Exhibit 10.2

 

 

 

SECOND AMENDED AND RESTATED AND SENIOR SECURED

SUPER-PRIORITY DEBTOR-IN-POSSESSION CREDIT AGREEMENT

Dated as of September 10, 2015

among

QS WHOLESALE, INC.

as the Lead Borrower,

QUIKSILVER, INC.

as Parent,

The Other Borrowers and Guarantors From Time to Time Party Hereto

BANK OF AMERICA, N.A. (including through its global branches and affiliates)

as Administrative Agent,

BANK OF AMERICA, NATIONAL ASSOCIATION

as Australian Security Trustee,

BANK OF AMERICA, N.A.

as Collateral Agent,

and

The Lenders Party Hereto

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

as Lead Arranger

 

 

 

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TABLE OF CONTENTS

 

Section        Page  

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

     4   

1.01

  Defined Terms      4   

1.02

  Other Interpretive Provisions      90   

1.03

  Accounting Terms      91   

1.04

  Rounding      93   

1.05

  Times of Day      93   

1.06

  Letter of Credit Amounts      93   

1.07

  Certifications      93   

1.08

  Exchange Rates; Currency Equivalents Generally      93   

1.09

  Additional Alternative Currencies      94   

1.10

  Change of Currency      95   

1.11

  Québec Matters      95   

ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS

     96   

2.01

  Committed Loans; Reserves      96   

2.02

  Committed Borrowings, Conversions and Continuations of Committed Loans      97
  

2.03

  Letters of Credit      101   

2.04

  [Reserved]      111   

2.05

  Prepayments      111   

2.06

  Termination or Reduction of Commitments; Reallocation of Commitments      114
  

2.07

  Repayment of Loans      115   

2.08

  Interest      115   

2.09

  Fees      116   

2.10

  Computation of Interest and Fees      116   

2.11

  Evidence of Debt      118   

2.12

  Payments Generally; Administrative Agent’s Clawback      119   

2.13

  Sharing of Payments by Lenders      121   

2.14

  Settlement Amongst Lenders      122   

2.15

  [Reserved]      122   

2.16

  [Reserved]      122   

2.17

  Cash Collateral      122   

2.18

  Certain Bankruptcy Matters      124   

2.19

  Defaulting Lenders      126   

2.20

  CFC Payments      128   

ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY; APPOINTMENT OF LEAD BORROWER

     128   

3.01

  Taxes      128   

3.02

  Illegality      135   

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3.03

  Inability to Determine Rates      136   

3.04

  Increased Costs; Reserves on LIBO Rate Loans      136   

3.05

  Compensation for Losses      138   

3.06

  Mitigation Obligations; Replacement of Lenders      139   

3.07

  Survival      140   

3.08

  Designation of Lead Borrower as Borrowers’ Agent      140   

ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

     141   

4.01

  Conditions of Initial Credit Extension      141   

4.02

  Conditions to all Credit Extensions      145   

ARTICLE V REPRESENTATIONS AND WARRANTIES

     146   

5.01

  Existence, Qualification and Power      146   

5.02

  Authorization; No Contravention      146   

5.03

  Governmental Authorization; Other Consents      147   

5.04

  Binding Effect      147   

5.05

  Financial Statements; No Material Adverse Effect      147   

5.06

  Litigation      148   

5.07

  No Default      148   

5.08

  Ownership of Property; Liens      148   

5.09

  Environmental Compliance      149   

5.10

  Insurance      149   

5.11

  Taxes      150   

5.12

  Plans      150   

5.13

  Subsidiaries; Equity Interests      151   

5.14

  Margin Regulations; Investment Company Act      152   

5.15

  Disclosure      152   

5.16

  Compliance with Laws      152   

5.17

  Intellectual Property; Licenses, Etc.      152   

5.18

  Labor Matters      153   

5.19

  Security Documents      153   

5.20

  [Reserved]      155   

5.21

  Deposit Accounts; Credit Card Arrangements      155   

5.22

  Brokers      156   

5.23

  Customer and Trade Relations      156   

5.24

  Material Contracts      156   

5.25

  Casualty      156   

5.26

  Anti-Social Forces      156   

5.27

  Tax Consolidation      158   

5.28

  Budget      158   

5.29

  Commercial benefit      158   

5.30

  No Immunity      158   

 

(ii)

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5.31

  Orders      158   

ARTICLE VI AFFIRMATIVE COVENANTS

     158   

6.01

  Financial Statements      158   

6.02

  Certificates; Other Information      160   

6.03

  Notices      163   

6.04

  Payment of Obligations      165   

6.05

  Preservation of Existence, Etc.      165   

6.06

  Maintenance of Properties      166   

6.07

  [Reserved]      166   

6.08

  Maintenance of Insurance      166   

6.09

  Compliance with Laws      168   

6.10

  Books and Records      168   

6.11

  Inspection Rights      168   

6.12

  Use of Proceeds      169   

6.13

  Additional Loan Parties      169   

6.14

  Cash Management      171   

6.15

  Information Regarding the Collateral      173   

6.16

  Physical Inventories      174   

6.17

  Environmental Laws      174   

6.18

  Further Assurances      175   

6.19

  Maintenance of New York Process Agent      176   

6.20

  Material Contracts      176   

6.21

  Canadian Pension Benefit Plans      176   

6.22

  Use of Property; Rejection and Assumption of Contracts; Post-Filing Pleadings
     176   

6.23

  [Reserved]      177   

6.24

  Additional Information Obligations      177   

6.25

  Compliance with Terms of Leaseholds      177   

6.26

  Plan of Reorganization      178   

ARTICLE VII NEGATIVE COVENANTS

     178   

7.01

  Liens; Retention of Title, Constructive Transfers      178   

7.02

  Investments      178   

7.03

  Indebtedness      179   

7.04

  Fundamental Changes      179   

7.05

  Dispositions      179   

7.06

  Restricted Payments      179   

7.07

  Prepayments of Indebtedness      180   

7.08

  Change in Nature of Business      180   

7.09

  Transactions with Affiliates      180   

7.10

  Burdensome Agreements      180   

7.11

  Use of Proceeds      181   

 

(iii)

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7.12

  Amendment of Material Documents      181   

7.13

  Fiscal Year; Accounting Policies      181   

7.14

  Deposit Accounts; Credit Card Processors      182   

7.15

  [Reserved]      182   

7.16

  Limitation on the Creation of Subsidiaries      182   

7.17

  Anti-Social Force      182   

7.18

  Chapter 11 Claims      182   

7.19

  Compliance with Budget      183   

7.20

  Use of Collateral      183   

7.21

  Bankruptcy Related Negative Covenants      184   

ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES

     185   

8.01

  Events of Default      185   

8.02

  Remedies Upon Event of Default      192   

8.03

  Application of Funds      194   

8.04

  Waivers By Loan Parties      198   

ARTICLE IX AGENTS AND LENDERS

     198   

9.01

  Appointment and Authority      198   

9.02

  Appointment of Australian Security Trustee by Foreign Credit Parties      200
  

9.03

  Rights as a Lender      206   

9.04

  Exculpatory Provisions      206   

9.05

  Reliance by Agents      207   

9.06

  Delegation of Duties      207   

9.07

  Resignation of Agents      208   

9.08

  Non-Reliance on Agents and Other Lenders      209   

9.09

  No Other Duties, Etc.      209   

9.10

  Administrative Agent May File Proofs of Claim      209   

9.11

  Collateral and Guaranty Matters      210   

9.12

  Notice of Transfer      211   

9.13

  Reports and Financial Statements      211   

9.14

  Agency for Perfection      212   

9.15

  Indemnification of Agents      213   

9.16

  Relation among Lenders      213   

9.17

  Risk Participation      213   

9.18

  Actions In Concert      214   

9.19

  [Reserved]      214   

ARTICLE X MISCELLANEOUS

     214   

10.01

  Amendments, Etc.      214   

10.02

  Notices; Effectiveness; Electronic Communications      217   

10.03

  No Waiver; Cumulative Remedies      219   

 

(iv)

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10.04

  Expenses; Indemnity; Damage Waiver      219   

10.05

  Reinstatement; Payments Set Aside      221   

10.06

  Successors and Assigns      222   

10.07

  [Reserved]      228   

10.08

  Right of Setoff      228   

10.09

  Interest Rate Limitation      228   

10.10

  Counterparts; Integration; Effectiveness      229   

10.11

  Survival      229   

10.12

  Severability      229   

10.13

  Replacement of Lenders      230   

10.14

  Governing Law; Jurisdiction; Etc.      231   

10.15

  Waiver of Jury Trial      232   

10.16

  No Advisory or Fiduciary Responsibility      232   

10.17

  USA PATRIOT Act Notice; Proceeds of Crime Act      233   

10.18

  Foreign Asset Control Regulations      233   

10.19

  [Reserved]      234   

10.20

  Time of the Essence      234   

10.21

  Foreign Subsidiaries      234   

10.22

  Press Releases      234   

10.23

  Additional Waivers      235   

10.24

  Judgment Currency      236   

10.25

  No Strict Construction      237   

10.26

  Attachments      237   

10.27

  Conflict of Terms; Intercreditor Agreement      237   

10.28

  Electronic Execution of Assignments and Certain Other Documents      238   

10.29

  Obligations and Collateral of the Foreign Loan Parties      238   

10.30

  Language      238   

10.31

  Keepwell      238   

10.32

  Amendment and Restatement      239   

10.33

  Money Lending Business Law      239   

SIGNATURES

     S-1   

 

(v)

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SCHEDULES

 

1.01

   Domestic Borrowers

1.02(a)

   Guarantors of Domestic Facilities

1.02(b)

   Guarantors of Foreign Facilities

1.03

   Mandatory Cost Formulae

1.04

   Existing Letters of Credit

1.05

   Australasia Subsidiaries

1.06

   Specified Account Debtors

2.01

   Commitments and Applicable Percentages

4.01(a)(x)

   [Reserved]

4.01(a)(xi)

   [Reserved]

5.01

   Loan Parties’ Organizational Information

5.05

   Material Indebtedness

5.08(b)(1)

   Owned Real Estate

5.08(b)(2)

   Leased Real Estate

5.10

   Insurance

5.13

   Subsidiaries; Other Equity Investments

5.18

   Collective Bargaining Agreements

5.21(a)

   Deposit Accounts

5.21(b)

   Credit Card Arrangements

5.22

   Brokers

5.24

   Material Contracts

6.02

   Financial and Collateral Reporting

6.14

   Japanese Loan Parties’ Lessors

7.01

   Existing Liens

 

(vi)

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7.03

   Existing Indebtedness

7.10

   Burdensome Agreements

10.02

   Administrative Agent’s Offices; Certain Addresses for Notices

EXHIBITS

Form of

 

A-1

   Domestic Committed Loan Notice

A-2

   Foreign Committed Loan Notice

B

   [Reserved]

C

   [Reserved]

D

   [Reserved]

E-1

   Assignment and Assumption – Domestic Lenders

E-2

   Assignment and Assumption – Foreign Lenders

F-1

   Joinder Agreement – Domestic Loan Parties

F-2

   Joinder Agreement – Foreign Loan Parties

G-1

   Domestic Borrowing Base Certificate

G-2

   Canadian Borrowing Base Certificate

G-3

   Australian Borrowing Base Certificate

G-4

   Japanese Borrowing Base Certificate

H

   [Reserved]

I

   [Reserved]

J

   [Reserved]

K

   [Reserved]

L

   [Reserved]

M-1 – M-4

   U.S. Tax Compliance Certificates

N

   Initial Budget

 

(vii)

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O

   [Reserved]

P

   Interim Order

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SECOND AMENDED AND RESTATED AND SENIOR SECURED

SUPER-PRIORITY DEBTOR-IN-POSSESSION CREDIT AGREEMENT

This SECOND AMENDED AND RESTATED AND SENIOR SECURED SUPER-PRIORITY
DEBTOR-IN-POSSESSION CREDIT AGREEMENT is entered into as of September 10, 2015
among

QS WHOLESALE, INC., a California corporation (the “Lead Borrower”);

the Persons named on Schedule 1.01 hereto (collectively, with the Lead Borrower
and each other Person that from time to time becomes a “Domestic Borrower”
hereunder, the “Domestic Borrowers”);

QUIKSILVER CANADA CORP., a Nova Scotia unlimited liability company (the
“Canadian Borrower”);

UG MANUFACTURING CO. PTY LTD, a proprietary limited company organized under the
laws of Australia (the “Australian Borrower”);

QUIKSILVER JAPAN CO., LTD., a Japanese Kabushiki Kaisha (the “Japanese
Borrower”);

QUIKSILVER, INC., a Delaware corporation (the “Parent”);

the Persons named on Schedules 1.02(a) and 1.02(b) hereto (collectively, with
each other Person that from time to time becomes a “Guarantor” hereunder, the
“Guarantors”);

each lender from time to time party hereto;

BANK OF AMERICA, N.A., as Administrative Agent and L/C Issuer;

BANK OF AMERICA, NATIONAL ASSOCIATION, as Australian Security Trustee; and

BANK OF AMERICA, N.A., as Collateral Agent.

PRELIMINARY STATEMENTS

Certain of the Loan Parties, the Administrative Agent, the Collateral Agent and
certain of the Lenders, among others, have entered into an Amended and Restated
Credit Agreement dated as of May 24, 2013 (as amended from time to time and
currently in effect immediately prior to the effectiveness of this Agreement,
the “Existing ABL Credit Agreement”).

On September 9, 2015 (the “Petition Date”), each of the Domestic Loan Parties
(as defined herein, collectively, the “Debtors”) filed a voluntary petition for
relief (collectively, the “Cases”) under Chapter 11 of the Bankruptcy Code with
the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy
Court”). The Debtors are continuing in the possession of their assets and
continuing to operate their respective businesses and manage their respective
properties as debtors and debtors in possession under Sections 1107(a) and 1108
of the Bankruptcy Code.

The Debtors and the other Loan Parties have requested that (a) the Lenders make
available to the Domestic Borrowers, from and after the date of entry of the
Interim Order (the “Interim Order Date”), a

 

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senior secured, super-priority debtor-in-possession revolving credit facility
and (b) that the terms of the Existing ABL Credit Agreement be amended and
restated in their entirety, all on the terms and conditions set forth herein.

In furtherance of the foregoing, the Debtors and the other Loan Parties have
also requested that (a) on the Interim Order Date (or within one Business Day
thereafter), the Canadian Lenders and the Australian Lenders, respectively,
shall make loans to each of the Canadian Borrower and the Australian Borrower,
respectively, in an amount equal to the principal balance of the Credit
Extensions owed to General Electric Capital Corporation and Wells Fargo Bank,
National Association and their respective Affiliates by each such Borrower as of
the Petition Date, the proceeds of such loans shall be used to repay such
lenders the aggregate amount of their respective Credit Extensions, in each
case, upon the terms and subject to the conditions set forth herein.

To provide security for the repayment of all obligations of the Loan Parties
hereunder and under the other Loan Documents, and in addition to all other all
other property of any Loan Party that is subject to the Liens granted on the
“Collateral” (as defined in the Existing ABL Credit Agreement) in favor of any
Agent securing the Existing ABL Obligations (as defined herein) (such Liens, the
“Existing ABL Liens”), each of the Debtors will provide to the Agent (for the
benefit of the Credit Parties) the following (as more fully described herein):

(a) pursuant to Section 364(c)(1) of the Bankruptcy Code and the Orders (as
defined herein), as applicable, a DIP Superpriority Claim in the Cases and any
Successor Cases (without the need to file a proof of claim) for all of the
Obligations with priority over any and all administrative expense claims and
unsecured claims of any entity against the Debtors or their estates, including,
without limitation, any claims specified in or ordered pursuant to Sections 105,
326, 328, 330, 331, 365, 503(a), 503(b), 507(a), 507(b) (except as set forth in
the Orders), 546(c), 546(d), 726 (to the extent permitted by law), 1113, and
1114 or any other provisions of the Bankruptcy Code, which shall at all times be
senior to the rights of the Debtors and their estates, and any successor trustee
or other estate representative, subject only to Permitted Encumbrances (as
defined herein) and the Carve-Out (as defined herein),

(b) pursuant to Section 364(c)(2) of the Bankruptcy Code and the Orders, as
applicable, an automatically perfected, valid, enforceable, unavoidable, and
first-priority security interest and Lien on all Collateral and assets of the
Borrower and the other Loan Parties of any kind (including, subject to the entry
of the Final Order, the proceeds of Avoidance Actions), whether now existing or
hereafter acquired that is not subject to a valid, perfected, and non-avoidable
lien in existence on the Petition Date, which first-priority liens and security
interests shall be perfected without necessity of the execution or filing of
mortgages, security agreements, pledge agreements, financing statements or other
agreements or documents, subject only to Permitted Encumbrances and the
Carve-Out,

(c) pursuant to Section 364(c)(3) of the Bankruptcy Code and subject to clause
(d) below, an automatically valid, enforceable, unavoidable and perfected Lien
on the property of the Borrower and the other Loan Parties as more fully
described herein subject to (i) unavoidable valid and perfected Liens in
existence at the time of the commencement of the Cases, (ii) unavoidable valid
Liens in existence at

 

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the time of such commencement that are perfected subsequent to such commencement
as permitted by Section 546(b) of the Bankruptcy Code (the Liens described in
clause (i) above and this clause (ii), being “Existing Liens”), other than with
respect to the Primed Liens (as defined herein), (iii) Permitted Encumbrances
permitted to be entered into hereunder and (iv) the Carve-Out, and

(d) pursuant to Section 364(d)(1) of the Bankruptcy Code and the Orders, as
applicable, be secured by an automatically perfected, first priority, valid,
enforceable, unavoidable and, senior, priming Lien on all the property of the
Borrower and the other Loan Parties of any kind that secure obligations under
the Existing Senior Secured Indenture and any Liens that are junior to such
Liens, all of which existing Liens (the “Primed Liens”) shall be primed by and
made subject and subordinate to the perfected first priority senior Liens to be
granted to the Administrative Agent, which senior priming Liens in favor of the
Administrative Agent shall also prime any Liens arising after the commencement
of the Cases to provide adequate protection in respect of any Primed Liens,
subject only to Priority Permitted Encumbrances and the Carve-Out.

NOW, THEREFORE, in consideration of the mutual conditions and agreements set
forth in this Agreement, and for good and valuable consideration, the receipt of
which is hereby acknowledged, the undersigned hereby agree that the Existing ABL
Credit Agreement shall be amended and restated in its entirety as follows (it
being agreed that this Agreement shall not be deemed to evidence or result in a
novation or repayment and reborrowing of the Obligations under, and as defined
in, the Existing ABL Credit Agreement):

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

1.01 Defined Terms. As used in this Agreement, the following terms shall have
the meanings set forth below:

“7.875% Senior Secured Notes” means the 7-875% senior secured notes due 2018
issued by the Parent and guaranteed by certain of its Subsidiaries, pursuant to
the Existing Senior Secured Indenture.

“Acceptable BOL” means with respect to In-Transit Inventory, a tangible,
negotiable bill of lading that (i) is issued by a common carrier which is not an
Affiliate of the applicable foreign vendor or North America Borrowing Base Party
and which is in actual possession of such In-Transit Inventory or by an Eligible
NVOCC; (ii) covers only such In-Transit Inventory; (iii) is issued to the order
of a North America Borrowing Base Party or, while an Event of Default exists, if
so requested by any Agent, to the order of the Administrative Agent; (iv) is
subject to the first priority Lien of an Agent and no other Lien that is not a
Permitted Encumbrance; and (v) an Agent has not notified the applicable North
America Borrowing Base Party that such bill of lading is not in form and content
reasonably acceptable to the applicable Agent.

“Acceptable Chief Restructuring Officer” means Stephen Coulombe of FTI
Consulting or a replacement thereof acceptable to the Required Lenders.

 

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“Accommodation Payment” has the meaning provided in Section 10.23(d).

“Account” means “accounts” as defined in the UCC, in the PPSA (or to the extent
governed by the Civil Code of Québec, defined as “claims” for the purposes of
the Civil Code of Québec) and in the Australian PPSA, and also means a right to
payment of a monetary obligation, whether or not earned by performance, (a) for
property that has been or is to be sold, leased, licensed, assigned, or
otherwise disposed of, (b) for services rendered or to be rendered, (c) for a
policy of insurance issued or to be issued, (d) for a secondary obligation
incurred or to be incurred, (e) for energy provided or to be provided, (f) for
the use or hire of a vessel under a charter or other contract, (g) arising out
of the use of a credit or charge card or information contained on or for use
with the card (including any claim against a credit card service provider), or
(h) as winnings in a lottery or other game of chance operated or sponsored by a
state, province, territory, governmental unit of a state, province or territory,
or person licensed or authorized to operate the game by a state, province,
territory or governmental unit of a state, province or territory. The term
“Account” includes health-care-insurance receivables.

“ACH” means automated clearing house transfers.

“Acquisition” means, with respect to any Person, (a) an Investment in, or a
purchase of a Controlling interest in, the Equity Interests of any other Person,
(b) a purchase or other acquisition of all or substantially all of the assets or
properties of, another Person or of any business unit of another Person, (c) any
merger, amalgamation or consolidation of such Person with any other Person or
other transaction or series of transactions resulting in the acquisition of all
or substantially all of the assets, or a Controlling interest in the Equity
Interests, of any Person, or (d) any acquisition of Store locations of any
Person (which, for the avoidance of doubt, shall exclude leasehold improvements
and Store buildouts) for which the aggregate consideration payable in connection
with such acquisition is $500,000 or more in any single transaction or
$1,000,000 or more in the aggregate during the Availability Period, in each case
in any transaction or group of transactions which are part of a common plan.

“Adjusted LIBO Rate” means, with respect to any LIBO Borrowing for any Interest
Period, an interest rate per annum (rounded upwards, if necessary, to the next
1/16 of one percent) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate. The Adjusted LIBO Rate will be
adjusted automatically as to all LIBO Borrowings then outstanding as of the
effective date of any change in the Statutory Reserve Rate.

“Administrative Agent” means Bank of America (including acting through its
global branches and Affiliates, including, without limitation, its Canada branch
and Hong Kong branch, as the context may require) in its capacity as
administrative agent under any of the Loan Documents, or any successor
administrative agent.

“Administrative Agent’s Office” means, with respect to any currency, the
Administrative Agent’s address and, as appropriate, account as set forth on
Schedule 10.02 with respect to such currency, or such other

 

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address or account with respect to such currency as the Administrative Agent may
from time to time notify the Lead Borrower and the Lenders.

“Affiliate” means, with respect to any Person, (i) another Person that directly,
or indirectly through one or more intermediaries, Controls or is Controlled by
or is under common Control with the Person specified, (ii) any other Person
directly or indirectly holding 10% or more of any class of the Equity Interests
of that Person, and (iii) any other Person 10% or more of any class of whose
Equity Interests is held directly or indirectly by that Person.

“Agent Parties” has the meaning specified in Section 10.02(c).

“Agent(s)” means, individually, the Administrative Agent, the Australian
Security Trustee, or the Collateral Agent, and collectively means all of them.

“Aggregate Applicable Commitments” means, at any time of determination, the
Aggregate Domestic Commitments, the Aggregate Australian Commitments, the
Aggregate Canadian Commitments or the Aggregate Japanese Commitments, as the
context may require.

“Aggregate Australian Commitments” means the Australian Commitments of all the
Australian Lenders; provided that, after the initial Australian Loan to be made
on the Effective Date, the Aggregate Australian Commitments shall be terminated.

“Aggregate Canadian Commitments” means the Canadian Commitments of all the
Canadian Lenders; provided that, after the initial Canadian Loan to be made on
the Effective Date, the Aggregate Canadian Commitments shall be terminated.

“Aggregate Domestic Commitments” means the Domestic Commitments of all the
Domestic Lenders. As of the Effective Date, the Aggregate Domestic Commitments
are $60,000,000.

“Aggregate Japanese Commitments” means the Japanese Commitments of all the
Japanese Lenders; provided that, effective immediately on the Effective Date,
the Aggregate Japanese Commitments shall be terminated.

“Aggregate Total Commitments” means, at any time of determination, the sum of
the Aggregate Domestic Commitments, the Aggregate Australian Commitments, the
Aggregate Canadian Commitments and the Aggregate Japanese Commitments; provided
that, after the initial Canadian Loan and the initial Australian Loan to be made
on the Effective Date, the Aggregate Total Commitments shall be equal to the
Domestic Commitments at such time of determination.

“Agreement” means this Second Amended and Restated and Senior Secured
Super-Priority Debtor-In-Possession Credit Agreement.

“Allocable Amount” has the meaning specified in Section 10.23(d).

“Alternative Currency” means each of Euro, Sterling, Yen, Canadian Dollars,
Australian Dollars and each other currency (other than Dollars) that is approved
in accordance with Section 1.09.

 

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“Alternative Currency Equivalent” means, at any time, with respect to any amount
denominated in Dollars, the equivalent amount thereof in the applicable
Alternative Currency as determined by the Administrative Agent or the L/C
Issuer, as the case may be, at such time on the basis of the Spot Rate
(determined in respect of the most recent Revaluation Date) for the purchase of
such Alternative Currency with Dollars.

“Americas/Foreign Consolidated” means, when used to modify a financial term,
test, statement, or report of the Parent, the application or preparation of such
term, test, statement or report (as applicable) based upon the financial
condition or operating results of the Americas/Foreign Subsidiaries, calculated
or prepared (as the case may be) as if such entities were a consolidated group.

“Americas/Foreign Subsidiaries” means, collectively, the Americas Subsidiaries,
the Australian Borrower and each Australasia Subsidiary and the Japanese
Borrower and each Japanese Subsidiary.

“Americas Subsidiaries” means, collectively, (a) each direct or indirect
Domestic Subsidiary of the Parent; (b) each Canadian Subsidiary; (c) Quiksilver
Industria e Comercio de Artigos Esportivos Ltda., (d) Quiksilver Mexico, S. de
R. L. de C.V. (e) Quiksilver Mexico Service, S. de R. L. de C.V., and
(f) Consultoria en Ventas Gama, S. de R.L. de C.V.

“Anti-Social Force” has the meaning specified in Section 5.26.

“Applicable Commitment” means, as to any Lender, its Domestic Commitment,
Australian Commitment, Canadian Commitment or Japanese Commitment, as the
context may require.

“Applicable Foreign Borrowing Base” means, with respect to each Foreign
Revolving Facility, the Canadian Borrowing Base, the Australian Borrowing Base,
or the Japanese Borrowing Base applicable to such Foreign Revolving Facility.

“Applicable Foreign Loan Cap” means, with respect to each Foreign Revolving
Facility, the Canadian Loan Cap, the Australian Loan Cap, or the Japanese Loan
Cap applicable to such Foreign Revolving Facility.

“Applicable L/C Fee Rate” means, with respect to any Letters of Credit, at any
time of calculation, a per annum rate equal to the Applicable Margin for Loans
which are LIBO Rate Loans or BBR Rate Loans.

“Applicable Margin” means 3.50% per annum.

“Applicable Percentage” means (a) with respect to any Canadian Lender at any
time, the percentage (carried out to the ninth decimal place) of the Canadian
Loans of such Canadian Lender at such time, (b) with respect to any Domestic
Lender at any time, the percentage (carried out to the ninth decimal place) of
the Aggregate Domestic Commitments represented by the Domestic Commitment of
such Domestic Lender at such time and the aggregate Domestic Loans of such
Domestic Lender at such time, (c) with respect to any Australian Lender at any
time, the percentage (carried out to the ninth decimal place) of the Australian
Loans of such Australian Lender at such time, (d) with respect to any Japanese
Lender at any time, the percentage (carried out to the ninth decimal place) of
the Japanese Loans of such Japanese Lender at such time, and (e) where
applicable to all Obligations (excluding Other Liabilities), for

 

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each Lender that percentage which the sum of its Commitments and Loans
represents of the sum of the Aggregate Total Commitments and the total
outstanding Loans at such time. As to each Lender, if the commitment of each
Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit
Extensions has been terminated pursuant to Section 8.02 or if the Aggregate
Total Commitments have expired, then the Applicable Percentage of each Lender
shall be determined based on the Applicable Percentage of such Lender most
recently in effect, giving effect to any subsequent assignments. The initial
Applicable Percentage of each Lender is set forth opposite the name of such
Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which
such Lender becomes a party hereto, as applicable.

“Applicable Time” means, with respect to any borrowings and payments in any
Alternative Currency, the local time in the place of settlement for such
Alternative Currency as may be determined by the Administrative Agent or the L/C
Issuer, as the case may be, to be necessary for timely settlement on the
relevant date in accordance with normal banking procedures in the place of
payment.

“Appraisal Percentage” means (a) with respect to the Domestic Borrowers, seventy
percent (70%), (b) with respect to the Canadian Borrower, ninety percent
(90%) and (c) with respect to the Australian Borrower and the Japanese Borrower,
eighty-five percent (85%).

“Appraised Value” means the appraised orderly liquidation value, net of costs
and expenses to be incurred in connection with any such liquidation, which value
is expressed as a percentage of Cost of the Borrowing Base Parties’ Eligible
Inventory as set forth in the Borrowing Base Parties’ inventory stock ledger,
which value shall be determined from time to time by the most recent appraisal
undertaken by an independent appraiser engaged by any Agent.

“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) a Lender Affiliate of a Lender or (c) an entity or Lender Affiliate of an
entity that administers or manages a Lender.

“Arranger” means Merrill Lynch, Pierce, Fenner & Smith Incorporated, in its
capacity as lead arranger.

“Assignee Group” means two or more Eligible Assignees that are Lender Affiliates
of one another or two or more Approved Funds managed by the same investment
advisor.

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is
required by Section 10.06(b)), and accepted by the Administrative Agent, in
substantially the form of Exhibit E-1 (Assignment and Assumption – Domestic
Lenders) or Exhibit E-2 (Assignment and Assumption – Foreign Lenders), as
applicable, or any other form approved by the Administrative Agent.

“Attributable Indebtedness” means, on any date, subject to the provisions of
Section 1.03(a), (a) in respect of any Capital Lease Obligation 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 (other than any Capital Lease Obligation), the
capitalized amount of the remaining lease or similar payments under the relevant
lease or other applicable

 

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agreement or instrument that would appear on a balance sheet of such Person
prepared as of such date in accordance with GAAP if such lease, agreement or
instrument were accounted for as a capital lease.

“Audited Financial Statements” means the audited Consolidated balance sheet of
the Parent and its Subsidiaries for the Fiscal Year ended October 31, 2014, and
the related Consolidated statements of income or operations, Shareholders’
Equity and cash flows for such Fiscal Year of the Parent and its Subsidiaries,
including the notes thereto.

“Australasia Subsidiary” means the Subsidiaries of the Parent listed on Schedule
1.05 hereto and any other Subsidiary organized in Australia or New Zealand.

“Australian Availability” means, as of any date of determination thereof, the
result, if a positive number, of:

(a) the Australian Loan Cap,

minus

(b) the Total Australian Outstandings on such date.

In calculating Australian Availability at any time and for any purpose under
this Agreement any amount calculated or referenced in Dollars shall also refer
to the Alternative Currency Equivalent (to the extent such Alternative Currency
is available to the Australian Borrower pursuant to Section 2.02(a)) for each
such Alternative Currencies.

“Australian Bank Bill Rate” means, (a) the average bid rate (the “BBR Screen
Rate”) displayed at or about 10:30 a.m. (Melbourne time) on the first day of an
Interest Period on the Reuters screen BBSY page for a term equivalent to the
Interest Period, or (b) to the extent the BBR Screen Rate is not displayed for a
term equivalent to such Interest Period, then the Australian Bank Bill Rate will
be the rate determined by the Administrative Agent in good faith and notified by
it to the Australian Borrower on or prior to the close of business on the first
day of the relevant Interest Period to be the arithmetic mean (rounded upward to
four decimal places) of the buying rates quoted by three reference banks at or
about that time on that date and as notified by the Administrative Agent to the
Australian Borrower at that time).

“Australian Base Rate” means the greater of (a) Australian “cash rate” as
determined by the Australian Reserve Bank Board, being the rate at which
Australian banks borrow from and lend to each other on an overnight, unsecured
basis as reflected at : http://www.rba.gov.au/ or (b) the Australian Bank Bill
Rate for an Interest Period of one month plus one percent (1.00%) per annum. Any
change in the Australian Base Rate shall take effect at the opening of business
on the day specified in the public announcement of such change.

“Australian Base Rate Loan” means a Loan that bears interest at the Australian
Base Rate.

 

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“Australian Borrower” has the meaning specified in the introductory paragraph
hereto and shall include, as applicable, any Australian Subsidiary that becomes
a Borrower after the Effective Date pursuant to Section 6.13(b).

“Australian Borrowing” means a Committed Australian Borrowing.

“Australian Borrowing Base” means, at any time of calculation, an amount in
Australian Dollars (or the Dollar Equivalent thereof) equal to:

(a) the face amount of Eligible Trade Receivables of the Australian Borrower
(net of Receivables Reserves applicable thereto) multiplied by the Receivables
Advance Rate;

plus

(b) the Cost of Eligible Inventory (other than Eligible In-Transit Inventory) of
the Australian Borrower, net of Inventory Reserves applicable thereto,
multiplied by the Appraisal Percentage of the Appraised Value of Eligible
Inventory (other than Eligible In-Transit Inventory) of the Australian Borrower;

minus

(c) the then amount of all Availability Reserves applicable to the Australian
Borrower. In no event shall the amount of Availability Reserves subtracted in
calculating the Australian Borrowing Base be duplicative of Availability
Reserves subtracted in calculating any other Borrowing Base.

“Australian Commitments” means, as to each Australian Lender, its obligation to
(a) to make a Committed Australian Loan to the Australian Borrower pursuant to
Section 2.01(b), and (b) purchase participations in Australian L/C Obligations,
in an aggregate principal amount at any one time outstanding not to exceed the
amount set forth opposite such Australian Lender’s name on Schedule 2.01 or in
the Assignment and Assumption pursuant to which such Australian Lender becomes a
party hereto, as applicable, as such amount may be adjusted from time to time in
accordance with this Agreement.

“Australian Concentration Account” means the accounts maintained by the
Australian Security Trustee in the name of the Australian Borrower at Bank of
America, N.A. (Australia branch) into which cash receipts and collections of the
Australian Loan Parties (including, without limitation, from the Collateral) are
deposited to the extent required hereby or by any other Loan Document (it being
understood that there are separate Australian Concentration Accounts for
Australian Dollar deposits, New Zealand dollar deposits and Dollar deposits).

“Australian Credit Extensions” mean each of the following: (a) an Australian
Borrowing and (b) an Australian L/C Credit Extension.

 

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“Australian Credit Party” or “Australian Credit Parties” means (a) individually,
(i) each Australian Lender and its Lender Affiliates, (ii) the Agents and their
respective Lender Affiliates, (iii) each L/C Issuer of any Australian Letter of
Credit, (iv) the Australian Security Trustee and its Lender Affiliates, and
(v) the successors and assigns of each of the foregoing, and (b) collectively,
all of the foregoing.

“Australian Dollars” means the lawful currency of Australia.

“Australian Double Tax Treaty” means an ‘international tax agreement’ as defined
in section 995-1 of the Income Tax Assessment Act 1997 (Cth).

“Australian Facility” means the revolving credit facility in favor of the
Australian Borrower established pursuant to this Agreement.

“Australian L/C Borrowing” means an extension of credit resulting from a drawing
under any Australian Letter of Credit which has not been reimbursed on or prior
to the date required to be reimbursed by the Australian Borrower pursuant to
Section 2.03(c)(i) or refinanced as a Committed Australian Borrowing.

“Australian L/C Obligations” means, as at any date of determination and without
duplication, the aggregate Stated Amount of all outstanding Australian Letters
of Credit plus the aggregate of all Unreimbursed Amounts under Australian
Letters of Credit, including all Australian L/C Borrowings.

“Australian Lenders” means the Lenders having Australian Commitments from time
to time or at any time.

“Australian Letter of Credit” means each Existing Letter of Credit issued for
the account of the Australian Borrower.

“Australian Liabilities” means (a) all advances to, and debts (including
principal, interest, fees, costs, and expenses), liabilities, obligations,
covenants, indemnities, and duties of, any Australian Loan Party arising under
any Loan Document or otherwise with respect to any Australian Loan or Australian
Letter of Credit (including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral
therefor), whether direct or indirect (including those acquired by assumption),
absolute or contingent, due or to become due, now existing or hereafter arising
and including interest, fees, costs and expenses that accrue after the
commencement by or against any Australian Loan Party of any proceeding under any
Debtor Relief Laws naming such Person as the debtor in such proceeding,
regardless of whether such interest and fees are allowed claims in such
proceeding, and (b) any Other Australian Liabilities.

“Australian Loan” means an extension of credit by an Australian Lender to the
Australian Borrower under Article II in the form of a Committed Loan.

