i) no Lender shall be responsible for any failure by any other Lender to
perform its obligation to make any Advance (or other extension of credit)
hereunder, nor shall any Revolver Commitment of any Lender be increased or
decreased as a result of any failure by any other Lender to perform its
obligations hereunder, and (ii) no failure by any Lender to perform its
obligations hereunder shall excuse any other Lender from its obligations
hereunder.

2.4. Payments; Reduction of Revolver Commitments; Prepayments.

(a) Payments by Borrowers.

(i) Except as otherwise expressly provided herein, all payments by US Borrower
shall be made in US Dollars to US Agent’s Account for the account of the Lender
Group and shall be made in immediately available funds, no later than 1:00 p.m.
(California time) on the date specified herein. Except as otherwise expressly
provided

 

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herein, all payments by Canadian Borrower shall be made in the same currency in
which such Canadian Advance being repaid was made to Canadian Agent’s Account
for the account of the applicable members of the Lender Group and shall be made
in immediately available funds, no later than 1:00 p.m. (California time) on the
date specified herein. Any payment received by an Agent later than 1:00 p.m.
(California time) shall be deemed to have been received on the following
Business Day and any applicable interest or fee shall continue to accrue until
such following Business Day.

(ii) Unless the applicable Agent receives notice from Borrowers prior to the
date on which any payment is due to the Lenders that the applicable Borrower(s)
will not make such payment in full as and when required, such Agent may assume
that such Borrower(s) have made (or will make) such payment in full to such
Agent on such date in immediately available funds and such Agent may (but shall
not be so required), in reliance upon such assumption, distribute to each Lender
on such due date an amount equal to the amount then due such Lender. If and to
the extent the applicable Borrower(s) do not make such payment in full to the
applicable Agent on the date when due, each Lender severally shall repay to such
Agent on demand such amount distributed to such Lender, together with interest
thereon at the Defaulting Lender Rate for each day from the date such amount is
distributed to such Lender until the date repaid.

(b) Apportionment and Application.

(i) So long as no Application Event has occurred and is continuing and except as
otherwise provided herein with respect to Defaulting Lenders, all principal and
interest payments received by an Agent shall be apportioned ratably among the
applicable Lenders (according to the unpaid principal balance of the Obligations
to which such payments relate held by each Lender) and all payments of fees and
expenses received by an Agent (other than fees or expenses that are for such
Agent’s separate account or for the separate account of an Issuing Lender) shall
be apportioned ratably among the Lenders having a Pro Rata Share of the Revolver
Commitment or Obligation to which a particular fee or expense relates. All
payments to be made hereunder by US Borrower shall be remitted to US Agent and
all (subject to Section 2.4(b)(iv) and Section 2.4(e)) such payments, and all
proceeds of Collateral received by US Agent, shall be applied, so long as no
Application Event has occurred and is continuing, to reduce the balance of the
US Advances outstanding and, thereafter, to US Borrower (to be wired to the US
Designated Account) or such other Person entitled thereto under applicable law.
All payments to be made hereunder by a Canadian Borrower shall be remitted to
Canadian Agent and all (subject to Section 2.4(b)(iv) and Section 2.4(e)) such
payments, and all proceeds of Collateral received by Canadian Agent, shall be
applied, so long as no Application Event has occurred and is continuing, to
reduce the balance of the Canadian Advances outstanding and, thereafter, to such
Canadian Borrower (to be wired to the Canadian Designated Account) or such other
Person entitled thereto under applicable law.

(ii) At any time that an Application Event has occurred and is continuing and
except as otherwise provided herein with respect to Defaulting Lenders:

(A) All payments in respect of US Obligations remitted to US Agent and all
proceeds of Collateral securing US Obligations received by US Agent shall be
applied as follows:

(1) first, to pay any Lender Group Expenses (including cost or expense
reimbursements) or indemnities then due to US Agent under the Loan Documents,
until paid in full,

 

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(2) second, to pay any fees or premiums then due to US Agent under the Loan
Documents until paid in full,

(3) third, to pay interest due in respect of all US Protective Advances until
paid in full,

(4) fourth, to pay the principal of all US Protective Advances until paid in
full,

(5) fifth, ratably, to pay any Lender Group Expenses (including cost or expense
reimbursements) or indemnities then due to any of the Lenders under the Loan
Documents in respect of US Obligations until paid in full,

(6) sixth, ratably, to pay any fees or premiums then due to any of the Lenders
under the Loan Documents with respect to the US Obligations until paid in full,

(7) seventh, to pay interest accrued in respect of the US Swing Loans until paid
in full,

(8) eighth, to pay the principal of all US Swing Loans until paid in full,

(9) ninth, ratably, to pay interest accrued in respect of the US Advances (other
than US Protective Advances) until paid in full,

(10) tenth, ratably (i) to pay the principal of all US Advances until paid in
full, (ii) to US Agent, to be held by US Agent, for the benefit of US Issuing
Lender (and for the ratable benefit of each of the Lenders that have an
obligation to pay to US Agent, for the account of the US Issuing Lender, a share
of each US Letter of Credit Disbursement), as cash collateral in an amount up to
103% of the US Letter of Credit Usage (to the extent permitted by applicable
law, such cash collateral shall be applied to the reimbursement of any US Letter
of Credit Disbursement as and when such disbursement occurs and, if a US Letter
of Credit expires undrawn, the cash collateral held by US Agent in respect of
such US Letter of Credit shall, to the extent permitted by applicable law, be
reapplied pursuant to this Section 2.4(b)(ii)(A), beginning with tier
(1) hereof), and (iii) ratably, to the US Bank Product Providers based upon
amounts then certified by the applicable US Bank Product Provider to Agent (in
form and substance satisfactory to US Agent) to be due and payable to such US
Bank Product Providers on account of US Bank Product Obligations,

 

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(11) eleventh, to pay any other US Obligations other than US Obligations owed to
Defaulting Lenders,

(12) twelfth, to Canadian Agent for application to any remaining Canadian
Obligations until paid in full,

(13) thirteenth, ratably to pay any US Obligations owed to Defaulting Lenders,
and

(14) fourteenth, to the US Borrower (to be wired to the US Designated Account)
or such other Person entitled thereto under applicable law.

(B) All payments in respect of Canadian Obligations remitted to Canadian Agent
and all proceeds of Collateral securing Canadian Obligations received by
Canadian Agent shall be applied as follows:

(1) first, to pay any Lender Group Expenses (including cost or expense
reimbursements) or indemnities then due to Canadian Agent with respect to
Canadian Obligations under the Loan Documents, until paid in full,

(2) second, to pay any fees or premiums then due to Canadian Agent under the
Loan Documents until paid in full,

(3) third, to pay interest due in respect of all Canadian Protective Advances
until paid in full,

(4) fourth, to pay the principal of all Canadian Protective Advances until paid
in full,

(5) fifth, ratably, to pay any Lender Group Expenses (including cost or expense
reimbursements) or indemnities then due to any of the Lenders under the Loan
Documents in respect of Canadian Obligations, until paid in full,

(6) sixth, ratably, to pay any fees or premiums then due to any of the Lenders
in respect of Canadian Obligations under the Loan Documents until paid in full,

(7) seventh, to pay interest accrued in respect of the Canadian Swing Loans
until paid in full,

(8) eighth, to pay the principal of all Canadian Swing Loans until paid in full,

 

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(9) ninth, ratably, to pay interest accrued in respect of the Canadian Advances
(other than Canadian Protective Advances) until paid in full,

(10) tenth, ratably (i) to pay the principal of all Canadian Advances until paid
in full, (ii) to Canadian Agent, to be held by Canadian Agent, for the benefit
of Canadian Issuing Lender (and for the ratable benefit of each of the Lenders
that have an obligation to pay to Canadian Agent, for the account of the
Canadian Issuing Lender, a share of each Canadian Letter of Credit
Disbursement), as cash collateral in an amount up to 103% of the Canadian Letter
of Credit Usage (to the extent permitted by applicable law, such cash collateral
shall be applied to the reimbursement of any Canadian Letter of Credit
Disbursement as and when such disbursement occurs and, if a Canadian Letter of
Credit expires undrawn, the cash collateral held by Canadian Agent in respect of
such Canadian Letter of Credit shall, to the extent permitted by applicable law,
be reapplied pursuant to this Section 2.4(b)(ii)(B), beginning with tier
(1) hereof), and (iii) ratably, to the Canadian Bank Product Providers based
upon amounts then certified by the applicable Canadian Bank Product Provider to
Canadian Agent (in form and substance satisfactory to Canadian Agent) to be due
and payable to such Canadian Bank Product Providers on account of Canadian Bank
Product Obligations,

(11) eleventh, to pay any other Canadian Obligations other than Canadian
Obligations owed to Defaulting Lenders,

(12) twelfth, ratably to pay any Canadian Obligations owed to Defaulting
Lenders, and

(13) thirteenth, to Canadian Borrowers (to be wired to the Canadian Designated
Account) or such other Person entitled thereto under applicable law.

(iii) The applicable Agent promptly shall distribute to each Lender, pursuant to
the applicable wire instructions received from each Lender in writing, such
funds as it may be entitled to receive from such Agent, subject to a Settlement
delay as provided in Section 2.3(e).

(iv) In each instance, so long as no Application Event has occurred and is
continuing, Section 2.4(b)(i) shall not apply to any payment made by any
Borrower to an Agent and specified by such Borrower to be for the payment of
specific Obligations then due and payable (or prepayable) under any provision of
this Agreement or any other Loan Document.

(v) For purposes of Section 2.4(b)(ii), “paid in full” of a type of Obligation
means payment in cash or immediately available funds of all amounts owing on
account of such type of Obligation, including interest accrued after the
commencement of any Insolvency Proceeding, default interest, interest on
interest, and expense reimbursements, irrespective of whether any of the
foregoing would be or is allowed or disallowed in whole or in part in any
Insolvency Proceeding.

 

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(vi) In the event of a direct conflict between the priority provisions of this
Section 2.4 and any other provision contained in this Agreement or any other
Loan Document, it is the intention of the parties hereto that such provisions be
read together and construed, to the fullest extent possible, to be in concert
with each other. In the event of any actual, irreconcilable conflict that cannot
be resolved as aforesaid, if the conflict relates to the provisions of
Section 2.3(g) and this Section 2.4, then the provisions of Section 2.3(g) shall
control and govern, and if otherwise, then the terms and provisions of this
Section 2.4 shall control and govern.

(c) Reduction of Revolver Commitments.

(i) The Revolver Commitments shall terminate on the Maturity Date. US Borrower
may reduce the US Revolver Commitments without premium or penalty to an amount
(which may be zero) not less than the sum of (A) the US Revolver Usage as of
such date, plus (B) the principal amount of all US Advances not yet made as to
which a request has been given by a US Borrower under Section 2.3(a), plus
(C) the amount of all US Letters of Credit not yet issued as to which a request
has been given by US Borrower pursuant to Section 2.11(a). Canadian Borrowers
may reduce the Canadian Revolver Commitments without premium or penalty to an
amount (which may be zero) not less than the sum of (A) the Canadian Revolver
Usage as of such date, plus (B) the principal amount of all Canadian Advances
not yet made as to which a request has been given by a Canadian Borrower under
Section 2.3(a), plus (C) the amount of all Canadian Letters of Credit not yet
issued as to which a request has been given by a Canadian Borrower pursuant to
Section 2.11(a). Each such reduction shall be in an amount which is not less
than $1,000,000 (unless the applicable Revolver Commitments are being reduced to
zero and the amount of the applicable Revolver Commitments in effect immediately
prior to such reduction are less than $1,000,000), shall be made by providing
not less than 10 Business Days prior written notice to the applicable Agent, and
shall be irrevocable. Once reduced, the applicable Revolver Commitments may not
be increased. Each such reduction of the Revolver Commitments shall reduce the
applicable Revolver Commitments of each Lender proportionately in accordance
with its ratable share thereof.

(d) Optional Prepayments.

US Borrower may prepay the principal of any US Advance at any time in whole or
in part without premium or penalty. Canadian Borrowers may prepay the principal
of any Canadian Advance at any time in whole or in part without premium or
penalty.

(e) Mandatory Prepayments.

(i) Borrowing Base. If, at any time, (A) (x) the US Revolver Usage on such date
exceeds (y) the US Borrowing Base (such excess being referred to as the “US
Borrowing Base Excess”), then US Borrower shall immediately prepay the US
Obligations in accordance with Section 2.4(f)(i) in an aggregate amount equal to
the US Borrowing Base Excess and (B) (x) the Canadian Revolver Usage on such
date exceeds (y) the Canadian Borrowing Base (such excess being referred to as
the “Canadian Borrowing

 

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Base Excess”), then Canadian Borrowers shall immediately prepay the Canadian
Obligations in accordance with Section 2.4(f)(i) in an aggregate amount equal to
the Canadian Borrowing Base Excess.

(ii) Dispositions. During a Dominion Period, within 1 Business Day of the date
of receipt by US Borrower or any of its Domestic Subsidiaries of the Net Cash
Proceeds of any voluntary or involuntary sale or disposition by a Borrower or
any of its Domestic Subsidiaries of assets (including casualty losses or
condemnations but excluding Dispositions from (1) sales, abandonment or other
Dispositions of Equipment that is substantially worn, damaged, or obsolete in
the ordinary course of business, (2) sales of Inventory to buyers in the
ordinary course of business, (3) the use or transfer of money or Cash
Equivalents in a manner that is not prohibited by the terms of the Agreement or
the other Loan Documents, and (4) the licensing, on a non-exclusive basis, of
patents, trademarks, copyrights and other intellectual property rights in the
ordinary course of business), US Borrower shall prepay the outstanding principal
amount of the US Obligations in accordance with Section 2.4(f)(ii) in an amount
equal to 100% of such Net Cash Proceeds (including condemnation awards and
payments in lieu thereof) received by such Person in connection with such
Dispositions. During a Dominion Period, within 1 Business Day of the date of
receipt by a Canadian Borrower or any of its Domestic Subsidiaries of the Net
Cash Proceeds of any voluntary or involuntary sale or disposition by a Canadian
Borrower or any of its Domestic Subsidiaries of assets (including casualty
losses or condemnations but excluding Dispositions from (1) sales, abandonment
or other Dispositions of Equipment that is substantially worn, damaged, or
obsolete in the ordinary course of business, (2) sales of Inventory to buyers in
the ordinary course of business, (3) the use or transfer of money or Cash
Equivalents in a manner that is not prohibited by the terms of the Agreement or
the other Loan Documents, and (4) the licensing, on a non-exclusive basis, of
patents, trademarks, copyrights and other intellectual property rights in the
ordinary course of business), such Canadian Borrower shall prepay the
outstanding principal amount of the Canadian Obligations in accordance with
Section 2.4(f)(ii) in an amount equal to 100% of such Net Cash Proceeds
(including condemnation awards and payments in lieu thereof) received by such
Person in connection with such Dispositions.

(iii) Extraordinary Receipts. During a Dominion Period, within 1 Business Day of
the date of receipt by US Borrower or any of its Domestic Subsidiaries of any
Extraordinary Receipts, US Borrower shall prepay the outstanding principal
amount of the Obligations in accordance with Section 2.4(f)(ii) in an amount
equal to 100% of such Extraordinary Receipts. During a Dominion Period, within 1
Business Day of the date of receipt by a Canadian Borrower or any of its
Domestic Subsidiaries of any Extraordinary Receipts, such Canadian Borrower
shall prepay the outstanding principal amount of the Canadian Obligations in
accordance with Section 2.4(f)(ii) in an amount equal to 100% of such
Extraordinary Receipts.

(iv) Indebtedness. During a Dominion Period, within 1 Business Day of the date
of incurrence by US Borrower or any of its Domestic Subsidiaries of any
Indebtedness (other than Permitted Indebtedness), US Borrower shall prepay the
outstanding principal amount of the Obligations in accordance with
Section 2.4(f)(ii) in an amount equal

 

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to 100% of the Net Cash Proceeds received by such Person in connection with such
incurrence. During a Dominion Period, within 1 Business Day of the date of
incurrence by a Canadian Borrower or any of its Domestic Subsidiaries of any
Indebtedness (other than Permitted Indebtedness), Canadian Borrowers shall
prepay the outstanding principal amount of the Canadian Obligations in
accordance with Section 2.4(f)(ii) in an amount equal to 100% of the Net Cash
Proceeds received by such Person in connection with such incurrence. The
provisions of this Section 2.4(e)(iv) shall not be deemed to be implied consent
to any such incurrence otherwise prohibited by the terms and conditions of this
Agreement.

(v) Equity. During a Dominion Period, within 1 Business Day of the date of the
issuance by US Borrower or any of its Domestic Subsidiaries of any shares of its
or their Equity Interests (other than (A) in the event that US Borrower or any
of its Domestic Subsidiaries forms any Subsidiary in accordance with the terms
hereof, the issuance by such Subsidiary of Equity Interests to US Borrower or
such Domestic Subsidiary, as applicable, (B) the issuance of Equity Interests of
US Borrower to directors, officers and employees of US Borrower and its Domestic
Subsidiaries pursuant to employee stock option plans (or other employee
incentive plans or other compensation arrangements) approved by the Board of
Directors, and (C) the issuance of Equity Interests of US Borrower in order to
finance the purchase consideration (or a portion thereof) in connection with a
Permitted Acquisition), US Borrower shall prepay the outstanding principal
amount of the Obligations in accordance with Section 2.4(f)(ii) in an amount
equal to 100% of the Net Cash Proceeds received by such Person in connection
with such issuance. During a Dominion Period, within 1 Business Day of the date
of the issuance by a Canadian Borrower or any of its Domestic Subsidiaries of
any shares of its or their Equity Interests (other than (A) in the event that a
Canadian Borrower or any Domestic Subsidiary forms any Subsidiary in accordance
with the terms hereof, the issuance by such Subsidiary of Equity Interests to a
Canadian Borrower or such Domestic Subsidiary, as applicable, (B) the issuance
of Equity Interests of a Canadian Borrower to directors, officers and employees
of such Borrower and its Domestic Subsidiaries pursuant to employee stock option
plans (or other employee incentive plans or other compensation arrangements)
approved by the Board of Directors, and (C) the issuance of Equity Interests of
a Canadian Borrower in order to finance the purchase consideration (or a portion
thereof) in connection with a Permitted Acquisition), such Canadian Borrower
shall prepay the outstanding principal amount of the Canadian Obligations in
accordance with Section 2.4(f)(ii) in an amount equal to 100% of the Net Cash
Proceeds received by such Person in connection with such issuance. The
provisions of this Section 2.4(e)(v) shall not be deemed to be implied consent
to any such issuance otherwise prohibited by the terms and conditions of this
Agreement.

(f) Application of Payments.

(i) Each prepayment by US Borrower pursuant to Section 2.4(e)(i) shall, (A) so
long as no Application Event shall have occurred and be continuing, be applied,
to the outstanding principal amount of the US Advances until paid in full and
(B) if an Application Event shall have occurred and be continuing, be applied in
the manner set forth in Section 2.4(b)(ii). Each prepayment by a Canadian
Borrower pursuant to Section 2.4(e)(i) shall, (A) so long as no Application
Event shall have occurred and be

 

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continuing, be applied, to the outstanding principal amount of the Canadian
Advances until paid in full and (B) if an Application Event shall have occurred
and be continuing, be applied in the manner set forth in Section 2.4(b)(ii).

(ii) Each prepayment pursuant to Section 2.4(e)(ii), 2.4(e)(iii), 2.4(e)(iv),
2.4(e)(v), or 2.4(e)(vi) shall (A) (x) with respect to prepayments by US
Borrower and its Domestic Subsidiaries, so long as no Application Event shall
have occurred and be continuing, be applied to the outstanding principal amount
of the US Advances (without a corresponding permanent reduction in the Maximum
US Revolver Amount or the Maximum Revolver Amount), until paid in full, and
(y) if an Application Event shall have occurred and be continuing, be applied in
the manner set forth in Section 2.4(b)(ii), and (B) (x) with respect to
prepayments by Canadian Borrowers and their Domestic Subsidiaries, so long as no
Application Event shall have occurred and be continuing, be applied to the
outstanding principal amount of the Canadian Advances (without a corresponding
permanent reduction in the Maximum Canadian Revolver Amount or the Maximum
Revolver Amount), until paid in full, and (y) if an Application Event shall have
occurred and be continuing, be applied in the manner set forth in
Section 2.4(b)(ii).

2.5. Overadvances.

If, at any time or for any reason, the amount of US Obligations owed by US
Borrower to the Lender Group pursuant to Section 2.1 or Section 2.11 is greater
than any of the limitations set forth in Section 2.1 or Section 2.11, as
applicable (a “ US Overadvance”), US Borrower shall immediately pay to US Agent,
in cash, the amount of such excess, which amount shall be used by US Agent to
reduce the Obligations in accordance with the priorities set forth in
Section 2.4(b). US Borrower promises to pay the US Obligations (including
principal, interest, fees, costs, and expenses) in full on the Maturity Date or,
if earlier, on the date on which the US Obligations (other than the US Bank
Product Obligations) become due and payable pursuant to the terms of this
Agreement. If, at any time or for any reason, the amount of Canadian Obligations
owed by Canadian Borrowers to the Lender Group pursuant to Section 2.1 or
Section 2.11 is greater than any of the limitations set forth in Section 2.1 or
Section 2.11, as applicable (a “Canadian Overadvance”), Canadian Borrower shall
immediately pay to Canadian Agent, in cash, the amount of such excess, which
amount shall be used by Canadian Agent to reduce the Canadian Obligations in
accordance with the priorities set forth in Section 2.4(b). Each Canadian
Borrower promises to pay the Canadian Obligations (including principal,
interest, fees, costs, and expenses) in full on the Maturity Date or, if
earlier, on the date on which the Canadian Obligations (other than the Canadian
Bank Product Obligations) become due and payable pursuant to the terms of this
Agreement. Notwithstanding anything in this Section 2.5 to the contrary, in the
case of an Overadvance that is caused solely as a result of the charging by an
Agent of Lender Group Expenses to the Loan Account, Borrowers shall have 3
Business Days from the date of the initial occurrence of such Overadvance to pay
to such Agent, in cash, the amount of such excess.

 

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2.6. Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations.

(a) Interest Rates. Except as provided in Section 2.6(c), all Obligations
(except for undrawn Letters of Credit) that have been charged to the Loan
Account pursuant to the terms hereof shall bear interest on the Daily Balance
thereof as follows:

(i) if the relevant US Obligation is a LIBOR Rate Loan denominated in US
Dollars, at a per annum rate equal to the US LIBOR Rate plus the LIBOR Rate
Margin,

(ii) if the relevant Canadian Obligation is a LIBOR Rate Loan denominated in US
Dollars, at a per annum rate equal to the US LIBOR Rate plus the LIBOR Rate
Margin,

(iii) otherwise with respect to amounts denominated in US Dollars, at a per
annum rate equal to the US Base Rate plus the Base Rate Margin, and

(iv) otherwise with respect to amounts denominated in Canadian Dollars, at a per
annum rate equal to the Canadian Base Rate plus the LIBOR Rate Margin.

(b) Letter of Credit Fee. US Borrower shall pay US Agent (for the ratable
benefit of the Lenders with a US Revolver Commitment), a Letter of Credit fee
(in addition to the charges, commissions, fees, and costs set forth in
Section 2.11(f)) which shall accrue at a per annum rate equal to the LIBOR Rate
Margin times the Daily Balance of the undrawn amount of all outstanding US
Letters of Credit. Each Canadian Borrower shall pay Canadian Agent (for the
ratable benefit of the Lenders with a Canadian Revolver Commitment), a Letter of
Credit fee (in addition to the charges, commissions, fees, and costs set forth
in Section 2.11(f)) which shall accrue at a per annum rate equal to the LIBOR
Rate Margin times the Daily Balance of the undrawn amount of all outstanding
Canadian Letters of Credit.

(c) Default Rate. Upon the occurrence and during the continuation of an Event of
Default and at the election of the Required Lenders,

(i) all Obligations (except for undrawn Letters of Credit) that have been
charged to the Loan Account pursuant to the terms hereof shall bear interest on
the Daily Balance thereof at a per annum rate equal to 2 percentage points above
the per annum rate otherwise applicable thereunder, and

(ii) the Letter of Credit fee provided for in Section 2.6(b) shall be increased
to 2 percentage points above the per annum rate otherwise applicable hereunder.

(d) Payment. Except to the extent provided to the contrary in Section 2.10 or
Section 2.12(a), all interest, all Letter of Credit fees, all other fees payable
hereunder or under any of the other Loan Documents, all costs and expenses
payable hereunder or under any of the other Loan Documents, and all Lender Group
Expenses shall be due and payable,

 

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in arrears, on the first day of each month at any time that Obligations or
Revolver Commitments are outstanding. US Borrower hereby authorizes US Agent,
from time to time without prior notice to any Borrower, to charge all interest,
Letter of Credit fees, and all other fees payable hereunder or under any of the
other Loan Documents (in each case, as and when due and payable) of US Borrower,
all costs and expenses payable hereunder or under any of the other Loan
Documents (in each case, as and when accrued or incurred) with respect to US
Borrower, and all Lender Group Expenses (as and when accrued or incurred), all
charges, commissions, fees, and costs provided for in Section 2.11(f) (as and
when accrued or incurred) with respect to US Borrower, all fees and costs
provided for in Section 2.10 (as and when accrued or incurred) with respect to
US Borrower, and all other payment obligations as and when due and payable under
any Loan Document or any US Bank Product Agreement (including any amounts due
and payable to the US Bank Product Providers in respect of US Bank Products) to
the US Loan Account, which amounts thereafter shall constitute US Advances
hereunder and, initially, shall accrue interest at the rate then applicable to
US Advances that are Base Rate Loans (unless and until converted into US LIBOR
Rate Loans in accordance with the terms of this Agreement). Any interest, fees,
costs, expenses, Lender Group Expenses, or other amounts payable hereunder or
under any other Loan Document with respect to US Borrower or under any US Bank
Product Agreement that are charged to the US Loan Account shall thereupon
constitute US Advances hereunder and shall initially accrue interest at the rate
then applicable to US Advances that are US Base Rate Loans (unless and until
converted into US LIBOR Rate Loans in accordance with the terms of this
Agreement). Each Canadian Borrower hereby authorizes Canadian Agent, from time
to time without prior notice to any Borrower, to charge all interest, Letter of
Credit fees, and all other fees payable hereunder or under any of the other Loan
Documents (in each case, as and when due and payable) of Canadian Borrowers, all
costs and expenses payable hereunder or under any of the other Loan Documents
(in each case, as and when accrued or incurred), and all Lender Group Expenses
(as and when accrued or incurred) with respect to Canadian Borrowers, all
charges, commissions, fees, and costs provided for in Section 2.11(f) (as and
when accrued or incurred) with respect to Canadian Borrowers, all fees and costs
provided for in Section 2.10 (as and when accrued or incurred) with respect to
Canadian Borrowers, and all other payment obligations as and when due and
payable under any Loan Document or any Canadian Bank Product Agreement
(including any amounts due and payable to the Canadian Bank Product Providers in
respect of Canadian Bank Products) with respect to Canadian Borrowers to the
Canadian Loan Account, which amounts thereafter shall constitute Canadian
Advances hereunder and, initially, shall accrue interest at the rate then
applicable to Canadian Advances made as US Dollars or Canadian Dollars (as
applicable to the amounts so paid) that are Base Rate Loans (unless and until
converted into LIBOR Rate Loans in accordance with the terms of this Agreement).
Any interest, fees, costs, expenses, Lender Group Expenses, or other amounts
payable hereunder or under any other Loan Document of Canadian Borrowers or
under any Canadian Bank Product Agreement that are charged to the Canadian Loan
Account shall thereupon constitute Canadian Advances hereunder and shall
initially accrue interest at the rate then applicable to Canadian Advances made
as US Dollars or Canadian Dollars (as applicable to the amounts so paid) that
are Base Rate Loans (unless and until converted into LIBOR Rate Loans, if
permitted, in accordance with the terms of this Agreement).

 

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(e) Computation. All interest and fees chargeable under the Loan Documents shall
be computed on the basis of a 360 day year, in each case, for the actual number
of days elapsed in the period during which the interest or fees accrue except
that Canadian Base Rate Loans denominated in Canadian Dollars shall be
calculated on the basis of a 365 or 366 day year, as applicable, for the actual
number of days elapsed. In the event the applicable Base Rate is changed from
time to time hereafter, the rates of interest hereunder based upon the
applicable Base Rate automatically and immediately shall be increased or
decreased by an amount equal to such change in the applicable Base Rate.

(f) Intent to Limit Charges to Maximum Lawful Rate. In no event shall the
interest rate or rates payable under this Agreement, plus any other amounts paid
in connection herewith, exceed the highest rate permissible under any law that a
court of competent jurisdiction shall, in a final determination, deem
applicable. Each Borrower and the Lender Group, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
to the contrary notwithstanding, if such rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto, as
of the date of this Agreement, the applicable Borrower(s) is and shall be liable
only for the payment of such maximum amount as is allowed by law, and, subject
to Section 2.14 payment received from any Borrower in excess of such legal
maximum, whenever received, shall be applied to reduce the principal balance of
the Obligations to the extent of such excess.

2.7. Crediting Payments.

The receipt of any payment item by an Agent shall not be considered a payment on
account unless such payment item is a wire transfer of immediately available
federal funds made to such Agent’s Account or unless and until such payment item
is honored when presented for payment. Should any payment item of a Borrower not
be honored when presented for payment, then such Borrower shall be deemed not to
have made such payment and interest shall be calculated accordingly. Anything to
the contrary contained herein notwithstanding, any payment item shall be deemed
received by an Agent only if it is received into such Agent’s Account on a
Business Day on or before 11:00 a.m. (California time). If any payment item is
received into an Agent’s Account on a non-Business Day or after 11:00 a.m.
(California time) on a Business Day, it shall be deemed to have been received by
such Agent as of the opening of business on the immediately following Business
Day.

2.8. Designated Accounts.

US Agent is authorized to make the US Advances and US Issuing Lender is
authorized to issue the US Letters of Credit, under this Agreement based upon
telephonic or other instructions received from anyone purporting to be an
Authorized Person or, without instructions, if pursuant to Section 2.6(d). US
Borrower agrees to establish and maintain the US Designated Account for the
purpose of receiving the proceeds of the US Advances requested by such US
Borrower and made by US Agent or the Lenders hereunder. Unless

 

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otherwise agreed by US Agent and US Borrower, any US Advance or US Swing Loan
requested by US Borrower and made by US Agent or the Lenders hereunder shall be
made to the US Designated Account. Canadian Agent is authorized to make the
Canadian Advances and Canadian Issuing Lender is authorized to issue the
Canadian Letters of Credit, under this Agreement based upon telephonic or other
instructions received from anyone purporting to be an Authorized Person or,
without instructions, if pursuant to Section 2.6(d). Canadian Borrowers agree to
establish and maintain the Canadian Designated Account for the purpose of
receiving the proceeds of the Canadian Advances requested by the Canadian
Borrowers and made by Canadian Agent or the Lenders hereunder. Unless otherwise
agreed by Canadian Agent and Canadian Borrowers, any Canadian Advance or
Canadian Swing Loan requested by a Canadian Borrower and made by Canadian Agent
or the Lenders hereunder shall be made to the Canadian Designated Account.

2.9. Maintenance of Loan Account; Statements of Obligations.

US Agent shall maintain an account on its books in the name of US Borrower (the
“US Loan Account”) on which US Borrower will be charged, all US Advances
(including US Protective Advances and US Swing Loans) made by US Agent, US Swing
Lender, or the Lenders to US Borrower or for US Borrower’s account, the US
Letters of Credit issued or made by US Issuing Lender for US Borrower’s account,
and with all other payment US Obligations hereunder or under the other Loan
Documents (except for US Bank Product Obligations), including, accrued interest,
fees and expenses, and Lender Group Expenses of US Borrower. In accordance with
Section 2.7, the US Loan Account will be credited with all payments received by
US Agent from US Borrower or for US Borrower’s account. US Agent shall render
monthly statements regarding the US Loan Account to US Borrower, including
principal, interest, fees, and including an itemization of all charges and
expenses constituting Lender Group Expenses owing, and such statements, absent
manifest error, shall be conclusively presumed to be correct and accurate and
constitute an account stated between US Borrower and the Lender Group unless,
within 30 days after receipt thereof by US Borrower, US Borrower shall deliver
to US Agent written objection thereto describing the error or errors contained
in any such statements. Canadian Agent shall maintain an account on its books in
the name of Canadian Borrowers (the “Canadian Loan Account”) on which Canadian
Borrowers will be charged, all Canadian Advances (including Canadian Protective
Advances and Canadian Swing Loans) made by Canadian Agent, Canadian Swing
Lender, or the Lenders to Canadian Borrowers or for Canadian Borrowers’ account,
the Canadian Letters of Credit issued or made by Canadian Issuing Lender for
Canadian Borrowers’ account, and with all other Canadian Obligations hereunder
or under the other Loan Documents (except for Canadian Bank Product
Obligations), including, accrued interest, fees and expenses, and Lender Group
Expenses of Canadian Borrowers. In accordance with Section 2.7, the Canadian
Loan Account will be credited with all payments received by Canadian Agent from
Canadian Borrowers or for Canadian Borrowers’ account. Canadian Agent shall
render monthly statements regarding the Canadian Loan Account to Canadian
Borrowers, including principal, interest, fees, and including an itemization of
all charges and expenses constituting Lender Group Expenses owing, and such
statements, absent manifest error, shall be conclusively presumed to be correct
and accurate and

 

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constitute an account stated between Canadian Borrowers and the Lender Group
unless, within 30 days after receipt thereof by Canadian Borrowers, Canadian
Borrowers shall deliver to Canadian Agent written objection thereto describing
the error or errors contained in any such statements.

2.10. Fees.

(a) The applicable Borrowers shall pay to the applicable Agents, for the account
of the applicable Agent, as and when due and payable under the terms of the Fee
Letter, the fees set forth in the Fee Letter.

(b) US Borrower shall pay to US Agent for the ratable account of those Lenders
with US Revolver Commitments, on the first day of each month from and after the
Closing Date up to the first day of the month prior to the Payoff Date and on
the Payoff Date, an unused line fee in an amount equal to 0.375% per annum times
the result of (i) the aggregate amount of the Revolver Commitments, less
(ii) the average Daily Balance of the aggregate of the US Revolver Usage and the
Canadian Revolver Usage during the immediately preceding month (or portion
thereof).

(c) The applicable Borrower(s), subject to the limitations set forth in
Section 5.7, shall pay to the applicable Agent audit, appraisal, field
examination, and valuation fees and charges, as and when incurred or chargeable,
as follows (i) a fee of $1,000 per day, per auditor, plus out-of-pocket expenses
for each financial audit of each Borrower and its Domestic Subsidiaries
performed by personnel employed by the applicable Agent, (ii) if implemented, a
fee of $1,000 per day, per applicable individual, plus out-of-pocket expenses
for the establishment of electronic collateral reporting systems, and (iii) the
actual charges paid or incurred by the applicable Agent if it elects to employ
the services of one or more third Persons to perform financial audits of each
Borrower and its Domestic Subsidiaries, to establish electronic collateral
reporting systems, to appraise the Collateral, or any portion thereof, or to
assess such Borrowers’ and their Subsidiaries’ business valuation.

2.11. Letters of Credit.

(a) US Letters of Credit.

(i) Subject to the terms and conditions of this Agreement, upon the request of
US Borrower made in accordance herewith, the US Issuing Lender agrees to issue a
requested US Letter of Credit. By submitting a request to US Issuing Lender for
the issuance of a US Letter of Credit, US Borrower shall be deemed to have
requested that US Issuing Lender issue the requested US Letter of Credit. Each
request for the issuance of a US Letter of Credit, or the amendment, renewal, or
extension of any outstanding US Letter of Credit, shall be made in writing by an
Authorized Person of US Borrower and delivered to the US Issuing Lender via hand
delivery, telefacsimile, or other electronic method of transmission reasonably
in advance of the requested date of issuance, amendment, renewal, or extension.
Each such request shall be in form and substance reasonably satisfactory to the
US Issuing Lender and shall specify (A) the amount of such US Letter of Credit,
(B) the date

 

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of issuance, amendment, renewal, or extension of such US Letter of Credit,
(C) the proposed expiration date of such US Letter of Credit, (D) the name and
address of the beneficiary of the US Letter of Credit, and (E) such other
information (including, the conditions of drawing, and, in the case of an
amendment, renewal, or extension, identification of the US Letter of Credit to
be so amended, renewed, or extended) as shall be necessary to prepare, amend,
renew, or extend such US Letter of Credit. Each US Letter of Credit shall be
denominated in US Dollars. Anything contained herein to the contrary
notwithstanding, the US Issuing Lender may, but shall not be obligated to, issue
a US Letter of Credit that supports the obligations of US Borrower or its
Subsidiaries (1) in respect of (x) a lease of real property, or (y) an
employment contract, or (2) at any time that one or more of the Lenders is a
Defaulting Lender. The US Issuing Lender shall have no obligation to issue a US
Letter of Credit if any of the following would result after giving effect to the
requested issuance:

 

  (I) the US Letter of Credit Usage would exceed the US Borrowing Base less the
outstanding amount of US Advances (inclusive of US Swing Loans), or

 

  (II) the US Letter of Credit Usage would exceed $20,000,000, or

 

  (III) the US Letter of Credit Usage would exceed the Maximum US Revolver
Amount less the outstanding amount of US Advances (including US Swing Loans).

The US Borrower and the Lender Group hereby acknowledge and agree that all
Existing US Letters of Credit shall constitute US Letters of Credit under this
Agreement on and after the Closing Date with the same effect as if such US
Existing Letters of Credit were issued by US Issuing Lender at the request of US
Borrower on the Closing Date. Each US Letter of Credit shall be in form and
substance reasonably acceptable to the US Issuing Lender, including the
requirement that the amounts payable thereunder must be payable in US Dollars.
If US Issuing Lender makes a payment under a US Letter of Credit, US Borrower
shall pay to US Agent an amount equal to the applicable US Letter of Credit
Disbursement on the date such US Letter of Credit Disbursement is made and, in
the absence of such payment, the amount of the US Letter of Credit Disbursement
immediately and automatically shall be deemed to be an US Advance hereunder and,
initially, shall bear interest at the rate then applicable to US Advances that
are US Base Rate Loans. If a US Letter of Credit Disbursement is deemed to be a
US Advance hereunder (notwithstanding any failure to satisfy any condition
precedent set forth in Section 3.2), US Borrower’s obligation to pay the amount
of such US Letter of Credit Disbursement to US Issuing Lender shall be
automatically converted into an obligation to pay the resulting US Advance.
Promptly following receipt by US Agent of any payment from US Borrower pursuant
to this paragraph, US Agent shall distribute such payment to the US Issuing
Lender or, to the extent that Lenders have made payments pursuant to
Section 2.11(a) to reimburse the US Issuing Lender, then to such Lenders and the
US Issuing Lender as their interests may appear.

(ii) Promptly following receipt of a notice of a US Letter of Credit
Disbursement pursuant to Section 2.11(a), each Lender with a US Revolver
Commitment

 

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agrees to fund its Pro Rata Share of any US Advance deemed made pursuant to
Section 2.11(a) on the same terms and conditions as if US Borrower had requested
the amount thereof as a US Advance and US Agent shall promptly pay to US Issuing
Lender the amounts so received by it from the Lenders. By the issuance of a US
Letter of Credit (or an amendment, renewal, or extension of a Letter of Credit)
and without any further action on the part of the US Issuing Lender or the
Lenders with US Revolver Commitments, the US Issuing Lender shall be deemed to
have granted to each Lender with a US Revolver Commitment, and each Lender with
a US Revolver Commitment shall be deemed to have purchased, a participation in
each US Letter of Credit issued by US Issuing Lender in an amount equal to its
Pro Rata Share of such US Letter of Credit, and each such Lender agrees to pay
to US Agent, for the account of the US Issuing Lender, such Lender’s Pro Rata
Share of any US Letter of Credit Disbursement made by US Issuing Lender under
the applicable US Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender with a US Revolver Commitment hereby absolutely and
unconditionally agrees to pay to US Agent, for the account of the US Issuing
Lender, such Lender’s Pro Rata Share of each US Letter of Credit Disbursement
made by US Issuing Lender and not reimbursed by US Borrower on the date due as
provided in Section 2.11(a), or of any reimbursement payment required to be
refunded (or that US Agent or US Issuing Lender elects, based upon the advice of
counsel, to refund) to US Borrower for any reason. Each Lender with a US
Revolver Commitment acknowledges and agrees that its obligation to deliver to US
Agent, for the account of the US Issuing Lender, an amount equal to its
respective Pro Rata Share of each US Letter of Credit Disbursement pursuant to
this Section 2.11(a) shall be absolute and unconditional and such remittance
shall be made notwithstanding the occurrence or continuation of an Event of
Default or Default or the failure to satisfy any condition set forth in
Section 3. If any such Lender fails to make available to US Agent the amount of
such Lender’s Pro Rata Share of a US Letter of Credit Disbursement as provided
in this Section, such Lender shall be deemed to be a Defaulting Lender and US
Agent (for the account of the US Issuing Lender) shall be entitled to recover
such amount on demand from such Lender together with interest thereon at the
Defaulting Lender Rate until paid in full.

(iii) US Borrower hereby agrees to indemnify, save, defend, and hold the Lender
Group harmless from any damage, loss, cost, expense, or liability (other than
Taxes, which shall be governed by Section 16), and reasonable attorneys’ fees
incurred by US Issuing Lender, or any other member of the Lender Group arising
out of or in connection with any US Letter of Credit; provided, however, that US
Borrower shall not be obligated hereunder to indemnify for any loss, cost,
expense, or liability that a court of competent jurisdiction finally determines
to have resulted from the gross negligence or willful misconduct of the US
Issuing Lender or any other member of the Lender Group as determined pursuant to
a final, non-appealable order of a court of competent jurisdiction. US Borrower
understands and agrees that none of the US Issuing Lender, nor any other member
of the Lender Group shall be liable for any error, negligence, or mistake,
whether of omission or commission, in following US Borrower’s instructions or
those contained in the US Letter of Credit or any modifications, amendments, or
supplements thereto. US Borrower hereby acknowledges and agrees that none of the
US Issuing Lender, nor any other member of the Lender Group shall be responsible
for delays, errors, or omissions resulting from the malfunction of equipment in
connection with any US Letter of Credit.

 

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(iv) The obligation of US Borrower to reimburse the Issuing Lender for each
drawing under each US Letter of Credit shall be absolute, unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including the following:

(A) any lack of validity or enforceability of such Letter of Credit, this
Agreement, or another Loan Document,

(B) the existence of any claim, counterclaim, setoff, defense or other right
that US Borrower or any of its Subsidiaries may have at any time against any
beneficiary or any transferee of such US Letter of Credit (or any Person for
whom any such beneficiary or any such transferee maybe acting), the Issuing
Lender or any other Person, whether in connection with this Agreement, the
transactions contemplated hereby or such Letter of Credit or any agreement or
instrument relating thereto, or any unrelated transaction,

(C) any draft, demand, certificate or other document presented under such US
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect,
or any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under such US Letter of Credit,

(D) any payment by the US Issuing Lender under such US Letter of Credit against
presentation of a draft or certificate that does not substantially or strictly
comply with the terms of such US Letter of Credit (including, without
limitation, any requirement that presentation be made at a particular place or
by a particular time of day), or any payment made by the US Issuing Lender under
such US Letter of Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of such US Letter of Credit,

(E) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, including any other circumstance that might otherwise
constitute a defense available to, or discharge of, any US Borrower or any of
its Subsidiaries, or

(F) the fact that any Event of Default shall have occurred and be continuing.

(v) US Borrower acknowledges and agrees that any and all customary issuance
charges, commissions, charges for amendments, extensions, drawings and renewals,
fees, and costs incurred by the US Issuing Lender relating to US Letters of
Credit shall be Lender Group Expenses for purposes of this Agreement and shall
be

 

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reimbursable immediately by US Borrower to US Agent for the account of the US
Issuing Lender; provided, that such additional charges, commissions, fees or
costs shall not be charged with respect to US Letters of Credit that are
stand-by Letters of Credit.

(vi) If by reason of (i) any change after the Closing Date in any applicable
law, treaty, rule, or regulation or any change in the interpretation or
application thereof by any Governmental Authority, or (ii) compliance by the US
Issuing Lender or any other member of the Lender Group with any direction,
request, or requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including, Regulation D of the
Federal Reserve Board as from time to time in effect (and any successor
thereto):

(A) any reserve, deposit, or similar requirement is or shall be imposed or
modified in respect of any US Letter of Credit issued or caused to be issued
hereunder or hereby, or

(B) there shall be imposed on the US Issuing Lender or any other member of the
Lender Group, any other condition regarding any US Letter of Credit,

and the result of the foregoing is to increase, directly or indirectly, the cost
to the US Issuing Lender or any other member of the Lender Group of issuing,
making, participating in, or maintaining any US Letter of Credit or to reduce
the amount receivable in respect thereof, then, and in any such case, US Agent
may, at any time within a reasonable period after the additional cost is
incurred or the amount received is reduced, notify US Borrower, and US Borrower
shall pay within 30 days after demand therefor, such amounts as US Agent may
specify to be necessary to compensate the US Issuing Lender or any other member
of the Lender Group for such additional cost or reduced receipt, together with
interest on such amount from the date of such demand until payment in full
thereof at the rate then applicable to US Base Rate Loans hereunder; provided,
however, that US Borrower shall not be required to provide any compensation
pursuant to this Section 2.11(g) for any such amounts incurred more than 180
days prior to the date on which the demand for payment of such amounts is first
made to Borrower (provided, that notwithstanding anything herein to the
contrary, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all
requests, rules, regulations, guidelines or directives thereunder or issued in
connection therewith shall be deemed to be a change in applicable law or
compliance requirement enacted after the Closing Date regardless of the date
actually enacted, adopted or issued); provided further, however, that if an
event or circumstance giving rise to such amounts is retroactive, then the
180-day period referred to above shall be extended to include the period of
retroactive effect thereof. The determination by US Agent of any amount due
pursuant to this Section 2.11(g), as set forth in a certificate setting forth
the calculation thereof in reasonable detail, shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the parties
hereto.

 

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(b) Canadian Letters of Credit.

(i) Subject to the terms and conditions of this Agreement, upon the request of a
Canadian Borrower made in accordance herewith, the Canadian Issuing Lender
agrees to issue, or cause a Canadian Underlying Issuer (including as Canadian
Issuing Lender’s agent) to issue, a requested Canadian Letter of Credit. If
Canadian Issuing Lender, at its option, elects to cause a Canadian Underlying
Issuer to issue a requested Canadian Letter of Credit, then Canadian Issuing
Lender agrees that it will enter into arrangements relative to the reimbursement
of such Canadian Underlying Issuer (which may include, among, other means, by
becoming an applicant with respect to such Letter of Credit or entering into
undertakings which provide for reimbursements of such Canadian Underlying Issuer
with respect to such Canadian Letter of Credit; each such obligation or
undertaking, irrespective of whether in writing, a “Canadian Reimbursement
Undertaking”) with respect to Canadian Letters of Credit issued by such Canadian
Underlying Issuer. By submitting a request to Canadian Issuing Lender for the
issuance of a Canadian Letter of Credit, such Canadian Borrower shall be deemed
to have requested that Canadian Issuing Lender issue or that a Canadian
Underlying Issuer issue the requested Canadian Letter of Credit and to have
requested Canadian Issuing Lender to issue a Reimbursement Undertaking with
respect to such requested Letter of Credit if it is to be issued by a Canadian
Underlying Issuer (it being expressly acknowledged and agreed by Borrowers that
Borrowers are and shall be deemed to be applicants (within the meaning of
Section 5-102(a)(2) of the Code) with respect to each Canadian Underlying Letter
of Credit). Each request for the issuance of a Canadian Letter of Credit, or the
amendment, renewal, or extension of any outstanding Canadian Letter of Credit,
shall be made in writing by an Authorized Person of such Canadian Borrower and
delivered to the Canadian Issuing Lender via hand delivery, telefacsimile, or
other electronic method of transmission reasonably in advance of the requested
date of issuance, amendment, renewal, or extension. Each such request shall be
in form and substance reasonably satisfactory to the Canadian Issuing Lender and
shall specify (A) the amount of such Canadian Letter of Credit, (B) the date of
issuance, amendment, renewal, or extension of such Canadian Letter of Credit,
(C) the proposed expiration date of such Canadian Letter of Credit, (D) the name
and address of the beneficiary of the Canadian Letter of Credit, and (E) such
other information (including, the conditions of drawing, and, in the case of an
amendment, renewal, or extension, identification of the Canadian Letter of
Credit to be so amended, renewed, or extended) as shall be necessary to prepare,
amend, renew, or extend such Canadian Letter of Credit. Each Canadian Letter of
Credit may be in US Dollars or Canadian Dollars, as requested by a Canadian
Borrower. Anything contained herein to the contrary notwithstanding, the
Canadian Issuing Lender may, but shall not be obligated to, issue or cause the
issuance of a Canadian Letter of Credit or to issue a Canadian Reimbursement
Undertaking in respect of a Canadian Underlying Letter of Credit, in either
case, that supports the obligations of such Canadian Borrower or its
Subsidiaries (1) in respect of (x) a lease of real property, or (y) an
employment contract, or (2) at any time that one or more of the Lenders is a
Defaulting Lender. The Canadian Issuing Lender shall have no obligation to issue
a Canadian Letter of Credit or a Canadian Reimbursement Undertaking if any of
the following would result after giving effect to the requested issuance:

 

  (I) the Canadian Letter of Credit Usage would exceed the Canadian Borrowing
Base less the outstanding amount of Canadian Advances (inclusive of Canadian
Swing Loans), or

 

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  (II) the Canadian Letter of Credit Usage would exceed $5,000,000, or

 

  (III) the Canadian Letter of Credit Usage would exceed the Maximum Canadian
Revolver Amount less the outstanding amount of Canadian Advances (including
Canadian Swing Loans).

Each Canadian Letter of Credit shall be in form and substance reasonably
acceptable to the Canadian Issuing Lender, including the requirement that the
amounts payable thereunder must be payable in Canadian Dollars or US Dollars, as
applicable. If Canadian Issuing Lender makes a payment under a Canadian Letter
of Credit or a Canadian Underlying Issuer makes a payment under a Canadian
Underlying Letter of Credit, Canadian Borrower shall pay to Canadian Agent an
amount equal to the applicable Canadian Letter of Credit Disbursement on the
date such Canadian Letter of Credit Disbursement is made and, in the absence of
such payment, the amount of the Canadian Letter of Credit Disbursement
immediately and automatically shall be deemed to be a Canadian Advance hereunder
and, initially, shall bear interest at the rate then applicable to Canadian
Advances that are Canadian Base Rate Loans. If a Canadian Letter of Credit
Disbursement is deemed to be a Canadian Advance hereunder (notwithstanding any
failure to satisfy any condition precedent set forth in Section 3), such
Canadian Borrowers’ obligation to pay the amount of such Canadian Letter of
Credit Disbursement to Canadian Issuing Lender shall be automatically converted
into an obligation to pay the resulting Canadian Advance. Promptly following
receipt by Canadian Agent of any payment from a Canadian Borrower pursuant to
this paragraph, Canadian Agent shall distribute such payment to the Canadian
Issuing Lender or, to the extent that Lenders have made payments pursuant to
Section 2.11(b) to reimburse the Canadian Issuing Lender, then to such Lenders
and the Canadian Issuing Lender as their interests may appear.

(ii) Promptly following receipt of a notice of a Canadian Letter of Credit
Disbursement pursuant to Section 2.11(b), each Lender with a Canadian Revolver
Commitment agrees to fund its Pro Rata Share of any Canadian Advance deemed made
pursuant to Section 2.11(b) on the same terms and conditions as if a Canadian
Borrower had requested the amount thereof as an Canadian Advance and Canadian
Agent shall promptly pay to Canadian Issuing Lender the amounts so received by
it from the Lenders. By the issuance of a Canadian Letter of Credit or a
Canadian Reimbursement Undertaking (or an amendment, renewal, or extension of a
Canadian Letter of Credit or a Canadian Reimbursement Undertaking) and without
any further action on the part of the Canadian Issuing Lender or the Lenders
with Canadian Revolver Commitments, the Canadian Issuing Lender shall be deemed
to have granted to each Lender with a Canadian Revolver Commitment, and each
Lender with a Canadian Revolver Commitment shall be deemed to have purchased, a
participation in each Canadian Letter of Credit issued by Canadian Issuing
Lender and each Canadian Reimbursement Undertaking in an amount equal to its Pro
Rata Share of such Canadian Letter of Credit, and each such Lender agrees to pay
to Canadian

 

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Agent, for the account of the Canadian Issuing Lender, such Lender’s Pro Rata
Share of any Canadian Letter of Credit Disbursement made by Canadian Issuing
Lender or a Canadian Underlying Issuer under the applicable Canadian Letter of
Credit. In consideration and in furtherance of the foregoing, each Lender with a
Canadian Revolver Commitment hereby absolutely and unconditionally agrees to pay
to Canadian Agent, for the account of the Canadian Issuing Lender, such Lender’s
Pro Rata Share of each Canadian Letter of Credit Disbursement made by Canadian
Issuing Lender or a Canadian Underlying Issuer and not reimbursed by a Canadian
Borrower on the date due as provided in Section 2.11(b), or of any reimbursement
payment required to be refunded (or that Canadian Agent or Canadian Issuing
Lender elects, based upon the advice of counsel, to refund) to such Canadian
Borrower for any reason. Each Lender with a Canadian Revolver Commitment
acknowledges and agrees that its obligation to deliver to Canadian Agent, for
the account of the Canadian Issuing Lender, an amount equal to its respective
Pro Rata Share of each Canadian Letter of Credit Disbursement pursuant to this
Section 2.11(b) shall be absolute and unconditional and such remittance shall be
made notwithstanding the occurrence or continuation of an Event of Default or
Default or the failure to satisfy any condition set forth in Section 3. If any
such Lender fails to make available to Canadian Agent the amount of such
Lender’s Pro Rata Share of a Letter of Credit Disbursement as provided in this
Section, such Lender shall be deemed to be a Defaulting Lender and Canadian
Agent (for the account of the Canadian Issuing Lender) shall be entitled to
recover such amount on demand from such Lender together with interest thereon at
the Defaulting Lender Rate until paid in full.