“Australian Loan Cap” means, at any time of determination, the lesser of
(a) $11,500,000 reduced by any repayments of the Australian Liabilities, and
(b) the Australian Borrowing Base.

 

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“Australian Loan Parties” means, collectively, the Australian Borrower and each
Australian Subsidiary that is a Guarantor of the Australian Liabilities.
“Australian Loan Party” means any one of such Persons.

“Australian Note” means a promissory note made by the Australian Borrower in
favor of an Australian Lender evidencing Australian Loans made by such
Australian Lender, in form and substance in satisfactory to the Administrative
Agent and each applicable Lender.

“Australian Overadvance” means an Australian Credit Extension to the extent
that, immediately after the making of such Australian Credit Extension, the
aggregate principal balance of all Australian Credit Extensions then outstanding
exceeds the Australian Loan Cap as then in effect.

“Australian Pension Plan” means a superannuation, retirement benefit or pension
fund (whether established by deed or under any statute of Australia or any state
or territory of Australia) contributed to by, or to which there is or may be an
obligation to contribute by, any Loan Party in respect of its Australian
employees and officers or former employees and officers.

“Australian PPS Law” means: (a) the Australian PPSA; (b) regulations made under
the Australian PPSA as amended from time to time; or (c) any amendment made at
any time to any other legislation as a consequence of an Australian PPSA Law
referred to in clauses (a) and (b) of this definition, including, amendments to
the Corporations Act.

“Australian PPSA” means the Personal Property Securities Act 2009 (Cth) of
Australia.

“Australian PPSR” has the meaning given to the term ‘register’ in the Australian
PPSA.

“Australian Priority Payables Reserve” means, on any date of determination, a
Reserve in such amount as any Agent from time to time determines in its
Permitted Discretion as reflecting amounts secured by any Liens, choate or
inchoate, or any rights, whether imposed by applicable Law in Australia or
elsewhere (and including rights to the payment or reimbursement of any costs,
charges or other amounts in connection with any proceeding of the type described
in Section 8.01(f)), which rank or are capable of ranking in priority to the
Liens in favor of the Administrative Agent or the Australian Security Trustee of
and/or for amounts which may represent costs relating to the enforcement of
Administrative Agent’s and/or the Australian Security Trustee’s Liens including,
without limitation, to the extent applicable by operation of law, any such
amounts due or which may become due and not paid for wages, long service leave,
retrenchment, payment in lieu of notice, or vacation pay (including in all
respects amounts protected by or payable pursuant to the Fair Work Act 2009
(Cth)), any preferential claims as set out in the Corporations Act, amounts due
or which may become due and not paid under any legislation relating to workers’
compensation or to employment insurance, all amounts deducted or withheld and
not paid and remitted when due under the Taxation Administration Act 1953 (Cth)
(but excluding Pay as You Go income withholding tax) and amounts in the future,
currently or past due and not contributed, remitted or paid in respect of any
Australian Pension Plan, together with any charges which may be levied by a
Governmental Authority as a result of any default in payment obligations in
respect of any Australian Pension Plan.

 

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“Australian Security Documents” means (a) the general security agreement dated
on or about the date of this Agreement between the Australian Security Trustee
and each Australian Loan Party; (b) each Blocked Account Agreement between the
Australian Security Trustee, the Australian Borrower and a Blocked Account Bank;
(c) the security trust deed dated on or prior to the date of this Agreement by
and between, among others, the Australian Loan Parties and the Australian
Security Trustee, (d) any other documents, incidental, collateral or
supplementary to the security documents referred to in clauses (a) through and
including (c) required by an Agent, including for purposes of payment of stamp
duty and registration and any accession deed to the security trust deed referred
to in clause (c), and (e) each other security agreement or other instrument or
document executed and delivered by any Australian Loan Party to the Australian
Security Trustee pursuant to this Agreement or any other Loan Document granting
a Lien on assets of any Australian Loan Party for the benefit of the Credit
Parties (other than the Domestic Credit Parties), as security for the Foreign
Liabilities.

“Australian Security Trustee” means Bank of America, National Association or any
successor security trustee appointed in accordance with this Agreement.

“Australian Subsidiary” means any Subsidiary that is organized under the laws of
Australia or any province or territory thereof.

“Australian Treaty State” means a jurisdiction having an Australian Double Tax
Treaty with Australia.

“Auto-Extension Letter of Credit” has the meaning specified in
Section 2.03(b)(iii).

“Availability” means, at any time of determination, the Domestic Availability.

“Availability Period” means the period from and including the Effective Date to
the earliest of (a) the Maturity Date, (b) the date of termination of the
Aggregate Total Commitments pursuant to Section 2.06, and (c) the date of
termination of the commitment of each Lender to make Loans and of the obligation
of the L/C Issuer to make L/C Credit Extensions pursuant to Section 8.02.

“Availability Reserves” means, without duplication of any other Reserves or
items that are otherwise addressed or excluded through eligibility criteria,
such reserves as any Agent from time to time determines in its Permitted
Discretion as reflecting (a) any impediments to any Agent’s ability to realize
upon the Collateral included in any Borrowing Base, (b) claims and liabilities
that any Agent determines in its Permitted Discretion will need to be satisfied
in connection with the realization upon the Collateral included in any Borrowing
Base, (c) criteria, events, conditions, contingencies or risks which adversely
affect any component of any Borrowing Base, or the assets, business, financial
performance or financial condition of any Borrowing Base Party, or (d) that a
Default or an Event of Default then exists. Without limiting the generality of
the foregoing, by way of example and not limitation, Availability Reserves may
include (but are not limited to), in any Agent’s Permitted Discretion, reserves
based on, without duplication: (i) rent; (ii) customs duties, freight charges,
taxes, tariffs insurance charges and other charges that may reasonably be
expected to come due with respect to any Eligible In-Transit Inventory or any
Inventory associated with any Eligible Letter of Credit and other costs
associated with Inventory of any Borrowing Base Party which is being imported
into the United States or Canada; (iii) outstanding

 

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Taxes and other governmental charges due and owing by any Borrowing Base Party
but unpaid, including, without limitation, ad valorem, real estate, personal
property, sales, goods and services, harmonized sales, claims of PBGC and other
Governmental Authorities in respect of Plans and other Taxes due and owing by
any Borrowing Base Party which may be subject to Liens that have priority over
or are pari passu with the Liens of any Agent in the Collateral; (iv) salaries,
wages, vacation pay and benefits due and owing to employees of any Loan Party
but unpaid; (v) any Agent’s estimate of Canadian Priority Payable Reserves;
(vi) Customer Credit Liabilities; (vii) reserves for reasonably anticipated
changes in the Appraised Value of Eligible Inventory between appraisals;
(viii) unpaid warehousemen’s or bailee’s charges due and owing by any Borrowing
Base Party relating to Inventory of any Borrowing Base Party and other Permitted
Encumbrances which may have priority over or are pari passu with the Liens of
any Agent in the Collateral; (ix) amounts due to vendors on account of consigned
goods of any Borrowing Base Party; (x) Cash Management Reserves; (xi) Bank
Products Reserves; (xii) Dilution Reserves, (xiii) any Agent’s estimate of the
Australian Priority Payables Reserve, (xiv) any Agent’s estimate of the Japanese
Priority Payable Reserve, and (xv) any Agent’s estimate of amounts owed with
respect to an asset which is the subject of a conditional sale or hire purchase
arrangement, Lien or retention of title arrangement.

“Avoidance Actions” means any causes of action under chapter 5 of the Bankruptcy
Code.

“Bank of America” means Bank of America, N.A., a national banking association,
its global branches and Affiliates, and its successors.

“Bank of Canada Overnight Rate” means, on any date of determination, the rate of
interest charged by the Bank of Canada on one-day Canadian dollar loans to
financial institutions, for such date.

“Bank Products” means any services or facilities provided to any Loan Party by
the Administrative Agent, any Lender or any of their respective Lender
Affiliates, excluding Credit Extensions and Cash Management Services but
including, without limitation, on account of (a) Swap Contracts, (b) leasing,
and (c) supply chain finance services, (including those described in a letter
between Bank of America and the Loan Parties of even date but otherwise only to
the extent that the applicable Loan Party and the Credit Party furnishing such
services or facilities notify the Administrative Agent in writing that such
services or facilities are to be deemed Bank Products hereunder).

“Bank Product Reserves” means such reserves as the Administrative Agent from
time to time determines in its Permitted Discretion as being appropriate to
reflect the liabilities and obligations of the Loan Parties with respect to Bank
Products then provided or outstanding.

“Bankruptcy Code” means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. §
101, et seq.), as amended.

“Bankruptcy Court” has the meaning set forth in the recitals to this Agreement.

“Basel III” means:(a) the agreements on capital requirements, a leverage ratio
and liquidity standards contained in “Basel III: A global regulatory framework
for more resilient banks and banking systems”,

 

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“Basel III: International framework for liquidity risk measurement, standards
and monitoring” and “Guidance for national authorities operating the
countercyclical capital buffer” published by the Basel Committee on Banking
Supervision in December 2010, each as amended, supplemented or restated; and
(b) the rules for global systemically important banks contained in “Global
systemically important banks: assessment methodology and the additional loss
absorbency requirement – Rules text” published by the Basel Committee on Banking
Supervision in November 2011, as amended, supplemented or restated.

“BBR Rate Loan” means a Committed Loan that bears interest at a rate based on
the Australian Bank Bill Rate. BBR Rate Loans may be denominated in Dollars or
in an Alternative Currency.

“Big Wave” means OCM Big Wave LLC, a Delaware limited liability company.

“Blocked Account” has the meaning provided in Section 6.14(a)(ii).

“Blocked Account Agreement” means, with respect to a Blocked Account established
by a Loan Party, an agreement, in form and substance reasonably satisfactory to
the applicable Agent, establishing control (as defined in the UCC, in the PPSA
or in the Australian PPSA, as applicable) of such Blocked Account by the
applicable Agent (for the benefit of itself and the other applicable Credit
Parties) and whereby the bank maintaining such account agrees to comply only
with the instructions originated by the applicable Agent without the further
consent of any Loan Party.

“Blocked Account Bank” means Bank of America, N.A., Bank of America, N.A.
(acting through its Canada branch), Commonwealth Bank of Australia, and each
other bank with whom deposit accounts are maintained in which any funds of any
of the Loan Parties from one or more DDAs are concentrated and with whom a
Blocked Account Agreement has been, or is required to be, executed in accordance
with the terms hereof.

“Boardriders Notes” means the 8.875% senior unsecured notes due December 15,
2017 issued pursuant to the Boardriders Notes Indenture.

“Boardriders Notes Indenture” means that certain indenture dated December 15,
2010 among Boardriders S.A., a company incorporated pursuant to the laws of the
Grand Duchy of Luxembourg, as issuer, the Borrower, as a guarantor thereunder,
Deutsche Trustee Company Limited as trustee (or any successor trustee thereof)
and certain other parties.

“Boardriders Notes Trustee” means Deutsche Trustee Company Limited (or any
successor trustee).

“Boardriders Waiver” means the waiver and support agreements executed by certain
holders of the Boardriders Notes.

“Borrower Materials” has the meaning specified in Section 6.02.

“Borrowers” means, collectively, the Domestic Borrowers, the Australian
Borrower, the Japanese Borrower and the Canadian Borrower.

 

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“Borrowing” means a Committed Borrowing.

“Borrowing Base” means, as the context may require, the Domestic Borrowing Base
or the Applicable Foreign Borrowing Base.

“Borrowing Notice” has the meaning set forth in Section 2.02(a).

“Budget” means the cash flow forecast attached hereto as Exhibit N, with such
adjustments thereto as are approved in writing by the Required Lenders in their
sole discretion (including, without limitation, the approval, if and when so
granted, of a revised Budget proposed pursuant to Section 6.01(f)); provided,
that in the event that the Borrower requests a Supplemental Term Loan (as
defined in the DIP Term Agreement), the Budget shall be deemed to have been
adjusted to incorporate the borrowing of such Supplemental Term Loan and the use
of proceeds thereof.

“Borrowing Base Certificate” means a certificate substantially in the form of
Exhibits G-1 through G-4 hereto (with such changes therein as may be required by
any Agent to reflect the components of and reserves against the Borrowing Base
as provided for hereunder from time to time), executed and certified as being
accurate and complete in accordance with the terms of the Borrowing Base
Certificate, by a Responsible Officer of the Lead Borrower or the Parent (with
respect to the Domestic Borrowing Base) and the applicable Foreign Loan Party or
the Parent (with respect to any Foreign Borrowing Base) which shall include
appropriate exhibits, schedules, supporting documentation, and additional
reports as reasonably requested in advance by any Agent.

“Borrowing Base Parties” means, collectively, the Domestic Borrowers, the
Australian Borrower, the Japanese Borrower and the Canadian Loan Parties, and,
in the singular, any one of them.

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state where the Administrative Agent’s Office with respect to
Obligations denominated in Dollars is located and:

(a) if such day relates to any interest rate settings as to a LIBO Rate Loan
denominated in Dollars, any fundings, disbursements, settlements and payments in
Dollars in respect of any such LIBO Rate Loan, or any other dealings in Dollars
to be carried out pursuant to this Agreement in respect of any such LIBO Rate
Loan, means any such day that is also a London Banking Day;

(b) if such day relates to any interest rate settings as to a LIBO Rate Loan
denominated in Euro, any fundings, disbursements, settlements and payments in
Euro in respect of any such LIBO Rate Loan, or any other dealings in Euro to be
carried out pursuant to this Agreement in respect of any such LIBO Rate Loan,
means a TARGET Day;

(c) if such day relates to any interest rate settings as to a TIBOR Rate Loan,
means any such day on which banks are open for business in Tokyo, Japan and Hong
Kong;

 

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(d) if such day relates to any interest rate settings as to a LIBO Rate Loan
denominated in a currency other than Dollars or Euro, means any such day on
which dealings in deposits in the relevant currency are conducted by and between
banks in the London or other applicable offshore interbank market for such
currency; and

(e) if such day relates to any fundings, disbursements, settlements and payments
in a currency other than Dollars or Euro in respect of a LIBO Rate Loan
denominated in a currency other than Dollars or Euro, or any other dealings in
any currency other than Dollars or Euro to be carried out pursuant to this
Agreement in respect of any such LIBO Rate Loan (other than any interest rate
settings), means any such day on which banks are open for foreign exchange
business in the principal financial center of the country of such currency.

When used in connection with any Loan to or Letter of Credit issued for the
account of the Canadian Borrower, the term “Business Day” shall also exclude any
day on which banks are authorized or required to be closed in Toronto, Ontario,
Canada or New York, New York. When used in connection with any Loan to or Letter
of Credit issued for the account of the Australian Borrower, the term “Business
Day” shall also exclude any day on which banks are authorized or required to be
closed in any of Sydney or Melbourne, Australia or Hong Kong. When used in
connection with any Loan to or Letter of Credit issued for the account of the
Japanese Borrower, the term “Business Day” shall also exclude any day on which
banks are authorized or required to be closed in either Tokyo, Japan or Hong
Kong.

For purposes of Section 6.14, “Business Day” shall be determined by the location
where the DDAs and Blocked Account Banks are located.

“Canadian Availability” means, as of any date of determination thereof, the
result, if a positive number, of:

(a) the Canadian Loan Cap

minus

(b) the Total Canadian Outstandings on such date.

In calculating Canadian Availability at any time and for any purpose under this
Agreement any amount calculated or referenced in Dollars shall also refer to the
Alternative Currency Equivalent in CD$.

“Canadian BA Rate” means, with respect to each Interest Period for a Canadian BA
Rate Loan, the rate of interest per annum equal to the average rate applicable
to Canadian Dollar bankers’ acceptances having an identical or comparable term
as the proposed Canadian BA Rate Loan displayed and identified as such on the
display referred to as the “CDOR Page” (or any display substituted therefor) of
Reuters Monitor Money Rates Service as at approximately 10:00 a.m. Toronto time
on such day (or, if such day is not a Business Day, as of 10:00 a.m. Toronto
time on the immediately preceding Business Day); provided that if such rate does
not appear on the CDOR Page at such time on such date, the rate for such date
will be the annual discount rate (rounded upward to the nearest whole multiple
of 1/100 of 1%) as of 10:00

 

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a.m. Toronto time on such day at which a Canadian chartered bank listed on
Schedule 1 of the Bank Act (Canada) as selected by Administrative Agent is then
offering to purchase Canadian Dollar bankers’ acceptances accepted by it having
such specified term (or a term as closely as possible comparable to such
specified term).

“Canadian BA Rate Loan” means any Canadian Loan in CD$ bearing interest at a
rate determined by reference to the Canadian BA Rate in accordance with the
provisions of Article II.

“Canadian Base Rate” means, for any day, a floating rate equal to the annual
rate of interest determined by the Administrative Agent which is equal to the
greatest of (a) the annual rate of interest announced from time to time by the
Administrative Agent (acting through its Canada branch), as being its reference
rate or “base rate” in effect on such date (or if such date is not a Business
Day, on the Business Day immediately preceding such date) for determining
interest rates on Dollar denominated commercial loans made by it in Canada, in
each case regardless of whether such bank actually charges such rate of interest
in connection with extensions of credit in Dollars to debtors, (b) the Federal
Funds Rate for such day plus one-half of one percent (0.50%) and (c) the LIBOR
Rate for a thirty (30) day interest period as determined on such day, plus 1.0%.
Each change in any interest rate provided for in the Agreement based upon the
Canadian Base Rate shall take effect at the time of such change in the Canadian
Base Rate.

“Canadian Base Rate Loan” means a Loan or portion thereof made to the Canadian
Borrower denominated in Dollars bearing interest at a rate based on the Canadian
Base Rate.

“Canadian Borrower” has the meaning specified in the introductory paragraph
hereto.

“Canadian Borrowing” means a Committed Canadian Borrowing.

“Canadian Borrowing Base” means, at any time of calculation, an amount in CD$
(or the Dollar Equivalent thereof, if applicable) equal to:

(a) the face amount of Eligible Credit Card Receivables of the Canadian Loan
Parties multiplied by the Credit Card Advance Rate;

plus

(b) the face amount of Eligible Trade Receivables of the Canadian Loan Parties
(net of Receivables Reserves applicable thereto) multiplied by the Receivables
Advance Rate;

plus

(c) the Cost of Eligible Inventory (other than Eligible In-Transit Inventory) of
the Canadian Loan Parties, net of Inventory Reserves applicable thereto,
multiplied by the Appraisal Percentage of the Appraised Value of Eligible
Inventory (other than Eligible In-Transit Inventory) of the Canadian Loan
Parties;

plus

 

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(d) the lesser of (i) $2,250,000 and (ii) the sum of (x) the Cost of Eligible
In-Transit Inventory of the Canadian Loan Parties, net of Inventory Reserves
applicable thereto, multiplied by the Appraisal Percentage of the Appraised
Value of Eligible In-Transit Inventory of the Canadian Loan Parties, and
(y) with respect to any Eligible Letter of Credit, the Appraisal Percentage of
the Appraised Value of the Inventory of the Canadian Loan Parties supported by
such Eligible Letter of Credit, multiplied by the Cost of such Inventory of the
Canadian Loan Parties when completed, net of applicable Reserves;

minus

(e) the then amount of all Availability Reserves applicable to the Canadian Loan
Parties. In no event shall the amount of Availability Reserves subtracted in
calculating the Canadian Borrowing Base be duplicative of Availability Reserves
subtracted in calculating any other Borrowing Base.

“Canadian Commitments” means, as to each Canadian Lender, its obligation to make
a Committed Canadian Loan to the Canadian Borrower pursuant to Section 2.01(b),
on or about the Effective Date, in an aggregate principal amount at any one time
outstanding not to exceed the amount set forth opposite such Canadian Lender’s
name on Schedule 2.01 or in the Assignment and Assumption pursuant to which such
Canadian Lender becomes a party hereto, as applicable, as such amount may be
adjusted from time to time in accordance with this Agreement.

“Canadian Concentration Account” means the account maintained by the
Administrative Agent at Bank of America (acting through its Canada branch) into
which cash receipts and collections of the Canadian Loan Parties (including,
without limitation, from the Collateral) are deposited to the extent required
hereby or by any other Loan Document.

“Canadian Credit Extensions” means a Canadian Borrowing.

“Canadian Credit Party” or “Canadian Credit Parties” means (a) individually,
(i) each Canadian Lender and its Lender Affiliates, (ii) the Agents and their
respective Lender Affiliates and (iii) the successors and assigns of each of the
foregoing, and (b) collectively, all of the foregoing.

“Canadian Facility” means the revolving credit facility in favor of the Canadian
Borrower established pursuant to this Agreement.

“Canadian Lenders” means the Lenders having Canadian Commitments from time to
time or at any time (or if the Canadian Commitments have been terminated, the
Lenders holding any Canadian Liabilities from time to time or at any time). Any
Person may be a Canadian Lender only if it is a financial institution that is
listed on Schedule I, II or III of the Bank Act (Canada) or is not a foreign
bank for purposes of the Bank Act (Canada), and if such financial institution is
not resident in Canada and is not deemed to be resident in Canada for purposes
of the Income Tax Act (Canada), then such financial institution deals at arm’s
length with each Canadian Loan Party for purposes of the Income Tax Act
(Canada).

 

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“Canadian Liabilities” means (a) all advances to, and debts (including
principal, interest, fees, costs, and expenses), liabilities, obligations,
covenants, indemnities, and duties of, any Canadian Loan Party arising under any
Loan Document or otherwise with respect to any Canadian Loan, whether direct or
indirect (including those acquired by assumption), absolute or contingent, due
or to become due, now existing or hereafter arising and including interest,
fees, costs and expenses that accrue after the commencement by or against any
Canadian Loan Party of any proceeding under any Debtor Relief Laws naming such
Person as the debtor in such proceeding, regardless of whether such interest and
fees are allowed claims in such proceeding, and (b) any Other Canadian
Liabilities.

“Canadian Loan” means an extension of credit by a Canadian Lender to the
Canadian Borrower under Article II in the form of a Committed Loan.

“Canadian Loan Cap” means, at any time of determination, the lesser of
(a) $10,100,000, reduced by any repayments of the Canadian Liabilities and
(b) the Canadian Borrowing Base.

“Canadian Loan Parties” means, collectively, the Canadian Borrower and each
Canadian Subsidiary that is a Guarantor of the Canadian Liabilities. “Canadian
Loan Party” means any one of such Persons.

“Canadian Note” means a promissory note made by the Canadian Borrower in favor
of a Canadian Lender evidencing Canadian Loans made by such Canadian Lender, in
form and substance in satisfactory to the Administrative Agent and each
applicable Lender in form and substance in satisfactory to the Administrative
Agent and each applicable Lender.

“Canadian Overadvance” means a Canadian Credit Extension to the extent that,
immediately after the making of such Canadian Credit Extension, the aggregate
principal balance of all Canadian Credit Extensions then outstanding exceeds the
Canadian Loan Cap as then in effect.

“Canadian Pension Plan” means an employee pension benefit plan or pension plan
that is covered by the Laws of any jurisdiction in Canada including the Pension
Benefits Act (Ontario) and the Income Tax Act (Canada) or subject to minimum
funding standards and that is either (a) maintained or sponsored by any Canadian
Loan Party or any Canadian Subsidiary for employees, (b) maintained pursuant to
a collective bargaining agreement, or other arrangement under which more than
one employer makes contributions and to which any Canadian Loan Party or any
Canadian Subsidiary is making or accruing an obligation to make contributions or
has within the preceding five years made or accrued such contributions or
(c) any other plan with respect to which any Canadian Loan Party has incurred or
may incur liability, including contingent liability either to such plan or to
any Person, administration or Governmental Authority, including the FSCO.
“Canadian Pension Plan” shall not include the group registered retirement
savings plan in which the employees of any Canadian Loan Party or any Canadian
Subsidiary participate and which is not subject to any pension benefits
standards legislation or the registered pension plan provisions of the Income
Tax Act (Canada).

“Canadian Prime Rate” means the per annum rate of interest equal to the greatest
of (a) the rate of interest in effect for such day or so designated from time to
time by Bank of America (acting through its Canada branch) as its “prime rate”
for commercial loans made by it in Canada in Canadian Dollars, such

 

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rate being a reference rate and not necessarily representing the lowest or best
rate being charged to any customer; (b) the Bank of Canada Overnight Rate for
such day, plus 0.50%; or (c) the Canadian BA Rate for a 30-day interest period
as determined on such day plus 1.00%. Any change in such rate announced by Bank
of America (acting through its Canada branch) shall take effect at the opening
of business on the day specified in the public announcement thereof. Each
interest rate based on the Canadian Prime Rate hereunder, shall be adjusted
simultaneously with any change in the Canadian Prime Rate.

“Canadian Prime Rate Loan” means a Loan that bears interest based on the
Canadian Prime Rate.

“Canadian Priority Payable Reserves” means, without duplication of any other
Reserves with respect to the Canadian Loan Parties, such reserves as the
Collateral Agent or the Administrative Agent from time to time determines in its
Permitted Discretion as being appropriate to reflect any obligations,
liabilities and indebtedness at such time which have, or would in any proceeding
have, a trust, deemed trust, right of garnishment, right of distress, charge or
statutory Lien imposed to provide for payment or Liens ranking or capable of
ranking senior to or pari passu with Liens securing the Canadian Liabilities on
any of the Collateral under federal, provincial, state, county, territorial,
municipal, or local law including, to the extent that there is such a trust,
statutory Liens or Liens in respect of the specified item that has or is capable
of having such rank, claims for unremitted and accelerated rents, utilities,
taxes (including goods and services tax, provincial sales taxes, and harmonized
sales taxes (“HST”), value added taxes, amounts deducted or withheld or not paid
and remitted when due under the Income Tax Act (Canada), excise taxes, and taxes
payable pursuant to Part IX of the Excise Tax Act (Canada) or similar provincial
or territorial Law), the claims of a clerk, servant, travelling salesperson,
labourer or worker (whether full-time or part-time) who is owed wages (including
any amounts protected by the Wage Earner Protection Program Act (Canada)),
salaries, commissions, disbursements, compensation or other amounts (such as
union dues payable on behalf of employees) by the Canadian Loan Parties (but
only to the extent that the claims of such parties may rank or be capable of
ranking senior to or pari passu with Liens securing the Foreign Liabilities on
any of the Collateral), vacation pay, severance pay, employee source deductions,
workers’ compensation obligations, government royalties or pension fund
obligations (including claims of the FSCO and all amounts currently or past due
and not contributed, remitted or paid to any Canadian Pension Plan, the Canada
Pension Plan or under the Pension Benefits Act (Ontario) or any similar Law)
(but only to the extent ranking or capable of ranking senior to or pari passu
with Liens securing the Foreign Liabilities on any of the Collateral), together
with the aggregate value, determined in accordance with GAAP, of all Eligible
Inventory which may be or may become subject to a right of a supplier to recover
possession thereof or to exercise rights of revendication with respect thereto
under any federal, provincial, state, county, municipal, territorial or local
law, where such supplier’s right may have priority over Liens securing the
Foreign Liabilities including Eligible Inventory subject to a right of a
supplier to repossess goods pursuant to Section 81.1 of the Bankruptcy and
Insolvency Act (Canada) or the Civil Code of Quebec, and amounts currently or
past due and owing by any Canadian Loan Party and not paid for realty, municipal
or similar Taxes (to the extent impacting personal property).

 

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“Canadian Security Documents” means each General Security Agreement, Deed of
Hypothec and each other security agreement or other instrument or document
executed and delivered by any Canadian Loan Party to the Administrative Agent
pursuant to this Agreement or any other Loan Document granting a Lien on assets
of any Canadian Loan Party for the benefit of the Canadian Credit Parties, as
security for the Foreign Liabilities.

“Canadian Subsidiary” means any Subsidiary that is organized under the laws of
Canada or any province or territory thereof.

“Capital Expenditures” means, without duplication and with respect to any Person
for any period, all expenditures made (whether made in the form of cash or other
property) or costs incurred for the acquisition or improvement of fixed or
capital assets of such Person (excluding normal replacements and maintenance
which are properly charged to current operations), in each case that are (or
should be) capitalized on the balance sheet of such Person under GAAP, but
excluding Capital Lease Obligations incurred by a Person during such period. For
purposes of this definition, the purchase price of Equipment that is purchased
substantially contemporaneously with the trade-in or sale of similar Equipment
or with insurance proceeds therefrom shall be included in Capital Expenditures
only to the extent of the gross amount by which such purchase price exceeds the
credit granted to such Person for the Equipment being traded in by the seller of
such new Equipment, the proceeds of such sale or the amount of the insurance
proceeds, as the case may be.

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

“Cash Collateral Account” means an account established by one or more of the
Loan Parties with the Administrative Agent, for its own benefit and the benefit
of the other Credit Parties, at Bank of America under the sole and exclusive
dominion and control of the Administrative Agent, in the name of the
Administrative Agent or as the Administrative Agent shall otherwise direct, in
which deposits are required to be made by the applicable Borrowers in respect of
the L/C Obligations in accordance with Section 2.17 or Section 8.02(c).

“Cash Collateralize” means to deposit in a Cash Collateral Account or to pledge
and deposit with or deliver to the Administrative Agent, for the benefit of one
or more of the Administrative Agent, the L/C Issuer or any applicable Lenders,
as collateral for any applicable L/C Obligations or obligations of the Lenders
to fund participations in respect thereof (as the context may require), cash or
deposit account balances or, if the Administrative Agent and the L/C Issuer
shall agree in their sole discretion, other credit support, in each case
pursuant to documentation in form and substance satisfactory to the
Administrative Agent and the L/C Issuer. “Cash Collateral” shall have a meaning
correlative to the foregoing and shall include the proceeds of such cash
collateral and other credit support.

 

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“Carve-Out” means, collectively: (i) all unpaid fees required to be paid by the
debtors to the Clerk of the Bankruptcy Court and to the Office of the United
States Trustee under 28 U.S.C. § 1930(a) plus interest pursuant to 31 U.S.C. §
3717; (ii) all reasonable and documented fees and expenses incurred by a trustee
under Section 726(b) of the Bankruptcy Code in an amount not to exceed $50,000;
(iii) to the extent allowed at any time (whether by interim order, procedural
order, or otherwise), all accrued and unpaid fees, disbursements, costs, and
expenses incurred by any professionals or professional firms retained by the
Domestic Borrowers or the Committee at any time before or on the first business
day following delivery by the Administrative Agent (or the Required Lenders,
where applicable) or the DIP Term Agent of a Carve-Out Trigger Notice, whether
such fees, disbursements, costs, and expenses are allowed by the Bankruptcy
Court prior to or after delivery of a Carve-Out Trigger Notice; and (iv) after
the first business day following delivery by the Administrative Agent (or the
Required Lenders, where applicable) or the DIP Term Agent of a Carve-Out Trigger
Notice, to the extent allowed at any time (whether by interim order, procedural
order, or otherwise), all unpaid fees, disbursements, costs, and expenses
incurred by professionals or professional firms retained by any Domestic
Borrower or any Committee in an aggregate amount not to exceed the
Post-Carve-Out Trigger Notice Cap.

“Carve-Out Reserve” means, at any time of determination, a Reserve equal to the
most recently delivered Reported Fee Accruals plus $1,000,000.

“Carve-Out Trigger Notice” means a written notice delivered by the
Administrative Agent or the Required Lenders (which delivery may be made by any
electronic method of transmission) to the Borrower and its counsel, the United
States Trustee, and lead counsel to any Committee, which notice may be delivered
following the occurrence and continuance of an Event of Default, and stating
that the Post-Carve-Out Trigger Notice Cap has been invoked.

“Cash Equivalent” means an Investment of any type specified in clauses
(a) through (h) in the definition below of the term “Permitted Investment”.

“Cash Management Order” means an order of the Bankruptcy Court, in form and
substance acceptable to the Required Lenders, (i) approving and authorizing the
Loan Parties to use existing cash management system, (ii) authorizing and
directing banks and financial institutions to honor and process checks and
transfers, (iii) authorizing continued use of intercompany transactions,
(iv) waiving requirements of Section 345(b) of the Bankruptcy Code and
(v) authorizing the Loan Parties to use existing bank accounts and existing
business forms.

“Cash Management Reserves “ means such reserves as the Administrative Agent,
from time to time, determines in its Permitted Discretion as being appropriate
to reflect the reasonably anticipated liabilities of the Loan Parties with
respect to Cash Management Services then provided or outstanding.

“Cash Management Services” means any cash management services or facilities
provided to any Loan Party by the Administrative Agent or any Lender or any of
their respective Lender Affiliates, including, without limitation: (a) ACH
transactions, (b) controlled disbursement services, treasury, depository,

 

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overdraft, and electronic funds transfer services, (c) foreign exchange
facilities, (d) credit card processing services, (e) purchase cards and
(f) credit or debit card products.

“CD$” or “Canadian Dollars” means lawful money of Canada.

“Cases” has the meaning set forth in the recitals to this Agreement.

“CERCLA” means the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. § 9601 et seq.

“CFC” means (a) a Subsidiary that is a controlled foreign corporation under
Section 957 of the Code, (b) a Subsidiary substantially all of whose assets
consist of Equity Interests in Subsidiaries described in clause (a) of this
definition, or (c) a Subsidiary treated as disregarded for United States federal
income tax purposes that owns more than 65% of the voting Equity Interests of a
Subsidiary described in clauses (a) or (b) of this definition.

“Champs-Élysées Lease” means the lease agreement for the Store located at 30-32
Av. des Champs-Élysées, 75008 Paris.

“Change in Law” means the occurrence, after the date of this Agreement, (or with
respect to any Lender, if later, the date upon which such Person becomes a
Lender) of any of the following: (a) the adoption or taking effect of any law,
rule, regulation or treaty, (b) any change in any law, rule, regulation or
treaty or in the administration, interpretation, implementation or application
thereof by any Governmental Authority or (c) the making or issuance of any
request, rule, guideline or directive (whether or not having the force of law)
by any Governmental Authority, requiring compliance by any Credit Party (or any
lending office of such Credit Party or by such Credit Party’s holding company,
if any); provided that notwithstanding anything herein to the contrary, (x) the
Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests,
rules, guidelines or directives thereunder or issued in connection therewith and
(y) all requests, rules, guidelines or directives promulgated by the Bank for
International Settlements, the Basel Committee on Banking Supervision (or any
successor or similar authority) or the United States or foreign regulatory
authorities, in each case pursuant to Basel III, shall in each case be deemed to
be a “Change in Law”, regardless of the date enacted, adopted or issued. A
Change in Law shall not include the application or effect of any regulations
promulgated and any interpretation or other guidance issued in connection with
Sections 1471 or 1472 of the Code.

“Change of Control” means an event or series of events by which:

(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, but excluding (i) any employee benefit
plan of such person or its subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such plan
and (ii) Rhône Capital L.P. and its Affiliates) becomes the “beneficial owner”
(as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934,
except that a person or group shall be deemed to have “beneficial ownership” of
all securities that such person or group has the right to acquire, whether such
right is exercisable

 

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immediately or only after the passage of time (such right, an “option right”)),
directly or indirectly, of 35% or more of the Equity Interests of the Parent
entitled to vote for members of the board of directors or equivalent governing
body of the Parent on a fully-diluted basis (and taking into account all such
Equity Interests that such “person” or “group” has the right to acquire pursuant
to any option right); or

(b) during any period of twelve (12) consecutive months, a majority of the
members of the board of directors or other equivalent governing body of the
Parent cease to be composed of individuals (i) who were members of that board or
equivalent governing body on the first day of such period, (ii) whose election
or nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and
(ii) above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body; or

(c) any “change in control” as defined in any document governing Material
Indebtedness of any Loan Party; or

(d) the Parent fails at any time to own, directly or indirectly, 100% of the
Equity Interests of each other Loan Party free and clear of all Liens (other
than (i) the Liens in favor of any Agent under the Security Documents, and
(ii) the DIP Term Agent and the DIP Term Lender under the DIP Term Documents to
the extent permitted pursuant to clause (n) of the definition of “Permitted
Encumbrances” and (iii) the Existing Senior Secured Note Liens to the extent
permitted pursuant to clause (p) of the definition of “Permitted Encumbrances”).

“Collateral Agent” means Bank of America, acting in its capacity as collateral
agent, for its own benefit and the benefit of the other Credit Parties, or any
successor collateral agent.

“Chief Restructuring Officer” has the meaning set forth in Section 4.01(b).

“Code” means the Internal Revenue Code of 1986, and the regulations promulgated
thereunder, each as amended from time to time.

“Collateral” means any and all “Collateral” as defined in any applicable
Security Document and all other property of any Loan Party that is or is
intended under the terms of the Security Documents to be subject to Liens in
favor of any Agent (for the benefit of itself and the other Credit Parties).

“Collateral Access Agreement” means an agreement in form and substance in
satisfactory to the Agents, executed by (a) a bailee or other Person in
possession of Collateral, or (b) a landlord of Real Estate leased by any Loan
Party, in each case, pursuant to which such landlord, bailee or other Person
(i) other than with respect to the Australian Loan Parties, acknowledges the
Lien granted to the applicable Agent on the Collateral, (ii) other than with
respect to the Australian Loan Parties and the Japanese Loan Parties, releases
or subordinates such Person’s Liens in the Collateral held by such Person or
located on

 

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such Real Estate, (iii) provides the applicable Agent with access to the
Collateral held by such bailee or other Person or located in or on such Real
Estate, and (iv) as to any landlord (x) provides the applicable Agent with
access to the Collateral located in or on such Real Estate and a reasonable time
to sell and dispose of the Collateral from such Real Estate, and (y) other than
with respect to the Australian Loan Parties and the Japanese Loan Parties,
agrees to give the applicable Agent reasonable prior notice before terminating
the lease covering such Real Estate and an opportunity to cure any default of
the applicable tenant if the applicable Agent so elects.

“Commercial Letter of Credit” means any letter of credit or similar instrument
(including, without limitation, bankers’ acceptances) issued for the purpose of
providing the primary payment mechanism in connection with the purchase of any
materials, goods or services by a Loan Party in the ordinary course of business
of such Loan Party.

“Commitment” means, as to each Lender, its Domestic Commitment, its Canadian
Commitment, its Australian Commitment and its Japanese Commitment.

“Commitment Fee” has the meaning set forth in Section 2.09.

“Committed Australian Borrowing” means a borrowing consisting of simultaneous
Committed Australian Loans of the same Type, in the same currency and, in the
case of BBR Rate Loans or LIBO Rate Loans, having the same Interest Period made
by each of the Australian Lenders pursuant to Section 2.01.

“Committed Australian Loan” means any loan at any time made by any Australian
Lender pursuant to Section 2.01.

“Committed Borrowing” means, as the context may require, each Committed Canadian
Borrowing, each Committed Domestic Borrowing, each Committed Australian
Borrowing and each Committed Japanese Borrowing.

“Committed Canadian Borrowing” means a borrowing consisting of simultaneous
Committed Canadian Loans of the same Type, in the same currency and, in the case
of Canadian BA Rate Loans or LIBO Rate Loans, having the same Interest Period
made by each of the Australian Lenders pursuant to Section 2.01. having the same
Interest Period made by each of the Canadian Lenders pursuant to Section 2.01.

“Committed Canadian Loan” means any loan at any time made by any Canadian Lender
pursuant to Section 2.01.

“Committed Domestic Borrowing” means a borrowing consisting of simultaneous
Committed Domestic Loans of the same Type, in the same currency and, in the case
of LIBO Rate Loans, having the same Interest Period made by each of the Domestic
Lenders pursuant to Section 2.01.

“Committed Domestic Loan” means any loan at any time made by any Domestic Lender
pursuant to Section 2.01.

 

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“Committed Foreign Loan” means, as the context may require, any Committed
Canadian Loan, any Committed Australian Loan and any Committed Japanese Loan.

“Committed Japanese Borrowing” means a borrowing consisting of simultaneous
Committed Japanese Loans of the same Type, in the same currency and, in the case
of TIBOR Rate Loans or LIBO Rate Loans, having the same Interest Period made by
each of the Japanese Lenders pursuant to Section 2.01.

“Committed Japanese Loan” means any loan at any time made by any Japanese Lender
pursuant to Section 2.01.

“Committed Loan” means, as the context may require, any Committed Domestic Loan,
any Committed Canadian Loan, any Committed Australian Loan and any Committed
Japanese Loan.

“Committed Loan Notice” means a notice of (a) a Committed Borrowing, (b) a
conversion of a Committed Loan from one Type to the other, or (c) a continuation
of a LIBO Rate Loan, a Canadian BA Rate Loan, a BBR Rate Loan or a TIBOR Rate
Loan, as applicable, pursuant to Section 2.02(b), which, if in writing, shall be
substantially in the form of Exhibit A-1 (Domestic Committed Loan Notice) or
Exhibit A-2 (Foreign Committed Loan Notice), as applicable.

“Committee” means an official committee of unsecured creditors appointed in the
Cases pursuant to section 1102 of the Bankruptcy Code.

“Committee Investigation Budget” has the meaning given such term in
Section 7.20(b).

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

“Concentration Account” means (a) individually, each North American
Concentration Account and each Foreign Concentration Account, and
(b) collectively, all of the foregoing.

“Connection Income Tax” means Other Connection Taxes that are imposed or
measured by income (however denominated) or that are franchise Taxes or branch
profits Taxes.

“Consent” means (a) actual written consent given by a Lender from whom such
consent is sought; or (b) the passage of ten (10) Business Days from receipt of
written notice to a Lender from the Administrative Agent of a proposed course of
action to be followed by the Administrative Agent without such Lender’s giving
the Administrative Agent written notice that such Lender objects to such course
of action.

“Consolidated” means, when used to modify a financial term, test, statement, or
report of a Person, the application or preparation of such term, test, statement
or report (as applicable) based upon the consolidation, in accordance with GAAP,
of the financial condition or operating results of such Person and its
Subsidiaries.

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

 

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“Control” means (a) 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, and
(b) in respect of the Australian Loan Parties, “control” as defined in section
50AA of the Corporations Act. “Controlling” and “Controlled” have meanings
correlative thereto.

“Controller” has the meaning given to it in section 9 of the Corporations Act.

“Corporations Act” means the Corporations Act 2001 (Cth) of Australia as,
(a) amended or re-enacted, (b) any statute, regulation or provision enacted in
replacement of that Law, (c) another regulation or other statutory instrument
made or issued under that Law, and (d) any amendment made to a statute,
regulation or provision referred to in clauses (a) through (c) of this
definition as a consequence of another statute, regulation or provision.

“Cost” means the lower of cost or market value of Inventory, based upon the
Borrowers’ accounting practices, known to the Administrative Agent, which
practices are in effect on the Effective Date as such calculated cost is
determined from invoices received by the Borrowing Base Parties, the Borrowing
Base Parties’ purchase journals or the Borrowing Base Parties’ stock ledger.
“Cost” does not include inventory capitalization costs or other non-purchase
price charges (such as freight) used in the Borrowing Base Parties’ calculation
of cost of goods sold.

“Credit Card Advance Rate” means (a) with respect to the Domestic Borrowers,
seventy percent (70%), and (b) with respect to the Canadian Borrower, ninety
percent (90%).

“Credit Card Issuer” shall mean any person (other than a Borrower or other Loan
Party or any Affiliate thereof) who issues or whose members issue credit cards,
including, without limitation, MasterCard or VISA bank credit or debit cards or
other bank credit or debit cards issued through MasterCard International, Inc.,
Visa, U.S.A., Inc. or Visa International and American Express, Discover, Diners
Club, Carte Blanche and other non-bank credit or debit cards, including, without
limitation, credit or debit cards issued by or through American Express Travel
Related Services Company, Inc., and Novus Services, Inc. and other issuers
approved by the Agents (such approval not to be unreasonably withheld).

“Credit Card Processor” shall mean any servicing or processing agent or any
factor or financial intermediary who facilitates, services, processes or manages
the credit authorization, billing transfer and/or payment procedures with
respect to any Borrowing Base Party’s sales transactions involving credit card
or debit card purchases by customers using credit cards or debit cards issued by
any Credit Card Issuer.

“Credit Card Notifications” has the meaning provided in Section 6.14(a)(i).

“Credit Card Receivables” means each “payment intangible” (as defined in the
UCC) together with all income, payments and proceeds thereof, owed by a Credit
Card Issuer or Credit Card Processor to a North America Borrowing Base Party
resulting from charges by a customer of a North America Borrowing Base Party on
credit or debit cards issued by such Credit Card Issuer in connection with the

 

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sale of goods by a North America Borrowing Base Party, or services performed by
a North America Borrowing Base Party, in each case in the ordinary course of its
business.

“Credit Extension” means each of (a) a Foreign Credit Extension and (b) a
Domestic Credit Extension.

“Credit Party” or “Credit Parties” means (a) individually, (i) each Foreign
Credit Party, (ii) each Domestic Credit Party, (iii) the Arranger, (iv) each
beneficiary of each indemnification obligation undertaken by any Loan Party
under any Loan Document, (v) each Lender Affiliate of any Lender or the
Administrative Agent providing Cash Management Services or Bank Products to a
Loan Party, and (vi) the successors and assigns of each of the foregoing, and
(b) collectively, all of the foregoing.

“Credit Party Expenses” means: (a) all reasonable and documented out-of-pocket
expenses incurred by the Administrative Agent, the Australian Security Trustee,
MLPFS and their respective Lender Affiliates, in connection with this Agreement
and the other Loan Documents, including, without limitation (but in any event
subject to the limitations described below), (i) the reasonable and documented
fees, charges and disbursements of (A) counsel for the Administrative Agent, the
Australian Security Trustee, and MLPFS (limited to not more than one primary
counsel and necessary local counsel (limited to one local counsel per
jurisdiction, (B) outside consultants for the Administrative Agent,
(C) appraisers, (D) commercial finance examinations, and (E) all such
out-of-pocket expenses incurred during any workout or restructuring negotiations
in respect of the Obligations, (ii) all reasonable and documented out-of-pocket
expenses incurred in connection with (A) the syndication of the credit facility
provided for herein, (B) the preparation, negotiation, administration,
management, execution and delivery of this Agreement and the other Loan
Documents or any amendments, modifications or waivers of the provisions thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (C) the enforcement or protection of their rights in connection
with this Agreement or the other Loan Documents or efforts to preserve, protect,
collect, or enforce the Collateral or in connection with any proceeding under
any Debtor Relief Laws, or (D) any workout or restructuring negotiations in
respect of any Obligations, and (iii) all customary fees and charges (as
adjusted from time to time) of the Administrative Agent with respect to the
disbursement of funds (or the receipt of funds) to or for the account of
Borrowers (whether by wire transfer or otherwise), together with any reasonable
out-of-pocket costs and expenses incurred in connection therewith; and (b) with
respect to the L/C Issuer and its Lender Affiliates, all reasonable and
documented out-of-pocket expenses incurred in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any demand for
payment thereunder; and (c) all reasonable and documented out-of-pocket expenses
incurred by the Credit Parties who are not the Administrative Agent, MLPFS, the
L/C Issuer or any Lender Affiliate of any of them in connection with the
enforcement of the Credit Parties’ rights and remedies under any of the Loan
Documents or applicable Law including in the course of any work-out or
restructuring of the Loans or other Obligations during the pendency of any Event
of Default, provided that such Credit Parties shall be entitled to reimbursement
for no more than one counsel representing all such Credit Parties (absent a
conflict of interest in which case the Credit Parties may engage and be
reimbursed for additional counsel).

“Currency Recalculation” has the meaning set forth in Section 2.05(k).

 

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“Customer Credit Liabilities” means, at any time, the aggregate remaining value
at such time of (a) outstanding gift certificates and gift cards of the
Borrowing Base Parties entitling the holder thereof to use all or a portion of
the certificate or gift card to pay all or a portion of the purchase price for
any Inventory, and (b) outstanding merchandise credits and customer deposits
(including, without limitation, on account of layaway transactions) of the
Borrowing Base Parties.

“Customs Broker Agreement” means an agreement in form and substance satisfactory
to the Agents and (if a party thereto) the Administrative Agent, among a North
America Borrowing Base Party, a customs broker, NVOCC or carrier, and the
Administrative Agent, in which the customs broker, NVOCC or carrier acknowledges
that it has control over and holds the documents evidencing ownership of the
subject Inventory or other property for the benefit of the Administrative Agent,
and agrees, upon notice from the Administrative Agent to hold and dispose of the
subject Inventory and other property solely as directed by the Administrative
Agent.

“DDA” means any checking, savings or other deposit account maintained by any of
the Loan Parties. All funds in each DDA shall be conclusively presumed to be
Collateral or the proceeds of Collateral and the Credit Parties shall have no
duty to inquire as to the source of the amounts on deposit in any DDA.

“Debtor Relief Laws” means each of (i) the Bankruptcy Code, (ii) the Bankruptcy
and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada)
and the Winding-up and Restructuring Act (Canada), (iii) with respect to Japan,
the Bankruptcy Act (Japan), the Civil Rehabilitation Act (Japan) and the
Corporate Reorganization Act (Japan), (iv) with respect to Australia, the
Corporations Act, and (v) all other liquidation, conservatorship, bankruptcy,
assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief Laws of the
United States, Canada, Australia, Japan or other applicable jurisdictions from
time to time in effect and affecting the rights of creditors generally.

“Debtors” has the meaning set forth in the recitals hereto.

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

“Default Rate” means (a) when used with respect to Obligations other than Letter
of Credit Fees, or Foreign Liabilities, an interest rate equal to (i) the Prime
Rate plus (ii) the Applicable Margin, if any, applicable to Domestic Prime Rate
Loans, plus (iii) two percent (2%) per annum; provided, however, that with
respect to a LIBO Rate Loan, the Default Rate shall be an interest rate equal to
the interest rate (including any Applicable Margin and any Mandatory Cost)
otherwise applicable to such LIBO Rate Loan plus two percent (2%) per annum;
(b) when used with respect to Foreign Liabilities other than Letter of Credit
Fees, an interest rate equal to (i) the Canadian Prime Rate plus (ii) the
Applicable Margin, if any, applicable to Canadian Prime Rate Loans, plus
(iii) two percent (2%) per annum; provided, however, that with respect to a
(A) LIBO Rate Loan, the Default Rate shall be an interest rate equal to the
interest rate (including any Applicable Margin and any Mandatory Cost) otherwise
applicable to such LIBO Rate Loan plus two percent (2%) per annum, and
(B) Canadian Base Rate Loan, Canadian BA Rate Loan, BBR Rate

 

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Loan, Australian Base Rate Loan, Japanese Base Rate Loan, or TIBOR Rate Loan,
the Default Rate shall be an interest rate equal to the interest rate (including
any Applicable Margin and any Mandatory Cost) otherwise applicable to such
Canadian BA Rate Loan, BBR Rate Loan, Australian Base Rate Loan, Japanese Base
Rate Loan, or TIBOR Rate Loan, plus two percent (2%) per annum; and (c) when
used with respect to Letter of Credit Fees, a rate equal to the Applicable L/C
Fee Rate plus two percent (2%) per annum.

“Defaulting Lender” means, subject to Section 2.18(b), any Lender that (a) has
failed to (i) fund all or any portion of its Loans within one Business Day of
the date such Loans were required to be funded hereunder, or (ii) pay to the
Administrative Agent, the L/C Issuer, or any other Lender any other amount
required to be paid by it hereunder (including in respect of its participation
in Letters of Credit) within one Business Day of the date when due, (b) has
notified the Lead Borrower, the Administrative Agent or the L/C Issuer in
writing that it does not intend to comply with its funding obligations
hereunder, or has made a public statement to that effect, (c) has failed, within
three Business Days after written request by the Administrative Agent or the
Lead Borrower, to confirm in writing to the Administrative Agent and the Lead
Borrower that it will comply with its prospective funding obligations hereunder
(provided that such Lender shall cease to be a Defaulting Lender pursuant to
this clause (c) upon receipt of such written confirmation by the Administrative
Agent and the Lead Borrower), or (d) has, or has a direct or indirect parent
company that has, (i) become the subject of a proceeding under any Debtor Relief
Law, or (ii) had appointed for it a receiver, interim receiver and manager,
custodian, conservator, trustee, administrator, assignee for the benefit of
creditors or similar Person charged with reorganization or liquidation of its
business or assets, including the Federal Deposit Insurance Corporation or any
other state, provincial, federal or foreign regulatory authority acting in such
a capacity; provided that a Lender shall not be a Defaulting Lender solely by
virtue of the ownership or acquisition of any Equity Interest in that Lender or
any direct or indirect parent company thereof by a Governmental Authority so
long as such ownership interest does not result in or provide such Lender with
immunity from the jurisdiction of courts within the United States or from the
enforcement of judgments or writs of attachment on its assets or permit such
Lender (or such Governmental Authority) to reject, repudiate, disavow or
disaffirm any contracts or agreements made with such Lender. Any determination
by the Administrative Agent that a Lender is a Defaulting Lender under any one
or more of clauses (a) through (d) above, and of the effective date of such
status, shall be conclusive and binding absent manifest error, and such Lender
shall be deemed to be a Defaulting Lender (subject to Section 2.18(b)) as of the
date established therefor by the Administrative Agent in a written notice of
such determination, which shall be delivered by the Administrative Agent to the
Lead Borrower, the L/C Issuer and each other Lender promptly following such
determination.

“Determination Date” shall mean the date upon which each of the following has
occurred:

(a) The Commitments have been terminated by the Required Lenders (or are deemed
terminated) upon the occurrence of an Event of Default; or

 

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(b) The Obligations and/or any of the Foreign Liabilities have been declared to
be due and payable (or have become automatically due and payable) pursuant to
Section 8.02 and have not been paid in accordance with the terms of this
Agreement.

“Dilution Percent” means, for any period, that percentage reasonably determined
by the Agents in their Permitted Discretion by dividing (a) the amount of
charge-offs, returns of goods purchased from the Borrowing Base Parties and any
other non-cash reductions to trade receivables during such period which had, at
the time of sale, resulted in the creation of a trade receivable, by (b) the
amount of sales (exclusive of sales and other similar taxes) of the Borrowing
Base Parties during such period.

“Dilution Reserve” means a Reserve in amounts established by any Agent from time
to time in its Permitted Discretion as being appropriate to reflect that the
Dilution Percent is or is reasonably anticipated to be greater than five percent
(5%).

“DIP Intercreditor Agreement” means that certain Intercreditor Agreement, dated
as of the Effective Date, between the Administrative Agent and the DIP Term
Agent.

“DIP Term Agent” means OCM FIE, LLC, in its capacity as agent under the DIP Term
Facility.

“DIP Term Claims” means those Obligations pursuant to the DIP Term Facility.

“DIP Term Documents” means the “Loan Documents” as defined in the DIP Term
Facility.

“DIP Term Facility” means that certain Senior Secured Super-Priority
Debtor-In-Possession Credit Agreement initially by and among Parent, QS
Wholesale, Inc., as borrower, the “Guarantors” party thereto, the DIP Term Agent
and the DIP Term Lender, the terms of which shall be reasonably satisfactory to
the Administrative Agent.

“DIP Term Lender” means Big Wave.

“DIP Term Liens” means those Liens granted to the DIP Term Agent pursuant to the
DIP Term Facility to secure the DIP Term Claims.

“DIP Term Priority Collateral” has the meaning given to “Term Loan Priority
Collateral” in the DIP Intercreditor Agreement.

“DIP Term Termination Date” has the meaning given to “Termination Date” in the
DIP Term Facility.

“DIP Superpriority Claim” means the allowed superpriority administrative expense
claim granted to the Secured Parties in each of the Cases and any Successor
Cases pursuant to Section 364(c)(1) of the Bankruptcy Code for all of the
Obligations with priority over any and all administrative expense claims and
unsecured claims against the Debtors or their estates in any of these Cases and
any Successor Cases, at any time existing or arising, of any kind or nature
whatsoever, including administrative expenses of the kinds specified in or
ordered pursuant to Sections 105, 326, 328, 330, 331, 365, 503(a), 503(b),
507(a), 507(b) (except as set forth in the Orders), 546(c), 546(d), 726 (to the
extent permitted by law), 1113, and 1114 of the Bankruptcy Code, and any other
provision of the Bankruptcy Code, which shall at

 

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all times be senior to the rights of the Debtors and their estates, and any
successor trustee or other estate representative; provided, however, that the
DIP Superpriority Claim shall attach to the proceeds of Avoidance Actions;
provided, further, that the DIP Superpriority Claim shall be subject to
Permitted Encumbrances and the Carve-Out.

“Disclosure Statement” has the meaning set forth in 8.01(z)(iv).

“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) (whether in one
transaction or in a series of transactions) of any property (including, without
limitation, any Equity Interests) by any Person, including any sale, assignment,
transfer or other disposal, with or without recourse, of any notes or accounts
receivable or any rights and claims associated therewith.

“Disqualified Stock” means any Equity Interest that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable (other than solely
for Equity Interests that do not constitute Disqualified Stock), pursuant to a
sinking fund obligation or otherwise, or redeemable (other than solely for
Equity Interests that do not constitute Disqualified Stock) at the option of the
holder thereof, in whole or in part, on or prior to the date that is 91 days
after the Maturity Date; provided, however, that (i) only the portion of such
Equity Interests which so matures or is so mandatorily redeemable, is so
convertible or exchangeable or is so redeemable at the option of the holder
thereof prior to such date shall be deemed to be Disqualified Stock and
(ii) with respect to any Equity Interests issued to any employee or to any plan
for the benefit of employees of the Parent or its Subsidiaries or by any such
plan to such employees, such Equity Interest shall not constitute Disqualified
Stock solely because it may be required to be repurchased by the Parent or one
of its Subsidiaries in order to satisfy applicable statutory or regulatory
obligations or as a result of such employee’s termination, resignation, death or
disability and if any class of Equity Interest of such Person that by its terms
authorizes such Person to satisfy its obligations thereunder by delivery of an
Equity Interest that is not Disqualified Stock, such Equity Interests shall not
be deemed to be Disqualified Stock. Notwithstanding the preceding sentence, any
Equity Interest that would constitute Disqualified Stock solely because the
holders thereof have the right to require a Loan Party to repurchase such Equity
Interest upon the occurrence of a change of control or an asset sale shall not
constitute Disqualified Stock. The amount of Disqualified Stock deemed to be
outstanding at any time for purposes of this Agreement will be the maximum
amount that the any Loan Party may become obligated to pay upon maturity of, or
pursuant to any mandatory redemption provisions of, such Disqualified Stock or
portion thereof, plus accrued dividends.

“Dollar Equivalent” means, at any time, (a) with respect to any amount
denominated in Dollars, such amount, and (b) with respect to any amount
denominated in any Alternative Currency, the equivalent amount thereof in
Dollars as determined by the Administrative Agent or the L/C Issuer, as the case
may be, at such time on the basis of the Spot Rate (determined in respect of the
most recent Revaluation Date) for the purchase of Dollars with such Alternative
Currency.

 

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“Dollars” and “$” mean the lawful currency of the United States.

“Domestic Availability” means, as of any date of determination thereof, the
result, if a positive number, of:

(a) the Domestic Loan Cap

minus

(b) the Total Domestic Outstandings on such date.

“Domestic Borrowers” has the meaning specified in the introductory paragraph
hereto.

“Domestic Borrowing” means a Committed Domestic Borrowing made to the Domestic
Borrowers.

“Domestic Borrowing Base” means, at any time of calculation, an amount equal to:

(a) the face amount of Eligible Credit Card Receivables of the Domestic
Borrowers multiplied by the Credit Card Advance Rate;

plus

(b) the face amount of Eligible Trade Receivables of the Domestic Borrowers (net
of Receivables Reserves applicable thereto) multiplied by the Receivables
Advance Rate;

plus

(c) the Cost of Eligible Inventory (other than Eligible In-Transit Inventory) of
the Domestic Borrowers, net of Inventory Reserves applicable thereto, multiplied
by the Appraisal Percentage of the Appraised Value of Eligible Inventory (other
than Eligible In-Transit Inventory) of the Domestic Borrowers;

plus

(d) the lesser of (i) $27,750,000 and (ii) the sum of (x) the Cost of Eligible
In-Transit Inventory of the Domestic Borrowers, net of Inventory Reserves
applicable thereto, multiplied by the Appraisal Percentage of the Appraised
Value of Eligible In-Transit Inventory of the Domestic Borrowers, and (y) with
respect to any Eligible Letter of Credit, the Appraisal Percentage of the
Appraised Value of the Inventory of the Domestic Borrowers supported by such
Eligible Letter of Credit, multiplied by the Cost of such Inventory of the
Domestic Borrowers when completed, net of applicable Reserves;

minus

(e) the aggregate of (i) the Foreign Liability Reserve, (ii) the Carve-Out
Reserve and (iii) the then amount of all other Availability Reserves (without
duplication) applicable to any of the Loan Parties. In no event shall the amount
of Availability Reserves subtracted in calculating the

 

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Domestic Borrowing Base be duplicative of Availability Reserves subtracted in
calculating any other Borrowing Base.

“Domestic Commitments” means, as to each Domestic Lender, its obligation to
(a) make Committed Domestic Loans to the Domestic Borrowers pursuant to
Section 2.01, and (b) purchase participations in Domestic L/C Obligations, in an
aggregate principal amount at any one time outstanding not to exceed the amount
set forth opposite such Domestic Lender’s name on Schedule 2.01 or in the
Assignment and Assumption pursuant to which such Domestic Lender becomes a party
hereto, as applicable, as such amount may be adjusted from time to time in
accordance with this Agreement.

“Domestic Concentration Account” means the account maintained by the
Administrative Agent at Bank of America into which cash receipts and collections
of the Domestic Loan Parties (including, without limitation, from the
Collateral) are deposited to the extent required hereby or by any other Loan
Document.

“Domestic Credit Extensions” mean each of the following: (a) a Domestic
Borrowing and (b) a Domestic L/C Credit Extension.

“Domestic Credit Party” or “Domestic Credit Parties” means (a) individually,
(i) each Domestic Lender and its Lender Affiliates, (ii) the Agents and their
respective Lender Affiliates, (iii) each L/C Issuer of any Domestic Letter of
Credit and (iv) the successors and assigns of each of the foregoing, and
(b) collectively, all of the foregoing.

“Domestic Facility” means the revolving credit facility in favor of the Domestic
Borrowers established pursuant to this Agreement.

“Domestic L/C Borrowing” means an extension of credit resulting from a drawing
under any Domestic Letter of Credit which has not been reimbursed on or prior to
the date required to be reimbursed by the Domestic Borrowers pursuant to
Section 2.03(c)(i) or refinanced as a Committed Domestic Borrowing.

“Domestic L/C Credit Extension” means, with respect to any Domestic Letter of
Credit, the issuance thereof or extension of the expiry date thereof, or the
increase of the amount thereof.

“Domestic L/C Obligations” means, as at any date of determination and without
duplication, the aggregate Stated Amount of all outstanding Domestic Letters of
Credit plus the aggregate of all Unreimbursed Amounts under Domestic Letters of
Credit, including all Domestic L/C Borrowings.

“Domestic Lenders” means the Lenders having Domestic Commitments from time to
time or at any time.

“Domestic Letter of Credit” means each Letter of Credit issued hereunder for the
account of the Domestic Borrowers.

“Domestic Letter of Credit Sublimit” means an amount equal to $40,000,000. The
Domestic Letter of Credit Sublimit is part of, and not in addition to, the
Aggregate Domestic Commitments. A permanent

 

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reduction of the Aggregate Domestic Commitments shall not require a
corresponding pro rata reduction in the Domestic Letter of Credit Sublimit;
provided, however, that if the Aggregate Domestic Commitments are reduced to an
amount less than the Domestic Letter of Credit Sublimit, then the Domestic
Letter of Credit Sublimit shall be reduced to an amount equal to (or, at Lead
Borrower’s option, less than) the Aggregate Domestic Commitments.

“Domestic Loan” means an extension of credit by a Domestic Lender to the
Domestic Borrowers under Article II in the form of a Committed Loan.

“Domestic Loan Cap” means, at any time of determination, the lesser of (a) the
Aggregate Domestic Commitments minus the Foreign Liability Reserve and (b) the
Domestic Borrowing Base.

“Domestic Loan Parties” means, collectively, the Parent, the Domestic Borrowers
and each Domestic Subsidiary that is a Guarantor of the Obligations. “Domestic
Loan Party” means any one of such Persons.

“Domestic Note” means a promissory note made by the Domestic Borrowers in favor
of a Domestic Lender evidencing Domestic Loans made by such Domestic Lender, in
form and substance in satisfactory to the Administrative Agent and each
applicable Lender.

“Domestic Overadvance” means a Domestic Credit Extension to the extent that,
immediately after the making of such Domestic Credit Extension, the aggregate
principal balance of all Domestic Credit Extensions then outstanding exceeds the
Domestic Loan Cap as then in effect.

“Domestic Prime Rate Loan” means a Loan that bears interest based on the Prime
Rate.

“Domestic Subsidiary” means any Subsidiary that is organized under the laws of
any political subdivision of the United States.

“E-Commerce Agreement” means that certain Amended and Restated E-Commerce
Agreement dated as of September 6, 2011 by and between QS Retail, Inc. and GSI.

“Effective Date” means the first date on which the conditions set forth in
Sections 4.01 and 4.02 have been satisfied or waived by the Agent and the
Lenders.

“Eligible Assignee” means (a) a Lender or any of its Lender Affiliates; (b) a
bank, insurance company, or company engaged in the business of making commercial
loans, which Person, together with its Lender Affiliates, has a combined capital
and surplus in excess of $250,000,000; (c) an Approved Fund; (d) any Person to
whom a Lender assigns its rights and obligations under this Agreement as part of
an assignment and transfer of such Lender’s rights in and to a material portion
of such Lender’s portfolio of asset based credit facilities, and (e) any other
Person (other than a natural person) approved by (i) the Administrative Agent
and the L/C Issuer (each such approval not to be unreasonably withheld or
delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall
not include the Parent or any of its Subsidiaries or other Affiliates.

 

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“Eligible Credit Card Receivables” means, at the time of any determination
thereof, each Credit Card Receivable that satisfies the following criteria at
the time of creation and continues to meet the same at the time of such
determination: such Credit Card Receivable (i) has been earned by performance
and represents the bona fide amounts due to a North America Borrowing Base Party
from a Credit Card Issuer or Credit Card Processor, and in each case originated
in the ordinary course of business of such North America Borrowing Base Party,
and (ii) in each case is acceptable to the Agents in their Permitted Discretion,
and is not ineligible for inclusion in the calculation of the Canadian Borrowing
Base or the Domestic Borrowing Base, as applicable, pursuant to any of clauses
(a) through (k) below. Without limiting the foregoing, to qualify as an Eligible
Credit Card Receivable, an Account shall indicate no Person other than a North
America Borrowing Base Party as payee or remittance party. In determining the
amount to be so included, the face amount of an Account shall be reduced by,
without duplication of any Reserve or any of clauses (a) through (k) below or
otherwise, to the extent not reflected in such face amount, (i) the amount of
all accrued and actual discounts, claims, credits or credits pending,
promotional program allowances, price adjustments, finance charges or other
allowances (including any amount that a North America Borrowing Base Party may
be obligated to rebate to a customer, a Credit Card Processor, or Credit Card
Issuer pursuant to the terms of any agreement or understanding (written or
oral)) and (ii) the aggregate amount of all cash received in respect of such
Account but not yet applied by the applicable North America Borrowing Base Party
to reduce the amount of such Credit Card Receivable. Any Credit Card Receivable
meeting the foregoing criteria shall be deemed to be an Eligible Credit Card
Receivable but only as long as such Credit Card Receivable is not included
within any of the following categories, in which case such Credit Card
Receivable shall not constitute an Eligible Credit Card Receivable, unless
otherwise agreed by the Agents:

(a) Credit Card Receivables which do not constitute an “Account” (as defined in
the UCC or the PPSA, as applicable);

(b) Credit Card Receivables that have been outstanding for more than five
(5) Business Days from the date of sale;

(c) Credit Card Receivables with respect to which a North America Borrowing Base
Party does not have good and valid title, free and clear of any Lien (other than
Liens granted to the Administrative Agent pursuant to the Security Documents and
other Permitted Encumbrances not having priority over, or that are pari passu
with, the Lien of the Administrative Agent under applicable Law);

(d) Credit Card Receivables that are not subject to a first priority Lien in
favor of the Administrative Agent pursuant to the Security Documents (other than
Permitted Encumbrances not having priority over, or that are pari passu with,
the Lien of the Administrative Agent under applicable Law) (it being the intent
that chargebacks in the ordinary course by such processors shall not be deemed
violative of this clause);

 

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(e) Credit Card Receivables which are disputed, are with recourse, or with
respect to which a claim, counterclaim, offset or chargeback has been asserted
(but only to the extent of such disputed amount, claim, counterclaim, offset or
chargeback);

(f) Credit Card Receivables as to which the Credit Card Processor or Credit Card
Issuer has the right under certain circumstances to require a North America
Borrowing Base Party to repurchase the Accounts from such Credit Card Processor
or Credit Card Issuer;

(g) Credit Card Receivables due from a Credit Card Issuer or Credit Card
Processor of the applicable credit card which is the subject of any proceeding
under any Debtor Relief Law;

(h) Credit Card Receivables which are not a valid, legally enforceable
obligation of the applicable Credit Card Issuer or Credit Card Processor with
respect thereto;

(i) Credit Card Receivables which do not conform in all material respects to all
representations, warranties or other provisions in the Loan Documents relating
to Credit Card Receivables or which are not payable in Dollars (with respect to
Credit Card Receivables of a Domestic Borrower) or in Dollars or CD$ (with
respect to Credit Card Receivables of a Canadian Loan Party);

(j) Credit Card Receivables which are evidenced by chattel paper or an
instrument of any kind unless such chattel paper or instrument is in the
possession of the Administrative Agent, and to the extent necessary or
appropriate, endorsed to the Administrative Agent; or

(k) Credit Card Receivables which any Agent determines in its Permitted
Discretion to be uncertain of collection.

Subject to Section 2.01(e) and Section 9.19, the Agents shall have the right to
establish or modify or eliminate Reserves against Eligible Credit Card
Receivables from time to time in their Permitted Discretion.

“Eligible GSI Consignment Inventory” means Inventory of QS Retail, Inc. held on
consignment by GSI in its capacity as e-commerce fulfillment service provider,
in accordance with the terms of the E-Commerce Agreement, which Inventory
satisfies each of the following conditions:

(a) possession of such Inventory is maintained by GSI until such time as GSI
shall ship Specified Inventory to customers of a Domestic Borrower upon purchase
thereof through e-commerce transactions fulfilled by GSI in accordance with the
E-Commerce Agreement;

(b) but for the application of clause (b) of the definition of Eligible
Inventory, such Inventory constitutes Eligible Inventory;

(c) QS Retail, Inc., as consignor, has a first-priority perfected Lien in such
Inventory, which Lien has been effectively assigned to the Administrative Agent
to secure the Obligations; and

 

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(d) such Inventory is subject to the terms of that certain Warehouse Bailment
Agreement dated as of September 6, 2011 among, inter alia, the Administrative
Agent, QS Retail, Inc. and GSI, or such other Collateral Access Agreement
reasonably acceptable to the Administrative Agent.

“Eligible In-Transit Inventory” means, as of any date of determination thereof,
without duplication of other Eligible Inventory, In-Transit Inventory:

(a) Which satisfies all of the requirements for Eligible Inventory other than
the requirement that it be located in the United States (with respect to
In-Transit Inventory of a Domestic Borrower) or Canada (with respect to
In-Transit Inventory of a Canadian Loan Party);

(b) Which has been fully paid for by the applicable North America Borrowing Base
Party, or, alternatively, for which the full purchase price thereof is secured
by a Commercial Letter of Credit issued under this Agreement;

(c) For which title to such In-Transit Inventory has passed to such North
America Borrowing Base Party;

(d) For which the purchase order is in the name of such North America Borrowing
Base Party;

(e) Which is scheduled for delivery within 45 days or less from the date of
shipment;

(f) For which an Acceptable BOL has been issued and in each case as to which the
Administrative Agent has possession of the Acceptable BOL which evidences
ownership of the subject In-Transit Inventory (which possession requirement can
be satisfied by the delivery of a Customs Broker Agreement from any third party
with possession over such Acceptable BOL);

(g) Which is in the possession of a common carrier or Eligible NVOCC which
issued the Acceptable BOL in respect of such In-Transit Inventory;

(h) The common carrier (to the extent an NVOCC has not engaged such common
carrier), NVOCC and customs broker (as applicable) with respect to such
In-Transit Inventory has entered into a Customs Broker Agreement which is then
in effect; and

(i) Which is fully insured by marine cargo and other insurance in accordance
with Section 5.10 and Section 6.08.

Subject to Section 2.01(e) and Section 9.19, the Agents shall have the right to
establish or modify or eliminate Reserves against Eligible In-Transit Inventory
from time to time in their Permitted Discretion.