(iii) Each Canadian Borrower hereby agrees to indemnify, save, defend, and hold
the Lender Group and each Canadian Underlying Issuer, without duplication,
harmless from any damage, loss, cost, expense, or liability (other than Taxes,
which shall be governed by Section 16), and reasonable attorneys’ fees incurred
by Canadian Issuing Lender, or any other member of the Lender Group or any
Canadian Underlying Issuer arising out of or in connection with any Canadian
Reimbursement Undertaking or any Canadian Letter of Credit; provided, however,
that any Canadian Borrower shall not be obligated hereunder to indemnify for any
loss, cost, expense, or liability that a court of competent jurisdiction finally
determines to have resulted from the gross negligence or willful misconduct of
the Canadian Issuing Lender, any other member of the Lender Group, or any
Canadian Underlying Issuer. Each Canadian Borrower agrees to be bound by the
Canadian Underlying Issuer’s regulations and interpretations of any Canadian
Letter of Credit or by Canadian Issuing Lender’s interpretations of any Canadian
Reimbursement Undertaking even though this interpretation may be different from
such Canadian Borrower’s own. Each Canadian Borrower understands and agrees that
none of the Canadian Issuing Lender, nor any other member of the Lender Group
shall be liable for any error, negligence, or mistake, whether of omission or
commission, in following a Canadian Borrower’s instructions or those contained
in the Canadian Letter of Credit or any modifications, amendments, or
supplements thereto. Each Canadian Borrower hereby acknowledges and agrees that
none of the Canadian Issuing Lender, nor any other member of the Lender Group
shall be responsible for delays, errors, or omissions resulting from the
malfunction of equipment in connection with any Canadian Letter of Credit.

 

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(iv) The obligation of each Canadian Borrower to reimburse the Canadian Issuing
Lender for each drawing under each Canadian Letter of Credit shall be absolute,
unconditional and irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, including the following:

(A) any lack of validity or enforceability of such Canadian Letter of Credit,
this Agreement, or another Loan Document,

(B) the existence of any claim, counterclaim, setoff, defense or other right
that a Canadian Borrower or any of its Subsidiaries may have at any time against
any beneficiary or any transferee of such Canadian Letter of Credit (or any
Person for whom any such beneficiary or any such transferee maybe acting), the
Canadian Issuing Lender or any other Person, whether in connection with this
Agreement, the transactions contemplated hereby or such Canadian Letter of
Credit or any agreement or instrument relating thereto, or any unrelated
transaction,

(C) any draft, demand, certificate or other document presented under such
Canadian Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect, or any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under such Canadian Letter of
Credit,

(D) any payment by the Canadian Issuing Lender under such Canadian Letter of
Credit against presentation of a draft or certificate that does not
substantially or strictly comply with the terms of such Canadian Letter of
Credit (including, without limitation, any requirement that presentation be made
at a particular place or by a particular time of day), or any payment made by
the Canadian Issuing Lender under such Canadian Letter of Credit to any Person
purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the
benefit of creditors, liquidator, receiver or other representative of or
successor to any beneficiary or any transferee of such Canadian Letter of
Credit,

(E) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, including any other circumstance that might otherwise
constitute a defense available to, or discharge of, any Canadian Borrower or any
of its Subsidiaries, or

(F) the fact that any Event of Default shall have occurred and be continuing.

(v) Canadian Borrowers hereby authorize and direct any Canadian Underlying
Issuer to deliver to the Canadian Issuing Lender all instruments, documents, and
other writings and property received by such Canadian Underlying Issuer pursuant
to such Canadian Underlying Letter of Credit and to accept and rely upon the
Canadian Issuing Lender’s instructions with respect to all matters arising in
connection with such Canadian Underlying Letter of Credit and the related
application.

 

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(vi) Each Canadian Borrower acknowledges and agrees that any and all customary
issuance charges (including 0.30% issuance charge with respect to Canadian
Letters of Credit issued by the Canadian Underlying Issuer), commissions,
charges for amendments, extensions, drawings and renewals, fees, and costs
incurred by the Canadian Issuing Lender relating to Canadian Letters of Credit
shall be Lender Group Expenses for purposes of this Agreement and shall be
reimbursable immediately by such Canadian Borrowers to Canadian Agent for the
account of the Canadian Issuing Lender or the Canadian Underlying Issuer, as
applicable.

(vii) If by reason of (i) any change after the Closing Date in any applicable
law, treaty, rule, or regulation or any change in the interpretation or
application thereof by any Governmental Authority, or (ii) compliance by the
Canadian Issuing Lender or any other member of the Lender Group or Canadian
Underlying Issuer with any direction, request, or requirement (irrespective of
whether having the force of law) of any Governmental Authority or monetary
authority:

(A) any reserve, deposit, or similar requirement is or shall be imposed or
modified in respect of any Canadian Letter of Credit issued or caused to be
issued hereunder or hereby, or

(B) there shall be imposed on the Canadian Issuing Lender, any other member of
the Lender Group or Canadian Underlying Issuer, any other condition regarding
any Canadian Letter of Credit or Canadian Reimbursement Undertaking,

and the result of the foregoing is to increase, directly or indirectly, the cost
to the Canadian Issuing Lender or any other member of the Lender Group of
issuing, making, participating in, or maintaining any Canadian Reimbursement
Undertaking, Canadian Letter of Credit or to reduce the amount receivable in
respect thereof, then, and in any such case, Canadian Agent may, at any time
within a reasonable period after the additional cost is incurred or the amount
received is reduced, notify Canadian Borrowers, and Canadian Borrowers shall pay
within 30 days after demand therefor, such amounts as Canadian Agent may specify
to be necessary to compensate the Issuing Lender or any other member of the
Lender Group for such additional cost or reduced receipt, together with interest
on such amount from the date of such demand until payment in full thereof at the
rate then applicable to Canadian Base Rate Loans denominated in Canadian Dollars
if such Obligation is denominated in Canadian Dollars or at the rate then
applicable to Canadian Base Rate Loans denominated in US Dollars if such
Obligation is denominated in US Dollars hereunder; provided, however, that
Canadian Borrowers shall not be required to provide any compensation pursuant to
this Section 2.11(g) for any such amounts incurred more than 180 days prior to
the date on which the demand for payment of such amounts is first made to
Canadian Borrowers; provided further, however, that if an event or circumstance
giving rise to such amounts is retroactive, then the 180-day period referred to
above shall be extended to include the period of retroactive effect thereof. The
determination by Canadian Agent of any amount due pursuant to this
Section 2.11(g), as set forth in a certificate setting forth the calculation
thereof in reasonable detail, shall, in the absence of manifest or demonstrable
error, be final and conclusive and binding on all of the parties hereto.

 

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2.12. LIBOR Option.

(a) Interest and Interest Payment Dates. In lieu of having interest charged at
the rate based upon the US Base Rate or Canadian Base Rate, as applicable, each
Borrower shall have the option, subject to Section 2.12(b) below (the “LIBOR
Option”) to have interest on all or a portion of the Advances made in US Dollars
be charged (whether at the time when made (unless otherwise provided herein),
upon conversion from a Base Rate Loan to a LIBOR Rate Loan, or upon continuation
of a LIBOR Rate Loan as a LIBOR Rate Loan) at a rate of interest based upon the
applicable LIBOR Rate (provided that all Advances to Canadian Borrowers in
Canadian Dollars shall bear interest based upon the Canadian Base Rate).
Interest on LIBOR Rate Loans (other than Daily LIBOR Rate Loans) shall be
payable on the earliest of (i) the last day of the Interest Period applicable
thereto; (ii) the date on which all or any portion of the Obligations are
accelerated pursuant to the terms hereof, or (iii) the date on which this
Agreement is terminated pursuant to the terms hereof. Interest on Daily LIBOR
Rate Loans shall be payable monthly, in arrears, on the first day of each month.
On the last day of each applicable Interest Period, unless the applicable
Borrower properly has exercised the LIBOR Option with respect thereto, the
interest rate applicable to such LIBOR Rate Loan automatically shall convert to
the rate of interest then applicable to Base Rate Loans of the same type
hereunder; provided, that LIBOR Rate Loans that are Daily LIBOR Rate Loans shall
continue as Daily LIBOR Rate Loans until otherwise directed by the applicable
Borrower. At any time that an Event of Default has occurred and is continuing,
at the written election of the Required Lenders, Borrowers no longer shall have
the option to request that Advances bear interest at a rate based upon the LIBOR
Rate.

(b) LIBOR Election.

(i) Each Borrower may, at any time and from time to time, so long as Borrowers
have not received a notice from Agents, after the occurrence and during the
continuance of an Event of Default, of the election of the Required Lenders to
terminate the right of Borrowers to exercise the LIBOR Option during the
continuance of such Event of Default, elect to exercise the LIBOR Option by
notifying the applicable Agent prior to 11:00 a.m. (California time) at least 3
Business Days prior to the commencement of the proposed Interest Period (the
“LIBOR Deadline”). Notice of a Borrower’s election of the LIBOR Option for a
permitted portion of the Advances and an Interest Period pursuant to this
Section shall be made by delivery to the applicable Agent of a LIBOR Notice
received by such Agent before the LIBOR Deadline, or by telephonic notice
received by such Agent before the LIBOR Deadline (to be confirmed by delivery to
Agent of a LIBOR Notice received by such Agent prior to 5:00 p.m. (California
time) on the same day). Promptly upon its receipt of each such LIBOR Notice, the
applicable Agent shall provide a copy thereof to each of the affected Lenders.
Notwithstanding the foregoing, no such LIBOR election shall be permitted with
respect to Canadian Advances made in Canadian Dollars.

(ii) Each LIBOR Notice of US Borrower shall be irrevocable and binding on US
Borrower. In connection with each LIBOR Rate Loan to US Borrower, US Borrower
shall indemnify, defend, and hold US Agent and the Lenders harmless against any
loss, cost, or expense actually incurred by US Agent or any Lender as a result
of (A) the

 

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payment of any principal of any LIBOR Rate Loan that is not a Daily LIBOR Rate
Loan other than on the last day of an Interest Period applicable thereto
(including as a result of an Event of Default), (B) the conversion of any LIBOR
Rate Loan other than on the last day of the Interest Period applicable thereto,
or (C) the failure to borrow, convert, continue or prepay any LIBOR Rate Loan on
the date specified in any LIBOR Notice delivered pursuant hereto (such losses,
costs, or expenses, “US Funding Losses”). A certificate of US Agent or a Lender
delivered to US Borrower setting forth in reasonable detail any amount or
amounts that US Agent or such Lender is entitled to receive pursuant to this
Section 2.11 shall be conclusive absent manifest error. US Borrower shall pay
such amount to US Agent or the Lender, as applicable, within 30 days of the date
of its receipt of such certificate. Each LIBOR Notice of a Canadian Borrower
shall be irrevocable and binding on Canadian Borrowers. In connection with each
LIBOR Rate Loan to Canadian Borrowers, Canadian Borrowers shall indemnify,
defend, and hold Canadian Agent and the Lenders harmless against any loss, cost,
or expense actually incurred by Canadian Agent or any Lender as a result of
(A) the payment of any principal of any LIBOR Rate Loan other than on the last
day of an Interest Period applicable thereto (including as a result of an Event
of Default), (B) the conversion of any LIBOR Rate Loan other than on the last
day of the Interest Period applicable thereto, or (C) the failure to borrow,
convert, continue or prepay any LIBOR Rate Loan on the date specified in any
LIBOR Notice delivered pursuant hereto (such losses, costs, or expenses,
“Canadian Funding Losses”). A certificate of Canadian Agent or a Lender
delivered to Canadian Borrowers setting forth in reasonable detail any amount or
amounts that Canadian Agent or such Lender is entitled to receive pursuant to
this Section 2.11 shall be conclusive absent manifest error. Canadian Borrowers
shall pay such amount to Canadian Agent or the Lender, as applicable, within 30
days of the date of its receipt of such certificate.

(iii) Borrowers shall have not more than 10 LIBOR Rate Loans in the aggregate in
effect at any given time. Borrowers only may exercise the LIBOR Option for
proposed LIBOR Rate Loans of at least US $100,000.

(c) Conversion. Each Borrower may convert LIBOR Rate Loans to Base Rate Loans at
any time; provided, however, that in the event that LIBOR Rate Loans are
converted or prepaid on any date that is not the last day of the Interest Period
applicable thereto, including as a result of any automatic prepayment through
the required application by the applicable Agent of proceeds of Borrowers’ and
their Domestic Subsidiaries’ Collections in accordance with Section 2.3(b) or
for any other reason, including early termination of the term of this Agreement
or acceleration of all or any portion of the Obligations pursuant to the terms
hereof, US Borrower and Canadian Borrowers, as applicable, shall indemnify,
defend, and hold Agent and the Lenders and their Participants harmless against
any and all Funding Losses with respect to such Borrower(s) in accordance with
Section 2.11(b)(ii).

(d) Special Provisions Applicable to LIBOR Rate.

(i) The LIBOR Rate may be adjusted by an Agent with respect to any Lender on a
prospective basis to take into account any additional or increased costs to

 

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such Lender of maintaining or obtaining any eurodollar deposits or increased
costs, in each case, due to changes in applicable law (other than changes in
laws relative to Taxes, which shall be governed by Section 16) occurring
subsequent to the commencement of the then applicable Interest Period, including
changes in tax laws (except changes of general applicability in corporate income
tax laws) and changes in the reserve requirements imposed by the Board of
Governors of the Federal Reserve System (or any successor), which additional or
increased costs would increase the cost of funding or maintaining loans bearing
interest at the LIBOR Rate. In any such event, the affected Lender shall give
the applicable Borrower(s) and the applicable Agent(s) notice of such a
determination and adjustment and the applicable Agent promptly shall transmit
the notice to each other Lender and, upon its receipt of the notice from the
affected Lender, the applicable Borrower(s) may, by notice to such affected
Lender (y) require such Lender to furnish to such Borrower(s) a statement
setting forth the basis for adjusting such LIBOR Rate and the method for
determining the amount of such adjustment, or (z) repay the LIBOR Rate Loans
with respect to which such adjustment is made (together with any amounts due
under Section 2.12(b)(ii)).

(ii) In the event that any change in market conditions or any law, regulation,
treaty, or directive, or any change therein or in the interpretation or
application thereof, shall at any time after the date hereof, in the reasonable
opinion of any Lender, make it unlawful or impractical for such Lender to fund
or maintain LIBOR Rate Loans or to continue such funding or maintaining, or to
determine or charge interest rates at the LIBOR Rate, such Lender shall give
notice of such changed circumstances to Agents and Borrowers and Agents promptly
shall transmit the notice to each other Lender and (y) in the case of any LIBOR
Rate Loans of such Lender that are outstanding, the date specified in such
Lender’s notice shall be deemed to be the last day of the Interest Period of
such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such Lender
thereafter shall accrue interest at the rate then applicable to Base Rate Loans,
and (z) Borrowers shall not be entitled to elect the LIBOR Option until such
Lender determines that it would no longer be unlawful or impractical to do so.

(e) No Requirement of Matched Funding. Anything to the contrary contained herein
notwithstanding, neither any Agent, nor any Lender, nor any of their
Participants, is required actually to acquire eurodollar deposits to fund or
otherwise match fund any Obligation as to which interest accrues at the LIBOR
Rate.

2.13. Capital Requirements.

(a) If, after the date hereof, any Lender determines that (i) the adoption of or
change in any law, rule, regulation or guideline regarding capital or reserve
requirements for banks or bank holding companies, or any change in the
interpretation, implementation, or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), has the effect of reducing the return on such Lender’s or
such holding company’s capital as a consequence of such Lender’s Revolver
Commitments hereunder to a level below that which such Lender or such holding
company could have achieved but for

 

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such adoption, change, or compliance (taking into consideration such Lender’s or
such holding company’s then existing policies with respect to capital adequacy
and assuming the full utilization of such entity’s capital) by any amount deemed
by such Lender to be material, then such Lender may notify the applicable
Borrower(s) and applicable Agent thereof (provided, that notwithstanding
anything herein to the contrary, the Dodd-Frank Wall Street Reform and Consumer
Protection Act and all requests, rules, regulations, guidelines or directives
thereunder or issued in connection therewith shall be deemed to be a change in
applicable law or compliance requirement enacted after the Closing Date
regardless of the date actually enacted, adopted or issued). Following receipt
of such notice, each applicable Borrower agrees to pay such Lender on demand the
amount of such reduction of return of capital as and when such reduction is
determined, payable within 30 days after presentation by such Lender of a
statement in the amount and setting forth in reasonable detail such Lender’s
calculation thereof and the assumptions upon which such calculation was based
(which statement shall be deemed true and correct absent manifest error). In
determining such amount, such Lender may use any reasonable averaging and
attribution methods. Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender’s right to demand such compensation; provided that no Borrower shall be
required to compensate a Lender pursuant to this Section for any reductions in
return incurred more than 180 days prior to the date that such Lender notifies
such Borrower(s) of such law, rule, regulation or guideline giving rise to such
reductions and of such Lender’s intention to claim compensation therefor;
provided further that if such claim arises by reason of the adoption of or
change in any law, rule, regulation or guideline that is retroactive, then the
180-day period referred to above shall be extended to include the period of
retroactive effect thereof.

(b) If any Lender requests additional or increased costs referred to in
Section 2.12(d)(i) or amounts under Section 2.13(a) or sends a notice under
Section 2.12(d)(i) relative to increased or additional costs or
Section 2.12(d)(ii) relative to changed circumstances (any such Lender, an
“Affected Lender”), then such Affected Lender shall use reasonable efforts to
promptly designate a different one of its lending offices or to assign its
rights and obligations hereunder to another of its offices or branches, if
(i) in the reasonable judgment of such Affected Lender, such designation or
assignment would eliminate or reduce amounts payable pursuant to
Section 2.12(d)(i) or Section 2.13(a), as applicable, or would eliminate the
illegality or impracticality of funding or maintaining LIBOR Rate Loans and
(ii) in the reasonable judgment of such Affected Lender, such designation or
assignment would not subject it to any material unreimbursed cost or expense and
would not otherwise be materially disadvantageous to it. Each applicable
Borrower agrees to pay all reasonable out-of-pocket costs and expenses incurred
by such Affected Lender in connection with any such designation or assignment.
If, after such reasonable efforts, such Affected Lender does not so designate a
different one of its lending offices or assign its rights to another of its
offices or branches so as to eliminate the applicable Borrower(s)’ obligation to
pay any future amounts to such Affected Lender pursuant to Section 2.12(d)(i),
Section 2.12(d)(ii) or Section 2.13(a), as applicable, or to enable the
applicable Borrower(s) to obtain LIBOR Rate Loans, then such Borrower(s)
(without prejudice to any amounts then due to such Affected Lender under
Section 2.12(d)(i), or

 

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Section 2.13(a), as applicable), unless prior to the effective date of any such
assignment the Affected Lender withdraws its request for such additional amounts
under Section 2.12(d)(i), or Section 2.13(a), as applicable, or indicates that
it is no longer unlawful or impractical to fund or maintain LIBOR Rate Loans,
may seek a substitute Lender reasonably acceptable to the applicable Agent to
purchase the Obligations owed to such Affected Lender and such Affected Lender’s
Revolver Commitments hereunder (a “Replacement Lender”), and if such Replacement
Lender agrees to such purchase, such Affected Lender shall assign to the
Replacement Lender its Obligations and Revolver Commitments, pursuant to an
Assignment and Acceptance Agreement, and upon such purchase by the Replacement
Lender, such Replacement Lender shall be deemed to be a “Lender” for purposes of
this Agreement and such Affected Lender shall cease to be a “Lender” for
purposes of this Agreement. In connection with the arrangement of such a
Replacement Lender, the Affected Lender shall have no right to refuse to be
replaced hereunder, and agrees to execute and deliver a completed form of
Assignment and Acceptance in favor of the Replacement Lender (and agrees that it
shall be deemed to have executed and delivered such document if it fails to do
so) subject only to being paid its share of the outstanding Obligations (other
than the applicable Bank Product Obligations, but including (1) all interest,
fees, and other amounts that may be due and payable in respect thereof, and
(2) an assumption of its Pro Rata Share of its participation in the applicable
Letters of Credit).

2.14. Interest Act (Canada); Criminal Rate of Interest; Nominal Rate of
Interest.

Notwithstanding anything to the contrary contained in this Agreement or in any
other Loan Document,

(a) solely to the extent that a court of competent jurisdiction finally
determines that the calculation or determination of interest payable by Canadian
Borrowers in respect of the Obligations pursuant to this Agreement and the other
Loan Documents shall be governed by the laws of the province of British Columbia
or the federal laws of Canada, in no event shall the aggregate “interest” (as
defined in Section 347 of the Criminal Code, R.S.C. 1985, c. C-46, as the same
shall be amended, replaced or re-enacted from time to time) payable by Canadian
Borrowers to any Agent or any Lender under this Agreement or any other Loan
Document exceed the effective annual rate of interest on the “credit advanced”
(as defined in that section) under this Agreement or such other Loan Document
lawfully permitted under that section and, if any payment, collection or demand
pursuant to this Agreement or any other Loan Document in respect of “interest”
(as defined in that section) is determined to be contrary to the provisions of
that section, such payment, collection or demand shall be deemed to have been
made by mutual mistake of Agents, Lenders and Canadian Borrowers and the amount
of such payment or collection shall be refunded by the applicable Agent and
Lenders to Canadian Borrowers. For the purposes of this Agreement and each other
Loan Document to which any Canadian Borrower is a party, the effective annual
rate of interest payable by Canadian Borrowers shall be determined in accordance
with generally accepted actuarial practices and principles over the term of the
loans on the basis of annual compounding for the lawfully permitted rate of
interest and, in the event of dispute, a certificate of a Fellow of the
Institute of Actuaries appointed by Canadian Agent for the account of Canadian
Borrowers will be conclusive for the purpose of such determination in the
absence of evidence to the contrary; and

 

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(b) For the purposes of the Interest Act (Canada) and disclosure thereunder and
with respect to the Canadian Loan Parties only:

(i) Whenever any interest or fee payable by the Canadian Loan Parties is
calculated using a rate based on a year of 360 or 365 days, as the case may be,
the rate determined pursuant to such calculation, when expressed as an annual
rate, is equivalent to (x) the applicable rate based on a year of 360 days or
365 days, as the case may be, (y) multiplied by the actual number of days in the
calendar year in which such rate is to be ascertained and (z) divided by 360 or
365, as the case may be,

(ii) all calculations of interest payable by Canadian Borrowers under this
Agreement or any other Loan Document are to be made on the basis of the nominal
interest rate described herein and therein and not on the basis of effective
yearly rates or on any other basis which gives effect to the principle of deemed
reinvestment of interest. The parties acknowledge that there is a material
difference between the stated nominal interests rates and the effective yearly
rates of interest and that they are capable of making the calculations required
to determine such effective yearly rates of interest.

2.15. Currencies.

The US Advances and other US Obligations (unless such other US Obligations
expressly provide otherwise) shall be made and repaid in US Dollars. The
Canadian Advances and other Canadian Obligations (unless such other Canadian
Obligations expressly provide otherwise) shall be made in US Dollars or, if
specifically requested, Canadian Dollars and repaid in the currency in which the
applicable Advance being repaid was made. All requests for Advances shall be
deemed to be requests for US Dollars unless, with respect to Canadian Advances,
a Canadian Borrower specifically requests Canadian Dollars.

2.16. Joint and Several Liability of Canadian Borrowers.

(a) Each Canadian Borrower is accepting joint and several liability hereunder
and under the other Loan Documents for the Canadian Obligations with the other
Canadian Borrowers in consideration of the financial accommodations to be
provided by the Lender Group under this Agreement, for the mutual benefit,
directly and indirectly, of each Canadian Borrower and in consideration of the
undertakings of the other Canadian Borrowers to accept joint and several
liability for the Canadian Obligations.

(b) Each Canadian Borrower, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Canadian Borrowers, with respect to the
payment and performance of all of the Canadian Obligations (including, without
limitation, any Canadian Obligations arising under this Section 2.16), it being
the intention of the parties hereto that all the Canadian Obligations shall be
the joint and several obligations of each Canadian Borrower without preferences
or distinction among them.

 

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(c) If and to the extent that any Canadian Borrower shall fail to make any
payment with respect to any of the Canadian Obligations as and when due or to
perform any of the Canadian Obligations in accordance with the terms thereof
(including any applicable grace period or notice requirement), then in each such
event the other Canadian Borrowers will make such payment with respect to, or
perform, such Canadian Obligation.

(d) The Canadian Obligations of each Canadian Borrower under the provisions of
this Section 2.16 constitute the absolute and unconditional, full recourse
Canadian Obligations of each Canadian Borrower enforceable against each Canadian
Borrower to the full extent of its properties and assets, irrespective of the
validity, regularity or enforceability of this Agreement or any other
circumstances whatsoever.

(e) Except as otherwise expressly provided in this Agreement, each Canadian
Borrower hereby waives, to the fullest extent permitted by applicable law,
notice of acceptance of its joint and several liability, notice of any Advances
or Letters of Credit issued under or pursuant to this Agreement, notice of the
occurrence of any Default, Event of Default, or of any demand for any payment
under this Agreement, notice of any action at any time taken or omitted by
Agents or Lenders under or in respect of any of the Obligations, any requirement
of diligence or to mitigate damages and, generally, to the fullest extent
permitted by applicable law, all demands, notices and other formalities of every
kind in connection with this Agreement (except as otherwise provided in this
Agreement). Each Canadian Borrower hereby assents to, and waives, to the extent
permitted by law, notice of, any extension or postponement of the time for the
payment of any of the Obligations, the acceptance of any payment of any of the
Obligations, the acceptance of any partial payment thereon, any waiver, consent
or other action or acquiescence by Agents or Lenders at any time or times in
respect of any default by any Borrower in the performance or satisfaction of any
term, covenant, condition or provision of this Agreement, any and all other
indulgences whatsoever by Agents or Lenders in respect of any of the
Obligations, and the taking, addition, substitution or release, in whole or in
part, at any time or times, of any security for any of the Obligations or the
addition, substitution or release, in whole or in part, of any Borrower. Without
limiting the generality of the foregoing, each Canadian Borrower assents to any
other action or delay in acting or failure to act on the part of any Agent or
any Lender with respect to the failure by any Borrower to comply with any of its
respective Obligations, including, without limitation, any failure strictly or
diligently to assert any right or to pursue any remedy or to comply fully with
applicable laws or regulations thereunder, which might, but for the provisions
of this Section 2.16 afford grounds for terminating, discharging or relieving
any Borrower, in whole or in part, from any of its Obligations under this
Section 2.16, it being the intention of each Canadian Borrower that, so long as
any of the Obligations hereunder remain unsatisfied, the Canadian Obligations of
each Canadian Borrower under this Section 2.16 shall not be discharged except by
performance or payment and then only to the extent of such performance or
payment. The Canadian Obligations of each Canadian Borrower under this
Section 2.16 shall not be diminished or rendered unenforceable by any winding
up, reorganization, arrangement, liquidation, reconstruction or similar
proceeding with respect to any Borrower or any Agent or any Lender.

 

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(f) Each Canadian Borrower represents and warrants to Agents and Lenders that
such Canadian Borrower is currently informed of the financial condition of
Borrowers and of all other circumstances which a diligent inquiry would reveal
and which bear upon the risk of nonpayment of the Canadian Obligations. Each
Canadian Borrower further represents and warrants to Agents and Lenders that
such Canadian Borrower has read and understands the terms and conditions of the
Loan Documents. Each Canadian Borrower hereby covenants that such Canadian
Borrower will continue to keep informed of Borrowers’ financial condition, the
financial condition of other guarantors, if any, and of all other circumstances
which bear upon the risk of nonpayment or nonperformance of the Canadian
Obligations.

(g) The provisions of this Section 2.16 are made for the benefit of Agents,
Lenders and their respective successors and assigns, and may be enforced by them
from time to time against any or all Canadian Borrowers as often as occasion
therefor may arise and without requirement on the part of such Agent, such
Lender, successor or assign first to marshal any of its or their claims or to
exercise any of its or their rights against any Borrower or to exhaust any
remedies available to it or them against any Borrower or to resort to any other
source or means of obtaining payment of any of the Obligations hereunder or to
elect any other remedy. The provisions of this Section 2.16 shall remain in
effect until all of the Canadian Obligations shall have been paid in full or
otherwise fully satisfied. If at any time, any payment, or any part thereof,
made in respect of any of the Canadian Obligations, is rescinded or must
otherwise be restored or returned by any Agent or any Lender upon the
insolvency, bankruptcy or reorganization of any Borrower, or otherwise, the
provisions of this Section 2.16 will forthwith be reinstated in effect, as
though such payment had not been made.

(h) Each Canadian Borrower hereby agrees that it will not enforce any of its
rights of contribution or subrogation against any other Borrower with respect to
any liability incurred by it hereunder or under any of the other Loan Documents,
any payments made by it to Agents or Lenders with respect to any of the Canadian
Obligations or any collateral security therefor until such time as all of the
Canadian Obligations have been paid in full. Any claim which any Canadian
Borrower may have against any other Borrower with respect to any payments to any
Agent or any Lender hereunder or under any other Loan Documents are hereby
expressly made subordinate and junior in right of payment, without limitation as
to any increases in the Obligations arising hereunder or thereunder, to the
prior payment in full in cash of the Obligations and, in the event of any
insolvency, bankruptcy, receivership, liquidation, reorganization or other
similar proceeding under the laws of any jurisdiction relating to any Borrower,
its debts or its assets, whether voluntary or involuntary, all such Obligations
shall be paid in full before any payment or distribution of any character,
whether in cash, securities or other property, shall be made to any other
Borrower therefor.

(i) Notwithstanding any other provision contained in this Agreement or any other
Loan Document, if a “secured creditor” (as that term is defined under the

 

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Bankruptcy and Insolvency Act (Canada)) is determined by a court of competent
jurisdiction not to include a Person to whom obligations are owed on a joint or
joint and several basis, then each Canadian Borrower’s Obligations, to the
extent such Canadian Obligations are secured, only shall be several and not
joint or joint and several obligations.

(j) For greater certainty, and notwithstanding any other provision in this
Agreement or any other Loan Document to the contrary, no Canadian Loan Party
will be liable in any way under this Agreement or the other Loan Documents,
directly or indirectly, whether as a surety or co-debtor, jointly or severally,
for the payment or performance of any Obligations of the US Borrower or its
Domestic Subsidiaries or is or will be obligated to grant security over its
assets to secure the payment or performance of any Obligations of the US
Borrower or its Domestic Subsidiaries.

 

3. CONDITIONS; TERM OF AGREEMENT.

3.1. Conditions Precedent to the Initial Extension of Credit.

The obligation of each Lender to make its initial extension of credit provided
for hereunder is subject to the fulfillment, to the satisfaction of each Agent
and each Lender, of each of the conditions precedent set forth on Schedule 3.1
(the making of such initial extension of credit by a Lender being conclusively
deemed to be its satisfaction or waiver of the conditions precedent).

3.2. Conditions Precedent to all Extensions of Credit.

The obligation of the Lender Group (or any member thereof) to make any Advances
hereunder (or to extend any other credit hereunder) at any time shall be subject
to the following conditions precedent:

(a) the representations and warranties of Borrowers and the other Loan Parties
contained in this Agreement or in the other Loan Documents shall be true and
correct in all material respects (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) on and as of the date
of such extension of credit, as though made on and as of such date (except to
the extent that such representations and warranties relate solely to an earlier
date, in which case such representations and warranties shall be true and
correct in all material respects (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) on and as of such
earlier date); and

(b) no Default or Event of Default shall have occurred and be continuing on the
date of such extension of credit, nor shall either result from the making
thereof.

3.3. Maturity.

This Agreement shall continue in full force and effect for a term ending on the
earlier of (a) fifth (5th) anniversary of the Closing Date (the “Maturity Date”)
and

 

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(b) 6 months prior to the maturity date of the Senior Unsecured Notes. The
foregoing notwithstanding, the Lender Group, upon the election of the Required
Lenders, shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default in accordance with Section 9.

3.4. Effect of Maturity.

On the Maturity Date, all commitments of the Lender Group to provide additional
credit hereunder shall automatically be terminated and all of the Obligations
immediately shall become due and payable without notice or demand and Borrowers
shall be required to repay all of the Obligations in full. No termination of the
obligations of the Lender Group (other than payment in full of the Obligations
and termination of the Revolver Commitments) shall relieve or discharge any Loan
Party of its duties, obligations, or covenants hereunder or under any other Loan
Document and each Agent’s Liens in the Collateral shall continue to secure the
Obligations such Collateral secures and shall remain in effect until all
Obligations have been paid in full and the Revolver Commitments have been
terminated. When all of the Obligations have been paid in full and the Lender
Group’s obligations to provide additional credit under the Loan Documents have
been terminated irrevocably, each Agent will, at Borrowers’ sole expense,
execute and deliver any termination statements, lien releases, discharges of
security interests, and other similar discharge or release documents (and, if
applicable, in recordable form) as are reasonably necessary to release, as of
record, such Agent’s Liens and all notices of security interests and liens
previously filed by such Agent.

3.5. Early Termination by Borrowers.

Borrowers have the option, at any time upon 10 Business Days prior written
notice to Agents, to terminate this Agreement and terminate the Revolver
Commitments hereunder by repaying to Agents all of the Obligations in full.

3.6. Conditions Subsequent.

The obligation of the Lender Group (or any member thereof) to continue to make
Revolving Loans (or otherwise extend credit hereunder) is subject to the
fulfillment, on or before the date applicable hereto, of the conditions
subsequent set forth on Schedule 3.6 (the failure by Borrowers to so perform or
cause to be performed such conditions subsequent as and when required by the
terms thereof (unless such date is extended, in writing, by Agents, which Agents
may do without the consent of other members of the Lender Group) shall
constitute an Event of Default).

 

4. REPRESENTATIONS AND WARRANTIES.

In order to induce the Lender Group to enter into this Agreement, each Borrower
makes the following representations and warranties to the Lender Group which
shall be true, correct, and complete, in all material respects (except that such
materiality qualifier shall not be applicable to any representations and
warranties that already are

 

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qualified or modified by materiality in the text thereof), as of the Closing
Date, and shall be true, correct, and complete, in all material respects (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), as of the date of the making of each Advance (or other extension of
credit) made thereafter, as though made on and as of the date of such Advance
(or other extension of credit) (except to the extent that such representations
and warranties relate solely to an earlier date in which case such
representations and warranties shall be true and correct in all material
respects as of such date (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 on and as of such earlier date)) and
such representations and warranties shall survive the execution and delivery of
this Agreement:

4.1. Legal Status; Subsidiaries.

(a) US Borrower is a corporation, duly organized and existing and in good
standing under the laws of Delaware, and is qualified or licensed to do business
(and is in good standing as a foreign corporation, if applicable) in all
jurisdictions in which the failure to so qualify or to be so licensed could
reasonably be expected to result in a Material Adverse Change. Canadian
Borrowers are each corporations, duly incorporated or amalgamated and existing
and in good standing under the laws of British Columbia, Canada, and are
qualified or licensed to do business (and in good standing as a foreign
corporation or extra-provincial corporation, as applicable) in all jurisdictions
in which the failure to so qualify or to be so licensed could reasonably be
expected to result in a Material Adverse Change. Each Subsidiary of each
Borrower is a corporation, partnership or limited liability company duly
organized, incorporated or amalgamated and existing and in good standing under
the laws of the jurisdiction of its incorporation, amalgamation, organization or
formation, and is qualified or licensed to do business (and is in good standing
as a foreign corporation, extra-provincial corporation, partnership or limited
liability company, if applicable) in all jurisdictions in which the failure to
so qualify or to be so licensed could reasonably be expected result in a
Material Adverse Change. Schedule 4.1(a) correctly identifies the jurisdiction
of organization of each Borrower and each of its Subsidiaries as of the date
hereof.

(b) As of the Closing Date, neither any Borrower nor any Subsidiary owns any
Equity Interest, directly or indirectly, in any Person other than the Persons
set forth on Schedule 4.1(b) hereto, which accurately and completely reflects
the number of shares or other units and the percentage ownership of such Person.

4.2. Authorization and Validity.

This Agreement and each Loan Document have been duly authorized by each Loan
Party that is a party thereto, and upon their execution and delivery in
accordance with the provisions hereof and thereof will constitute legal, valid
and binding agreements and obligations of each Borrower and each Domestic
Subsidiary party thereto enforceable against such Loan Party in accordance with
their respective terms, except as enforcement may be limited by equitable
principles, or bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or limiting creditors’ rights generally.

 

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4.3. No Violation.

The execution, delivery and performance by each Borrower and each Domestic
Subsidiary of each of the Loan Documents does not violate any provision of any
law or regulation, or contravene any provision of such Person’s Organizational
Documents, or result in any breach of or default under any Material Contract, or
any other material obligation, indenture or other instrument to which such
Borrower or any Domestic Subsidiary is a party or by which Borrower or any
Domestic Subsidiary may be bound.

4.4. [Reserved.]

4.5. [Reserved.]

4.6. [Reserved.]

4.7. Litigation.

There are no pending, or to any Borrowers’ or any other Loan Party’s actual
knowledge after due inquiry (based upon the litigation search reports by CT
Corporation or by CSC Corporation attached as Schedule 4.7(A) threatened,
actions, claims, investigations, suits or proceedings by or before any
Governmental Authority, arbitrator, court or administrative agency which could
result in a Material Adverse Change other than those disclosed on Schedule 4.7
hereto or as disclosed in the US Borrower’s periodic reports and disclosures
filed with the SEC.

4.8. Compliance with Laws.

No Loan Party (a) is in violation of any applicable laws, rules, regulations,
executive orders, or codes (including Environmental Laws) that, individually or
in the aggregate, could reasonably be expected to result in a Material Adverse
Change, or (b) is subject to or in default with respect to any final judgments,
writs, injunctions, decrees, rules or regulations of any Governmental Authority
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Change.

4.9. Correctness of Financial Statements.

The annual consolidated audited financial statements of US Borrower dated
December 31, 2010, and all interim consolidated and consolidating financial
statements delivered to Agents and Lenders since such date, true copies of which
have been delivered by any Borrower to any Agent prior to the date hereof,
(a) are complete and correct and present fairly in all material respects the
financial condition of US Borrower and each Subsidiary as of the date thereof
(except in the case of (i) unaudited financial statements, for the lack of
footnotes and being subject to year end audit adjustments and (ii) consolidating
financial statements, for the lack of any presentation of changes in cash flows
and stockholders

 

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equity), (b) disclose all liabilities of Borrower and each Subsidiary that are
required to be reflected or reserved against, whether liquidated or
unliquidated, fixed or contingent, in accordance with GAAP as of the date
thereof, and (c) have been prepared in accordance with GAAP consistently
applied. Since December 31, 2010, no event, circumstance, or change has occurred
that has or could reasonably be expected to result in a Material Adverse Change
with respect to the Loan Parties.

4.10. [Reserved.]

4.11. ERISA; Canadian Employee Plans.

(a) US Borrower and each of its Domestic Subsidiaries are in compliance in all
material respects with all applicable provisions of ERISA; US Borrower has not,
and none of its Domestic Subsidiaries has, violated any provision of any Plan
maintained or contributed to by such Borrower or such Domestic Subsidiary; no
Reportable Event (as defined in ERISA) has occurred and is continuing with
respect to any Plan initiated by US Borrower or any Domestic Subsidiary; US
Borrower and each of its Domestic Subsidiaries has met its minimum funding
requirements under ERISA with respect to each Plan; and each such Plan will be
able to fulfill its benefit obligations as they come due in accordance with the
Plan documents and under GAAP.

(b) Except as set forth on Schedule 4.11, no Canadian Loan Party maintains or
contributes to, or has any liability in respect of, any Canadian Employee Plan
or Canadian Pension Plan other than statutory plans required by applicable law.

(c) Except as set forth in Schedule 4.11, no Canadian Loan Party has or is
subject to any present or is aware of any future obligation or liability under
any Canadian Employee Plan that could reasonably be expected to cause a Material
Adverse Change and any overtime pay, vacation pay, premiums for unemployment
insurance, health and welfare insurance premiums, wages, salaries and
commissions, severance pay and employee benefit plan payments have been fully
paid by each Canadian Loan Party or such payments either (i) have accrued and
have been accurately accounted for in the books and records of each Canadian
Loan Party or have been reported pursuant to the collateral reporting
obligations under Section 5.2 or (ii) have accrued in part but are not yet due
and payable and such accruals cannot reasonably be expected to result in a
Material Adverse Change.

(d) Schedule 4.11 lists all the Canadian Pension Plans and Canadian Employee
Plans applicable to the Canadian Employees of each Canadian Loan Party in
respect of employment in Canada and which are currently maintained or sponsored
by each Canadian Loan Party or to which each Canadian Loan Party contributes or
has an obligation to contribute, except, for greater certainty, any statutory
plans to which each Canadian Loan Party is obligated to contribute to or comply
with under applicable law. The Canadian Employee Plans have been registered
(where applicable), administered, funded and invested in accordance with the
terms of the particular plan and any applicable laws. There are no outstanding
disputes concerning Canadian Employee Plans.

 

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(e) No improvements to any Canadian Pension Plan or any Canadian Employee Plan
have been promised by the applicable Loan Party, and no new amendments or
improvements to a Canadian Employee Plan will be made or promised by any
Canadian Loan Party before the Closing Date.

(f) Except as disclosed in Schedule 4.11, no Canadian Loan Party provides
benefits to retired Canadian Employees or to beneficiaries or dependents of
retired Canadian Employees.

(g) All obligations regarding the Canadian Pension Plans and the Canadian
Employee Plans (including current service contributions and required special
payments) have been satisfied pursuant to applicable law, there are no
outstanding defaults or violations by any party to any Canadian Pension Plan and
any Canadian Employee Plan that could reasonably be expected to have a Material
Adverse Change and there are no taxes, penalties or fees (other than fees owing
to advisors or service providers in the ordinary course) owing or exigible under
any of the Canadian Employee Plans or Canadian Pension Plans. None of the
Canadian Pension Plans contain a “defined benefit provision” as defined in
Section 147.1(1) of the Income Tax Act (Canada). Except as disclosed in
Schedule 4.11, each Canadian Pension Plan and each Canadian Employee Plan is
funded or insured pursuant to applicable law. No fact or circumstance exists
that could adversely affect the tax-exempt status of a Canadian Pension Plan or
Canadian Employee Plan. There are no entities other than one or more Canadian
Loan Parties participating in any Canadian Employee Plan. None of the Canadian
Loan Parties currently, sponsors, maintains, contributes to or has liability
under a “registered pension plan” or a “retirement compensation arrangement”,
each as defined under the Income Tax Act (Canada), a “pension plan” as defined
under Canadian Employee Benefits Legislation, or any other plan organized and
administered to provide pensions for employees or former employees.

4.12. Environmental Matters.

Except as set forth on Schedule 4.12 hereto, each Borrower and each of its
Domestic Subsidiaries is in compliance in all material respects with all
applicable Environmental Laws, except where the failure to comply could not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Change. No Borrower nor any of its Domestic Subsidiaries has received
notice that its operations are the subject of any federal, state or provincial
investigation evaluating whether any remedial action involving a material
expenditure is needed to respond to a release of any toxic or hazardous waste or
substance into the environment. No Borrower nor any of its Domestic Subsidiaries
has any material contingent liability in connection with any release of any
toxic or hazardous waste or substance into the environment.

 

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4.13. [Reserved.]

4.14. [Reserved.]

4.15. [Reserved.]

4.16. Truth, Accuracy of Information.

No statement of financial or other information furnished by a Borrower or any
other Loan Party to any Agent or any Lender in connection with this Agreement or
any of the other Loan Documents contains any untrue statement of material fact
or omits a material fact necessary to make the statement not misleading in light
of all of the circumstances existing on the date the statement was made,
including such circumstances or other factual information previously furnished
by a Borrower or any other Loan Party to Agents and Lenders. Any projections and
pro forma financial information contained in such materials are based upon good
faith estimates and assumptions believed by each Borrower to be reasonable at
the time made, it being recognized by Agents and Lenders that such projections
as to future events are not to be viewed as facts and that actual results during
the period or periods covered by any such projections may differ from the
projected results. There are no facts that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Change and that
have not been disclosed herein or in such other documents, certificates and
statements furnished to any Agent or any Lender for use in connection with the
transactions contemplated hereby.

4.17. [Reserved.]

4.18. Patriot Act.

(a) No Loan Party, and to such Loan Party’s knowledge none of their respective
Affiliates, is in violation of, and shall not violate, any Laws relating to
terrorism or money laundering (“Anti-Terrorism Laws”), including Executive Order
No. 13224 on Terrorist Financing, effective September 24, 2001 (the “Executive
Order”), the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 (the
“USA PATRIOT Act”), Part II.1 of the Criminal Code (Canada), the Proceeds of
Crime (Money Laundering) and Terrorist Financing Act (Canada) (the “PCTFA”), the
Regulations Implementing the United Nations Resolutions on the Suppression of
Terrorism (Canada) and United Nations Al-Qaida and Taliban Regulations (Canada);

(b) No Loan Party and, to the knowledge of the Loan Parties, no Affiliate or
broker or other agent of any Loan Party acting or benefiting in any capacity in
connection with any extension of credit hereunder is any of the following: (i) a
person that is listed in the annex to, or is otherwise subject to the provisions
of, the Executive Order; (ii) a person owned or controlled by, or acting for or
on behalf of, any person that is listed in the annex to, or is otherwise subject
to the provisions of, the Executive Order; (iii) a person with which any Lender
is prohibited from dealing or otherwise engaging in any transaction by any
Anti-Terrorism

 

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Law; (iv) a person that commits, threatens or conspires to commit or supports
terrorism as defined in the Executive Order; or (v) a person that is named as a
specially designated national and blocked person on the most current list
published by the U.S. Treasury Department Office of Foreign Assets Control
(“OFAC”) at its official website or any replacement website or other replacement
official publication of such list.

(c) No Loan Party and, to the knowledge of the Loan Parties, no broker or other
agent of any Loan Party acting in any capacity in connection with any credit
extension hereunder (i) conducts any business or engages in making or receiving
any contribution of funds, goods or services to or for the benefit of any person
described in paragraph (b) above, (ii) deals in, or otherwise engages in any
transaction relating to, any property or interests in property blocked pursuant
to the Executive Order, (iii) engages in or conspires to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in any Anti-Terrorism
Law, or (iv) is in violation of, and shall not violate, any of the county or
list based economic and trade sanctions administered and enforced by OFAC as
published from time to time.

4.19. Indebtedness; Other Obligations.

Set forth on Schedule 6.1 is a true and complete list of all Indebtedness of
each Loan Party and each of its Domestic Subsidiaries outstanding immediately
prior to the Closing Date that is to remain outstanding immediately after giving
effect to the closing hereunder on the Closing Date and such Schedule accurately
sets forth the aggregate principal amount of such Indebtedness as of the Closing
Date or the date shown on such Schedule.

Neither any Borrower nor any of its Domestic Subsidiaries is in default on any
material obligation for borrowed money, any purchase money obligation or any
other material lease, commitment, contract, instrument or obligation and no
condition exists which, with the giving of notice or the lapse of time or both,
could constitute such a default, except where the consequences, direct or
indirect, of such default or defaults, if any, could not reasonably be expected
to result in a Material Adverse Change.

4.20. Payment of Taxes; Income Tax Returns.

Except as otherwise permitted under Section 5.5, all income tax returns and
reports and all other material tax returns and reports of each Loan Party and
its Domestic Subsidiaries required to be filed by any of them have been timely
filed, and all taxes shown on such tax returns to be due and payable and all
other material assessments, fees and other governmental charges upon a Loan
Party and its Domestic Subsidiaries and upon their respective assets, income,
businesses and franchises that are due and payable have been paid when due and
payable. Each Loan Party and each of its Domestic Subsidiaries have made
adequate provision in accordance with GAAP for all taxes not yet due and
payable. There are no pending material assessments or adjustments of any
Borrower’s or any its Domestic Subsidiaries’ income tax payable with respect to
any year that is not being actively contested by such Loan Party diligently, in
good faith and by appropriate proceedings; provided such reserves or other
appropriate provisions, if any, as shall be required in conformity with GAAP
shall have been made or provided therefor.

 

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4.21. Margin Stock.

No Borrower nor any of its Domestic Subsidiaries 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 part of the proceeds of
the Loans made to a Borrower will be used to purchase or carry any such margin
stock or to extend credit to others for the purpose of purchasing or carrying
any such margin stock or for any purpose that violates, or is inconsistent with,
the provisions of Regulation T, U or X of the Board.

4.22. Governmental Regulation.

No Loan Party nor any of its Subsidiaries is subject to regulation under the
Federal Power Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable. No Loan Party nor any of its Subsidiaries is a “registered
investment company” or a company “controlled” by a “registered investment
company” or a “principal underwriter” of a “registered investment company” as
such terms are defined in the Investment Company Act of 1940.

4.23. [Reserved.]

4.24. Employee and Labor Matters.

(a) There is (i) no unfair labor practice complaint pending or, to the knowledge
of any Borrower, threatened against any Loan Party before any Governmental
Authority and no grievance or arbitration proceeding pending or threatened
against any Loan Party which arises out of or under any collective bargaining
agreement and that could reasonably be expected to result in a material
liability, (ii) no strike, labor dispute, slowdown, stoppage or similar action
or grievance pending or threatened in writing against any Loan Party that could
reasonably be expected to result in a material liability, or (iii) except as set
forth on Schedule 4.24 to the knowledge of any Borrower, after due inquiry, as
of the Closing Date, no union representation question existing with respect to
the employees of any Loan Party or any of its Subsidiaries and no union
organizing activity taking place with respect to any of the employees of any
Loan Party. No Loan Party has incurred any liability or obligation under the
Worker Adjustment and Retraining Notification Act or similar state law, which
remains unpaid or unsatisfied. Except as set forth on Schedule 4.7, the hours
worked and payments made to employees of each Loan Party have not been in
violation of the Fair Labor Standards Act or any other applicable legal
requirements, except to the extent such violations could not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Change.
All material payments due from each Loan Party on account of wages and employee
health and welfare insurance and other benefits have been paid or accrued as a
liability on the books of such Loan Party or Subsidiary, except where the
failure to do so could not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Change. For clarity and with express
limitation, this Section 4.24(a) does not apply to any Canadian Loan Party.

 

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(b) As of the Closing Date, no Canadian Loan Party is a party to any collective
bargaining agreement, contract or legally binding commitment to any trade union
or employee organization or group in respect of or affecting Canadian Employees.
No Canadian Loan Party is a party to any application, complaint, grievance,
arbitration, or other proceeding under any statute or under any collective
agreement related to any Canadian Employee or the termination of any Canadian
Employee except which could not reasonably be expected to cause a Material
Adverse Change and there is no complaint, inquiry or other investigation by any
regulatory or other administrative authority or agency with regard to or in
relation to any Canadian Employee or the termination of any Canadian Employee
except which would not reasonably be expected to cause a Material Adverse
Change. No Canadian Loan Party has engaged in any unfair labor practice, nor is
any Canadian Loan Party aware of any pending or threatened complaint regarding
any alleged unfair labor practices. There is no strike, labor dispute, work slow
down or stoppage pending or threatened in writing against any Canadian Loan
Party. As of the Closing Date, no Canadian Loan Party is, to its knowledge,
currently the subject of any union organization effort or any labor negotiation.

(c) All contributions, assessments, premiums, fees, taxes, penalties or fines in
relation to the Canadian Employees have been duly paid and there is no
outstanding liability of any kind in relation to the employment of the Canadian
Employees or the termination of employment of any Canadian Employee, except, in
each case, which could not reasonably be expected to cause a Material Adverse
Change.

(d) Each Canadian Loan Party is in material compliance with all requirements of
Canadian Employee Benefits Legislation and applicable health and safety, workers
compensation, employment standards, labor relations, health insurance,
employment insurance, protection of personal information, human rights laws.

(e) Any overtime pay, vacation pay, premiums for unemployment insurance,
premiums for health and welfare insurance, accrued wages, salaries, commissions,
severance pay and other payments payable to any employees of any Canadian Loan
Party are fully paid on a current basis except to the extent the failure to make
such payments could not reasonably be expected to result in a Material Adverse
Change.

4.25. No Subordination

There is no agreement, indenture, contract or instrument to which any Borrower
or any Domestic Subsidiary is a party or by which any Borrower or any Domestic
Subsidiary may be bound that requires the subordination in right of payment of
any Borrower’s or any Domestic Subsidiary’s obligations subject to this
Agreement to any other obligation of any Borrower or any Domestic Subsidiary.

 

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4.26. Permits; Franchises.

Each Loan Party possesses, and will hereafter possess, all material permits,
consents, approvals, franchises and licenses required and rights to all
trademarks, trade names, patents, and fictitious names, if any, necessary to
enable it to conduct the business in which it is now engaged in compliance in
all material respects with applicable law.

4.27. Fictitious Names.

The only fictitious business or trade names used by a Borrower or any other Loan
Party are set forth on Schedule 4.27 hereto, as such schedule may be updated
concurrently with the delivery of any Compliance Certificate required to be
delivered hereunder.

4.28. Eligible Accounts.

As to each Account that is identified in a Borrowing Base Certificate submitted
to an Agent, such Account is (a) a bona fide existing payment obligation of the
applicable Account Debtor created by the sale and delivery of Inventory or the
rendition of services to such Account Debtor in the ordinary course of the Loan
Parties’ business, and (b) owed to such Loan Party. In addition, after a
Borrowing Base Trigger Event, each Account that is identified by a Borrower as
an Eligible Account is not excluded as ineligible by virtue of one or more of
the excluding criteria (other than Agent-discretionary criteria) set forth in
the definition of Eligible Accounts.

4.29. Eligible Inventory.

As to each item of Inventory in a Borrowing Base Certificate submitted to an
Agent, such Inventory is of good and merchantable quality, free from known
defects. In addition, after a Borrowing Base Trigger Event, each item of
Inventory that is identified by a Borrower as Eligible Inventory is not excluded
as ineligible by virtue of one or more of the excluding criteria (other than
Agent-discretionary criteria) set forth in the definition of Eligible Inventory.

4.30. Eligible Equipment.

As to each item of Equipment that is identified by a Borrower as Equipment that
is free from Liens other than the Liens in favor of Agents in a Borrowing Base
Certificate submitted to an Agent, such Equipment is of (a) good and
merchantable quality, free from known defects and (b) free from Liens (other
than the Liens in favor of Agents). In addition, after a Borrowing Base Trigger
Event, each item of Equipment that is identified by a Borrower as Eligible
Equipment is not excluded as ineligible by virtue of one or more of the
excluding criteria (other than Agent-discretionary criteria) set forth in the
definition of Eligible Equipment.

 

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4.31. Locations of Inventory and Equipment and Chief Executive Offices.

(a) The Inventory and Equipment (other than vehicles or Equipment out for
repair) of the Loan Parties are not stored with a bailee, warehouseman, or
similar party. As of October 31, 2011 and as of the date such Schedule is, from
time to time, updated and replaced by Borrowers, Schedule 4.31(a) sets forth a
listing of the Loan Parties’ Equipment that is not subject to a Lien (other than
in favor of Agents).

(b) Schedule 4.31(b) identifies each Borrower’s and each of its Domestic
Subsidiaries’ chief executive offices (as such Schedule may be updated pursuant
to Section 5.15.