“Eligible Inventory” means, as of the date of determination thereof, without
duplication of Eligible In-Transit Inventory, items of Inventory of a Borrowing
Base Party that are raw materials (consisting solely of blank t-shirts) or
finished goods, merchantable and readily saleable to the public in the ordinary

 

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course deemed by the Agents in their Permitted Discretion, to be eligible for
inclusion in the calculation of any Borrowing Base (including blank t-shirts
which otherwise satisfy the requirements set forth in this definition), in each
case that, except as otherwise agreed by the Agents, complies in all material
respects with each of the representations and warranties respecting Inventory
made by a Borrowing Base Party in the Loan Documents, and that is not excluded
as ineligible by virtue of one or more of the criteria set forth below. Except
as otherwise agreed by the Agents, the following items of Inventory shall not be
included in Eligible Inventory:

(a) Inventory that is not solely owned by a Borrowing Base Party or a Borrowing
Base Party does not have good and valid title thereto (including, without
limitation, as a result of retention of title to such Inventory by the supplier
thereof);

(b) Inventory that is leased by or is on consignment to a Borrowing Base Party
or, other than Eligible GSI Consignment Inventory, that is consigned by a
Borrowing Base Party to (or is subject to retention of title in favor of a
Borrowing Base Party with respect to) a Person which is not a Loan Party;

(c) Inventory (other than Eligible In-Transit Inventory) that (i) is not located
in the United States in the case of Inventory of a Domestic Borrower (excluding
territories or possessions thereof) or Canada (in the case of Inventory of the
Canadian Borrower), Australia (in the case of Inventory of the Australian
Borrower) or Japan (in the case of Inventory of the Japanese Borrower)
(excluding territories or possessions thereof), (ii) is in transit, (iii) is
located at a location that is not owned or leased by a Borrowing Base Party,
except either (x) with respect to the North America Borrowing Base Parties, to
the extent that a Collateral Access Agreement executed by the Person owning any
such location is delivered to the Administrative Agent, or (y) with respect to
any Borrowing Base Party, the Agents have established an Availability Reserve or
an Inventory Reserve with respect thereto (it being understood that
notwithstanding the delivery of a Collateral Access Agreement by a North America
Borrowing Base Party, the Agents may establish an Availability Reserve or an
Inventory Reserve for any location at which, pursuant to such Collateral Access
Agreement or otherwise, the Agents may be responsible for any charges for any
period of time other than during the actual occupancy of the premises by the
Agents), or (iv) is in the possession of any Person who is a processor;

(d) Inventory that is located in a distribution center leased by a Borrowing
Base Party except either (x) with respect to the North America Borrowing Base
Parties, to the extent that a Collateral Access Agreement executed by the
applicable lessor is delivered to the Administrative Agent, or (y) with respect
to any Borrowing Base Party, the Agents have established an Availability Reserve
or an Inventory Reserve with respect thereto (it being understood that
notwithstanding the delivery of a Collateral Access Agreement by a North America
Borrowing Base Party, the Agents may establish an Availability Reserve or an
Inventory Reserve for any location at which, pursuant to such Collateral Access
Agreement or otherwise, the Agents may be responsible for any charges for any
period of time other than during the actual occupancy of the premises by the
Agents);

 

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(e) Inventory that is comprised of goods which (i) are damaged, defective,
“seconds,” or otherwise unmerchantable, (ii) are to be returned to the vendor,
(iii) are obsolete or slow moving, or custom items, work-in-process, raw
materials (but excluding blank t-shirts), or that constitute spare parts,
display, promotional, marketing, packaging and shipping materials or supplies
used or consumed in a Borrowing Base Party’s business, (iv) are seasonal in
nature and which have been packed away for sale in a subsequent season, (v) are
not in compliance with all standards imposed by any Governmental Authority
having regulatory authority over such Inventory, its use or sale, (vi) are bill
and hold goods, or (vii) are of a type which is not held for sale by the
Borrowing Base Parties in the ordinary course of their business;

(f) Inventory that is not subject to a perfected first-priority security
interest in favor of the applicable Agent (and with respect to Inventory of the
Japanese Borrower, each of the Japanese Secured Parties) pursuant to the
Security Documents (other than Permitted Encumbrances not having priority over,
or that are pari passu with, the Lien of such Agent (and with respect to
Inventory of the Japanese Borrower, each of the Japanese Secured Parties) under
applicable Law, or having priority but acceptable to the Collateral Agent in
their Permitted Discretion);

(g) Inventory that consists of samples, labels, bags, and other similar
non-merchandise categories;

(h) Inventory that is not insured in compliance with the provisions of
Section 5.10 and Section 6.08 hereof;

(i) Inventory that has been sold but not yet delivered or as to which a
Borrowing Base Party has accepted a deposit;

(j) Inventory that is subject to any licensing, patent, royalty, trademark,
trade name or copyright agreement with any third party which any Borrowing Base
Party or any of their Subsidiaries has received notice of a dispute in respect
of any such agreement or which would require the payment of fees or royalties to
or the consent of the licensor under such agreement for any sale or other
disposition of such Inventory by the Agents, unless the Agents have reviewed the
underlying agreements and determined the terms to be acceptable, and subject to
the imposition of a Reserve for the payment of any such fees or royalties;

(k) Inventory, the assignment or pledge of which is prohibited under agreements
between any Loan Party and lessors of any leased premises or other third party
locations if, unless otherwise agreed by the Agents in their Permitted
Discretion, consent from such lessor has not been obtained to the reasonable
satisfaction of the Administrative Agent; or

(l) [reserved].

Subject to Section 2.01(e) and Section 9.19, the Agents and, if applicable, the
Administrative Agent shall have the right to establish or modify or eliminate
Reserves against Eligible Inventory from time to time in their Permitted
Discretion.

 

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“Eligible Letter of Credit” means, as of any date of determination thereof, a
Commercial Letter of Credit issued for the account of a North America Borrowing
Base Party which supports the full purchase price of Inventory (other than
In-Transit Inventory), (a) which Inventory does not constitute Eligible
In-Transit Inventory and for which no Acceptable BOL or other documents of title
have then been issued; (b) which Commercial Letter of Credit (i) has an expiry
within 45 days of the date of determination, and (ii) provides that such
Commercial Letter of Credit may be drawn only after the Inventory is completed
and after an Acceptable BOL has been issued for such Inventory; and (c) with
respect to the Inventory to be purchased with such Commercial Letter of Credit,
such Inventory satisfies all of the requirements for Eligible In-Transit
Inventory other than the requirement set forth in clause (e) of the definition
of the term herein.

“Eligible NVOCC” means, with respect to any In-Transit Inventory, an NVOCC for
such In-Transit Inventory that (i) is not an Affiliate of a Borrowing Base Party
or the applicable foreign vendor and is otherwise acceptable to the Agents;
(ii) is engaged by a Domestic Borrower or a Canadian Loan Party as freight
forwarder with respect to such In-Transit Inventory; (iii) has received from the
carrier a tangible bill of lading with respect to such In-Transit Inventory that
names such NVOCC as consignee; (iv) has issued an Acceptable BOL to the order of
a North America Borrowing Base Party in respect of such In-Transit Inventory;
and (v) has entered into a Customs Broker Agreement which is then in effect.

“Eligible Trade Receivables” means Accounts arising from the sale of a Borrowing
Base Party’s Inventory (other than those consisting of Credit Card Receivables)
that satisfy the following criteria at the time of creation and continue to meet
the same at the time of such determination: such Account (i) has been earned by
performance and represents the bona fide amounts due to a Borrowing Base Party
from an account debtor, and in each case originated in the ordinary course of
business of such Borrowing Base Party, and (ii) in each case is acceptable to
the Agents in their Permitted Discretion, and is not ineligible for inclusion in
the calculation of any Borrowing Base pursuant to any of clauses (a) through
(v) below. Without limiting the foregoing, to qualify as an Eligible Trade
Receivable, an Account shall indicate no Person other than a Borrowing Base
Party as payee or remittance party. In determining the amount to be so included,
the face amount of an Account shall be reduced by, without duplication, to the
extent not reflected in such face amount, (i) the amount of all accrued and
actual discounts, claims, credits or credits pending, promotional program
allowances, price adjustments, finance charges or other allowances (including
any amount that a Borrowing Base Party may be obligated to rebate to a customer
pursuant to the terms of any agreement or understanding (written or oral)) and
(ii) the aggregate amount of all cash received in respect of such Account but
not yet applied by the applicable Borrowing Base Party to reduce the amount of
such Eligible Trade Receivable. Any Account meeting the foregoing criteria shall
be deemed to be an Eligible Trade Receivable but only as long as such Account is
not included within any of the following categories, in which case such Account
shall not constitute an Eligible Trade Receivable, unless otherwise agreed by
the Agents:

(a) Accounts that are not evidenced by an invoice;

(b) Accounts (i) that have been outstanding for more than ninety (90) days from
the original invoice date (or, (x) with respect to Accounts of the Domestic
Borrowers and/or the Australian

 

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Borrower having an aggregate face amount not in excess of $10,000,000, more than
one hundred twenty (120) days from the original invoice date, and (y) with
respect to Accounts of the Domestic Borrowers and/or the Australian Borrower,
without duplication of the Accounts described in clause (x), Accounts having an
aggregate face amount not in excess of $1,000,000, more than one hundred eighty
(180) days from the original invoice date) or (ii) that are more than sixty
(60) days past the due date;

(c) Accounts due from any account debtor if fifty percent (50%) or more of
Accounts due from account debtor are ineligible under the provisions of clause
(b) above;

(d) Accounts with respect to which a Borrowing Base Party does not have good and
valid title thereto, free and clear of any Lien (other than Liens granted to the
Agents pursuant to the Security Documents and other Permitted Encumbrances not
having priority over, or that are pari passu with, the Lien of the Agents under
applicable Law);

(e) Accounts that are not subject to a first priority security interest in favor
of the applicable Agent (and with respect to Accounts of the Japanese Borrower,
each of the Japanese Secured Parties) pursuant to the Security Documents (other
than Permitted Encumbrances not having priority over, or that are pari passu
with, the Lien of such Agent (and with respect to Accounts of the Japanese
Borrower, each of the Japanese Secured Parties) under applicable Law);

(f) Accounts which are disputed or with respect to which a claim, counterclaim,
offset or chargeback has been asserted, but only to the extent of such dispute,
counterclaim, offset or chargeback;

(g) Accounts which arise out of any sale made not in the ordinary course of
business, made on a basis other than upon credit terms usual to the business of
a Borrowing Base Party;

(h) Accounts which are owed by any account debtor whose principal place of
business is not within (i) the United States (with respect to the Domestic
Borrowers), (ii) Canada (with respect to the Canadian Loan Parties),
(iii) Australia (with respect to the Australian Borrower), or (iv) Japan (with
respect to the Japanese Borrower);

(i) Accounts which are owed by any Affiliate or any employee of a Loan Party;

(j) Accounts for which all consents, approvals or authorizations of, or
registrations or declarations with any Governmental Authority required to be
obtained, effected or given in connection with the performance of such Account
by the account debtor or in connection with the enforcement of such Account by
the Agents have not been duly obtained, effected or given and are not in full
force and effect;

(k) Accounts due from an account debtor which is the subject of any bankruptcy
or insolvency proceeding, has had a trustee or receiver appointed for all or a
substantial part of its property, has made an assignment for the benefit of
creditors or has suspended its business;

 

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(l) Accounts due from (i) the federal government of the United States of America
unless such Accounts have been assigned by the applicable Borrowing Base Party
to the Administrative Agent in accordance with the Federal Assignment of Claims
Act of 1940 or (ii) the federal government of Canada or a political subdivision
thereof, or any province or territory, or any municipality or department or
agency or instrumentality thereof unless the provisions of the Financial
Administration Act (Canada) or any applicable provincial, territorial or
municipal law of similar purpose and effect restricting the assignment thereof,
as the case may be, have been complied with, or any other Governmental Authority
except to the extent reasonably acceptable to the Collateral Agent and, if
applicable, the Administrative Agent; and in any event such Accounts described
in this subsection shall not exceed $6,000,000 at any time outstanding;

(m) Accounts (i) owing from any Person that is also a supplier to or creditor of
a Loan Party or any of its Subsidiaries unless such Person has waived any right
of setoff in a manner reasonably acceptable to the Agents, or (ii) representing
any manufacturer’s or supplier’s credits, discounts, incentive plans or similar
arrangements entitling a Loan Party or any of its Subsidiaries to discounts on
future purchase therefrom;

(n) Accounts arising out of sales on a bill-and-hold, guaranteed sale,
sale-or-return, sale on approval or consignment basis (other than Accounts due
from GSI arising in connection with the Disposition of Eligible GSI Consignment
Inventory) or subject to any right of return;

(o) Accounts arising out of sales to account debtors outside (i) the United
States (with respect to Accounts of a Domestic Borrower), (ii) Canada (with
respect to Accounts of a Canadian Loan Party), (iii) Australia (with respect to
Accounts of the Australian Borrower), or (iv) Japan (with respect to Accounts of
the Japanese Borrower), unless, in each case, such Accounts are fully backed by
an irrevocable letter of credit on terms, and issued by a financial institution,
reasonably acceptable to the Agents;

(p) Accounts payable other than (i) in Dollars (with respect to Accounts of a
Domestic Borrower), (ii) in Dollars or CD$ (with respect to Accounts of a
Canadian Loan Party), (iii) in Australian Dollars (with respect to Accounts of
the Australian Borrower), or (iv) Yen (with respect to Accounts of the Japanese
Borrower);

(q) Accounts evidenced by a judgment, chattel paper, promissory note or other
instrument;

(r) Accounts consisting of amounts due from vendors as rebates or allowances, or
as finance or interest charges;

(s) Accounts which are in excess of the credit limit for such account debtor
established by a Borrowing Base Party in the ordinary course of business and
consistent with past practices;

(t) Accounts which include extended payment terms (datings) beyond those
generally furnished to other account debtors in the ordinary course of business;

 

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(u) Accounts due from an account debtor and its Affiliates, where the aggregate
amount due on such Accounts to the Borrowing Base Parties at any time exceeds
fifteen percent (15%) of the total Eligible Trade Receivables then due to such
Borrowing Base Parties, only to the extent of such amount in excess of fifteen
percent (15%) of the total Eligible Trade Receivables due to such Borrowing Base
Parties; provided that the foregoing shall not apply to the account debtors
listed on Schedule 1.06 (who shall rather be subject to the percentages set
forth therein);

(v) Accounts owing from any Embargoed Person or from any Person located in a
jurisdiction other than that in which the applicable Borrower is organized,
which, in either case, a Lender notifies the Loan Parties in writing shall be
ineligible;

(w) Accounts, the assignment or pledge of which is prohibited under agreements
between any Loan Party and lessors of any leased premises or with any Account
debtor, if, unless otherwise agreed by the Agents in their Permitted Discretion,
consent from such lessor or Account debtor has not been obtained to the
reasonable satisfaction of the Administrative Agent; or

(x) Accounts which any Agent determines in its Permitted Discretion to be
unacceptable for borrowing.

Subject to Section 2.01(e) and Section 9.19, the Agents and, if applicable, the
Administrative Agent, shall have the right to establish or modify or eliminate
Reserves against Eligible Trade Receivables from time to time in their Permitted
Discretion.

“Embargoed Person” means any party that (i) is publicly identified on the most
current list of “Specially Designated Nationals and Blocked Persons” published
by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) or
(ii) resides, is organized or chartered, or has a place of business in a country
or territory that is the subject of OFAC sanctions programs.

“Environmental Laws” means any and all federal, state, provincial, territorial,
municipal, local, and foreign statutes, laws, regulations, ordinances, final and
enforceable rules, judgments, orders, decrees or governmental restrictions
governing pollution and the protection of the environment or the release of any
materials into the environment, including those governing Hazardous Materials,
air emissions and discharges to waste or public systems.

“Environmental Liability” means any liability, obligation, damage, loss, claim,
action, suit, judgment, order, fine, penalty, fee, expense, or cost (including
any liability for damages, costs of environmental remediation, fines, penalties
or indemnities), of any Borrower, any other Loan Party or any of their
respective Subsidiaries resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal or presence of any Hazardous Materials, (c) exposure to
any Hazardous Materials, (d) the release or threatened release of any Hazardous
Materials into the environment or (e) any contract, agreement or other
consensual arrangement imposing liability under Environmental Law or for
Hazardous Materials.

 

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“Environmental Permit” means any permit, approval, license or other
authorization required under any Environmental Law.

“Equipment” shall mean “equipment”, as defined in the UCC or in the PPSA, and
shall also mean all furniture, store fixtures, motor vehicles, rolling stock,
machinery, office equipment, plant equipment, tools, dies, molds, and other
goods, property, and assets which are used and/or were purchased for use in the
operation or furtherance of a Loan Party’s (or any applicable Subsidiary’s)
business, and any and all accessions or additions thereto, and substitutions
therefor.

“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, and
all of the warrants or options for the purchase or acquisition from such Person
of shares of capital stock of (or other ownership or profit interests in) such
Person.

“Equivalent Amount” means, with respect to any Alternative Currency, the
equivalent amount thereof determined by the Administrative Agent at such time on
the basis of the Spot Rate.

“ERISA” means the Employee Retirement Income Security Act of 1974.

“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with a Loan Party within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan;
(b) the withdrawal of any Domestic Loan Party or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which such
entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or
a cessation of operations that is treated as such a withdrawal under
Section 4062(e) of ERISA; (c) a complete or partial withdrawal by a Domestic
Loan Party or any ERISA Affiliate from a Multiemployer Plan or notification that
a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent
to terminate, the treatment of a Pension Plan amendment as a termination under
Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings
to terminate a Pension Plan; (f) any event or condition which constitutes
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan; (g) the determination that any
Pension Plan is considered an at-risk plan or a plan in endangered or critical
status within the meaning of Sections 430, 431 and 432 of the Code or Sections
303, 304 and 305 of ERISA; or (h) the imposition of any liability under Title IV
of ERISA, other than for PBGC premiums due but not delinquent under Section 4007
of ERISA, upon any Borrower or any ERISA Affiliate.

“Euro” and “€” mean the single currency of the Participating Member States.

“Eurocurrency Interbank Market” means any lawful recognized market in which
deposits of Dollars and the relevant Alternative Currencies are offered by
international banking units of United States banking institutions and by foreign
banking institutions to each other and in which foreign currency and exchange
operations are customarily conducted.

 

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“European Subsidiary” means any Subsidiary of the Parent organized under the
laws of any European Governmental Authority.

“Event of Default” has the meaning specified in Section 8.01.

“Excluded Swap Obligation” means, with respect to any Loan Party, any Swap
Obligation if, and to the extent that, all or a portion of the Guarantee of such
Loan Party of, or the grant under a Loan Document by such Loan Party of a
security interest to secure, such Swap Obligation (or any Guarantee thereof) is
or becomes illegal under the Commodity Exchange Act (or the application or
official interpretation thereof) by virtue of such Loan Party’s failure for any
reason to constitute an “eligible contract participant” as defined in the
Commodity Exchange Act at the time the Guarantee of such Loan Party, or grant by
such Loan Party of a security interest, becomes effective with respect to such
Swap Obligation. If a Swap Obligation arises under a Master Agreement governing
more than one Swap Contract, such exclusion shall apply only to the portion of
such Swap Obligation that is attributable to Swap Contracts for which such
Guarantee or security interest becomes illegal.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to
any Recipient or required to be withheld or deducted from a payment to a
Recipient, (a) Taxes imposed on or measured by net income (however denominated),
franchise Taxes, branch profits Taxes or similar Taxes, in each case,
(i) imposed by the jurisdiction (or any political subdivision thereof) in which
such Recipient is organized, has its principal office, or in which it is
otherwise doing business or, in the case of any Lender, the jurisdiction (or any
political subdivision thereof) in which its Lending Office is located, or
(ii) that are Other Connection Taxes, (b) in the case of (A) a Lender,
withholding Taxes imposed on amounts payable to or for the account of such
Lender with respect to an applicable interest in a Loan or Commitment pursuant
to a law in effect on the date on which (i) such Lender acquires such interest
in the Loan or Commitment or, if such Lender is an intermediary, partnership, or
other flow-through entity for Japanese tax purposes, the later of the date on
which such Lender acquires such interest in the Loan or Commitment and the date
on which the relevant beneficiary, partner or member of such Lender becomes such
a beneficiary, partner or member (other than pursuant to an assignment request
by the Borrower under Section 10.13) or (ii) such Lender changes its Lending
Office, except in each case to the extent that such Lender (or its assignor, if
any) was entitled, immediately prior to the designation of a new Lending Office
(or assignment) to receive additional amounts from the Loan Parties with respect
to such withholding, pursuant to Section 3.01(a)(ii), (B) any Agent, L/C Issuer
or other Recipient of a payment by or on account of any obligation or any Loan
Party under any Loan Document, any withholding tax that is imposed on amounts
payable to such Person at the time such Person becomes a party to this Agreement
(or changes its Lending Office), (c), amounts with respect to such Taxes were
payable either to such Lender’s assignor immediately before such Lender became a
party hereto or to such Lender immediately before it changed its Lending Office,
(d) Taxes attributable to such Recipient’s failure to comply with
Section 3.01(e), (e) any withholding Taxes imposed pursuant to FATCA, and (f) in
the case of a Non-Qualifying Japanese Lender, any Japanese withholding Tax that
is imposed on amounts payable hereunder to such Non-Qualifying Japanese Lender
or its designee. For the avoidance

 

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of doubt, any Participant that is entitled to the benefits of Section 3.01(a)
shall be treated as a Lender for purposes of this defined term.

“Executive Order” has the meaning set forth in Section 10.18.

“Existing ABL Agent” means Bank of America, N.A., as agent pursuant to the
Existing ABL Credit Agreement, and any successor thereto.

“Existing ABL Lenders” means the lenders under the Existing ABL Credit
Agreement.

“Existing ABL Liens” has the meaning set forth in the recitals hereto.

“Existing ABL Obligations” means all outstanding amounts of the Credit
Extensions provided under the Existing ABL Credit Agreement as of the Petition
Date.

“Existing ABL Credit Agreement” has the meaning set forth in the recitals
hereto.

“Existing ABL Credit Agreement Collateral Account” means a funded escrow account
in the sum of $250,000 established under the Orders to secure any contingent
indemnification obligations under the Existing ABL Credit Agreement.

“Existing Letters of Credit” means the letters of credit outstanding on the
Effective Date issued under the Existing ABL Credit Agreement and described on
Schedule 1.04 hereto.

“Existing Liens” shall have the meaning set forth in the recitals hereto.

“Existing Notes Intercreditor Agreement” means that certain Second Amended and
Restated Intercreditor Agreement, dated as of July 16, 2013, between the
Administrative Agent and the Existing Senior Secured Note Agent.

“Existing Senior Secured Indenture” means that certain Indenture dated July 16,
2013, pursuant to which Parent, as issuer, issued $280 million in aggregate
initial principal amount of 7.875% senior secured notes due 2018, with U.S. Bank
National Association (successor in interest to Wells Fargo Bank, National
Association), as trustee and collateral agent.

“Existing Senior Secured Note Collateral Agent” means U.S. Bank National
Association.

“Existing Senior Secured Note Documents” means the “Notes Documents” as defined
in the Existing Senior Secured Indenture.

“Existing Senior Secured Note Liens” means the “Note Liens” in favor of the
Existing Senior Secured Note Collateral Agent, as defined in the Existing Senior
Secured Indenture.

“Existing Senior Secured Note Obligations” means all “Note Obligations” as
defined in the Existing Senior Secured Indenture.

“Existing Senior Secured Noteholders” means the holders of the 7.875% Senior
Secured Notes.

 

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“Facility Guaranty” means (a) that certain Amended and Restated Guarantee of the
Obligations made by each Guarantor that is a Domestic Loan Party in favor of the
Administrative Agent and the other Credit Parties, dated as of May 24, 2013, and
(b) that certain Guarantee of the Australian Liabilities, the Canadian
Liabilities and the Japanese Liabilities made by each Guarantor that is a
Foreign Loan Party in favor of the Administrative Agent and the other Foreign
Credit Parties, dated as of May 24, 2013, as each has been ratified and
confirmed pursuant to the Reaffirmation Agreement.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof, any intergovernmental
agreements related thereto, and any agreements entered into pursuant to
Section 1471(b)(1) of the Code.

“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of
America on such day on such transactions as determined by the Administrative
Agent.

“Fee Letter” means the amended and restated letter agreement, dated as of the
Effective Date, among the Parent, the Administrative Agent, and MLPFS.

“Final Order” means an order or judgment as entered on the docket of the
Bankruptcy Court with respect to the Cases substantially in the form of the
Interim Order, with only such modifications as are satisfactory in form and
substance to the Required Lenders, which order shall (x) have been entered on
such prior notice to such parties as may be satisfactory to the Required Lenders
and (y) not have been vacated, reversed, modified, amended or stayed.

“Final Order Date” means the date of the entry of the Final Order.

“Fiscal Month” means any fiscal month of any Fiscal Year, which month shall
generally end on the last day of each calendar month in accordance with the
fiscal accounting calendar of the Loan Parties.

“Fiscal Quarter” means any fiscal quarter of any Fiscal Year, which quarters
shall generally end on the last day of each April, July, October and January of
such Fiscal Year in accordance with the fiscal accounting calendar of the Loan
Parties.

“Fiscal Year” means any period of twelve (12) consecutive months ending on
October 31st of any calendar year.

 

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“Foreign Assets Control Regulations” has the meaning set forth in Section 10.18.

“Foreign Borrower” means (a) individually, the Australian Borrower, the Canadian
Borrower and the Japanese Borrower, and (b) collectively, all of the foregoing.

“Foreign Commitment” means (a) individually, the Commitment of a Foreign Lender
to make Australian Credit Extensions, the Commitment of a Foreign Lender to make
Canadian Credit Extensions or the Commitment of a Foreign Lender to make
Japanese Credit Extensions, as the context may require, and (b) collectively,
all of the foregoing.

“Foreign Concentration Account” means (a) individually, each Australian
Concentration Account, each Canadian Concentration Account, and each Japanese
Concentration Account, and (b) collectively, all of the foregoing.

“Foreign Credit Party” or “Foreign Credit Parties” means (a) individually, each
Australian Credit Party, each Canadian Credit Party and each Japanese Credit
Party, and (b) collectively, all of the foregoing.

“Foreign Credit Extension” means (a) individually, each Australian Credit
Extension, each Canadian Credit Extension and each Japanese Credit Extension,
and (b) collectively, all of the foregoing.

“Foreign Guarantors” means (a) individually, each Foreign Loan Party which is a
Guarantor of the Australian Liabilities, the Canadian Liabilities and the
Japanese Liabilities, and (b) collectively, all of the foregoing.

“Foreign Lenders” means the Lenders having Foreign Commitments from time to time
or at any time.

“Foreign Liability” or “Foreign Liabilities” means (a) individually, each
Australian Liability, each Canadian Liability and each Japanese Liability as the
context may require, and (b) collectively, all of the foregoing.

“Foreign Liability Reserve” shall mean an amount equal to the sum of the
outstanding Foreign Liabilities.

“Foreign Loan” means (a) individually, each Australian Loan, each Canadian Loan
and each Japanese Loan, and (b) collectively, all of the foregoing.

“Foreign Loan Cap” means (a) individually, the Australian Loan Cap, the Canadian
Loan Cap and the Japanese Loan Cap as the context may require and
(b) collectively, all of the foregoing.

“Foreign Loan Party” or “Foreign Loan Parties” means (a) individually, each of
the Australian Loan Parties, each of the Canadian Loan Parties and each of the
Japanese Loan Parties, and (b) collectively, all of them.

“Foreign Note” means (a) individually, each Australian Note and each Canadian
Note, and (b) collectively, all of the foregoing.

“Foreign Overadvance” means (a) individually, each Australian Overadvance, each
Canadian Overadvance and each Japanese Overadvance, and (b) collectively, all of
the foregoing.

 

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“Foreign Plans” has the meaning set forth in Section 5.12(e).

“Foreign Facilities” means (a) individually, the Australian Facility, the
Canadian Facility and the Japanese Facility, and (b) collectively, all of the
foregoing.

“Foreign Subsidiary” means each Subsidiary other than a Domestic Subsidiary.

“FRB” means the Board of Governors of the Federal Reserve System of the United
States.

“Fronting Exposure” means, at any time there is a Defaulting Lender, with
respect to the L/C Issuer, such Defaulting Lender’s Applicable Percentage of the
Outstanding Amount of all outstanding L/C Obligations other than L/C Obligations
as to which such Defaulting Lender’s participation obligation has been
reallocated to other Lenders or Cash Collateralized in accordance with the terms
hereof.

“Fronting Fee” has the meaning specified in Section 2.03(i).

“FSCO” means the Financial Services Commission of Ontario and any Person
succeeding to the functions thereof and includes the Superintendent under such
statute and any other Governmental Authority empowered or created by the
Supplemental Pension Plans Act (Quebec) or the Pension Benefits Act (Ontario) or
any Governmental Authority of any other Canadian jurisdiction exercising similar
functions in respect of any Canadian Pension Plan of any Canadian Loan Party and
any Governmental Authority succeeding to the functions thereof.

“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.

“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied; provided that, (a) with respect
to Foreign Subsidiaries of Parent organized under the laws of Canada, or any
province or territory thereof, unless GAAP is being applied, “GAAP” shall mean
principles which are consistent with those promulgated or adopted by the
Canadian Institute of Chartered Accountants and its predecessors (or successors)
in effect and applicable to the accounting period in respect of which reference
to GAAP is being made, (b) with respect to the Australian Loan Parties and other
Foreign Subsidiaries of the Parent incorporated in Australia, unless GAAP is
being applied, “GAAP” shall mean the generally accepted accounting principles,
standards and practices in Australia, and (c) with respect to the Japanese Loan
Parties and other Foreign Subsidiaries of the Parent incorporated in Japan,
unless GAAP is being applied, “GAAP” shall mean the generally accepted
accounting principles, standards and practices in Japan.

 

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“General Security Agreements” means each General Security Agreement dated as of
the Effective Date among the respective Canadian Loan Parties and the
Administrative Agent for the benefit of the Foreign Credit Parties.

“Governmental Authority” means the government of the United States, Canada,
Australia, Japan, or any other nation, or any political subdivision thereof,
whether state, local, provincial, territorial or municipal and any agency,
authority, instrumentality, regulatory body, court, tribunal, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supra-national bodies such as the European Union or the European Central Bank).

“GSI” means GSI Commerce Solutions, Inc.

“GST” means any goods or services tax, value added tax, consumption tax or
similar tax including as that term is defined in the GST Act.

“GST Act” means A New Tax System (Goods and Services Tax) Act 1999 (Cth) of
Australia as, (a) amended or re-enacted, (b) any statute, regulation or
provision enacted in replacement of that Law, (c) another regulation or other
statutory instrument made or issued under that Law, and (d) any amendment made
to a statute, regulation or provision as a consequence of another statute,
regulation or provision.

“Guarantee” means, as to any Person, (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien); provided that the term
“Guarantee” shall not include endorsements of checks, drafts and other items for
the payment of money for collection or deposit, in either case in the ordinary
course of business. The amount of any Guarantee shall be deemed to be an amount
equal to the stated or determinable amount of the related primary obligation, or
portion thereof, in respect of which such Guarantee is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by the guaranteeing Person in good faith. The term “Guarantee” as a
verb has a corresponding meaning.

 

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“Guarantor” means (a) with respect to the Obligations (including, without
limitation, the Foreign Liabilities), the Parent and each Domestic Subsidiary of
any Domestic Loan Party that shall be required to execute and deliver a Facility
Guaranty or Facility Guaranty supplement pursuant to Section 6.13(a) and
(b) with respect to the Foreign Liabilities, each Foreign Borrower and each
Foreign Subsidiary of any Foreign Loan Party (but only to the extent that such
Foreign Subsidiary is organized under the Laws of Canada or a province thereof,
Japan or Australia) that shall be required to execute and deliver a Facility
Guaranty or Facility Guaranty supplement pursuant to Section 6.13(b), and
(c) with respect to any Swap Obligation of a Specified Loan Party (determined
before giving effect to Section 10.31, but subject in all respects to
Section 10.29) under the Facility Guaranty, the Borrowers.

“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes regulated
pursuant to any Environmental Law.

“Honor Date” has the meaning specified in Section 2.03(c)(i).

“Immaterial Subsidiary” means Q. S. Optics, Inc., a California corporation.

“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

(a) all obligations of such Person for borrowed money and all obligations of
such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;

(b) the maximum amount of all direct or contingent obligations of such Person
arising under letters of credit (including standby and commercial), bankers’
acceptances, bank guaranties, surety bonds and similar instruments;

(c) net obligations of such Person under any Swap Contract;

(d) all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course
of business);

(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited in
recourse;

(f) all Attributable Indebtedness of such Person;

(g) all obligations of such Person in respect of Disqualified Stock; and

(h) all Guarantees of such Person in respect of any of the foregoing.

 

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For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person and except to the extent such Person’s
liability for such Indebtedness is otherwise limited under applicable Law or
otherwise. The amount of any net obligation under any Swap Contract on any date
shall be deemed to be the Swap Termination Value thereof as of such date.

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

“Indemnitee” has the meaning specified in Section 10.04(b).

“Intellectual Property” means all: trade secrets, know-how and other proprietary
information; trademarks, trademark applications, internet domain names, service
marks, trade dress, trade names, designs, logos, slogans, indicia of origin and
other source identifiers, and all registrations or applications for
registrations which have heretofore been or may hereafter be issued thereon
throughout the world; copyrights and copyright applications (including
copyrights for computer programs), unpatented inventions (whether or not
patentable); patents and patent applications; industrial design applications and
registered industrial designs; any Loan Party’s rights in any license agreements
related to any of the foregoing and income therefrom; intellectual property
rights in books, records, writings, computer tapes or disks, flow diagrams,
specification sheets, computer software, source codes, object codes, executable
code, data and databases; all other intellectual property; and all common law
and other rights throughout the world in and to all of the foregoing.

“Intellectual Property Security Agreement” means, as applicable, the
Intellectual Property Security Agreement dated as of the Effective Date among
the applicable Domestic Loan Parties and the Administrative Agent.

“Interest Payment Date” means, (a) as to any LIBO Rate Loan, BBR Rate Loan,
TIBOR Rate Loan, Canadian BA Rate Loan, or any Prime Rate Loan, the first day of
each calendar month and the Maturity Date.

“Interest Period” means, as to each Committed Borrowing, the period commencing
on the date such Loan is disbursed or automatically continued and ending on the
date one month thereafter; provided that:

(i) any Interest Period that would otherwise 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;

 

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(ii) any 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) shall end on the last
Business Day of the calendar month at the end of such Interest Period;

(iii) no Interest Period shall extend beyond the Maturity Date; and

(iv) notwithstanding the provisions of clause (iii), no Interest Period shall
have a duration of less than one (1) month, and if any Interest Period
applicable to any LIBO Borrowing, BBR Rate Loan, TIBOR Rate Loan, or a Canadian
BA Rate Loan, as applicable, would be for a shorter period, such Interest Period
shall not be available hereunder.

For purposes hereof, the date of a Committed Borrowing initially shall be the
date on which such Committed Borrowing is made and thereafter shall be the
effective date of the most recent conversion or continuation of such Committed
Borrowing.

“Interim Order” means the order or judgment of the Bankruptcy Court as entered
on the docket of the Bankruptcy Court with respect to the Cases substantially in
the form of Exhibit P hereto and otherwise acceptable to the Lenders and
Administrative Agent, approving, inter alia, this Agreement and the other Loan
Documents, and (a) authorizing the incurrence by the Loan Parties of interim
secured indebtedness in accordance with this Agreement, (b) approving the
indefeasible repayment of the Existing ABL Obligations as described herein,
(c) approving the payment by the Loan Parties of the fees and other amounts
contemplated by this Agreement, and (d) providing adequate protection to the
Existing Senior Secured Noteholders in a manner satisfactory to the Required
Lenders, which order shall not have been vacated, reversed, modified, amended or
stayed.

“Interim Order Intercompany Loans” means the intercompany loans advanced by the
Lead Borrower to the Japanese Borrower on the Interim Order Date in original
principal amounts sufficient to pay off loans outstanding under the Existing ABL
Credit Agreement that are not held by the Lenders. Each Interim Order
Intercompany Loan shall, (i) secured to the extent required by the DIP Term Loan
Agreement, (ii) not include any scheduled or mandatory payments prior to the
maturity or acceleration thereof, (iii) accrue interest at 5% per annum, all
paid-in-kind on quarterly (and compounding) basis, (iv) have a maturity of not
less than one (1) year from the Interim Order Date, (v) have no covenants other
than the agreement to repay the loan on the maturity date and grant the
security, on a post-closing basis, contemplated by clause (i), (vi) be
cross-defaulted to an Event of Default under this Agreement; (vii) provide that
the exercise of any rights or remedies of the secured lender shall be subject to
the consent of the Administrative Agent; (viii) be pledged as security for the
Obligations in a manner satisfactory to the Administrative Agent; and (ix) not
be amended, modified or accelerated without the consent of the Administrative
Agent.

“Interim Order Date” has the meaning set forth in the recitals hereto.

“Interim Order Period” means the period of time from the time at which the
Bankruptcy Court enters the Interim Order until the time at which the Bankruptcy
Court enters the Final Order.