(c) As of the end of each calendar month prior to the occurrence of a Borrowing
Base Trigger Date, the aggregate net book value of the Loan Parties’ Equipment
that is free from Liens (other than in favor of Agents) and that is set forth on
Schedule 4.31(a) has not decreased by more than $2,000,000 since the date such
Schedule was last updated by Borrowers pursuant to Section 4.31(a).

(d) As of the end of each calendar quarter following the occurrence of a
Borrowing Base Trigger Date, the Eligible Equipment and Eligible Inventory of
the Loan Parties included in the most recently delivered Borrowing Base
Certificate are not stored with a bailee, warehouseman or similar party, and are
located only at the locations set forth on Schedule 4.31(d) (as such schedule
may be updated concurrently with the delivery of any quarterly Compliance
Certificate to be delivered hereunder).

4.32. Inventory Records.

Each Loan Party keeps correct and accurate records itemizing and describing the
type, quality, and quantity of its Inventory and the book value thereof.

4.33. Real Property.

As of the Closing Date, Schedule 4.33 contains a true, accurate and complete
list of all Owned Real Estate. Borrowers and their Domestic Subsidiaries enjoy
peaceful and undisturbed possession under all leases material to their business
and to which they are parties or under which they are operating, and subject to
good faith disputes promptly and diligently prosecuted by such Loan Party, all
of such material leases are valid and subsisting and no material default by any
Borrower or its Domestic Subsidiaries exist under any of them.

4.34. Solvency.

Each Borrower and each other Loan Party, taken individually, is Solvent, able to
pay its debts generally as such debts mature, and has capital sufficient to
carry on its businesses and all businesses in which it is about to engage.
Neither any Borrower nor any other Loan Party will be rendered insolvent by the
execution or delivery of this Agreement or of any of the other Loan Documents or
by the transactions contemplated hereunder or thereunder.

 

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4.35 Withholdings and Remittances.

Each Canadian Loan Party has withheld from each payment made to any of its
present or former employees, officers and directors, and to all persons who are
non-residents of Canada for the purposes of the Income Tax Act (Canada) all
amounts required by applicable law to be withheld by it, including all payroll
deductions required to be withheld by it, and, furthermore, has remitted such
withheld amounts within the prescribed periods to the appropriate Governmental
Authority. Each Canadian Loan Party has remitted all contributions required to
be remitted by it pursuant to the Canada Pension Plan Act (Canada), Quebec
Pension Plan Act (Quebec), and provincial pension plans, workers compensation
assessments, employment insurance premiums, employer health taxes, municipal
real estate taxes and other taxes payable by it under the applicable law (the
“Statutory Lien Payments”) and has remitted such amounts to the proper
Governmental Authority within the time required under applicable law except for
Statutory Lien Payments that are not delinquent.

 

5. AFFIRMATIVE COVENANTS.

Each Borrower covenants and agrees that, until termination of all of the
Revolver Commitments and payment in full of the Obligations, the Loan Parties
shall comply with each of the following:

5.1. Financial Statements, Reports, Certificates.

Provide to each Agent all of the following, in form and detail satisfactory to
Agents:

(a) upon the earlier of the date that is 90 days after the end of each fiscal
year of Borrowers or the date such information is filed with the SEC, the
consolidated balance sheets of US Borrower and its Subsidiaries as at the end of
such fiscal year, and the related consolidated statements of income or
operations, changes in stockholders’ equity, and cash flows for such fiscal
year, 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, such consolidated statements to be audited and accompanied by a report and
opinion of an independent certified public accountant of nationally recognized
standing acceptable to Agents, 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, and also accompanied by internally
prepared, unaudited consolidating financial statements (covering the matters
described above, but excluding statements of cash flow and changes in
stockholders’ equity), all such consolidating statements to be certified by a
Responsible Officer of each Borrower to the effect that such statements are
fairly stated in all material respects when considered in relation to the
consolidated financial statements of Borrowers and their Subsidiaries;

 

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(b) within 30 days after the end of each month (or 45 days of a month that is a
fiscal quarter end), a consolidated and consolidating balance sheet of US
Borrower and its Subsidiaries as at the end of such month, and the related
consolidated and consolidating statements of income or operations, consolidated
statements of changes in stockholders’ equity and cash flows for such month,
such consolidated statements to be certified by a Responsible Officer of each
Borrower as fairly presenting the financial condition, results of operations,
stockholders’ equity and cash flows of Borrowers and their Subsidiaries in
accordance with GAAP, subject only to normal year-end audit adjustments and the
absence of footnotes and such consolidating statements to be certified by a
Responsible Officer of each Borrower to the effect that such statements are
fairly stated in all material respects when considered in relation to the
consolidated financial statements of Borrowers and their Subsidiaries;

(c) upon the earlier of the date that is 45 days after the end of each of the
first three fiscal quarters of each fiscal year of Borrowers or the date such
information is filed with the SEC, a consolidated and consolidating balance
sheet of US Borrower and its Subsidiaries as at the end of such fiscal quarter,
and the related consolidated and consolidating statements of income or
operations, consolidated statements of changes in shareholders’ equity, and cash
flows for such fiscal quarter and for the portion of Borrowers’ fiscal year then
ended, 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, such consolidated
statements to be certified by a Responsible Officer of each Borrower as fairly
presenting the financial condition, results of operations, shareholders’ equity
and cash flows of Borrowers and their Subsidiaries in accordance with GAAP,
subject only to normal year-end audit adjustments and the absence of footnotes
and such consolidating statements to be certified by a Responsible Officer of
each Borrower to the effect that such statements are fairly stated in all
material respects when considered in relation to the consolidated financial
statements of Borrowers and their Subsidiaries;

(d) contemporaneously with each monthly, quarterly and annual financial
statement of Borrowers required by Section 5.1(a), (b) and (c), a duly completed
Compliance Certificate signed by an appropriate Responsible Officer of each
Borrower, including, with respect to quarterly financial statements, a certified
calculation of Average Daily Net Availability;

(e) promptly after the furnishing thereof, copies of any statement or report
furnished to the trustee or agent, as applicable, on behalf of any holder of
debt securities of any Borrower or of any of its Domestic Subsidiaries pursuant
to the terms of any indenture, loan or credit or similar agreement and not
otherwise required to be furnished to Agents and Lenders pursuant to this
Agreement;

 

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(f) 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 any Borrower, and copies of all annual, regular, periodic and special reports
and registration statements which any US Borrower may file or be required to
file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of
1934, or with any national securities exchange, and in any case not otherwise
required to be delivered to Agents pursuant hereto; Documents required to be
delivered pursuant to this Section 5.1(f) (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 a Borrower posts such documents, or provides a link
thereto or other direction as to where such information is posted (provided,
that such Borrower gives written notice to Agents of such posting on such date,
which notice may be receipt of an automatically generated email link); or
(ii) on which such documents are posted on such Borrower’s behalf on an Internet
or intranet website, if any, to which Agents and Lenders have access; provided
that Borrowers shall deliver paper copies of such documents to Agents upon
request.

(g) promptly, and in any event within 5 Business Days after receipt thereof by
any Borrower or any Subsidiary thereof, copies of each notice or other
correspondence received from the SEC (or comparable agency in any applicable
non-U.S. jurisdiction) concerning any investigation or possible investigation or
other inquiry by such agency regarding financial or other operational results of
any Borrower or any Subsidiary thereof; and

(h) As soon as practicable and in any event no later than ninety (90) days after
the beginning of each fiscal year, a consolidated plan and financial forecast
for such fiscal year and each fiscal year (or portion thereof) through the final
maturity date of the Loans (a “Financial Plan”), including (i) a forecasted
consolidated balance sheet and forecasted consolidated statements of income and
cash flows of US Borrower and its Subsidiaries for each such fiscal year,
together with pro forma calculations of financial covenants showing compliance
therewith for each such fiscal year and the assumptions on which such forecasts
are based, (ii) forecasted consolidated statements of income and cash flows of
US Borrower and its Subsidiaries for each quarter of such fiscal year and
(iii) forecasts demonstrating adequate liquidity through the final maturity date
of the Loans without giving effect to any additional debt or equity offerings
not reflected in the Projections, together, in each case, with an explanation of
the assumptions on which such forecasts are based all in form and substance
reasonably satisfactory to the Agent;

(i) from time to time such other information as any Agent may reasonably
request.

5.2. Collateral Reporting.

Provide each Agent with each of the reports set forth on Schedule 5.2 at the
times specified therein. In addition, at any time on or after the Borrowing Base
Trigger Date, each Borrower agrees to use commercially reasonable efforts in
cooperation with Agents to facilitate and implement a system of electronic
collateral reporting in order to provide electronic reporting of each of the
items set forth on such Schedule.

 

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5.3. Compliance.

Preserve and maintain all licenses, permits, governmental approvals, rights,
privileges and franchises necessary for the conduct of its business; and comply
with the provisions of all documents pursuant to which any Borrower or any of
its Domestic Subsidiaries is organized and/or which govern such Borrower’s or
such Domestic Subsidiaries’ continued existence and with the requirements of all
laws, rules, regulations and orders of any Governmental Authority applicable to
such Borrower or such Domestic Subsidiary and/or such Person’s business except
where such failure could not reasonably be expected to result in a Material
Adverse Change.

5.4. Facilities.

Keep all properties useful and necessary to each Borrower’s and each of its
Domestic Subsidiaries’ business in good repair and condition (ordinary wear,
tear casualty and Asset Sales permitted hereunder excepted), and from time to
time make necessary repairs, renewals and replacements thereto so that such
properties shall be fully and efficiently preserved and maintained to the extent
necessary for the proper conduct of each of Borrowers and its Domestic
Subsidiaries’ business.

5.5. Taxes and other Liabilities.

Pay and discharge when due any and all indebtedness, obligations, assessments
and taxes, both real or personal, including without limitation federal, state
and provincial income taxes, Canadian Pension Plan, provincial pension plans,
employer health taxes, Canadian employment insurance and state, provincial and
local property taxes and assessments, except (a) such as the applicable Borrower
or such Domestic Subsidiary may in good faith contest or as to which a bona fide
dispute may arise, and (b) for which such Borrower or such Domestic Subsidiary
has made provision, to Agents’ reasonable satisfaction, for eventual payment
thereof in the event such Borrower or such Domestic Subsidiary is obligated to
make such payment.

5.6. Insurance.

Maintain and keep in force, for each business in which each Borrower and each of
its Domestic Subsidiaries is engaged, insurance of the types and in amounts
customarily carried in similar lines of business, including but not limited to
fire, extended coverage, public liability, flood, property damage, business
interruption and workers’ compensation, with all such insurance carried with
companies, in amounts and containing loss payable (with respect to property
insurance and business interruption insurance) and additional insured (with
respect to general liability insurance) endorsements and notice of cancellation
in favor of the applicable Agent, all in a manner, reasonably satisfactory to
Agents, and deliver to Agents from time to time at an Agent’s request, schedules
setting forth

 

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all insurance then in effect. If any Borrower fails to maintain such insurance,
the applicable Agent may arrange for such insurance, but at such Borrower’s
expense and without any responsibility on any Agent’s part for obtaining the
insurance, the solvency of the insurance companies, the adequacy of the
coverage, or the collection of claims. Borrowers shall give Agents prompt notice
of any loss exceeding $1,000,000 covered by its casualty or business
interruption insurance. Prior to the occurrence of a Borrowing Base Trigger
Date, the applicable Agent shall hold any proceeds of business interruption
insurance received by such Agent in trust for the Loan Parties and promptly turn
over such proceeds to the account directed by the applicable Loan Party. Upon
the occurrence and during the continuance of an Event of Default, the applicable
Agent shall have the sole right to file claims under any property, business
interruption and general liability insurance policies in respect of the
Collateral, to receive, receipt and give acquittance for any payments that may
be payable thereunder, and to execute any and all endorsements, receipts,
releases, assignments, reassignments or other documents that may be necessary to
effect the collection, compromise or settlement of any claims under any such
insurance policies.

5.7. Accounting Records; Inspection and Appraisals.

Maintain adequate books and records in accordance with GAAP consistently
applied, and permit any representative of Agent, upon prior notice (so long as
no Event of Default is then continuing) and during normal business hours, to
inspect, audit and examine such books and records, to make copies of the same,
to inspect the properties of each Borrower (specifically excluding, however, any
such books or records to the extent they include personnel, medical and similar
records which the Borrowers are not permitted by law to disclose) and to have
Inventory and Equipment appraisals made of each Borrower and its Domestic
Subsidiaries to be made, all at such Borrower’s expense. Notwithstanding the
foregoing, (i) prior to a Borrowing Base Trigger Date, so long as Excess
Availability exceeds $17,500,000, Agents shall not conduct any audits or
appraisals, (ii) if Excess Availability is less than $17,500,000, but no
Borrowing Base Trigger Date has occurred, Agents may cause 1 audit and appraisal
of Inventory and Equipment of Borrowers and their Domestic Subsidiaries as well
as a new set of UCC and PPSA searches to be made and (iii) if the Borrowing Base
Trigger Date has occurred, Agents may conduct up to 3 audits and 1 Inventory and
Equipment Appraisal of Borrowers and their Domestic Subsidiaries each calendar
year, all at such Borrower’s expense. Such examinations, audits, appraisals and
inspections shall be conducted during ordinary business hours and upon five
(5) Business Day’s advance notice (unless an Event of Default shall have
occurred and be continuing, in which case no notice shall be required).

5.8. Litigation.

Promptly give notice in writing to Agents of any litigation pending or
threatened in writing against any Borrower or any of its Subsidiaries with a
stated claim (a) in excess of Six Million US Dollars ($6,000,000.00) or (b) that
could reasonably be expected to have or result in a Material Adverse Change.

 

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5.9. Environmental.

(a) Keep any property either owned or operated by any Loan Party free of any
Environmental Liens or post bonds or other financial assurances sufficient to
satisfy the obligations or liability evidenced by such Environmental Liens,

(b) Comply, in all material respects, with Environmental Laws except where
failure to do so could not reasonably be expected to result in a Material
Adverse Change,

(c) Promptly notify Agent of any release of which a Borrower has knowledge of a
Hazardous Material in any reportable quantity from or onto property owned or
operated by any Loan Party and take any Remedial Actions required to abate said
release or otherwise to come into compliance, in all material respects, with
applicable Environmental Law except where failure to do so could not reasonably
be expected to result in a Material Adverse Change, and

(d) Promptly, but in any event within 5 Business Days of its receipt thereof,
provide Agent with written notice of any of the following: (i) notice that an
Environmental Lien has been filed against any of the real or personal property
of any Loan Party, and (ii) commencement of any Environmental Action or written
notice that an Environmental Action will be filed against any Loan Party that
could reasonably be expected to result in a liability in excess of $1,000,000,
and (iii) written notice of a violation, citation, or other administrative order
from a Governmental Authority that could reasonably be expected to result in a
liability in excess of $1,000,000.

5.10. Disclosure Updates.

Promptly and in no event later than 5 Business Days after obtaining knowledge
thereof, notify Agents if any written information, exhibit, or report furnished
to Agent or the Lenders contained, at the time it was furnished, any untrue
statement of a material fact or omitted to state any material fact necessary to
make the statements contained therein not misleading in light of the
circumstances in which made. The foregoing to the contrary notwithstanding, any
notification pursuant to the foregoing provision will not cure or remedy the
effect of the prior untrue statement of a material fact or omission of any
material fact nor shall any such notification have the effect of amending or
modifying this Agreement or any of the Schedules hereto.

5.11. Subsidiaries.

At the time that any Loan Party forms any direct or indirect Domestic Subsidiary
or acquires any direct or indirect Domestic Subsidiary after the Closing Date,
such Loan Party shall (a) within 10 days of such formation or acquisition (or
such later date as permitted by Agent in its sole discretion) cause any such new
Subsidiary to provide to the applicable Agent a joinder to the applicable
Guaranty and Security Agreement with respect to such Borrower, together with
such other security documents, as well as appropriate

 

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financing statements, all in form and substance reasonably satisfactory to such
Agent (including being sufficient to grant such Agent a first priority Lien
(subject to Permitted Liens) in and to the assets of such newly formed or
acquired Domestic Subsidiary) in accordance with and subject to the terms of the
Guaranty and Security Agreement, (b) within 10 days of such formation or
acquisition (or such later date as permitted by the applicable Agent in its sole
discretion) provide to the applicable Agent a pledge agreement (or an addendum
to the Security Agreement) and appropriate certificates and powers or financing
statements, pledging all of the direct or beneficial ownership interest in such
new Subsidiary reasonably satisfactory to such Agent, and (c) within 10 days of
such formation or acquisition (or such later date as permitted by the applicable
Agent in its sole discretion) provide to the applicable Agent all other
documentation, including, if requested by Agent, one or more opinions of counsel
reasonably satisfactory to such Agent, which in its opinion is appropriate with
respect to the execution and delivery of the applicable documentation referred
to above. Any document, agreement, or instrument executed or issued pursuant to
this Section 5.11 shall be a Loan Document. With respect to each such
Subsidiary, each Borrower shall promptly send to Agents written notice setting
forth with respect to such Person all of the information required to be set
forth in Schedule 4.1(a) with respect to all Subsidiaries of such Borrower;
provided that such written notice shall be deemed to supplement Schedule 4.1(a)
for all purposes hereof.

5.12. Further Assurances.

At any time upon the reasonable request of an Agent, execute or deliver to such
Agent any and all financing statements, fixture filings, security agreements,
pledges, assignments, endorsements of certificates of title opinions of counsel,
and all other documents (the “Additional Documents”) that such Agent may
reasonably request in form and substance reasonably satisfactory to such Agent,
to create, perfect, and continue perfected or to better perfect such Agent’s
Liens in all of the assets of the types, and subject to the limitations
described in the Guaranty and Security Agreement of (a) with respect to US
Obligations, US Borrower and its Domestic Subsidiaries (whether now owned or
hereafter arising or acquired, tangible or intangible) and (b) with respect to
the Canadian Obligations, Canadian Borrowers, US Borrowers and each of their
Domestic Subsidiaries, in order to fully consummate all of the transactions
contemplated hereby and under the other Loan Documents. To the maximum extent
permitted by applicable law, if a Borrower refuses or fails to execute or
deliver any reasonably requested Additional Documents within a reasonable period
of time following the request to do so, each Borrower hereby authorizes Agents
to execute any such Additional Documents in the applicable Loan Party’s name, as
applicable, and authorizes Agents to file such executed Additional Documents in
any appropriate filing office. In furtherance and not in limitation of the
foregoing, each Loan Party shall take such actions as an Agent may reasonably
request from time to time to ensure that the Obligations are guaranteed by the
Guarantors and are secured by substantially all of the assets of each Borrower
and its Domestic Subsidiaries and all of the outstanding Equity Interests of
Borrower’s Domestic Subsidiaries, in each case to the extent and the manner set
forth in the Guaranty and Security Agreement, provided, that no Canadian Loan
Party shall be required to guarantee the Obligations of US Borrower and its
Domestic Subsidiaries or pledge or grant security over any of its assets to
secure the Obligations of US Borrower and its Domestic Subsidiaries.

 

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5.13. [Reserved.]

5.14. [Reserved.]

5.15. Locations of Chief Executive Offices.

Keep each Loan Parties’ chief executive offices only at the locations identified
on Schedule 4.31(b); provided, however, that Borrowers may amend
Schedule 4.31(b) so long as such amendment occurs by written notice to Agents
not less than 10 days prior to the date on which such chief executive office is
relocated and so long as such new location is within (a) the continental United
States with respect to the US Loan Parties and (B) Canada with respect to the
Canadian Loan Parties.

5.16. Notice to Agents.

Promptly (but in no event more than ten (10) days after the occurrence of each
such event or matter) give written notice to Agents in reasonable detail of:
(a) the occurrence of any Event of Default, or any condition, event or act which
with the giving of notice or the passage of time or both would constitute an
Event of Default; (b) any change in the legal name, the organizational structure
or jurisdiction of organization of each Borrower or any other Loan Party;
(c) the occurrence and nature of any Reportable Event or Prohibited Transaction,
each as defined in ERISA, or any funding deficiency with respect to any Plan or
Canadian Pension Plan; or (d) any termination or cancellation of any insurance
policy which any Borrower or any other Loan Party is required to maintain, or
any uninsured or partially uninsured loss through liability or property damage,
or through fire, theft or any other cause affecting any Borrower’s property in
excess of an aggregate of One Million US Dollars ($1,000,000).

 

6. NEGATIVE COVENANTS.

Each Borrower covenants and agrees that, until termination of all of the
Revolver Commitments and payment in full of the Obligations, the Loan Parties
will not do any of the following:

6.1. Indebtedness.

Create, incur, assume, suffer to exist, guarantee, or otherwise become or
remain, directly or indirectly, liable with respect to any Indebtedness, except
for Permitted Indebtedness.

 

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6.2. Liens.

Create, incur, assume, or suffer to exist, directly or indirectly, any Lien on
or with respect to any of its assets, of any kind, whether now owned or
hereafter acquired, or any income or profits therefrom, except for Permitted
Liens.

6.3. Merger, Consolidation, Amalgamation, Permitted Acquisitions.

(a) Enter into, any merger, consolidation, amalgamation or other reorganization
or liquidation, except for (i) any merger, consolidation, amalgamation or other
reorganization or liquidation between or among Loan Parties, provided that US
Borrower must be the surviving entity of any such merger, consolidation or
amalgamation to which it is a party, (ii) any merger between Borrowers and their
Subsidiaries that are not Loan Parties so long as a Borrower is the surviving
entity of any such merger, and (iii) (for the avoidance of doubt) any merger
between Subsidiaries of Borrower that are not Loan Parties.

(b) engage in any business that is not substantially related to
business-to-business document management services and other services related
thereto; nor

(c) other than pursuant to a Permitted Acquisition, make an Acquisition.

6.4. Transfer of Assets.

Consummate any Asset Sales unless (a) such Borrower (or the Domestic Subsidiary,
as the case may be) receives consideration at the time of the Asset Sale at
least equal to the fair market value of the assets or Equity Interests issued or
sold or otherwise Disposed of, and at least 75% of the consideration received in
the Asset Sale by such Borrower or such Subsidiary is in the form of cash or
eligible Cash Equivalents, or (b) such Asset Sale is in respect of Equipment in
connection with Permitted Sale-Leasebacks, provided that the proceeds of any
such Permitted Sale-Leaseback shall be entirely in cash and shall not be less
than 100% of the fair market value of the equipment being sold (determined in
good faith by such Borrower) and (c) the Borrowing Base is adjusted at such time
to reflect the effect of such sale on the Borrowing Base.

6.5. Change Name.

Except as permitted by Section 6.3, change any Borrower’s or any of its Domestic
Subsidiaries’ legal name, organizational identification number, jurisdiction of
organization or organizational identity; provided, however, that a Borrower or
any of its Subsidiaries may change its legal name upon at least 10 days prior
written notice to Agents of such change.

 

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6.6. Reserved.

6.7. Senior Unsecured Notes; Amendments.

(a) No Borrower nor any other Loan Party shall amend or modify any of the terms
applicable to (i) the Senior Unsecured Notes, (ii) other Permitted Indebtedness
or (iii) any Governing Documents of any Loan Party if, in the case of clause
(ii) or (iii), the effect thereof, either individually or in the aggregate,
could reasonably be expected to be materially adverse to the interests of
Lenders.

6.8. Sale and Leasebacks.

No Loan Party shall directly or indirectly, become or remain liable as lessee or
as a guarantor or other surety with respect to any lease (a “Sale-Leaseback”) of
any property (whether real, personal or mixed), whether now owned or hereafter
required, which such Loan Party (a) has sold or transferred or is to sell or to
transfer to any other Person (other than a Borrower or any of its Domestic
Subsidiaries), or (b) intends to use for substantially the same purpose as any
other property which has been or is to be sold or transferred by such Loan Party
to any Person (other than a Borrower or any of its Domestic Subsidiaries) in
connection with such lease; provided, that the Borrower and its Domestic
Subsidiaries may enter into Sale-Leasebacks which are in the ordinary course of
such Borrower’s or such Domestic Subsidiary’s business, consistent with past
practice and at market rates and subject to compliance with Section 6.3(b), with
respect to Equipment acquired by a Borrower and its Domestic Subsidiaries after
the Closing Date (“Permitted Sale Leasebacks”). For avoidance of doubt,
Sale-Leasebacks that result in Capital Leases shall be treated as Indebtedness
for all purposes of this Agreement.

6.9. Restricted Payments.

Declare or make, directly or indirectly, any Restricted Payment, or incur any
obligation (contingent or otherwise) to do so, except:

(a) each Loan Party may make Restricted Payments to a Borrower and to wholly
owned Subsidiaries of a Borrower so long as the amount of such Restricted
Payment, made to an owner of Equity Interests that are not a Borrower or a
Domestic Subsidiary of a Borrower does not exceed $1,000,000 in any fiscal year
of Borrowers, or if such payments exceed $1,000,000 (i) no Default or Event of
Default exists at such time (ii) Borrowers, after giving effect to such
Restricted Payment, on a pro forma basis, would be in compliance with the
financial covenants set forth in Section 7 as of the end of the month most
recently ended, as of such restricted payment were made during such month
(whether or not such financial covenants are then in effect, and (iii) after
giving effect to such Restricted Payment, Excess Availability exceeds
$15,000,000);

(b) each Borrower and each of its Domestic Subsidiaries may declare and make
dividend payments or other distributions payable solely in common Equity
Interests of such Person;

 

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(c) the Loan Parties may make required payments with respect to Earn-Outs so
long as no Event of Default is then continuing;

(d) US Borrower may declare and make other Restricted Payments, up to the
Restricted Payments Permitted Amount, so long as (i) no Default or Event of
Default exists at the time of the making of such Restricted Payment or results
or would result by virtue of the making thereof, (ii) Borrowers, after giving
effect to such Restricted Payments (and any other Restricted Payments pursuant
to this Section 6.9) on a pro forma basis, would be in compliance with the
financial covenants set forth in Section 7 as of the end of the month most
recently ended, as if such Restricted Payments were made during such month
(whether or not such financial covenants are then in effect), and (iii) after
giving effect to such Restricted Payment, Excess Availability exceeds
$15,000,000; provided that US Borrower shall not make any Restricted Payment in
respect of any of the Senior Unsecured Notes triggered by any calculation of
“excess cash flow” without Required Lenders’ prior written consent.

(e) So long as no Event of Default is then continuing, any Borrower may make
distributions to former employees, officers, or directors of such Borrower on
account of redemptions and repurchases of Equity Interests of such Borrower held
by such Persons, such distributions not to exceed $1,000,000 in the aggregate in
any calendar year; and

(f) So long as no Event of Default is continuing at the time of such Restricted
Payment and, after giving effect to such Restricted Payment, Excess Availability
exceeds $15,000,000 US Borrower may repurchase Senior Unsecured Notes for an
aggregate purchase price of up to $30,000,000 from the Closing Date through the
Maturity Date;

(g) So long as no Event of Default is then continuing, US Borrower may
repurchase fractional shares of its Equity Interests in an amount not to exceed
$1,000,000 in the aggregate in any calendar year; and

(h) Loan Parties may make payments permitted under the Intercompany
Subordination Agreement.

6.10. Accounting Methods.

Modify or change its fiscal year or its method of accounting (other than as may
be required to conform to GAAP).

6.11. Investments; Controlled Investments.

(a) Except for Permitted Investments, directly or indirectly, make or acquire
any Investment or incur any liabilities (including contingent obligations) for
or in connection with any Investment.

(b) Other than (i) an aggregate amount of not more than $500,000 for any
overnight balances, in the case of a Borrower and its Domestic Subsidiaries, and
(ii) amounts deposited into Deposit Accounts specially and exclusively used for
(x) payroll, payroll taxes

 

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and other employee wage and benefit payments to or for such Borrower’s or its
Domestic Subsidiaries’ employees or (y) disbursements other than the master
disbursement account identified on Schedule 9 to the Guaranty and Security
Agreement (to the extent such other disbursement accounts are linked to a master
disbursement account (subject to a Control Agreement) as zero balance accounts),
make, acquire, or permit to exist Permitted Investments consisting of cash, Cash
Equivalents, or amounts credited to Deposit Accounts or Securities Accounts
unless such Borrower or its Domestic Subsidiary, as applicable, and the
applicable bank or securities intermediary have entered into Control Agreements
with the applicable Agent(s) governing such Permitted Investments in order to
perfect (and further establish) such Agent’s Liens in such Permitted
Investments. Except as provided in Section 6.11(b)(i), and (ii), no Borrower
shall, nor shall it permit its Domestic Subsidiaries to establish or maintain
any Deposit Account or Securities Account unless the applicable Agent(s) shall
have received a Control Agreement in respect of such Deposit Account or
Securities Account (or, with respect to newly opened Deposit or Securities
Accounts opened for the sole purpose of effectuating a repurchase of Senior
Unsecured Notes or Equity Interests of Borrower permitted hereunder and
containing less than $2,000,000, within ten (10) Business Days after the opening
thereof).

6.12. Transactions with Affiliates.

Enter into any transaction of any kind with any Affiliate of any Loan Party,
irrespective of whether in the ordinary course of business, other than on fair
and reasonable terms substantially as favorable to a Borrower or a Subsidiary of
a Borrower as would be obtainable by such Person at the time in a comparable
arm’s-length transaction with a Person other than an Affiliate, provided that
the foregoing restriction shall not apply to: (a) transactions between or among
any Borrower and any other Loan Party or between or among Loan Parties;
(b) Restricted Payments permitted hereunder; (c) Permitted Indebtedness and
Permitted Investments, (d) employment agreements, indemnification and fee
agreements with officers and directors and other employment and compensation
related transactions approved by each Loan Party’s board of directors and
(d) transactions permitted by Section 6.3.

6.13. Use of Proceeds.

Use the proceeds of any loan made hereunder for any purpose other than (a) on
the Closing Date, (i) to repay, in full, the outstanding principal, accrued
interest, and accrued fees and expenses owing under or in connection with the
Existing Credit Facility, and (ii) to pay transactional fees, costs, and
expenses incurred in connection with this Agreement, the other Loan Documents,
and the transactions contemplated hereby and thereby, and (b) thereafter,
consistent with the terms and conditions hereof, for their lawful and permitted
purposes (including that no part of the proceeds of the loans made to Borrowers
will be used to purchase or carry any such Margin Stock or to extend credit to
others for the purpose of purchasing or carrying any such margin stock or for
any purpose that violates the provisions of Regulation T, U or X of the Board of
Governors of the United States Federal Reserve).

 

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6.14. Limitation on Issuance of Equity Interests.

Except for the issuance or sale of common stock or Permitted Preferred Stock by
a Borrower or the issuance of Equity Interests by a Domestic Subsidiary to a
Borrower, issue or sell or enter into any agreement or arrangement for the
issuance and sale of any of its Equity Interests.

6.15. Canadian Employee Plan.

Contribute to or assume an obligation to contribute to any new Canadian Pension
Plan or acquire an interest in any Person if such Person sponsors, maintains or
contributes to a defined benefit pension plan; provided, that a Canadian Loan
Party may acquire an interest in such Person if such Person is acquired as a
Permitted Acquisition and no Canadian Loan Party has any legal liability to
perform such Person’s defined benefit pension plan obligations or assume such
liabilities.

 

7. FINANCIAL COVENANTS.

Borrowers covenant and agree that, until termination of all of the Revolver
Commitments and payment in full of the Obligations, Borrowers will:

Fixed Charge Coverage Ratio. Following the occurrence of a Triggering Event, for
the most recently completed month-end, and for each month during a Covenant
Enforcement Period, have a Fixed Charge Coverage Ratio, measured on a month-end
basis, of at least 1.00:1.00 for the 12 month period ending on the last day of
such month.

 

8. EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an event of default
(each, an “Event of Default”) under this Agreement:

8.1. Any Borrower shall fail to pay (i) all or any portion of the principal of
the Obligations as and when due, or (ii) within three (3) Business Days after
the same becomes due, any other amount payable hereunder by it or under any
other Loan Document;

8.2. Any default in the performance of or compliance with any obligation,
agreement or other provision contained herein or in any other Loan Document
(other than those specifically described as an “Event of Default” in this
Section 8), and with respect to any such default that by its nature can be
cured, such default shall continue for a period of twenty (20) days from its
occurrence;

8.3. (i) There is entered against any Borrower or any other Loan Party a
judgment or order that has or could reasonably be expected to result in,
individually or in the aggregate, a Material Adverse Change and, in any such
case there is a period of 30 consecutive days during which a stay of enforcement
of such judgment, by reason of a pending appeal or otherwise, is not in effect,
or (ii) the filing of a notice of judgment lien against, or the recording in any
county in which such Borrower or other Loan Party has an

 

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interest in Real Property or any abstract of judgment against, any Borrower or
any other Loan Party, or the service of a notice of levy and/or of a writ of
attachment or execution, or other like process, against any material portion of
assets of the Borrower or any other Loan Party that has or could reasonably be
expected to result in, individually or in the aggregate, a Material Adverse
Change;

8.4. If an Insolvency Proceeding is commenced by a Loan Party or any of its
Subsidiaries;

8.5. If an Insolvency Proceeding is commenced against a Loan Party or any of its
Subsidiaries and any of the following events occur: (a) such Loan Party or such
Subsidiary consents to the institution of such Insolvency Proceeding against it,
(b) the petition commencing the Insolvency Proceeding is not timely
controverted, (c) the petition commencing the Insolvency Proceeding is not
dismissed within 60 calendar days of the date of the filing thereof, (d) an
interim trustee is appointed to take possession of all or any substantial
portion of the properties or assets of, or to operate all or any substantial
portion of the business of, such Loan Party or its Subsidiary, or (e) an order
for relief shall have been issued or entered therein;

8.6. If a Loan Party or any of its Subsidiaries is enjoined, restrained, or in
any way prevented by court order from continuing to conduct all or any material
part of the business affairs of Borrowers and their Subsidiaries, taken as a
whole;

8.7. If there is a default in one or more agreements to which a Loan Party is a
party with one or more third Persons relative to a Loan Party’s Indebtedness for
borrowed money involving an aggregate amount of $5,000,000 or more and such
default (a) occurs at the final maturity of the obligations thereunder or
(b) such default has not been waived by such third party within a reasonable
period of time after the occurrence thereof, is continuing and results in a
right by such third Person, irrespective of whether exercise, to accelerate the
maturity of such Loan Party’s obligations thereunder;

8.8. Any financial statement or certificate furnished to Agents and Lenders in
writing in connection with, or any representation or warranty made by a Borrower
or any other party under this Agreement or any other Loan Document shall prove
to be incorrect, false or misleading in any material respect when furnished or
made;

8.9. If the obligation of any Guarantor under the guaranty contained in the
Guaranty and Security Agreement (or any other guaranty of the Obligations) is
limited or terminated by operation of law or by such Guarantor (other than in
accordance with the terms of this Agreement);

8.10. If the Security Agreement or any other Loan Document that purports to
create a Lien, shall, for any reason, fail or cease to create a valid and
perfected and, except to the extent of Permitted Liens which are non-consensual
Permitted Liens, permitted purchase money Liens, the interests of lessors under
Capital Leases or permitted pursuant to clause (p) of the definition of
Permitted Liens, first priority Lien on the Collateral covered thereby,

 

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except (a) as a result of a disposition of the applicable Collateral in a
transaction permitted under this Agreement, or (b) as the result of an action or
failure to act on the part of an Agent;

8.11. The validity or enforceability of any Loan Document shall at any time for
any reason (other than solely as the result of an action or failure to act on
the part of Agent) be declared to be null and void, or a proceeding shall be
commenced by a Loan Party or its Subsidiaries, or by any Governmental Authority
having jurisdiction over a Loan Party or its Subsidiaries, seeking to establish
the invalidity or unenforceability thereof, or a Loan Party or its Subsidiaries
shall deny that such Loan Party or its Subsidiaries has any liability or
obligation purported to be created under any Loan Document;

8.12. [Reserved]

8.13. The dissolution or liquidation of any Borrower or (unless permitted
pursuant to Section 6.3 any Third Party Obligor; or any Borrower or any such
Third Party Obligor, or any of its directors, stockholders or members, shall
take action seeking to effect the dissolution or liquidation of any Borrower or
(unless permitted pursuant to Section 6.3) such Third Party Obligor; or

8.14. Any Change of Control.

 

9. RIGHTS AND REMEDIES.

9.1. Rights and Remedies.

Upon the occurrence and during the continuation of an Event of Default, Agents
may, and, at the instruction of the Required Lenders, shall (in each case under
clauses (a) or (b) by written notice to Borrowers), in addition to any other
rights or remedies provided for hereunder or under any other Loan Document or by
applicable law, do any one or more of the following:

(a) declare the Obligations (other than the Bank Product Obligations), whether
evidenced by this Agreement or by any of the other Loan Documents immediately
due and payable, whereupon the same shall become and be immediately due and
payable and Borrowers shall be obligated to repay all of such Obligations in
full, without presentment, demand, protest, or further notice or other
requirements of any kind, all of which are hereby expressly waived by each
Borrower;

(b) declare the Revolver Commitments terminated, whereupon the Revolver
Commitments shall immediately be terminated together with (i) any obligation of
any Lender hereunder to make Advances, (ii) the obligation of the Swing Lenders
to make Swing Loans, and (iii) the obligation of the Issuing Lenders to issue
Letters of Credit; and

(c) exercise all other rights and remedies available to Agents or the Lenders
under the Loan Documents or applicable law.

 

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The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in Section 8.4 or Section 8.5, in addition to the remedies
set forth above, without any notice to any Borrower or any other Person or any
act by the Lender Group, the Revolver Commitments shall automatically terminate
and the Obligations (other than the Bank Product Obligations), inclusive of all
accrued and unpaid interest thereon and all fees and all other amounts owing
under this Agreement or under any of the other Loan Documents, shall
automatically and immediately become due and payable and Borrowers shall be
obligated to repay all of such Obligations in full, without presentment, demand,
protest, or notice of any kind, all of which are expressly waived by each
Borrower.

9.2. Remedies Cumulative.

The rights and remedies of the Lender Group under this Agreement, the other Loan
Documents, and all other agreements shall be cumulative. The Lender Group shall
have all other rights and remedies not inconsistent herewith as provided under
the Code, by law, or in equity. No exercise by the Lender Group of one right or
remedy shall be deemed an election, and no waiver by the Lender Group of any
Event of Default shall be deemed a continuing waiver. No delay by the Lender
Group shall constitute a waiver, election, or acquiescence by it.

 

10. WAIVERS; INDEMNIFICATION.

10.1. Demand; Protest; etc.

Each Borrower waives demand, protest, notice of protest, notice of default or
dishonor, notice of payment and nonpayment, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of documents, instruments, chattel
paper, and guarantees at any time held by the Lender Group on which any Borrower
may in any way be liable.

10.2. The Lender Group’s Liability for Collateral.

Each Borrower hereby agrees that: (a) so long as each Agent complies with its
obligations, if any, under the Code or the PPSA, as applicable, the Lender Group
shall not in any way or manner be liable or responsible for: (i) the safekeeping
of the Collateral, (ii) any loss or damage thereto occurring or arising in any
manner or fashion from any cause, (iii) any diminution in the value thereof, or
(iv) any act or default of any carrier, warehouseman, bailee, forwarding agency,
or other Person, and (b) all risk of loss, damage, or destruction of the
Collateral shall be borne by Borrowers.

10.3. Indemnification.

Each Borrower shall pay, indemnify, defend, and hold the Agent-Related Persons,
the Lender-Related Persons, and each Participant (each, an “Indemnified Person”)
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, liabilities,
fines, costs, penalties, and damages, and all reasonable fees and disbursements
of attorneys, experts, or consultants and all other costs and expenses actually
incurred in connection therewith or in connection with

 

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the enforcement of this indemnification (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them (a) in connection with or as a result of or
related to the execution and delivery (provided that Borrowers shall not be
liable for costs and expenses (including attorneys’ fees) of any Lender (other
than Wells Fargo and Wells Fargo Canada) incurred in advising, structuring,
drafting, reviewing, administering or syndicating the Loan Documents),
enforcement, performance, or administration (including any restructuring or
workout with respect hereto) of this Agreement, any of the other Loan Documents,
or the transactions contemplated hereby or thereby or the monitoring of each
Borrower’s and its Domestic Subsidiaries’ compliance with the terms of the Loan
Documents (provided, however, that the indemnification in this clause (a) shall
not extend to (i) disputes solely between or among the Lenders, (ii) disputes
solely between or among the Lenders and their respective Affiliates; it being
understood and agreed that the indemnification in this clause (a) shall extend
to Agents (but not the Lenders) relative to disputes between or among an Agent
on the one hand, and one or more Lenders, or one or more of their Affiliates, on
the other hand, or (iii) any Taxes or any costs attributable to Taxes, which
shall be governed by Section 16), (b) with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the proceeds of the credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto), or any act, omission, event,
or circumstance in any manner related thereto, and (c) in connection with or
arising out of any presence or release of Hazardous Materials at, on, under, to
or from any assets or properties owned, leased or operated by any Loan Party or
any of its Subsidiaries or any Environmental Actions, Environmental Liabilities
or Remedial Actions related in any way to any such assets or properties of any
Loan Party or any of its Subsidiaries (each and all of the foregoing, the
“Indemnified Liabilities”). The foregoing to the contrary notwithstanding, no
Borrower shall have any obligation to any Indemnified Person under this
Section 10.3 with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person or its officers, directors,
employees, attorneys, or agents. This provision shall survive the termination of
this Agreement and the repayment of the Obligations. If any Indemnified Person
makes any payment to any other Indemnified Person with respect to an Indemnified
Liability as to which a Borrower was required to indemnify the Indemnified
Person receiving such payment, the Indemnified Person making such payment is
entitled to be indemnified and reimbursed by Borrowers with respect thereto.
WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED
PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE
CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED
PERSON OR OF ANY OTHER PERSON.

 

11. NOTICES.

Unless otherwise provided in this Agreement, all notices or demands relating to
this Agreement or any other Loan Document shall be in writing and (except for
financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by
registered or certified mail (postage prepaid,

 

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return receipt requested), overnight courier, electronic mail (at such email
addresses as a party may designate in accordance herewith), or telefacsimile. In
the case of notices or demands to Borrowers or Agents, as the case may be, they
shall be sent to the respective address set forth below:

If to Borrowers:

AMERICAN REPROGRAPHICS COMPANY

1981 North Broadway, Suite 385

Walnut Creek, California 94596

Attn: Chief Financial Officer

Fax No. (925) 949-5101

ARC REPROGRAPHICS CANADA CORP.

1981 North Broadway, Suite 385

Walnut Creek, California 94596

Attn: Chief Financial Officer

Fax No. (925) 949-5101

ARC DIGITAL CANADA CORP.

1981 North Broadway, Suite 385

Walnut Creek, California 94596

Attn: Chief Financial Officer

Fax No. (925) 949-5101

with copies to:

Pillsbury Winthrop Shaw Pittman LLP

50 Fremont Street

San Francisco, California

Attn: Philip J. Tendler, Esq.

Fax No. (415) 983-1200

If to US Agent:

WELLS FARGO BANK, NATIONAL ASSOCIATION

2450 Colorado Avenue, Suite 3000W

Santa Monica, California 90404

Attn: Business Finance Division Manager

Fax No. (310) 453-7413

 

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with copies to:

Goldberg Kohn Ltd.

55 East Monroe Street, Suite 3300

Chicago, Illinois 60603

Attn: Philip M. Blackman, Esq.

Fax No. (312) 863-7436

If to Canadian Agent:

c/o WELLS FARGO BANK, NATIONAL ASSOCIATION

2450 Colorado Avenue, Suite 3000W

Santa Monica, California 90404

Attn: Business Finance Division Manager

Fax No. (310) 453-7413

with copies to:

Goldberg Kohn Ltd.

55 East Monroe Street, Suite 3300

Chicago, Illinois 60603

Attn: Philip M. Blackman, Esq.

Fax No. (312) 863-7436

Any party hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other
party. All notices or demands sent in accordance with this Section 11, shall be
deemed received on the earlier of the date of actual receipt or 3 Business Days
after the deposit thereof in the mail; provided, that (a) notices sent by
overnight courier service shall be deemed to have been given when received,
(b) notices by facsimile shall be deemed to have been given when sent (except
that, if not given during normal business hours for the recipient, shall be
deemed to have been given at the opening of business on the next Business Day
for the recipient) and (c) notices by electronic mail shall be deemed received
upon the sender’s receipt of an acknowledgment from the intended recipient (such
as by the “return receipt requested” function, as available, return email or
other written acknowledgment).

 

12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE PROVISION.

(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL
BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF CALIFORNIA.

 

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(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN
THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED
IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA; PROVIDED, HOWEVER, THAT ANY
SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS
TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED
UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM
NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 12(b).

(c) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH BORROWER AND EACH
MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP REPRESENT
THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.

(d) EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF
LOS ANGELES AND THE STATE OF CALIFORNIA, IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO ANY LOAN DOCUMENTS, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT
AGENT MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN
THE COURTS OF ANY JURISDICTION.

 

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(e) IN THE EVENT ANY LEGAL PROCEEDING IS FILED IN A COURT OF THE STATE OF
CALIFORNIA (THE “COURT”) BY OR AGAINST ANY PARTY HERETO IN CONNECTION WITH ANY
CLAIM AND THE WAIVER SET FORTH IN CLAUSE (C) ABOVE IS NOT ENFORCEABLE IN SUCH
PROCEEDING, THE PARTIES HERETO AGREE AS FOLLOWS:

(i) WITH THE EXCEPTION OF THE MATTERS SPECIFIED IN SUBCLAUSE (ii) BELOW, ANY
CLAIM SHALL BE DETERMINED BY A GENERAL REFERENCE PROCEEDING IN ACCORDANCE WITH
THE PROVISIONS OF CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 638 THROUGH 645.1.
THE PARTIES INTEND THIS GENERAL REFERENCE AGREEMENT TO BE SPECIFICALLY
ENFORCEABLE. VENUE FOR THE REFERENCE PROCEEDING SHALL BE IN THE COUNTY OF LOS
ANGELES, CALIFORNIA.

(ii) THE FOLLOWING MATTERS SHALL NOT BE SUBJECT TO A GENERAL REFERENCE
PROCEEDING: (A) NON-JUDICIAL FORECLOSURE OF ANY SECURITY INTERESTS IN REAL OR
PERSONAL PROPERTY, (B) EXERCISE OF SELF-HELP REMEDIES (INCLUDING SET-OFF OR
RECOUPMENT), (C) APPOINTMENT OF A RECEIVER, AND (D) TEMPORARY, PROVISIONAL, OR
ANCILLARY REMEDIES (INCLUDING WRITS OF ATTACHMENT, WRITS OF POSSESSION,
TEMPORARY RESTRAINING ORDERS, OR PRELIMINARY INJUNCTIONS). THIS AGREEMENT DOES
NOT LIMIT THE RIGHT OF ANY PARTY TO EXERCISE OR OPPOSE ANY OF THE RIGHTS AND
REMEDIES DESCRIBED IN CLAUSES (A) - (D) AND ANY SUCH EXERCISE OR OPPOSITION DOES
NOT WAIVE THE RIGHT OF ANY PARTY TO PARTICIPATE IN A REFERENCE PROCEEDING
PURSUANT TO THIS AGREEMENT WITH RESPECT TO ANY OTHER MATTER.

(iii) UPON THE WRITTEN REQUEST OF ANY PARTY, THE PARTIES SHALL SELECT A SINGLE
REFEREE, WHO SHALL BE A RETIRED JUDGE OR JUSTICE. IF THE PARTIES DO NOT AGREE
UPON A REFEREE WITHIN 10 DAYS OF SUCH WRITTEN REQUEST, THEN, ANY PARTY SHALL
HAVE THE RIGHT TO REQUEST THE COURT TO APPOINT A REFEREE PURSUANT TO CALIFORNIA
CODE OF CIVIL PROCEDURE SECTION 640(B). THE REFEREE SHALL BE APPOINTED TO SIT
WITH ALL OF THE POWERS PROVIDED BY LAW. PENDING APPOINTMENT OF THE REFEREE, THE
COURT SHALL HAVE THE POWER TO ISSUE TEMPORARY OR PROVISIONAL REMEDIES.

(iv) EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE REFEREE SHALL
DETERMINE THE MANNER IN WHICH

 

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THE REFERENCE PROCEEDING IS CONDUCTED INCLUDING THE TIME AND PLACE OF HEARINGS,
THE ORDER OF PRESENTATION OF EVIDENCE, AND ALL OTHER QUESTIONS THAT ARISE WITH
RESPECT TO THE COURSE OF THE REFERENCE PROCEEDING. ALL PROCEEDINGS AND HEARINGS
CONDUCTED BEFORE THE REFEREE, EXCEPT FOR TRIAL, SHALL BE CONDUCTED WITHOUT A
COURT REPORTER, EXCEPT WHEN ANY PARTY SO REQUESTS A COURT REPORTER AND A
TRANSCRIPT IS ORDERED, A COURT REPORTER SHALL BE USED AND THE REFEREE SHALL BE
PROVIDED A COURTESY COPY OF THE TRANSCRIPT. THE PARTY MAKING SUCH REQUEST SHALL
HAVE THE OBLIGATION TO ARRANGE FOR AND PAY THE COSTS OF THE COURT REPORTER,
PROVIDED THAT SUCH COSTS, ALONG WITH THE REFEREE’S FEES, SHALL ULTIMATELY BE
BORNE BY THE PARTY WHO DOES NOT PREVAIL, AS DETERMINED BY THE REFEREE.

(v) THE REFEREE MAY REQUIRE ONE OR MORE PREHEARING CONFERENCES. THE PARTIES
HERETO SHALL BE ENTITLED TO DISCOVERY, AND THE REFEREE SHALL OVERSEE DISCOVERY
IN ACCORDANCE WITH THE RULES OF DISCOVERY, AND SHALL ENFORCE ALL DISCOVERY
ORDERS IN THE SAME MANNER AS ANY TRIAL COURT JUDGE IN PROCEEDINGS AT LAW IN THE
STATE OF CALIFORNIA.

(vi) THE REFEREE SHALL APPLY THE RULES OF EVIDENCE APPLICABLE TO PROCEEDINGS AT
LAW IN THE STATE OF CALIFORNIA AND SHALL DETERMINE ALL ISSUES IN ACCORDANCE WITH
CALIFORNIA SUBSTANTIVE AND PROCEDURAL LAW. THE REFEREE SHALL BE EMPOWERED TO
ENTER EQUITABLE AS WELL AS LEGAL RELIEF AND RULE ON ANY MOTION WHICH WOULD BE
AUTHORIZED IN A TRIAL, INCLUDING MOTIONS FOR DEFAULT JUDGMENT OR SUMMARY
JUDGMENT. THE REFEREE SHALL REPORT HIS OR HER DECISION, WHICH REPORT SHALL ALSO
INCLUDE FINDINGS OF FACT AND CONCLUSIONS OF LAW. THE REFEREE SHALL ISSUE A
DECISION AND PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE, SECTION 644, THE
REFEREE’S DECISION SHALL BE ENTERED BY THE COURT AS A JUDGMENT IN THE SAME
MANNER AS IF THE ACTION HAD BEEN TRIED BY THE COURT. THE FINAL JUDGMENT OR ORDER
FROM ANY APPEALABLE DECISION OR ORDER ENTERED BY THE REFEREE SHALL BE FULLY
APPEALABLE AS IF IT HAS BEEN ENTERED BY THE COURT.

(vii) THE PARTIES RECOGNIZE AND AGREE THAT ALL CLAIMS RESOLVED IN A GENERAL
REFERENCE PROCEEDING PURSUANT HERETO WILL BE DECIDED BY A REFEREE AND NOT BY A
JURY. AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL
OF THEIR OWN CHOICE, EACH PARTY HERETO KNOWINGLY AND VOLUNTARILY AND FOR THEIR
MUTUAL BENEFIT AGREES THAT THIS REFERENCE PROVISION SHALL APPLY TO ANY DISPUTE
BETWEEN THEM THAT ARISES OUT OF OR IS RELATED TO THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS.

 

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13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

13.1. Assignments and Participations.

(a) With the prior written consent of Borrowers, which consent of Borrowers
shall not be unreasonably withheld, delayed or conditioned, and shall not be
required (1) if an Event of Default has occurred and is continuing, or (2) in
connection with an assignment to a Person that is a Lender or an Affiliate
(other than individuals) of a Lender; provided that Borrowers shall be deemed to
have consented to a proposed assignment unless it objects thereto by written
notice to Agents within 5 Business Days after having received notice thereof,
and with the prior written consent of Agents, which consents of Agents shall not
be unreasonably withheld, delayed or conditioned, and shall not be required in
connection with an assignment to a Person that is a Lender or an Affiliate
(other than individuals) of a Lender, any Lender may assign and delegate to one
or more assignees (each, an “Assignee”; provided, however, that no Loan Party or
Affiliate of a Loan Party shall be permitted to become an Assignee) all or any
portion of the Obligations, the Revolver Commitments and the other rights and
obligations of such Lender hereunder and under the other Loan Documents, in a
minimum amount (unless waived by Agents) of $5,000,000 (except such minimum
amount shall not apply to (x) an assignment or delegation by any Lender to any
other Lender or an Affiliate of any Lender or (y) a group of new Lenders, each
of which is an Affiliate of each other or a Related Fund of such new Lender to
the extent that the aggregate amount to be assigned to all such new Lenders is
at least $5,000,000); provided, however, that Borrowers and Agents may continue
to deal solely and directly with such Lender in connection with the interest so
assigned to an Assignee until (i) written notice of such assignment, together
with payment instructions, addresses, and related information with respect to
the Assignee, have been given to Borrowers and Agents by such Lender and the
Assignee, (ii) such Lender and its Assignee have delivered to Borrowers and
Agents an Assignment and Acceptance and Agents have notified the assigning
Lender of its receipt thereof in accordance with Section 13.1(b), and
(iii) unless waived by US Agent, the assigning Lender or Assignee has paid to US
Agent for US Agent’s separate account a processing fee in the amount of $5,000.

(b) From and after the date that US Agent notifies the assigning Lender (with a
copy to Borrowers) that it has received an executed Assignment and Acceptance
and, if applicable, payment of the required processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall be a “Lender” and shall have the rights and obligations of a
Lender under the Loan Documents, and (ii) the assigning Lender shall, to the
extent that rights and obligations hereunder and under the other Loan Documents
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights (except with respect to Section 10.3) and be released from any future
obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender’s rights
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Loan Documents, such Lender shall cease to be a party hereto and thereto);
provided, however, that nothing contained herein shall release any assigning
Lender from obligations that survive the termination of this Agreement,
including such assigning Lender’s obligations under Section 15 and
Section 17.9(a).

(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the Assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other Loan Document furnished pursuant hereto,
(ii) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrowers or the
performance or observance by Borrowers of any of its obligations under this
Agreement or any other Loan Document furnished pursuant hereto, (iii) such
Assignee confirms that it has received a copy of this Agreement, together with
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance,
(iv) such Assignee will, independently and without reliance upon Agent, such
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement, (v) such
Assignee appoints and authorizes Agents to take such actions and to exercise
such powers under this Agreement and the other Loan Documents as are delegated
to Agents, by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto, and (vi) such Assignee agrees that it will
perform all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.