 

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“Internal Control Event” means a material weakness in, or fraud that involves
management or other employees who have a significant role in, the Parent’s
and/or its Subsidiaries’ internal controls over financial reporting, in each
case as described in the Securities Laws.

“In-Transit Inventory” means Inventory of a North America Borrowing Base Party
that is in the possession of a common carrier and is in transit from a foreign
location to either (a) with respect to Inventory of a Domestic Borrower, a
location of such Domestic Borrower (or a location designated by such Domestic
Borrower) that is in the United States or (b) with respect to Inventory of a
Canadian Loan Party, a location of such Canadian Loan Party (or a location
designated by such Canadian Loan Party) that is in Canada.

“Inventory” means all “inventory” as defined in the UCC, the PPSA or the
Australian PPSA, as applicable, and shall also include, without limitation, all:
(a) goods which (i) are leased by a Person as lessor, (ii) are held by a Person
for sale or lease or to be furnished under a contract of service, (iii) are
furnished by a Person under a contract of service, or (iv) consist of raw
materials, work in process, or materials used or consumed in a business;
(b) goods of said description in transit; (c) goods of said description which
are returned, repossessed or rejected; and (d) packaging, advertising, and
shipping materials related to any of the foregoing.

“Inventory Reserves” means, without duplication of any other Reserves or items
that are otherwise addressed or excluded through eligibility criteria, such
reserves as may be established from time to time by any Agent in its Permitted
Discretion with respect to the determination of the saleability, at retail or
wholesale, of the Eligible Inventory or which reflect such other factors as
affect the market value of the Eligible Inventory. Without limiting the
generality of the foregoing, Inventory Reserves may, in the Permitted Discretion
of any Agent, include (but are not limited to) reserves based on:

(a) obsolescence;

(b) seasonality;

(c) Shrink;

(d) imbalance;

(e) change in Inventory character;

(f) change in Inventory composition;

(g) change in Inventory mix;

(h) mark-downs (both permanent and point of sale);

(i) retail mark-ons and mark-ups inconsistent with prior period practice and
performance, industry standards, current business plans or advertising calendar
and planned advertising events;

 

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(j) out-of-date and/or expired Inventory; and

(k) seller’s reclamation or repossession rights under any Debtor Relief Laws.

Upon the determination by any Agent, in its Permitted Discretion, that an
Inventory Reserve should be established or modified, such Agent shall notify the
Administrative Agent in writing and the Administrative Agent shall thereupon
establish or modify such Inventory Reserve.

“Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition of Equity Interests of another Person, (b) a loan, advance or
capital contribution to, Guarantee or assumption of debt of, or purchase or
other acquisition of any other debt or Equity Interest in, another Person, or
(c) any Acquisition. For purposes of covenant compliance, the amount of any
Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.

“IP Collateral” means “IP Collateral”, as such term is defined in the
Intellectual Property Security Agreement, any Intellectual Property rights
subject to the Australian Security Documents, and any Intellectual Property
rights subject to the Japanese Law governed Japanese Security Documents.

“IP Rights Agreement” means that certain letter agreement dated as of the
Effective Date among QS Holdings, S.à.r.l. and 54th Street Holdings S.à.r.l. and
the Administrative Agent regarding certain license agreements between QS
Holdings, S.à.r.l. and 54th Street Holdings S.à.r.l. and the Australian Borrower
and the Japanese Borrower, respectively.

“IRS” means the United States Internal Revenue Service.

“ISP” means, with respect to any Letter of Credit, the “International Standby
Practices 1998” published by the Institute of International Banking Law &
Practice (or such later version thereof as may be in effect at the time of
issuance).

“Issuer Documents” means, with respect to any Letter of Credit, the Letter
Credit Application, and any other document, agreement and instrument entered
into by the L/C Issuer and any Borrower (or any Subsidiary) or in favor the L/C
Issuer and relating to any such Letter of Credit.

“Japanese Availability” means, as of any date of determination thereof, the
result, if a positive number, of:

(a) the Japanese Loan Cap,

minus

(b) the Total Japanese Outstandings on such date.

In calculating Japanese Availability at any time and for any purpose under this
Agreement any amount calculated or referenced in Dollars shall also refer to the
Alternative Currency Equivalent in Yen.

 

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“Japanese Base Rate” means the greater of (a) the “basic loan rate” established
by the Bank of Japan from time to time as reflected at :
http://www.boj.or.jp/en/statistics/boj/other/discount/discount.htm/, or (b) the
TIBOR Rate for an Interest Period of one month plus one percent (1.00%) per
annum.

“Japanese Base Rate Loan” means a Loan that bears interest at the Japanese Base
Rate.

“Japanese Borrower” has the meaning specified in the introductory paragraph
hereto and shall include, as applicable, any Japanese Subsidiary that becomes a
Borrower after the Effective Date pursuant to Section 6.13(b).

“Japanese Borrowing” means a Committed Japanese Borrowing.

“Japanese Borrowing Base” means, at any time of calculation, an amount in Yen
(or the Dollar Equivalent thereof) equal to:

(a) the face amount of Eligible Trade Receivables of the Japanese Borrower (net
of Receivables Reserves applicable thereto) multiplied by the Receivables
Advance Rate;

plus

(b) the Cost of Eligible Inventory (other than Eligible In-Transit Inventory) of
the Japanese Borrower, net of Inventory Reserves applicable thereto, multiplied
by the Appraisal Percentage of the Appraised Value of Eligible Inventory (other
than Eligible In-Transit Inventory) of the Japanese Borrower;

minus

(c) the then amount of all Availability Reserves applicable to the Japanese
Borrower. In no event shall the amount of Availability Reserves subtracted in
calculating the Japanese Borrowing Base be duplicative of Availability Reserves
subtracted in calculating any other Borrowing Base.

“Japanese Commitments” means, as to each Japanese Lender, its obligation to make
Committed Japanese Loans to the Japanese Borrower pursuant to Section 2.01, in
an aggregate principal amount at any one time outstanding not to exceed the
amount set forth opposite such Japanese Lender’s name on Schedule 2.01 or in the
Assignment and Assumption pursuant to which such Japanese Lender becomes a party
hereto, as applicable, as such amount may be adjusted from time to time in
accordance with this Agreement.

“Japanese Concentration Account” means the account maintained by the
Administrative Agent at Bank of America, N.A. (Japan branch) into which cash
receipts and collections of the Japanese Loan Parties (including, without
limitation, from the Collateral) are deposited to the extent required hereby or
by any other Loan Document.

“Japanese Credit Party” or “Japanese Credit Parties” means (a) individually,
(i) each Japanese Lender and its Lender Affiliates, (ii) the Agents and their
respective Lender Affiliates, and (iii) the successors and assigns of each of
the foregoing, and (b) collectively, all of the foregoing.

 

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“Japanese Depository Banks” means each of The Bank of Tokyo – Mitsubishi UFJ
Ltd., Mizuho Bank Ltd., Sumitomo Mitsui Banking Corporation, Tokyo Tomin Bank,
The Bank of Yokohama, Ltd. and Resona Bank, Limited.

“Japanese Facility” means the revolving credit facility in favor of the Japanese
Borrower established pursuant to this Agreement.

“Japanese Lenders” means the Lenders having Japanese Commitments from time to
time or at any time.

“Japanese Liabilities” means (a) all advances to, and debts (including
principal, interest, fees, costs, and expenses), liabilities, obligations,
covenants, indemnities, and duties of, any Japanese Loan Party arising under any
Loan Document or otherwise with respect to any Japanese Loan, whether direct or
indirect (including those acquired by assumption), absolute or contingent, due
or to become due, now existing or hereafter arising and including interest,
fees, costs and expenses that accrue after the commencement by or against any
Japanese Loan Party of any proceeding under any Debtor Relief Laws naming such
Person as the debtor in such proceeding, regardless of whether such interest and
fees are allowed claims in such proceeding, and (b) any Other Japanese
Liabilities.

“Japanese Loan” means an extension of credit by a Japanese Lender to the
Japanese Borrower under Article II in the form of a Committed Loan.

“Japanese Loan Cap” means, at any time of determination, the lesser of
(a) $3,050,000 reduced by any repayments of the Japanese Liabilities and (b) the
Japanese Borrowing Base.

“Japanese Loan Parties” means, collectively, the Japanese Borrower and each
Japanese Subsidiary that is a Guarantor of the Japanese Liabilities. “Japanese
Loan Party” means any one of such Persons.

“Japanese Overadvance” means a Japanese Credit Extension to the extent that,
immediately after the making of such Japanese Credit Extension, the aggregate
principal balance of all Japanese Credit Extensions then outstanding exceeds the
Japanese Loan Cap as then in effect.

“Japanese Priority Payable Reserve” means, on any date of determination, a
reserve in such amount as the Administrative Agent may determine in its
Permitted Discretion which reflects amounts secured by any Liens, choate or
inchoate, which rank or are capable of ranking in priority to the Administrative
Agent’s and/or the Japanese Secured Parties’ Liens and/or for amounts which may
represent costs relating to the enforcement of the Administrative Agent’s or the
Japanese Secured Parties’ Liens.

“Japanese Secured Parties” means “Secured Parties” as such term is defined in
each of the Japanese Security Documents.

“Japanese Security Documents” means each (a) movable assets security agreement
(with respect to Equipment and Inventory), (b) account receivables security
agreement, (c) trademark security agreement, (d) bank account pledge agreement,
(e) insurance claims pledge agreement, and (f) each other security agreement or
other instrument or document executed and delivered by any Japanese Loan Party
to an Agent and/or each of the Japanese Secured Parties pursuant to this
Agreement or any

 

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other Loan Document granting a Lien on assets of any Japanese Loan Party for the
benefit of the Japanese Secured Parties, as security for the Foreign
Liabilities.

“Japanese Subsidiary” means any Subsidiary that is organized under the laws of
Japan.

“Joinder Agreement” means an agreement, in the form attached hereto as Exhibit
F-1 (Joinder Agreement – Domestic Loan Parties), Exhibit F-2 (Joinder Agreement
– Foreign Loan Parties), or such other form as is reasonably satisfactory to the
Agents, pursuant to which, among other things, a Person becomes a party to, and
bound by the terms of, this Agreement and/or the other Loan Documents in the
same capacity and to the same extent as either a Borrower or a Guarantor, as
applicable.

“Landlord Lien State” means (a) Pennsylvania, Virginia, Washington and such
other state(s) determined by the Agents in their Permitted Discretion in which a
landlord’s claim for rent may have priority over the Liens of the Administrative
Agent in any of the Eligible Inventory of the Domestic Borrowers, under the
Security Documents and (b) Ontario, Nova Scotia, Alberta, Manitoba and British
Columbia and such other province(s) determined by the Agents in their Permitted
Discretion in which a landlord’s claim for rent may have priority over the Liens
of the Administrative Agent on any of the Eligible Inventory of the Canadian
Loan Parties under the Security Documents.

“Laws” means each international, foreign, federal, state, provincial,
territorial, municipal and local statute, treaty, rule, guideline, regulation,
ordinance, code and administrative or judicial precedent or authority, including
the interpretation or administration thereof by any Governmental Authority
charged with the enforcement, interpretation or administration thereof, and each
applicable administrative order, directed duty, license, authorization and
permit of, and agreement with, any Governmental Authority, in each case whether
or not having the force of law.

“L/C Advance” means, with respect to each Lender, such Lender’s funding of its
participation in any L/C Borrowing in accordance with its Applicable Percentage.
All L/C Advances shall be denominated in Dollars.

“L/C Borrowing” means (a) individually, each of a Domestic L/C Borrowing and an
Australian L/C Borrowing, and (b) collectively, all of the foregoing. All L/C
Borrowings shall be denominated in Dollars.

“L/C Credit Extension” means (a) each of a Domestic L/C Credit Extension and an
Australian L/C Credit Extension and (b) collectively, means all of the
foregoing.

“L/C Issuer” means Bank of America in its capacity as issuer of Letters of
Credit hereunder, or any successor issuer of Letters of Credit hereunder (which
successor may only be a Lender selected by the Administrative Agent in its
discretion and reasonably acceptable to the Lead Borrower). The L/C Issuer may,
in its discretion, arrange for one or more Letters of Credit to be issued by
Lender Affiliates of the L/C Issuer, in which case the term “L/C Issuer” shall
include any such Lender Affiliate with respect to Letters of Credit issued by
such Lender Affiliate.

 

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“L/C Obligations” means, collectively, the Australian L/C Obligations and the
Domestic L/C Obligations. For purposes of computing the amounts available to be
drawn under any Letter of Credit, the amount of such Letter of Credit shall be
determined in accordance with Section 1.06. For all purposes of this Agreement,
if on any date of determination a Letter of Credit has expired by its terms but
any amount may still be drawn thereunder by reason of the operation of Rule 3.14
of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the
amount so remaining available to be drawn.

“Lead Borrower” has the meaning specified in the introductory paragraph hereto.

“Lease” means any written agreement pursuant to which a Loan Party is entitled
to the use or occupancy of any real property for any period of time.

“Lender” means each Domestic Lender, each Canadian Lender, each Australian
Lender and each Japanese Lender.

“Lender Affiliate” means, with respect to any Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.

“Lending Office” means, as to any Lender, the office or offices of such Lender
provided in writing to the Administrative Agent, or such other office or offices
as a Lender may from time to time notify the Administrative Agent.

“Lessor Notification” has the meaning specified in Section 6.14(a)(iii).

“Letter of Credit” means each Standby Letter of Credit, each Commercial Letter
of Credit, each Existing Letter of Credit, each documentary banker’s acceptance
and, to the extent applicable, each foreign guarantee issued hereunder. Letters
of Credit may be issued in Dollars or in an Alternative Currency.

“Letter of Credit Application” means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in use
by the L/C Issuer.

“Letter of Credit Expiration Date” means the day that is seven days prior to the
Maturity Date then in effect (or, if such day is not a Business Day, the next
preceding Business Day).

“Letter of Credit Fee” has the meaning specified in Section 2.03(h).

“LIBO Borrowing” means a Committed Borrowing comprised of LIBO Rate Loans.

“LIBO Rate” means,

(a) for any Interest Period with respect to a LIBO Rate Loan, the rate per annum
rate which appears on the Reuters Screen LIBOR01 page as of 11:00 a.m., London
time, on the second London Business Day preceding the first day of such Interest
Period (or if such rate does not appear on the Reuters Screen LIBOR01 Page, then
the rate as determined by the Administrative Agent from another recognized
source or interbank quotation), for a term, and in an amount, comparable to the
Interest Period and the

 

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amount of the LIBO Rate Loan requested (whether as an initial LIBO Rate Loan or
as a continuation of a LIBO Rate Loan or as a conversion of a Base Rate Loan to
a LIBO Rate Loan) by the applicable Borrowers in accordance with this Agreement
(and, if any such rate is below zero, the LIBO Rate shall be deemed to be zero),
which determination shall be made by administrative Agent and shall be
conclusive in the absence of manifest error. If such rate is not available at
such time for any reason, then the “LIBO Rate” for such Interest Period shall be
the rate per annum determined by the Administrative Agent to be the rate at
which deposits in Dollars for delivery on the first day of such Interest Period
in same day funds in the approximate amount of the LIBO Rate Loan being made,
continued or converted by Bank of America and with a term equivalent to such
Interest Period would be offered to Bank of America by major banks in the London
interbank eurodollar market in which Bank of America participates at their
request at approximately 11:00 a.m. (London time) two Business Days prior to the
commencement of such Interest Period, and

(b) for any interest calculation with respect to a Domestic Prime Rate Loan or a
Canadian Base Rate Loan on any date, the rate per annum equal to (i) LIBOR, at
approximately 11:00 a.m., London time determined two London Banking Days prior
to such date for Dollar deposits being delivered in the London interbank market
for a term of one month commencing that day or (ii) if such published rate is
not available at such time for any reason, the rate per annum determined by the
Administrative Agent to be the rate at which deposits in Dollars for delivery on
the date of determination in same day funds in the approximate amount of the
Domestic Prime Rate Loan or Canadian Base Rate Loan being made or maintained and
with a term equal to one month would be offered by Bank of America’s London
Branch to major banks in the London interbank Eurodollar market at their request
at the date and time of determination.

“LIBO Rate Loan” means a Committed Loan that bears interest at a rate based on
the Adjusted LIBO Rate. LIBO Rate Loans may be denominated in Dollars or in an
Alternative Currency.

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust,
pledge, hypothecation, assignment in the nature of a security interest, deposit
arrangement in the nature of a security interest, encumbrance, lien (statutory
or other), charge or other security interest or preferential arrangement in the
nature of a security interest of any kind or nature whatsoever (including any
conditional sale, Capital Lease Obligation, Synthetic Lease Obligation, or other
title retention agreement, any easement, right of way or other encumbrance on
title to real property, and any financing lease having substantially the same
economic effect as any of the foregoing relating to such asset) and, with
respect to the Canadian Loan Parties, also includes any deemed trust or prior
claim in, on or of such asset, and, with respect to the Australian Loan Parties,
also includes any ‘security interest’ as defined in sections 12 (1) and 12(2) of
the Australian PPSA and, with respect to the Japanese Loan Parties, includes any
constructive transfers (joto tampo by way of senyu kaitei), and (b) in the case
of securities, any purchase option, call or similar right of a third party with
respect to such securities.

“Liquidation” means the exercise by the Administrative Agent, the Australian
Security Trustee, or the Collateral Agent, as applicable, of those rights and
remedies accorded to such Persons under the Loan Documents and applicable Law as
a creditor of the Loan Parties with respect to the realization on the

 

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Collateral, including (after the occurrence and during the continuation of an
Event of Default) the conduct by the Loan Parties acting with the consent of the
Agents, of any public, private or “going-out-of-business”, “store closing” or
other similar sale or any other disposition of the Collateral for the purpose of
liquidating the Collateral as well as the collection or other disposition of any
of the Collateral. Derivations of the word “Liquidation” (such as “Liquidate”)
are used with like meaning in this Agreement.

“Liquidation Percentage” shall mean, for any Lender, a fraction, the numerator
of which is the sum of such Lender’s and its Lender Affiliates’ Commitments
immediately prior to the Determination Date and the denominator of which is the
Aggregate Total Commitments immediately prior to the Determination Date.

“Loan” means a Domestic Loan and an extension of credit to a Foreign Borrower
pursuant to Article II in the form of a Committed Loan.

“Loan Account” has the meaning assigned to such term in Section 2.11(a).

“Loan Documents” means this Agreement, each Note, each Issuer Document, the Fee
Letter, all Borrowing Base Certificates, the Security Documents, each Facility
Guaranty, the Reaffirmation Agreement, any agreement creating or perfecting
rights in Cash Collateral pursuant to the provisions of Section 2.17, and any
other instrument or agreement now or hereafter executed and delivered by any
Loan Party in connection herewith.

“Loan Parties” means, collectively, the Domestic Loan Parties and the Foreign
Loan Parties. “Loan Party” means any one of such Persons.

“London Banking Day” means any day on which dealings in Dollar deposits are
conducted by and between banks in the London Eurodollar Interbank Market.

“Mandatory Cost” means, with respect to any period, the percentage rate per
annum determined in accordance with Schedule 1.03.

“Master Agreement” has the meaning set forth in the definition of “Swap
Contract.”

“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual
or contingent) or financial condition of the Parent and its Subsidiaries taken
as a whole; (b) a material impairment of the ability of any Loan Party to
perform its obligations under any Loan Document to which it is a party; or (c) a
material impairment of the rights and remedies of any Agent or the Lenders under
the Loan Documents or a material adverse effect upon the legality, validity,
binding effect or enforceability against any Loan Party of the Loan Documents to
which it is a party. In determining whether any individual event would result in
a Material Adverse Effect for the purposes of determining compliance with any
representation, warranty, covenant or event of default under this Agreement,
notwithstanding that such event in and of itself does not have such effect, a
Material Adverse Effect shall be deemed to have occurred if the cumulative
effect of such event

 

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and all other then existing events subject to such representation, warranty,
covenant or event of default would result in a Material Adverse Effect.
Notwithstanding anything herein to the contrary, the act of filing the Cases
shall not in itself constitute Material Adverse Effect.

“Material Contract” means, with respect to any Person, each contract to which
such Person is a party, the breach or termination of which would (or would be
reasonably likely to) result in a Material Adverse Effect.

“Material Indebtedness” means Indebtedness (other than the Obligations) of the
Loan Parties in an aggregate principal amount exceeding $10,000,000 (including,
for purposes of calculating such amount, undrawn committed or available amounts
and amounts owing to all creditors under any combined or syndicated credit
arrangement). Without limitation of the foregoing, the Indebtedness under the
DIP Term Loan Agreement, the Boardriders Notes and any credit facility in favor
of any European Subsidiary in an aggregate principal amount exceeding
$10,000,000 (if any Loan Party is an obligor thereunder, whether as a guarantor
or otherwise) shall be deemed Material Indebtedness. For purposes of determining
the amount of Material Indebtedness at any time, the amount of the obligations
in respect of any Swap Contract at such time shall be calculated at the Swap
Termination Value thereof.

“Maturity Date” means February 8, 2016.

“Maximum Rate” has the meaning provided in Section 10.09.

“Minimum Collateral Amount” means, at any time, (i) with respect to Cash
Collateral consisting of cash or deposit account balances provided to reduce or
eliminate Fronting Exposure during the existence of a Defaulting Lender, an
amount equal to 103% of the Fronting Exposure of the L/C Issuer with respect to
Letters of Credit issued and outstanding at such time, (ii) with respect to Cash
Collateral consisting of cash or deposit account balances provided in accordance
with the provisions of Section 2.17(a)(i), (a)(ii) or (a)(iii), an amount equal
to 103% of the Outstanding Amount of all L/C Obligations, and (iii) otherwise,
an amount determined by the Administrative Agent and the L/C Issuer in their
sole discretion.

“MLPFS” means Merrill Lynch, Pierce, Fenner & Smith Incorporated and its
successors.

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

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

“Multiple Employer Plan” means a Plan which has two or more contributing
sponsors (including a Loan Party or any ERISA Affiliate) at least two of whom
are not under common control, as such a plan is described in Section 4064 of
ERISA.

“Non-Consenting Lender” has the meaning provided therefor in Section 10.01.

“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting
Lender at such time.

 

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“Non-Qualifying Japanese Lender” means a Japanese Lender other than:

(a) a Japanese Lender that exists, is created or organized under the Laws of
Japan and is either lending from an office in Japan or a branch office outside
of Japan;

(b) a Japanese Lender that is not created or organized under the Laws of Japan
but is acting through a branch or other permanent establishment located in Japan
and holds a valid Certificate of Exemption for Withholding Tax for Foreign
Corporations issued by the relevant Tax authorities in Japan; and

(c) a Japanese Lender which is treated as an eligible resident of a jurisdiction
having entered into a double taxation treaty with Japan which double taxation
treaty is in effect and which provides for exemption from Japanese withholding
tax imposed on all interest and other payments hereunder and under the other
Loan Documents.

“Non-U.S. Lender” means any Lender that is organized under the laws of a
jurisdiction other than the United States, each State thereof and the District
of Columbia.

“North America Borrowing Base Party” means (a) individually, each of the
Domestic Borrowers and the Canadian Loan Parties, and (b) collectively, all of
the foregoing.

“North American Concentration Account” means (a) individually, each Canadian
Concentration Account and each Domestic Concentration Account, and
(b) collectively, all of the foregoing.

“Note” means either a Domestic Note or a Foreign Note, as the context may
require.

“Novation Deed” means the Novation Deed by and among DC Shoes Australia Pty Ltd,
DC Shoes, Inc., Ug Manufacturing Co. Pty Ltd and the Australian Security Trustee
dated as of May 24, 2013 regarding that certain Amended and Restated DC Shoes,
Inc. License and Services Agreement dated November 1, 2011.

“NPL” means the National Priorities List under CERCLA.

“NVOCC” means with respect to any In-Transit Inventory, a non-vessel operating
common carrier engaged as a freight forwarder or otherwise to assist in the
importation of In-Transit Inventory.

“Obligations” means (a) all advances to, and debts (including principal,
interest, fees, costs, and expenses), liabilities, obligations, covenants and
indemnities of, any Loan Party arising under any Loan Document or otherwise with
respect to any Loan or Letter of Credit (including payments in respect of
reimbursement of disbursements, interest thereon and obligations to provide cash
collateral therefor), whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or
hereafter arising and including interest, fees, costs and expenses that accrue
after the commencement by or against any Loan Party or any Subsidiary thereof of
any proceeding under any Debtor Relief Laws naming such Person as the debtor in
such proceeding, regardless of whether such interest and fees are allowed claims
in such proceeding, and (b) any Other Liabilities. Without limiting the
foregoing, for purposes of clarity, whenever used herein the term

 

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“Obligations” shall (i) include all Foreign Liabilities, and (ii) as to any Loan
Party, exclude any Excluded Swap Obligations with respect to such Loan Party
(but not Obligations of any other Loan Party with respect thereto).

“Office Campus” means the real property located in Saint-Jean-de-Luz, France and
owned in fee simple by a Foreign Subsidiary

“Orders” means, collectively, the Interim Order and the Final Order.

“Organization 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);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(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 and any agreement, instrument, filing or notice with
respect thereto filed in connection with its 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 entity, (d) with respect to any unlimited liability
company, the memorandum of association and articles of association (or
equivalent or comparable constitutive documents with respect to any non-U.S.
jurisdiction); and (e) in each case, all shareholder or other equity holder
agreements, voting trusts and similar arrangements to which such Person is a
party or which is applicable to its Equity Interests.

“Organized Crime Group Member Etc.” has the meaning specified in Section 5.26.

“Other Australian Liabilities” means any obligation on account of: (a) any Cash
Management Services furnished to any of the Australian Loan Parties or any of
their Australian Subsidiaries and/or (b) any transaction which arises out of any
Bank Product entered into with any Australian Loan Party or any of its
Australian Subsidiaries.

“Other Canadian Liabilities” means any obligation on account of: (a) any Cash
Management Services furnished to any of the Canadian Loan Parties or any of
their Canadian Subsidiaries and/or (b) any transaction which arises out of any
Bank Product entered into with any Canadian Loan Party or any of its Canadian
Subsidiaries.

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

 

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“Other Domestic Liabilities” means any obligation on account of: (a) any Cash
Management Services furnished to any of the Domestic Loan Parties or any of
their Domestic Subsidiaries and/or (b) any transaction which arises out of any
Bank Product entered into with any Domestic Loan Party or any of its Domestic
Subsidiaries.

“Other Japanese Liabilities” means any obligation on account of: (a) any Cash
Management Services furnished to any of the Japanese Loan Parties or any of
their Japanese Subsidiaries and/or (b) any transaction which arises out of any
Bank Product entered into with any Japanese Loan Party or any of its Japanese
Subsidiaries.

“Other Liabilities” means, collectively, all Other Canadian Liabilities, all
Other Domestic Liabilities, all Other Australian Liabilities and all Other
Japanese Liabilities.

“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Loan Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment (other than an assignment
made pursuant to Section 3.06) or with respect to a participation.

“Outstanding Amount” means (i) with respect to Committed Loans on any date, the
Dollar Equivalent amount of the aggregate outstanding principal amount thereof
after giving effect to any borrowings and prepayments or repayments of such
Committed Loans occurring on such date; and (ii) with respect to any L/C
Obligations on any date, the Dollar Equivalent amount of the aggregate
outstanding amount of such L/C Obligations on such date after giving effect to
any L/C Credit Extension occurring on such date and any other changes in the
aggregate amount of the L/C Obligations as of such date, including as a result
of any reimbursements by any Borrower of Unreimbursed Amounts, or the
refinancing of such unreimbursed amounts as Committed Borrowings.

“Overadvance” means a Canadian Overadvance, a Domestic Overadvance, an
Australian Overadvance or a Japanese Overadvance.

“Overnight Rate” means, for any day, (a) with respect to any amount denominated
in Dollars, the greater of (i) the Federal Funds Rate and (ii) an overnight rate
determined by the Administrative Agent or the L/C Issuer in accordance with
banking industry rules on interbank compensation, (b) with respect to any amount
denominated in Canadian Dollars, the Bank of Canada Overnight Rate, and (c) with
respect to any amount denominated in any other Alternative Currency, the rate of
interest per annum at which overnight deposits in the applicable Alternative
Currency, in an amount approximately equal to the amount with respect to which
such rate is being determined, would be offered for such day by a branch or
Affiliate of Bank of America in the applicable offshore interbank market for
such currency to major banks in such interbank market.

“Parent” has the meaning specified in the introductory paragraph hereto.

 

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“Participant” has the meaning specified in Section 10.06.

“Participating Member State” means any member state of the European Union that
has the Euro as its lawful currency in accordance with legislation of the
European Union relating to Economic and Monetary Union.

“Patriot Act” means USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)).

“Payment in Full” means (a) the payment in full in cash of all Obligations (or
with respect to the Foreign Borrowers, all Foreign Liabilities), including,
without limitation, with respect to amounts available to be drawn under
outstanding Letters of Credit, the cancellation of such Letters of Credit or the
delivery or provision of money or backstop irrevocable letters of credit, in
form, on terms, and issued by a financial institution reasonably acceptable to
the Administrative Agent, in respect thereof in an amount equal to 103% of the
L/C Obligations, and (b) the termination of all obligations of the L/C Issuer to
issue Letters of Credit and the termination of all Commitments hereunder. The
term “Paid in Full” shall have a correlative meaning.

“PBGC” means the Pension Benefit Guaranty Corporation.

“PCAOB” means the Public Company Accounting Oversight Board.

“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum
required contributions (including any installment payment thereof) to Pension
Plans and set forth in, with respect to plan years ending prior to the effective
date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each
as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431,
432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.

“Pension Plan” means any employee pension benefit plan (including a Multiple
Employer Plan or a Multiemployer Plan) that is maintained or is contributed to
by a Domestic Loan Party or any ERISA Affiliate or to which a Domestic Loan
Party or any ERISA Affiliate has maintained, contributed to, or been obligated
to make contributions during the preceding five plan years and is either covered
by Title IV of ERISA or is subject to the minimum funding standards under
Section 412 of the Code.

“Permitted Discretion” means a determination made in good faith and in the
exercise of commercially reasonable business judgment in accordance with
customary business practices for comparable asset based lending transactions.

“Permitted Disposition” means each of the following:

(a) Dispositions of Inventory in the ordinary course of business solely for cash
consideration;

(b) bulk sales or other Dispositions of the Inventory or any other asset of any
Loan Party or any Subsidiary solely for cash consideration in connection with
Store closings, at arm’s length, provided, that, unless otherwise approved by
Required Lenders, (1) (x) all such bulk sales or

 

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Dispositions shall be consistent with the Budget and (2) notwithstanding
anything to the contrary contained herein, (y) there shall not be more than 30
Store closures during the term of this Agreement and (z) any such Store closures
shall be in accordance with liquidation agreements and with professional
liquidators reasonably acceptable to the Required Lenders;

(c) licenses of Intellectual Property of a Loan Party or any of its Subsidiaries
in the ordinary course of business, in each case, subject to any rights of the
Administrative Agent to use such Intellectual Property pursuant to any Loan
Document or agreement with any Affiliate of a Loan Party;

(d) licenses for the conduct of licensed departments within any Loan Party’s or
Subsidiary’s Stores in the ordinary course of business; provided that, in the
case of any Loan Party, if requested by the Administrative Agent, the applicable
Loan Party shall have used commercially reasonable efforts to cause the Person
operating such licensed department to enter into an intercreditor agreement with
the Administrative Agent, on terms and conditions reasonably satisfactory to the
Administrative Agent;

(e) Dispositions of Equipment and other assets (including abandonment of or
other failures to maintain, preserve, renew, protect or keep in full force and
effect Intellectual Property) in the ordinary course of business that is
substantially worn, damaged, obsolete or, in the judgment of a Loan Party, no
longer useful or necessary in its business or that of any Subsidiary;

(f) Dispositions among the Domestic Loan Parties (other than any Disposition to
an Immaterial Subsidiary);

(g) Dispositions by any Subsidiary which is not a Loan Party to any other
Subsidiary which is not a Loan Party;

(h) Dispositions of the Office Campus in connection with a sale-leaseback
transaction on market terms, provided that the Indebtedness deemed to arise
therefrom is permitted under clause (k) of the definition of “Permitted
Indebtedness”;

(i) Dispositions consisting of the compromise, settlement or collection of
Accounts receivable in the ordinary course of business, consistent with past
practices;

(j) leases, subleases, space leases, licenses or sublicenses of Real Estate (and
terminations of any of the foregoing), in each case in the ordinary course of
business and which do not materially interfere with the business of the Parent
and its Subsidiaries, taken as a whole;

(k) Dispositions of cash, cash equivalents and Permitted Investments described
in clauses (a) through (h) of the definition of “Permitted Investments”
contained in this Agreement, in each case on ordinary business terms and, to the
extent constituting a Disposition, the making of Permitted Investments;

 

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(l) any Disposition of Real Estate to a Governmental Authority as a result of
the condemnation of such Real Estate;

(m) Dispositions of property to the extent that (i) such property is exchanged
for credit against the purchase price of similar replacement property that is
promptly purchased or (ii) the proceeds of such Disposition are promptly applied
to the purchase price of such replacement property (which replacement property
is actually promptly purchased);

(n) to the extent constituting a Disposition, (i) transactions permitted by
Section 7.04, (ii) Restricted Payments permitted by Section 7.06 and (iii) Liens
permitted by Section 7.01;

(o) Dispositions of the Champs-Élysées Lease for fair market cash consideration
on market terms;

(p) other Dispositions (other than Dispositions of Intellectual Property) at
fair market value for consideration not exceeding $7,500,000 in the aggregate
during the term of this Agreement so long as no Event of Default has occurred
and is continuing or would immediately result therefrom;

(q) early termination of leases or subleases consistent with the Budget;

(r) Dispositions of assets related to the “Ampla” brand; and

(s) Dispositions of property to the extent that (i) such property is exchanged
for credit against the purchase price of similar replacement property or
(ii) the proceeds of such Disposition are promptly applied to the purchase price
of such replacement property; provided that to the extent the property being
transferred constitutes Collateral included in any Borrowing Base, such
replacement property shall constitute Collateral included in a Borrowing Base.

“Permitted Domestic Overadvance” means a Domestic Overadvance made by the
Administrative Agent, in its Permitted Discretion, which:

(a) is made to maintain, protect or preserve the Collateral and/or the Credit
Parties’ rights under the Loan Documents or which is otherwise for the benefit
of the Credit Parties; or

(b) is made to enhance the likelihood of, or to maximize the amount of,
repayment of any Obligation; or

(c) is made to pay any other amount chargeable to any Loan Party hereunder or
any other Loan Document; and

(d) together with all other Permitted Domestic Overadvances then outstanding,
shall not (i) exceed at any time the lesser of $10,000,000 or ten percent
(10%) of the Domestic Borrowing Base at any time or (ii) unless a Liquidation is
occurring, remain outstanding for more than thirty (30) consecutive Business
Days, unless in each case, the Required Lenders otherwise agree;

 

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provided, that the foregoing shall not (i) modify or abrogate any of the
provisions of Section 2.03 regarding each Domestic Lender’s obligations with
respect to Domestic Letters of Credit, or (ii) result in any claim or liability
against the Administrative Agent (regardless of the amount of any Domestic
Overadvance) for “inadvertent Domestic Overadvances” (i.e. where a Domestic
Overadvance results from changed circumstances beyond the control of the
Administrative Agent (such as a reduction in the value of Collateral)), and such
“inadvertent Domestic Overadvances” shall not reduce the amount of Permitted
Domestic Overadvances allowed hereunder, and provided further, that in no event
shall the Administrative Agent make a Domestic Overadvance, if after giving
effect thereto, the principal amount of the Domestic Credit Extensions would
exceed the Aggregate Domestic Commitments (as in effect prior to any termination
of the Domestic Commitments pursuant to Section 2.06 hereof).