(d) Immediately upon US Agent’s receipt of the required processing fee, if
applicable, and delivery of notice to the assigning Lender pursuant to
Section 13.1(b), this Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Revolver Commitments arising therefrom. The Revolver
Commitment allocated to each Assignee shall reduce such Commitments of the
assigning Lender pro tanto.

(e) Any Lender may at any time sell to one or more commercial banks, financial
institutions, or other Persons (a “Participant”) participating interests in all
or any portion of its Obligations, its Revolver Commitment, and the other rights
and interests of that Lender (the “Originating Lender”) hereunder and under the
other Loan Documents; provided, however, that (i) the Originating Lender shall
remain a “Lender” for all purposes of this Agreement and the other Loan
Documents and the Participant receiving the participating interest in the
Obligations, the Revolver Commitments, and the other rights and interests of the
Originating Lender hereunder shall not constitute a “Lender” hereunder or under
the other Loan Documents and the Originating Lender’s obligations under this
Agreement shall remain unchanged, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations, (iii) Borrowers,
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deal solely and directly with the Originating Lender in connection with the
Originating Lender’s rights and obligations under this Agreement and the other
Loan Documents, (iv) no Lender shall transfer or grant any participating
interest under which the Participant has the right to approve any amendment to,
or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment to, or consent or waiver with
respect to this Agreement or of any other Loan Document would (A) extend the
final maturity date of the Obligations hereunder in which such Participant is
participating, (B) reduce the interest rate applicable to the Obligations
hereunder in which such Participant is participating, (C) release all or
substantially all of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through such Lender (other than a waiver of default interest), or
(E) decreases the amount or postpones the due dates of scheduled principal
repayments or prepayments or premiums payable to such Participant through such
Lender, and (v) all amounts payable by Borrowers hereunder shall be determined
as if such Lender had not sold such participation, except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement. The rights of any Participant only shall be
derivative through the Originating Lender with whom such Participant
participates and no Participant shall have any rights under this Agreement or
the other Loan Documents or any direct rights as to the other Lenders, Agents,
Borrowers, the Collections of Borrowers or their Domestic Subsidiaries, the
Collateral, or otherwise in respect of the Obligations. No Participant shall
have the right to participate directly in the making of decisions by the Lenders
among themselves.

(f) In connection with any such assignment or participation or proposed
assignment or participation or any grant of a security interest in, or pledge
of, its rights under and interest in this Agreement, a Lender may, subject to
the provisions of Section 17.9, disclose all documents and information which it
now or hereafter may have relating to Borrowers and its Subsidiaries and their
respective businesses.

(g) Any other provision in this Agreement notwithstanding, any Lender may at any
time create a security interest in, or pledge, all or any portion of its rights
under and interest in this Agreement in favor of any Federal Reserve Bank in
accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury
Regulation 31 CFR §203.24, and such Federal Reserve Bank may enforce such pledge
or security interest in any manner permitted under applicable law.

(h) Agent (as a non-fiduciary agent on behalf of Borrowers) shall maintain, or
caused to be maintained, a register (the “Register”) on which it enters the name
and address of each Lender as the registered owner of the Advances (and the
principal amount thereof ad stated interest thereon) held by such Lender (each,
a “Registered Loan”). Other than in connection with an assignment by a Lender of
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Advances to an Affiliate of such Lender or a Related Fund of such Lender (i) a
Registered Loan (and the registered note, if any, evidencing the same) may be
assigned or sold in whole or in part only by registration of such assignment or
sale on the Register (and each registered note shall expressly so provide) and
(ii) any assignment or sale of all or part of such Registered Loan (and the
registered note, if any, evidencing the same) may be effected only by
registration of such assignment or sale on the Register, together with the
surrender of the registered note, if any, evidencing the same duly endorsed by
(or accompanied by a written instrument of assignment or sale duly executed by)
the holder of such registered note, whereupon, at the request of the designated
assignee(s) or transferee(s), one or more new registered notes in the same
aggregate principal amount shall be issued to the designated assignee(s) or
transferee(s). Prior to the registration of assignment or sale of any Registered
Loan (and the registered note, if any, evidencing the same), Borrowers shall
treat the Person in whose name such Registered Loan (and the registered note, if
any, evidencing the same) is registered as the owner thereof for the purpose of
receiving all payments thereon and for all other purposes, notwithstanding
notice to the contrary. In the case of any assignment by a Lender of all or any
portion of its Advances to an Affiliate of such Lender or a Related Fund of such
Lender, and which assignment is not recorded in the Register, the assigning
Lender, on behalf of Borrowers, shall maintain a register comparable to the
Register.

(i) In the event that a Lender sells participations in the Registered Loan, such
Lender, as a non-fiduciary agent on behalf of Borrowers, shall maintain (or
cause to be maintained) a register on which it enters the name of all
participants in the Registered Loans held by it (and the principal amount (and
stated interest thereon) of the portion of such Registered Loans that is subject
to such participations) (the “Participant Register”). A Registered Loan (and the
Registered Note, if any, evidencing the same) may be participated in whole or in
part only by registration of such participation on the Participant Register (and
each registered note shall expressly so provide). Any participation of such
Registered Loan (and the registered note, if any, evidencing the same) may be
effected only by the registration of such participation on the Participant
Register.

(j) US Agent shall make a copy of the Register (and each Lender shall make a
copy of its Participant Register to the extent it has one) available for review
by any Borrowers from time to time as such Borrowers may reasonably request.

13.2. Successors.

This Agreement shall bind and inure to the benefit of the respective successors
and assigns of each of the parties; provided, however, that no Borrower may
assign this Agreement or any rights or duties hereunder without the Lenders’
prior written consent and any prohibited assignment shall be absolutely void ab
initio. No consent to assignment by the Lenders shall release any Borrower from
its Obligations. A Lender may assign this Agreement and the other Loan Documents
and its rights and duties hereunder and thereunder pursuant to Section 13.1 and,
except as expressly required pursuant to Section 13.1, no consent or approval by
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14. AMENDMENTS; WAIVERS.

14.1. Amendments and Waivers.

(a) No amendment, waiver or other modification of any provision of this
Agreement or any other Loan Document (other than Bank Product Agreements or the
Fee Letter), and no consent with respect to any departure by any Loan Party
therefrom, shall be effective unless the same shall be in writing and signed by
the Required Lenders (or by Agents at the written request of the Required
Lenders) and the Loan Parties that are party thereto and then any such waiver or
consent shall be effective, but only in the specific instance and for the
specific purpose for which given; provided, however, that no such waiver,
amendment, or consent shall, unless in writing and signed by all of the Lenders
directly affected thereby and all of the Loan Parties that are party thereto, do
any of the following:

(i) increase the amount of or extend the expiration date of any Revolver
Commitment of any Lender or amend, modify, or eliminate the last sentence of
Section 2.4(c)(i),

(ii) postpone or delay any date fixed by this Agreement or any other Loan
Document for any payment of principal, interest, fees, or other amounts due
hereunder or under any other Loan Document,

(iii) reduce the principal of, or the rate of interest on, any loan or other
extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document (except (y) in connection with the
waiver of applicability of Section 2.6(c) (which waiver shall be effective with
the written consent of the Required Lenders),

(iv) amend, modify, or eliminate this Section or any provision of this Agreement
providing for consent or other action by all Lenders,

(v) amend, modify, or eliminate Section 15.11,

(vi) other than as permitted by Section 15.11, release Agents’ Liens in and to
all or substantially all of the Collateral,

(vii) amend, modify, or eliminate the definition of “Required Lenders” or “Pro
Rata Share”,

(viii) contractually subordinate any of Agents’ Liens,

(ix) other than in connection with a merger, liquidation, dissolution or sale of
such Person expressly permitted by the terms hereof or the other Loan Documents,
release any Borrower or any Guarantor from any obligation for the payment of
money or consent to the assignment or transfer by any Borrower or any Guarantor
of any of its rights or duties under this Agreement or the other Loan Documents,

 

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(x) amend, modify, or eliminate any of the provisions of Section 2.4(b)(i) or
(ii),

(xi) amend, modify, or eliminate any of the provisions of Section 13.1(a) to
permit a Loan Party, an Affiliate of a Loan Party, or an Affiliate of Equity
Sponsor to be permitted to become an Assignee, or

(xii) amend, modify, or eliminate the definition of US Borrowing Base, US
Borrowing Base I, US Borrowing Base II, Canadian Borrowing Base, Canadian
Borrowing Base I, Canadian Borrowing Base II, Borrowing Base or any of the
defined terms (including the definitions of Eligible Accounts, Eligible
Inventory and Eligible Equipment) that are used in such definition to the extent
that any such change results in more credit being made available to Borrowers
based upon the US Borrowing Base or the Canadian Borrowing Base, but not
otherwise, or the definitions of Maximum US Revolver Amount, Maximum Canadian
Revolver Amount or Maximum Revolver Amount.

(b) No amendment, waiver, modification, elimination, or consent shall amend,
modify, or waive (i) the definition of, or any of the terms or provisions of,
the Fee Letter, without the written consent of Agents and each Borrower (and
shall not require the written consent of any of the Lenders), and (ii) any
provision of Section 15 pertaining to Agent, or any other rights or duties of
Agent under this Agreement or the other Loan Documents, without the written
consent of Agents, Borrowers, and the Required Lenders,

(c) No amendment, waiver, modification, elimination, or consent shall amend,
modify, or waive any provision of this Agreement or the other Loan Documents
pertaining to an Issuing Lender, or any other rights or duties of an Issuing
Lender under this Agreement or the other Loan Documents, without the written
consent of such Issuing Lender, Agents, Borrowers, and the Required Lenders,

(d) No amendment, waiver, modification, elimination, or consent shall amend,
modify, or waive any provision of this Agreement or the other Loan Documents
pertaining to a Swing Lender, or any other rights or duties of a Swing Lender
under this Agreement or the other Loan Documents, without the written consent of
such Swing Lender, Agents, Borrowers, and the Required Lenders,

(e) Anything in this Section 14.1 to the contrary notwithstanding, (i) any
amendment, modification, elimination, waiver, consent, termination, or release
of, or with respect to, any provision of this Agreement or any other Loan
Document that relates only to the relationship of the Lender Group among
themselves, and that does not affect the rights or obligations of any Borrower,
shall not require consent by or the agreement of any Loan Party, and (ii) any
amendment, waiver, modification, elimination, or consent of or with respect to
any provision of this Agreement or any other Loan Document may be entered into
without the consent of, or over the objection of, any Defaulting Lender.

 

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14.2. Replacement of Certain Lenders.

(a) If (i) any action to be taken by the Lender Group or any Agent hereunder
requires the consent, authorization, or agreement of all Lenders or all Lenders
affected thereby and if such action has received the consent, authorization, or
agreement of the Required Lenders but not of all Lenders or all Lenders affected
thereby, or (ii) any Lender makes a claim for compensation under Section 16,
then Borrowers or an Agent, upon at least 5 Business Days prior irrevocable
notice, may permanently replace any Lender that failed to give its consent,
authorization, or agreement (a “Holdout Lender”) or any Lender that made a claim
for compensation (a “Tax Lender”) with one or more Replacement Lenders, and the
Holdout Lender or Tax Lender, as applicable, shall have no right to refuse to be
replaced hereunder. Such notice to replace the Holdout Lender or Tax Lender, as
applicable, shall specify an effective date for such replacement, which date
shall not be later than 15 Business Days after the date such notice is given.

(b) Prior to the effective date of such replacement, the Holdout Lender or Tax
Lender, as applicable, and each Replacement Lender shall execute and deliver an
Assignment and Acceptance, subject only to the Holdout Lender or Tax Lender, as
applicable, being repaid in full its share of the outstanding Obligations
(without any premium or penalty of any kind whatsoever, but including (i) all
interest, fees and other amounts that may be due in payable in respect thereof,
and (ii) an assumption of its Pro Rata Share of participations in the Letters of
Credit). If the Holdout Lender or Tax Lender, as applicable, shall refuse or
fail to execute and deliver any such Assignment and Acceptance prior to the
effective date of such replacement, Agents may, but shall not be required to,
execute and deliver such Assignment and Acceptance in the name or and on behalf
of the Holdout Lender or Tax Lender, as applicable, and irrespective of whether
Agents execute and deliver such Assignment and Acceptance, the Holdout Lender or
Tax Lender, as applicable, shall be deemed to have executed and delivered such
Assignment and Acceptance. The replacement of any Holdout Lender or Tax Lender,
as applicable, shall be made in accordance with the terms of Section 13.1. Until
such time as one or more Replacement Lenders shall have acquired all of the
Obligations, the Revolver Commitments, and the other rights and obligations of
the Holdout Lender or Tax Lender, as applicable, hereunder and under the other
Loan Documents, the Holdout Lender or Tax Lender, as applicable, shall remain
obligated to make the Holdout Lender’s or Tax Lender’s, as applicable, Pro Rata
Share of Advances and to purchase a participation in each Letter of Credit, in
an amount equal to its Pro Rata Share of such Letters of Credit.

14.3. No Waivers; Cumulative Remedies.

No failure by any Agent or any Lender to exercise any right, remedy, or option
under this Agreement or any other Loan Document, or delay by any Agent or any
Lender in exercising the same, will operate as a waiver thereof. No waiver by
any Agent or any Lender will be effective unless it is in writing, and then only
to the extent specifically stated. No waiver by any Agent or any Lender on any
occasion shall affect or diminish each Agent’s and each Lender’s rights
thereafter to require strict performance by any Borrower of any provision of
this Agreement. Each Agent’s and each Lender’s rights under this Agreement and
the other Loan Documents will be cumulative and not exclusive of any other right
or remedy that any Agent or any Lender may have.

 

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15. AGENTS; THE LENDER GROUP.

15.1. Appointment and Authorization of Agent.

Each Lender hereby designates and appoints (a) Wells Fargo as its agent as
US Agent and as US and Canadian collateral agent, and (b) Wells Fargo Canada as
its agent as Canadian Agent, under this Agreement and the other Loan Documents
and each Lender hereby irrevocably authorizes (and by entering into a Bank
Product Agreement, each Bank Product Provider shall be deemed to designate,
appoint, and authorize) each Agent to execute and deliver each of the other Loan
Documents on its behalf and to take such other action on its behalf under the
provisions of this Agreement and each other Loan Document and to exercise such
powers and perform such duties as are expressly delegated to each Agent by the
terms of this Agreement or any other Loan Document, together with such powers as
are reasonably incidental thereto. Each Agent agrees to act as agent for and on
behalf of the Lenders (and the Bank Product Providers) on the conditions
contained in this Section 15. Any provision to the contrary contained elsewhere
in this Agreement or in any other Loan Document notwithstanding, no Agent shall
have any duties or responsibilities, except those expressly set forth herein or
in the other Loan Documents, nor shall any Agent have or be deemed to have any
fiduciary relationship with any Lender (or Bank Product Provider), and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against an Agent. Without limiting the generality of the
foregoing, the use of the term “agent” in this Agreement or the other Loan
Documents with reference to an Agent is not intended to connote any fiduciary or
other implied (or express) obligations arising under agency doctrine of any
applicable law. Instead, such term is used merely as a matter of market custom,
and is intended to create or reflect only a representative relationship between
independent contracting parties. Each Lender hereby further authorizes (and by
entering into a Bank Product Agreement, each Bank Product Provider shall be
deemed to authorize) each Agent to act as the secured party under each of the
Loan Documents that create a Lien on any item of Collateral. Except as expressly
otherwise provided in this Agreement, each Agent shall have and may use its sole
discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions that such
Agent expressly is entitled to take or assert under or pursuant to this
Agreement and the other Loan Documents. Without limiting the generality of the
foregoing, or of any other provision of the Loan Documents that provides rights
or powers to each Agent, Lenders agree that each Agent shall have the right to
exercise the following powers as long as this Agreement remains in effect:
(a) maintain, in accordance with its customary business practices, ledgers and
records reflecting the status of the Obligations, the Collateral, the
Collections of each Borrower and its Domestic Subsidiaries, and related matters,
(b) execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to the Loan Documents,
(c) make Advances, for itself or on behalf of Lenders, as provided in the Loan
Documents, (d) exclusively receive, apply, and distribute the Collections of
each Borrower

 

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and its Domestic Subsidiaries as provided in the Loan Documents, (e) open and
maintain such bank accounts and cash management arrangements as such Agent deems
necessary and appropriate in accordance with the Loan Documents for the
foregoing purposes with respect to the Collateral and the Collections of each
Borrower and its Domestic Subsidiaries, (f) perform, exercise, and enforce any
and all other rights and remedies of the Lender Group with respect to each
Borrower and its Domestic Subsidiaries, the Obligations, the Collateral, the
Collections of each Borrower and its Domestic Subsidiaries, or otherwise related
to any of same as provided in the Loan Documents, and (g) incur and pay such
Lender Group Expenses as such Agent may deem necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to the Loan
Documents.

15.2. Delegation of Duties.

Each Agent may execute any of its duties under this Agreement or any other Loan
Document by or through agents, employees or attorneys in fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
No Agent shall be responsible for the negligence or misconduct of any agent or
attorney in fact that it selects as long as such selection was made without
gross negligence or willful misconduct.

15.3. Liability of Agent.

None of the Agent-Related Persons shall (a) be liable for any action taken or
omitted to be taken by any of them under or in connection with this Agreement or
any other Loan Document or the transactions contemplated hereby (except for its
own gross negligence or willful misconduct), or (b) be responsible in any manner
to any of the Lenders (or Bank Product Providers) for any recital, statement,
representation or warranty made by any Borrower or any of its Subsidiaries or
Affiliates, or any officer or director thereof, contained in this Agreement or
in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by an Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of any Borrower or its Subsidiaries
or any other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lenders
(or Bank Product Providers) to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the books and records or
properties of any Borrower or its Subsidiaries.

15.4. Reliance by Agents.

Each Agent shall be entitled to rely, and shall be fully protected in relying,
upon any writing, resolution, notice, consent, certificate, affidavit, letter,
telegram, telefacsimile or other electronic method of transmission, telex or
telephone message, statement or other document or conversation believed by it to
be genuine and correct and to have been signed, sent, or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel to Borrowers or counsel to any Lender),

 

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independent accountants and other experts selected by such Agent. Each Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless such Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If an Agent so requests, it shall first be indemnified to its
reasonable satisfaction by the Lenders (and, if it so elects, the Bank Product
Providers) against any and all liability and expense that may be incurred by it
by reason of taking or continuing to take any such action. Each Agent shall in
all cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Required Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders (and Bank Product
Providers).

15.5. Notice of Default or Event of Default.

No Agent shall be deemed to have knowledge or notice of the occurrence of any
Default or Event of Default, except with respect to defaults in the payment of
principal, interest, fees, and expenses required to be paid to such Agent for
the account of the Lenders and, except with respect to Events of Default of
which such Agent has actual knowledge, unless such Agent shall have received
written notice from a Lender or any Borrower referring to this Agreement,
describing such Default or Event of Default, and stating that such notice is a
“notice of default.” Agents promptly will notify the Lenders of its receipt of
any such notice or of any Event of Default of which an Agent has actual
knowledge. If any Lender obtains actual knowledge of any Event of Default, such
Lender promptly shall notify the other Lenders and Agents of such Event of
Default. Each Lender shall be solely responsible for giving any notices to its
Participants, if any. Subject to Section 15.4, each Agent shall take such action
with respect to such Default or Event of Default as may be requested by the
Required Lenders in accordance with Section 9; provided, however, that unless
and until an Agent has received any such request, such Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable.

15.6. Credit Decision.

Each Lender (and Bank Product Provider) acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by an Agent hereinafter taken, including any review of the affairs of each
Borrower and its Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender (or Bank
Product Provider). Each Lender represents (and by entering into a Bank Product
Agreement, each Bank Product Provider shall be deemed to represent) to each
Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such due diligence, documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of each Borrower or any other Person party to a Loan Document,
and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter

 

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into this Agreement and to extend credit to each Borrower. Each Lender also
represents (and by entering into a Bank Product Agreement, each Bank Product
Provider shall be deemed to represent) that it will, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of each Borrower or
any other Person party to a Loan Document. Except for notices, reports, and
other documents expressly herein required to be furnished to the Lenders by an
Agent, no Agent shall have any duty or responsibility to provide any Lender (or
Bank Product Provider) with any credit or other information concerning the
business, prospects, operations, property, financial and other condition or
creditworthiness of any Borrower or any other Person party to a Loan Document
that may come into the possession of any of the Agent-Related Persons. Each
Lender acknowledges (and by entering into a Bank Product Agreement, each Bank
Product Provider shall be deemed to acknowledge) that no Agent has any duty or
responsibility, either initially or on a continuing basis (except to the extent,
if any, that is expressly specified herein) to provide such Lender (or Bank
Product Provider) with any credit or other information with respect to any
Borrower, its Affiliates or any of their respective business, legal, financial
or other affairs, and irrespective of whether such information came into Agent’s
or its Affiliates’ or representatives’ possession before or after the date on
which such Lender became a party to this Agreement (or such Bank Product
Provider entered into a Bank Product Agreement).

15.7. Costs and Expenses; Indemnification.

Each Agent may incur and pay Lender Group Expenses to the extent such Agent
reasonably deems necessary or appropriate for the performance and fulfillment of
its functions, powers, and obligations pursuant to the Loan Documents, including
court costs, attorneys’ fees and expenses, fees and expenses of financial
accountants, advisors, consultants, and appraisers, costs of collection by
outside collection agencies, auctioneer fees and expenses, and costs of security
guards or insurance premiums paid to maintain the Collateral, whether or not a
Borrower is obligated to reimburse Agents or Lenders for such expenses pursuant
to this Agreement or otherwise. Each Agent is authorized and directed to deduct
and retain sufficient amounts from the Collections of each Borrower and its
Domestic Subsidiaries received by such Agent to reimburse such Agent for such
out-of-pocket costs and expenses prior to the distribution of any amounts to
Lenders (or Bank Product Providers). In the event an Agent is not reimbursed for
such costs and expenses by Borrowers or the other Loan Parties, each Lender
hereby agrees that it is and shall be obligated to pay to such Agent such
Lender’s ratable thereof. Whether or not the transactions contemplated hereby
are consummated, each of the Lenders, on a ratable basis, shall indemnify and
defend the Agent-Related Persons (to the extent not reimbursed by or on behalf
of Borrowers and without limiting the obligation of Borrowers to do so) from and
against any and all Indemnified Liabilities; provided, however, that no Lender
shall be liable for the payment to any Agent-Related Person of any portion of
such Indemnified Liabilities resulting solely from such Person’s gross
negligence or willful misconduct nor shall any

 

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Lender be liable for the obligations of any Defaulting Lender in failing to make
an Advance or other extension of credit hereunder. Without limitation of the
foregoing, each Lender shall reimburse each Agent upon demand for such Lender’s
ratable share of any costs or out of pocket expenses (including attorneys,
accountants, advisors, and consultants fees and expenses) incurred by such Agent
in connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement or any other Loan Document to the extent
that such Agent is not reimbursed for such expenses by or on behalf of
Borrowers. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of any Agent.

15.8. Agent in Individual Capacity.

Wells Fargo, Wells Fargo Canada and their Affiliates may make loans to, issue
letters of credit for the account of, accept deposits from, provide Bank
Products to, acquire equity interests in, and generally engage in any kind of
banking, trust, financial advisory, underwriting, or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person party to
any Loan Document as though Wells Fargo were not an Agent hereunder, and, in
each case, without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge (and by entering into a
Bank Product Agreement, each Bank Product Provider shall be deemed to
acknowledge) that, pursuant to such activities, Wells Fargo, Wells Fargo Canada
and its Affiliates may receive information regarding any Borrower or its
Affiliates or any other Person party to any Loan Documents that is subject to
confidentiality obligations in favor of such Borrower or such other Person and
that prohibit the disclosure of such information to the Lenders (or Bank Product
Providers), and the Lenders acknowledge (and by entering into a Bank Product
Agreement, each Bank Product Provider shall be deemed to acknowledge) that, in
such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Agent will use its reasonable best efforts to
obtain), such Agent shall not be under any obligation to provide such
information to them. The terms “Lender” and “Lenders” include Wells Fargo and
Wells Fargo Canada in its individual capacity.

15.9. Successor Agent.

An Agent may resign as Agent upon 30 days prior written notice to the Lenders
(unless such notice is waived by the Required Lenders) and Borrowers (unless
such notice is waived by Borrowers) and without any notice to the Bank Product
Providers. If an Agent resigns under this Agreement, the Required Lenders shall
be entitled, with (so long as no Event of Default has occurred and is
continuing) the consent of Borrowers (such consent not to be unreasonably
withheld, delayed, or conditioned), appoint a successor Agent for the Lenders
(and the Bank Product Providers). If, at the time that such Agent’s resignation
is effective, it is acting as an Issuing Lender or a Swing Lender, such
resignation shall also operate to effectuate its resignation as an Issuing
Lender or a Swing Lender, as applicable, and it shall automatically be relieved
of any further obligation to issue Letters of Credit or to make Swing Loans. If
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resignation of an Agent, such Agent may appoint, after consulting with the
Lenders and Borrowers, a successor Agent. If an Agent has materially breached or
failed to perform any material provision of this Agreement or of applicable law,
the Required Lenders may agree in writing to remove and replace such Agent with
a successor Agent from among the Lenders with (so long as no Event of Default
has occurred and is continuing) the consent of Borrowers (such consent not to be
unreasonably withheld, delayed, or conditioned). In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term “Agent”, “US Agent” or “Canadian Agent”, as applicable, shall mean such
successor Agent and the retiring Agent’s appointment, powers, and duties as such
Agent shall be terminated. After any retiring Agent’s resignation hereunder as
an Agent, the provisions of this Section 15 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was an Agent under this
Agreement. If no successor Agent has accepted appointment as an Agent by the
date which is 30 days following a retiring Agent’s notice of resignation, the
retiring Agent’s resignation shall nevertheless thereupon become effective and
the Lenders shall perform all of the duties of Agent hereunder until such time,
if any, as the Lenders appoint a successor Agent as provided for above.

15.10. Lender in Individual Capacity.

Any Lender and its respective Affiliates may make loans to, issue letters of
credit for the account of, accept deposits from, provide Bank Products to,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with any Borrower and its
Subsidiaries and Affiliates and any other Person party to any Loan Documents as
though such Lender were not a Lender hereunder without notice to or consent of
the other members of the Lender Group (or the Bank Product Providers). The other
members of the Lender Group acknowledge (and by entering into a Bank Product
Agreement, each Bank Product Provider shall be deemed to acknowledge) that,
pursuant to such activities, such Lender and its respective Affiliates may
receive information regarding any Borrower or its Affiliates or any other Person
party to any Loan Documents that is subject to confidentiality obligations in
favor of such Borrower or such other Person and that prohibit the disclosure of
such information to the Lenders, and the Lenders acknowledge (and by entering
into a Bank Product Agreement, each Bank Product Provider shall be deemed to
acknowledge) that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver such Lender will use its reasonable
best efforts to obtain), such Lender shall not be under any obligation to
provide such information to them.

15.11. Collateral Matters.

(a) The Lenders hereby irrevocably authorize (and by entering into a Bank
Product Agreement, each Bank Product Provider shall be deemed to authorize) each
Agent to release any Lien on any Collateral (i) upon the termination of the
Revolver Commitments and payment and satisfaction in full by Borrowers of all of
the Obligations, (ii) constituting property being sold or disposed of if a
release is required or desirable in connection therewith and if the applicable
Borrower certifies to Agents that the sale or disposition is permitted

 

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under Section 6.4 (and each Agent may rely conclusively on any such certificate,
without further inquiry), (iii) constituting property in which no Loan Party
owned any interest at the time such Agent’s Lien was granted nor at any time
thereafter, or (iv) constituting property leased to a Borrower or its Domestic
Subsidiaries under a lease that has expired or is terminated in a transaction
permitted under this Agreement or subject to a Permitted Lien securing Purchase
Money Indebtedness permitted hereunder. The Loan Parties and the Lenders hereby
irrevocably authorize (and by entering into a Bank Product Agreement, each Bank
Product Provider shall be deemed to authorize) each Agent, based upon the
instruction of the Required Lenders, to (a) consent to, credit bid or purchase
(either directly or through one or more acquisition vehicles) all or any portion
of the Collateral at any sale thereof conducted under the provisions of the
Bankruptcy Code, including under Section 363 of the Bankruptcy Code, (b) credit
bid or purchase (either directly or through one or more acquisition vehicles)
all or any portion of the Collateral at any sale or other disposition thereof
conducted under the provisions of the Code, including pursuant to Sections 9-610
or 9-620 of the Code, or (c) credit bid or purchase (either directly or through
one or more acquisition vehicles) all or any portion of the Collateral at any
other sale or foreclosure conducted by an Agent (whether by judicial action or
otherwise) in accordance with applicable law. In connection with any such credit
bid or purchase, the Obligations owed to the Lenders and the Bank Product
Providers shall be entitled to be, and shall be, credit bid on a ratable basis
(with Obligations with respect to contingent or unliquidated claims being
estimated for such purpose if the fixing or liquidation thereof would not unduly
delay the ability of any Agent to credit bid or purchase at such sale or other
disposition of the Collateral and, if such claims cannot be estimated without
unduly delaying the ability of an Agent to credit bid, then such claims shall be
disregarded, not credit bid, and not entitled to any interest in the asset or
assets purchased by means of such credit bid) and the Lenders and the Bank
Product Providers whose Obligations are credit bid shall be entitled to receive
interests (ratably based upon the proportion of their Obligations credit bid in
relation to the aggregate amount of Obligations so credit bid) in the asset or
assets so purchased (or in the Equity Interests of the acquisition vehicle or
vehicles that are used to consummate such purchase). Except as provided above,
no Agent will execute and deliver a release of any Lien on any Collateral
without the prior written authorization of (y) if the release is of all or
substantially all of the Collateral, all of the Lenders (without requiring the
authorization of the Bank Product Providers), or (z) otherwise, the Required
Lenders (without requiring the authorization of the Bank Product Providers).
Upon request by an Agent or Borrowers at any time, the Lenders will (and if so
requested, the Bank Product Providers will) confirm in writing such Agent’s
authority to release any such Liens on particular types or items of Collateral
pursuant to this Section 15.11; provided, however, that (1) no Agent shall be
required to execute any document necessary to evidence such release on terms
that, in such Agent’s opinion, would expose such Agent to liability or create
any obligation or entail any consequence other than the release of such Lien
without recourse, representation, or warranty, and (2) such release shall not in
any manner discharge, affect, or impair the Obligations or any Liens (other than
those expressly being released) upon (or obligations of the applicable Borrower
in respect of) all interests retained by such Borrower, including, the proceeds
of any sale, all of which shall continue to constitute part of the Collateral.
The Lenders further hereby irrevocably authorize (and by entering into a Bank
Product

 

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Agreement, each Bank Product Provider shall be deemed to authorize) each Agent,
at its option and in its sole discretion, to subordinate any Lien granted to or
held by Agent under any Loan Document to the holder of any Permitted Lien on
such property if such Permitted Lien secures Purchase Money Indebtedness
permitted hereunder.

(b) No Agent shall have any obligation whatsoever to any of the Lenders (or the
Bank Product Providers) to assure that the Collateral exists or is owned by any
Borrower or its Subsidiaries or is cared for, protected, or insured or has been
encumbered, or that such Agent’s Liens have been properly or sufficiently or
lawfully created, perfected, protected, or enforced or are entitled to any
particular priority, or that any particular items of Collateral meet the
eligibility criteria applicable in respect thereof or whether to impose,
maintain, reduce, or eliminate any particular reserve hereunder or whether the
amount of any such reserve is appropriate or not, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to such Agent pursuant to any of the Loan Documents, it being
understood and agreed that in respect of the Collateral, or any act, omission,
or event related thereto, subject to the terms and conditions contained herein,
such Agent may act in any manner it may deem appropriate, in its sole discretion
given such Agent’s own interest in the Collateral in its capacity as one of the
Lenders and that such Agent shall have no other duty or liability whatsoever to
any Lender (or Bank Product Provider) as to any of the foregoing, except as
otherwise provided herein.

15.12. Restrictions on Actions by Lenders; Sharing of Payments.

(a) Each of the Lenders agrees that it shall not, without the express written
consent of Agents, and that it shall, to the extent it is lawfully entitled to
do so, upon the written request of an Agent, set off against the Obligations,
any amounts owing by such Lender to any Borrower or its Domestic Subsidiaries or
any deposit accounts of any Borrower or its Domestic Subsidiaries now or
hereafter maintained with such Lender. Each of the Lenders further agrees that
it shall not, unless specifically requested to do so in writing by an Agent,
take or cause to be taken any action, including, the commencement of any legal
or equitable proceedings to enforce any Loan Document against any Borrower or
any Guarantor or to foreclose any Lien on, or otherwise enforce any security
interest in, any of the Collateral.

(b) If, at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from an Agent in excess of such Lender’s Pro Rata Share of all
such distributions by such Agent, such Lender promptly shall (A) turn the same
over to such Agent, in kind, and with such endorsements as may be required to
negotiate the same to such Agent, or in immediately available funds, as
applicable, for the account of all of the Lenders and for application to the
Obligations in accordance with the applicable provisions of this Agreement, or
(B) purchase, without recourse or warranty, an undivided interest and
participation in the Obligations owed to the other Lenders so that such excess
payment received shall be applied ratably as among the

 

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Lenders in accordance with their Pro Rata Shares; provided, however, that to the
extent that such excess payment received by the purchasing party is thereafter
recovered from it, those purchases of participations shall be rescinded in whole
or in part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest except
to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.

15.13. Agency for Perfection.

Each Agent hereby appoints each other Lender (and each Bank Product Provider) as
its agent (and each Lender hereby accepts (and by entering into a Bank Product
Agreement, each Bank Product Provider shall be deemed to accept) such
appointment) for the purpose of perfecting such Agent’s Liens in assets which,
in accordance with Article 8 or Article 9, as applicable, of the Code or the
applicable provisions of the PPSA, can be perfected by possession or control.
Should any Lender obtain possession or control of any such Collateral, such
Lender shall notify Agents thereof, and, promptly upon an Agent’s request
therefor shall deliver possession or control of such Collateral to such Agent or
in accordance with such Agent’s instructions.

15.14. Payments by Agents to the Lenders.

All payments to be made by an Agent to the Lenders (or Bank Product Providers)
shall be made by bank wire transfer of immediately available funds pursuant to
such wire transfer instructions as each party may designate for itself by
written notice to Agent. Concurrently with each such payment, such Agent shall
identify whether such payment (or any portion thereof) represents principal,
premium, fees, or interest of the Obligations.

15.15. Concerning the Collateral and Related Loan Documents.

Each member of the Lender Group authorizes and directs each Agent to enter into
this Agreement and the other Loan Documents. Each member of the Lender Group
agrees (and by entering into a Bank Product Agreement, each Bank Product
Provider shall be deemed to agree) that any action taken by an Agent in
accordance with the terms of this Agreement or the other Loan Documents relating
to the Collateral and the exercise by such Agent of its powers set forth therein
or herein, together with such other powers that are reasonably incidental
thereto, shall be binding upon all of the Lenders (and such Bank Product
Provider).

15.16. Audits and Examination Reports; Confidentiality; Disclaimers by Lenders;
Other Reports and Information.

By becoming a party to this Agreement, each Lender:

(a) is deemed to have requested that Agents furnish such Lender, promptly after
it becomes available, a copy of each field audit or examination report
respecting any Borrower or its Subsidiaries (each, a “Report”) prepared by or at
the request of an Agent, and such Agent shall so furnish each Lender with such
Reports,

 

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(b) expressly agrees and acknowledges that no Agent (i) makes any representation
or warranty as to the accuracy of any Report, and (ii) shall be liable for any
information contained in any Report,

(c) expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that each Agent or other party performing any audit or
examination will inspect only specific information regarding any Borrower and
its Subsidiaries and will rely significantly upon each Borrower’s and its
Subsidiaries’ books and records, as well as on representations of each
Borrower’s personnel,

(d) agrees to keep all Reports and other material, non-public information
regarding each Borrower and its Subsidiaries and their operations, assets, and
existing and contemplated business plans in a confidential manner in accordance
with Section 17.9, and

(e) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold each Agent and any other Lender
preparing a Report harmless from any action the indemnifying Lender may take or
fail to take or any conclusion the indemnifying Lender may reach or draw from
any Report in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to any Borrower, or the indemnifying
Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or
loans of such Borrower, and (ii) to pay and protect, and indemnify, defend and
hold each Agent, and any such other Lender preparing a Report harmless from and
against, the claims, actions, proceedings, damages, costs, expenses, and other
amounts (including, attorneys’ fees and costs) incurred by such Agent and any
such other Lender preparing a Report as the direct or indirect result of any
third parties who might obtain all or part of any Report through the
indemnifying Lender.

In addition to the foregoing: (x) any Lender may from time to time request of
any Agent in writing that such Agent provide to such Lender a copy of any report
or document provided by any Borrower or its Subsidiaries to such Agent that has
not been contemporaneously provided by such Borrower or such Subsidiary to such
Lender, and, upon receipt of such request, such Agent promptly shall provide a
copy of same to such Lender, (y) to the extent that an Agent is entitled, under
any provision of the Loan Documents, to request additional reports or
information from a Borrower or its Subsidiaries, any Lender may, from time to
time, reasonably request such Agent to exercise such right as specified in such
Lender’s notice to such Agent, whereupon such Agent promptly shall request of
such Borrower the additional reports or information reasonably specified by such
Lender, and, upon receipt thereof from such Borrower or such Subsidiary, such
Agent promptly shall provide a copy of same to such Lender, and (z) any time
that an Agent renders to a Borrower a statement regarding the Loan Account, such
Agent shall send a copy of such statement to each Lender.

 

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15.17. Several Obligations; No Liability.

Notwithstanding that certain of the Loan Documents now or hereafter may have
been or will be executed only by or in favor of each Agent in its capacity as
such, and not by or in favor of the Lenders, any and all obligations on the part
of each Agent (if any) to make any credit available hereunder shall constitute
the several (and not joint) obligations of the respective Lenders on a ratable
basis, according to their respective Revolver Commitments, to make an amount of
such credit not to exceed, in principal amount, at any one time outstanding, the
amount of their respective Revolver Commitments. Nothing contained herein shall
confer upon any Lender any interest in, or subject any Lender to any liability
for, or in respect of, the business, assets, profits, losses, or liabilities of
any other Lender. Each Lender shall be solely responsible for notifying its
Participants of any matters relating to the Loan Documents to the extent any
such notice may be required, and no Lender shall have any obligation, duty, or
liability to any Participant of any other Lender. Except as provided in
Section 15.7, no member of the Lender Group shall have any liability for the
acts of any other member of the Lender Group. No Lender shall be responsible to
any Borrower or any other Person for any failure by any other Lender (or Bank
Product Provider) to fulfill its obligations to make credit available hereunder,
nor to advance for such Lender (or Bank Product Provider) or on its behalf, nor
to take any other action on behalf of such Lender (or Bank Product Provider)
hereunder or in connection with the financing contemplated herein.

 

16. WITHHOLDING TAXES.

(a) All payments made by each Borrower hereunder or under any note or other Loan
Document will be made without setoff, counterclaim, or other defense. In
addition, except as provided in this Section 16, all such payments will be made
free and clear of, and without deduction or withholding for, any present or
future Taxes.

(b) In the event any Borrower is required by any applicable law, rule or
regulation to deduct or withhold any Taxes from any payment of principal,
interest or other amounts required to be paid under the Loan Documents, such
Borrower shall comply with the next sentence of this Section 16(b). If any such
Taxes are required to be deducted or withheld, such Borrower will be entitled to
deduct and withhold the full amount of such Taxes and will pay the amount of
such Taxes to the relevant Government Authority and will pay such additional
amounts to the Agent or Lender, as the case may be, as may be necessary upon the
earlier of determining that such deduction or withholding is required or
receiving notice that such amount has been assessed against Agent or a Lender,
so that every payment of all amounts due under this Agreement, any note, or Loan
Document, including any amount paid pursuant to this Section 16(b) after
withholding or deduction for or on account of any Taxes, will not be less than
the amount provided for herein had no such deduction or withholding been
required; provided, however, that no Borrower shall be required to (i) make any
such payments if such Tax is not an Indemnifiable Tax or (ii) increase any such
amounts if the increase in such amount payable results solely from Agent’s or
such Lender’s own willful misconduct or gross negligence (as finally determined
by a court of competent jurisdiction). Each Borrower will furnish to Agents as
promptly as possible after the date the payment of any such Tax is due pursuant
to applicable law, certified copies of tax receipts or such other evidence as
Agent may accept of such payment by such Borrower.

 

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(c) Each Borrower agrees to pay any present or future stamp, value added or
documentary taxes or any other excise or property taxes, charges, or similar
levies that arise from any payment made hereunder or from the execution,
delivery, performance, recordation, or filing of, or otherwise with respect to
this Agreement or any other Loan Document (“Other Taxes”).

(d) Each Lender or Participant that is not a United States Person (within the
meaning of IRC 7701(a)(30)) agrees with and in favor of Agent, to deliver to
Agent and US Borrower (or, in the case of a Participant, to the Lender granting
the participation only) one of the following before receiving its first payment
under this Agreement or any other Loan Document:

(i) if such Lender or Participant is entitled to claim an exemption from United
States withholding tax pursuant to the portfolio interest exception, (A) a
statement of the Lender or Participant, signed under penalty of perjury, that it
is not a (I) a “bank” as described in Section 881(c)(3)(A) of the IRC, (II) a
10% shareholder of a Borrower (within the meaning of Section 871(h)(3)(B) of the
IRC), or (III) a controlled foreign corporation related to a Borrower within the
meaning of Section 864(d)(4) of the IRC, and (B) a properly completed and
executed IRS Form W-8BEN or Form W-8IMY (with proper attachments);

(ii) if such Lender or Participant is entitled to claim an exemption from
withholding tax under a United States tax treaty, a properly completed and
executed copy of IRS Form W-8BEN;

(iii) if such Lender or Participant is entitled to claim that interest paid
under this Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such Lender, a
properly completed and executed copy of IRS Form W-8ECI; or

(iv) if such Lender or Participant is entitled to claim that interest paid under
this Agreement is exempt from United States withholding tax because such Lender
or Participant serves as an intermediary, a properly completed and executed copy
of IRS Form W-8IMY (with proper attachments).

Each Lender or Participant that is a United States Person (within the meaning of
IRC 7701(a)(30)) agrees with and in favor of Agent, to deliver to Agent and US
Borrower (or, in the case of a Participant, to the Lender granting the
participation only) a properly completed and executed IRS Form W-9 and any other
form or forms, as may be required under the IRC or other laws of the United
States as a condition to exemption from, or reduction of, United States
withholding or backup withholding tax.

 

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Each Lender or Participant shall provide new forms (or successor forms) upon the
expiration or obsolescence of any previously delivered forms and shall promptly
notify Agents and US Borrower (or, in the case of a Participant, to the Lender
granting the participation only) of any change in circumstances which would
modify or render invalid any claimed exemption or reduction.

(e) If a Lender or Participant claims an exemption or reduction from withholding
tax levied or imposed by a jurisdiction other than the United States, such
Lender or such Participant agrees with and in favor of each Agent and the
Borrowers, to deliver to such Agent and Borrowers (or, in the case of a
Participant, to the Lender granting the participation only) any such form or
forms, as may be required under the laws of such jurisdiction as a condition to
exemption from, or reduction of, foreign withholding or backup withholding tax
or such form or forms as may have been released by a Governmental Authority in
such jurisdiction for taxpayers to declare eligibility for treaty benefits
before receiving its first payment under this Agreement or any other Loan
Document, but only if such Lender or such Participant is legally able to deliver
such forms and Borrower previously provides a copy of such forms to each such
Agent and Lender; provided, however, that nothing in this Section 16(e) shall
require a Lender or Participant to disclose any information that it deems to be
confidential (including without limitation, its tax returns). Without limiting
the foregoing, if a Lender or Participant claims an exemption or reduction from
withholding tax levied or imposed by Canada under an applicable Canadian tax
treaty, such Lender or Participant agrees with and in favor of each Canadian
Agent and the Canadian Borrower to deliver to such Canadian Agent and the
Canadian Borrower one of the following:

(i) if such Lender or Participant is a partnership entitled to claim an
exemption from, or a reduction of, withholding tax under a Canadian tax treaty,
a properly completed and executed copy of CRA Form NR302;

(ii) if such Lender or Participant is a hybrid entity that is entitled to claim
an exemption from, or a reduction of, withholding tax under a Canadian tax
treaty, a properly completed and executed copy of CRA Form NR303; and

(iii) if such Lender or Participant is not a partnership or hybrid entity and is
entitled to claim an exemption from, or a reduction of, withholding tax under a
Canadian tax treaty, a properly completed and executed copy of CRA Form NR301.

Each Lender and each Participant shall provide new forms (or successor forms)
upon the expiration or obsolescence of any previously delivered forms and to
promptly notify Agents and Borrowers (or, in the case of a Participant, to the
Lender granting the participation only) of any change in circumstances which
would modify or render invalid any claimed exemption or reduction.

(f) If a Lender or Participant claims exemption from, or reduction of,
withholding tax and such Lender or Participant sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of any
Borrower to such Lender or

 

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Participant, such Lender or Participant agrees to notify Agents and Borrowers
(or, in the case of a sale of a participation interest, to the Lender granting
the participation only) of the percentage amount in which it is no longer the
beneficial owner of Obligations of such Borrower to such Lender or Participant.
To the extent of such percentage amount, each Agent will treat such Lender’s or
such Participant’s documentation provided pursuant to Section 16(d) or 16(e) as
no longer valid. With respect to such percentage amount, such Participant or
Assignee shall provide new documentation, pursuant to Section 16(d) or 16(e), if
applicable. Each Borrower agrees that each Participant shall be entitled to the
benefits of this Section 16 with respect to its participation in any portion of
the Revolver Commitments and the Obligations so long as such Participant
complies with the obligations set forth in this Section 16 with respect thereto.

(g) If a Lender or a Participant is entitled to a reduction in the applicable
withholding tax, each Agent (or, in the case of a Participant, the Lender
granting the participation) may withhold from any interest or other payment to
such Lender or such Participant an amount equivalent to the applicable
withholding tax after taking into account such reduction. If the forms or other
documentation required by Section 16(d) or 16(e) are not delivered to Agents and
Borrowers (or, in the case of a Participant, the Lender granting the
participation), then each Agent (or, in the case of a Participant, to the Lender
granting the participation) may withhold from any interest or other payment to
such Lender or such Participant not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.

(h) If the IRS or any other Governmental Authority of the United States or other
jurisdiction asserts a claim that an Agent (or, in the case of a Participant,
the Lender granting the participation) did not properly withhold tax from
amounts paid to or for the account of any Lender or any Participant due to a
failure on the part of the Lender or any Participant (because the appropriate
form was not delivered, was not properly executed, or because such Lender failed
to notify Agents (or such Participant failed to notify the Lender granting the
participation) of a change in circumstances which rendered the exemption from,
or reduction of, withholding tax ineffective, or for any other reason) such
Lender shall indemnify and hold such Agent harmless (or, in the case of a
Participant, such Participant shall indemnify and hold the Lender granting the
participation harmless) for all amounts paid, directly or indirectly, by such
Agent (or, in the case of a Participant, to the Lender granting the
participation), as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to such
Agent (or, in the case of a Participant, to the Lender granting the
participation only) under this Section 16, together with all costs and expenses
(including attorneys’ fees and expenses). The obligation of the Lenders and the
Participants under this subsection shall survive the payment of all Obligations
and the resignation or replacement of each Agent.

(i) If an Agent or a Lender determines in its sole discretion exercised in good
faith that it has received a refund of any Indemnified Taxes or Other Taxes as
to which it has been indemnified by a Borrower or which a Borrower has paid or
with respect to which a Borrower has paid additional amounts pursuant to this
Section 16, so long as no Default or Event of Default has occurred and is
continuing, it shall promptly pay over such refund to

 

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such Borrower (but only to the extent of payments made, or additional amounts
paid, by such Borrower under this Section 16 with respect to Taxes giving rise
to such a refund), net of all out-of-pocket expenses of such Agent or such
Lender incurred to obtain such refund and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such a
refund); provided, that each Borrower, upon the request of an Agent or such
Lender, agrees to repay the amount paid over to such Borrower (plus any
penalties, interest or other charges, imposed by the relevant Governmental
Authority, other than such penalties, interest or other charges imposed as a
result of the willful misconduct or gross negligence of an Agent hereunder) to
such Agent or such Lender in the event such Agent or such Lender is required to
repay such refund to such Governmental Authority. Notwithstanding anything in
this Agreement to the contrary, this Section 16 shall not be construed to
require any Agent or any Lender to make available its tax returns (or any other
information which it deems confidential) to any Borrower or any other Person.

(j) The US Borrower and its Domestic Subsidiaries shall jointly and severally
indemnify each Indemnified Person as defined in Section 10.3 and its agents
(collectively, a “Tax Indemnitee”), and the Canadian Borrowers and their
Domestic Subsidiaries shall jointly and severally indemnify each Tax Indemnitee
that is a Canadian Agent, Canadian Lender, Canadian Issuing Lender, or Canadian
Underlying Issuer and their Affiliates and agents for the full amount of
Indemnified Taxes and Other Taxes arising in connection with this Agreement or
any other Loan Document paid by such Tax Indemnitee and not previously paid or
reimbursed by the applicable Borrower(s) and all reasonable fees and
disbursements of attorneys, experts, or consultants, and all other costs and
expenses actually incurred in connection therewith or in connection with the
enforcement of this indemnification as and when they are incurred and
irrespective of whether suit is brought, whether or not such Indemnified Taxes
or Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority (other than such Indemnified Taxes or Other Taxes that
would not have arisen but for the gross negligence or willful misconduct of such
Tax Indemnitee as finally determined by a court of competent jurisdiction). This
Section 16(j) shall survive the termination of the Agreement and the repayment
of the Obligations.

 

17. GENERAL PROVISIONS.

17.1. Effectiveness.

This Agreement shall be binding and deemed effective when executed by a
Borrower, each Agent, and each Lender whose signature is provided for on the
signature pages hereof.

17.2. Section Headings.

Headings and numbers have been set forth herein for convenience only. Unless the
contrary is compelled by the context, everything contained in each Section
applies equally to this entire Agreement.

 

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17.3. Interpretation.

Neither this Agreement nor any uncertainty or ambiguity herein shall be
construed against the Lender Group or Borrowers, whether under any rule of
construction or otherwise. On the contrary, this Agreement has been reviewed by
all parties and shall be construed and interpreted according to the ordinary
meaning of the words used so as to accomplish fairly the purposes and intentions
of all parties hereto.

17.4. Severability of Provisions.

Each provision of this Agreement shall be severable from every other provision
of this Agreement for the purpose of determining the legal enforceability of any
specific provision.

17.5. Bank Product Providers.

Each Bank Product Provider shall be deemed a third party beneficiary hereof and
of the provisions of the other Loan Documents for purposes of any reference in a
Loan Document to the parties for whom an Agent is acting. Each Agent hereby
agrees to act as agent for such Bank Product Providers and, by virtue of
entering into a Bank Product Agreement, the applicable Bank Product Provider
shall be automatically deemed to have appointed each Agent as its agent and to
have accepted the benefits of the Loan Documents; it being understood and agreed
that the rights and benefits of each Bank Product Provider under the Loan
Documents consist exclusively of such Bank Product Provider’s being a
beneficiary of the Liens and security interests (and, if applicable, guarantees)
granted to Agents and the right to share in payments and collections out of the
Collateral as more fully set forth herein. In addition, each Bank Product
Provider, by virtue of entering into a Bank Product Agreement, shall be
automatically deemed to have agreed that each Agent shall have the right, but
shall have no obligation, to establish, maintain, relax, or release reserves in
respect of the Bank Product Obligations and that if reserves are established
there is no obligation on the part of an Agent to determine or insure whether
the amount of any such reserve is appropriate or not. In connection with any
such distribution of payments or proceeds of Collateral, each Agent shall be
entitled to assume no amounts are due or owing to any Bank Product Provider
unless such Bank Product Provider has provided a written certification (setting
forth a reasonably detailed calculation) to such Agent as to the amounts that
are due and owing to it and such written certification is received by Agent a
reasonable period of time prior to the making of such distribution. No Agent
shall have any obligation to calculate the amount due and payable with respect
to any Bank Products, but may rely upon the written certification of the amount
due and payable from the relevant Bank Product Provider. In the absence of an
updated certification, each Agent shall be entitled to assume that the amount
due and payable to the relevant Bank Product Provider is the amount last
certified to such Agent by such Bank Product Provider as being due and payable
(less any distributions made to such Bank Product Provider on account thereof).
Each Borrower may obtain Bank Products from any Bank Product Provider, although
no Borrower is required to do so. Each Borrower acknowledges and agrees that no
Bank Product Provider has committed to provide any Bank Products and that the
providing of Bank Products by any

 

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Bank Product Provider is in the sole and absolute discretion of such Bank
Product Provider. Notwithstanding anything to the contrary in this Agreement or
any other Loan Document, no provider or holder of any Bank Product shall have
any voting or approval rights hereunder (or be deemed a Lender) solely by virtue
of its status as the provider or holder of such agreements or products or the
Obligations owing thereunder, nor shall the consent of any such provider or
holder be required (other than in their capacities as Lenders, to the extent
applicable) for any matter hereunder or under any of the other Loan Documents,
including as to any matter relating to the Collateral or the release of
Collateral or Guarantors.

17.6. Debtor-Creditor Relationship.

The relationship between the Lenders and each Agent, on the one hand, and the
Loan Parties, on the other hand, is solely that of creditor and debtor. No
member of the Lender Group has (or shall be deemed to have) any fiduciary
relationship or duty to any Loan Party arising out of or in connection with the
Loan Documents or the transactions contemplated thereby, and there is no agency
or joint venture relationship between the members of the Lender Group, on the
one hand, and the Loan Parties, on the other hand, by virtue of any Loan
Document or any transaction contemplated therein.

17.7. Counterparts; Electronic Execution.

This Agreement may be executed in any number of counterparts and by different
parties on separate counterparts, each of which, when executed and delivered,
shall be deemed to be an original, and all of which, when taken together, shall
constitute but one and the same Agreement. Delivery of an executed counterpart
of this Agreement by telefacsimile or other electronic method of transmission
shall be equally as effective as delivery of an original executed counterpart of
this Agreement. Any party delivering an executed counterpart of this Agreement
by telefacsimile or other electronic method of transmission also shall deliver
an original executed counterpart of this Agreement but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability, and
binding effect of this Agreement. The foregoing shall apply to each other Loan
Document mutatis mutandis.

17.8. Revival and Reinstatement of Obligations.

If the incurrence or payment of the Obligations by any Borrower or any Guarantor
or the transfer to the Lender Group of any property should for any reason
subsequently be asserted, or declared, to be void or voidable under any state,
provincial or federal law relating to creditors’ rights, including provisions of
the Bankruptcy Code relating to fraudulent conveyances, preferences, or other
voidable or recoverable payments of money or transfers of property (each, a
“Voidable Transfer”), and if the Lender Group is required to repay or restore,
in whole or in part, any such Voidable Transfer, or elects to do so upon the
advice of counsel, then, as to any such Voidable Transfer, or the amount thereof
that the Lender Group is required or elects to repay or restore, and as to all
reasonable costs, expenses, and attorneys’ fees of the Lender Group related
thereto, the liability of such Borrower or such Guarantor automatically shall be
revived, reinstated, and restored and shall exist as though such Voidable
Transfer had never been made.

 

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17.9. Confidentiality.

(a) Agents and Lenders each individually (and not jointly or jointly and
severally) agree that material, non-public information regarding each Borrower
and its Subsidiaries, their operations, assets, and existing and contemplated
business plans (“Confidential Information”) shall be treated by Agents and the
Lenders in a confidential manner, and shall not be disclosed by Agents and the
Lenders to Persons who are not parties to this Agreement, except: (i) to
attorneys for and other advisors, accountants, auditors, and consultants to any
member of the Lender Group and to employees, directors and officers of any
member of the Lender Group (the Persons in this clause (i), “Lender Group
Representatives”) on a “need to know” basis in connection with this Agreement
and the transactions contemplated hereby and on a confidential basis, (ii) to
Subsidiaries and Affiliates of any member of the Lender Group (including the
Bank Product Providers), provided that any such Subsidiary or Affiliate shall
have agreed to receive such information hereunder subject to the terms of this
Section 17.9, (iii) as may be required by regulatory authorities so long as such
authorities are informed of the confidential nature of such information, (iv) as
may be required by statute, decision, or judicial or administrative order, rule,
or regulation; provided that (x) prior to any disclosure under this clause (iv),
the disclosing party agrees to provide such Borrower with prior notice thereof,
to the extent that it is practicable to do so and to the extent that the
disclosing party is permitted to provide such prior notice to such Borrower
pursuant to the terms of the applicable statute, decision, or judicial or
administrative order, rule, or regulation and (y) any disclosure under this
clause (iv) shall be limited to the portion of the Confidential Information as
may be required by such statute, decision, or judicial or administrative order,
rule, or regulation, (v) as may be agreed to in advance in writing by such
Borrower, (vi) as requested or required by any Governmental Authority pursuant
to any subpoena or other legal process, provided, that, (x) prior to any
disclosure under this clause (vi) the disclosing party agrees to provide such
Borrower with prior written notice thereof, to the extent that it is practicable
to do so and to the extent that the disclosing party is permitted to provide
such prior written notice to such Borrower pursuant to the terms of the subpoena
or other legal process and (y) any disclosure under this clause (vi) shall be
limited to the portion of the Confidential Information as may be required by
such Governmental Authority pursuant to such subpoena or other legal process,
(vii) as to any such information that is or becomes generally available to the
public (other than as a result of prohibited disclosure by an Agent or the
Lenders or the Lender Group Representatives), (viii) in connection with any
assignment, participation or pledge of any Lender’s interest under this
Agreement, provided that prior to receipt of Confidential Information any such
assignee, participant, or pledgee shall have agreed in writing to receive such
Confidential Information hereunder subject to the terms of this Section, (ix) in
connection with any litigation or other adversary proceeding involving parties
hereto which such litigation or adversary proceeding involves claims related to
the rights or duties of such parties under this Agreement or the other Loan
Documents; provided, that, prior to any disclosure to any Person (other than any
Loan Party, any Agent, any Lender, any of their

 

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respective Affiliates, or their respective counsel) under this clause (ix) with
respect to litigation involving any Person (other than such Borrower, any Agent,
any Lender, any of their respective Affiliates, or their respective counsel),
the disclosing party agrees to provide such Borrower with prior written notice
thereof, and (x) in connection with, and to the extent reasonably necessary for,
the exercise of any secured creditor remedy under this Agreement or under any
other Loan Document.

(b) Anything in this Agreement to the contrary notwithstanding, each Agent may
(i) provide customary information concerning the terms and conditions of this
Agreement and the other Loan Documents to loan syndication and pricing reporting
services, and (ii) use the name, logos, and other insignia of each Borrower and
the Loan Parties and the Revolver Commitments provided hereunder in any
“tombstone” or comparable advertising, on its website or in other marketing
materials of such Agent.

17.10. Lender Group Expenses.

Each Borrower agrees to pay the Lender Group Expenses on the earlier of (a) the
first day of the month following the date on which such Lender Group Expenses
were first incurred or (b) the date on which demand therefor is made by an
Agent. Each Borrower agrees that its obligations contained in this Section 17.10
shall survive payment or satisfaction in full of all other Obligations.

17.11. Survival.

All representations and warranties made by the Loan Parties in the Loan
Documents and in the certificates or other instruments delivered in connection
with or pursuant to this Agreement or any other Loan Document shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of the Loan Documents and the making of any
loans and issuance of any Letters of Credit, regardless of any investigation
made by any such other party or on its behalf and notwithstanding that any
Agent, any Issuing Lender, or any Lender may have had notice or knowledge of any
Default or Event of Default or incorrect representation or warranty at the time
any credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Revolver Commitments have not
expired or terminated.

17.12. Patriot Act; Anti Money Laundering Legislation.

(a) Each Lender that is subject to the requirements of the Patriot Act or the
PCTFA hereby notifies each Borrower that pursuant to the requirements of the
Act, it is required to obtain, verify and record information that identifies
such Borrower, which information includes the name and address of such Borrower
and other information that will allow such Lender to identify such Borrower in
accordance with the Patriot Act or the PCTFA. In addition, if an Agent is
required by law or regulation or internal policies to do so, it shall have the
right to periodically conduct (a) Patriot Act searches, OFAC/PEP

 

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searches, and customary individual background checks for the Loan Parties and
(b) OFAC/PEP searches and customary individual background checks for the Loan
Parties’ senior management and key principals, and each Borrower agrees to
cooperate in respect of the conduct of such searches and further agrees that the
reasonable costs and charges for such searches shall constitute Lender Group
Expenses hereunder and be for the account of such Borrower.

(i) Each Canadian Loan Party acknowledges that, pursuant to the PCTFA and other
applicable anti-money laundering, anti-terrorist financing, government sanction
and “know your client” laws, under the laws of Canada (collectively, including
any guidelines or orders thereunder, “AML Legislation”), Agents and Lenders may
be required to obtain, verify and record information regarding each Canadian
Loan Party, its respective directors, authorized signing officers, direct or
indirect shareholders or other Persons in control of such Canadian Loan Party,
and the transactions contemplated hereby. Each Canadian Loan Party shall
promptly provide all such information, including supporting documentation and
other evidence, as may be reasonably requested by any Lender or Agent, or any
prospective assign or participant of a Lender or Agent, necessary in order to
comply with any applicable AML Legislation, whether now or hereafter in
existence.

(ii) If an Agent has ascertained the identity of any Canadian Loan Party or any
authorized signatories of any Loan Party for the purposes of applicable AML
Legislation, then such Agent:

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

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

(b) Notwithstanding the provisions of this Section and except as may otherwise
be agreed in writing, each Lender agrees that no Agent has any obligation to
ascertain the identity of the Canadian Loan Parties or any authorized
signatories of the Canadian Loan Parties on behalf of any Lender, or to confirm
the completeness or accuracy of any information it obtains from the Canadian
Loan Parties or any such authorized signatory in doing so.

17.13. Integration.

This Agreement, together with the other Loan Documents, reflects the entire
understanding of the parties with respect to the transactions contemplated
hereby and shall not be contradicted or qualified by any other agreement, oral
or written, before the date hereof. The foregoing to the contrary
notwithstanding, all Bank Product Agreements, if any, are independent agreements
governed by the written provisions of such Bank Product Agreements, which will
remain in full force and effect, unaffected by any repayment, prepayments,
acceleration, reduction, increase, or change in the terms of any credit extended
hereunder, except as otherwise expressly provided in such Bank Product
Agreement.

 

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17.14. Determinations; Judgment Currency.

(a) This is an international financial transaction in which the specification of
a currency and payment is of the essence. US Dollars or Canadian Dollars, as
applicable, shall be the currency of account in the case of all payments
pursuant to or arising under this Agreement or under any other Loan Document,
and all such payments shall be made to the applicable Agent’s Account in
immediately available funds. To the fullest extent permitted by applicable law,
the Obligations of each Borrower to Agents and the Lenders under this Agreement
and under the other Loan Documents shall not be discharged by any amount paid in
any other currency or in any other manner than to the applicable Agent’s Account
to the extent that the amount so paid after conversion under this Agreement and
transfer to the applicable Agent’s Account, as applicable, does not yield the
amount of US Dollars with respect to US Obligations, Canadian Obligations
advanced as US Dollars or Canadian Dollars with respect to Canadian Obligations
advanced as Canadian Dollars owing to Lenders due under this Agreement and under
the other Loan Documents. If, for the purposes of obtaining or enforcing
judgment against Borrowers in any court in any jurisdiction in connection with
this Agreement or any Loan Document, it becomes necessary to convert into any
other currency (such other currency being referred to as the “Judgment
Currency”) an amount due under this Agreement or any Loan Document in US Dollars
or Canadian Dollars, as applicable, the conversion shall be made at the rate of
exchange prevailing on the Business Day immediately preceding (i) the date of
actual payment of the amount due, in the case of any proceeding in the courts of
any jurisdiction that would give effect to such conversion being made on such
date, or (ii) the date on which the judgment is given, in the case of any
proceeding in the courts of any other jurisdiction (the applicable date as of
which such conversion is made pursuant to this Section 17.14 being hereinafter
referred to as the “Judgment Conversion Date”).

(b) If, in the case of any proceeding in the court of any jurisdiction referred
to in subsection (a) above, there is a change in the rate of exchange prevailing
between the Judgment Conversion Date and the date of actual receipt for value of
the amount due, the applicable Borrowers shall pay such additional amount (if
any and in any event not a lesser amount) as may be necessary to ensure that the
amount actually received in the Judgment Currency, when converted at the rate of
exchange prevailing on the date of payment, will produce the amount of US
Dollars or Canadian Dollars, as applicable, which could have been purchased with
the amount of the Judgment Currency stipulated in the judgment or judicial order
at the rate of exchange prevailing on the Judgment Conversion Date. The term
“rate of exchange” in this Section means the spot rate of exchange at which US
Agent would, on the relevant date at or about 10:30 a.m. (New York time), be
prepared to sell US Dollars or Canadian Dollars, as applicable, against the
Judgment Currency.

(c) Any amount due from Borrowers under this Section 17.14 shall not be affected
by judgment being obtained for any other amounts due under or in respect of this
Agreement or any Loan Document.

 

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(d) Where any amount is denominated in US Dollars under this Agreement but
requires for its determination an amount which is determined in another
currency, US Agent shall determine the applicable exchange rate in its Permitted
Discretion. Where any amount is denominated in Canadian Dollars under this
Agreement but requires for its determination an amount which is determined in
another currency, Canadian Agent shall determine the applicable exchange rate in
its Permitted Discretion. With respect to all commitments, caps, baskets and
other amounts identified herein, unless specifically noted otherwise, to the
extent any usage or determination is made using a currency other than US
Dollars, such amount shall be deemed to be the Dollar Equivalent of such amount.

[Signature pages to follow.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered as of the date first above written.

 

AMERICAN REPROGRAPHICS COMPANY, a Delaware corporation By:  

/s/ John Toth

Title:  

John Toth, Chief Financial Officer

ARC REPROGRAPHICS CANADA CORP., a British Columbia corporation By:  

/s/ Jorge Avalos

Title:  

Jorge Avalos, Chairman

ARC DIGITAL CANADA CORP., a British Columbia corporation By:  

/s/ Jorge Avalos

Title:  

Jorge Avalos, President

Signature Page to Credit Agreement

--------------------------------------------------------------------------------

WELLS FARGO BANK, NATIONAL ASSOCIATION, as US Agent and as a Lender By:  

/s/ Grant Pritchard

Title:   Authorized Signatory WELLS FARGO CAPITAL FINANCE CORPORATION CANADA, as
Canadian Agent and as a Lender By:  

/s/ Carmela Massari

Title:   Authorized Signatory

Signature Page to Credit Agreement

--------------------------------------------------------------------------------

Schedule 1.1

As used in the Agreement, the following terms shall have the following
definitions:

“Account” means an account (as that term is defined in the Code).

“Account Debtor” means any Person who is obligated on an Account, chattel paper,
or a general intangible.

“Accounting Changes” means changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions).

“Acquisition” means (a) the purchase or other acquisition by a Person or its
Subsidiaries of all or substantially all of the assets of (or any division or
business line of) any other Person, or (b) the purchase or other acquisition
(whether by means of a merger, consolidation, or otherwise) by a Person or its
Subsidiaries of all or substantially all of the Equity Interests of any other
Person.

“Additional Documents” has the meaning specified therefor in Section 5.12 of the
Agreement.

“Advances” means US Advances and/or Canadian Advances, as the context requires.

“Affected Lender” has the meaning specified therefor in Section 2.13(b) of the
Agreement.

“Affiliate” means, as applied to any Person, any other Person who controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, “control” means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the management and policies
of a Person, whether through the ownership of Equity Interests, by contract, or
otherwise; provided, however, that, for purposes of the definition of Eligible
Accounts and Section 6.12 of the Agreement: (a) any Person which owns directly
or indirectly 10% or more of the Equity Interests having ordinary voting power
for the election of directors or other members of the governing body of a Person
or 10% or more of the partnership or other ownership interests of a Person
(other than as a limited partner of such Person) shall be deemed an Affiliate of
such Person, (b) each director (or comparable manager) of a Person shall be
deemed to be an Affiliate of such Person, and (c) each partnership in which a
Person is a general partner shall be deemed an Affiliate of such Person.

“Agent” means the US Agent and/or the Canadian Agent, as the context requires.

 

Schedule 1.1 – Page 1

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“Agent-Related Persons” means each Agent, together with its Affiliates,
officers, directors, employees, attorneys, and agents.

“Agent’s Account” means the US Agent’s Account and/or the Canadian Agent’s
Account, as the context requires.

“Agent’s Liens” means the Liens granted by any Borrower or its Domestic
Subsidiaries to an Agent under the Loan Documents.

“Agreement” means the Credit Agreement to which this Schedule 1.1 is attached.

“Application Event” means the occurrence of (a) a failure by any Borrower to
repay all of the Obligations in full on the Maturity Date, or (b) an Event of
Default and the election by Agent or the Required Lenders to require that
payments and proceeds of Collateral be applied pursuant to Section 2.4(b)(ii) of
the Agreement.

“Asset Sale” means any direct or indirect Disposition (whether in one
transaction or a series of related transactions) by any Borrower or any of its
Domestic Subsidiaries thereof to any Person other than a Borrower or any wholly
owned Domestic Subsidiary of: (a) any Equity Interests of any Domestic
Subsidiary of such Borrower; or (b) any other property of such Borrower or any
Domestic Subsidiary thereof other than: (i) any Disposition by such Borrower or
any Domestic Subsidiary thereof of Investments of the type described in
clause (a) of the definition of Permitted Investments; (ii) any Disposition of
Inventory in the ordinary course of business; (iii) any Disposition of used,
obsolete or surplus property Disposed of in the ordinary course of business;
(iv) transactions expressly permitted by Section 6.3(a) or 6.11; (v) the
licensing on a non-exclusive basis, of patents, trademarks, copyrights, and
other intellectual property rights in the ordinary course of business; (vi) the
granting of Permitted Liens; (vii) the sale or discount, in each case without
recourse and forgiveness, of Accounts arising in the ordinary course of
business, but only in connection with the compromise or collection thereof;
(viii) any involuntary loss, damage or destruction of property; (ix) any
involuntary condemnation, seizure or taking, by the exercise of the power of
eminent domain or otherwise, or confiscation or requisition of use of property;
(x) the leasing or subleasing of assets of any Loan Party in the ordinary course
of business; (xi) the lapse of registered patents, trademarks, and other
intellectual property of any Loan Party to the extent not economically desirable
in the conduct of their business and so long as such lapse is not materially
adverse to the interests of the Lenders; (xii) the making of a Restricted
Payment that is expressly permitted to be made pursuant to this Agreement;
(xiii) dispositions of a Permitted Investment in the minority interests of the
stock of another Person, so long as made in an arm’s length transaction at fair
market value; (xiv) the contemporaneous exchange of Equipment traded for credit
towards new Equipment so long as such transaction is otherwise permitted by the
terms of the Agreement; (xv) the unwinding of Hedge Agreements so long as the
termination of the Hedge Agreement does not result in an Event of Default;
(xvii) the entry into Permitted Sale Leasebacks; and (xvi) dispositions of
assets (other than accounts, intellectual property, licenses, stock of Domestic
Subsidiaries) not otherwise permitted in clauses (i) through (xvi) above so long
as made at

 

Schedule 1.1 – Page 2

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fair market value and the aggregate fair market value of all assets disposed of
in all such dispositions since the Closing Date would not exceed $2,500,000. For
the avoidance of doubt, an Asset Sale does not include any issuance by a
Borrower of common Equity Interests.

“Assignee” has the meaning specified therefor in Section 13.1(a) of the
Agreement.

“Assignment and Acceptance” means an Assignment and Acceptance Agreement
substantially in the form of Exhibit A-1.

“Attributable Debt” means, on any date of determination: (a) in respect of any
capital lease of any Person, the capitalized amount thereof that would appear on
a balance sheet of such Person prepared as of such date in accordance with GAAP;
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of
the remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a capital lease.

“Authorized Person” means any one of the individuals identified on Schedule A-2,
as such schedule is updated from time to time by written notice from Borrower to
Agent.

“Availability” means, as of any date of determination, the amount that such
Borrower is entitled to borrow as Advances under Section 2.1 of the Agreement
(after giving effect to all then outstanding Obligations (other than Bank
Product Obligations)).

“Average Daily Net Availability” means, as of any date of determination, the
average daily amount, calculated as of the close of business on each day, for
the preceding fiscal quarter, of Excess Availability.

“Bank Product” means any one or more of the following financial products or
accommodations extended to a Borrower or its Domestic Subsidiaries by a Bank
Product Provider: (a) credit cards, (b) credit card processing services,
(c) debit cards, (d) stored value cards, (e) purchase cards (including so-called
“procurement cards” or “P-cards”), (f) Cash Management Services, or
(g) transactions under Hedge Agreements.

“Bank Product Agreements” means those agreements entered into from time to time
by a Borrower or its Subsidiaries with a Bank Product Provider in connection
with the obtaining of any of the Bank Products.

“Bank Product Collateralization” means US Bank Product Collateralization and/or
Canadian Bank Product Collateralization, as the context requires.

“Bank Product Obligations” means US Bank Product Obligations and/or Canadian
Bank Product Obligations, as the context requires.

“Bank Product Provider” means Wells Fargo or any of its Affiliates.

 

Schedule 1.1 – Page 3

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“Bankruptcy Code” means title 11 of the United States Code, as in effect from
time to time.

“Base Rate” means the Canadian Base Rate or the US Base Rate, as the context
requires.

“Base Rate Loan” means a US Base Rate Loan and/or a Canadian Base Rate Loan, as
the context requires.

“Base Rate Margin” means, as of any date of determination (with respect to any
portion of the outstanding Advances on such date that is a Base Rate Loan), the
applicable margin set forth in the following table that corresponds to the
Average Daily Net Availability; provided, however, that for the period from the
Closing Date through the date Agent receives the Average Daily Net Availability
calculation in respect of the testing period ending March 31, 2012, the Base
Rate Margin shall be at the margin in the row styled “Level III”:

 

Level

  

Average Daily Net Availability

   Base Rate Margin

I

   If the Average Daily Net Availability is less than 33% of the Maximum
Revolver Amount    1.25 percentage points

II

   If the Average Daily Net Availability is equal to or greater than 33%, but
less than 66% of the Maximum Revolver Amount    1.00 percentage points

III

   If the Average Daily Net Availability is equal to or greater than 66% of the
Maximum Revolver Amount    0.75 percentage points

Except as set forth in the foregoing proviso, the Base Rate Margin shall be
based upon the most recent Average Daily Net Availability, which will be
calculated as of the end of each fiscal quarter for the next fiscal quarter
period. Except as set forth in the foregoing proviso, the Base Rate Margin shall
be re-determined quarterly on the first day of the month following the date of
delivery to Agents of the certified calculation of the Average Daily Net
Availability pursuant to Section 5.1 of the Agreement; provided, however, that
if Borrowers fail to provide such certification when such certification is due,
the Base Rate Margin shall be set at the margin in the row styled “Level I” as
of the first day of the month following the date on which the certification was
required to be delivered until the date on which such certification is delivered
(on which date (but not retroactively), without constituting a waiver of any
Default or Event of Default occasioned by the failure to timely deliver such
certification, the Base Rate Margin shall be set at the margin based upon the
calculations disclosed by such certification. In the event that the information
regarding the Average Daily Net Availability contained in any certificate
delivered pursuant to Section 5.1 of the Agreement is shown to be inaccurate,
and such inaccuracy, if corrected, would have

 

Schedule 1.1 – Page 4

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led to the application of a higher Base Rate Margin for any period (a “Base Rate
Period”) than the Base Rate Margin actually applied for such Base Rate Period,
then (i) Borrowers shall within three (3) Business Days deliver to Agent a
correct certificate for such Base Rate Period, (ii) the Base Rate Margin shall
be determined as if the correct Base Rate Margin (as set forth in the table
above) were applicable for such Base Rate Period, and (iii) Borrowers shall
within three (3) Business Days deliver to Agents full payment in respect of the
accrued additional interest as a result of such increased Base Rate Margin for
such Base Rate Period, which payment shall be promptly applied by the applicable
Agent to the affected Obligations.

“Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35) of
ERISA) for which a Borrower or any of its Subsidiaries or ERISA Affiliates has
been an “employer” (as defined in Section 3(5) of ERISA) within the past six
years.

“Board of Directors” means the board of directors (or comparable managers) of a
Loan Party (as the context indicates) or any committee thereof duly authorized
to act on behalf of the board of directors (or comparable managers).

“Borrower” has the meaning specified therefor in the preamble to the Agreement.

“Borrowing” means a US Borrowing and/or a Canadian Borrowing, as the context
requires.

“Borrowing Base” means the US Borrowing Base and/or the Canadian Borrowing Base,
as the context requires.

“Borrowing Base Certificate” means a US Borrowing Base Certificate and/or
Canadian Borrowing Base Certificate, as the context requires.

“Borrowing Base Excess Amount” has the meaning set forth in Section 2.4(e)(i).

“Borrowing Base Trigger Date” means the date on which any of (a) Excess
Availability is less than $15,000,000 for the third consecutive Business Day, or
(b) Consolidated Adjusted EBITDA, for the 12 month period ending on the last day
of any month is less than $50,000,000.

“Business Day” means any day that is not a Saturday, Sunday, or other day on
which banks are authorized or required to close in the state of California,
except that, (i) if a determination of a Business Day shall relate to a LIBOR
Rate Loan, the term “Business Day” also shall exclude any day on which banks are
closed for dealings in US Dollar deposits in the London interbank market and
(ii) if a determination of a Business Day shall relate to a Canadian Advance, or
a Canadian Letter of Credit (including a request therefor) the term “Business
Day also shall exclude any day on which banks are authorized to close in
Toronto, Ontario, Canada.

 

Schedule 1.1 – Page 5

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“Canadian Advances” has the meaning specified therefor in Section 2.1(a) of the
Agreement.

“Canadian Agent” has the meaning specified therefor in the preamble to the
Agreement.

“Canadian Agent’s Account” means the Deposit Account of Canadian Agent
identified on Schedule A-1.

“Canadian Bank Product Agreement” means a Bank Product Agreement entered into by
a Canadian Borrower or one of its Domestic Subsidiaries.

“Canadian Bank Product Collateralization” means providing cash collateral
(pursuant to documentation reasonably satisfactory to Canadian Agent) to be held
by Canadian Agent for the benefit of the Bank Product Providers (other than the
Hedge Providers) in an amount determined by Canadian Agent as sufficient to
satisfy the reasonably estimated credit exposure with respect to the then
existing Canadian Bank Product Obligations (other than Hedge Obligations).

“Canadian Bank Product Obligations” means (a) all obligations, liabilities,
reimbursement obligations, fees, or expenses owing by a Canadian Borrower or its
Subsidiaries to any Bank Product Provider pursuant to or evidenced by a Bank
Product Agreement and irrespective of whether for the payment of money, whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, (b) all Hedge Obligations of Canadian Borrowers and their
Domestic Subsidiaries, and (c) all amounts that any Agent or any Lender is
obligated to pay to a Bank Product Provider as a result of such Agent or such
Lender purchasing participations from, or executing guarantees or indemnities or
reimbursement obligations to, a Bank Product Provider with respect to the Bank
Products provided by such Bank Product Provider to a Canadian Borrower or its
Subsidiaries.

“Canadian Bank Product Provider” means the Bank Product Provider to the Canadian
Borrowers and their Domestic Subsidiaries.

“Canadian Bank Product Reserve Amount” means, as of any date of determination,
the Dollar Equivalent amount of reserves that Canadian Agent has determined it
is necessary or appropriate to establish (based upon the Canadian Bank Product
Providers’ reasonable determination of their credit exposure to Canadian
Borrowers and their Domestic Subsidiaries in respect of Canadian Bank Product
Obligations) in respect of Bank Products then provided or outstanding.

“Canadian Base Rate” means, the Canadian Base CDOR Rate (which shall be
determined on a daily basis).

“Canadian Base CDOR Rate” means for any particular day the annual rate of
interest equal to the average rate applicable to Canadian Dollar bankers’
acceptances having a 1 month duration appearing on the “Reuters Screen CDOR
Page” (as defined in the International Swaps and Derivatives Association, Inc.
2000 definitions, as modified and

 

Schedule 1.1 – Page 6

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amended from time to time), rounded to the nearest 1/100th of 1% (with .005%
being rounded up), at approximately 10:00 a.m. (Toronto time), on such day, or
if such day is not a Business Day, then on the immediately preceding Business
Day, provided that if such rate does not appear on the Reuters Screen CDOR Page
on such day as contemplated, then the Canadian Base CDOR Rate on such day shall
be calculated as the average of the rates for such 1 month period applicable to
Canadian Dollar bankers’ acceptances quoted by the banks listed in Schedule I of
the Bank Act (Canada) as of 10:00 a.m. (Toronto time) on such day or, if such
day is not a Business Day, then on the immediately preceding Business Day for
the amount of the Canadian Base Rate Loan requested by the Canadian Borrowers or
otherwise outstanding in accordance with the Agreement, which determination
shall be conclusive in the absence of manifest error.

“Canadian Base Rate Loan” means each portion of the Canadian Advances that bears
interest at a rate determined by reference to the Canadian Base Rate or the
US Base Rate.

“Canadian Borrowing” means a borrowing consisting of Canadian Advances made on
the same day by the Lenders having Canadian Revolver Commitments (or Canadian
Agent on behalf thereof), or by Canadian Swing Lender in the case of a Canadian
Swing Loan, or by Canadian Agent in the case of a Canadian Protective Advance.

“Canadian Borrowing Base” means, as of any date of determination prior to the
Borrowing Base Trigger Date, Canadian Borrowing Base I, and as of any date of
determination on and after the Borrowing Base Trigger Date, Canadian Borrowing
Base II.

“Canadian Borrowing Base I” means, as of any date of determination, the result
of:

(a) 75% of the amount of the Net Book Value of Canadian Borrowers’ and their
Domestic Subsidiaries’ Accounts, plus

(b) the lesser of

(i) $500,000, and

(ii) 50% of the Net Book Value of Canadian Borrowers’ and their Domestic
Subsidiaries’ Inventory consisting of raw materials and finished goods, plus

(c) the lesser of

(i) $500,000, and

(ii) 25% of the Net Book Value of Canadian Borrowers’ and their Domestic
Subsidiaries’ Equipment (other than any Equipment that is subject to a Lien);
minus.

 

Schedule 1.1 – Page 7

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(d) a reserve in an amount equal to the Canadian Bank Product Reserve Amount.

“Canadian Borrowing Base II” means, as of any date of determination, the result
of:

(a) 85% of the amount of Canadian Borrowers’ and their Domestic Subsidiaries’
Eligible Accounts, plus

(b) the lesser of

(i) 85% of the amount of Canadian Borrowers’ and their Domestic Subsidiaries’
Eligible Extended Accounts, and

(ii) $250,000, plus

(c) the lesser of

(i) $500,000, and

(ii) 85% times the most recently determined Net Liquidation Percentage times the
value (calculated at the lower of cost or market on a basis consistent with
Borrower’s historical accounting practices) of Canadian Borrowers’ and their
Domestic Subsidiaries’ Eligible Inventory; plus

(d) the lesser of

(i) $500,000, and

(ii) 85% times the most recently determined Net Liquidation Percentage of
Canadian Borrowers’ and their Domestic Subsidiaries’ Eligible Equipment; minus

(e) the Dilution Reserve with respect to Canadian Borrowers and their Domestic
Subsidiaries, the Canadian Bank Product Reserve Amount and the aggregate amount
of such other reserves, if any, established by Agent under Section 2.1(c) of the
Agreement.

“Canadian Borrowing Base Certificate” means a certificate in the form of Exhibit
B-1; provided, that on and after the Borrowing Base Trigger Date, “Canadian
Borrowing Base Certificate” means a certificate in the form of Exhibit B-2.

“Canadian Designated Account” means the Deposit Account of each Canadian
Borrower identified on Schedule D-1.

“Canadian Dollars” or “Cdn$” means Canadian dollars.

 

Schedule 1.1 – Page 8

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“Canadian Employee” means any employee or former employee of a Canadian Loan
Party.

“Canadian Employee Benefits Legislation” means the Canada Pension Plan (Canada),
the Employment Pensions Plans Act (Alberta), Pension Benefits Standards Act
(British Columbia), the Supplemental Pension Plans Act (Quebec), the Pension
Benefits Act (Ontario), the Income Tax Act (Canada) 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” means any employee benefit, health, welfare,
supplemental unemployment benefit, bonus, pension, supplemental pension, profit
sharing, retiring allowance, severance, deferred compensation, stock
compensation, stock purchase, retirement, life, hospitalization insurance,
medical, dental, disability or other employee group or similar benefit or
employment plans or supplemental arrangements applicable to the Canadian
Employees.

“Canadian Funding Losses” has the meaning specified therefor in
Section 2.11(b)(ii) of the Agreement.

“Canadian Inventory Reserves” means reserves (determined from time to time by
Canadian Agent in its Permitted Discretion) for (a) the estimated costs relating
to unpaid freight charges, warehousing or storage charges, taxes, duties, and
other similar unpaid costs associated with the acquisition of Eligible Inventory
by the Canadian Loan Parties, plus (b) the estimated reclamation claims of
unpaid suppliers of Inventory sold to Canadian Loan Parties (including, without
limitation, such claims arising under the Bankruptcy and Insolvency Act
(Canada)).

“Canadian Issuing Lender” means Wells Fargo Canada or any other Lender that, at
the request of a Canadian Borrower and with the consent of Canadian Agent,
agrees, in such Lender’s sole discretion, to become a Canadian Issuing Lender
for the purpose of issuing Canadian Letters of Credit or Canadian Reimbursement
Undertakings pursuant to Section 2.11 of the Agreement and the Canadian Issuing
Lender shall be a Canadian Lender.

“Canadian Lenders” means Lenders to the Canadian Borrowers.

“Canadian Letter of Credit” means a letter of credit (as that term is defined in
the Code) issued by Canadian Issuing Lender or a letter of credit issued by a
Canadian Underlying Issuer, as the context requires.

“Canadian Letter of Credit Collateralization” means either (a) providing cash
collateral (pursuant to documentation reasonably satisfactory to Canadian Agent,
including provisions that specify that the Letter of Credit fee and all usage
charges set forth in the Agreement will continue to accrue while the Canadian
Letters of Credit are outstanding) to be held by Canadian Agent for the benefit
of those Lenders with a Canadian Revolver Commitment in an amount equal to 103%
of the then existing Canadian Letter of Credit Usage, (b) delivering to Canadian
Agent documentation executed by all beneficiaries under

 

Schedule 1.1 – Page 9

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the Canadian Letters of Credit, in form and substance reasonably satisfactory to
Canadian Agent and the Canadian Issuing Lender, terminating all of such
beneficiaries’ rights under the Canadian Letters of Credit, or (c) providing
Canadian Agent with a standby letter of credit, in form and substance reasonably
satisfactory to Canadian Agent, from a commercial bank acceptable to Canadian
Agent (in its sole discretion) in an amount equal to 103% of the then existing
Canadian Letter of Credit Usage (it being understood that the Letter of Credit
fee and all usage charges set forth in the Agreement will continue to accrue
while the Canadian Letters of Credit are outstanding and that any such fees that
accrue must be an amount that can be drawn under any such standby letter of
credit).

“Canadian Letter of Credit Disbursement” means a payment made by Canadian
Issuing Lender or a Canadian Underlying Issuer pursuant to a Canadian Letter of
Credit.

“Canadian Letter of Credit Usage” means, as of any date of determination, the
aggregate undrawn amount of all outstanding Canadian Letters of Credit.

“Canadian Loan Account” has the meaning specified therefor in Section 2.9 of the
Agreement.

“Canadian Loan Parties” means each Canadian Borrower and each Loan Party
organized under the laws of Canada or a province thereof.

“Canadian Obligations” means all Obligations owing by Canadian Borrowers to the
Lender Group pursuant to this Agreement and the other Loan Documents.

“Canadian Overadvance” has the meaning specified therefor in Section 2.5 of the
Agreement.

“Canadian Pension Plan” means any pension plan required to be registered under
the Income Tax Act (Canada) or any Canadian federal or provincial law and which
is sponsored, maintained or contributed to by a Canadian Loan Party for its
Canadian Employees or former Canadian Employees, including any pension benefit
plan or pension plan within the meaning of the Employment Pensions Plan Act
(Alberta), Pension Benefits Standards Act (British Columbia), Pension Benefits
Act (Ontario), the Supplemental Pensions Plan Act (Quebec) but does not include
the Canada Pension Plan or the Quebec Pension Plan maintained by the Governments
of Canada and Quebec, respectively.

“Canadian Priority Payables Reserves” means, without duplication, reserves
(determined from time to time by Canadian Agent in its Permitted Discretion)
for: (a) the amount past due and owing by any Canadian Loan Party, or the
accrued amount for which such Canadian Loan Party has an obligation to remit, to
a Governmental Authority or other Person pursuant to any applicable law, rule or
regulation, in respect of (i) goods and services taxes, sales taxes, employee
income taxes, municipal taxes and other taxes payable or to be remitted or
withheld; (ii) workers’ compensation; (iii) vacation or holiday pay;
(iv) pension obligations and (v) other like charges and demands to the extent
that any Governmental

 

Schedule 1.1 – Page 10

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Authority or other Person may claim a lien, security interest, hypothec, trust
or other claim ranking or capable of ranking in priority to or pari passu with
one or more of the Liens granted in the Loan Documents; and (b) the aggregate
amount of any other liabilities of any Canadian Loan Party (i) in respect of
which a trust has been or may be imposed on any Collateral to provide for
payment, or (ii) in respect of unpaid or unremitted pension plan contributions,
or (iii) which are secured by a lien, security interest, pledge, charge, right
or claim on any Collateral, or (iv) in respect of directors and officers,
debtor-in-possession financing, administrative charges, critical supplier
charges or shareholder charges; in each case, pursuant to any applicable law,
rule or regulation and which such lien, trust, security interest, hypothec,
pledge, charge, right or claim ranks or, in the Permitted Discretion of the
Canadian Agent, is capable of ranking in priority to or pari passu with one or
more of the Liens granted in the Loan Documents (such as liens, trusts, security
interests, hypothecs, pledges, charges, rights or claims in favor of employees,
landlords, warehousemen, customs brokers, carriers, mechanics, materialmen,
labourers, or suppliers, or liens, trusts, security interests, hypothecs,
pledges, charges, rights or claims for ad valorem, excise, sales, or other taxes
where given priority under applicable law); in each case net of the aggregate
amount of all restricted cash held or set aside for the payment of such
obligations.

“Canadian Protective Advances” has the meaning specified therefor in
Section 2.3(d)(i) of the Agreement.

“Canadian Reimbursement Undertaking” has the meaning specified therefor in
Section 2.11(b)(i) of the Agreement.

“Canadian Revolver Commitment” means, with respect to each Lender, its Canadian
Revolver Commitment, and, with respect to all Lenders, their Canadian Revolver
Commitments, in each case as such Dollar Equivalent amounts are set forth beside
such Lender’s name under the applicable heading on Schedule C-1 or in the
Assignment and Acceptance pursuant to which such Lender became a Lender under
the Agreement, as such amounts may be reduced or increased from time to time
pursuant to assignments made in accordance with the provisions of Section 13.1
of the Agreement.

“Canadian Revolver Usage” means, as of any date of determination, the sum of
(a) the amount of outstanding Canadian Advances, plus (b) the amount of the
Canadian Letter of Credit Usage.

“Canadian Swing Lender” means Wells Fargo Canada or any other Lender that, at
the request of a Canadian Borrower and with the consent of Canadian Agent
agrees, in such Lender’s sole discretion, to become the Canadian Swing Lender
under Section 2.3(b) of the Agreement.

“Canadian Swing Loan” has the meaning specified therefor in Section 2.3(b) of
the Agreement.

“Canadian Underlying Issuer” means The Toronto-Dominion Bank or such other bank
designated by Canadian Agent.

 

Schedule 1.1 – Page 11

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“Canadian Underlying Letter of Credit” means a Canadian Letter of Credit that
has been issued by a Canadian Underlying Issuer.

“Capital Expenditures” means, with respect to any Person for any period, the
aggregate of all expenditures by such Person and its Subsidiaries during such
period that are capital expenditures as determined in accordance with GAAP, to
the extent such expenditures are paid in cash and not financed; provided that
Capital Expenditures shall not include (a) the purchase price paid in connection
with a Permitted Acquisition, (b) any additions to property, plant and equipment
and other capital expenditures made with (i) the proceeds of any issued Equity
Interests to the extent that the proceeds and/or consideration therefrom are
utilized for capital expenditures within twelve months of the receipt of such
proceeds, (ii) the proceeds from any casualty insurance or condemnation or
eminent domain, or proceeds otherwise provided by Persons other than Borrowers
and their Subsidiaries at the extent that such proceeds are utilized for capital
expenditures within twelve months of the receipt of such proceeds, (iii) the
proceeds or consideration received from any sale, trade in or other disposition
of Equipment of Real Property, to the extent that the proceeds and/or
consideration therefrom are utilized for capital expenditures within twelve
months of the receipt of such proceeds, or (c) any expenditures which are
contractually required to be, and have been, reimbursed to the Loan Parties in
cash by a third party (including landlords) during such period of calculation.

“Capitalized Lease Obligation” means that portion of the obligations under a
Capital Lease that is required to be capitalized in accordance with GAAP.

“Capital Lease” means a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

“Cash Equivalents” means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States or Canada or issued by any
agency thereof and backed by the full faith and credit of the United States or
Canada, in each case maturing within 1 year from the date of acquisition
thereof, (b) marketable direct obligations issued or fully guaranteed by any
state of the United States or province of Canada (in the case of Canadian Loan
Parties) or any political subdivision of any such state or province any public
instrumentality thereof maturing within 1 year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor’s Rating Group (“S&P”) or Moody’s
Investors Service, Inc. (“Moody’s”), (c) commercial paper maturing no more than
270 days from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody’s,
(d) certificates of deposit, time deposits, overnight bank deposits or bankers’
acceptances maturing within 1 year from the date of acquisition thereof issued
by any bank organized under the laws of the United States or Canada or any state
or province thereof or the District of Columbia or any United States or Canadian
branch of a foreign bank having at the date of acquisition thereof combined
capital and surplus of not less than US $250,000,000, (e) Deposit Accounts
maintained with (i) any bank that satisfies the criteria described in clause
(d) above, or (ii) any other bank organized under the laws of the United States
or Canada or any state or province thereof so long as the full amount maintained
with

 

Schedule 1.1 – Page 12

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any such other bank is insured by the Federal Deposit Insurance Corporation or
comparable organization in the relevant jurisdiction, (f) repurchase obligations
of any commercial bank satisfying the requirements of clause (d) of this
definition or recognized securities dealer having combined capital and surplus
of not less than US $250,000,000, having a term of not more than seven days,
with respect to securities satisfying the criteria in clauses (a) or (d) above,
(g) debt securities with maturities of six months or less from the date of
acquisition backed by standby letters of credit issued by any commercial bank
satisfying the criteria described in clause (d) above, and (h) Investments in
money market funds substantially all of whose assets are invested in the types
of assets described in clauses (a) through (g) above.

“Cash Management Services” means any cash management or related services
including treasury, depository, return items, overdraft, controlled
disbursement, merchant store value cards, e-payables services, electronic funds
transfer, interstate depository network, automatic clearing house transfer
(including the Automated Clearing House processing of electronic funds transfers
through the direct Federal Reserve Fedline system) and other cash management
arrangements.

“CFC” means a controlled foreign corporation (as that term is defined in the
IRC).

“Change in Tax Law” means the enactment, promulgation, execution or ratification
of, or any change in or amendment to, any treaty, law, regulation or ruling
relating to any Tax (or in the application or official interpretation of any
treaty, law, regulation or ruling relating to any Tax) that occurs on or after
the date of this Agreement.

“Change of Control” means, (a) at any time (i) any “person” or “group” (within
the meaning of Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934,
shall have acquired “beneficial ownership” (as defined in Rules 13d-3 and 13d-5
under the Securities Exchange Act of 1934), of 30% or more on a fully diluted
basis of the voting or economic interest in the Equity Interests of any
Borrower, or (ii) during any period of 24 consecutive months commencing on or
after the Closing Date, the occurrence of a change in the composition of the
board of directors of US Borrower such that a majority of board of directors are
not Continuing Directors; (b) the occurrence of any event or the existence of
any circumstance that constitutes “fundamental change” or “change of control”
(or any similar term) under the documents governing the Senior Unsecured Notes
or any other Indebtedness involving in excess of $10,000,000; or (c) US Borrower
fails to own and control, directly or indirectly, at least the percentage of the
Equity Interest of each other Loan Party, owned or controlled, directly or
indirectly, by the US Borrower on the Closing Date.

“Closing Date” means the date of the making of the initial Advance (or other
extension of credit) under the Agreement or the date on which Agent sends
Borrowers a written notice that each of the conditions precedent set forth on
Schedule 3.1 either have been satisfied or have been waived.

“Code” means the California Uniform Commercial Code, as in effect from time to
time.

 

Schedule 1.1 – Page 13

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“Collateral” means all assets and interests in assets and proceeds thereof now
owned or hereafter acquired by any Borrower or its Domestic Subsidiaries in or
upon which a Lien is granted by such Person in favor of Agent or the Lenders
under any of the Loan Documents.

“Collateral Access Agreement” means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or
other Person in possession of, having a Lien upon, or having rights or interests
in any Borrower’s or its Domestic Subsidiaries’ books and records, Equipment, or
Inventory, in each case, in form and substance reasonably satisfactory to Agent.

“Collections” means all cash, checks, notes, instruments, and other items of
payment (including insurance proceeds, cash proceeds of asset sales, rental
proceeds, and tax refunds).

“Compliance Certificate” means a certificate substantially in the form of
Exhibit C-1 delivered by the chief financial officer of each Borrower to Agent.

“Confidential Information” has the meaning specified therefor in Section 17.9(a)
of the Agreement.

“Consolidated Adjusted EBITDA” means, for any period, for US Borrower and its
Subsidiaries on a consolidated basis, (i) the sum for such period of (without
duplication): (a) Consolidated Net Income; and to the extent already deducted in
arriving at Consolidated Net Income: (b) Consolidated Interest Expense,
(c) provisions for taxes based on income, (d) total depreciation expense,
(e) total amortization expense, and (f) any non-cash non-recurring costs and
expenses related to Permitted Acquisitions, Permitted Investments, Permitted
Investments, Permitted Indebtedness, Restricted Payments permitted in accordance
with this Agreement or the issuance of Equity Interests of the US Borrower,
(g) non-cash restructuring and severance expenses disclosed to Agents, other non
cash items reducing Consolidated Net Income (excluding any such non cash item to
the extent that it represents an accrual or reserve for potential cash items in
any future period or amortization of a prepaid cash item that were paid in a
prior period), minus (ii) other non cash items increasing Consolidated Net
Income for such period (excluding any such non cash item to the extent it
represents the reversal of an accrual or reserve for potential cash item in any
prior period), minus (iii) all cash interest income; provided, that for each of
the following months, Consolidated Adjusted EBITDA shall be deemed to be the
following amounts: (i) January, 2011, $4,091,580, (ii) for February 2011,
$4,638,228, (iii) for March, 2011, $6,120,975, (iv) for April, 2011, $5,684,293,
(v) for May, 2011, $6,183,627, (vi) for June, 2011, $6,382,941, (vii) for July,
2011 $4,776,014, (viii) for August, 2011, $6,545,344, (ix) for September, 2011,
$6,609,307, (x) for October 2011, $5,892,589 and (xi) for November, 2011,
$5,427,466.

“Consolidated Interest Expense” means, for any period, for US Borrower and its
Subsidiaries on a consolidated basis, the sum for such period of (without
duplication): (a) all interest, premium payments, debt discount, fees, charges
and related expenses in

 

Schedule 1.1 – Page 14

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connection with borrowed money (including capitalized interest) or in connection
with the deferred purchase price of assets; plus (b) all payments made under
interest rate Hedge Agreements to the extent not included in clause (a) of this
definition; minus (c) all payments received under interest rate Hedge
Agreements; plus (d) the portion of rent expense under capital leases that is
treated as interest in accordance with GAAP.

“Consolidated Net Income” means, for any period, for US Borrower and its
Subsidiaries on a consolidated basis, net income (or loss) for such period, but
excluding (without duplication): (a) any income (or loss) of any Person if such
Person is not a Subsidiary, except that US Borrower’s direct or indirect equity
in the net income of any such Person for such period shall be included in such
computation of net income (or loss) up to the aggregate amount of cash actually
distributed by such Person during such period to any Borrower or a Subsidiary as
a dividend or other distribution; and (b) net income of any Subsidiary to the
extent that the declaration or payment of dividends or similar distributions by
such Subsidiary of that income is prohibited by operation of the terms of its
Organizational Documents or any document or Laws applicable to such Subsidiary
or by which Subsidiary is bound.

“Consolidated Senior Secured Debt” means, as of any date of determination, for
US Borrower and its Subsidiaries on a consolidated basis, the sum of (without
duplication) the aggregate amount of all outstanding Indebtedness (including
(i) all outstanding Obligations, and (ii) all outstanding Attributable Debt),
that is secured by a Lien on any assets or properties of US Borrower or any of
its Subsidiaries, but excluding any such secured Indebtedness that is cash
collateralized.

“Consolidated Senior Secured Debt Leverage Ratio” means, as of any date of
determination, the ratio of: (a) Consolidated Senior Secured Debt on such date;
to (b) Consolidated Adjusted EBITDA for the period consisting of the four
consecutive fiscal quarters ending on such date.

“Continuing Director” means (a) any member of the board of directors who was a
director (or comparable manager) of US Borrower on the Closing Date, and (b) any
individual who becomes a member of the board of directors after the Closing Date
if such individual was approved, appointed or nominated for election to the
board of directors by a majority of the Continuing Directors, but excluding any
such individual originally proposed for election in opposition to the board of
directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors (or comparable managers) of US
Borrower and whose initial assumption of office resulted from such contest or
settlement thereof.

“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. The
terms “Controlling” and “Controlled” have meanings correlative thereto. Without
limiting the generality of the foregoing, a Person shall be deemed to be
Controlled by another Person if such other Person possesses, directly or
indirectly, the power to vote 5.00% or more of the securities having ordinary
voting power for the election of directors, managing general partners or the
equivalent.

 

Schedule 1.1 – Page 15

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“Control Agreement” means a control agreement, in form and substance reasonably
satisfactory to Agent, executed and delivered by a Borrower or one of its
Domestic Subsidiaries, the applicable Agent, and the applicable securities
intermediary (with respect to a Securities Account) or bank (with respect to a
Deposit Account).

“Controlled Account Agreement” has the meaning specified therefor in the
Security Agreement.

“Copyright Security Agreement” has the meaning specified therefor in the
Security Agreement.

“Covenant Enforcement Period” means the period beginning on the occurrence of a
Triggering Event and ending on the 90th consecutive day thereafter that Excess
Availability exceeds $10,000,000.

“Currency Exchange Rate” means, with respect to a currency, the rate reasonably
determined in good faith by US Agent as the spot rate for the purchase of such
currency with another currency.

“Daily Balance” means, as of any date of determination and with respect to any
Obligation, the amount of such Obligation owed at the end of such day.

“Daily LIBOR Rate Loan” means a Loan bearing interest with respect to the US
LIBOR Rate at the rate applicable each day to LIBOR Rate Loans having an
Interest Period of 1 month, but, with an Interest Period of only 1 day.

“Default” means an event, condition, or default that, with the giving of notice,
the passage of time, or both, would be an Event of Default.

“Defaulting Lender” means any Lender that (a) has failed to fund any amounts
required to be funded by it under the Agreement on the date that it is required
to do so under the Agreement (including the failure to make available to an
Agent amounts required pursuant to a Settlement or to make a required payment in
connection with a Letter of Credit Disbursement), (b) notified the Borrowers, an
Agent, or any Lender in writing that it does not intend to comply with all or
any portion of its funding obligations under the Agreement, (c) has made a
public statement to the effect that it does not intend to comply with its
funding obligations under the Agreement or under other agreements generally (as
reasonably determined by Agent) under which it has committed to extend credit,
(d) failed, within 1 Business Day after written request by an Agent, to confirm
that it will comply with the terms of the Agreement relating to its obligations
to fund any amounts required to be funded by it under the Agreement,
(e) otherwise failed to pay over to an Agent or any other Lender any other
amount required to be paid by it under the Agreement on the date that it is
required to do so under the Agreement, or (f) (i) becomes or is insolvent or has
a parent company that has become or is insolvent or (ii) becomes the subject of
a bankruptcy or insolvency

 

Schedule 1.1 – Page 16

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proceeding (including, without limitation, any Insolvency Proceeding), or has
had a receiver, conservator, trustee, or custodian or appointed for it, or has
taken any action in furtherance of, or indicating its consent to, approval of or
acquiescence in any such proceeding or appointment or has a parent company that
has become the subject of a bankruptcy or insolvency proceeding (including,
without limitation, any Insolvency Proceeding), or has had a receiver,
conservator, trustee, or custodian appointed for it, or has taken any action in
furtherance of, or indicating its consent to, approval of or acquiescence in any
such proceeding or appointment.

“Defaulting Lender Rate” means (a) for the first 3 days from and after the date
the relevant payment is due, the US Base Rate or Canadian Base Rate, as
applicable, and (b) thereafter, the interest rate then applicable to Advances
that are Base Rate Loans (inclusive of the Base Rate Margin or LIBOR Rate Margin
applicable thereto).

“Deposit Account” means any deposit account (as that term is defined in the
Code).

“Designated Account” means the US Designated Account and/or the Canadian
Designated Account, as the context requires.

“Designated Account Bank” has the meaning specified therefor in Schedule D-1.

“Dilution” means, as of any date of determination, a percentage, based upon the
experience of the immediately prior 12 consecutive months, that is the result of
dividing the Dollar Equivalent amount of (a) bad debt write-downs, discounts,
advertising allowances, credits, or other dilutive items with respect to the
Borrowers’ Accounts during such period, by (b) the Borrowers’ billings (net of
sales adjustments made within the same applicable collateral reporting period as
of the original invoice date) with respect to Accounts during such period.

“Dilution Reserve” means, as of any date of determination, an amount sufficient
to reduce the advance rate against Eligible Account of a Borrower and its
Domestic Subsidiaries by 1 percentage point for each percentage point by which
Dilution is in excess of 5%.

“Disposition” means the sale, assignment transfer, conveyance, license, lease or
other disposition (including any sale and leaseback transaction) of any property
by any Person, including any sale, assignment, transfer, conveyance or other
disposal, with or without recourse, of any notes or accounts receivable or any
rights and claims associated therewith. The term “Dispose” has a meaning
correlative thereto.

“Dollar Equivalent” means, as of any date of determination, (a) as to any amount
denominated in US Dollars, the amount thereof as of such date of determination,
and (b) as to any amount denominated in another currency, the equivalent amount
thereof in US Dollars as determined by the applicable Agent on the basis of the
Currency Exchange Rate for the purchase of US Dollars with such currency in
effect on such date of determination.

 

Schedule 1.1 – Page 17

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“Domestic Subsidiary” means (i) with respect to US Borrower, any Subsidiary of
US Borrower that is organized under the laws of the United States of America,
any state or territory thereof or the District of Columbia and (ii) with respect
to Canadian Borrowers, any Subsidiary of a Canadian Borrower that is organized
under the laws of Canada or any province or territory thereof.

“Dominion Period” means the period commencing on the date of a Dominion
Triggering Event and ending on the date thereafter that 30 consecutive days have
passed during which (i) Excess Availability has exceeded $15,000,000 and (ii) no
Event of Default has occurred and is continuing (and any Event of Default that
gave rise to a Dominion Triggering Event has been cured or waived in accordance
with this Agreement).

“Dominion Triggering Event”, means, as of any date of determination, that (i) an
Agent has notified Borrowers that an Event of Default has occurred as of such
date or (ii) Excess Availability is less than $15,000,000 for the third
consecutive Business Day.

“Earn-Outs” shall mean unsecured liabilities of a Loan Party arising under an
agreement to make any deferred payment as a part of the Purchase Price for a
Permitted Acquisition, including performance bonuses or consulting payments in
any related services, employment or similar agreement, in an amount that is
subject to or contingent upon the revenues, income, cash flow or profits (or the
like) of the underlying target.