“Permitted Encumbrances” means any of the following:

(a) Liens imposed by law for Taxes that (i) with respect to the Foreign Loan
Parties, are not yet due or are being contested in compliance with Section 6.04,
or (ii) with respect to the Domestic Loan Parties, are not yet due or constitute
prepetition claims;

(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s,
landlords’, movables seller’s and other like Liens imposed by applicable Law,
arising in the ordinary course of business and securing obligations that are not
overdue by more than thirty (30) days or (x) with respect to the Foreign Loan
Parties, are being contested in compliance with Section 6.04, and (y) with
respect to the Domestic Loan Parties, constitute prepetition claims;

(c) pledges and deposits made in the ordinary course of business in compliance
with workers’ compensation, unemployment insurance and other social security or
similar laws or regulations, other than any Lien imposed by ERISA or any other
applicable Law relating to Plans;

(d) deposits to secure or relating to the performance of bids, trade contracts,
government contracts and leases (other than Indebtedness), statutory
obligations, surety, stay, customs and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business;

(e) Liens in respect of judgments that do not constitute an Event of Default
hereunder;

(f) easements, covenants, conditions, restrictions, building code laws, zoning
restrictions, rights-of-way and similar encumbrances on real property imposed by
law or arising in the ordinary course of business that do not secure any
monetary obligations and do not materially detract from the value of the
affected property or materially interfere with the ordinary conduct of business
of the Parent, the other Loan Parties and their Subsidiaries, taken as a whole,
and such other minor title defects or survey matters that are disclosed by
current surveys that, in each case, do not materially interfere with the
ordinary conduct of business of the Parent and its Americas/Foreign
Subsidiaries, taken as a whole;

 

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(g) Liens existing on the date hereof and listed on Schedule 7.01 and any
renewals or extensions thereof, provided that (i) the property covered thereby
is not changed other than after-acquired property affixed or incorporated
thereto and proceeds or products thereof, (ii) the amount secured or benefited
thereby is not increased except to the extent permitted hereunder, and (iii) any
renewal or extension of the obligations secured or benefited thereby is
permitted hereunder;

(h) Liens on fixed or capital assets acquired by any Loan Party or any
Subsidiary securing Indebtedness permitted under clause (c) of the definition of
Permitted Indebtedness so long as (i) such Liens and the Indebtedness secured
thereby are incurred prior to or within one hundred and eighty (180) days after
such acquisition (other than refinancing thereof permitted hereunder), (ii) the
Indebtedness secured thereby does not exceed the cost of acquisition of such
fixed or capital assets and (iii) such Liens shall not extend to any other
property or assets of the Loan Parties (other than replacements thereof and
additions and accessions to such property and the proceeds and the products
thereof; provided that individual financings of Equipment provided by one lender
may be cross-collateralized with other financings of Equipment provided by such
lender;

(i) Liens in favor of the Agents under the Security Documents for its own
benefit and the benefit of the other Credit Parties, as applicable;

(j) landlords’ and lessors’ Liens in respect of rent not in default for more
than any applicable grace period, not to exceed thirty (30) days;

(k) possessory Liens in favor of brokers and dealers arising in connection with
the acquisition or disposition of Investments owned as of the date hereof and
other Permitted Investments, provided that such Liens (i) attach only to such
Investments or other Investments held by such broker or dealer and (ii) secure
only obligations incurred in the ordinary course and arising in connection with
the acquisition or disposition of such Investments and not any obligation in
connection with margin financing;

(l) Liens arising solely by virtue of any statutory or common law provisions
relating to banker’s liens, liens in favor of securities intermediaries, rights
of setoff or similar rights and remedies as to deposit accounts or securities
accounts or other funds maintained with depository institutions or securities
intermediaries;

(m) Liens (if any) arising from precautionary UCC or PPSA filings or similar
filings regarding “true” operating leases, or the consignment of goods to a Loan
Party or any Subsidiary;

(n) DIP Term Liens in favor of the DIP Term Agent, provided that such DIP Term
Liens are subject to the terms and conditions of the DIP Intercreditor
Agreement;

(o) Liens in favor of customs and revenues authorities imposed by applicable Law
arising in the ordinary course of business in connection with the importation of
goods and securing

 

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obligations (i) that are not overdue by more than thirty (30) days, or (ii)(A)
that are being contested in good faith by appropriate proceedings, (B) the
applicable Loan Party or Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP and (C) such contest effectively
suspends collection of the contested obligation and enforcement of any Lien
securing such obligation;

(p) Existing Senior Secured Note Liens provided that such Existing Senior
Secured Note Liens are subordinate in priority to the Liens granted under the
Loan Documents in all respects;

(q) leases or subleases granted to others in the ordinary course of business
which do not interfere in any material respect with the business of the Parent
and its Subsidiaries, taken as a whole;

(r) any interest or title of a licensor, sublicensor, lessor or sublessor under
licenses, leases, sublicenses, or subleases entered into by the Parent or any of
its Subsidiaries in the ordinary course of business provided such interest or
title is limited to the property that is the subject of such transaction;

(s) Liens in respect of the licensing and sublicensing of Intellectual Property
in the ordinary course of business;

(t) Liens that are contractual rights of set-off relating to purchase orders and
other similar agreements entered into by the Parent or any of its Subsidiaries;

(u) Liens on insurance policies and the proceeds thereof securing the financing
of the premiums with respect thereto incurred in the ordinary course of
business;

(v) Liens securing the Carve-Out;

(w) Priority Permitted Encumbrances;

(x) Liens securing Indebtedness of Foreign Subsidiaries in existence on the
Petition Date or securing Indebtedness permitted pursuant to clause (k) of the
definition of “Permitted Indebtedness”; provided that no such Liens encumber any
assets of any Loan Party;

(y) Liens on the Office Campus in connection with a sale-leaseback thereof,
provided that the Indebtedness deemed to arise therefrom is permitted under
clause (k) of the definition of “Permitted Indebtedness”;

(z) in respect of each Australian Loan Party, as long as no Event of Default
exists at the time of incurrence thereof, any Lien arising prior to or after the
Effective Date, which arises by the operation of the Australian PPSA in respect
of an asset or in the proceeds of an asset which is the subject of a conditional
sale or hire purchase arrangement or retention of title arrangement or any
commingled product or mass of which it becomes part, where the obligation
secured by that Lien is limited to the unpaid balance of purchase money for the
original asset and that

 

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unpaid balance is not overdue by more than thirty (30) days or is being
contested in compliance with Section 6.04;

(aa) in respect of each Japanese Loan Party, as long as no Event of Default
exists at the time of incurrence thereof, any Lien arising prior to or after the
Effective Date, which is the subject of a retention of title arrangement or any
commingled product or mass of which it becomes part, where the obligation
secured by that Lien is limited to the unpaid balance of purchase money for the
original asset and that unpaid balance is not overdue by more than thirty
(30) days or is being contested in compliance with Section 6.04;

(bb) other Liens securing obligations in an aggregate outstanding principal
amount not to exceed $7,500,000 at any time outstanding; provided that (i) if
such Lien secures Indebtedness in excess of $500,000 and is secured by any of
the Collateral of the type included in any Borrowing Base, if reasonably
requested by the Administrative Agent, the holder of such Indebtedness (or an
agent or representative thereof) shall have entered into an intercreditor
agreement on terms reasonably satisfactory to the Administrative Agent and
(ii) post-petition Liens permitted hereby may not secure more than $500,000
aggregate principal amount of Indebtedness or other Obligations at any time
outstanding and no such Lien shall have priority senior to, or be pari passu
with, the Liens securing the Obligations or the Liens in favor of the Agents
under the Security Documents; and

(bb) Liens securing the Interim Order Intercompany Loans (in accordance with the
definition thereof).

Provided that, if any Lien described in any of the clauses other than clause
(i), is not permitted to be incurred or exist pursuant to the DIP Term
Documents, then notwithstanding the inclusion of such Lien in the foregoing
definition of “Permitted Encumbrances”, such Lien shall not be permitted
hereunder.

“Permitted Foreign Overadvance” means a Foreign Overadvance made by the
Administrative Agent (including acting through its global branches and Lender
Affiliates), in its Permitted Discretion, which:

(a) is made to maintain, protect or preserve the Collateral of any of the
Foreign Loan Parties and/or the Foreign Credit Parties’ rights under the Loan
Documents or which is otherwise for the benefit of the Credit Parties; or

(b) is made to enhance the likelihood of, or maximize the amount of, repayment
of any of the Foreign Liabilities; or

(c) is made to pay any other amount chargeable to any Foreign Loan Party
hereunder or under any other Loan Document; and

(d) together with all other Permitted Foreign Overadvances to any particular
Foreign Borrower then outstanding, shall not (i) exceed at any time the lesser
of $1,000,000 or ten percent (10%) of the Borrowing Base of such Foreign
Borrower at any time or (ii) unless a

 

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Liquidation is occurring, remain outstanding for more than thirty
(30) consecutive Business Days, unless in each case, the Required Lenders
otherwise agree;

provided, that advances under the foregoing clauses (a), (b) and (c) shall be
made only to the extent such amounts are not paid for by the Loan Parties or by
the DIP Term Agent; provided further, that, the foregoing shall not (i) modify
or abrogate any of the provisions of Section 2.03 regarding each Foreign
Lender’s obligations with respect to Foreign Letters of Credit, or (ii) result
in any claim or liability against the Administrative Agent or its branches or
Lender Affiliates (regardless of the amount of any Foreign Overadvance) for
“inadvertent Foreign Overadvances” (i.e. where a Foreign Overadvance results
from changed circumstances beyond the control of the Administrative Agent (such
as a reduction in the value of Collateral)), and such “inadvertent Foreign
Overadvances” shall not reduce the amount of Permitted Foreign Overadvances
allowed hereunder, and provided further, that in no event shall the
Administrative Agent, its branches or Lender Affiliates make a Foreign
Overadvance, if after giving effect thereto, the principal amount of the Foreign
Credit Extensions to any Foreign Borrower would exceed the Aggregate Applicable
Commitments for such Foreign Borrower (as in effect prior to any termination of
the Commitments for such Foreign Borrower pursuant to Section 2.06 hereof).

“Permitted Indebtedness” means, without duplication, each of the following:

(a) Indebtedness outstanding on the date hereof and listed on Schedule 7.03;

(b) Indebtedness (i) of any Loan Party to any other Loan Party (other than an
Immaterial Subsidiary); (ii) of any Subsidiary that is not a Loan Party to any
other Subsidiary that is not a Loan Party; and (iii) of any Subsidiary that is
not a Loan Party to any Loan Party (other than an Immaterial Subsidiary);

(c) purchase money Indebtedness of any Loan Party or any Subsidiary to finance
the acquisition of any fixed or capital assets, including Capital Lease
Obligations and Synthetic Lease Obligations, and any Indebtedness assumed in
connection with the acquisition of any such assets or secured by a Lien on any
such assets prior to the acquisition thereof; provided, however, that any such
obligations that were not in existence as of the Petition Date shall not exceed
$1,000,000 aggregate principal amount at any time outstanding;

(d) the Boardriders Notes in the aggregate principal amount outstanding as of
the Petition Date;

(e) Indebtedness in respect of performance bonds, bid bonds, customs and appeal
bonds, surety bonds, performance and completion guarantees and similar
obligations related thereto, in each case provided in the ordinary course of
business;

(f) the DIP Term Claims in a maximum aggregate principal amount not to exceed
$138,000,000;

(g) [reserved];

 

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(h) the Existing Senior Secured Note Obligations;

(i) the Obligations;

(j) unsecured Guarantees by the Parent in connection with Indebtedness of any
Foreign Subsidiaries of the Parent in existence as of the Petition Date;

(k) other Indebtedness of all Foreign Subsidiaries in an aggregate principal
amount not to exceed the sum of (x) €90,000,000 minus (y) Investments made
pursuant to clause (q) of the definition of “Permitted Investments”, in each
case, incurred on market terms (as reasonably determined by the Borrower) at any
time outstanding (provided however that no such Indebtedness may include any
prepayment premium, back-end fee or similar item in excess of 1% of the
principal amount of such Indebtedness);

(l) (i) Indebtedness constituting indemnification obligations or obligations in
respect of purchase price or other similar adjustments in connection with
Permitted Dispositions; and (ii) Indebtedness consisting of obligations of any
Loan Party or any Subsidiary under deferred compensation or other similar
arrangements incurred by such Person in connection with any Permitted
Investment;

(m) Indebtedness consisting of the financing of insurance premiums incurred in
the ordinary course of business of any Loan Party or any Subsidiary;

(n) Guarantees (i) of any Indebtedness of any Loan Party or any Subsidiary
thereof described in clause (a) hereof, (ii) by any Loan Party of any
Indebtedness of another Loan Party permitted hereunder, (iii) by any Loan Party
of Indebtedness otherwise permitted hereunder of any Subsidiary that is not a
Loan Party to the extent such Guarantees are permitted pursuant to Section 7.02,
and (iv) by any Subsidiary that is not a Loan Party of Indebtedness of another
Subsidiary that is not a Loan Party;

(o) the Interim Order Intercompany Loans in an aggregate principal amount not to
exceed the amount specified in the definition of such term plus any interest
paid-in-kind thereon;

(p) Indebtedness consisting of obligations of any Loan Party or any Subsidiary
under deferred compensation or other similar arrangements incurred by such
Person in connection with any Investment to the extent permitted under
Section 7.02;

(q) obligations in respect of Bank Products and Cash Management Services and
other Indebtedness in respect of netting services, automatic clearinghouse
arrangements, overdraft protections and similar arrangements , in each case, to
the extent permitted by the Cash Management Order;

(r) Indebtedness incurred by any Loan Party or any Subsidiary in respect of
letters of credit, bank guarantees, bankers’ acceptances, warehouse receipts or
similar instruments issued or created in the ordinary course of business
consistent with past practice in respect of workers

 

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compensation claims, health, disability or other employee benefits or property,
casualty or liability insurance or self-insurance or other Indebtedness with
respect to reimbursement-type obligations regarding workers compensation claims;
provided that any such Indebtedness of a Loan Party shall be unsecured;

(s) without duplication of any Indebtedness described in clause (a) through
(r) above, other Indebtedness in an aggregate principal amount not to exceed
$1,000,000 at any time outstanding (provided, that this clause (s) shall not be
used by any Loan Party to extend any credit to any Immaterial Subsidiary);

(t) [reserved]; and

(t) all premiums (if any), interest (including post-petition interest), fees,
expenses, charges and additional or contingent interest on obligations described
in clauses (a) through (s) above.

Notwithstanding anything to the contrary contained in this Agreement, the
aggregate amount of Indebtedness that is incurred under clause (k) above in any
currency other than Euros shall be determined based on currency exchange rates
as of the date of incurrence and the limit set forth in clause (k) above will
not be deemed to have been exceeded solely as a result of fluctuations in
currency exchange rates.

“Permitted Investments” means each of the following:

(a) readily marketable obligations issued or directly and fully guaranteed or
insured by the United States of America (or with respect to a Foreign
Subsidiary, any country (or province thereof, as applicable) in which such
Foreign Subsidiary is incorporated or otherwise formed) (or by any agency or
instrumentality of the United States of America or such other country, as
applicable) having maturities of not more than one year from the date of
acquisition thereof; provided that the full faith and credit of the United
States of America or such other country, as applicable, is pledged in support
thereof;

(b) commercial paper issued by any Person organized under the laws of any state
of the United States of America, (or with respect to a Foreign Subsidiary, any
country (or province thereof, as applicable) in which such Foreign Subsidiary is
incorporated or otherwise formed) and rated, at the time of acquisition thereof,
at least “Prime-1” (or the then equivalent grade) by Moody’s or at least “A-1”
(or the then equivalent grade) by S&P, in each case with maturities of not more
than one year from the date of acquisition thereof;

(c) time deposits with, or insured certificates of deposit or bankers’
acceptances of, any commercial bank that (i) (A) is a Lender or (B) is organized
under the laws of the United States of America, any state thereof or the
District of Columbia (or with respect to a Foreign Subsidiary, any country (or
province thereof, as applicable) in which such Foreign Subsidiary is
incorporated or otherwise formed) or is the principal banking subsidiary of a
bank holding company organized under the laws of the United States of America,
any state thereof or the District of Columbia,

 

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and is a member of the Federal Reserve System, (ii) issues (or the parent of
which issues) commercial paper rated, at the time of acquisition thereof, as
described in clause (b) of this definition and (iii) has combined capital and
surplus of at least $500,000,000, in each case with maturities of not more than
one year from the date of acquisition thereof;

(d) fully collateralized repurchase agreements with a term of not more than
thirty (30) days for securities described in clause (a) above (without regard to
the limitation on maturity contained in such clause) and entered into with a
financial institution satisfying the criteria described in clause (c) above at
the time of acquisition thereof or with any primary dealer and having a market
value at the time that such repurchase agreement is entered into of not less
than 100% of the repurchase obligation of such counterparty entity with whom
such repurchase agreement has been entered into;

(e) securities with maturities of one year or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States of America (or with respect to a Foreign Subsidiary, any country (or
province thereof, as applicable) in which such Foreign Subsidiary is
incorporated or otherwise formed), by any political subdivision or taxing
authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or A by Moody’s;

(f) 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 requirements of clause (c) of this definition;

(g) marketable short-term money market and similar securities or funds having,
at the time of acquisition thereof, a rating of at least A-2 from S&P (or, if at
any time S&P shall not be rating such obligations, an equivalent rating from
another nationally recognized rating service);

(h) Investments, classified in accordance with GAAP as current assets of the
Loan Parties or any Subsidiary, in any money market fund, mutual fund, or other
shares of investment companies that are registered under the Investment Company
Act of 1940, and which invest primarily in one or more of the types of
securities described in clauses (a) through (g) above;

(i) Investments existing on the Petition Date, provided that the amount of any
Investment permitted pursuant to this clause is not increased from the amount of
such Investment on the Petition Date except as otherwise permitted by
Section 7.02;

(j) [reserved];

(k) Investments (i) by any Domestic Loan Party in any other Domestic Loan Party
(other than an Immaterial Subsidiary), (ii) by any Subsidiary that is not a Loan
Party in any other Subsidiary that is not a Loan Party;

 

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(l) Investments consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade credit in the
ordinary course of business, and Investments received in satisfaction or partial
satisfaction thereof from financially troubled account debtors and other credits
to suppliers in the ordinary course of business;

(m) Guarantees constituting Permitted Indebtedness;

(n) Investments by the Domestic Loan Parties in the Foreign Borrowers in the
form of loans to the extent required to fund any prepayment required under
Section 2.05(d), (e) or (f);

(o) Investments received in connection with the bankruptcy or reorganization of,
or settlement of delinquent accounts and disputes with, customers and suppliers,
in each case in the ordinary course of business;

(p) (i) advances of payroll payments to employees in the ordinary course of
business and (ii) other loans and advances to officers, directors and employees
of the Loan Parties and Subsidiaries in the ordinary course of business in an
amount not to exceed $100,000 to any individual at any time or in an aggregate
amount not to exceed $1,000,000 at any time outstanding; provided, however, that
an individual’s use of a cashless exercise procedure to pay the exercise price
and required tax withholding (or either of them) in connection with such
individual’s exercise of a compensatory option to purchase stock issued by the
Parent shall not give rise to a loan or advance for the purposes of this clause
(ii) to the extent that all funds representing full payment of such option
exercise price and required tax withholding are actually remitted to the Parent
before the close of business on either (x) the date of exercise of the stock
option or (y) the date of issuance of the stock pursuant to the option exercise;

(q) Investments by the Domestic Loan Parties in Foreign Subsidiaries in the form
of loans that are (x) made for the purpose of funding disbursements by Foreign
Subsidiaries other than the Canadian Subsidiary, the Australian Subsidiary and
the Japanese Subsidiaries, in each case, consistent with the Budget (within
Permitted Variances) and (y) in an aggregate amount outstanding at any time not
in excess of the amount by which the maximum principal amount of Indebtedness
permitted under clause (k) of the definition of “Permitted Indebtedness” exceeds
the aggregate outstanding principal amount of Indebtedness actually incurred in
reliance thereon;;

(r) Interim Order Intercompany Loans;

(s) [reserved];

(t) Guarantees of leases or other obligations of any Loan Party or any
Subsidiary that do not constitute Indebtedness, in each case entered into in the
ordinary course of business;

(u) in the case of investments by any Foreign Subsidiary or investments made in
a country outside of the United States, Permitted Investments shall also include
(i) investments of the type

 

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described in clauses (a) through (h) above of foreign obligors, which
investments or obligors (or the parents of such obligors) have ratings described
in such clauses or equivalent ratings from comparable foreign rating agencies
and (ii) other short-term investments utilized by Foreign Subsidiaries in
accordance with normal investment practices for cash management in investments
analogous to the foregoing investments described in clauses (a) through
(h) above;

(v) promissory notes and other non-cash consideration that is received in
connection with any Permitted Disposition; and

(w) other Investments in an aggregate amount not to exceed $1,000,000 at any
time outstanding (provided, that no Loan Party shall make any Investment
pursuant to this clause (w) in any Immaterial Subsidiary);

provided, however, that notwithstanding the foregoing, (i) except as otherwise
provided in any Security Document, no Investment of any Loan Party of a type
specified in clauses (a) through (h) above (each, a “Cash Equivalent”) shall
constitute a Permitted Investment unless such Investment is pledged to the
Administrative Agent (and, with respect to any Investment by a Japanese Loan
Party, to each of the Japanese Secured Parties) as additional collateral for the
applicable Obligations pursuant to such security and control agreements as may
be reasonably required by any Agent and (ii) no Cash Equivalent of any Domestic
Loan Party or Canadian Loan Party shall constitute a Permitted Investment while
any Loans are outstanding.

“Permitted Variance” means a Variance from the Budget on a cumulative basis
tested on a weekly basis (the “Testing Period”) commencing with the Petition
Date, which Variance (i) is not more than 15% with respect to cumulative total
operating receipts to the Budget for such Testing Period and (ii) is not more
than 15% more than the cumulative Total Disbursements in the Budget for such
Testing Period (without giving effect to the making of Loans or DIP Term Loans
or the repayments or prepayments of Loans or DIP Term Loans) on a cumulative
basis to the Budget; provided, however, that the first such Variance with
respect to clauses (i) and (ii) will be tested after the end of the third
(3rd) full calendar week after the Petition Date.

“Permitted Overadvance” means either a Permitted Domestic Overadvance or a
Permitted Foreign Overadvance.

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

“Petition Date” has the meaning set forth in the recitals hereto.

“Plan” means (a) in respect of the Domestic Loan Parties, any employee benefit
plan within the meaning of Section 3(3) of ERISA (including a Pension Plan),
maintained for employees of a Borrower or, with respect to any such plan that is
subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate or
any such Plan to which a Borrower or, with respect to any such plan that is
subject to Section 412 of the Code or Title IV of ERISA, or any ERISA Affiliate
is required to contribute on behalf of any of

 

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its employees, or (b) in respect of the Canadian Loan Parties, any Canadian
Pension Plan or other pension benefit or retirement savings plan maintained by
any of the Canadian Loan Parties for its employees or its former employees to
which any of the Canadian Loan Parties contributes or are required to contribute
with respect to which any of the Canadian Loan Parties have incurred or may
incur liability, including contingent liability.

“Plan of Reorganization” means a plan filed in the Cases pursuant to Chapter 11
of the Bankruptcy Code.

“Plan Sponsor Agreement” means that certain plan sponsor agreement among
Borrower, the other Debtors and Big Wave or one or more of its affiliates dated
as of September 8, 2015.

“Platform” has the meaning specified in Section 6.02.

“Pledge Agreement” means the Pledge Agreement dated as of the Effective Date
among the Domestic Loan Parties party thereto and the Administrative Agent.

“PPSA” means the Personal Property Security Act (Ontario) (or any successor
statute) or similar legislation of any other Canadian jurisdiction, including,
without limitation, the Civil Code of Quebec, the laws of which are required by
such legislation to be applied in connection with the issue, perfection,
enforcement, opposability, validity or effect of security interests or other
applicable Liens.

“Post-Carve Out Trigger Notice Cap” means $1,000,000.

“Prepetition Parties” means, collectively, the Existing ABL Agent, the Existing
ABL Lenders, the Existing Senior Secured Note Collateral Agent, and the Existing
Senior Secured Noteholders.

“Prime Rate” means, for any day, a fluctuating rate per annum equal to the
highest of (a) the rate of interest in effect for such day as publicly announced
from time to time by Bank of America as its “prime rate”, (b) the Federal Funds
Rate for such day plus one-half of one percent (0.50%) or (c) the Adjusted LIBO
Rate for a one month interest period as determined on such day plus one percent
(1.00%). The “prime rate” is a rate set by Bank of America based upon various
factors including Bank of America’s costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate. Any change
in such rate announced by Bank of America shall take effect at the opening of
business on the day specified in the public announcement of such change.

“Prime Rate Loan” means a Canadian Prime Rate Loan, a Canadian Base Rate Loan, a
Domestic Prime Rate Loan, a Japanese Base Rate Loan or an Australian Base Rate
Loan, as the context may require.

“Primed Liens” has the meaning set forth in the recitals hereto.

“Priority Permitted Encumbrances” means, (x) subject to the Intercreditor
Agreement, with respect to the DIP ABL Priority Collateral, the DIP ABL Lien of
the DIP ABL Agent securing the DIP ABL Claims, (y) the Lien of the Existing ABL
Agent on the Existing ABL Credit Agreement Collateral Account, and (z) any other

 

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valid, perfected, and non-avoidable Permitted Encumbrance in existence on the
Petition Date (other than any Existing Senior Secured Note Liens and, except as
set forth above, the Existing ABL Liens).

“Public Lender” has the meaning specified in Section 6.02.

“Qualified ECP Guarantor” means, at any time, each Loan Party with total assets
exceeding $10,000,000 or that qualifies at such time as an “eligible contract
participant” under the Commodity Exchange Act and can cause another Person to
qualify as an “eligible contract participant” at such time under
Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

“Qualifying Australian Treaty Party” means an Australian Credit Party which:

(a) is treated as a resident of an Australian Treaty State for the purposes of
the relevant Australian Double Tax Treaty;

(b) does not perform its role as an Australian Credit Party at or through a
permanent establishment in Australia; and

(c) fulfills any other conditions which must be fulfilled under the relevant
Australian Double Tax Treaty by residents of the Australian Treaty State for
such residents to obtain a full exemption from taxation imposed in Australia in
respect of the relevant payment.

“Reaffirmation Agreement” means that certain Joinder, Confirmation, Ratification
and Amendment of Ancillary Loan Documents among each of the Loan Parties and the
Administrative Agent dated as of the date hereof, reaffirming each of the
Security Documents, the Facility Guaranties (as defined in the Existing ABL
Credit Agreement), the Credit Card Notifications (as defined in the Existing ABL
Credit Agreement), the Blocked Account Agreements (as defined in the Existing
ABL Credit Agreement), the Lessor Notifications (as defined in the Existing ABL
Credit Agreement), and the other Loan Documents (as defined in the Existing ABL
Credit Agreement) referred to therein.

“Real Estate” means all land, together with the buildings, structures, parking
areas, and other improvements thereon, now or hereafter owned or leased by any
Loan Party or any Subsidiary, including all easements, rights-of-way, and
similar rights relating thereto.

“Receivables Advance Rate” means (a) with respect to the Domestic Borrowers,
seventy percent (70%), and (b) with respect to the Foreign Borrowers,
eighty-five percent (85%).

“Receivables Reserves” means, without duplication of any other Reserves or items
that are otherwise addressed or excluded through eligibility criteria, such
Reserves as may be established from time to time by any Agent in its Permitted
Discretion with respect to the determination of the collectability in the
ordinary course of Eligible Trade Receivables. Upon the determination by any
Agent in its Permitted Discretion that a Receivables Reserve should be
established or modified, such Agent shall notify the Administrative Agent in
writing and the Administrative Agent shall thereupon establish or modify such
Receivables Reserve, in all cases subject to the provisions of Section 2.01(e)
and Section 9.19.

 

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“Recipient” means any Agent, any Lender, the L/C Issuer or any other recipient
of any payment to be made by or on account of any obligation of any Loan Party
hereunder.

“Register” has the meaning specified in Section 10.06(d).

“Registered Public Accounting Firm” has the meaning specified by the Securities
Laws and shall be independent of the Parent and its Subsidiaries as prescribed
by the Securities Laws.

“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents and advisors of such
Person and of such Person’s Affiliates.

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

“Reported Fee Accruals” shall mean accrued and unpaid fees, disbursements,
costs, and expenses incurred by any professionals or professional firms retained
by the Domestic Borrowers or the Committee through and including the date of
delivery by the Administrative Agent (or the Required Lenders, where applicable)
or the DIP Term Agent of a Carve Out Trigger Notice, which amounts shall be
reported in arrears by the Domestic Borrowers to the Administrative Agent on a
weekly basis, less any amounts actually paid on account thereof.

“Reports” has the meaning provided in Section 9.13(b).

“Request for Credit Extension” means (a) with respect to a Committed Borrowing,
conversion or continuation of Committed Loans, a Committed Loan Notice and
(b) with respect to an L/C Credit Extension, a Letter of Credit Application.

“Required Lenders” means, as of any date of determination, at least two Lenders
(excluding Affiliates) holding more than fifty percent (50%) of the Aggregate
Total Commitments or, if the Commitment of each Lender to make Loans and the
obligation of the L/C Issuer to make L/C Credit Extensions have been terminated
pursuant to Section 8.02, at least two Lenders (excluding Affiliates) holding in
the aggregate more than 50% of the Total Outstandings (with the aggregate amount
of each Lender’s risk participation and funded participation in L/C Obligations
being deemed “held” by such Lender for purposes of this definition); provided
that the Commitment of, and the portion of the Total Outstandings held or deemed
held by, any Defaulting Lender shall be excluded for purposes of making a
determination of Required Lenders.

“Reserves” means all (if any) Inventory Reserves, Availability Reserves and
Receivables Reserves.

“Responsible Officer” means the chief executive officer, president, chief
financial officer, treasurer, assistant treasurer, director or secretary of a
Loan Party or any of the other individuals designated in writing to the
Administrative Agent by an existing Responsible Officer of a Loan Party as an
authorized signatory of any certificate or other document to be delivered
hereunder. Any document delivered hereunder that is signed by a Responsible
Officer of a Loan Party shall be conclusively presumed to have been authorized
by all necessary corporate, partnership and/or other action on the part of such
Loan

 

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Party and such Responsible Officer shall be conclusively presumed to have acted
on behalf of such Loan Party.

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity
Interest of any Loan Party or any of its Subsidiaries, or any payment (whether
in cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, defeasance,
acquisition, cancellation or termination of any such capital stock or other
Equity Interest, or on account of any return of capital to such Person’s
stockholders, partners or members (or the equivalent of any thereof), or any
option, warrant or other right to acquire any such dividend or other
distribution or payment. Without limiting the foregoing, “Restricted Payments”
with respect to any Loan Party or any Subsidiary shall also include all payments
made by such Person with any proceeds of a dissolution or liquidation of such
Loan Party or such Subsidiary.

“Revaluation Date” means (a) with respect to any Loan, each of the following:
(i) each date of a Borrowing of a LIBO Rate Loan denominated in an Alternative
Currency, (ii) each date of a continuation of a LIBO Rate Loan denominated in an
Alternative Currency pursuant to Section 2.02, and (iii) such additional dates
as the Administrative Agent shall determine or the Required Lenders shall
require; and (b) with respect to any Letter of Credit, each of the following:
(i) each date of issuance of a Letter of Credit denominated in an Alternative
Currency, (ii) each date of an amendment of any such Letter of Credit having the
effect of increasing the amount thereof, (iii) each date of any payment by the
L/C Issuer under any Letter of Credit denominated in an Alternative Currency,
and (iv) such additional dates as the Administrative Agent or the L/C Issuer
shall determine or the Required Lenders shall require.

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. and any successor thereto.

“Same Day Funds” means (a) with respect to disbursements and payments in
Dollars, immediately available funds, and (b) with respect to disbursements and
payments in an Alternative Currency, same day or other funds as may be
determined by the Administrative Agent or the L/C Issuer, as the case may be, to
be customary in the place of disbursement or payment for the settlement of
international banking transactions in the relevant Alternative Currency.

“Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002, as amended and in effect
from time to time.

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

“Securities Laws” means, collectively, the Securities Act of 1933, the
Securities Exchange Act of 1934, Sarbanes-Oxley, and the applicable accounting
and auditing principles, rules, standards and practices promulgated, approved or
incorporated by the SEC or the PCAOB; and all applicable securities laws in each
province and territory of Canada and the respective regulations, rules
regulations, blanket orders and blanket rulings under such laws together with
applicable published policy statements and notices of the securities regulator
of each such province and territory.

 

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“Security Agreement” means the Security Agreement dated as of the Effective Date
among the Domestic Loan Parties and the Administrative Agent.

“Security Documents” means the Security Agreement, the Canadian Security
Documents, the Australian Security Documents, the Japanese Security Documents,
the Pledge Agreement, the Intellectual Property Security Agreement, the Blocked
Account Agreements, the Credit Card Notifications, the IP Rights Agreement, the
Novation Deed, and each other security agreement or other instrument or document
executed and delivered by or on behalf of any Loan Party to the applicable Agent
pursuant to this Agreement or any other Loan Document granting a Lien to secure
any of the Obligations or the Foreign Liabilities, as applicable, as each has
been ratified and confirmed pursuant to the Reaffirmation Agreement.

“Settlement Date” has the meaning provided in Section 2.14(a).

“Shareholders’ Equity” means, as of any date of determination, consolidated
shareholders’ equity of the Parent and its Subsidiaries or the Parent and its
Americas/Foreign Subsidiaries, as applicable, as of that date determined in
accordance with GAAP.

“Shrink” means Inventory of the Borrowing Base Parties which has been lost,
misplaced, stolen, or is otherwise unaccounted for.

“Special Notice Currency” means at any time an Alternative Currency, other than
the currency of a country that is a member of the Organization for Economic
Cooperation and Development at such time located in North America or Europe.

“Specified Loan Party” means any Loan Party that is not then an “eligible
contract participant” under the Commodity Exchange Act (determined prior to
giving effect to Section 10.31).

“Sponsored Plan” means a plan of reorganization supported by Big Wave.

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

“Standby Letter of Credit” means any Letter of Credit that is not a Commercial
Letter of Credit.

“Stated Amount” means at any time, the maximum amount for which a Letter of
Credit may be honored.

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum

 

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reserve percentages (including any marginal, special, emergency or supplemental
reserves) expressed as a decimal established by the FRB to which the
Administrative Agent is subject with respect to the Adjusted LIBO Rate, for
eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of the FRB). Such reserve percentages shall include those imposed
pursuant to such Regulation D. LIBO Rate Loans shall be deemed to constitute
eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.

“Sterling” and “£” mean the lawful currency of the United Kingdom.

“Store” means any retail store (which may include any real property, fixtures,
equipment, inventory and other property related thereto) operated, or to be
operated, by any Loan Party or, as applicable, any Subsidiary; provided that
with respect to the provisos to clause (b) of the definition of “Permitted
Disposition”, “Store” does not include kiosks, temporary stores, seasonal
stores, pop-up stores or “shops within a shop.”

“Subordinated Indebtedness” means Indebtedness which is expressly subordinated
in right of payment to the prior Payment in Full and which is in form and on
terms approved in writing by the Administrative Agent.

“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company, unlimited liability company or other business entity
of which a majority of the shares of Equity Interests having ordinary voting
power for the election of directors or other governing body are at the time
beneficially owned, or the management of which is otherwise Controlled,
directly, or indirectly through one or more intermediaries, or both, by such
Person and, with respect to the Australian Subsidiaries means a subsidiary
within the meaning given in Part 1.2 Division 6 of the Corporations Act. Unless
otherwise specified, all references herein to a “Subsidiary” or to
“Subsidiaries” shall refer to a Subsidiary or Subsidiaries of a Loan Party.

“Substantial Liquidation” means either (a) the Liquidation of substantially all
of the Collateral, or (b) the sale or other disposition of substantially all of
the Collateral by the Loan Parties.

“Successor Cases” means any case under Chapter 7 of the Bankruptcy Code upon the
conversion of any of these Cases, or in any proceedings superseding or related
to any of the foregoing.

“Supermajority Lenders” means, as of any date of determination, at least two
(2) Lenders holding more than 66 2/3% of the Aggregate Total Commitments or, if
the Commitment of each Lender to make Loans and the obligation of the L/C Issuer
to make L/C Credit Extensions have been terminated pursuant to Section 8.02, at
least two (2) Lenders holding in the aggregate more than 66 2/3% of the Total
Outstandings (with the aggregate amount of each Lender’s risk participation and
funded participation in L/C Obligations being deemed “held” by such Lender for
purposes of this definition); provided that the

 

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Commitment of, and the portion of the Total Outstandings held or deemed held by,
any Defaulting Lender shall be excluded for purposes of making a determination
of Supermajority Lenders.

“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement.

“Swap Obligation” means with respect to any Loan Party any obligation to pay or
perform under any agreement, contract or transaction that constitutes a “swap”
within the meaning of Section 1a(47) of the Commodity Exchange Act.

“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Lender or any Lender
Affiliate of a Lender).

“Synthetic Lease Obligation” means the monetary obligation of a Person under
(a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property (including sale and leaseback
transactions), in each case, creating obligations that do not appear on the
balance sheet of such Person but which, upon the application of any Debtor
Relief Laws to such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).

“TARGET2” means the Trans-European Automated Real-time Gross Settlement Express
Transfer payment system which utilizes a single shared platform and which was
launched on November 19, 2007.

“TARGET Day” means any day on which TARGET2 (or, if such payment system ceases
to be operative, such other payment system, if any, determined by the
Administrative Agent to be a suitable replacement) is open for the settlement of
payments in Euro.