“Eligible Accounts” means those Accounts created by a Borrower and its Domestic
Subsidiaries in the ordinary course of its business, that arise out of such
Borrower’s and such Domestic Subsidiaries’ sale of goods or rendition of
services, that comply with each of the representations and warranties respecting
Eligible Accounts made in the Loan Documents, and that are not excluded as
ineligible by virtue of one or more of the excluding criteria set forth below;
provided, however, that such criteria may be revised from time to time by the
applicable Agent in such Agent’s Permitted Discretion to address the results of
any audit performed by such Agent from time to time after the Closing Date. In
determining the amount to be included, Eligible Accounts shall be calculated net
of customer deposits and unapplied cash. Eligible Accounts shall not include the
following:

(a) Accounts that the Account Debtor has failed to pay within 90 days of
original invoice date or more than 60 days past the due date thereof,

(b) Accounts owed by an Account Debtor (or its Affiliates) where 50% or more of
all Accounts owed by that Account Debtor (or its Affiliates) are deemed
ineligible under clause (a) above,

(c) Accounts with respect to which the Account Debtor is an Affiliate of any
Borrower or any Subsidiary of any Borrower or an employee or agent of any
Borrower or any Affiliate of any Borrower or Subsidiary of any Borrower,

(d) Accounts arising in a transaction wherein goods are placed on consignment or
are sold pursuant to a guaranteed sale, a sale or return, a sale on approval, a
bill and hold, or any other terms by reason of which the payment by the Account
Debtor may be conditional,

 

Schedule 1.1 – Page 18

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(e) Accounts that are not payable in US Dollars or, with respect to Canadian
Borrowers, Canadian Dollars or US Dollars,

(f) Accounts with respect to which the Account Debtor either (i) does not
maintain its chief executive office in the United States or Canada (ii) is not
organized under the laws of the United States, or any state thereof, or Canada
or any province thereof, or (iii) is the government of any foreign country or
sovereign state, or of any state, province, municipality, or other political
subdivision thereof, or of any department, agency, public corporation, or other
instrumentality thereof, unless (y) the Account is supported by an irrevocable
letter of credit reasonably satisfactory to the applicable Agent (as to form,
substance, and issuer or domestic confirming bank) that has been delivered to
the applicable Agent and is directly drawable by such Agent, or (z) the Account
is covered by credit insurance in form, substance, and amount, and by an
insurer, reasonably satisfactory to such Agent,

(g) Accounts with respect to which the Account Debtor is either (i) the United
States or any department, agency, or instrumentality of the United States
(exclusive, however, of Accounts with respect to which the applicable Borrower
has complied, to the reasonable satisfaction of Agent, with the Assignment of
Claims Act, 31 USC §3727), (ii) any state of the United States (provided, that
Accounts owing by federal, state and local governments in the United States
shall not be ineligible notwithstanding this provision, up to $500,000 at any
time), or (iii) Canada or any province or any department, agency or
instrumentality of Canada or any province (unless any applicable assignment of
claims statue, including the Financial Administration Act (Canada) has been
complied with).

(h) Accounts with respect to which the Account Debtor is a creditor of a
Borrower, has or has asserted a right of setoff, or has disputed its obligation
to pay all or any portion of the Account, to the extent of such claim, right of
setoff, or dispute,

(i) Accounts with respect to an Account Debtor whose total obligations owing to
the Loan Parties taken as whole exceed 10% (such percentage, as applied to a
particular Account Debtor, being subject to reduction by the applicable Agent in
its Permitted Discretion if the creditworthiness of such Account Debtor
deteriorates) of all Eligible Accounts, to the extent of the obligations owing
by such Account Debtor in excess of such percentage; provided, however, that, in
each case, the amount of Eligible Accounts that are excluded because they exceed
the foregoing percentage shall be determined by Agent based on all of the
otherwise Eligible Accounts prior to giving effect to any eliminations based
upon the foregoing concentration limit,

(j) Accounts with respect to which the Account Debtor is subject to an
Insolvency Proceeding, is not Solvent, has gone out of business, or as to which
any Borrower has received notice of an imminent Insolvency Proceeding or a
material impairment of the financial condition of such Account Debtor,

 

Schedule 1.1 – Page 19

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(k) Accounts, the collection of which, the applicable Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor’s financial
condition,

(l) Accounts that are not subject to a valid and perfected first priority
Agent’s Lien,

(m) Accounts with respect to which (i) the goods giving rise to such Account
have not been shipped and billed to the Account Debtor, or (ii) the services
giving rise to such Account have not been performed and billed to the Account
Debtor,

(n) Accounts with respect to which the Account Debtor is a Sanctioned Person or
Sanctioned Entity, or

(o) Accounts that represent the right to receive progress payments or other
advance billings that are due prior to the completion of performance by a
Borrower of the subject contract for goods or services.

“Eligible Equipment” means Equipment of a Borrower and its Domestic Subsidiaries
that complies with each of the representations and warranties respecting
Eligible Equipment made in the Loan Documents and meets all of the criteria set
forth below; provided, however, that such criteria may be revised from time to
time by an Agent in such Agent’s Permitted Discretion to address the results of
any audit or appraisal performed by such Agent from time to time after the
Closing Date:

(a) such Equipment is included in the most recent Equipment appraisal delivered
to Agents,

(b) such Equipment is in good order, repair, running and marketable condition
(ordinary wear and tear excepted) and not damaged or defective, and used in the
operation of such Borrower’s or its Domestic Subsidiaries’ business or in
storage and available for use in the operation of such Borrower’s or its
Domestic Subsidiaries’ businesses,

(c) Such Borrower or any of its Domestic Subsidiaries has good, valid, and
marketable title to such Equipment on the Closing Date and such Equipment is not
leased to a third party,

(d) it does not constitute fixtures,

(e) it complies with the representations and warranties set forth in
Section 4.31(d),

(f) such Equipment is subject to the first priority, valid and perfected Lien of
Agent and is subject to no other Lien in favor of any other Person, except as
permitted in this Agreement and which is subject to an intercreditor agreement
with the applicable Agent(s), in form and substance satisfactory to such Agent
(and, before any Equipment is included as Eligible Equipment following the
Borrowing Base Trigger Date, Agents shall

 

Schedule 1.1 – Page 20

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have conducted a set of new UCC searches and PPSA searches (as contemplated by
Section 5.7) and be satisfied that the Equipment to be included in Eligible
Equipment is not subject to any other Liens),

(g) such Equipment is not worn out or obsolete, and

(h) if it was acquired in connection with a Permitted Acquisition, with the
completion of an appraisal and field examination of such Equipment, in each
case, reasonably satisfactory to the applicable Agent (which appraisal and field
examination may be conducted prior to the closing of such Permitted
Acquisition).

“Eligible Extended Accounts” means those Accounts created by a Borrower and its
Domestic Subsidiaries in the ordinary course of their businesses, that satisfy
all of the criteria of Eligible Accounts (including all discretionary criteria
imposed by the applicable Agent thereunder) except the criteria in clause (a) of
the definition of Eligible Accounts, and consist of Accounts with respect to
which the Account Debtor has failed to pay (i) within 90 days of the original
invoice date, but not more than 120 days from the original invoice date or
(ii) more than 60 days past the due date thereof, but not more than 90 days past
the due date thereof.

“Eligible Inventory” means Inventory consisting of first quality raw materials
and finished goods held for sale in the ordinary course of a Borrower’s or its
Domestic Subsidiaries’ business, that complies with each of the representations
and warranties respecting Eligible Inventory made in the Loan Documents, and
that is not excluded as ineligible by virtue of one or more of the excluding
criteria set forth below; provided, however, that such criteria may be revised
from time to time by an Agent in such Agent’s Permitted Discretion to address
the results of any audit or appraisal performed by such Agent from time to time
after the Closing Date. In determining the amount to be so included, Inventory
shall be valued at the lower of cost or market on a basis consistent with such
Borrower’s historical accounting practices. An item of Inventory shall not be
included in Eligible Inventory if:

(a) such Borrower or Domestic Subsidiary does not have good, valid, and
marketable title thereto,

(b) it complies with the representations and warranties set forth in
Section 4.31(d),

(c) it is the subject of a bill of lading or other document of title,

(d) it is not subject to a valid and perfected first priority Agent’s Lien,

(e) it consists of goods returned or rejected by such Borrower’s or Domestic
Subsidiary’s customers,

(f) it consists of goods that are obsolete or slow moving, restrictive or custom
items, work-in-process, or goods that constitute spare parts, packaging and
shipping

 

Schedule 1.1 – Page 21

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materials, supplies used or consumed in such Borrower’s or Domestic Subsidiary’s
business (other than paper or toner cartridges), bill and hold goods, defective
goods, “seconds,” or Inventory acquired on consignment,

(g) it is subject to third party trademark, licensing or other proprietary
rights, unless the applicable Agent is satisfied that such Inventory can be
freely sold by such Agent on and after the occurrence of an Event of a Default
despite such third party rights, or

(h) if it was acquired in connection with a Permitted Acquisition, until the
completion of an appraisal and field examination of such Inventory, in each
case, reasonably satisfactory to the applicable Agent (which appraisal and field
examination may be conducted prior to the closing of such Permitted
Acquisition).

“Environmental Action” means any written complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other written communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials (a) from any assets, properties, or
businesses of any Loan Party or any Subsidiary of a Loan Party, or any of their
predecessors in interest, (b) from adjoining properties or businesses, or
(c) from or onto any facilities which received Hazardous Materials generated by
any Loan Party, any Subsidiary of a Loan Party, or any of their predecessors in
interest.

“Environmental Law” means any applicable federal, state, provincial, foreign or
local statute, law, rule, regulation, ordinance, code, binding and enforceable
guideline, binding and enforceable written policy, or rule of common law now or
hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, in each case, to the extent binding on any
Loan Party or any Subsidiary of any Loan Party, relating to the environment, the
effect of the environment on employee health, or Hazardous Materials, in each
case as amended from time to time.

“Environmental Liabilities” means all liabilities, monetary obligations, losses,
damages, costs and expenses (including all reasonable fees, disbursements and
expenses of counsel, experts, or consultants, and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, or Remedial Action required, by any Governmental
Authority or any third party, and which relate to any Environmental Action.

“Environmental Lien” means any Lien in favor of any Governmental Authority for
Environmental Liabilities.

“Equipment” means equipment (as that term is defined in the Code).

“Equity Interests” means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital

 

Schedule 1.1 – Page 22

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stock of (or other ownership or profit interests in) such Person, all of the
securities convertible into or exchangeable for shares of capital stock of (or
other ownership or profit interests in) such Person or warrants, rights or
options for the purchase or acquisition from such Person of such shares (or such
other interests), and all of the other ownership or profit interests in such
Person (including partnership, member or trust interests therein), whether
voting or nonvoting, and whether or not such shares, warrants, options, rights
or other interests are outstanding on any date of determination.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute thereto.

“ERISA Affiliate” means (a) any Person subject to ERISA whose employees are
treated as employed by the same employer as the employees of any Borrower or its
Subsidiaries under IRC Section 414(b), (b) any trade or business subject to
ERISA whose employees are treated as employed by the same employer as the
employees of any Borrower or its Subsidiaries under IRC Section 414(c),
(c) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of
which any Borrower or any of its Subsidiaries is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and
Section 412 of the IRC, any Person subject to ERISA that is a party to an
arrangement with any Borrower or any of its Subsidiaries and whose employees are
aggregated with the employees of any Borrower or its Subsidiaries under IRC
Section 414(o).

“Event of Default” has the meaning specified therefor in Section 8 of the
Agreement.

“Excess Availability” means, as of any date of determination, the amount equal
to (a) the lesser of (i) the Maximum Revolver Amount and (ii) the sum of the US
Borrowing Base and the Canadian Borrowing Base at such time, less (b) the sum of
(x) all outstanding US Advances and Canadian Advances, (y) the US Letter of
Credit Usage and Canadian Letter of Credit Usage at such time, and (z) without
duplication, the US Bank Products Reserve and Canadian Bank Products Reserve at
such time.

“Exchange Act” means the Securities Exchange Act of 1934, as in effect from time
to time.

“Excluded Taxes” means any of the following Taxes, now or hereafter imposed on
or with respect to the Agent or any Lender or Participant or required to be
withheld or deducted from a payment to any such recipient: (a) Taxes imposed on
or measured by net income or net profits (however denominated), and general
capital Taxes and franchise Taxes (imposed in lieu of net income taxes) by the
United States of America or by the jurisdiction (or any political subdivision
thereof) under the laws of which such recipient is organized or conducts
business or is resident or in which its principal office is located or, in the
case of any Lender, in which its applicable lending office is located, or as a
result of a present or former connection between such Agent or such Lender and
the jurisdiction imposing the Tax (other than a connection arising from the
execution, delivery or

 

Schedule 1.1 – Page 23

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enforcement of, or performance under, or receipt of payments under any Loan
Document, or from the sale or assignment of an interest in any Advance or
Revolver Commitment or Loan Document); (b) any branch profits Taxes imposed by
the United States or any similar Tax imposed by any other jurisdiction as a
result of a present or former connection between such Agent or such Lender and
the jurisdiction imposing the Tax (other than a connection arising from the
execution, delivery or enforcement of, or performance under, or receipt of
payments under any Loan Document, or from the sale or assignment of an interest
in any Advance or Revolver Commitment or Loan Document), (c) in the case of a
Lender that is not a United State Person, any United States federal withholding
Tax that is imposed on amounts payable to or for the account of such Lender with
respect to an applicable interest in an Advance or Revolver Commitment pursuant
to a law in effect at the time such Lender acquires such interest in Advance or
Revolver Commitment (or designates a new lending office), except to the extent
that such Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from US Borrower with respect to such withholding Tax pursuant to
Section 16 (provided that such Lender has complied with Section 16(d), unless
the failure so to make or to comply is due to a Change in Tax Law), (d) Canadian
withholding Taxes attributable to such Lender’s failure or inability to comply
with Section 16(e), other than as a result of a Change in Tax Law and (e) any
United States federal withholding Taxes imposed under FATCA.

“Existing Credit Facility” means the existing loan facility between US Borrower
and Wells Fargo evidenced by the Credit Agreement dated as of December 1, 2010,
as amended from time to time.

“Existing Letters of Credit” means those letters of credit described on
Schedule E-2 to the Agreement.

“Extraordinary Receipts” means any payments received by a Borrower or any of its
Domestic Subsidiaries not in the ordinary course of business (and not consisting
of proceeds described in Section 2.4(e)(ii) of the Agreement) consisting of
(a) proceeds of judgments, proceeds of settlements or other consideration of any
kind in connection with any cause of action, (b) indemnity payments (other than
to the extent such indemnity payments are (i) immediately payable to a Person
that is not an Affiliate of a Borrower or any of its Domestic Subsidiaries, or
(ii) received by a Borrower or any of its Domestic Subsidiaries as reimbursement
for any payment previously made to such Person), (c) any purchase price
adjustment (other than a working capital adjustment) received in connection with
any purchase agreement and (d) proceeds of life insurance policies.

“FATCA” means Sections 1471 through 1474 of the IRC, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not more onerous to comply with) and any regulations or official
interpretations thereof.

“Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal to, for each day during such period, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal

 

Schedule 1.1 – Page 24

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Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by Agent from three Federal funds brokers of recognized
standing selected by it.

“Fee Letter” means that certain fee letter, dated as of even date with the
Agreement, between Borrowers and Agents, in form and substance reasonably
satisfactory to Agents.

“Fixed Charges” means, with respect to any fiscal period and with respect to
US Borrower and its Subsidiaries determined on a consolidated basis in
accordance with GAAP, the sum, without duplication, of (a) Consolidated Interest
Expense accrued (other than interest paid-in-kind, amortization of financing
fees, and other non-cash Consolidated Interest Expense) during such period (but
excluding amounts paid with respect to Indebtedness that has been repaid in full
and the commitments thereunder, if any such commitments exist, have been
terminated (unless it is repaid in connection with a refinancing of such
Indebtedness)), (b) principal payments in respect of Indebtedness that are
required to be paid during such period (but excluding amounts paid with respect
to such Indebtedness that has been repaid in full and the commitments
thereunder, if any such commitments exist, have been terminated (unless it is
repaid in connection with a refinancing of such Indebtedness)), and (c) all
federal, state, and local income taxes paid in cash during such period (net of
cash tax refunds) and (d) all dividends, distributions, stock repurchases and
other Restricted Payments paid during such period (excluding any such dividends,
distributions, stock repurchases and other Restricted Payments (x) made by one
Loan Party to another Loan Party during such period or (y) constituting
dividends payable in the form of Equity Interests to stockholders of the US
Borrower).

“Fixed Charge Coverage Ratio” means, with respect to US Borrower and its
Subsidiaries for any period, the ratio of (i) Consolidated Adjusted EBITDA for
such period minus Capital Expenditures made (to the extent not already incurred
in a prior period) or incurred during such period, to (ii) Fixed Charges for
such period.

“Foreign Lender” means any Lender or Participant that is not a United States
person within the meaning of IRC section 7701(a)(30).

“Foreign Subsidiary” means any Subsidiary of a Borrower other than a Domestic
Subsidiary.

“Funding Date” means the date on which a Borrowing occurs.

“Funding Losses” means US Funding Losses and/or Canadian Funding Losses, as the
context requires.

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States, consistently applied; provided, however, that all
calculations relative to liabilities shall be made without giving effect to
Statement of ASC No. 825.

 

Schedule 1.1 – Page 25

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“Governing Documents” means, with respect to any Person, the certificate or
articles of incorporation, by-laws, or other organizational documents of such
Person.

“Governmental Authority” means any federal, state, provincial, local, or other
governmental or administrative body, instrumentality, board, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body.

“Governmental Authorization” means any permit, license, authorization, plan,
directive, consent order or consent decree of or from any Governmental
Authority.

“Guarantors” means (a) each Domestic Subsidiary of each Borrower that is not
itself a Borrower, and (b) each other Person that becomes a guarantor after the
Closing Date pursuant to Section 5.11 of the Agreement, and “Guarantor” means
any one of them.

“Guaranty and Security Agreement” means those certain general continuing
Guaranty and Security Agreements, dated as of even date with the Agreement,
executed and delivered by the applicable Borrowers and each extant applicable
Guarantor in favor of the applicable Agent, for the benefit of the Lender Group
and the Bank Product Providers, in form and substance reasonably satisfactory to
such Agent.

“Hazardous Materials” means (a) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable laws or regulations as
“hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic
substances,” or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP
toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.

“Hedge Agreement” means a “swap agreement” as that term is defined in
Section 101(53B)(A) of the Bankruptcy Code.

“Hedge Obligations” means any and all obligations or liabilities, whether
absolute or contingent, due or to become due, now existing or hereafter arising,
of any Borrower or its Subsidiaries arising under, owing pursuant to, or
existing in respect of Hedge Agreements entered into with one or more of the
Bank Product Providers.

“Hedge Provider” means Wells Fargo or any of its Affiliates.

“Holdout Lender” has the meaning specified therefor in Section 14.2(a) of the
Agreement.

 

Schedule 1.1 – Page 26

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“Indebtedness” as to any Person means (a) all obligations of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes, or other similar instruments and all reimbursement or other
obligations in respect of letters of credit, bankers acceptances, or other
financial products, (c) all obligations of such Person as a lessee under Capital
Leases, (d) all obligations or liabilities of others secured by a Lien on any
asset of such Person, irrespective of whether such obligation or liability is
assumed, (e) all obligations of such Person to pay the deferred purchase price
of assets (other than trade payables incurred in the ordinary course of business
and repayable in accordance with customary trade practices), (f) all obligations
of such Person owing under Hedge Agreements (which amount shall be calculated
based on the amount that would be payable by such Person if the Hedge Agreement
were terminated on the date of determination), (g) any Prohibited Preferred
Stock of such Person, and (h) any obligation of such Person guaranteeing or
intended to guarantee (whether directly or indirectly guaranteed, endorsed,
co-made, discounted, or sold with recourse) any obligation of any other Person
that constitutes Indebtedness under any of clauses (a) through (g) above. For
purposes of this definition, (i) the amount of any Indebtedness represented by a
guaranty or other similar instrument shall be the lesser of the principal amount
of the obligations guaranteed and still outstanding and the maximum amount for
which the guaranteeing Person may be liable pursuant to the terms of the
instrument embodying such Indebtedness, and (ii) the amount of any Indebtedness
described in clause (d) above shall be the lower of the amount of the obligation
and the fair market value of the assets of such Person securing such obligation.

“Indemnifiable Tax” means any Tax other than an Excluded Tax.

“Indemnified Liabilities” has the meaning specified therefor in Section 10.3 of
the Agreement.

“Indemnified Person” has the meaning specified therefor in Section 10.3 of the
Agreement.

“Insolvency Proceeding” means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code or under any other state, provincial
or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.

“Intercompany Subordination Agreement” means an intercompany subordination
agreement, dated as of even date with the Agreement, executed and delivered by
each Borrower, each of its Subsidiaries and each Agent, the form and substance
of which is reasonably satisfactory to Agents.

“Interest Period” means, with respect to each LIBOR Rate Loan, a period
commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending 1 day (in the case of Daily LIBOR Rate Loans) or 1,
2, or 3 months thereafter; provided, however, that (a) interest shall accrue at
the applicable rate based upon the LIBOR Rate from

 

Schedule 1.1 – Page 27

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and including the first day of each Interest Period to, but excluding, the day
on which any Interest Period expires, (b) any Interest Period that would end on
a day that is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Business Day, (c) with
respect to an Interest Period (other than a 1 day Interest Period) that begins
on the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period), the Interest Period shall end on the last Business Day of the calendar
month that is 1, 2, or 3 months after the date on which the Interest Period
began, as applicable, and (d) no Borrower may elect an Interest Period which
will end after the Maturity Date.

“Inventory” means inventory (as that term is defined in the Code).

“Investment” means, with respect to any Person, any investment by such Person in
any other Person (including Affiliates) in the form of loans, advances, capital
contributions (excluding (a) commission, travel, and similar advances to
officers and employees of such Person made in the ordinary course of business,
and (b) bona fide Accounts arising in the ordinary course of business), or
acquisitions of Indebtedness, Acquisitions, and any other items that are or
would be classified as investments on a balance sheet prepared in accordance
with GAAP.

“IRC” means the Internal Revenue Code of 1986, as in effect from time to time.

“Issuing Lender” means the US Issuing Lender and/or the Canadian Issuing Lender,
as the context requires.

“Lender” has the meaning set forth in the preamble to the Agreement, shall
include each Issuing Lender and each Swing Lender, and shall also include any
other Person made a party to the Agreement pursuant to the provisions of
Section 13.1 of the Agreement and “Lenders” means each of the Lenders or any one
or more of them.

“Lender Group” means each of the Lenders (including the Issuing Lenders and the
Swing Lenders) and Agents, or any one or more of them.

“Lender Group Expenses” means all (a) costs or expenses (including taxes, and
insurance premiums) required to be paid by a Borrower or its Domestic
Subsidiaries under any of the Loan Documents that are paid, advanced, or
incurred by the Lender Group, (b) out-of-pocket fees or charges paid or incurred
by Agent in connection with the Lender Group’s transactions with a Borrower or
its Subsidiaries under any of the Loan Documents, including, fees or charges for
photocopying, notarization, couriers and messengers, telecommunication, public
record searches (including tax lien, litigation, and Uniform Commercial Code and
PPSA searches and including searches with the patent and trademark office, the
copyright office, or the department of motor vehicles), filing, recording,
publication, appraisal (including periodic collateral appraisals or business
valuations to the extent of the fees and charges (and up to the amount of any
limitation) contained in the

 

Schedule 1.1 – Page 28

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Agreement or the Fee Letter), real estate surveys, real estate title policies
and endorsements, and environmental audits, (c) each Agent’s customary fees and
charges (as adjusted from time to time) with respect to the disbursement of
funds (or the receipt of funds) to or for the account of a Borrower (whether by
wire transfer or otherwise), together with any out-of-pocket costs and expenses
incurred in connection therewith, (d) out-of-pocket charges paid or incurred by
an Agent resulting from the dishonor of checks payable by or to any Loan Party,
(e) reasonable out-of-pocket costs and expenses paid or incurred by the Lender
Group to correct any default or enforce any provision of the Loan Documents, or
during the continuance of an Event of Default, in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (f) reasonable out-of-pocket
audit fees and expenses (including travel, meals, and lodging) of an Agent
related to any inspections or audits to the extent of the fees and charges (and
up to the amount of any limitation) contained in the Agreement or the Fee
Letter, (g) reasonable out-of-pocket costs and expenses of third party claims or
any other suit paid or incurred by the Lender Group in enforcing or defending
the Loan Documents or in connection with the transactions contemplated by the
Loan Documents or the Lender Group’s relationship with such Borrower or any of
its Subsidiaries, (h) each Agent’s reasonable costs and expenses (including
reasonable attorneys’ fees) incurred in advising, structuring, drafting,
reviewing, administering (including travel, meals, and lodging), syndicating, or
amending the Loan Documents, (i) each Agent’s and each Lender’s reasonable costs
and expenses (including reasonable attorneys, accountants, consultants, and
other advisors fees and expenses) incurred in terminating, enforcing (including
attorneys, accountants, consultants, and other advisors fees and expenses
incurred in connection with a “workout,” a “restructuring,” or an Insolvency
Proceeding concerning any Borrower or any of its Subsidiaries or in exercising
rights or remedies under the Loan Documents), or defending the Loan Documents,
irrespective of whether suit is brought, or in taking any Remedial Action
concerning the Collateral, and (j) usage charges, charges, fees, costs and
expenses for amendments, renewals, extensions, transfers, or drawings from time
to time incurred by each Issuing Lender in respect of Letters of Credit and
out-of-pocket charges, fees, costs and expenses paid or incurred by each Issuing
Lender in connection with the issuance, amendment, renewal, extension, or
transfer of, or drawing under, any Letter of Credit or any demand for payment
thereunder.

“Lender Group Representatives” has the meaning specified therefor in
Section 17.9 of the Agreement.

“Lender-Related Person” means, with respect to any Lender, such Lender, together
with such Lender’s Affiliates, officers, directors, employees, attorneys, and
agents.

“Letter of Credit” means a US Letter of Credit or a Canadian Letter of Credit,
as the context requires.

“Letter of Credit Collateralization” means the US Letter of Credit
Collateralization and/or the Canadian Letter of Credit Collateralization, as the
context requires.

 

Schedule 1.1 – Page 29

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“Letter of Credit Disbursement” means a US Letter of Credit Disbursement or
and/or a Canadian Letter of Credit Disbursement, as the context requires.

“Letter of Credit Usage” means, as of any date of determination, the US Letter
of Credit Usage and/or the Canadian Letter of Credit Usage, as the context
requires.

“LIBOR Deadline” has the meaning specified therefor in Section 2.12(b)(i) of the
Agreement.

“LIBOR Notice” means a written notice in the form of Exhibit L-1.

“LIBOR Option” has the meaning specified therefor in Section 2.12(a) of the
Agreement.

“LIBOR Rate” means the US LIBOR Rate.

“LIBOR Rate Loan” means each portion of an Advance that bears interest at a rate
determined by reference to the LIBOR Rate.

“LIBOR Rate Margin” means, as of any date of determination (with respect to any
portion of the outstanding Advances on such date that is a LIBOR Rate Loan or
Canadian Base Rate Loan denominated in Canadian Dollars), the applicable margin
set forth in the following table that corresponds to the Average Daily Net
Availability; provided, however, that for the period from the Closing Date
through the date Agent receives the Average Daily Net Availability calculation
in respect of the testing period ending March 31, 2012, the LIBOR Rate Margin
shall be at the margin in the row styled “Level III”:

 

Level

  

Average Daily Net Availability

   LIBOR Rate Margin I    If the Average Daily Net Availability is less than 33%
of the Maximum Revolver Amount    2.25 percentage points II    If the Average
Daily Net Availability is equal to or greater than 33%, but less than 66% of the
Maximum Revolver Amount    2.00 percentage points III    If the Average Daily
Net Availability is equal to or greater than 66% of the Maximum Revolver Amount
   1.75 percentage points

Except as set forth in the foregoing proviso, the LIBOR Rate Margin shall be
based upon the most recent Average Daily Net Availability, which will be
calculated as of the end of each fiscal quarter for the next fiscal quarter
period. Except as set forth in the foregoing proviso, the LIBOR Rate Margin
shall be re-determined quarterly on the first day of the month following the
date of delivery to Agents of the certified calculation of the Average Daily Net
Availability pursuant to Section 5.1 of the Agreement; provided,

 

Schedule 1.1 – Page 30

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however, that if any Borrower fails to provide such certification when such
certification is due, the LIBOR Rate Margin shall be set at the margin in the
row styled “Level I” as of the first day of the month following the date on
which the certification was required to be delivered until the date on which
such certification is delivered (on which date (but not retroactively), without
constituting a waiver of any Default or Event of Default occasioned by the
failure to timely deliver such certification, the LIBOR Rate Margin shall be set
at the margin based upon the calculations disclosed by such certification. In
the event that the information regarding the Average Daily Net Availability
contained in any certificate delivered pursuant to Section 5.1 of the Agreement
is shown to be inaccurate, and such inaccuracy, if corrected, would have led to
the application of a higher LIBOR Rate Margin for any period (a “LIBOR Rate
Period”) than the LIBOR Rate Margin actually applied for such LIBOR Rate Period,
then (i) Borrowers shall, within three (3) Business Days deliver to Agents a
correct certificate for such LIBOR Rate Period, (ii) the LIBOR Rate Margin shall
be determined as if the correct LIBOR Rate Margin (as set forth in the table
above) were applicable for such LIBOR Rate Period, and (iii) Borrowers shall
within three (3) Business Days deliver to Agents full payment in respect of the
accrued additional interest and Letter of Credit fees as a result of such
increased LIBOR Rate Margin for such LIBOR Rate Period, which payment shall be
promptly applied by the applicable Agent to the affected Obligations.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment,
charge, deposit arrangement, encumbrance, easement, lien (statutory or other),
security interest, or other security arrangement and any other preference,
priority, or preferential arrangement of any kind or nature whatsoever,
including any conditional sale contract or other title retention agreement, the
interest of a lessor under a Capital Lease and any synthetic or other financing
lease having substantially the same economic effect as any of the foregoing.

“Loan Account” means the US Loan Account and/or the Canadian Loan Account, as
the context requires.

“Loan Documents” means the Agreement, any Borrowing Base Certificate, the
Controlled Account Agreements, the Control Agreements, the Copyright Security
Agreements, the Fee Letter, the Guaranties, the Intercompany Subordination
Agreement, the Letters of Credit, the Patent Security Agreements, the Security
Agreements, the Trademark Security Agreements, any note or notes executed by any
Borrower in connection with the Agreement and payable to any member of the
Lender Group, any letter of credit application or letter of credit agreement
entered into by any Borrower in connection with the Agreement, and any other
instrument or agreement entered into, now or in the future, by any Borrower or
any of its Subsidiaries and any member of the Lender Group in connection with
the Agreement.

“Loan Party” means each Borrower or any Guarantor.

“Margin Stock” as defined in Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.

 

Schedule 1.1 – Page 31

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“Material Adverse Change” means (a) a material adverse change in the business,
condition (financial or otherwise), operations, performance or properties of
Borrowers and their Domestic Subsidiaries, taken as a whole, (b) a material
impairment of the ability of Borrowers’ and their Domestic Subsidiaries, taken
as a whole, to perform their respective obligations under the Loan Documents, or
(c) a material adverse effect upon (i) the enforceability or priority of an
Agent’s Liens with respect to a material portion of the Collateral as a result
of an action or failure to act on the part of a Borrower or its Domestic
Subsidiaries; or (ii) the ability of an Agent to enforce or collect the
Obligations or to realize on a material portion of the Collateral.

“Material Contract” means, with respect to any Person, all contracts or
agreements, the loss of which could reasonably be expected to result in a
Material Adverse Change.

“Maturity Date” has the meaning specified therefor in Section 3.3 of the
Agreement.

“Maximum Revolver Amount” means $50,000,000, decreased by the amount of
reductions in the Revolver Commitments made in accordance with Section 2.4(c) of
the Agreement and increased by the amount of increase in accordance with
Section 2.2.

“Maximum Canadian Revolver Amount” means $5,000,000, decreased by the amount of
reductions in the Canadian Revolver Commitments made in accordance with
Section 2.4(c) of the Agreement and increased by the amount of increase in
accordance with Section 2.2.

“Maximum US Revolver Amount” means $50,000,000, less the amount of any
outstanding Canadian Advances at such time, decreased by the amount of
reductions in the US Revolver Commitments made in accordance with Section 2.4(c)
of the Agreement and increased by the amount of increase in accordance with
Section 2.2.

“Moody’s” has the meaning specified therefor in the definition of Cash
Equivalents.

“Net Book Value” means the book value of the applicable assets as shown on a
Borrower’s and its Domestic Subsidiaries’ financial statements as determined in
accordance with GAAP.

“Net Cash Proceeds” means:

(a) with respect to any sale or disposition by a Borrower or any of its Domestic
Subsidiaries of assets, the amount of cash proceeds received (directly or
indirectly) from time to time (whether as initial consideration or through the
payment of deferred consideration) by or on behalf of such Borrower or its
Domestic Subsidiaries, in connection therewith after deducting therefrom only
(i) the amount of any Indebtedness secured by any Permitted Lien on any asset
(other than (A) Indebtedness owing to an Agent or any Lender under the Agreement
or the other Loan Documents and (B) Indebtedness assumed by the

 

Schedule 1.1 – Page 32

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purchaser of such asset) which is required to be, and is, repaid in connection
with such sale or disposition, (ii) reasonable fees, commissions, and expenses
related thereto and required to be paid by such Borrower or such Subsidiary in
connection with such sale or disposition and (iii) taxes paid or payable to any
taxing authorities by such Borrower or such Subsidiary in connection with such
sale or disposition, in each case to the extent, but only to the extent, that
the amounts so deducted are, at the time of receipt of such cash, actually paid
or payable to a Person that is not an Affiliate of such Borrower or any of its
Domestic Subsidiaries, and are properly attributable to such transaction, and

(b) with respect to the issuance or incurrence of any Indebtedness by a Borrower
or any of its Domestic Subsidiaries, or the issuance by a Borrower or any of its
Domestic Subsidiaries of any shares of its Equity Interests, the aggregate
amount of cash received (directly or indirectly) from time to time (whether as
initial consideration or through the payment or disposition of deferred
consideration) by or on behalf of such Borrower or such Subsidiary in connection
with such issuance or incurrence, after deducting therefrom only (i) reasonable
fees, commissions, and expenses related thereto and required to be paid by such
Borrower or such Subsidiary in connection with such issuance or incurrence,
(ii) taxes paid or payable to any taxing authorities by such Borrower or such
Subsidiary in connection with such issuance or incurrence, in each case to the
extent, but only to the extent, that the amounts so deducted are, at the time of
receipt of such cash, actually paid or payable to a Person that is not an
Affiliate of a Borrower or any of its Domestic Subsidiaries, and are properly
attributable to such transaction.

“Net Liquidation Percentage” means the percentage of the book value of a
Borrower’s and its Domestic Subsidiaries’ Inventory or Equipment, that is
estimated to be recoverable in an orderly liquidation of such Inventory or
Equipment, as applicable, net of all associated costs and expenses of such
liquidation, such percentage to be as determined from time to time by an
appraisal company selected by Agent.

“Obligations” means (a) all loans (including the Advances (inclusive of
Protective Advances and Swing Loans)), debts, principal, interest (including any
interest that accrues after the commencement of an Insolvency Proceeding,
regardless of whether allowed or allowable in whole or in part as a claim in any
such Insolvency Proceeding), reimbursement or indemnification obligations with
respect to Reimbursement Undertakings or with respect to Letters of Credit
(irrespective of whether contingent), premiums, liabilities (including all
amounts charged to the Loan Account pursuant to the Agreement), obligations
(including indemnification obligations), fees (including the fees provided for
in the Fee Letter), Lender Group Expenses (including any fees or expenses that
accrue after the commencement of an Insolvency Proceeding, regardless of whether
allowed or allowable in whole or in part as a claim in any such Insolvency
Proceeding), guaranties, and all covenants and duties of any other kind and
description owing by any Loan Party pursuant to or evidenced by the Agreement or
any of the other Loan Documents and irrespective of whether for the payment of
money, whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, and including all interest not paid when due
and all other expenses or other amounts that any Borrower is required to pay or
reimburse by the Loan Documents or by law or otherwise in connection with the
Loan Documents, (b) all

 

Schedule 1.1 – Page 33

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debts, liabilities, or obligations (including reimbursement obligations,
irrespective of whether contingent) owing by any Borrower or any other Loan
Party to Canadian Underlying Issuer now or hereafter arising from or in respect
of any Canadian Underlying Letters of Credit, and (c) all Bank Product
Obligations. Any reference in the Agreement or in the Loan Documents to the
Obligations shall include all or any portion thereof and any extensions,
modifications, renewals, or alterations thereof, both prior and subsequent to
any Insolvency Proceeding.

“OFAC” means The Office of Foreign Assets Control of the U.S. Department of the
Treasury.

“Originating Lender” has the meaning specified therefor in Section 13.1(e) of
the Agreement.

“Organizational Documents” means: (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction) of
such Person; (b) with respect to any limited liability company, the certificate
or articles of formation or organization and operating agreement of such Person;
and (c) with respect to any partnership, joint venture, trust or other form of
business entity, the partnership, joint venture or other applicable agreement of
formation or organization of such Person and any agreement, instrument, filing
or notice with respect thereto filed in connection with such Person’s formation
or organization with the applicable Governmental Authority in the jurisdiction
of its formation or organization and, if applicable, any certificate or articles
of formation or organization of such Person.

“Overadvance” means a US Overadvance and/or a Canadian Overadvance, as the
context requires.

“Owned Real Estate” means any real property in which a Borrower or any of its
Domestic Subsidiaries holds title or the beneficial interest in fee simple.

“Participant” has the meaning specified therefor in Section 13.1(e) of the
Agreement.

“Participant Register” has the meaning set forth in Section 13.1(i) of the
Agreement.

“Patent Security Agreement” has the meaning specified therefor in the Security
Agreement.

“Patriot Act” has the meaning specified therefor in Section 4.18 of the
Agreement.

“Payoff Date” means the first date on which all of the Obligations are paid in
full and the Revolver Commitments of the Lenders are terminated.

 

Schedule 1.1 – Page 34

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“PCTFA” has the meaning specified therefor in Section 4.18(a) of the Agreement.

“Permitted Acquisition” means any Acquisition by a Borrower or any of its
Domestic Subsidiaries, whether by purchase, merger or otherwise, of all or
substantially all of the assets of, all of the Equity Interests of, or a
business line or unit or a division of, any Person; provided that,

(a) immediately prior to, and after giving effect thereto, no Default or Event
of Default shall have occurred and be continuing or would result therefrom;

(b) all transactions in connection therewith shall be consummated, in all
material respects, in accordance with all applicable laws and in conformity with
all applicable Governmental Authorizations;

(c) in the case of the acquisition of Equity Interests, all of the Equity
Interests (except for any such securities in the nature of directors’ qualifying
shares required pursuant to applicable law) acquired, or otherwise issued by
such Person or any newly formed Domestic Subsidiary of a Borrower, in connection
with such acquisition shall be owned 100% by such Borrower or another Loan
Party, and such Borrower shall have taken, or caused to be taken, as of the date
such Person becomes a Domestic Subsidiary of such Borrower each of the actions
set forth in Section 5.11;

(d) if the consideration to be delivered in connection with the proposed
acquisition includes any deferred consideration payable to any seller, such as
payment under a seller note, Earn-Outs, or extraordinary payments under
consulting, employment or lease agreements with such seller or its Affiliates,
such deferred consideration shall in all cases be expressly subordinated to
payment of the Obligations pursuant to a Seller Subordinated Note or a
subordination agreement substantially in the form of Exhibit D (or an agreement
containing substantially similar terms);

(e) Borrowers and their Subsidiaries shall be in compliance with the financial
covenants set forth in Section 7 on a pro forma basis after giving effect to
such Acquisition as of the last day of the month most recently ended regardless
of whether such financial covenant is in effect at such time;

(f) Borrowers shall have delivered to Agents at least 5 Business Days prior to
such proposed acquisition: (x) a Compliance Certificate evidencing compliance
with Section 7 as required under clause (e) above, together with all relevant
financial information with respect to such acquired assets, including the
aggregate consideration for such acquisition and any other information required
to demonstrate compliance with Section 7; provided, that Borrowers shall not be
required to deliver a Compliance Certificate with respect to any proposed
acquisition if, since the date of the most recently delivered Compliance
Certificate, the Purchase Price for all Permitted Acquisitions plus the proposed
acquisition is less than $10,000,000; (y) copies of the definitive documentation
relating to such proposed acquisition, unless Purchase Price for the proposed
acquisition is less than $10,000,000;

 

Schedule 1.1 – Page 35

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(g) any Person or assets or division as acquired in accordance herewith
(i) shall be in the same or a similar or related business or lines of business
in which Borrowers and/or their Domestic Subsidiaries are permitted to be
engaged pursuant to Section 6.3(b) and (ii) if the Purchase Price for a proposed
acquisition is greater than or equal to $10,000,000, shall have generated
positive Consolidated Adjusted EBITDA (after allowing for pro forma adjustments
permitted hereunder) for the most recently completed four-fiscal quarter period
prior to the date of such acquisition;

(h) in the case of a purchase or other acquisition of the Equity Interests of
another Person, the board of directors (or other comparable governing body) of
such other Person shall have duly approved such purchase or other acquisition;

(i) no Loan Party shall, in connection with any such transaction, assume or
remain liable with respect to any Indebtedness or other liability (including any
material tax or ERISA liability) of the related seller or the business, Person
or properties acquired, unless (i) with respect to any Indebtedness, such
Indebtedness is permitted to exist under Section 6.1 and (ii) with respect to
obligations not constituting Indebtedness, such obligations are incurred in the
ordinary course of business and are necessary or desirable to the continued
operation of the underlying properties; and any other such liabilities or
obligations not permitted to be assumed or otherwise supported by any Loan Party
hereunder shall be paid in full or released as to the business, Persons or
properties being so acquired on or before the consummation of such acquisition;
and

(j) after giving effect to the Acquisition, Excess Availability exceeds
$15,000,000.

“Permitted Discretion” means a determination made in the exercise of reasonable
(from the perspective of a secured lender) business judgment.

“Permitted Indebtedness” means

(a) the Obligations of each Borrower to Agents and Lenders, including Hedging
Obligations, as well as Indebtedness owing to underlying issuers with respect to
Letters of Credit;

(b) Indebtedness outstanding on the date hereof and listed on Schedule 6.1 and
any Refinancing Indebtedness;

(c) Indebtedness that refinances of replaces the Senior Unsecured Notes on terms
acceptable to the Required Lenders;

(d) guarantees (i) of Indebtedness of a Borrower or any other Loan Party owing
to an Agent and Lenders or any of their Affiliates; (ii) of Indebtedness
otherwise permitted hereunder of a Borrower or any other Loan Party, provided
both before and

 

Schedule 1.1 – Page 36

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immediately after giving effect thereto, no Default or Event of Default exists
or would result therefrom, including as a consequence of failure to comply with
any of the financial covenants set forth in Section 7; and (iii) by a Borrower
or any other Loan Party of Indebtedness otherwise permitted hereunder of any
Foreign Subsidiary, provided that the aggregate outstanding amount of all
Indebtedness so guaranteed shall not at any time exceed $25,000,000.

(e) Indebtedness (which shall include the then applicable outstanding
Attributable Debt with respect to Capital Leases and Synthetic Lease Obligations
and the outstanding principal balance of all other amounts then outstanding and
set forth on Part 3 of Schedule 6.1) with respect to (i) Capital Leases or
Synthetic Lease Obligations, (ii) Purchase Money Indebtedness (including
Indebtedness with respect to assets acquired in connection with a Permitted
Acquisition) and (iii) borrowed money that is secured by a Permitted Lien
pursuant to clause (p) of the definition thereof to the extent that the
aggregate amount of such Indebtedness does not exceed the greater of (x) the
maximum amount of such Indebtedness, which would not cause the Consolidated
Senior Secured Debt Leverage Ratio, on a pro forma basis after giving effect to
the incurrence of any such Indebtedness, based on the last financial statements
required to be delivered to Agents under this Agreement, to exceed 1.33:1.0 and
(y) $90,000,000 less the Consolidated Senior Secured Debt.

(f) Indebtedness of a Borrower, American Reprographics Company, LLC and ARC
Acquisition Corporation with respect to Earn-Outs; provided that such Earn-Out
also conform to the requirement of clause (d) of the definition of Permitted
Acquisition;

(g) guarantees (or liabilities as a surety, endorser, accommodation endorser or
otherwise) in respect of performance, surety, statutory, appeal or similar
obligations otherwise permitted hereunder incurred in the ordinary course of
business but excluding guaranties with respect to any obligations for borrowed
money); and

(h) Indebtedness constituting endorsement of instruments or other payment items
for deposit;

(i) Indebtedness composing Permitted Investments;

(j) the incurrence by Borrower or its Domestic Subsidiaries of Indebtedness
under Hedge Agreements that are incurred for the bona fide purpose of hedging
the interest rate, commodity, or foreign currency risk associated with
Borrower’s and it Subsidiaries’ operations and not for speculative purposes;

(k) Indebtedness incurred in respect of credit cards credit card processing
services, debit cards, stored value cards (including so-called “procurement
cards” or “P-cards”), or Cash Management Services, in each case, incurred in the
ordinary course of business;

(l) Indebtedness of a Loan Party to a Foreign Subsidiary, subject to the terms
of the Intercompany Subordination Agreement; and

 

Schedule 1.1 – Page 37

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(m) unsecured Indebtedness not otherwise permitted under subsections (a) through
(m) inclusive of this definition in an aggregate outstanding principal amount
not to exceed at any time $30,000,000.

“Permitted Investments” means:

(a) Investments in cash and Cash Equivalents;

(b) Investments in negotiable instruments deposited or to be deposited for
collection in the ordinary course of business;

(c) advances made in connection with purchases of goods or services in the
ordinary course of business;

(d) Investments received in settlement of amounts due to any Loan Party or any
of its Subsidiaries effected in the ordinary course of business or owing to any
Loan Party or any of its Subsidiaries as a result of Insolvency Proceedings
involving an Account Debtor or upon the foreclosure or enforcement of any Lien
in favor of any Loan Party or its Subsidiaries;

(e) Investments owned by any Loan Party on the Closing Date and as set forth on
Schedule P-1;

(f) Equity Interests or other securities acquired in connection with the
satisfaction or enforcement of Indebtedness or claims due or owing to a Loan
Party or its Subsidiaries (in bankruptcy of customers or suppliers or otherwise
in the ordinary course of business) or as security for an such Indebtedness or
claims;

(g) Investments resulting from entering into Bank Product Agreements;

(h) the formation of any direct or indirect Subsidiary so long as the
requirements set forth in Section 5.11 are met.

(i) Investments arising from transactions by any Borrower or any Subsidiary
thereof with customers or suppliers in the ordinary course of business;

(j) advances to officers, directors, employees, shareholders, partners or
members of any Borrower or any Subsidiary thereof for travel, entertainment,
relocation and analogous business purposes, that are not excluded as
“Investments” in the definition thereof, in a maximum aggregate amount at any
time outstanding not to exceed $5,000,000;

(k) (i) Investments by Canadian Borrowers or any Domestic Subsidiary of a
Canadian Borrower in US Borrower or any Domestic Subsidiary of a US Borrower;
(ii) Investments by any Borrower in any of its Domestic Subsidiaries;
(iii) Investments of any Domestic Subsidiary in any other Domestic Subsidiary;
(iv) Investments by Domestic Subsidiaries of a Borrower in such Borrower;
(v) Investments of any Borrower or any wholly owned Subsidiary thereof
consisting of Equity Interests disclosed on Schedule 4.1(b); (vi) Investments of
US Borrower in Canadian Borrowers

 

Schedule 1.1 – Page 38

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(l) Investments of any Borrower or any Domestic Subsidiary in Foreign
Subsidiaries (other than Canadian Borrowers) and Foreign Joint Ventures in an
aggregate outstanding amount not to exceed $25,000,000 for all such Foreign
Subsidiaries (other than Canadian Borrowers) and Foreign Joint Ventures;
provided, that at the time of the making of such Investment, after giving effect
to such Investment, Excess Availability exceeds $15,000,000;

(m) Investments made for the benefit of employees of any Borrower or any
Subsidiary thereof for the purposes of deferred compensation;

(n) Reserved;

(o) Investments that constitute Permitted Indebtedness;

(p) other Investments not to exceed $30,000,000; and

“Permitted Liens” means:

(a) any Lien granted to or for the benefit of an Agent;

(b) any Lien existing on the date hereof and listed on Schedule 6.2 and any
renewals or extensions thereof, provided that: (i) the property covered thereby
is not changed; (ii) the amount secured or benefited thereby is not increased;
(iii) the direct or any contingent obligor with respect thereto is not changed;
and (iv) and any renewal or extension of the obligations secured or benefited
thereby is permitted by clause (b) of the definition of Permitted Indebtedness;

(c) any Lien for tax liabilities, assessments and governmental charges or levies
not yet due or to the extent that non payment thereof is permitted by
Section 5.5; provided that no notice of lien has been filed or recorded under
the Code;

(d) any landlord’s, grower’s, supplier’s, producer’s, carrier’s, warehouseman’s,
mechanic’s, materialman’s, repairman’s or other like Lien arising in the
ordinary course of business that is being contested in good faith and by
appropriate proceedings timely instituted and diligently conducted, if adequate
reserves with respect thereto, if any, in accordance with GAAP are set aside on
the financial statements of the applicable Person;

(e) any pledge or deposit 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) any deposit to secure the performance of bids, trade contracts or leases
(other than Indebtedness constituting borrowed money), statutory obligations,
surety bonds

 

Schedule 1.1 – Page 39

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and reimbursement obligations thereof (other than bonds related to judgments or
litigation), performance bonds and other obligations of a like nature, in each
case incurred in the ordinary course of business;

(g) any lease, utility access, sublease, easement, right of way, encroachment,
zoning restriction, restriction or other similar encumbrance affecting real
property that, when aggregated with all other such Liens, is not substantial in
amount, and that does 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) any Lien securing a judgment for the payment of money not constituting an
Event of Default under Section 8.3 or securing an appeal or other surety bond
related to any such judgment;

(i) Liens solely on any cash earnest money deposits made by Borrower or any of
its Domestic Subsidiaries in connection with any letter of intent or purchase
agreement with respect to a Permitted Acquisition;

(j) any Lien existing on any property prior to a Permitted Acquisition or
existing on any property of any Person that becomes a Domestic Subsidiary of any
Borrower after the date hereof prior to the time such Person becomes a Domestic
Subsidiary of any Borrower; provided that: such Lien is not created in
contemplation of or in connection with such Permitted Acquisition or such Person
becoming a Domestic Subsidiary of any Borrower as otherwise permitted hereunder,
as the case may be; (ii) such Lien shall not apply to any other property or
assets of any Borrower or any Domestic Subsidiary thereof; and (iii) such Lien
shall secure only those obligations which it secures on the date of such
Permitted Acquisition or the date such Person becomes a Domestic Subsidiary of
any Borrower, as the case may be;

(k) any Lien securing obligations in respect of a Capital Lease on the assets
subject to such lease; provided that such Capital Lease is otherwise permitted
hereunder;

(l) any Lien 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; provided that: (i) such deposit account is not a dedicated cash
collateral account and is not subject to restrictions against access by any
Borrower or any Domestic Subsidiary thereof in excess of those set forth by
regulations promulgated by the Federal Reserve Board; and (ii) such deposit
account is not intended by any Borrower or any Domestic Subsidiary thereof to
provide collateral to the depository institution;

(m) the right of a licensee under a license agreement entered into by any
Borrower or any Domestic Subsidiary thereof, as licensor, in the ordinary course
of business for the use of intellectual property or other intangible assets of
any Borrower or any such Domestic Subsidiary; provided that, in the case of any
such license granted by any Borrower or any such Domestic Subsidiary on an
exclusive basis: (i) such Person shall have

 

Schedule 1.1 – Page 40

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determined in its reasonable business judgment that such intellectual property
or other intangible assets are no longer useful in the ordinary course of
business; (ii) such license is for the use of intellectual property or other
intangible assets in geographic regions in which any Borrower or any Domestic
Subsidiary thereof does not have material operations or in connection with the
exploitation of any product not then produced or planned to be produced by any
Borrower or any Domestic Subsidiary thereof; or (iii) such license is granted in
connection with a transaction otherwise permitted by this Agreement in which a
third party acquires the right to manufacture or sell any product covered by
such intellectual property or other intangible assets from such Borrower or such
Domestic Subsidiary; provided further that, in the case of clauses (ii) and
(iii) of this subsection (n), such Borrower or such Subsidiary has determined
that it is in its best economic interest to grant such license; and

(n) the interests of lessors under operating leases and non-exclusive licensors
under license agreements;

(o) Liens in favor of customs and revenue authorities arising as a matter of law
to secure payment of customs duties in connection with the importation of goods;

(p) any Lien securing Indebtedness permitted under clause (e) of the definition
of Permitted Indebtedness; provided that: (i) any such Lien does not at any time
encumber any property other than the property financed by the related
Indebtedness and proceeds thereof to the extent granted as a matter of law; and
(ii) the Indebtedness secured thereby does not exceed the cost or fair market
value, whichever is lower, of the property being acquired on the date of the
acquisition thereof;

(q) Liens in favor of credit card processors (including, Bank of America and
Axia) (“Credit Card Processors”) pursuant to the agreements with such parties,
consisting of (i) Deposit Accounts into which such Credit Card Processor makes
payments and any reserve Deposit Account required to be established by such
Credit Card Processor, (ii) the transactions executed pursuant to the merchant
services agreement with such Credit Card Processor and the proceeds thereof;
(iii) the rights of the applicable Loan Party under such merchant services
agreement, and (iv) other assets in the possession of such Credit Card
Processor, provided, that (x) obligations secured by such Liens are incurred by
such Loan Parties in the ordinary course of business for credit card processing
services and not in connection with the borrowing of money, (y) such Liens only
secure amounts not past due (except to the extent such amounts are being
diligently disputed by the applicable Loan Party in good faith and the
applicable Credit Card Processor has not exercised any of its rights with
respect to the collateral for its obligations, and (z) all Deposit Accounts
subject to Liens in favor of the Credit Card Processors are subject to Control
Agreements unless any such Deposit Account is permitted to remain without a
Control Agreement pursuant to Section 6.11(b)(i); and

(r) other Liens which do not secure Indebtedness for borrowed money or letters
of credit and as to which the aggregate amount of the obligations secured
thereby does not exceed $1,500,000.

 

Schedule 1.1 – Page 41

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“Permitted Preferred Stock” means and refers to any Preferred Stock issued by a
Borrower (and not by one or more of its Subsidiaries) that is not Prohibited
Preferred Stock.

“Permitted Sale-Leaseback” has the meaning specified therefor in Section 6.8.

“Person” means natural persons, corporations, limited liability companies,
limited partnerships, general partnerships, limited liability partnerships,
joint ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.

“Plan” means an employee pension benefit plan (as defined in ERISA).

“PPSA” means the Personal Property Security Act (British Columbia), and the
regulations promulgated thereunder and other applicable personal property
security legislation of Canada or any applicable Canadian province or provinces
in respect of the Canadian Loan Parties or Collateral (including the Civil Code
of Quebec and the regulation respecting the register of personal and movable
real rights promulgated thereunder) as all such legislation now exists or may
from time to time hereafter be amended, modified, supplemented or replaced,
together with all rules, regulations and interpretations thereunder or related
thereto.