 

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“Tax Consolidated Group” means a Consolidated Group or an MEC Group as defined
in (a) the Income Tax Assessment Act 1997 (Cth) of Australia as amended or
re-enacted, (b) any statute, regulation or provision enacted in replacement of
that Law, (c) another regulation or other statutory instrument made or issued
under that Law, and (d) any amendment made to a statute, regulation or provision
referred to in clauses (a) through (c) of this definition as a consequence of
another statute, regulation or provision.

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

“Termination Date” means the earliest to occur of (i) the Maturity Date,
(ii) the date on which the maturity of the Obligations is accelerated (or deemed
accelerated) and the Commitments are irrevocably terminated (or deemed
terminated) in accordance with Article VIII, or (iii) the date of the occurrence
of any Event of Default pursuant to Section 8.01(f) with respect to a Foreign
Loan Party, or (iv) conversion of any of the Cases to a case under Chapter 7 of
the Bankruptcy Code, (v) dismissal of any of the Cases, (vi) the effective date
of any Loan Party’s plan of reorganization in the Cases that has been confirmed
by an order of the Bankruptcy Court, (vii) repayment in full of the Obligations
and the termination of the Commitments hereunder, (viii) the occurrence of the
DIP Term Termination Date and (ix) a sale of all or substantially all of the
assets of the Domestic Loan Parties under Section 363 of the Bankruptcy Code.

“Term Loan Priority Account” means the “Term Loan Priority Collateral Account”
as such term is defined in the DIP Intercreditor Agreement.

“Testing Period” has the meaning set forth in the definition of “Permitted
Variance”.

“TIBOR Rate” means, in relation to any TIBOR Rate Loan or other sum and in
relation to a particular Interest Period therefor:

(a)(i) in relation to any Interest Period, the percentage rate of interest per
annum offered for deposits in the relevant currency for period comparable to
that Interest Period that appears on Reuters screen page DTIBOR01 (or such other
screen display or service as may replace it for the purposes of displaying Tokyo
interbank offered rates of prime banks for deposits in the relevant currency) at
or about 11:00 a.m. two (2) Business Days prior to the first day of the relevant
Interest Period therefor;

(ii) in relation to an Interest Period of less than one month, the percentage
rate of interest per annum offered for deposits in the relevant currency for a
period of one month that appears on Reuters screen page DTIBOR01 (or such other
screen display or service as may replace it for the purposes of displaying Tokyo
interbank offered rates of prime banks for deposits in the relevant currency),
in each case at or about 11:00 a.m. two (2) Business Days prior to the first day
of the relevant Interest Period therefor.

 

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(b) If no such interest rate is available on Reuters screen page DTIBOR01 (or
such replacement), the arithmetic mean (rounded upwards to 4 decimal places) of
the rates per annum (as quoted to the Administrative Agent by three reference
banks, at its request) at which each reference bank was offering deposits in the
relevant currency in an amount comparable with that Loan or other sum, as the
case may be, to leading banks in the Tokyo interbank market for a period equal
to that Interest Period at or about 11:00 a.m. two (2) Business Days prior to
the first day of the relevant Interest Period therefor.

“TIBOR Rate Loan” means a Committed Loan that bears interest at a rate based on
the TIBOR Rate. TIBOR Rate Loans may be denominated in Yen or in another
Alternative Currency.

“Total Australian Outstandings” means, without duplication, the aggregate
Outstanding Amount of all Australian Loans and all Australian L/C Obligations.

“Total Canadian Outstandings” means, without duplication, the aggregate
Outstanding Amount of all Canadian Loans.

“Total Disbursements” means the sum of total operating disbursements, total
non-operating disbursements and total bankruptcy disbursements as provided in
the Budget.

“Total Domestic Outstandings” means, without duplication, the aggregate
Outstanding Amount of all Domestic Loans and all Domestic L/C Obligations.

“Total Japanese Outstandings” means, without duplication, the aggregate
Outstanding Amount of all Japanese Loans.

“Total Outstandings” means (a) individually, all Total Canadian Outstandings,
all Total Domestic Outstandings, all Total Australian Outstandings and all Total
Japanese Outstandings, as the context may require, and (b) collectively, the
aggregate of the foregoing.

“Trading with the Enemy Act” has the meaning set forth in Section 10.18.

“Type” means, with respect to a Committed Loan, its character as a Prime Rate
Loan, a LIBO Rate Loan, a BBR Rate Loan, a TIBOR Rate Loan or a Canadian BA Rate
Loan.

“UCC” or “Uniform Commercial Code” means the Uniform Commercial Code as in
effect from time to time in the State of New York and all terms used in this
Agreement or any other Loan Document and not otherwise defined herein or therein
shall have the respective meanings (if any) given such terms in the UCC;
provided that, if a term is defined in Article 9 of the Uniform Commercial Code
differently than in another Article thereof, the term shall have the meaning set
forth in Article 9; provided further that, if by reason of mandatory provisions
of law, perfection, or the effect of perfection or non-perfection, of a security
interest in any Collateral or the availability of any remedy hereunder is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, “Uniform Commercial Code” means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or
non-perfection or availability of such remedy, as the case may be.

 

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“UFCA” has the meaning specified in Section 10.23(d).

“UFTA” has the meaning specified in Section 10.23(d).

“Unbudgeted Investigation Claims” has the meaning given to such term in
Section 7.20.

“Unencumbered Assets” has the meaning given to such term in Section 7.20.

“United States” and “U.S.” mean the United States of America.

“United States Trustee” means the Office of the United States Trustee.

“Unreimbursed Amount” has the meaning specified in Section 2.03(c)(i).

“U.S. Person” means any Person that is a “United States Person” as defined in
Section 7701(a)(30) of the Code.

“U.S. Tax Compliance Certificate” has the meaning specified in
Section 3.01(e)(ii)(B)(III).

“Variance” means a difference in the amount contained in the Budget with respect
to cumulative operating receipts and cumulative Total Disbursements, in each
case compared to the actual cumulative operating receipts and/or actual
aggregate cumulative Total Disbursements, as applicable, on a cumulative basis.

“Variance Report” has the meaning set forth in Section 6.02.

“Wholly Owned Subsidiary” means, with respect to any Person, any corporation,
partnership or other entity of which all of the Equity Interests (other than, in
the case of a corporation, directors’ qualifying shares) are directly or
indirectly owned or controlled by such Person or one or more Wholly Owned
Subsidiaries of such Person or by such Person and one or more Wholly Owned
Subsidiaries of such Person.

“Yen” and “¥” mean the lawful currency of Japan.

1.02 Other Interpretive Provisions. With reference to this Agreement and each
other Loan Document, unless otherwise specified herein or in such other Loan
Document:

(a) The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words
“include,” “includes” and “including” shall be deemed to be followed by the
phrase “without limitation.” The word “will” shall be construed to have the same
meaning and effect as the word “shall.” Unless the context requires otherwise,
(i) any definition of or reference to any agreement, instrument or other
document (including any Organization Document) shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
restated, amended and restated, supplemented or otherwise modified (subject to
any restrictions on such

 

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amendments, restatements, amendment and restatements, supplements or
modifications set forth herein or in any other Loan Document), (ii) any
reference herein to any Person shall be construed to include such Person’s
successors and assigns, (iii) the words “herein,” “hereof” and “hereunder,” and
words of similar import when used in any Loan Document, shall be construed to
refer to such Loan Document in its entirety and not to any particular provision
thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits
and Schedules shall be construed to refer to Articles and Sections of, and
Exhibits and Schedules to, the Loan Document in which such references appear,
(v) any reference to any law shall include all statutory and regulatory rules,
regulations, orders and provisions consolidating, amending replacing or
interpreting such law and any reference to any law or regulation shall, unless
otherwise specified, refer to such law or regulation as amended, modified or
supplemented from time to time, and (vi) the words “asset” and “property” shall
be construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.

(b) In the computation of periods of time from a specified date to a later
specified date, unless otherwise expressly provided, the word “from” means “from
and including;” the words “to” and “until” each mean “to but excluding;” and the
word “through” means “to and including.”

(c) Article and Section headings used herein and in the other Loan Documents are
for convenience of reference only, are not part of this Agreement and shall not
affect the construction of, or be taken into consideration in interpreting, this
Agreement or any other Loan Document.

(d) Any other undefined term contained in any of the Loan Documents shall,
unless the context indicates otherwise, have the meaning provided for such term
in the Uniform Commercial Code as in effect in the State of New York, the PPSA
or the Australian PPSA, as the context may require, to the extent the same are
used or defined therein.

(e) Whenever any provision in any Loan Document refers to the knowledge (or an
analogous phrase) of any Loan Party, such words are intended to signify that
such Loan Party has actual knowledge or awareness of a particular fact or
circumstance or that such Loan Party, if it had exercised reasonable diligence,
would have known or been aware of such fact or circumstance.

1.03 Accounting Terms.

(a) Generally. All accounting terms not specifically or completely defined
herein shall be construed in conformity with, and all financial data (including
financial ratios and other financial calculations) required to be submitted
pursuant to this Agreement shall be prepared in conformity with, GAAP applied on
a consistent basis, as in effect from time to time, applied in a manner
consistent with that used in preparing the Audited Financial Statements, except
as

 

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otherwise specifically prescribed herein. Any obligation of a Person under a
lease that is not (or would not be) required to be classified and accounted for
as a Capital Lease Obligation or Attributable Indebtedness on a balance sheet of
such Person under GAAP as in effect on the Effective Date shall not be treated
as a Capital Lease Obligation or Attributable Indebtedness as a result of the
adoption of changes in GAAP or changes in the application of GAAP.

(b) Changes in GAAP. If at any time any change in GAAP would affect the
computation of any financial ratio or requirement set forth in any Loan
Document, and either the Lead Borrower or the Required Lenders shall so request,
the Administrative Agent, the Lenders and the Lead Borrower shall negotiate in
good faith to amend such ratio or requirement to preserve the original intent
thereof in light of such change in GAAP (subject to the approval of the Required
Lenders); provided that, until so amended, (i) such ratio or requirement shall
continue to be computed in accordance with GAAP prior to such change therein and
(ii) the Lead Borrower shall provide to the Administrative Agent for
distribution to the Lenders financial statements and other documents required
under this Agreement or as reasonably requested hereunder setting forth a
reconciliation between calculations of such ratio or requirement made before and
after giving effect to such change in GAAP.

 

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1.04 Rounding. Any financial ratios required to be maintained by the Loan
Parties pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).

1.05 Times of Day. Unless otherwise specified, all references herein to times of
day shall be references (a) to Eastern time (daylight or standard, as
applicable) with respect to the Domestic Loan Parties and the Canadian Loan
Parties, (b) to Tokyo, Japan time with respect to the Japanese Loan Parties and
(c) to Sydney, Australia time with respect to the Australian Loan Parties.

1.06 Letter of Credit Amounts. Unless otherwise specified, all references herein
to the amount of a Letter of Credit at any time shall be deemed to be the Dollar
Equivalent of the Stated Amount of such Letter of Credit in effect at such time;
provided, however, that with respect to any Letter of Credit that, by its terms
of any Issuer Documents related thereto, provides for one or more automatic
increases in the Stated Amount thereof, the amount of such Letter of Credit
shall be deemed to be the Dollar Equivalent of the maximum Stated Amount of such
Letter of Credit after giving effect to all such increases, whether or not such
maximum Stated Amount is in effect at such time.

1.07 Certifications. All certifications to be made hereunder by an officer or
representative of a Loan Party shall be made by such Person in his or her
capacity solely as an officer or a representative of such Loan Party, on such
Loan Party’s behalf and not in such Person’s individual capacity.

1.08 Exchange Rates; Currency Equivalents Generally.

(a) The Administrative Agent or the L/C Issuer, as applicable, shall determine
the Spot Rates as of each Revaluation Date to be used for calculating Dollar
Equivalent amounts of Credit Extensions and Outstanding Amounts denominated in
Alternative Currencies. Such Spot Rates shall become effective as of such
Revaluation Date and shall be the Spot Rates employed in converting any amounts
between the applicable currencies until the next Revaluation Date to occur.
Except for purposes of financial statements delivered by Loan Parties hereunder
or calculating financial covenants hereunder or except as otherwise provided
herein, the applicable amount of any currency (other than Dollars) for purposes
of the Loan Documents shall be such Dollar Equivalent amount as so determined by
the Administrative Agent or the L/C Issuer, as applicable.

(b) Wherever in this Agreement in connection with a Committed Borrowing,
conversion, continuation or prepayment of a LIBO Rate Loan, BBR Rate Loan,
Canadian BA Rate Loan or TIBOR Rate Loan or the issuance, amendment or extension
of a Letter of Credit, an amount, such as a required minimum or multiple amount,
is expressed in Dollars, but such Committed Borrowing, LIBO Rate Loan, BBR Rate
Loan, Canadian BA Rate Loan or TIBOR Rate Loan or Letter of Credit is
denominated in an Alternative Currency, such amount shall be the relevant
Alternative Currency Equivalent of such Dollar amount (rounded to the nearest
unit of

 

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such Alternative Currency, with 0.5 of a unit being rounded upward), as
determined by the Administrative Agent or the L/C Issuer, as the case may be.

1.09 Additional Alternative Currencies.

(a) Each Borrower may from time to time request that Loans be made and/or
Letters of Credit be issued in a currency other than those specifically listed
in the definition of “Alternative Currency;” provided that such requested
currency is a lawful currency (other than Dollars) that is readily available and
freely transferable and convertible into Dollars. In the case of any such
request with respect to the making of Loans, such request shall be subject to
the approval of the Administrative Agent and the Lenders; and in the case of any
such request with respect to the issuance of Letters of Credit, such request
shall be subject to the approval of the Administrative Agent and the L/C Issuer.

(b) Any such request shall be made to the Administrative Agent not later than
11:00 a.m., 20 Business Days prior to the date of the desired Credit Extension
(or such other time or date as may be agreed by the Administrative Agent and, in
the case of any such request pertaining to Letters of Credit, the L/C Issuer, in
its or their sole discretion). In the case of any such request pertaining to
Loans, the Administrative Agent shall promptly notify each Lender thereof; and
in the case of any such request pertaining to Letters of Credit, the
Administrative Agent shall promptly notify the L/C Issuer thereof. Each Lender
(in the case of any such request pertaining to Loans) or the L/C Issuer (in the
case of a request pertaining to Letters of Credit) shall notify the
Administrative Agent, not later than 11:00 a.m., ten Business Days after receipt
of such request whether it consents, in its sole discretion, to the making of
Loans or the issuance of Letters of Credit, as the case may be, in such
requested currency.

(c) Any failure by a Lender or the L/C Issuer, as the case may be, to respond to
such request within the time period specified in the preceding sentence shall be
deemed to be a refusal by such Lender or the L/C Issuer, as the case may be, to
permit Loans to be made or Letters of Credit to be issued in such requested
currency. If the Administrative Agent and all the Lenders consent to making
Loans in such requested currency, the Administrative Agent shall so notify the
Lead Borrower and such currency shall thereupon be deemed for all purposes to be
an Alternative Currency hereunder for purposes of any Committed Borrowings of
Loans; and if the Administrative Agent and the L/C Issuer consent to the
issuance of Letters of Credit in such requested currency, the Administrative
Agent shall so notify the Lead Borrower and such currency shall thereupon be
deemed for all purposes to be an Alternative Currency hereunder for purposes of
any Letter of Credit issuances. If the Administrative Agent shall fail to obtain
consent to any request for an additional currency under this Section 1.09, the
Administrative Agent shall promptly so notify the Lead Borrower.

 

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1.10 Change of Currency.

(a) Each obligation of the Borrowers to make a payment denominated in the
national currency unit of any Participating Member State of the European Union
that adopts the Euro as its lawful currency after the date hereof shall be
redenominated into Euro at the time of such adoption. If, in relation to the
currency of any such Participating Member State, the basis of accrual of
interest expressed in this Agreement in respect of that currency shall be
inconsistent with any convention or practice in the London interbank market for
the basis of accrual of interest in respect of the Euro, such expressed basis
shall be replaced by such convention or practice with effect from the date on
which such Participating Member State adopts the Euro as its lawful currency;
provided that if any Committed Borrowing in the currency of such Participating
Member State is outstanding immediately prior to such date, such replacement
shall take effect, with respect to such Committed Borrowing, at the end of the
then current Interest Period.

(b) Each provision of this Agreement shall be subject to such reasonable changes
of construction as the Administrative Agent may from time to time specify to be
appropriate to reflect the adoption of the Euro by any Participating Member
State of the European Union and any relevant market conventions or practices
relating to the Euro.

(c) Each provision of this Agreement also shall be subject to such reasonable
changes of construction as the Administrative Agent may from time to time
specify to be appropriate to reflect a change in currency of any other country
and any relevant market conventions or practices relating to the change in
currency.

(d) The Administrative Agent shall use commercially reasonable efforts to
promptly advise the Lead Borrower of any changes of construction pursuant to
clauses (b) and (c) hereof, but any failure to do so shall not limit the
Administrative Agent’s rights or any changes made under such clauses.

1.11 Québec Matters. For purposes of any assets, liabilities or entities located
in the Province of Québec and for all other purposes pursuant to which the
interpretation or construction of this Agreement may be subject to the laws of
the Province of Québec or a court or tribunal exercising jurisdiction in the
Province of Québec, (a) “personal property” shall include “movable property”,
(b) “real property” or “real estate” shall include “immovable property”,
(c) “tangible property” shall include “corporeal property”, (d) “intangible
property” shall include “incorporeal property”, (e) “security interest”,
“mortgage” and “security” shall include a “hypothec”, “right of retention”,
“prior claim” and a resolutory clause, (f) all references to filing, perfection,
priority, remedies, registering or recording under the UCC or a PPSA shall
include publication under the Civil Code of Québec, (g) all references to
“perfection” of or “perfected” security or security interest shall include a
reference to an “opposable” or “set up” hypothec, security or security interest
as against third parties, (h) any “right of offset”, “right of setoff” or
similar expression shall include a “right of compensation”, (i) “goods” shall
include “corporeal movable property” other than chattel paper, documents of
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(j) an “agent” shall include a “mandatary”, (k) “construction security” shall
include “legal hypothecs”, (l) “joint and several” shall include “solidary”,
(m) “gross negligence or willful misconduct” shall be deemed to be “intentional
or gross fault”, (n) “beneficial ownership” shall include “ownership on behalf
of another as mandatary”; (o) “easement” shall include “servitude”,
(p) “priority” shall include “prior claim”, (q) “survey” shall include
“certificate of location and plan”, (r) “state” shall include “province”,
(s) “fee simple title” shall include “absolute ownership”, and (t) “accounts”
shall include “claims”.

ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS

2.01 Committed Loans; Reserves.

(a) (a) Subject to the terms and conditions set forth herein, the outstanding
loans to Domestic Borrowers funded under the Existing ABL Credit Agreement by
each Domestic Lender are hereby continued, amended and restated as a Committed
Domestic Loan under this Agreement. Subject to the terms and conditions set
forth herein, each Domestic Lender severally agrees to make Committed Domestic
Loans to the Domestic Borrowers from time to time, on any Business Day during
the Availability Period, in an aggregate principal amount not to exceed at any
time outstanding the lesser of (x) the amount of the Domestic Commitment of such
Domestic Lender, or (y) the Applicable Percentage of the Domestic Borrowing Base
for such Domestic Lender; subject in each case to the following limitations:

(i) after giving effect to any Committed Domestic Borrowing, the Total Domestic
Outstandings shall not exceed the Domestic Loan Cap,

(ii) after giving effect to any Committed Domestic Borrowing, the aggregate
Outstanding Amount of the Committed Domestic Loans of any Domestic Lender, plus
(without duplication) the Applicable Percentage of the Outstanding Amount of all
Domestic L/C Obligations for such Domestic Lender shall not exceed the Domestic
Commitment of such Domestic Lender, and

(iii) the Outstanding Amount of all Domestic L/C Obligations shall not at any
time exceed the Domestic Letter of Credit Sublimit.

Within the limits of the Domestic Commitment for each Domestic Lender, and
subject to the other terms and conditions hereof, the Domestic Borrowers may
borrow under this Section 2.01, prepay under Section 2.05, and reborrow under
this Section 2.01. Committed Domestic Loans may be Domestic Prime Rate Loans or
LIBO Rate Loans, as further provided herein.

(b) Subject to the terms and conditions set forth herein, the outstanding loans
to the Foreign Borrowers funded under the Existing ABL Credit Agreement
immediately prior to the effectiveness hereof by each Foreign Lender are hereby
continued, amended and restated as a Committed Foreign Loan under this
Agreement. Subject to the terms and conditions set forth herein, each Foreign
Lender severally agrees to make a single Committed Foreign Loan to the
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Borrower (other than the Japanese Borrower) on the Effective Date, in an
aggregate principal amount not to exceed at any time outstanding the lesser of
(x) the amount of the applicable Foreign Commitment of such Foreign Lender to
such Foreign Borrower or (y) the Applicable Percentage of the applicable
Borrowing Base for such Foreign Borrower; subject in each case to the following
limitations:

(i) after giving effect to any Committed Foreign Borrowing, the Total
Outstandings for any Foreign Borrower shall not exceed such Foreign Borrower’s
Foreign Loan Cap, and

(ii) with respect to each Foreign Borrower, after giving effect to any Committed
Foreign Borrowing made to such Foreign Borrower, the aggregate Outstanding
Amount of the Committed Foreign Loans of any Foreign Lender to such Foreign
Borrower, plus (without duplication) such Foreign Lender’s Applicable Percentage
of the Outstanding Amount of all Australian L/C Obligations for such Foreign
Borrower, shall not exceed the applicable Foreign Commitment of such Foreign
Lender,

After the making of the Committed Foreign Loans on the Effective Date, the
Foreign Commitments shall be automatically terminated.

(c) [Reserved].

(d) The Inventory Reserves and Availability Reserves as of the Effective Date
are set forth in the Borrowing Base Certificates delivered to the Administrative
Agent pursuant to Section 4.01(c).

(e) Any Agent shall have the right, at any time and from time to time after the
Effective Date, in its Permitted Discretion to establish new, or modify or
eliminate any existing Reserves without prior notice to any Loan Party.
Availability Reserves will not be established or changed except upon one
(1) Business Day’s prior notice to the applicable Borrower (during which period
the Agents shall be available to discuss any proposed Availability Reserve with
the Borrowers and the Borrowers may take such action as may be required so that
the event, condition or matter that is the basis for the Availability Reserve no
longer exists); provided that no such prior notice shall be required (i) after
the occurrence and during the continuance of an Event of Default or if an Event
of Default would arise from the establishment or change of such Availability
Reserve, (ii) for changes to any Availability Reserves resulting solely by
virtue of mathematical calculations of the amount of the Availability Reserve in
accordance with the methodology of calculation previously utilized, (iii) for
the establishment of any Reserves in an amount equal to the unpaid balance
relating to any Liens permitted under clauses (y) and (z) of the definition of
Permitted Encumbrances, or (iv) if a Material Adverse Effect is reasonably
likely to arise by any delay in implementing such Availability Reserve.

2.02 Committed Borrowings, Conversions and Continuations of Committed Loans.

(a) Committed Domestic Loans shall be made in Dollars and shall be either
Domestic Prime Rate Loans or LIBO Rate Loans, as the Lead Borrower or the
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Domestic Borrowers, may request subject to and in accordance with this
Section 2.02. Committed Canadian Loans shall be made in Dollars or Canadian
Dollars and shall be either Canadian Prime Rate Loans, Canadian Base Rate Loans,
LIBO Rate Loans (if in Dollars only and not in an Alternative Currency) or
Canadian BA Rate Loans, as the Canadian Borrower or the Parent, on behalf of the
Canadian Borrower, may request subject to and in accordance with this
Section 2.02. Committed Australian Loans shall be made in Dollars or Australian
Dollars and shall be either Australian Base Rate Loans, LIBO Rate Loans (if in
Dollars) or BBR Rate Loans, as the Australian Borrower or the Parent, on behalf
of the Australian Borrower, may request subject to and in accordance with this
Section 2.02. Committed Japanese Loans shall be made in Yen and shall be either
Japanese Base Rate Loans or TIBOR Rate Loans, as the Japanese Borrower or the
Parent, on behalf of the Japanese Borrower, may request subject to and in
accordance with this Section 2.02. Subject to the other provisions of this
Section 2.02, Committed Borrowings of more than one Type may be incurred at the
same time.

(b) Each Committed Borrowing, each conversion of a Committed Loan from one Type
to the other, and each continuation of LIBO Rate Loans, BBR Rate Loans, TIBOR
Rate Loans and Canadian BA Rate Loans shall be made upon the irrevocable notice
of the applicable Borrower or the Parent on behalf of the applicable Borrower to
the Administrative Agent which may be given by electronic transmission. Each
such notice must be received by the Administrative Agent not later than 11:00
a.m. (i) three Business Days prior to the requested date of any Committed
Borrowing of, conversion to or continuation of LIBO Rate Loans, BBR Rate Loans,
TIBOR Rate Loans, or Canadian BA Rate Loans or of any conversion of LIBO Rate
Loans, BBR Rate Loans, TIBOR Rate Loans, or Canadian BA Rate Loans to Prime Rate
Loans, (ii) four Business Days (or, without duplication of the time periods set
forth in Section 1.09(b), five Business Days in the case of a Special Notice
Currency) prior to the requested date of any Borrowing or continuation of LIBO
Rate Loans, BBR Rate Loans, or TIBOR Rate Loans denominated in Alternative
Currencies, and (iii) one Business Day prior to the requested date of any
Committed Borrowing of any Prime Rate Loans. Each electronic notice by the
Parent or the applicable Borrower pursuant to this Section 2.02(b) must be
confirmed promptly by delivery to the Administrative Agent of a written
Committed Loan Notice, appropriately completed and signed by a Responsible
Officer of the Parent or the applicable Borrower (and, with respect to the
Japanese Borrower, a written Committed Loan Notice may be delivered to the
Administrative Agent via facsimile). Each Committed Borrowing of, conversion to
or continuation of LIBO Rate Loans, BBR Rate Loans or TIBOR Rate Loans shall be
in a principal amount of $1,000,000 or a whole multiple of $1,000,000 in excess
thereof. Each Committed Borrowing of, conversion to or continuation of Canadian
BA Rate Loans shall be in a principal amount of CD$500,000 or a whole multiple
of CD$100,000 in excess thereof. Except as provided in Section 2.03(c), each
Committed Borrowing of or conversion to Prime Rate Loans shall be in a principal
amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each
Committed Loan Notice (whether electronic or written) shall specify (i) whether
the request is for a Committed Borrowing, a conversion of Committed Loans from
one Type to the other, or a continuation of LIBO Rate Loans, BBR Rate Loans,
TIBOR Rate Loans or Canadian BA Rate Loans, (ii) the requested date of the
Committed Borrowing, conversion or continuation, as the case may be (which shall
be a Business Day), (iii) the principal amount of Committed Loans to be
borrowed, converted or continued, (iv) the Type of Committed Loans to be
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converted, (v) [reserved], and (vi) the currency of the Committed Loans to be
borrowed. If the request fails to specify a currency in a Committed Loan Notice
requesting a Borrowing, then the Committed Loans so requested shall be made in
Dollars (except that any Japanese Borrowing shall only be made in Yen). If the
request fails to specify a Type of Committed Loan in a Committed Loan Notice or
if the Parent or the applicable Borrower, as the case may be, fails to give a
timely notice of a conversion or continuation of a LIBO Rate Loan, a BBR Rate
Loan, a TIBOR Rate Loan or a Canadian BA Rate Loan, then the applicable
Committed Loans shall be made as, or converted to, Prime Rate Loans; provided,
however, that in the case of a failure to timely request a continuation of
Committed Loans denominated in an Alternative Currency, such Loans shall be
continued as BBR Rate Loans, TIBOR Rate Loans or Canadian BA Rate Loans in their
original currency with an Interest Period of one month. Any automatic conversion
to Prime Rate Loans shall be effective as of the last day of the Interest Period
then in effect with respect to the applicable LIBO Rate Loans, BBR Rate Loans,
TIBOR Rate Loans or Canadian BA Rate Loans. No Committed Loan may be converted
into or continued as a Committed Loan denominated in a different currency, but
instead must be prepaid in the original currency of such Committed Loan and
reborrowed in the other currency.

(c) Following receipt of a Committed Loan Notice, the Administrative Agent shall
promptly notify each Lender of the amount (and currency) of its Applicable
Percentage of the applicable Committed Loans, and if no timely notice of a
conversion or continuation is provided by a Borrower or the Parent, on behalf of
a Borrower, the Administrative Agent shall notify each Lender of the details of
any automatic conversion to Prime Rate Loans or continuation of Committed Loans
denominated in a currency other than Dollars, in each case as described in
Section 2.02(b). Each applicable Lender shall make the amount of its Committed
Loan available to the Administrative Agent in Same Day Funds at the
Administrative Agent’s Office for the applicable currency not later than 1:00
p.m., in the case of any Committed Loan denominated in Dollars, and not later
than the Applicable Time specified by the Administrative Agent in the case of
any Committed Loan in an Alternative Currency, in each case on the Business Day
specified in the applicable Committed Loan Notice. Upon satisfaction of the
applicable conditions set forth in Section 4.02 (and, if such Committed
Borrowing is the initial Credit Extension, Section 4.01), the Administrative
Agent shall use reasonable efforts to make all funds so received available to
the applicable Borrowers in like funds by no later than 4:00 p.m. on the day of
receipt by the Administrative Agent either by (i) crediting either the account
of the applicable Borrower on the books of Bank of America, with the amount of
such funds or (ii) wire transfer of such funds, in each case in accordance with
instructions provided to (and reasonably acceptable to) the Administrative
Agent; provided, however, that if, on the date a Committed Loan Notice with
respect to a Committed Borrowing denominated in Dollars is given by a Borrower
or the Parent on behalf of a Borrower, there are L/C Borrowings outstanding,
then the proceeds of such Committed Borrowing, first, shall be applied to the
payment in full of any such L/C Borrowings, and second, shall be made available
to the applicable Borrower as provided above.

(d) In the event that any Borrower, after receipt of an invoice therefor, fails
to pay any interest, fee, service charge, Credit Party Expenses, or other
payment to which any Lender or any Agent is entitled from the Loan Parties
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Administrative Agent’s reasonable determination that an Event of Default is
likely to occur, the Administrative Agent, without the request of any Borrower,
may advance such interest, fee, service charge, Credit Party Expenses, or other
payment to which any Lender or any Agent is entitled from the applicable Loan
Parties pursuant hereto or any other Loan Document and may charge the same to
the Loan Account with respect to such Credit Extensions, notwithstanding that an
Overadvance may result thereby. The Administrative Agent shall advise the
applicable Borrower of any such advance or charge by the Administrative Agent
promptly after the making thereof. Such action on the part of the Administrative
Agent shall not constitute a waiver of the applicable Credit Party’s rights and
the applicable Borrowers’ obligations under Section 2.05(c). Any amount which is
added to the principal balance of the applicable Loan Account as provided in
this Section 2.02(d) shall be deemed to be a Prime Rate Loan.

(e) Except as otherwise provided herein, a LIBO Rate Loan, a BBR Rate Loan, a
TIBOR Rate Loan or a Canadian BA Rate Loan may be continued or converted only on
the last day of an Interest Period for such LIBO Rate Loan, BBR Rate Loan, TIBOR
Rate Loan or Canadian BA Rate Loan. During the existence of an Event of Default,
no Loans may be requested as, converted to or continued as LIBO Rate Loans, BBR
Rate Loans, TIBOR Rate Loans or Canadian BA Rate Loans (whether in Dollars or
any Alternative Currency) without the Consent of the Required Lenders, and the
Required Lenders may demand that any or all of the then outstanding LIBO Rate
Loans, BBR Rate Loans, Canadian BA Rate Loans, and TIBOR Rate Loans denominated
in an Alternative Currency be prepaid, or redenominated into Dollars in the
amount of the Dollar Equivalent thereof, on the last day of the then current
Interest Period with respect thereto.

(f) The Administrative Agent shall promptly notify the Lead Borrower and the
applicable Lenders of the interest rate applicable to any Interest Period for
LIBO Rate Loans, BBR Rate Loans, Canadian BA Rate Loans and TIBOR Rate Loans
upon determination of such interest rate. At any time that Prime Rate Loans are
outstanding, the Administrative Agent shall notify the Lead Borrower and the
applicable Lenders of any change in Bank of America’s (or its applicable
branch’s) prime rate used in determining the applicable prime rate promptly
following the public announcement of such change.

(g) After giving effect to all Committed Borrowings, all conversions of
Committed Loans from one Type to the other, and all continuations of Committed
Loans as the same Type, there shall not be more than eight (8) Interest Periods
in effect with respect to Committed Loans.

(h) Except as provided in Section 2.01(c), the Administrative Agent, the Lenders
and the L/C Issuer shall have no obligation to make any Loan or to provide any
Letter of Credit if an Overadvance would result. The Administrative Agent may,
in its Permitted Discretion, make Permitted Overadvances without the consent of
the Lenders, the L/C Issuer and each applicable Lender shall be bound thereby. A
Permitted Overadvance is for the account of the applicable Borrower and shall
constitute a Prime Rate Loan and an Obligation and shall be repaid by the
applicable Borrowers in accordance with the provisions of Section 2.05(c). The
making of any such Permitted Overadvance on any one occasion shall not obligate
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Permitted Overadvance on any other occasion or to permit such Permitted
Overadvances to remain outstanding. The making by the Administrative Agent of a
Permitted Overadvance shall not modify or abrogate any of the provisions of
Section 2.03 regarding the Lenders’ obligations to purchase participations with
respect to Letters of Credit. The Administrative Agent shall have no liability
for, and no Loan Party or Credit Party shall have the right to, or shall, bring
any claim of any kind whatsoever against the Administrative Agent with respect
to “inadvertent Overadvances” (i.e. where an Overadvance results from changed
circumstances beyond the control of the Administrative Agent (such as a
reduction in the Collateral value)) regardless of the amount of any such
Overadvance(s).

2.03 Letters of Credit.

(a) The Letter of Credit Commitment.

Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees,
in reliance upon the agreements of the Lenders set forth in this Section 2.03,
(1) from time to time on any Business Day during the period from the Effective
Date until the Letter of Credit Expiration Date, to issue Domestic Letters of
Credit denominated in Dollars or in one or more Alternative Currencies] for the
account of any Domestic Borrower but for the benefit of the Domestic Borrower,
any Foreign Borrower or any of their respective Subsidiaries, and to amend or
extend Letters of Credit previously issued by it, in accordance with
Section 2.03(b) below, and (2) to honor drawings under the Letters of Credit;
(B) each Domestic Lender severally agrees to participate in Domestic Letters of
Credit and any drawings thereunder; provided that, after giving effect to any
L/C Credit Extension with respect to any Domestic Letter of Credit, (x) the
Total Domestic Outstandings shall not exceed the Domestic Loan Cap, (y) the
aggregate Outstanding Amount of the Committed Domestic Loans of any Domestic
Lender, plus (without duplication) such Domestic Lender’s Applicable Percentage
of the Outstanding Amount of all Domestic L/C Obligations shall not exceed such
Domestic Lender’s Domestic Commitment, and (z) the Outstanding Amount of the
Domestic L/C Obligations shall not exceed the Domestic Letter of Credit
Sublimit; and (C) each Foreign Lender severally agrees to participate in
Australian Letters of Credit and any drawings thereunder; provided that, after
giving effect to any Australian L/C Credit Extension, (x) the Total Outstandings
of the Australian Borrower shall not exceed the Australian Borrower’s Loan Cap,
(y) with respect to the Australian Borrower, (i) the aggregate Outstanding
Amount of the Committed Loans of such Foreign Lender to the Australian Borrower,
plus (without duplication) (ii) such Foreign Lender’s Applicable Percentage of
the Outstanding Amount of all L/C Obligations of the Australian Borrower shall
not exceed such Foreign Lender’s Foreign Commitment with respect to the
Australian Borrower, and (z) the Outstanding Amount of the L/C Obligations of
the Australian Borrower shall not exceed the Letter of Credit Sublimit for the
Australian Borrower. Each request by a Domestic Borrower for the issuance or
amendment of a Letter of Credit shall be deemed to be a representation by such
Domestic Borrower that the L/C Credit Extension so requested complies with the
conditions set forth in the proviso to the preceding sentence. Within the
foregoing limits, and subject to the terms and conditions hereof, each Domestic
Borrower’s ability to obtain Letters of Credit shall be fully revolving, and
accordingly such Borrower may, during the foregoing period, obtain Letters of
Credit to replace Letters of Credit that have expired or that

 

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have been drawn upon and reimbursed. Notwithstanding anything herein to the
contrary, from and after the Effective Date, no Foreign Letters of Credit shall
be issued.