“Preferred Stock” means, as applied to the Equity Interests of any Person, the
Equity Interests of any class or classes (however designated) that is preferred
with respect to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over shares of Equity Interests of any other class of such Person.

“Prohibited Preferred Stock” means any Preferred Stock that by its terms is
mandatorily redeemable or subject to any other payment obligation (including any
obligation to pay dividends, other than dividends of shares of Preferred Stock
of the same class and series payable in kind or dividends of shares of common
stock) on or before a date that is less than 1 year after the Maturity Date, or,
on or before the date that is less than 1 year after the Maturity Date, is
redeemable at the option of the holder thereof for cash or assets or securities
(other than distributions in kind of shares of Preferred Stock of the same class
and series or of shares of common stock).

“Projections” means US Borrower’s and its Subsidiaries’ consolidated forecasted
(a) balance sheets, (b) profit and loss statements, and (c) cash flow
statements, all prepared on a basis consistent with US Borrower’s historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions.

“Pro Rata Share” means, as of any date of determination:

(a) with respect to a Lender’s obligation to make US Advances and right to
receive payments of principal, interest, fees, costs, and expenses with respect
thereto, (i) prior to the US Revolver Commitments being terminated or reduced to
zero, the

 

Schedule 1.1 – Page 42

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percentage obtained by dividing (y) such Lender’s US Revolver Commitment, by
(z) the aggregate US Revolver Commitments of all Lenders, and (ii) from and
after the time that the US Revolver Commitments have been terminated or reduced
to zero, the percentage obtained by dividing (y) the outstanding principal
amount of such Lender’s US Advances by (z) the outstanding principal amount of
all US Advances,

(b) with respect to a Lender’s obligation to participate in US Letters of
Credit, to reimburse the US Issuing Lender, and right to receive payments of
fees with respect thereto, (i) prior to the US Revolver Commitments being
terminated or reduced to zero, the percentage obtained by dividing (y) such
Lender’s US Revolver Commitment, by (z) the aggregate US Revolver Commitments of
all Lenders, and (ii) from and after the time that the US Revolver Commitments
have been terminated or reduced to zero, the percentage obtained by dividing
(y) the outstanding principal amount of such Lender’s US Advances by (z) the
outstanding principal amount of all US Advances; provided, however, that if all
of the US Advances have been repaid in full and US Letters of Credit remain
outstanding, Pro Rata Share under this clause shall be determined based upon
subclause (i) of this clause as if the US Revolver Commitments had not been
terminated or reduced to zero and based upon the US Revolver Commitments as they
existed immediately prior to their termination or reduction to zero,

(c) with respect to a Lender’s obligation to make Canadian Advances and right to
receive payments of principal, interest, fees, costs, and expenses with respect
thereto, (i) prior to the Canadian Revolver Commitments being terminated or
reduced to zero, the percentage obtained by dividing (y) such Lender’s Canadian
Revolver Commitment, by (z) the aggregate Canadian Revolver Commitments of all
Lenders, and (ii) from and after the time that the Canadian Revolver Commitments
have been terminated or reduced to zero, the percentage obtained by dividing
(y) the outstanding principal amount of such Lender’s Canadian Advances by
(z) the outstanding principal amount of all US Advances,

(d) with respect to a Lender’s obligation to participate in Canadian Letters of
Credit and Canadian Reimbursement Undertaking, to reimburse the Canadian Issuing
Lender, and right to receive payments of fees with respect thereto, (i) prior to
the Canadian Revolver Commitments being terminated or reduced to zero, the
percentage obtained by dividing (y) such Lender’s Canadian Revolver Commitment,
by (z) the aggregate Canadian Revolver Commitments of all Lenders, and (ii) from
and after the time that the Canadian Revolver Commitments have been terminated
or reduced to zero, the percentage obtained by dividing (y) the outstanding
principal amount of such Lender’s Canadian Advances by (z) the outstanding
principal amount of all Canadian Advances; provided, however, that if all of the
Canadian Advances have been repaid in full and Canadian Letters of Credit remain
outstanding, Pro Rata Share under this clause shall be determined based upon
subclause (i) of this clause as if the Canadian Revolver Commitments had not
been terminated or reduced to zero and based upon the Canadian Revolver
Commitments as they existed immediately prior to their termination or reduction
to zero, and

(e) with respect to all other matters as to a particular Lender (including the
indemnification obligations arising under Section 15.7 of the Agreement),
(i) prior to the

 

Schedule 1.1 – Page 43

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Revolver Commitments being terminated or reduced to zero, the percentage
obtained by dividing (y) such Lender’s Revolver Commitment, by (z) the aggregate
amount of Revolver Commitments of all Lenders, and (ii) from and after the time
that the Revolver Commitments have been terminated or reduced to zero, the
percentage obtained by dividing (y) the outstanding principal amount of such
Lender’s Advances, by (z) the outstanding principal amount of all Advances;
provided, however, that if all of the Advances have been repaid in full and
Letters of Credit remain outstanding, Pro Rata Share under this clause shall be
determined based upon subclause (i) of this clause as if the Revolver
Commitments had not been terminated or reduced to zero and based upon the
Revolver Commitments as they existed immediately prior to their termination or
reduction to zero.

“Protective Advances” means the US Protective Advances and/or the Canadian
Protective Advances, as the context requires.

“Purchase Money Indebtedness” means Indebtedness (other than the Obligations,
but including Capitalized Lease Obligations), incurred at the time of, or within
(i) with respect to Capitalized Lease Obligations and Indebtedness permitted
under clause (e) (iii) of the definition of Permitted Indebtedness, 12 months
after or (ii) with respect to other purchase money financing, 20 days after, the
acquisition of any fixed assets for the purpose of financing all or any part of
the acquisition cost thereof.

“Purchase Price” means, with respect to any Acquisition, an amount equal to the
aggregate consideration, whether cash, property or securities (including the
fair market value of any Equity Interests of issued in connection with such
Acquisition and including the maximum amount of Earn-Outs), paid or delivered by
or one of its Subsidiaries in connection with such Acquisition (whether paid at
the closing thereof or payable thereafter and whether fixed or contingent), but
excluding therefrom (a) any cash of the seller and its Affiliates used to fund
any portion of such consideration and (b) any cash or Cash Equivalents acquired
in connection with such Acquisition.

“Qualified Cash” means, as of any date of determination, the amount of
unrestricted cash and Cash Equivalents of a Borrower and its Domestic
Subsidiaries that is in Deposit Accounts or in Securities Accounts, or any
combination thereof, and which such Deposit Account or Securities Account is the
subject of a Control Agreement and is maintained by a branch office of the bank
or securities intermediary located within the United States.

“Real Property” means any estates or interests in real property now owned or
hereafter acquired by a Borrower or its Subsidiaries and the improvements
thereto.

“Record” means information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable form.

 

Schedule 1.1 – Page 44

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“Refinancing Indebtedness” means refinancings, renewals, or extensions of
Indebtedness so long as:

(a) such refinancings, renewals, or extensions do not result in an increase in
the principal amount of the Indebtedness so refinanced, renewed, or extended,
other than by the amount of premiums paid thereon and the fees and expenses
incurred in connection therewith and by the amount of unfunded commitments with
respect thereto,

(b) such refinancings, renewals, or extensions do not result in a shortening of
the average weighted maturity (measured as of the refinancing, renewal, or
extension) of the Indebtedness so refinanced, renewed, or extended, nor are they
on terms or conditions that, taken as a whole, are or could reasonably be
expected to be materially adverse to the interests of the Lenders,

(c) if the Indebtedness that is refinanced, renewed, or extended was
subordinated in right of payment to the Obligations, then the terms and
conditions of the refinancing, renewal, or extension must include subordination
terms and conditions that are at least as favorable to the Lender Group as those
that were applicable to the refinanced, renewed, or extended Indebtedness, and

(d) the Indebtedness that is refinanced, renewed, or extended is not recourse to
any Person that is liable on account of the Obligations other than those Persons
which were obligated with respect to the Indebtedness that was refinanced,
renewed, or extended.

“Register” has the meaning set forth in Section 13.1(h) of the Agreement.

“Registered Loan” has the meaning set forth in Section 13.1(h) of the Agreement.

“Related Fund” means, with respect to any Lender that is an investment fund, any
other investment fund that invests in commercial loans and that is managed or
advised by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.

“Remedial Action” means all actions taken to (a) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate, or in any way address Hazardous
Materials in the indoor or outdoor environment, (b) prevent or minimize a
release or threatened release of Hazardous Materials so they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment, (c) restore or reclaim natural resources or the
environment, (d) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (e) conduct any other
actions with respect to Hazardous Materials required by Environmental Laws.

“Replacement Lender” has the meaning specified therefor in Section 2.13(b) of
the Agreement.

 

Schedule 1.1 – Page 45

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“Report” has the meaning specified therefor in Section 15.16 of the Agreement.

“Required Availability” means that the sum of (a) Excess Availability, plus
(b) Qualified Cash exceeds $25,000,000.

“Required Lenders” means, at any time, Lenders whose aggregate Pro Rata Shares
(calculated under clause (c) of the definition of Pro Rata Shares) exceed 50%;
provided, however, that at any time there are 2 or more Lenders, “Required
Lenders” must include at least 2 Lenders.

“Responsible Officer” means: (a) with respect to any Borrower in connection with
any request for Advances or Letter of Credit, any Compliance Certificate or any
other certificate or notice pertaining to any financial information required to
be delivery by such Borrower hereunder, the chief financial officer, treasurer
or controller of such Borrower; and (b) otherwise, with respect to any Borrower
or any other Loan Party, the chief executive officer, president, chief financial
officer, treasurer or controller of such Person.

“Restricted Payment” means, as to any Person: (a) any dividend or other
distribution by such Person (whether in cash, securities or other property) with
respect to any Equity Interests of such Person; (b) any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such Equity Interest; (c) any payment of
principal or interest or any purchase, redemption, retirement, acquisition or
defeasance with respect to any Indebtedness of such Person arising under the
Senior Unsecured Notes or which is otherwise subordinated to the payment of the
Obligations; (d) the acquisition for value by such Person of any Equity
Interests issued by such Person or any other Person that Controls such Person;
(e) payments with respect to Earn Outs arising with respect to Acquisitions
occurring after the Closing Date and (f) any other transaction that has a
similar effect as clauses (a) through (e) of this definition.

“Restricted Payments Permitted Amount” means an aggregate cumulative amount
equal to $25,000,000.

“Revolver Commitment” means the US Revolver Commitment or the Canadian Revolver
Commitment, as the context requires.

“Revolver Usage” means the US Revolver Usage and/or the Canadian Revolver Usage,
as the context requires.

“S&P” has the meaning specified therefor in the definition of Cash Equivalents.

“Sale-Leaseback” has the meaning specified therefor in Section 6.8.

“Sanctioned Entity” means (a) a country or a government of a country, (b) an
agency of the government of a country, (c) an organization directly or
indirectly controlled

 

Schedule 1.1 – Page 46

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by a country or its government, (d) a Person resident in or determined to be
resident in a country, in each case, that is subject to a country sanctions
program administered and enforced by OFAC.

“Sanctioned Person” means a person named on the list of Specially Designated
Nationals maintained by OFAC.

“SEC” means the United States Securities and Exchange Commission and any
successor thereto.

“Securities Account” means a securities account (as that term is defined in the
Code).

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and any successor statute.

“Security Agreement” means each security agreement (including the Guaranty and
Security Agreement), dated as of even date with the Agreement, in form and
substance reasonably satisfactory to the applicable Agent(s), executed and
delivered by a Borrower and Guarantors to Agent.

“Seller Subordinated Notes” means, collectively, the unsecured promissory notes
issued by any Loan Party to any seller in connection with a Permitted
Acquisition which are expressly subordinated and made junior to the payment and
performance in full of all the Obligations in accordance with a subordination
agreement substantially in the form of Exhibit D.

“Senior Unsecured Notes” means the senior unsecured promissory notes of the US
Borrower maturing in 2016.

“Settlement” has the meaning specified therefor in Section 2.3(e)(i) of the
Agreement.

“Settlement Date” has the meaning specified therefor in Section 2.3(e)(i) of the
Agreement.

“Solvent” means, with respect to any Person on a particular date, that, at fair
valuations, the sum of such Person’s assets is greater than all of such Person’s
debts.

“Subsidiary” of a Person means a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns or
controls the shares of Equity Interests having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.

“Swing Lender” means the US Swing Lender and/or the Canadian Swing Lender, as
the context requires.

 

Schedule 1.1 – Page 47

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“Swing Loan” means the US Swing Loans and/or the Canadian Swing Loans, as the
context requires.

“Synthetic Lease Obligation” means the monetary obligations of a Person under
either: (a) a so-called synthetic, off-balance sheet or tax retention lease; or
(b) an agreement for the use or possession of property creating obligations that
do not appear on the balance sheet of such Person but which, upon the insolvency
or bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).

“Tax Lender” has the meaning specified therefor in Section 14.2(a) of the
Agreement.

“Taxes” means any taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction or by
any political subdivision or taxing authority thereof or therein with respect to
such payments and all interest, penalties or similar liabilities with respect
thereto.

“Trademark Security Agreement” has the meaning specified therefor in the
Security Agreement.

“Triggering Event” shall mean the day on which Excess Availability is less than
$10,000,000.

“United States” means the United States of America.

“US Advances” has the meaning specified therefor in Section 2.1(a) of the
Agreement.

“US Agent” has the meaning specified in the preamble to the Agreement.

“US Agent’s Account” means the Deposit Account of US Agent identified on
Schedule A-1.

“US Bank Product Agreement” means a Bank Product Agreement entered into by US
Borrower or one of its Domestic Subsidiaries.

“US Bank Product Collateralization” means providing cash collateral (pursuant to
documentation reasonably satisfactory to US Agent) to be held by US Agent for
the benefit of the Bank Product Providers (other than the Hedge Providers) in an
amount determined by US Agent as sufficient to satisfy the reasonably estimated
credit exposure with respect to the then existing US Bank Product Obligations
(other than Hedge Obligations).

“US Bank Product Obligations” means (a) all obligations, liabilities,
reimbursement obligations, fees, or expenses owing by US Borrower or its
Subsidiaries (other than Canadian Borrowers and their Subsidiaries) to any Bank
Product Provider

 

Schedule 1.1 – Page 48

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pursuant to or evidenced by a Bank Product Agreement and irrespective of whether
for the payment of money, whether direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, (b) all Hedge
Obligations with respect to US Borrower and its Domestic Subsidiaries (other
than Canadian Borrowers and their Subsidiaries), and (c) all amounts that any
Agent or any Lender is obligated to pay to a Bank Product Provider as a result
of such Agent or such Lender purchasing participations from, or executing
guarantees or indemnities or reimbursement obligations to, a Bank Product
Provider with respect to the Bank Products provided by such Bank Product
Provider to US Borrower or its Subsidiaries (other than Canadian Borrowers and
their Subsidiaries).

“US Bank Product Provider” means the Bank Product Provider to the US Borrower
and its Domestic Subsidiaries.

“US Bank Product Reserve Amount” means, as of any date of determination, the US
Dollar amount of reserves that US Agent has determined it is necessary or
appropriate to establish (based upon the US Bank Product Providers’ reasonable
determination of their credit exposure to US Borrower and its Domestic
Subsidiaries (other than Canadian Borrowers and their Subsidiaries) in respect
of US Bank Product Obligations) in respect of Bank Products then provided or
outstanding.

“US Base Rate” means the greatest of (a) the Federal Funds Rate plus  1/2%,
(b) the LIBOR Rate (which rate shall be calculated based upon an Interest Period
of 3 months and shall be determined on a daily basis), plus 1 percentage point,
and (c) the rate of interest announced, from time to time, within Wells Fargo at
its principal office in San Francisco as its “prime rate”, with the
understanding that the “prime rate” is one of Wells Fargo’s base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publications as Wells Fargo may designate.

“US Base Rate Loan” means each portion of the US Advances that bears interest at
a rate determined by reference to the US Base Rate.

“US Borrowing” means a borrowing consisting of US Advances made on the same day
by the Lenders having US Revolver Commitments (or US Agent on behalf thereof),
or by US Swing Lender in the case of a US Swing Loan, or by US Agent in the case
of a US Protective Advance.

“US Borrowing Base” means, as of any date of determination prior to the
Borrowing Base Trigger Date, US Borrowing Base I, and as of any date of
determination on and after the Borrowing Base Trigger Date, US Borrowing Base
II.

“US Borrowing Base I” means, as of any date of determination, the result of:

(a) 75% of the amount of the Net Book Value of US Borrower’s and its Domestic
Subsidiaries’ Accounts, plus

 

Schedule 1.1 – Page 49

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(b) the lesser of

(i) $7,000,000, and

(ii) 50% of the Net Book Value of US Borrower’s and its Domestic Subsidiaries’
Inventory consisting of raw materials and finished goods, plus

(c) the lesser of

(i) $7,000,000, and

(ii) 25% of the Net Book Value of US Borrower’s and their Domestic Subsidiaries’
Equipment (other than any Equipment that is subject to a Lien); minus.

(d) a reserve in an amount equal to the US Bank Product Reserve Amount.

“US Borrowing Base II” means, as of any date of determination, the result of:

(a) 85% of the amount of US Borrower’s and its Domestic Subsidiaries’ Eligible
Accounts, plus

(b) the lesser of

(i) 85% of the amount of US Borrower’s and its Domestic Subsidiaries’ Eligible
Extended Accounts, and

(ii) $3,250,000, plus

(c) the lesser of

(i) $7,000,000, and

(ii) 85% times the most recently determined Net Liquidation Percentage times the
value (calculated at the lower of cost or market on a basis consistent with
Borrower’s historical accounting practices) of US Borrower’s and its Domestic
Subsidiaries Eligible Inventory; plus

(d) the lesser of

(i) $7,000,000, and

(ii) 85% times the most recently determined Net Liquidation Percentage of US
Borrower’s and its Domestic Subsidiaries Eligible Equipment; minus

 

Schedule 1.1 – Page 50

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(e) the Dilution Reserve with respect to US Borrower and its Domestic
Subsidiaries, the US Bank Product Reserve and the aggregate amount of such other
reserves, if any, established by US Agent under Section 2.1(c) of the Agreement.

“US Borrowing Base Certificate” means a certificate in the form of Exhibit B-3;
provided, that on and after the Borrowing Base Trigger Date, “Borrowing Base
Certificate” means a certificate in the form of Exhibit B-4.

“US Designated Account” means the Deposit Account of US Borrower identified on
Schedule D-1.

“US Dollars”, “$” or “US$” means United States dollars.

“US Funding Losses” has the meaning specified therefor in Section 2.12(b)(ii) of
the Agreement.

“US Issuing Lender” means Wells Fargo or any other US Lender that, at the
request of US Borrower and with the consent of US Agent, agrees, in such US
Lender’s sole discretion, to become a US Issuing Lender for the purpose of
issuing US Letters of Credit or US Reimbursement Undertakings pursuant to
Section 2.11 of the Agreement and the US Issuing Lender shall be a US Lender.

“US Lenders” means Lenders to the US Borrower.

“US Letter of Credit” means a letter of credit (as that term is defined in the
Code) issued by US Issuing Lender.

“US Letter of Credit Collateralization” means either (a) providing cash
collateral (pursuant to documentation reasonably satisfactory to US Agent,
including provisions that specify that the Letter of Credit fee and all usage
charges set forth in the Agreement will continue to accrue while the US Letters
of Credit are outstanding) to be held by US Agent for the benefit of those US
Lenders with a US Revolver Commitment in an amount equal to 103% of the then
existing US Letter of Credit Usage, (b) delivering to US Agent documentation
executed by all beneficiaries under the US Letters of Credit, in form and
substance reasonably satisfactory to US Agent and the US Issuing Lender,
terminating all of such beneficiaries’ rights under the US Letters of Credit, or
(c) providing US Agent with a standby letter of credit, in form and substance
reasonably satisfactory to US Agent, from a commercial bank acceptable to US
Agent (in its sole discretion) in an amount equal to 103% of the then existing
US Letter of Credit Usage (it being understood that the Letter of Credit fee and
all usage charges set forth in the Agreement will continue to accrue while the
US Letters of Credit are outstanding and that any such fees that accrue must be
an amount that can be drawn under any such standby letter of credit).

“US Letter of Credit Disbursement” means a payment made by US Issuing Lender
pursuant to a US Letter of Credit.

 

Schedule 1.1 – Page 51

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“US Letter of Credit Usage” means, as of any date of determination, the
aggregate undrawn amount of all outstanding US Letters of Credit.

“US LIBOR Rate” means the rate per annum rate appearing on Bloomberg L.P.’s (the
“Service”) Page BBAM1/(Official BBA USD Dollar Libor Fixings) (or on any
successor or substitute page of such Service, or any successor to or substitute
for such Service) 2 Business Days prior to the commencement of the requested
Interest Period, for a term and in an amount comparable to the Interest Period
and the amount of the LIBOR Rate Loan requested (whether as an initial LIBOR
Rate Loan or as a continuation of a LIBOR Rate Loan or as a conversion of a Base
Rate Loan to a LIBOR Rate Loan) in accordance with the Agreement, which
determination shall be conclusive in the absence of manifest error; provided,
that with respect to Daily LIBOR Rate Loans, the US LIBOR Rate shall, for each
day during the 1 day Interest Period applicable to each such Daily LIBOR Rate
Loan, be the rate described above on such date for LIBOR Rate Loans having a 1
month Interest Period.

“US Loan Account” has the meaning specified therefor in Section 2.9 of the
Agreement.

“US Overadvance” has the meaning specified therefor in Section 2.5 of the
Agreement.

“US Protective Advances” has the meaning specified therefor in Section 2.3(d)(i)
of the Agreement.

“US Revolver Commitment” means, with respect to each Lender, its US Revolver
Commitment, and, with respect to all Lenders, their US Revolver Commitments, in
each case as such US Dollar amounts are set forth beside such Lender’s name
under the applicable heading on Schedule C-1 or in the Assignment and Acceptance
pursuant to which such Lender became a Lender under the Agreement, as such
amounts may be reduced or increased from time to time pursuant to assignments
made in accordance with the provisions of Section 13.1 of the Agreement.

“US Revolver Usage” means, as of any date of determination, the sum of (a) the
amount of outstanding US Advances, plus (b) the amount of the US Letter of
Credit Usage.

“US Swing Lender” means Wells Fargo or any other Lender that, at the request of
US Borrower and with the consent of US Agent agrees, in such Lender’s sole
discretion, to become the US Swing Lender under Section 2.3(b) of the Agreement.

“US Swing Loan” has the meaning specified therefor in Section 2.3(b) of the
Agreement.

“Voidable Transfer” has the meaning specified therefor in Section 17.8 of the
Agreement.

 

Schedule 1.1 – Page 52

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“Wells Fargo” means Wells Fargo Bank, National Association, a national banking
association.

“Wells Fargo Canada” means Wells Fargo Capital Finance Corporation Canada.

 

Schedule 1.1 – Page 53

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Schedule 3.1

The obligation of each Lender to make its initial extension of credit provided
for in the Agreement is subject to the fulfillment, to the satisfaction of each
Lender (the making of such initial extension of credit by any Lender being
conclusively deemed to be its satisfaction or waiver of the following), of each
of the following conditions precedent:

(a) the Closing Date shall occur on or before January 27, 2012;

(b) Agents shall have received a letter duly executed by each Borrower and each
Guarantor authorizing Agents to file appropriate financing statements in such
office or offices as may be necessary or, in the opinion of Agents, desirable to
perfect the security interests to be created by the Loan Documents;

(c) Agents shall have received evidence that appropriate financing statements
have been duly filed in such office or offices as may be necessary or, in the
opinion of Agents, desirable to perfect each Agent’s Liens in and to the
Collateral, and Agents shall have received searches reflecting the filing of all
such financing statements;

(d) Agents shall have received each of the following documents, in form and
substance satisfactory to Agents, duly executed, and each such document shall be
in full force and effect:

(i) [Reserved]

(ii) [Reserved]

(iii) the Guaranty and Security Agreement,

(iv) [Reserved]

(v) the Fee Letter,

(vi) [Reserved],

(vii) the Intercompany Subordination Agreement, and

(viii) a letter, in form and substance satisfactory and Agent, from Wells Fargo
Bank (“Existing Lender”) to US Agent and to US Borrower respecting the amount
necessary to repay in full all of the obligations of US Borrower and its
Subsidiaries owing to Existing Lender and obtain a release of all of the Liens
existing in favor of Existing Lender in and to the assets of US Borrower and its
Subsidiaries, together with termination statements, return of stock certificates
and other documentation evidencing the termination by Existing Lender of its
Liens in and to the properties and assets of US Borrower and its Subsidiaries.

 

Schedule 3.1 – Page 1

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(e) Agents shall have received a certificate from the Secretary of each Borrower
(i) attesting to the resolutions of each Borrower’s Board of Directors
authorizing its execution, delivery, and performance of this Agreement and the
other Loan Documents to which each Borrower is a party, (ii) authorizing
specific officers of each Borrower to execute the same, and (iii) attesting to
the incumbency and signatures of such specific officers of each Borrower;

(f) Agents shall have received copies of each Borrower’s Governing Documents, as
amended, modified, or supplemented to the Closing Date, certified by the
Secretary of such Borrower;

(g) Agents shall have received a certificate of status with respect to each
Borrower, dated within 10 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of such
Borrower, which certificate shall indicate that such Borrower is in good
standing in such jurisdiction;

(h) Agents shall have received certificates of status with respect to each
Borrower, each dated within 30 days of the Closing Date, such certificates to be
issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of such Borrower) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Borrower is in good standing in such
jurisdictions;

(i) Agents shall have received a certificate from the Secretary of each
Guarantor (i) attesting to the resolutions of such Guarantor’s Board of
Directors authorizing its execution, delivery, and performance of the Loan
Documents to which such Guarantor is a party, (ii) authorizing specific officers
of such Guarantor to execute the same and (iii) attesting to the incumbency and
signatures of such specific officers of Guarantor;

(j) Agents shall have received copies of each Guarantor’s Governing Documents,
as amended, modified, or supplemented to the Closing Date, certified by the
Secretary of such Guarantor;

(k) Agents shall have received a certificate of status with respect to each
Guarantor, dated within 10 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of such
Guarantor, which certificate shall indicate that such Guarantor is in good
standing in such jurisdiction;

(l) Agents shall have received a certificate from CSC Corporation certifying
that such Guarantors are in good standing in all jurisdictions (other than the
jurisdiction of organization of such Guarantor) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change;

(m) Agents shall have received a certificate of insurance, together with the
endorsements thereto, as are required by Section 5.8, the form and substance of
which shall be satisfactory to Agents;

 

Schedule 3.1 – Page 2

--------------------------------------------------------------------------------

(n) Agents shall have received Collateral Access Agreements with respect to the
applicable Loan Party’s lease covering the leased premises at 1981 North
Broadway, Walnut Creek, California 94596;

(o) Agents shall have received an opinion of the applicable Loan Parties’
counsel from each of Pillsbury Winthrop Shaw Pittman LLP, Gowling Lafleur
Henderson LLP and Barnes and Thornburg LLP in form and substance satisfactory to
Agents;

(p) Borrowers shall have the Required Availability after giving effect to the
initial extensions of credit hereunder and the payment of all fees and expenses
required to be paid by Borrowers on the Closing Date under this Agreement or the
other Loan Documents;

(q) Agents shall have completed its business, legal, and collateral due
diligence, including a collateral audit and review of Borrowers’ and its
Subsidiaries books and records and verification of Borrowers’ representations
and warranties to Lender Group, the results of which shall be satisfactory to
Agents;

(r) Agents shall have completed (i) Patriot Act searches, OFAC/PEP searches for
each Borrower, and (ii) OFAC/PEP searches for each Borrower’s senior management
and key principals, and each Guarantor, the results of which shall be
satisfactory to Agents;

(s) Agents shall have received a set of Projections of Borrowers for the 5 year
period following the Closing Date (on a year by year basis, and for the 2 year
period following the Closing Date, on a quarter by quarter basis), in form and
substance (including as to scope and underlying assumptions) satisfactory to
Agents;

(t) Borrowers shall have paid all Lender Group Expenses incurred in connection
with the transactions evidenced by this Agreement and paid all other fees
payable on the Closing Date as set forth in the Loan Documents;

(u) Agents shall have received copies of each of the documents evidencing the
Senior Secured Notes, together with a certificate of the Secretary of
US Borrower certifying each such document as being a true, correct, and complete
copy thereof;

(v) Each Borrower and each of its Domestic Subsidiaries shall have received all
licenses, approvals or evidence of other actions required by any Governmental
Authority in connection with the execution and delivery by such Borrower or its
Domestic Subsidiaries of the Loan Documents or with the consummation of the
transactions contemplated thereby; and

(w) all other documents and legal matters in connection with the transactions
contemplated by this Agreement shall have been delivered, executed, or recorded
and shall be in form and substance satisfactory to Agents.

 

Schedule 3.1 – Page 3

--------------------------------------------------------------------------------

Schedule 3.6

 

  1. On or prior to the date that is 90 days after the Closing Date, Borrowers
shall provide Agents with evidence of the release of that certain tax lien filed
by the State of California Franchise Tax Board, recorded on November 7, 2007, as
Document No. 20072504563, with the Los Angeles County, California recorder’s
office.

 

  2. On or prior the date that is 90 days after Closing Date, Borrowers make
such filings with the U.S. Copyright Office and the U.S. Patent and Trademark
Office, or the analogous governmental office if such Trademark or Copyright is
not registered in the United States, which will result in such Borrower or
Guarantor, thereafter, being reflected in the records of such office as the
owner of the Trademarks or Copyrights, as applicable, listed on Exhibit A
hereto, and such Borrower or Guarantor shall promptly address any issues raised
by the U.S. Copyright Office or the U.S. Patent and Trademark Office to effect
such filings contemplated hereunder.

 

  3. On or prior to the date that is 90 days after the Closing Date, Borrowers
shall provide to Agents PPSA Acknowledgments executed by the secured party with
respect to the PPSA financing statements listed on Exhibit B hereto.

 

  4. On or prior to the date that is 180 days after the Closing Date, the Loan
Parties shall maintain all of their primary depository and treasury management
relationships with US Agent or one of its affiliates, provided that (i) such
depository and treasury management products are offered on commercially
competitive terms, and (ii) if US Agent or one of its affiliates does not offer
depository and treasury management services in a reasonable geographic proximity
to where a Loan Party requires such services, such Loan Party may use another
banking institution in such location.

 

  5. On or prior to the date that is 90 days after the Closing Date, Borrowers
shall provide to Agents a PPSA Acknowledgement executed by RCAP Leasing Inc., as
secured party, for the PPSA recorded as file number 673925625- 20111026 1704
8077 4093 acknowledging that the assets secured pursuant to such PPSA are
restricted to only certain leased equipment; provided, however, that unless such
PPSA Acknowledgment has been previously delivered, on the date that is the
earlier of (a) that date that such PPSA Acknowledgment has been delivered or
(b) the date that is 90 days after the Closing Date, such Lien shall no longer
be a Permitted Lien under the Credit Agreement and shall automatically be
removed from Schedule 6.2 (Permitted Liens) to the Credit Agreement.

 

  6. On or prior to the date that is 60 days after the Closing Date, Borrowers
shall (i) separate bank accounts and create new bank accounts, as necessary,
located in Canada such that no bank account has both depository and disbursement
capabilities, and (ii) provide to Agents Control Agreements for the bank
accounts of the Loan Parties at TD Canada Trust and Bank of Nova Scotia, each in
form and substance reasonably satisfactory to Agents and containing the
provisions described in the Guaranty and Security Agreement.

 

  7. On or prior to the date that is 30 days after the Closing Date, Borrowers
shall provide to Agents an lender loss payee endorsement issued by Borrowers’
Canadian insurance carrier to Canadian Borrowers’ property and casualty
insurance policy containing terms reasonably acceptable to Agent.

 

Schedule 3.6 – Page 1

--------------------------------------------------------------------------------

  8. On or prior to the date that is 60 days after the Closing Date, Borrowers
shall (i) separate bank accounts and create new bank accounts, as necessary,
located at US Agent or its affiliates such that no bank account has both
depository and disbursement capabilities, and (ii) provide to Agents Control
Agreements for the Loan Parties’ bank accounts at US Agent or its affiliates,
each in form and substance reasonably satisfactory to Agents and containing the
provisions described in the Guaranty and Security Agreement.

 

  9. On or prior to the date that is 30 days after the Closing Date, Borrowers
shall provide to Agents Control Agreements for the Loan Parties’ bank accounts
at JPMorgan Chase Bank, N.A. and Bank of America, N.A., each in form and
substance reasonably satisfactory to Agents and containing the provisions
described in the Guaranty and Security Agreement.

 

  10. On or prior to the date that is 30 days after the Closing Date, Borrowers
shall deliver to Agents a copy of the charter documents of each of Planwell, LLC
and ERS Digital, Inc., certified by the Secretary of State of the jurisdiction
of organization of such entity.

 

  11. On or prior to the date that is 15 days after the Closing Date, Borrowers
shall deliver to Agents copies of UCC-1 File Nos. 09-7213740255 and
09-7213815490, each filed by Oce Financial Services, Inc., as secured party,
against American Reprographics Southeast, L.L.C. with the Secretary of State of
the State of California on November 9, 2009.

With respect to the matters set forth in paragraphs 4, 6, 7, 8 and 9 above, to
the extent that the failure to have delivered such documents or taken such
actions on the Closing Date would constitute a breach of Borrowers’ obligations
under this Agreement, such failure to deliver shall not constitute an Event of
Default hereunder unless such matters are not completed within the respective
timeframes set forth above.

 

Schedule 3.6 – Page 2

--------------------------------------------------------------------------------

EXHIBIT A

Trademark Filings

 

MARK

   SERIAL
NUMBER    REGIS.
NUMBER    REGIS.
DATE   

CURRENT REGISTERED OWNER

R Reprographics Northwest Inc

   75494092    2330987    03/21/00    Reprographics Northwest, LLC

Color It Plus

   77312950    3581391    02/24/09    Ridgways, LTD

Color It Plus

   77198777    3502614    09/16/08    Ridgways, LTD

It Plus Equipment Services

   77144516    3528276    11/04/08    Ridgways, LTD

It Plus Advanced Technologies

   77144513    3644071    06/23/09    Ridgways, LTD

It Plus Network

   77144489    3505966    09/23/08    Ridgways, LTD

It Plus Equipment Services

   77143818    3528275    11/04/08    Ridgways, LTD

It Plus Advanced Technologies

   77143797    3648076    06/30/09    Ridgways, LTD

It Plus Network

   77143783    3505965    09/23/08    Ridgways, LTD

Ridgway’s

   72106641    0722848    10/17/61    Ridgways, LTD

BPS

   75410499    2390739    10/03/00    Blue Print Service Company, Inc.

R

   73806461    1632527    01/22/91    Franklin Graphics Corporation

DAD

   76422614    2768932    09/30/03    Western Blue Print Co. LLC

Digital Blackline

   75300631    2225124    02/23/99    Western Blue Print Co. LLC

US Reprographics

   76422615    2824474    03/23/04    Western Blue Print Co. LLC

World Planroom

   07/24/03    3059947    02/21/06    Western Blue Print Co. LLC

Think Beyond the Ink

   78868025    3211191    10/01/05    Western Blue Print Co. LLC

Westernblue

   78867934    3211190    02/20/07    Western Blue Print Co. LLC

National Graphic Imaging

   76566967    2984598    08/16/05    Bay Reprographics, Inc.

NGI

   76422144    3043132    01/17/06    Bay Reprographics, Inc.

NGI

   76421923    3056745    02/07/06    Bay Reprographics, Inc.

NGI National Graphic Imaging

   76421924    3067026    03/14/06    Bay Reprographics, Inc.

Mix Imaging

   78696311    3313835    10/16/07    T-Square Express, Inc.

Copyright Filings

 

COPYRIGHT TITLE

   REGISTRATION
NUMBER    DATE   

CURRENT OWNER

Horowitzer AEC software    TX0004945114    02/23/99    Engineering Repro
Systems, Inc. General street map, Montgomery, Alabama/prepared by Frank H.
Temple, cartographer, in cooperation with Blueprint Service Company, Inc.   
VA0000001342    03/30/78    Blueprint Service Company, Inc. General street map,
Montgomery, Alabama/prepared by Frank H. Temple, cartographer, in cooperation
with Blueprint Service Company, Inc.    VA0000096748    03/29/82    Blueprint
Service Company, Inc.

 

Schedule 3.6 – Page 3

--------------------------------------------------------------------------------

EXHIBIT B

BRITISH COLUMBIA

 

Secured
Party(ies)

    

Debtor(s)

    

Registration Number
(Registration Period)

    

General Collateral Description

1.

   Xerox Canada Ltd      ARC Digital Canada Corp.     

Regn No.: 413411F

Regn Date: Feb 17, 2010

Expiry Date: Feb 17, 2014

    

General Collateral:

 

Equipment, Other

All present and future office equipment and software supplied or financed from
time to time by the secured party (whether by lease, conditional sale or
otherwise), whether or not manufactured by the secured party or any affiliate
thereof.

2.

   Xerox Canada Ltd      ARC Digital Canada Corp.     

Regn No.: 256759E

Regn Date: March 24, 2008

Expiry Date: March 24, 2013

    

General Collateral:

 

Equipment, Other

All present and future office equipment and software supplied or financed from
time to time by the secured party (whether by lease, conditional sale or
otherwise), whether or not manufactured by the secured party or any affiliate
thereof.

3.

   Xerox Canada Ltd      ARC Digital Canada Corp.     

Regn No.: 240877E

Regn Date: March 13, 2008

Expiry Date: March 13, 2012

    

General Collateral:

 

Equipment, Other

All present and future office equipment and software supplied or financed from
time to time by the secured party (whether by lease, conditional sale or
otherwise), whether or not manufactured by the secured party or any affiliate
thereof.

4.

   Xerox Canada Ltd     

ARC Digital Canada Corp.

 

American Reprographic Co (sic)

    

Regn No.: 566657D

Regn Date: March 21, 2007

Expiry Date: March 21, 2013

    

General Collateral:

 

Equipment, Other

All present and future office equipment and software supplied or financed from
time to time by the secured party (whether by lease, conditional sale or
otherwise), whether or not manufactured by the secured party or any affiliate
thereof.

5.

   Xerox Canada Ltd      ARC Digital Canada Corp. (two addresses listed)     

Regn No.: 526206D

Regn Date: Feb 27, 2007

Expiry Date: Feb 27, 2013

    

General Collateral:

 

Equipment, Other

All present and future office equipment and software supplied or financed from
time to time by the secured party (whether by lease, conditional sale or
otherwise), whether or not manufactured by the secured party or any affiliate
thereof.

 

Schedule 3.6 – Page 4

--------------------------------------------------------------------------------

Secured
Party(ies)

    

Debtor(s)

    

Registration Number
(Registration Period)

    

General Collateral Description

6.    Xerox Canada Ltd     

HOK Canada Inc.

 

ARC Digital Canada Corporation (sic)

    

Regn No.: 914560F

Regn Date: Dec 16, 2010

Expiry Date: Dec 16, 2013

    

General Collateral:

 

Equipment, Other

All present and future office equipment and software supplied or financed from
time to time by the secured party (whether by lease, conditional sale or
otherwise), whether or not manufactured by the secured party or any affiliate
thereof.

7.    Xerox Canada Ltd     

ARC Digital

 

Canada Corp.

Aecom Canada Ltd.

    

Regn No.: 237503G

Regn Date: July 7, 2011

Expiry Date: July 7, 2014

    

General Collateral:

 

Equipment, Other

All present and future office equipment and software supplied or financed from
time to time by the secured party (whether by lease, conditional sale or
otherwise), whether or not manufactured by the secured party or any affiliate
thereof.

8.    Xerox Canada Ltd.     

Arcprint and Imaging Ltd. (two addresses listed)

 

Argo-ICC Reprographics Ltd.

    

Regn No.: 609580E

Regn Date: Sept 25, 2008

Expiry Date: Sept 25, 2014

    

General Collateral:

 

Equipment, Other

All present and future office equipment and software supplied or financed from
time to time by the secured party (whether by lease, conditional sale or
otherwise), whether or not manufactured by the secured party or any affiliate
thereof.

ONTARIO

 

Secured
Party(ies)

    

Debtor(s)

    

Reference File No. &
Registration Number
(Registration Period)

    

Collateral
Classification

    

General Collateral Description

1.

   Xerox Canada Ltd.      ARC Digital Canada (sic)      674043768- 20111101 1403
1462 5865 (3 years)      Equipment, Other     

2.

   Xerox Canada Ltd      ARC Digital Canada Corp      673426314- 20111004 1701
1462 8826 (3 years)      Equipment, Other     

3.

   Xerox Canada Ltd      ARC Digital Canada Corp      673426332- 20111004 1701
1462 8828 (3 years)      Equipment, Other     

4.

   Xerox Canada Ltd     

ARC Digital Canada

Aecom

     673386723- 20111003 1704 1462 8466 (3 years)      Equipment, Other     

5.

   Xerox Canada Ltd      ARC Digital Canada Corp      673386732- 20111003 1704
1462 8467 (3 years)      Equipment, Other     

6.

   Xerox Canada Ltd      ARC Digital Canada Corp      673386741- 20111003 1704
1462 8468 (3 years)      Equipment, Other     

 

Schedule 3.6 – Page 5

--------------------------------------------------------------------------------

Secured
Party(ies)

    

Debtor(s)

    

Reference File No. &
Registration Number
(Registration Period)

    

Collateral
Classification

    

General Collateral Description

7.

   Xerox Canada Ltd      ARC Digital Canada Corp      672625098- 20110901 1002
1462 0695 (3 years)      Equipment, Other     

8.

   Xerox Canada Ltd      ARC Digital Canada Corp      671891634- 20110802 1702
1462 4166 (3 years)      Equipment, Other     

9.

   Xerox Canada Ltd      ARC Digital Canada Corp      671891643- 20110802 1702
1462 4167 (3 years)      Equipment, Other     

10.

   Xerox Canada Ltd      ARC Digital Canada Corp      671349627- 20110711 1404
1462 8976 (3 years)      Equipment, Other     

11.

   Xerox Canada Ltd      ARC Digital Canada Corp      671349636- 20110711 1404
1462 8977 (3 years)      Equipment, Other     

12.

   Xerox Canada Ltd      ARC Digital Canada Corp      671349645- 20110711 1404
1462 8978 (3 years)      Equipment, Other     

13.

   Xerox Canada Ltd      ARC Digital Canada Corp      671075379- 20110629 1404
1462 6570 (3 years)      Equipment, Other     

14.

   Xerox Canada Ltd      ARC Digital Canada Corp      669357441- 20110426 1701
1462 8629 (3 years)      Equipment, Other     

15.

   Xerox Canada Ltd      ARC Digital Canada Corp      668764935- 20110401 1701
1462 2676 (3 years)      Equipment, Other     

16.

   Xerox Canada Ltd      ARC Digital Canada Corp      668273292- 20110314 1704
1462 7410 (3 years0      Equipment, Other     

17.

   Xerox Canada Ltd      ARC Digital Canada Corp      666730107- 20101222 1412
1462 9028 (3 years)      Equipment, Other     

18.

   Xerox Canada Ltd     

ARC Digital Canada Corporation (sic)

 

HOK Canada Inc.

 

(two addresses listed for each debtor)

     666599805- 20101216 1002 1462 7326 (3 years)      Equipment, Other     

19.

   Xerox Canada Ltd     

ARC Digital Canada Corporation

 

Argo-ICC Reprographics Ltd.

     666410427- 20101207 1402 1462 5309 (3 years)      Equipment, Other     

 

Schedule 3.6 – Page 6

--------------------------------------------------------------------------------

Secured
Party(ies)

    

Debtor(s)

    

Reference File No. &
Registration Number
(Registration Period)

    

Collateral
Classification

    

General Collateral Description

20.

   Xerox Canada Ltd      ARC Digital Canada Corp.      659468466- 20100225 1412
1462 7063 (5 years)      Equipment, Other     

21.

   Xerox Canada Ltd      ARC Digital Canada Corp.      639596619- 20071003 1005
1462 5407 (5 years)      Equipment, Other     

22.

   Xerox Canada Ltd      ARC Digital Canada Corp.      636034491- 20070606 1006
1462 8174 (6 years)      Equipment, Other     

23.

   Xerox Canada Ltd.     

Argo-ICC Reprographics Ltd.

 

Arcprint and Imaging Ltd. (two addresses listed)

     648768654- 20080924 1701 1462 1098 (6 years)      Equipment, Other     

24.

   Xerox Canada Ltd.      Argo-ICC Reprographics Ltd.      666310734- 20101202
1403 1462 4247 (3 years)      Equipment, Other     

25.

   Xerox Canada Ltd.      Argo ICC Reprographics Ltd.      657347796- 20091103
1402 1462 0885 (3 years)      Equipment, Other     

26.

   Roynat Inc.      ARC Digital Canada Corp      673743654- 20111019 1301 1902
5975 (5 years)      Equipment, Other      Scanner(s), commercial printing
equipment(s) together with all attachments accessories accessions replacements
substitutions additions and improvements thereto and all proceeds in any form
derived directly or indirectly from any sale and or dealings with the collateral
and a right to an insurance payment or other payment that indemnifies or
compensates for loss or damage to the collateral or proceeds of the collateral.

 

Schedule 3.6 – Page 7

--------------------------------------------------------------------------------

Secured
Party(ies)

    

Debtor(s)

    

Reference File No. &
Registration Number
(Registration Period)

    

Collateral
Classification

    

General Collateral Description

27.

   Roynat Inc.      Argo-ICC Reprographics Ltd.      659561193- 20100302 1848
1901 2207 (6 years)      Equipment, Other      Printer(s), scanner(s), Plotwave
300(s) together with all attachments accessories accessions replacements
substitutions additions and improvements thereto and all proceeds in any form
derived directly or indirectly from any sale and or dealings with the collateral
and a right to an insurance payment or other payment that indemnifies or
compensates for loss or damage to the collateral or proceeds of the collateral

28.

   Konica Minolta Business Solutions (Canada) Ltd      ARC Digital Canada Corp.
     668406348- 20110321 1158 1616 2731 (5 years)      Equipment, Other     
Photocopiers

29.

   Hewlett-Packard Financial Services Canada Company      ARC Digital Canada
Corp.      666705591- 20101221 1440 8077 0361 (25 years)      Equipment, Other
     Master Lease. Any and all equipment, tangible and intangible, leased
pursuant to schedules under Master Lease Agreement No. 2986727001 and any
proceeds therefrom.

30.

   Hewlett-Packard Financial Services Canada Company      ARC Digital Canada
Corp.      666212004- 20101129 1437 8077 8553 (5 years)      Equipment, Other
     Business Lease Agreement. Any and all equipment, tangible and intangible,
pursuant to Business Lease Agreement No. 80124, and amendments thereto, and all
amounts owing thereunder.

31.

   GE VFS Canada Limited Partnership      Argo-ICC Reprographics Ltd.     
669461976- 20110429 1255 5064 0077 (4 years)      Equipment, Other     
8679160001

32.

   Document Direction      Argo – ICC Reprographics Ltd.      667426482-
20110131 1944 1531 1671 (4 years)      Equipment, Other     

 

Schedule 3.6 – Page 8

--------------------------------------------------------------------------------

Secured
Party(ies)

    

Debtor(s)

    

Reference File No. &
Registration Number
(Registration Period)

    

Collateral
Classification

    

General Collateral Description

33.

   Document Direction      Argo - ICC Reprographics Ltd.      665843778-
20101112 1452 1530 9373 (5 years)      Equipment, Other     

34.

   Ricoh Canada Inc.      Argo - ICC Reprographics Ltd.      665352612- 20101022
1453 1530 1872 (5 years)      Equipment, Other     

35.

   De Lage Landen Financial Services Canada Inc.      Argo-ICC Reprographics
Ltd.      658999521- 20100129 1453 1530 8371 (3 years)      Equipment, Other
    

36.

   De Lage Landen Financial Services Canada Inc.      Argo-ICC Reprographics
Ltd.      654897906- 20090714 1941 1531 3528 (5 years)      Equipment, Other
    

37.

  

Relational Funding Canada Corp.

 

The Bank of Nova Scotia (listed twice)

     Argo-ICC Reprographics Ltd.      649769499- 20081106 1142 1862 2982
(5 years)      Equipment, Other      All equipment pursuant to Equipment
Schedule 001 thereto under Master Lease Agreement dated November 5, 2008 and all
amounts owing thereunder.

38.

   CIT Financial Ltd.      Argo-ICC Reprographics Ltd.      649313541- 20081016
1640 1616 2638 (4 years)      Equipment, Other      Photocopiers

39.

   National City Commercial Capital Corporation     

Argo-ICC Reprographics Ltd

 

The Print In Limited

     636175431- 20070608 1646 1616 7715 (5 years)      Equipment, Other     

Printing equipment complete with all attachments and accessories included

Large format printer complete with all attachments and accessories included

 

Schedule 3.6 – Page 9

--------------------------------------------------------------------------------

ALBERTA

 

Secured
Party(ies)

    

Debtor(s)

    

Registration Number
(Registration Period)

    

General Collateral Description

1.

   Xerox Canada Ltd.      ARC Digital Canada Corp.     

Regn No.: 08062308937

Regn Date: June 23, 2008

Expiry Date: June 23, 2013

    

General Collateral:

 

Equipment, Other

All present and future office equipment and software supplied or financed from
time to time by the secured party (whether by lease, conditional sale or
otherwise), whether or not manufactured by the secured party or any affiliate
thereof.

2.

   Xerox Canada Ltd.      ARC Digital Canada Corp. (two addresses listed)     

Regn No.: 10111705059

Regn Date: Nov 17, 2010

Expiry Date: Nov 17, 2013

    

General Collateral:

 

Equipment, Other

All present and future office equipment and software supplied or financed from
time to time by the secured party (whether by lease, conditional sale or
otherwise), whether or not manufactured by the secured party or any affiliate
thereof.

3.

   Xerox Canada Ltd.     

HOK Canada Inc.

 

ARC Digital Canada Corporation

 

(two addresses listed for each debtor)

    

Regn No.: 10121603941

Regn Date: Dec 16, 2010

Expiry Date: Dec 16, 2013

    

General Collateral:

 

Equipment, Other

All present and future office equipment and software supplied or financed from
time to time by the secured party (whether by lease, conditional sale or
otherwise), whether or not manufactured by the secured party or any affiliate
thereof.

4.

   Xerox Canada Ltd.      ARC Digital Canada Corp.     

Regn No.: 10122204520

Regn Date: Dec 22, 2010

Expiry Date: Dec 22, 2015

    

General Collateral:

 

Equipment, Other

All present and future office equipment and software supplied or financed from
time to time by the secured party (whether by lease, conditional sale or
otherwise), whether or not manufactured by the secured party or any affiliate
thereof.

5.

   Xerox Canada Ltd.     

Arcprint and Imaging Ltd. (two addresses listed)

 

Argo-ICC Reprographics Ltd.

    

Regn No.: 08092512596

Regn Date: Sept 25, 2008

Expiry Date: Sept 25, 2014

    

General Collateral:

 

Equipment, Other

All present and future office equipment and software supplied or financed from
time to time by the secured party (whether by lease, conditional sale or
otherwise), whether or not manufactured by the secured party or any affiliate
thereof.

 

Schedule 3.6 – Page 10

--------------------------------------------------------------------------------

Schedule 5.2

Provide Agents (and if so requested by Agents, with copies for each Lender) with
each of the documents set forth below at the following times in form
satisfactory to Agents:

 

  A. Prior to a Borrowing Base Trigger Date:

 

Monthly (no later than the 30th day of each month) except for a month ending at
the end of a fiscal quarter, in which case, no later than 45 days after the end
of such month    (a) a Borrowing Base Certificate Quarterly (no later than 45
days following the end of each fiscal quarter)    (b) an unencumbered Equipment
report

 

  B. Following a Borrowing Base Trigger Date:

 

Schedule 5.2 – Page 1

--------------------------------------------------------------------------------

Monthly (no later than the 10th Business Day of each month)   

(a) a Borrowing Base Certificate,

 

(b) a detailed aging, by total, of each Borrower’s and its Domestic
Subsidiaries’ Accounts, together with a reconciliation and supporting
documentation for any reconciling items noted (delivered electronically in an
acceptable format, if Borrowers have implemented electronic reporting),

 

(c) a detailed calculation of those Accounts that are not eligible for the
Borrowing Base, if Borrowers have not implemented electronic reporting,

 

(d) a detailed Inventory system/perpetual report, together with a reconciliation
to such Borrower’s general ledger accounts (delivered electronically in an
acceptable format, if Borrowers have implemented electronic reporting),

 

(e) a detailed calculation of Inventory categories that are not eligible for the
Borrowing Base, if Borrowers have not implemented electronic reporting,

 

(f) a summary aging, by vendor, of each Borrower’s and its Domestic
Subsidiaries’ accounts payable and any book overdraft (delivered electronically
in an acceptable format, if Borrowers have implemented electronic reporting) and
an aging, by vendor, of any held checks,

 

(g) a detailed report regarding each Borrower’s and its Domestic Subsidiaries’
cash and Cash Equivalents, including an indication of which amounts constitute
Qualified Cash, and

 

(h) a monthly Account roll-forward, in a format acceptable to Agent in its
discretion, tied to the beginning and ending account receivable balances of each
Borrower’s and its Domestic Subsidiaries’ general ledger.

 

(i) an unencumbered Equipment report.

Monthly (no later than the 30th day of each month)    (j) a reconciliation of
Accounts, trade accounts payable, and Inventory of each Borrower’s and its
Domestic Subsidiaries’ general ledger accounts to its monthly financial
statements including any book reserves related to each category. Quarterly   
(k) a report regarding each Borrower’s and its Domestic Subsidiaries’ accrued,
but unpaid, ad valorem taxes. Annually    (l) a detailed list of each Borrower’s
and its Domestic Subsidiaries’ customers, with address and contact information.

 

Schedule 5.2 – Page 2

--------------------------------------------------------------------------------

Upon request by Agent   

(m) copies of purchase orders and invoices for Inventory and Equipment acquired
by a Borrower or its Domestic Subsidiaries, and

 

(n) such other reports as to the Collateral or the financial condition of each
Borrower and its Domestic Subsidiaries, as an Agent may reasonably request.

 

(o) notice of all claims, offsets, or disputes asserted by Account Debtors with
respect to each Borrower’s and its Domestic Subsidiaries’ Accounts,

 

(p) copies of invoices together with corresponding shipping and delivery
documents, and credit memos together with corresponding supporting
documentation, with respect to invoices and credit memos in excess of an amount
determined in the sole discretion of an Agent, from time to time.

 

Schedule 5.2 – Page 3

--------------------------------------------------------------------------------

Schedule C-1

Commitments

 

Lender

   Revolver
Commitment      Total
Commitment  

Wells Fargo Bank, National Association

   $ 50,000,000       $ 50,000,000   

Wells Fargo Capital Finance Corporation Canada

   $ 5,000,000       $ 5,000,000   

All Lenders

   $ 50,000,000       $ 50,000,000   

--------------------------------------------------------------------------------

EXHIBIT A-1

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

This ASSIGNMENT AND ACCEPTANCE AGREEMENT (“Assignment Agreement”) is entered
into as of                                  between
                                 (“Assignor”) and
                                 (“Assignee”). Reference is made to the
Agreement described in Annex I hereto (the “Credit Agreement”). Capitalized
terms used herein and not otherwise defined shall have the meanings ascribed to
them in the Credit Agreement.

1. In accordance with the terms and conditions of Section 13 of the Credit
Agreement, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, that interest in and to
the Assignor’s rights and obligations under the Loan Documents as of the date
hereof with respect to the Obligations owing to the Assignor, and Assignor’s
portion of the Commitments, all to the extent specified on Annex I.

2. The Assignor (a) represents and warrants that (i) it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim and (ii) it has full power and
authority, and has taken all action necessary, to execute and deliver this
Assignment Agreement and to consummate the transactions contemplated hereby;
(b) makes no representation or warranty and assumes no responsibility with
respect to (i) any statements, representations or warranties made in or in
connection with the Loan Documents, or (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Documents or any
other instrument or document furnished pursuant thereto; (c) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Borrower or any Guarantor or the performance or
observance by any Borrower or any Guarantor of any of their respective
obligations under the Loan Documents or any other instrument or document
furnished pursuant thereto, and (d) represents and warrants that the amount set
forth as the Purchase Price on Annex I represents the amount owed by Borrowers
to Assignor with respect to Assignor’s share of the Term Loan[s] and the
Advances assigned hereunder, as reflected on Assignor’s books and records.

3. The Assignee (a) confirms that it has received copies of the Credit Agreement
and the other Loan Documents, together with copies of the financial statements
referred to therein and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment Agreement; (b) agrees that it will, independently and without
reliance upon any Agent, Assignor, or any other Lender, based upon such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking any action under the Loan
Documents; (c) confirms that it is an Eligible Transferee; (d) appoints and
authorizes the each Agent to take such action as such Agent on its behalf and to
exercise such powers under the Loan Documents as are delegated to such Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto; (e) agrees that it will perform in accordance with their terms all of
the obligations which by the terms of the Loan Documents are required to be
performed by it as a

--------------------------------------------------------------------------------

Lender; and (f) attaches the forms prescribed by the Internal Revenue Service of
the United States certifying as to the Assignee’s status for purposes of
determining exemption from United States withholding taxes with respect to all
payments to be made to the Assignee under the Credit Agreement, or such forms
released by the Canada Revenue Agency for the Assignee to declare its
eligibility for benefits under an applicable tax treaty with respect to such
payments, or such other documents as are necessary to indicate that all such
payments are subject to such rates at a rate reduced by an applicable tax
treaty.

4. Following the execution of this Assignment Agreement by the Assignor and
Assignee, the Assignor will deliver this Assignment Agreement to the Agents for
recording by the Agents. The effective date of this Assignment (the “Settlement
Date”) shall be the latest to occur of (a) the date of the execution and
delivery hereof by the Assignor and the Assignee, (b) the receipt by US Agent
for its sole and separate account a processing fee in the amount of $5,000 (if
required by the Credit Agreement), (c) the receipt of any required consent of
the Agents, and (d) the date specified in Annex I.

5. As of the Settlement Date (a) the Assignee shall be a party to the Credit
Agreement and, to the extent of the interest assigned pursuant to this
Assignment Agreement, have the rights and obligations of a Lender thereunder and
under the other Loan Documents, and (b) the Assignor shall, to the extent of the
interest assigned pursuant to this Assignment Agreement, relinquish its rights
and be released from its obligations under the Credit Agreement and the other
Loan Documents, provided, however, that nothing contained herein shall release
any assigning Lender from obligations that survive the termination of this
Agreement, including such assigning Lender’s obligations under Article 15 and
Section 17.9(a) of the Credit Agreement.

6. Upon the Settlement Date, Assignee shall pay to Assignor the Purchase Price
(as set forth in Annex I). From and after the Settlement Date, Agents shall make
all payments that are due and payable to the holder of the interest assigned
hereunder (including payments of principal, interest, fees and other amounts) to
Assignor for amounts which have accrued up to but excluding the Settlement Date
and to Assignee for amounts which have accrued from and after the Settlement
Date. On the Settlement Date, Assignor shall pay to Assignee an amount equal to
the portion of any interest, fee, or any other charge that was paid to Assignor
prior to the Settlement Date on account of the interest assigned hereunder and
that are due and payable to Assignee with respect thereto, to the extent that
such interest, fee or other charge relates to the period of time from and after
the Settlement Date.

7. This Assignment Agreement may be executed in counterparts and by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all of which shall together constitute one and the
same instrument. This Assignment Agreement may be executed and delivered by
telecopier or other facsimile transmission all with the same force and effect as
if the same were a fully executed and delivered original manual counterpart.

8. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.

 

-2-

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement and
Annex I hereto to be executed by their respective officers, as of the first date
written above.

 

[NAME OF ASSIGNOR]

as Assignor

By  

 

  Name:   Title:

[NAME OF ASSIGNEE]

as Assignee

By  

 

  Name:   Title:

 

-3-

--------------------------------------------------------------------------------

ACCEPTED THIS      DAY OF              WELLS FARGO BANK, NATIONAL ASSOCIATION,
as US Agent BY:  

 

TITLE:   Authorized Signatory ACCEPTED THIS      DAY OF              WELLS FARGO
CAPITAL FINANCE CORPORATION CANADA, as Canadian Agent BY:  

 

TITLE:   Authorized Signatory

 

-4-

--------------------------------------------------------------------------------

ANNEX FOR ASSIGNMENT AND ACCEPTANCE

ANNEX I

 

1.    Borrowers: AMERICAN REPROGRAPHICS COMPANY, a Delaware corporation (“US
Borrower”), ARC REPROGRAPHICS CANADA CORP., a British Columbia corporation (“ARC
Canada”) and ARC DIGITAL CANADA CORP., a British Columbia corporation (“ARC
Digital Canada”) 2.    Name and Date of Credit Agreement:       Credit
Agreement, dated as of January 27, 2012, by and among US Borrower, ARC Canada,
ARC Digital Canada, the lenders from time to time a party thereto (the
“Lenders”), Wells Fargo Bank, National Association, as the administrative agent
for the US Lenders, and Wells Fargo Capital Finance Corporation Canada, an
Ontario corporation, as administrative agent for the Canadian Lenders 3.    Date
of Assignment Agreement:                  

 

4.    Amounts:          (a)    Assigned Amount of Revolver Commitment    $      
        

 

   (b)    Assigned Amount of Advances    $               

 

5.    Settlement Date:                  

 

6.    Purchase Price    $               

 

7.    Notice and Payment Instructions, etc.      

 

     Assignee:     Assignor:        

 

   

 

       

 

   

 

       

 

   

 

  

 

Annex 1 – Page 1

--------------------------------------------------------------------------------

8. Agreed and Accepted:

 

[ASSIGNOR]      [ASSIGNEE] By:  

 

     By:  

 

Title:  

 

     Title:  

 

 

ACCEPTED THIS      DAY OF              WELLS FARGO BANK, NATIONAL ASSOCIATION,
as US Agent BY:  

 

TITLE:   Authorized Signatory ACCEPTED THIS      DAY OF              WELLS FARGO
CAPITAL FINANCE CORPORATION CANADA, as Canadian Agent BY:  

 

TITLE:   Authorized Signatory

 

Annex 1 – Page 2

--------------------------------------------------------------------------------

AMERICAN REPROGRAPHICS COMPANY,

a Delaware corporation

By:  

 

Title:  

 

ARC REPROGRAPHICS CANADA CORP.,

a British Columbia corporation

By:  

 

Title:  

 

ARC DIGITAL CANADA CORP.,

a British Columbia corporation

By:  

 

Title:  

 

 

Annex 1 – Page 3

--------------------------------------------------------------------------------

LOGO [g295061ex10_1pg189logo.jpg]

American Reprographics Company

Borrowing Base Certificate

 

As of:          xx/xx/xxxx              

($000’s)

         U.S.     Canada     Total  

Accounts Receivables: Gross

     $ —        $ —        $ —     

Less:

        

G/L #105 - Unbilled AR (Corporate)

     $ —        $ —        $ —     

G/L #105 - Unapplied Cash - National Accounts

     $ —        $ —        $ —     

G/L #113 - Allowance for Doubtful Accts - US and Canada

     $ —        $ —        $ —     

G/L #115 - Allowance for Customer Discounts/Potential Credits (Corporate)

     $ —        $ —        $ —     

G/L #115 - Allowance for Customer Discounts (US and Canada)

     $ —        $ —        $ —          

 

 

   

 

 

   

 

 

 

NBV of Accounts Receivables

     $ 0      $ 0      $ 0   

Advance Rate

       75 %      75 %      75 %      

 

 

   

 

 

   

 

 

 

Net Available A/R

     (A )    $ 0      $ 0      $ 0   

Line Limit

     (B )    $ 50,000      $ 5,000      $ 50,000        

 

 

   

 

 

   

 

 

 

Available A/R for Borrowing Base (Lesser of (A) or (B)

     $ 0      $ 0      $ 0        

 

 

   

 

 

   

 

 

 

Inventory: Gross

     $ —        $ —        $ —     

Less: Reserves

        

G/L #123 Slow Moving

     $ 0      $ 0      $ —          

 

 

   

 

 

   

 

 

 

NBV of Inventory

     $ —        $ —        $ —     

Advance Rate

       50 %      50 %      50 %      

 

 

   

 

 

   

 

 

 

Net Available Inventory

     (C )    $ 0      $ 0      $ 0   

Line Limit

     (D )    $ 7,000      $ 500      $ 7,500        

 

 

   

 

 

   

 

 

 

Available INV for Borrowing Base (Lesser of (C) or (D)

     $ 0      $ 0      $ 0        

 

 

   

 

 

   

 

 

 

NBV of Unencumbered M&E per M&E Report as of: 10/31/2011

     $ —        $ —        $ —     

Advance Rate

       25 %      25 %      25 %      

 

 

   

 

 

   

 

 

 

Net Available M&E

     (E )    $ 0      $ 0      $ 0   

Line Limit

     (F )    $ 7,000      $ 500      $ 7,500        

 

 

   

 

 

   

 

 

 

Available M&E for Borrowing Base (Lesser of (E) or (F)

     $ 0      $ 0      $ 0        

 

 

   

 

 

   

 

 

 

Facility Line Limit

     $ 50,000      $ 5,000      $ 50,000   

Total Available A/R, INV, M&E

     $ 0      $ 0      $ 0        

 

 

   

 

 

   

 

 

 

AVAILABLE FOR BORROWING BASE

     $ 0      $ 0      $ 0        

 

 

   

 

 

   

 

 

 

USES:

        

Revolver

     $ —        $ —        $ —     

L/C’s

     $ —        $ —        $ —          

 

 

   

 

 

   

 

 

 

TOTAL USES

     $ 0      $ 0      $ 0        

 

 

   

 

 

   

 

 

 

NET AVAILABILITY

         $ 0        

 

 

   

 

 

   

 

 

 

The undersigned,                                  (“Borrower”), pursuant to that
certain Credit Agreement dated as of January     , 2012 (as amended, restated,
modified, supplemented, refinanced, renewed, or extended from time to time, the
“Credit Agreement”), entered into among American Reprographics Company (“US
Borrower”), ARC REPROGRAPHICS CANADA CORP. (“ARC Canada”), ARC DIGITAL CANADA
CORP. (“ARC Digital”, and together with ARC Canada, the “Canadian Borrowers”),
the lenders signatory thereto from time to time, Wells Fargo Bank, National
Association, as administrative agent for the US Lenders (in such capacity,
together with its successors and assigns, if any, in such capacity, “US Agent”),
and Wells Fargo Capital Finance Corporation Canada, as administrative agent for
the Canadian Lenders (“Canadian Agent”, and together with US Agent, the
“Agents”), hereby certifies to Agents that the following items, calculated in
accordance with the terms and definitions set forth in the Credit Agreement for
such items are true and correct, and that Borrower is in compliance with and,
after giving effect to any currently requested Advances, will be in compliance
with, the terms, conditions, and provisions of the Credit Agreement.
Additionally, the undersigned hereby certifies and represents and warrants to
the Lender Group on behalf of Borrower that (i) as of the date hereof, each
representation or warranty contained in or pursuant to any Loan Document, any
agreement, instrument, certificate, document or other writing furnished at any
time under or in connection with any Loan Document, and as of the effective date
of any advance, continuation or conversion requested above is true and correct
in all material respects (except to the extent any representation or warranty
relate solely to an earlier date, in which case such representations and
warranties shall be true and correct in all material respects as of such date
(except that such materiality qualifier shall not be applicable to any
representations and warranties that are already qualified or modified by
materiality in the text thereof)), (ii) each of the covenants and agreements
contained in any Loan Document have been performed (to the extent required to be
performed on or before the date hereof or each such effective date), (iii) no
Default or Event of Default has occurred and is continuing on the date hereof,
nor will any thereof occur after giving effect to the request above, and (iv)
all of the foregoing is true and correct as of the effective date of the
calculations set forth above and that such calculations have been made in
accordance with the requirements of the Credit Agreement.

 

American Reprographics Company       ARC Reprographics Canada Corp.       ARC
Digital Canada Corp.    As U.S. Borrower       As Canadian Borrower       As
Canadian Borrower    By:   

 

      By:   

 

      By:   

 

   Title:   

 

      Title:   

 

      Title:   

 

   Date:   

 

      Date:   

 

      Date:   

 

  

--------------------------------------------------------------------------------

LOGO [g295061ex10_1pg190.jpg]    Certificate No.                         Report
Date                     

American Reprographics Company

Borrowing Base Report

- Submitted to Wells Fargo Capital Finance, as Collateral Agent

 

  

U.S. ACCOUNTS RECEIVABLE

                   

BALANCE PER AGINGS

   as of      xx/xx/xxxx            0.00           

Less: Unapplied Cash

                   

Less: Ineligible Accounts Receivable

              0.00           

ELIGIBLE ACCOUNTS RECEIVABLE

              0.00           

Times: Accounts Receivable Advance Rate: 85%

           85 %         

ACCOUNTS RECEIVABLE AVAILABILITY

              0.00           

Dilution Reserve (Amount > 5%)

              0.00           

Other Reserve

              0.00           

Other Reserve

              0.00           

Other Reserve

              0.00                       

 

 

      

1.

  

Total AR Availability

              0.00           

U.S. AR AVAILABILITY:

   THE LESSER OF       $ 50,000,000.00         OR      Line 1      0.00      

CANADIAN ACCOUNTS RECEIVABLE

                   

BALANCE PER AGINGS

   as of      xx/xx/xxxx            0.00           

Less: Unapplied Cash

                   

Less: Ineligible Accounts Receivable

              0.00           

ELIGIBLE ACCOUNTS RECEIVABLE

              0.00           

Times: Accounts Receivable Advance Rate: 85%

           85 %         

ACCOUNTS RECEIVABLE AVAILABILITY

              0.00           

Dilution Reserve (Amount > 5%)

              0.00           

Other Reserve

              0.00           

Other Reserve

              0.00           

Other Reserve

              0.00                       

 

 

      

2.

  

Total AR Availability

              0.00           

A.R. AVAILABILITY:

   THE LESSER OF       $ 5,000,000.00         OR      Line 2      0.00      

U.S. INVENTORY

                   

Total Inventory

   as of      xx/xx/xxxx            0.00                       

 

 

         

Less: Ineligible Inventory

              0.00           

ELIGIBLE INVENTORY:

              0.00           

INVENTORY AVAILABILITY (X% Advance)

              #VALUE!           

Other Reserve

              0.00           

Other Reserve

              0.00                       

 

 

      

3.

  

Total Available Inventory

              #VALUE!           

U.S. INVENTORY AVAILABILITY:

   THE LESSER OF       $ 7,000,000.00         OR      Line 3      #VALUE!      

CANADIAN INVENTORY

                   

Total Inventory

   as of      xx/xx/xxxx            0.00                       

 

 

         

Less: Ineligible Inventory

              0.00           

ELIGIBLE INVENTORY:

              0.00           

INVENTORY AVAILABILITY (X% Advance)

              #VALUE!           

Other Reserve

              0.00           

Other Reserve

              0.00                       

 

 

      

4.

  

Total Available Inventory

              #VALUE!           

CANADIAN INVENTORY AVAILABILITY:

   THE LESSER OF       $ 500,000.00         OR      Line 4      #VALUE!      

U.S. M&E

                   

Total M&E

   as of      xx/xx/xxxx            0.00                       

 

 

         

Less: Ineligible M&E

              0.00           

ELIGIBLE M&E:

              0.00           

M&E AVAILABILITY (X% Advance)

              #VALUE!           

Other Reserve

              0.00           

Other Reserve

              0.00                       

 

 

      

5.

  

Total Available M&E

              #VALUE!           

U.S. M&E AVAILABILITY:

   THE LESSER OF       $ 7,000,000.00         OR      Line 5      #VALUE!      

CANADIAN M&E

                   

Total M&E

   as of      xx/xx/xxxx            0.00                       

 

 

         

Less: Ineligible M&E

              0.00           

ELIGIBLE M&E:

              0.00           

M&E AVAILABILITY (X% Advance)

              #VALUE!           

Other Reserve

              0.00           

Other Reserve

              0.00                       

 

 

      

6.

  

Total Available M&E

              #VALUE!           

CANADIAN M&E AVAILABILITY:

   THE LESSER OF       $ 500,000.00         OR      Line 6      #VALUE!      

AVAILABILITY: THE LESSER OF MAX. LOAN

        50,000,000         OR SUM OF LINES 1 through 6      #VALUE!      

AVAILABILITY

                   

Calculated Borrowing Base Availability

                   #VALUE!      

Less: Ending Loan Balance

                   

Less: Outstanding L/C Balance

                                    

 

 

    

Net Excess Availability

                   #VALUE!                       

 

 

 

The undersigned,                                  (“Borrower”), pursuant to that
certain Credit Agreement dated as of January     , 2012 (as amended, restated,
modified, supplemented, refinanced, renewed, or extended from time to time, the
“Credit Agreement”), entered into among American Reprographics Company (“US
Borrower”), ARC REPROGRAPHICS CANADA CORP. (“ARC Canada”), ARC DIGITAL CANADA
CORP. (“ARC Digital”, and together with ARC Canada, the “Canadian Borrowers”),
the lenders signatory thereto from time to time, Wells Fargo Bank, National
Association, as administrative agent for the US Lenders (in such capacity,
together with its successors and assigns, if any, in such capacity, “US Agent”),
and Wells Fargo Capital Finance Corporation Canada, as administrative agent for
the Canadian Lenders (“Canadian Agent”, and together with US Agent, the
“Agents”), hereby certifies to Agents that the following items, calculated in
accordance with the terms and definitions set forth in the Credit Agreement for
such items are true and correct, and that Borrower is in compliance with and,
after giving effect to any currently requested Advances, will be in compliance
with, the terms, conditions, and provisions of the Credit
Agreement. Additionally, the undersigned hereby certifies and represents and
warrants to the Lender Group on behalf of Borrower that (i) as of the date
hereof, each representation or warranty contained in or pursuant to any Loan
Document, any agreement, instrument, certificate, document or other writing
furnished at any time under or in connection with any Loan Document, and as of
the effective date of any advance, continuation or conversion requested above is
true and correct in all material respects (except to the extent any
representation or warranty relate solely to an earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such date (except that such materiality qualifier shall not be
applicable to any representations and warranties that are already qualified or
modified by materiality in the text thereof)), (ii) each of the covenants and
agreements contained in any Loan Document have been performed (to the extent
required to be performed on or before the date hereof or each such effective
date), (iii) no Default or Event of Default has occurred and is continuing on
the date hereof, nor will any thereof occur after giving effect to the request
above, and (iv) all of the foregoing is true and correct as of the effective
date of the calculations set forth above and that such calculations have been
made in accordance with the requirements of the Credit Agreement.

 

American Reprographics Company       ARC Reprographics Canada Corp.       ARC
Digital Canada Corp.    As U.S. Borrower       As Canadian Borrower       As
Canadian Borrower    By:   

 

      By:   

 

      By:   

 

   Title:   

 

      Title:   

 

      Title:   

 

   Date:   

 

      Date:   

 

      Date:   

 

  

--------------------------------------------------------------------------------

AR Borrowing Base

 

American Reprographics Company

   Report #       Date Prepared    xx/xx/xxxx

 

         As of [DATE]       Loan #                             U.S.     Canada  
  Total  

Gross A/R Aging

       0.00        0.00        0.00   

Less Ineligibles:

       0.00        0.00     

Delinquent A/R

       0.00        0.00        0.00   

Credits in Prior

       0.00        0.00        0.00   

50% Cross-Age

       0.00        0.00        0.00   

Foreign

       0.00        0.00        0.00   

Government

       0.00        0.00        0.00   

COD

       0.00        0.00        0.00   

Employee Sales

       0.00        0.00        0.00   

Non-Trade Sales

       0.00        0.00        0.00   

Short Pays

       0.00        0.00        0.00   

Contras

       0.00        0.00        0.00   

Bankruptcy/Doubtful Customer

       0.00        0.00        0.00   

Concentration excess

       0.00        0.00        0.00   

Other

       0.00        0.00        0.00   

Other

       0.00        0.00        0.00   

Other

       0.00        0.00        0.00        

 

 

   

 

 

   

 

 

 

Total Ineligibles

       0.00        0.00        0.00   

Eligible A/R

       0.00        0.00        0.00   

Advance Rate

       85 %      85 %      85 %      

 

 

   

 

 

   

 

 

 

Available A/R

     $ —        $ —          0.00   

Less: Dilution Reserve

     $ —        $ —          0.00   

Less: Other

     $ —        $ —          0.00   

Less: Other

     $ —        $ —          0.00   

Subtotal Available

     $ —        $ —          0.00   

Line Sublimits

     $ 50,000,000      $ 5,000,000          

 

 

   

 

 

   

 

 

 

Revolver - Available A/R

     $ —        $ —          0.00            

 

 

 

The undersigned represents and warrants that the foregoing information is true,
complete and correct, and that the collateral and reserves reflected comply with
the terms, conditions, covenants & representations as set forth in the Credit
Agreement.

 

Authorized Signature:  

 

--------------------------------------------------------------------------------

Inventory Borrowing Base

American Reprographics Company

xx/xx/xxxx

 

          As of [DATE]        Loan #                                U.S.     
Canada      Total  

Gross Inventory

        0.00         0.00         0.00   

Less Ineligibles:

           

No bill of lading / title document

        0.00         0.00         0.00   

Returns / rejected goods

        0.00         0.00         0.00   

Slow Moving / Obsolete

        0.00         0.00         0.00   

Spare Parts

        0.00         0.00         0.00   

WIP

        0.00         0.00         0.00   

Packaging

        0.00         0.00         0.00   

Outside processor

        0.00         0.00         0.00   

Subject to Trademark / License

        0.00         0.00         0.00   

Acquired, but no appraisal / exam

        0.00         0.00         0.00   

Other

        0.00         0.00         0.00         

 

 

    

 

 

    

 

 

 

Total Ineligibles

        0.00         0.00         0.00   

Eligible Inventory

        0.00         0.00         0.00   

Appraised NOLV

        TBD         TBD      

85% of NOLV

       
0.00
  
    
0.00
  
        

 

 

    

 

 

    

 

 

          0.00        
0.00
  
    
0.00
  

Less: Reserves

        0.00         0.00         0.00   

Less: Reserves

        0.00         0.00         0.00         

 

 

    

 

 

    

 

 

 

Subtotal Availability

       
0.00
  
    
0.00
  
    
0.00
  

Line Sublimit

      $ 7,000,000       $ 500,000      

REVOLVER AVAILABLE INV.

       
0.00
  
     0.00        
0.00
  

The undersigned represents and warrants that the foregoing information is true,
complete & correct, and the collateral and reserves reflected comply with the
terms, conditions, covenants & representations as set forth in the Credit
Agreement.

 

Authorized Signature:

 

 

--------------------------------------------------------------------------------

M&E Borrowing Base

American Reprographics Company

xx/xx/xxxx

 

          As of [DATE]        Loan #                                U.S.     
Canada      Total  

Gross Inventory

        0.00         0.00         0.00   

Less Ineligibles:

        0.00         0.00         0.00   

Damaged / Defective

        0.00         0.00         0.00   

No valid title

        0.00         0.00         0.00   

Fixtures

        0.00         0.00         0.00   

Obsolete

        0.00         0.00         0.00   

Acquired, but no appraisal / exam

        0.00         0.00         0.00   

Other

        0.00         0.00         0.00         

 

 

    

 

 

    

 

 

 

Total Ineligibles

        0.00         0.00         0.00   

Eligible Inventory

        0.00         0.00         0.00   

Appraised NOLV

        TBD         TBD      

85% of NOLV

        0.00         0.00            

 

 

    

 

 

    

 

 

          0.00         0.00         0.00   

Less: Reserves

        0.00         0.00         0.00   

Less: Reserves

        0.00         0.00         0.00         

 

 

    

 

 

    

 

 

 

Subtotal Availability

        0.00         0.00         0.00   

Line Sublimit

      $ 7,000,000       $ 500,000      

REVOLVER AVAILABLE INV.

        0.00         0.00         0.00   

The undersigned represents and warrants that the foregoing information is true,
complete & correct, and the collateral and reserves reflected comply with the
terms, conditions, covenants & representations as set forth in the Credit
Agreement.

 

Authorized Signature:

 

 

--------------------------------------------------------------------------------

EXHIBIT C-1

FORM OF COMPLIANCE CERTIFICATE

[on Borrowers’ letterhead]

 

To: Wells Fargo Bank, National Association

2450 Colorado Avenue, Suite 3000W

Santa Monica, California 90404

Attn: Business Finance Division Manager

 

  Re: Compliance Certificate dated                     

Ladies and Gentlemen:

Reference is made to that certain CREDIT AGREEMENT (the “Credit Agreement”)
dated as of January 27, 2012, by and among the lenders identified on the
signature pages thereof (such lenders, together with their respective successors
and permitted assigns, are referred to hereinafter each individually as a
“Lender” and collectively as the “Lenders”), WELLS FARGO BANK, NATIONAL
ASSOCIATION, a national banking association, as the administrative agent for the
US Lenders (“US Agent”), WELLS FARGO CAPITAL FINANCE CORPORATION CANADA, an
Ontario corporation, as the administrative agent for the Canadian Lenders
(“Canadian Agent”), AMERICAN REPROGRAPHICS COMPANY, a Delaware corporation (“US
Borrower”), ARC REPROGRAPHICS CANADA CORP., a British Columbia corporation (“ARC
Canada”) and ARC DIGITAL CANADA CORP., a British Columbia corporation (“ARC
Digital Canada”); and together with ARC Canada, “Canadian Borrowers”), US
Borrower and Canadian Borrowers are collectively referred to as “Borrowers”).
Capitalized terms used in this Compliance Certificate have the meanings set
forth in the Credit Agreement unless specifically defined herein.

Pursuant to Schedule 5.1 of the Credit Agreement, the undersigned officer of
each Borrower hereby certifies that:

1. The financial information of each Borrower and its Subsidiaries furnished in
Schedule 1 attached hereto, has been prepared in accordance with GAAP (except
for (i) year-end adjustments and the lack of footnotes, and (ii) consolidating
financial statements, for the lack of any presentation of changes in cash flows
and stockholders equity), and fairly presents in all material respects the
financial condition of each Borrower and its Subsidiaries.

2. Such officer has reviewed the terms of the Credit Agreement and has made, or
caused to be made under his/her supervision, a review in reasonable detail of
the transactions and condition of each Borrower and its Subsidiaries during the
accounting period covered by the financial statements delivered pursuant to
Section 5.1 of the Credit Agreement.

3. Such review has not disclosed the existence on and as of the date hereof, and
the undersigned does not have knowledge of the existence as of the date hereof,
of any event

--------------------------------------------------------------------------------

or condition that constitutes a Default or Event of Default, except for such
conditions or events listed on Schedule 2 attached hereto, specifying the nature
and period of existence thereof and what action such Borrower and its
Subsidiaries have taken, are taking, or propose to take with respect thereto.

4. The representations and warranties of each Borrower set forth in the Credit
Agreement and the other Loan Documents are true and correct in all material
respects (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) on and as of the date hereof (except to the
extent that such representations and warranties relate solely to an earlier date
in which case such representations and warranties shall be true and correct in
all material respects as of such date (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 on and as of such
earlier date)), except as set forth on Schedule 3 attached hereto.

5. [Each Borrower is in compliance with the applicable covenants contained in
Section 7 of the Credit Agreement as demonstrated on Schedule 4 hereof.]1

5. [Schedule 4 hereof represents the calculation of the financial covenants
contained in Section 7 of the Credit Agreement; provided that failure to satisfy
the covenants set forth in Section 7 of the Credit Agreement shall not
constitute an Event of Default.]2

 

1 

To be used during a Covenant Enforcement Period.

2  To be used on a quarterly basis if no Covenant Enforcement Period is then
continuing.

 

-2-

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, this Compliance Certificate is executed by the undersigned
this      day of             ,     .

 

AMERICAN REPROGRAPHICS COMPANY,

a Delaware corporation

By:  

 

Title:  

 

 

ARC REPROGRAPHICS CANADA CORP.,

a British Columbia corporation

By:  

 

Title:  

 

 

ARC DIGITAL CANADA CORP.,

a British Columbia corporation

By:  

 

Title:  

 

 

-3-

--------------------------------------------------------------------------------

SCHEDULE 1

Financial Information

--------------------------------------------------------------------------------

SCHEDULE 2

Default or Event of Default

--------------------------------------------------------------------------------

SCHEDULE 3

Representations and Warranties

--------------------------------------------------------------------------------

SCHEDULE 4

Financial Covenants

 

1. Fixed Charge Coverage Ratio.

The Fixed Charge Coverage Ratio, measured on a month-end basis, for the 12-month
period ending             ,              is     :1.0, which [is/is not] greater
than or equal to the amount set forth in Section 7 of the Credit Agreement for
the corresponding period.

--------------------------------------------------------------------------------

EXHIBIT D

SELLER SUBORDINATION AGREEMENT

This Seller Subordination Agreement (this “Agreement”), dated as of [        
    , 20    ] is entered into by and between [Name of Entity], a [jurisdiction]
[type of entity] (the “Company”), [Name of Entity], a California limited
liability company (“Seller”), and [Name of Entity], a [jurisdiction] [type of
entity], and [Name of Entity], a [jurisdiction] [type of entity], collectively
constituting all of the [members or shareholders] of Seller (collectively,
“Seller Members”1), for the benefit of the Senior Lenders (as defined herein).

WHEREAS, the Company, Seller and Seller Members have entered into that certain
Asset Purchase Agreement dated as of [                 , 20    ] (“Asset
Purchase Agreement”), whereby the Company agrees to pay to the Seller at the
Closing and thereafter, in the aggregate, an amount up to [                    ]
Dollars ($[        ]) for substantially all of the assets of Seller used in
connection with Seller’s business by delivery to Seller of: (A) cash in the
amount of [                    ] Dollars ($[        ]), payable to Seller by
wire transfer or delivery of other immediately available funds (the “Cash
Payment”) at the Closing, and (B) a subordinated promissory note from the
Company, as Maker (the “Subordinated Note”), in the principal amount of
[                    ] Dollars ($        ), all as subject to adjustment as set
forth in the Asset Purchase Agreement; and

WHEREAS, Seller has agreed to subordinate the Subordinated Obligations (as
defined below) to the Senior Indebtedness (as defined below) on the terms and
subject to the conditions hereof;

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Seller agree as follows;

1. Definitions. As used herein, the following terms shall have the following
meanings:

“Holdings” American Reprographics Company, a Delaware corporation.

“Paid in Full,” “Payment in Full,” “paid in full” or “payment in full” shall
mean, as of any date of determination with respect to the Senior Indebtedness,
that: (a) all of such Senior Indebtedness (other than (i) contingent
indemnification obligations not yet due and payable or with respect to which a
claim has not been asserted, (ii) obligations not yet due and payable with
respect to letters of credit issued pursuant to the Senior Debt Documents (it
being understood that such obligations include interest, fees, charges, costs
and expenses that accrue subsequent to such date of determination in respect of
undrawn or drawn letters of credit) and (iii) Bank Product Obligations (as
defined in the Senior Credit Agreement) not yet due and payable) has been paid
in full in cash, (b) no Person has any further right to obtain any loans,
letters of credit or other extensions of credit under the Senior Debt Documents,
(c) any and all

 

1 

If Seller is a corporation, this should be changed to “Seller Shareholders”.

--------------------------------------------------------------------------------

letters of credit issued under the Senior Debt Documents have been cancelled and
returned (or backed by standby letters of credit (issued by a bank, and in form
and substance, acceptable to US Agent or Canadian Agent, as applicable) or cash
collateralized, in each case in an amount equal to 105% of the face amount of
such letters of credit in accordance with the terms of such documents), (d) any
and all Bank Product Obligations have been cancelled (or backed by standby
letters of credit (issued by a bank, and in form and substance, acceptable to US
Agent or Canadian Agent, as applicable) or cash collateralized, in each case in
an amount reasonably determined by such Agent as sufficient to satisfy the
estimated credit exposure with respect to the Bank Product Obligations), and
(e) any costs, expenses and contingent indemnification obligations which are not
yet due and payable but with respect to which a claim has been or may reasonably
be expected to be asserted by US Agent, Canadian Agent or a Senior Lender, are
backed by standby letters of credit (issued by a bank, and in form and
substance, acceptable to US Agent or Canadian Agent, as applicable) or cash
collateralized, in each case in an amount reasonably estimated by US Agent or
Canadian Agent, as applicable, to be the amount of costs, expenses and
contingent indemnification obligations that may become due and payable.

“Person” means an individual, a partnership, a corporation, an association, a
limited liability company, a joint stock company, a trust, a joint venture, an
unincorporated organization or a governmental entity or any department, agency
or political subdivision thereof.

“Senior Agent” shall mean collectively Wells Fargo Bank, National Association,
as U.S. Agent and Wells Fargo Capital Finance Corporation Canada, as the
Canadian Agent, for the Lenders under the Senior Credit Agreement, and their
respective successors in such capacity, or if there is then no acting
administrative agent under the Senior Credit Agreement, financial institutions
or other Persons holding a majority in principal amount of the outstanding
Senior Indebtedness under the Senior Credit Agreement.

“Senior Credit Agreement” shall mean the Credit Agreement dated January     ,
2012, by and among Holdings, the Canadian Borrowers (as defined therein), the
financial institutions and other Persons listed therein as lenders, Wells Fargo
Bank, National Association, as U.S. Agent and Wells Fargo Capital Finance
Corporation Canada, as the Canadian Agent, as amended, restated, modified or
supplemented from time to time, together with any credit agreement or similar
document from time to time executed by Holdings and/or any of their respective
subsidiaries to evidence any Refinancing (as defined in the definition of Senior
Indebtedness) or successive Refinancings.

“Senior Debt Documents” shall mean the Senior Credit Agreement and all other
documents and instruments evidencing, governing, guarantying, creating or
securing any Senior Indebtedness under the Senior Credit Agreement (including,
without limitation, the guaranty agreements executed and delivered by Holdings
and certain subsidiaries of the Company in respect of the Obligations under and
as defined in the Senior Credit Agreement) and under any other Senior
Indebtedness.

“Senior Indebtedness” shall mean (i) all Obligations (as defined in the Senior
Credit Agreement) now or hereafter incurred pursuant to and in accordance with
the Senior Debt Documents relating to the Senior Credit Agreement, including any
principal, prepayment charges, interest (including, without limitation, interest
accruing after the filing of a petition

 

2

--------------------------------------------------------------------------------

initiating any proceeding under the Bankruptcy Code, whether or not allowed as a
claim in such proceeding), fees, Bank Product Obligations (as defined in the
Senior Credit Agreement) indemnities and reimbursement of fees, expenses and
other amounts, and (ii) any indebtedness and other obligations incurred for the
purpose of refinancing, restructuring, extending or renewing (collectively,
“Refinancing”) the obligations of the Company under the Senior Credit Agreement
as set forth in clause (i) above.

“Senior Lenders” shall mean the financial institutions and/or other Persons
party to, or holders of any Indebtedness outstanding under, the Senior Credit
Agreement as “Lenders” from time to time.

Capitalized terms not otherwise defined herein shall have the meanings given in
the Asset Purchase Agreement.

2. Subordination.

(a) Agreement to Subordinate. The Company and Seller (each for itself and each
future holder of Subordinated Obligations) hereby agree that the indebtedness of
the Company and any of its subsidiaries and affiliates evidenced by the Asset
Purchase Agreement and the Subordinated Note and all rights or claims arising
out of or associated with such indebtedness (the “Subordinated Obligations”),
shall be junior and subordinate in right of payment to the prior Payment in Full
of all Senior Indebtedness, in accordance with the provisions of this Section 2;
provided, however, that except as provided in Sections 2(b) and 2(c) below, the
Company may pay and Seller may receive and retain scheduled payments which are
currently due under the Subordinated Obligations. Each holder of Senior
Indebtedness shall be deemed to have acquired Senior Indebtedness in reliance
upon the agreements of the Company and the Seller contained in this Section 2.
The provisions of this Section 2 shall be reinstated if at any time any payment
of any of the Senior Indebtedness is rescinded or must otherwise be returned by
any holder of Senior Indebtedness or any representative of such Seller upon the
insolvency, bankruptcy or reorganization of the Company or any affiliate of the
Company. In no event shall the Seller commence any action or proceeding to
contest the provisions of this Section 2 or the priority of the Liens (as
defined in the Senior Credit Agreement) granted to the holders of the Senior
Indebtedness by the Company. Seller shall not take, accept or receive any
collateral security from the Company for the payment of the Subordinated
Obligations.

(b) Liquidation, Dissolution, Bankruptcy. In the event of any insolvency,
bankruptcy, dissolution, winding up, liquidation, arrangement, reorganization,
marshalling of assets or liabilities, composition, assignment for the benefit of
creditors or other similar proceedings relating to the Company, its debts, its
property or its operations, whether voluntary or involuntary, including, without
limitation the filing of any petition or the taking of any action to commence
any of the foregoing (which, in the case of action by a third party, is not
dismissed within 60 days) (a “Bankruptcy Event”), all Senior Indebtedness shall
first be Paid in Full before Seller shall be entitled to receive or retain any
payment or distribution of assets of the Company with respect to any
Subordinated Obligations. In the event of any such Bankruptcy Event, any payment
or distribution of assets to which Seller would be entitled if the Subordinated
Obligations were not subordinated to the Senior Indebtedness in accordance with
this Section 2, whether in cash, property, securities or otherwise, shall be
paid or delivered by the debtor,

 

3

--------------------------------------------------------------------------------

custodian, trustee or agent or other Person making such payment or distribution,
or by Seller if received by it, directly to the Senior Agent on behalf of the
holders of the Senior Indebtedness (subject to any intercreditor agreement or
arrangement among such holders) for application to the payment of the Senior
Indebtedness remaining unpaid, to the extent necessary to make Payment in Full
of all Senior Indebtedness remaining unpaid, after giving effect to any
concurrent payment or distribution to or for the holders of the Senior
Indebtedness.

(c) No Payments with Respect to Subordinated Obligations in Certain
Circumstances.

(i) In circumstances in which Section 2(b) is not applicable, no payment of any
nature (including, without limitation, any distribution of assets) in respect of
the Subordinated Obligations (including, without limitation, pursuant to any
judgment with respect thereto or on account of the purchase or redemption or
other acquisition of Subordinated Obligations, by set off, prepayment exchange
or other manner) shall be made by or on behalf of the Company if, at the time of
such payment, (x) the Company shall have received notice from the Senior Agent
of the occurrence of one or more “Events of Default” (as defined in the Senior
Credit Agreement) in respect of the Senior Indebtedness and (y) any such Event
of Default shall not have been cured or waived in accordance with the terms of
the Senior Debt Documents.

The Company may resume payments (and may make any payments missed due to the
application of Section 2(c)(i)) in respect of the Subordinated Obligations or
any judgment with respect thereto upon a cure or waiver thereof in accordance
with the terms of the Senior Debt Documents.

(ii) Following any acceleration of the maturity of any Senior Indebtedness and
as long as such acceleration shall continue unrescinded and unannulled, such
Senior Indebtedness shall first be Paid in Full before any payment is made on
account of or applied on the Subordinated Obligations.

(iii) The Company shall give prompt written notice to Seller of (i) any Event of
Default in respect of Senior Obligations.

(d) When Distribution Must Be Paid Over. In the event that Seller shall receive
any payment or distribution of assets that it is not entitled to receive or
retain under the provisions of this Agreement in respect of the Subordinated
Obligations, Seller shall hold any amount so received in trust for the holders
of Senior Indebtedness, shall segregate such assets from other assets held by
Seller and shall forthwith turn over such payment or distribution (without
liability for interest thereon) to the Senior Agent on behalf of the holders of
Senior Indebtedness (subject to any intercreditor agreement or arrangement among
such holders) in the form received (with any necessary endorsement) to be
applied to Senior Indebtedness.

(e) Exercise of Remedies. So long as any Senior Indebtedness is outstanding
(including any loans, any letters of credit, any commitments to lend or any
lender guarantees), Seller shall not exercise any rights or remedies in respect
of the Subordinated Obligations, including, without limitation, any action
(1) to demand or sue for collection of amounts payable under any Purchase
Document in respect of the Subordinated Obligations or (2) to commence or

 

4

--------------------------------------------------------------------------------

join with any other creditor (other than the holder of a majority in principal
amount of the Senior Indebtedness) in commencing any proceeding in connection
with or premised on the occurrence of a Bankruptcy Event prior to the earliest
of:

(A) the Payment in Full in cash or other immediately available funds of all
Senior Indebtedness;

(B) the initiation of a proceeding (other than a proceeding prohibited by clause
(2) of this Section 2(e)) in connection with or premised upon the occurrence of
a Bankruptcy Event; and

(C) the acceleration of the maturity of all of the Senior Indebtedness;

provided, however, that if, with respect to (B) and (C) above, such proceeding
or acceleration, respectively, is rescinded, the prohibition against taking the
actions described in this Section 2(e) shall automatically be reinstated as of
the date of the rescission, cure or waiver, as applicable.

(f) Amending Senior Indebtedness. Any holder of Senior Indebtedness may, at any
time and from time to time, without the consent of or notice to Seller
(i) modify or amend the terms of the Senior Indebtedness, (ii) sell, exchange,
release, fail to perfect a lien on or a security interest in or otherwise in any
manner deal with or apply any property pledged or mortgaged to secure, or
otherwise securing, Senior Indebtedness, (iii) release any guarantor or any
other person liable in any manner for the Senior Indebtedness, (iv) exercise or
refrain from exercising any rights against the Company or any other person,
(v) apply any sums by whomever paid or however realized to Senior Indebtedness
or (vi) take any other action that might be deemed to impair in any way the
rights of Seller. Any and all of such actions may be taken by the holders of
Senior Indebtedness without incurring responsibility to Seller and without
impairing or releasing the obligations of Seller to the holders of Senior
Indebtedness.

(g) Certain Rights in Bankruptcy. In order to enable each holder of Senior
Indebtedness to enforce their rights hereunder in any bankruptcy, insolvency or
similar proceeding, Seller hereby irrevocably authorizes and empowers the Senior
Agent (and its representative or representatives) to demand, sue for, collect
and receive all payments and distributions in respect of the Subordinated
Obligations, to file and prove all claims (including claims in bankruptcy)
relating to the Subordinated Obligations, to exercise any right to vote arising
with respect to the Subordinated Obligations and any claims hereunder in any
bankruptcy, insolvency or similar proceeding and take any and all other actions
in the name of Seller, as the Senior Agent determines to be necessary or
appropriate.

(h) Subrogation. No payment or distribution to any holder of Senior Indebtedness
pursuant to the provisions of this Agreement shall entitle Seller to exercise
any right of subrogation in respect thereof until (i)(1) all Senior Indebtedness
shall have been Paid in Full or (ii) all holders of Senior Indebtedness have
consented in writing to the taking of such action.

(i) Obligations Hereunder Not Affected. All rights and interest of of the
holders of Senior Indebtedness hereunder, and all agreements and obligations of
Seller Members and the Company hereunder, shall remain in full force and effect
irrespective of:

(A) any lack of validity or enforceability of any document evidencing any of the
Senior Indebtedness;

 

5

--------------------------------------------------------------------------------

(B) any change in the time, manner or place of payment of, or any other term of,
all or any of the Senior Indebtedness, or any other amendment or waiver of or
any release or consent to departure from any of the Senior Debt Documents

(C) any exchange, subordination, release or non-perfection of any collateral for
all or any of the Senior Indebtedness;

(D) any failure of any holder of Senior Indebtedness to assert any claim or to
enforce any right or remedy against any other party hereto under the provisions
of this Agreement or any Senior Debt Document other than this Agreement;

(E) any reduction, limitation, impairment or termination of the Senior
Indebtedness for any reason, including any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to (and Company and Seller
Members hereby waive any right to or claim of) any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of invalidity,
illegality, nongenuiness, irregularity, compromise, unenforceability of, or any
other event or occurrence affecting, any Senior Indebtedness; and

(F) any other circumstance which might otherwise constitute a defense available
to, or a discharge of, Company or its subsidiaries or affiliates in respect of
the Senior Indebtedness or Seller Members in respect of this Agreement.

Seller Members acknowledge and agree that the holders of Senior Indebtedness may
in accordance with the terms of the Senior Debt Documents, without notice or
demand and without affecting or impairing Seller Members’ obligations hereunder,
(i) modify the Senior Debt Documents; (ii) take or hold security for the payment
of the Senior Indebtedness and exchange, enforce, foreclose upon, waive and
release any such security; (iii) apply such security and direct the order or
manner of sale thereof as Senior Agent and Senior Lenders in their sole
discretion, may determine; (iv) release and substitute one or more endorsers,
warrantors, borrowers or other obligors; and (v) exercise or refrain from
exercising any rights against any Company or any other Person. The Senior
Indebtedness shall continue to be treated as Senior Indebtedness and the
provisions of this Agreement shall continue to govern the relative rights and
priorities of Senior Agent and Senior Lenders on the one and hand and Seller
Members on the other hand, even if all or part of the Senior Indebtednedss or
the security interests securing the Senior Indebtedness are subordinated, set
aside, avoided, invalidated or disallowed.

(j) Subordination of Liens and Security Interests; Agreement to Release Liens.

Until the Senior Indebtedness has been Paid in Full, any liens and security
interests of any Seller Member in any collateral which may exist, shall be and
hereby are subordinated for all purposes and in all respects to the liens and
security interests of Senior

 

6

--------------------------------------------------------------------------------

Agent in such Collateral, regardless of the time, manner or order of perfection
of any such liens and security interests. In the event that any Seller Member
obtains any liens or security interests in the collateral or any portion
thereof, (i) Senior Agent shall be deemed authorized by Seller Members to file
UCC termination statements necessary to terminate such liens and security
interests and (ii) Seller Members shall promptly execute and deliver to Senior
Agent such releases and terminations as Senior Agent shall reasonably request to
effect the release of such liens, and security interests.

(k) Modifications to Seller Documents. Until the Senior Indebtedness has been
Paid in Full, and notwithstanding anything to the contrary contained in the
Seller Note or the Asset Purchase Agreement, Seller Members shall not, without
the prior written consent of Senior Agent, amend, modify or supplement the
Seller Note or Asset Purchase Agreement.

(l) Relative Rights. The provisions of this Section 2 are for the benefit of the
holders of Senior Indebtedness (and their successors and assigns) and shall be
enforceable by them directly against Seller. Seller acknowledges and agrees that
any breach of the provisions of this Section 2 will cause irreparable harm for
which the payment of monetary damages may be inadequate. For this reason, Seller
agrees that, in addition to any remedies at law or equity to which a holder of
the Senior Indebtedness may be entitled, a holder of the Senior Indebtedness
will be entitled to an injunction or other equitable relief to prevent breaches
of the provisions of this Section 2 and/or to compel specific performance of
such provisions. The provisions of this Section 2 shall continue to be effective
or be reinstated, as the case may be, if at any time any payment of Senior
Indebtedness is rescinded or must otherwise be returned by any holder of Senior
Indebtedness upon the occurrence of a Bankruptcy Event or otherwise, all as
though such payment had not been made. The provisions of this Section 2 are not
intended to impair and shall not impair as between the Company and Seller, the
obligation of the Company, which is absolute and unconditional, to pay Seller
all amounts owing under the Asset Purchase Agreement in respect of the
Subordinated Obligations.

(m) Transfers. Seller agrees that it will not (a) sell, assign or otherwise
transfer, in whole or in part, the Subordinated Obligations owed to it or any
interest therein to any other person or entity (a “Transferee”) or (b) create,
incur or suffer to exist any security interest, lien, charge or other
encumbrance whatsoever upon any Subordinated Obligations owed to it in favor of
any Transferee unless, in either case, such Transferee expressly acknowledges to
the Senior Lenders in writing the subordination provided for herein and agrees
to be bound by all of the terms hereof.

(n) Amendment. So long as any Senior Indebtedness (including any letter of
credit or lender guarantee) is outstanding or there is a commitment to lend any
Senior Indebtedness (including any commitment under the Senior Debt Documents)
the terms of this Agreement may be amended only with the consent of the Senior
Agent.

(o) Acknowledgment of Security Interest. Seller hereby acknowledges, and agrees
to, the Company’s grant of its interest herein to the lenders under the Senior
Credit Agreement to collaterally secure the Company’s obligations under such
Senior Credit Agreement.

 

7

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(p) Governing Law. The construction, validity and interpretation of the
provisions of Section 2 of this Agreement shall be governed by and construed in
accordance with the domestic laws of the State of California, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of California or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of California.

[Signatory Page to Follow]

 

8

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IN WITNESS WHEREOF, the Company, Seller and Seller Members have executed and
delivered this Agreement on the date first written above.

 

[ARC Entity], a [jurisdiction][type of entity] By:  

 

Name:  

 

Title:  

 

 

SELLER:

[Entity Name], a [jurisdiction][type of entity]

By:  

 

Name:  

 

Title:  

 

 

SELLER MEMBERS:

[Entity Name], a [jurisdiction][type of entity]

By:  

 

Name:  

 

Title:  

 

 

[Entity Name], a [jurisdiction][type of entity] By:  

 

Name:  

 

Title:  

 

[SIGNATORY PAGE FOR SELLER SUBORDINATION AGREEMENT]

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EXHIBIT L-1

FORM OF LIBOR NOTICE

[Wells Fargo Bank, National Association, as US Agent]

[Wells Fargo Capital Finance Corporation Canada, as Canadian Agent]

under the below referenced Credit Agreement

[2450 Colorado Avenue

Suite 3000 West

Santa Monica, California 90404]

[c/o WELLS FARGO BANK, NATIONAL ASSOCIATION

2450 Colorado Avenue, Suite 3000W

Santa Monica, California 90404]

Ladies and Gentlemen:

Reference hereby is made to that certain Credit Agreement, dated as of
January 27, 2012 (the “Credit Agreement”), among AMERICAN REPROGRAPHICS COMPANY,
a Delaware corporation (“US Borrower”), ARC REPROGRAPHICS CANADA CORP., a
British Columbia corporation (“ARC Canada”) and ARC DIGITAL CANADA CORP., a
British Columbia corporation (“ARC Digital Canada”); and together with ARC
Canada, “Canadian Borrowers”), US Borrower and Canadian Borrowers are
collectively referred to as “Borrowers”), the lenders signatory thereto (the
“Lenders”), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking
association, as administrative agent for the US Lenders (in such capacity,
together with its successors and assigns in such capacity, “US Agent”), WELLS
FARGO CAPITAL FINANCE CORPORATION CANADA, an Ontario Corporation, as
administrative agent for the Canadian Lenders (in such capacity, together with
its successors and assigns in such capacity, “Canadian Agent”). Capitalized
terms used herein and not otherwise defined herein shall have the meanings
ascribed to them in the Credit Agreement.

This LIBOR Notice represents [US Borrower’s][Canadian Borrowers’] request to
elect the LIBOR Option with respect to outstanding Advances in the amount of
$             (the “LIBOR Rate Advance”)[, and is a written confirmation of the
telephonic notice of such election given to Agent].

The LIBOR Rate Advance will have an Interest Period of [1 day][1, 2, or 3
month(s)] commencing on                     .

This LIBOR Notice further confirms [US Borrower’s][Canadian Borrowers’]
acceptance, for purposes of determining the rate of interest based on the LIBOR
Rate under the Credit Agreement, of the LIBOR Rate as determined pursuant to the
Credit Agreement.

[US Borrower][Canadian Borrowers] represent[s] and warrant[s] that (i) as of the
date hereof, each representation or warranty contained in or pursuant to any
Loan Document or any agreement, instrument, certificate, document or other
writing furnished at any time under or in connection with any Loan Document, and
as of the effective date of any advance, continuation or conversion requested
above, is true and correct in all material respects (except to

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[Wells Fargo Bank, National Association, as US Agent]

[Wells Fargo Capital Finance Corporation Canada, as Canadian Agent]

Page 2

 

the extent that such representations and warranties relate solely to an earlier
date in which case such representations and warranties shall be true and correct
in all material respects as of such date (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 on and as of such
earlier date)), (ii) each of the covenants and agreements contained in any Loan
Document have been performed (to the extent required to be performed on or
before the date hereof or each such effective date), and (iii) no Default or
Event of Default has occurred and is continuing on the date hereof, nor will any
thereof occur after giving effect to the request above.

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[Wells Fargo Bank, National Association, as US Agent]

[Wells Fargo Capital Finance Corporation Canada, as Canadian Agent]

Page 3

 

Dated:  

 

AMERICAN REPROGRAPHICS COMPANY,

a Delaware corporation1

By:  

 

Title:  

 

ARC REPROGRAPHICS CANADA CORP.,

a British Columbia corporation2

By:  

 

Title:  

 

ARC DIGITAL CANADA CORP.,

a British Columbia corporation3

By:  

 

Title:  

 

 

Acknowledged by:

[Wells Fargo Bank, National Association, as US Agent]

[Wells Fargo Capital Finance Corporation Canada, as Canadian Agent]

By  

 

Name:  

 

Title:  

 

 

1 

To be signed if LIBOR Notice is given by US Borrower.

2 

To be signed if LIBOR Notice is given by Canadian Borrowers.

3 

To be signed if LIBOR Notice is given by Canadian Borrowers.