(i) The L/C Issuer shall not issue any Domestic Letter of Credit, if:

(A) subject to Section 2.03(b)(iii), the expiry date of such requested Standby
Letter of Credit would occur more than 365 days after the date of issuance or
last extension, unless the Administrative Agent has approved such expiry date;
or

(B) subject to Section 2.03(b)(iii), the expiry date of such requested
Commercial Letter of Credit would occur more than 180 days after the date of
issuance or last extension, unless the Administrative Agent has approved such
expiry date; or

(C) the expiry date of such requested Letter of Credit would occur after the
Letter of Credit Expiration Date, unless either such Letter of Credit is Cash
Collateralized on or prior to issuance of such Letter of Credit (or such other
time as the Administrative Agent may agree but in no event after the Letter of
Credit Expiration Date) or all the Lenders have approved such expiry date.

(ii) The L/C Issuer shall not issue any Letter of Credit without the prior
consent of the Administrative Agent if:

(A) any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain the L/C Issuer from issuing
such Letter of Credit, or any Law applicable to the L/C Issuer or any request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over the L/C Issuer shall prohibit, or request that
the L/C Issuer refrain from, the issuance of letters of credit generally or such
Letter of Credit in particular or shall impose upon the L/C Issuer with respect
to such Letter of Credit any restriction, reserve or capital requirement (for
which the L/C Issuer is not otherwise compensated hereunder) not in effect on
the Effective Date, or shall impose upon the L/C Issuer any unreimbursed loss,
cost or expense which was not applicable on the Effective Date and which the L/C
Issuer in good faith deems material to it;

(B) the issuance of such Letter of Credit would violate one or more policies of
the L/C Issuer applicable to letters of credit generally;

(C) such Letter of Credit is to be denominated in a currency other than Dollars
or an Alternative Currency; provided that if the L/C Issuer, in its discretion,
issues a Letter of Credit denominated in a currency other than Dollars, all
reimbursements by the applicable Borrowers of the honoring of any drawing under
such Letter of Credit shall be paid in the currency in which such Letter of
Credit was denominated;

(D) the L/C Issuer does not as of the issuance date of the requested Letter of
Credit issue Letters of Credit in the requested currency;

 

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(E) such Letter of Credit contains any provisions for automatic reinstatement of
the Stated Amount after any drawing thereunder; or

(F) any Lender is at that time a Defaulting Lender, unless the L/C Issuer has
entered into arrangements, including the delivery of Cash Collateral,
satisfactory to the L/C Issuer (in its sole discretion) with the applicable
Borrower or such Lender to eliminate the L/C Issuer’s actual or potential
Fronting Exposure (after giving effect to Section 2.18(a)(iv)) with respect to
the Defaulting Lender arising from either the Letter of Credit then proposed to
be issued or that Letter of Credit and all other L/C Obligations as to which the
L/C Issuer has actual or potential Fronting Exposure, as it may elect in its
sole discretion.

(iii) The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer
would not be permitted at such time to issue such Letter of Credit in its
amended form under the terms hereof or if the beneficiary of such Letter of
Credit does not accept the proposed amendment to such Letter of Credit.

(iv) The L/C Issuer shall act on behalf of the applicable Lenders with respect
to any Letters of Credit issued by it and the documents associated therewith,
and the L/C Issuer shall have all of the benefits and immunities (A) provided to
the Administrative Agent in Article IX with respect to any acts taken or
omissions suffered by the L/C Issuer in connection with Letters of Credit issued
by it or proposed to be issued by it and Issuer Documents pertaining to such
Letters of Credit as fully as if the term “Administrative Agent” as used in
Article IX included the L/C Issuer with respect to such acts or omissions, and
(B) as additionally provided herein with respect to the L/C Issuer.

(b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension
Letters of Credit.

(i) Each Letter of Credit shall be issued or amended, as the case may be, upon
the request of a Domestic Borrower or the Parent on behalf of a Domestic
Borrower, Foreign Borrower or any of their respective Subsidiaries, delivered to
the L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter
of Credit Application, appropriately completed and signed by a Responsible
Officer of the applicable Borrower or the Parent. Such Letter of Credit
Application may be sent by facsimile, by overnight courier, by electronic
transmission using the system provided by the L/C Issuer, by personal delivery
or by any other means acceptable to the L/C Issuer. Such Letter of Credit
Application must be received by the L/C Issuer and the Administrative Agent, not
later than 11:00 a.m. at least two (2) Business Days (or such later date and
time as the Administrative Agent and the L/C Issuer may agree in a particular
instance in their sole discretion) prior to the proposed issuance date or date
of amendment, as the case may be. In the case of a request for an initial
issuance of a Domestic Letter of Credit, such Letter of Credit Application shall
specify in form and detail reasonably satisfactory to the L/C Issuer: (A) the
proposed issuance date of the requested Letter of Credit (which shall be a
Business Day); (B) the amount and currency thereof; (C) the expiry date thereof;
(D) the name and address of the beneficiary thereof; (E) the documents to be
presented by such beneficiary in case of any drawing thereunder; (F) the full
text of any certificate to be presented by such beneficiary in case of any

 

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drawing thereunder; (G) the identity of the Domestic Borrower for the account of
which such Letter of Credit is requested to be issued; and (H) such other
matters as the L/C Issuer may reasonably require. In the case of a request for
an amendment of any outstanding Letter of Credit, such Letter of Credit
Application shall specify in form and detail reasonably satisfactory to the L/C
Issuer: (A) the Letter of Credit to be amended; (B) the proposed date of
amendment thereof (which shall be a Business Day); (C) the nature of the
proposed amendment; and (D) such other matters as the L/C Issuer may require.
Additionally, the applicable Domestic Borrower shall furnish to the L/C Issuer
and the Administrative Agent such other documents and information pertaining to
such requested Letter of Credit issuance or amendment, including any Issuer
Documents, as the L/C Issuer or the Administrative Agent may require.

(ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer
will confirm with the Administrative Agent (by telephone or in writing) that the
Administrative Agent has received a copy of such Letter of Credit Application
from the applicable Domestic Borrower and, if not, the L/C Issuer will provide
the Administrative Agent with a copy thereof. Unless the L/C Issuer has received
written notice from any Lender, the Administrative Agent, or any Loan Party, at
least one (1) Business Day prior to the requested date of issuance or amendment
of the applicable Letter of Credit, that one or more applicable conditions
contained in Article IV shall not then be satisfied or unless the L/C Issuer
would have no obligation, at such time to issue such Letter of Credit under the
terms hereof (by reason of the provisions of Section 2.03(a)(i) or otherwise),
then, subject to the terms and conditions hereof, the L/C Issuer shall, on the
requested date, issue a Letter of Credit for the account of the applicable
Domestic Borrower or enter into the applicable amendment, as the case may be, in
each case in accordance with the L/C Issuer’s usual and customary business
practices. Immediately upon the issuance or amendment of each Letter of Credit,
each applicable Lender shall be deemed to (without any further action), and
hereby irrevocably and unconditionally severally agrees to, purchase from the
L/C Issuer, without recourse or warranty, a risk participation in such Letter of
Credit in an amount equal to the product of such Lender’s Applicable Percentage
times the Stated Amount of such Letter of Credit. Upon any change in any
Commitments under this Agreement, it is hereby agreed that with respect to all
L/C Obligations, there shall be an automatic adjustment to the participations
hereby created to reflect the new Applicable Percentages of the assigning and
assignee Lenders.

(iii) If a Domestic Borrower so requests in any applicable Letter of Credit
Application, the L/C Issuer may, in its sole and absolute discretion, agree to
issue a Standby Letter of Credit that has automatic extension provisions (each,
an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension
Letter of Credit must permit the L/C Issuer to prevent any such extension at
least once in each twelve-month period (commencing with the date of issuance of
such Standby Letter of Credit) by giving prior notice to the beneficiary thereof
not later than a day (the “Non-Extension Notice Date”) in each such twelve-month
period to be agreed upon at the time such Standby Letter of Credit is issued.
Unless otherwise directed by the L/C Issuer or the applicable Domestic Borrower
shall not be required to make a specific request to the L/C Issuer for any such
extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders
shall be deemed to have authorized (but may not require) the L/C Issuer to
permit the extension of such Standby Letter of Credit at any time to an expiry
date not later than the Letter of Credit Expiration Date; provided, however,
that the L/C Issuer

 

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shall not permit any such extension if (A) the L/C Issuer has determined that it
would not be permitted, or would have no obligation, at such time to issue such
Standby Letter of Credit in its revised form (as extended) under the terms
hereof (by reason of the provisions of clauses (ii) or (iii) of Section 2.03(a)
or otherwise), or (B) it has received notice (which may be by telephone or in
writing) on or before the day that is fifteen (15) Business Days before the
Non-Extension Notice Date (1) from the Administrative Agent that the Required
Lenders have elected not to permit such extension or (2) from the Administrative
Agent, any Lender or the Lead Borrower that one or more of the applicable
conditions specified in Section 4.02 is not then satisfied, and in each such
case directing the L/C Issuer not to permit such extension.

(iv) Promptly after its delivery of any Letter of Credit or any amendment to a
Letter of Credit to an advising bank with respect thereto or to the beneficiary
thereof, the L/C Issuer will also deliver to the Lead Borrower and the
Administrative Agent a true and complete copy of such Letter of Credit or
amendment.

(c) Drawings and Reimbursements; Funding of Participations.

(i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a
drawing under such Letter of Credit, the L/C Issuer shall notify the Domestic
Borrower or Australian Borrower, as applicable, and the Administrative Agent
thereof; provided, however, that any failure to give or delay in giving such
notice shall not relieve the Domestic Borrower or Australian Borrower, as
applicable, of its obligation to reimburse the L/C Issuer and the applicable
Lenders with respect to any such payment. In the case of a Letter of Credit
denominated in an Alternative Currency, the Domestic Borrower or Australian
Borrower, as applicable, shall reimburse the L/C Issuer in such Alternative
Currency, unless (A) the L/C Issuer (at its option) shall have specified in such
notice that it will require reimbursement in Dollars, or (B) in the absence of
any such requirement for reimbursement in Dollars, the Domestic Borrower or
Australian Borrower, as applicable, shall have notified the L/C Issuer promptly
following receipt of the notice of drawing that the Domestic Borrower or
Australian Borrower, as applicable, will reimburse the L/C Issuer in Dollars. In
the case of any such reimbursement in Dollars of a drawing under a Letter of
Credit denominated in an Alternative Currency, the L/C Issuer shall notify the
Lead Borrower of the Dollar Equivalent of the amount of the drawing promptly
following the determination thereof. Not later than 11:00 a.m. on the first
(1st) Business Day after the date of any payment by the L/C Issuer under a
Letter of Credit to be reimbursed in Dollars, or the Applicable Time on the date
of any payment by the L/C Issuer under a Letter of Credit to be reimbursed in an
Alternative Currency (each such date, an “Honor Date”), the Domestic Borrower or
Australian Borrower, as applicable, shall reimburse the L/C Issuer through the
Administrative Agent in an aggregate principal amount equal to the amount of
such drawing and in the applicable currency. In the event that (A) a drawing
denominated in an Alternative Currency is to be reimbursed in Dollars pursuant
to the second sentence in this Section 2.03(c)(i) and (B) the Dollar amount paid
by the Domestic Borrower or Australian Borrower, as applicable,, whether on or
after the Honor Date, shall not be adequate on the date of that payment to
purchase in accordance with normal banking procedures a sum denominated in the
Alternative Currency equal to the drawing, the Domestic Borrower or Australian
Borrower, as

 

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applicable, agrees, as a separate and independent obligation, to indemnify the
L/C Issuer for the loss resulting from its inability on that date to purchase
the Alternative Currency in the full amount of the drawing. If the Domestic
Borrower or Australian Borrower, as applicable, fails to timely reimburse the
L/C Issuer by the Honor Date, the Administrative Agent shall promptly notify
each applicable Lender of the Honor Date, the amount of the unreimbursed drawing
(expressed in Dollars in the amount of the Dollar Equivalent thereof in the case
of a Letter of Credit denominated in an Alternative Currency) (the “Unreimbursed
Amount”), and the amount of such Lender’s Applicable Percentage thereof. In such
event, the Domestic Borrower shall be deemed to have requested a Committed
Borrowing of Prime Rate Loans to be disbursed on the Honor Date in an amount
equal to the Unreimbursed Amount, without regard to the minimum and multiples
specified in Section 2.02 for the principal amount of Prime Rate Loans, but
subject to the amount of the unutilized portion of the Aggregate Applicable
Commitments and the conditions set forth in Section 4.02 (other than the
delivery of a Committed Loan Notice). Any notice given by the L/C Issuer or the
Administrative Agent pursuant to this Section 2.03(c)(i) may be given by
telephone if immediately confirmed in writing; provided that the lack of such an
immediate confirmation shall not affect the conclusiveness or binding effect of
such notice.

(ii) Each Lender shall upon any notice delivered pursuant to Section 2.03(c)(i)
make funds available to the Administrative Agent for the account of the L/C
Issuer, in Dollars, at the Administrative Agent’s Office for Dollar-denominated
payments in an amount equal to its Applicable Percentage of the Unreimbursed
Amount not later than 1:00 p.m. on the Business Day specified in such notice by
the Administrative Agent whereupon, subject to the provisions of
Section 2.03(c)(iii), each Lender that so makes funds available shall be deemed
to have made a Prime Rate Loan to the Domestic Borrower in such amount. The
Administrative Agent shall remit the funds so received to the L/C Issuer in
Dollars.

(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a
Committed Borrowing of Prime Rate Loans because the conditions set forth in
Section 4.02 cannot be satisfied or for any other reason, the Domestic Borrower
or Australian Borrower, as applicable, shall be deemed to have incurred from the
L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not
so refinanced, which L/C Borrowing shall be due and payable on demand (together
with interest) and shall bear interest at the Default Rate for Prime Rate Loans.
In such event, each Lender’s payment to the Administrative Agent for the account
of the L/C Issuer pursuant to Section 2.03(c)(ii) shall be deemed payment in
respect of its participation in such L/C Borrowing and shall constitute an L/C
Advance from such Lender in satisfaction of its participation obligation under
this Section 2.03.

(iv) Until each applicable Lender funds its Committed Loan or L/C Advance
pursuant to this Section 2.03(c) to reimburse the L/C Issuer for any amount
drawn under any Letter of Credit, interest in respect of such Lender’s
Applicable Percentage of such amount shall be solely for the account of the L/C
Issuer.

(v) Each Lender’s obligation to make Committed Loans or L/C Advances to
reimburse the L/C Issuer for amounts drawn under Letters of Credit, as
contemplated by this Section 2.03(c),

 

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shall be absolute and unconditional and shall not be affected by any
circumstance, including (A) any setoff, counterclaim, recoupment, defense or
other right which such Lender may have against the L/C Issuer, any Borrower or
any other Person for any reason whatsoever; (B) the occurrence or continuance of
a Default, or (C) any other occurrence, event or condition, whether or not
similar to any of the foregoing; provided, however, that each Lender’s
obligation to make Committed Loans pursuant to this Section 2.03(c) is subject
to the conditions set forth in Section 4.02 (other than delivery of a Committed
Loan Notice). No such making of an L/C Advance shall relieve or otherwise impair
the obligation of the Domestic Borrower or Australian Borrower, as applicable,
to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer
under any Letter of Credit, together with interest as provided herein.

(vi) If any Lender fails to make available to the Administrative Agent for the
account of the L/C Issuer any amount required to be paid by such Lender pursuant
to the foregoing provisions of this Section 2.03(c) by the time specified in
Section 2.03(c)(ii), the L/C Issuer shall be entitled to recover from such
Lender (acting through the Administrative Agent), on demand, such amount with
interest thereon for the period from the date such payment is required to the
date on which such payment is immediately available to the L/C Issuer at a rate
per annum equal to the applicable Overnight Rate from time to time in effect,
plus any administrative, processing or similar fees customarily charged by the
L/C Issuer in connection with the foregoing. If such Lender pays such amount
(with interest and fees as aforesaid), the amount so paid shall constitute such
Lender’s Committed Loan included in the relevant Committed Borrowing or L/C
Advance in respect of the relevant L/C Borrowing, as the case may be. A
certificate of the L/C Issuer submitted to any Lender (through the
Administrative Agent) with respect to any amounts owing under this clause
(vi) shall be conclusive absent manifest error.

(d) Repayment of Participations.

(i) At any time after the L/C Issuer has made a payment under any Letter of
Credit and has received from any Lender such Lender’s L/C Advance in respect of
such payment in accordance with Section 2.03(c), if the L/C Issuer or the
Administrative Agent receives for the account of the L/C Issuer, receives any
payment in respect of the related Unreimbursed Amount or interest thereon
(whether directly from the Domestic Borrower or Australian Borrower, as
applicable, or otherwise, including proceeds of Cash Collateral applied thereto
by the Administrative Agent), the L/C Issuer shall distribute any payment it
receives to the Administrative Agent and the Administrative Agent will
distribute to such Lender its Applicable Percentage thereof (appropriately
adjusted, in the case of interest payments, to reflect the period of time during
which such Lender’s L/C Advance was outstanding), in Dollars and in the same
funds as those received by the Administrative Agent.

(ii) If any payment received by the L/C Issuer by the Administrative Agent for
the account of the L/C Issuer pursuant to Section 2.03(c)(i) is required to be
returned under any of the circumstances described in Section 10.05 (including
pursuant to any settlement entered into by the L/C Issuer in its discretion),
each applicable Lender shall pay to the Administrative Agent for the account of
the L/C Issuer its Applicable Percentage thereof on demand of the Administrative
Agent plus interest

 

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thereon from the date of such demand to the date such amount is returned by such
Lender, at a rate per annum equal to the applicable Overnight Rate from time to
time in effect. The obligations of the Lenders under this clause shall survive
Payment in Full and the termination of this Agreement.

(e) Obligations Absolute. The obligation of each Domestic Borrower or Australian
Borrower, as applicable, to reimburse the L/C Issuer for each drawing under each
Letter of Credit and to repay each L/C Borrowing 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:

(i) any lack of validity or enforceability of such Letter of Credit, this
Agreement, or any other Loan Document;

(ii) the existence of any claim, counterclaim, setoff, defense or other right
that any Borrower or any Subsidiary may have at any time against any beneficiary
or any transferee of such Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the L/C Issuer or any other
Person, whether in connection with this Agreement, the transactions contemplated
hereby or by such Letter of Credit or any agreement or instrument relating
thereto, or any unrelated transaction;

(iii) any draft, demand, certificate or other document presented under such
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 Letter of Credit;

(iv) waiver by the L/C Issuer of any requirement that exists for the L/C
Issuer’s protection and not the protection of the Borrowers or any waiver by the
L/C Issuer which does not in fact materially prejudice the Borrowers;

(v) honor of a demand for payment presented electronically even if such Letter
of Credit requires that demand be in the form of a draft;

(vi) any payment made by the L/C Issuer in respect of an otherwise complying
item presented after the date specified as the expiration date of, or the date
by which documents must be received under such Letter of Credit if presentation
after such date is authorized by the UCC, the ISP or the UCP, as applicable;

(vii) any payment by the L/C Issuer under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of such Letter of Credit; or any payment made by the L/C Issuer under such
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 Letter of Credit, including any arising in connection with
any proceeding under any Debtor Relief Law;

 

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(viii) any adverse change in the relevant exchange rates or in the availability
of the relevant Alternative Currency to any Borrower or in the relevant currency
markets generally; or

(ix) 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 a discharge of, any Borrower or any of
their respective Subsidiaries (other than reimbursement in full of such drawing
or L/C Borrowing); or

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

The Domestic Borrower or Australian Borrower, as applicable, shall promptly
examine a copy of each Letter of Credit and each amendment thereto that is
delivered to such Person and, in the event of any claim of noncompliance with
such Borrower’s instructions or other irregularity, such Borrower will promptly
notify the L/C Issuer. The Borrowers shall be conclusively deemed to have waived
any such claim against the L/C Issuer and its correspondents unless such notice
is given as aforesaid.

(f) Role of L/C Issuer. Each Lender and the Borrowers agree that, in paying any
drawing under a Letter of Credit, the L/C Issuer shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document. None of the L/C Issuer,
the Administrative Agent, any of their respective Related Parties nor any
correspondent, participant or assignee of the L/C Issuer shall be liable to any
Lender for (i) any action taken or omitted in connection herewith at the request
or with the approval of the Lenders or the Required Lenders, as applicable;
(ii) any action taken or omitted in the absence of gross negligence or willful
misconduct; (iii) any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication under or
relating to any Letter of Credit or any error in interpretation of technical
terms; (iv) the due execution, effectiveness, validity or enforceability of any
document or instrument related to any Letter of Credit or Issuer Document; or
(v) for any action, neglect or omission under or in connection with any Letter
of Credit or Issuer Documents, including, without limitation, the issuance or
amendment of any Letter of Credit, the failure to issue or amend any Letter of
Credit, or the honoring or dishonoring of any demand under any Letter of Credit,
and such action or neglect or omission will be binding upon the Loan Parties and
the Lenders; provided that the Borrowers may have a claim against the L/C
Issuer, and the L/C Issuer may be liable to the Borrowers, to the extent, but
only to the extent, of any direct, as opposed to punitive, consequential or
exemplary, damages suffered by the Borrowers which the Borrowers prove were
caused by the L/C Issuer’s willful misconduct or gross negligence. The Borrowers
hereby assume all risks of the acts or omissions of any beneficiary or
transferee with respect to its use of any Letter of Credit; provided, however,
that this assumption is not intended to, and shall not, preclude the Borrowers’
pursuing such rights and remedies as it may have against the beneficiary or
transferee at law or under any other agreement. None of the L/C Issuer, the
Administrative Agent, any of their respective Related Parties nor any
correspondent, participant or assignee of the L/C Issuer shall be liable or
responsible for any of the matters described in clauses (i) through (x) of
Section 2.03(e); provided, however, that anything in such clauses to the
contrary notwithstanding, the Borrowers may have a claim against the L/C Issuer,
and the

 

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L/C Issuer may be liable to the Borrowers, to the extent, but only to the
extent, of any direct, as opposed to consequential or exemplary, damages
suffered by the Borrowers which the Borrowers prove were caused by the L/C
Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful
failure to pay under any Letter of Credit after the presentation to it by the
beneficiary of a sight draft and certificate(s) strictly complying with the
terms and conditions of a Letter of Credit. In furtherance and not in limitation
of the foregoing, the L/C Issuer may accept documents that appear on their face
to be in order, without responsibility for further investigation, regardless of
any notice or information to the contrary (or the L/C Issuer may refuse to
accept and make payment upon such documents if such documents are not in strict
compliance with the terms of such Letter of Credit), and the L/C Issuer shall
not be responsible for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a Letter of Credit
or the rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason. The L/C Issuer may
send a Letter of Credit or conduct any communication to or from the beneficiary
via the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”)
message or overnight courier, or any other commercially reasonable means of
communicating with a beneficiary.

(g) Applicability of ISP and UCP. Unless otherwise expressly agreed by the L/C
Issuer and the applicable Borrower when a Letter of Credit is issued, (i) the
rules of the ISP shall apply to each Standby Letter of Credit, and (ii) the
rules of the Uniform Customs and Practice for Documentary Credits, as most
recently published by the International Chamber of Commerce at the time of
issuance shall apply to each Commercial Letter of Credit. Notwithstanding the
foregoing, the L/C Issuer shall not be responsible to the Borrowers for, and the
L/C Issuer’s rights and remedies against the Borrowers shall not be impaired by,
any action or inaction of the L/C Issuer required or permitted under any law,
order, or practice that is required or permitted to be applied to any Letter of
Credit or this Agreement, including the Law or any order of a jurisdiction where
the L/C Issuer or the beneficiary is located, the practice stated in the ISP or
UCP, as applicable, or in the decisions, opinions, practice statements, or
official commentary of the ICC Banking Commission, the Bankers Association for
Finance and Trade—International Financial Services Association (BAFT-IFSA), or
the Institute of International Banking Law & Practice, whether or not any Letter
of Credit chooses such law or practice.

(h) Letter of Credit Fees. The applicable Borrower shall pay to the
Administrative Agent for the account of the applicable Lenders, each in
accordance with its Applicable Percentage, in Dollars, a Letter of Credit fee
(the “Letter of Credit Fee”) equal to the Applicable L/C Fee Rate multiplied by
the Dollar Equivalent of the daily Stated Amount under each such Letter of
Credit (whether or not such maximum amount is then in effect under such Letter
of Credit). For purposes of computing the daily amount available to be drawn
under any Letter of Credit, the amount of the Letter of Credit shall be
determined in accordance with Section 1.06. Letter of Credit Fees shall be
(i) due and payable on the first Business Day of each calendar quarter,
commencing with the first such date to occur after the issuance of such Letter
of Credit, on the Letter of Credit Expiration Date and thereafter on demand, and
(ii) computed on a quarterly basis in arrears. If there is any change in the
Applicable L/C Fee Rate during any quarter, the daily amount available to be
drawn under each Letter of Credit shall be computed and multiplied by the
Applicable L/C Fee Rate separately for each period during such quarter that such

 

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Applicable L/C Fee Rate was in effect. Notwithstanding anything to the contrary
contained herein, while any Event of Default exists, Administrative Agent may,
and upon the request of the Required Lenders shall, notify the Lead Borrower
that all Letter of Credit Fees shall accrue at the Default Rate and thereafter
such Letter of Credit Fees shall accrue at the Default Rate to the fullest
extent permitted by applicable Law so long as such Event of Default is
continuing.

(i) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer.
The applicable Borrower shall pay directly to the L/C Issuer for its own
account, in Dollars, a fronting fee (the “Fronting Fee”) with respect to each
Letter of Credit, at a rate equal to 0.125% per annum, computed on the Dollar
Equivalent of the outstanding amount of such Letter of Credit, and payable on a
quarterly basis in arrears. Such Fronting Fees shall be due and payable on the
first Business Day of each calendar quarter, commencing with the first such date
to occur after the issuance of such Letter of Credit, on the Letter of Credit
Expiration Date and thereafter on demand. For purposes of computing the daily
amount available to be drawn under any Letter of Credit, the amount of the
Letter of Credit shall be determined in accordance with Section 1.06. In
addition, the applicable Borrower shall pay directly to the L/C Issuer for its
own account, in Dollars, the customary issuance, presentation, amendment and
other processing fees, and other standard costs and charges, of the L/C Issuer
relating to Letters of Credit as from time to time in effect. Such customary
fees and standard costs and charges are due and payable on demand and are
nonrefundable.

(j) Existing Letters of Credit. Each Existing Letter of Credit shall for all
purposes hereunder and under the other Loan Documents, be deemed to be a Letter
of Credit issued under this Agreement and shall be subject to all of the terms
of this Agreement with respect to Letters of Credit. Without limiting the
foregoing, Existing Letters of Credit which are Australian Letters of Credit are
the direct obligation of the Australian Borrower, the payment and performance of
which obligation is guaranteed by the Domestic Loan Parties.

(k) Conflict with Issuer Documents. In the event of any conflict between the
terms hereof and the terms of any Issuer Document, the terms hereof shall
control.

2.04 [Reserved].

2.05 Prepayments.

(a) Each Borrower may, upon irrevocable notice to the Administrative Agent, at
any time or from time to time voluntarily prepay Committed Loans in whole or in
part without premium or penalty; provided that (i) such notice must be received
by the Administrative Agent not later than 11:00 a.m. (A) three Business Days
prior to any date of prepayment of LIBO Rate Loans, BBR Rate Loans, TIBOR Rate
Loans or Canadian BA Rate Loans denominated in Dollars, (B) four Business Days
(or five, in the case of prepayment of Loans denominated in Special Notice
Currencies) prior to any date of prepayment of LIBO Rate Loans denominated in
Alternative Currencies, and (C) on the date of prepayment of Prime Rate Loans;
(ii) any voluntary prepayment of LIBO Rate Loans denominated in Dollars shall be
in a principal amount of $1,000,000 or a whole multiple of $1,000,000 in excess
thereof; and (iii) any

 

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voluntary prepayment of BBR Rate Loans, TIBOR Rate Loans or Canadian BA Rate
Loans shall be in a principal amount of $500,000 (or the Alternative Currency
Equivalent thereof) or a whole multiple of $100,000 (or the Applicable Currency
Equivalent thereof) in excess thereof; and (iv) any voluntary prepayment of
Prime Rate Loans shall be in a principal amount of $500,000 (or the Applicable
Currency Equivalent thereof) or a whole multiple of $100,000 (or the Applicable
Currency Equivalent thereof) in excess thereof or, in each case, if less, the
entire principal amount thereof then outstanding. Each such notice shall specify
the date and amount of such prepayment and the Type(s) of Loans to be prepaid
and, if LIBO Rate Loans, BBR Rate Loans, TIBOR Rate Loans or Canadian BA Rate
Loans, the Interest Period(s) of such Loans. The Administrative Agent will
promptly notify each applicable Lender of its receipt of each such notice, and
of the amount of such Lender’s Applicable Percentage of such prepayment. If such
notice is given by a Borrower, the applicable Borrowers shall make such
prepayment and the payment amount specified in such notice shall be due and
payable on the date specified therein. Any prepayment of a LIBO Rate Loan, a BBR
Rate Loan, a TIBOR Rate Loan or a Canadian BA Rate Loan shall be accompanied by
all accrued interest on the amount prepaid, together with any additional amounts
required pursuant to Section 3.05. Subject to Section 2.18, each such prepayment
shall be applied to the Committed Loans of the Lenders in accordance with their
respective Applicable Percentages.

(b) [Reserved].

(c) If for any reason the Total Domestic Outstandings at any time exceed the
Domestic Loan Cap as then in effect, the Domestic Borrowers shall immediately
prepay Committed Domestic Loans and Domestic L/C Borrowings and/or Cash
Collateralize the Domestic L/C Obligations (other than Domestic L/C Borrowings)
and/or (subject to the DIP Intercreditor Agreement) prepay Foreign Loans or Cash
Collateralize Australian L/C Obligations, in an aggregate amount equal to such
excess; provided, however, that the Domestic Borrowers shall not be required to
Cash Collateralize the Domestic L/C Obligations pursuant to this Section 2.05(c)
unless after the prepayment in full of the Domestic Loans the Total Domestic
Outstandings exceed the lesser of the Aggregate Domestic Commitments or the
Domestic Borrowing Base, each as then in effect. The Administrative Agent may,
at any time and from time to time after the initial deposit of such Cash
Collateral, request that additional Cash Collateral be provided in order to
protect against the results of exchange rate fluctuations.

(d) If for any reason the Total Canadian Outstandings at any time exceed the
Canadian Loan Cap as then in effect, the Canadian Borrower shall immediately
prepay Committed Canadian Loans in an aggregate amount equal to such excess;
provided, however, that notwithstanding the foregoing, to the extent that the
Canadian Borrower is required to prepay loans solely as a result of a Currency
Recalculation, such payments shall be due and payable two (2) Business Days
after the Canadian Borrower receives notice of such Currency Recalculation.

(e) If for any reason the Total Australian Outstandings at any time exceed the
Australian Loan Cap as then in effect, the Australian Borrower shall immediately
prepay Committed Australian Loans, and Australian L/C Borrowings and/or Cash
Collateralize the Australian L/C Obligations

 

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(other than Australian L/C Borrowings) in an aggregate amount equal to such
excess; provided, however, that the Australian Borrower shall not be required to
Cash Collateralize the Australian L/C Obligations pursuant to this
Section 2.05(e) unless after the prepayment in full of the Australian Loans the
Total Australian Outstandings exceed the Australian Borrowing Base, each as then
in effect; and further provided that notwithstanding the foregoing, to the
extent that the Australian Borrower is required to prepay loans and cash
collateralize Letters of Credit solely as a result of a Currency Recalculation,
such payments and cash collateral shall be due and payable two (2) Business Days
after such Borrower receives notice of such Currency Recalculation.

(f) If for any reason the Total Japanese Outstandings at any time exceed the
Japanese Loan Cap as then in effect, the Japanese Borrower shall immediately
prepay Committed Japanese Loans in an aggregate amount equal to such excess;
provided, however, that notwithstanding the foregoing, to the extent that the
Japanese Borrower is required to prepay loans solely as a result of a Currency
Recalculation, such payments shall be due and payable two (2) Business Days
after such Borrower receives notice of such Currency Recalculation.

(g) The Borrowers shall prepay the Loans in accordance with the provisions of
Section 6.14 hereof.

(h) Reserved.

(i) Prepayments made pursuant to (i) Section 2.05(c), and (ii) to the extent
representing funds on deposit in the Domestic Concentration Account,
Section 2.05(g), first, shall be applied ratably to the Domestic L/C Borrowings,
second, shall be applied ratably to the outstanding Committed Domestic Loans,
and third, the amount remaining, if any, after the prepayment in full of all
Domestic L/C Borrowings, and Committed Domestic Loans outstanding at such time
may be retained by (or shall be returned to) the Domestic Borrowers for use in a
manner not prohibited by this Agreement.

(j) Prepayments made pursuant to Sections 2.05(d), 2.05(e) or 2.05(f), to the
extent representing funds on deposit in a Foreign Concentration Account,
Section 2.05(g), first, shall be applied ratably to the L/C Borrowings, second,
shall be applied ratably to the outstanding Committed Loans made to such
Borrower, and third the amount remaining, if any, after the prepayment in full
of all L/C Borrowings, and Committed Loans outstanding at such time made to a
Foreign Borrower may be retained by (or shall be returned to) such Foreign
Borrower for use in a manner not prohibited by this Agreement.

(k) In the case of Loans and Letters of Credit denominated in Alternative
Currencies, the Administrative Agent shall with the delivery of each Borrowing
Base Certificate, and may, at its discretion, at other times, recalculate the
aggregate exposure under such Loans and Letters of Credit denominated in
Alternative Currencies at any time to account for fluctuations in exchange rates
affecting the Alternative Currencies in which any such non-Dollar Loans and
Letters of Credit are denominated (a “Currency Recalculation”). Following
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the applicable Borrowers shall promptly make payments in accordance with the
provisions of Sections 2.05(c), (d), (e) and (f) hereof, to the extent necessary
as a result of any such recalculation.

2.06 Termination or Reduction of Commitments; Reallocation of Commitments.

(a) The Domestic Borrowers may, upon irrevocable notice from the Lead Borrower
to the Administrative Agent, terminate the Aggregate Domestic Commitments, the
Domestic Letter of Credit Sublimit or from time to time permanently reduce in
part the Aggregate Domestic Commitments, the Domestic Letter of Credit Sublimit;
provided that (i) any such notice shall be received by the Administrative Agent
not later than 11:00 a.m. three (3) Business Days prior to the date of
termination or reduction, (ii) any such partial reduction shall be in an
aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess
thereof and (iii) the Domestic Borrowers shall not reduce (A) the Aggregate
Domestic Commitments if, after giving effect thereto and to any concurrent
prepayments hereunder, the Total Domestic Outstandings would exceed the
Aggregate Domestic Commitments and (B) the Domestic Letter of Credit Sublimit
if, after giving effect thereto, the Outstanding Amount of Domestic L/C
Obligations (other than Domestic L/C Borrowings) not fully Cash Collateralized
hereunder would exceed the Domestic Letter of Credit Sublimit.

(b) If, after giving effect to any reduction of the Aggregate Domestic
Commitments, the Domestic Letter of Credit Sublimit exceeds the amount of the
Aggregate Domestic Commitments, such Domestic Letter of Credit Sublimit shall be
automatically reduced by the amount of such excess.

(c) If, after giving effect to any reduction of the Commitments in favor of any
Foreign Borrower, the Letter of Credit Sublimit for such Foreign exceeds the
amount of the Aggregate Applicable Commitments in favor of such Foreign
Borrower, the Letter of Credit Sublimit for such Foreign Borrower shall be
automatically reduced by the amount of such excess.

(d) The Foreign Commitments, the Letter of Credit Sublimit for each Foreign
Borrower shall be automatically terminated without any further action of any
Loan Party or any Credit Party upon the Effective Date (after making of
Committed Loans to the Australian Borrower and the Canadian Borrower on such
date).

(e) The Administrative Agent will promptly notify the applicable Lenders of any
termination or reduction made pursuant to this Section 2.06. Upon any reduction
of any Commitments, the applicable Commitment of each Lender shall be reduced by
such Lender’s Applicable Percentage of such reduction amount. All fees
(including, without limitation, Commitment Fees and Letter of Credit Fees) and
interest in respect of the Aggregate Total Commitments accrued until the
effective date of any termination of the Aggregate Total Commitments shall be
paid on the effective date of such termination.

(f) Reserved.

(g) Notwithstanding anything to the contrary contained herein, any notice of
prepayment, reduction or termination, as the case may be, delivered by the Lead
Borrower may state

 

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that such notice is conditioned upon the effectiveness of other credit
facilities or the receipt of the proceeds from the issuance of other
Indebtedness or the occurrence of some other event or condition, in which case
such notice may be revoked by the Lead Borrower (by notice to the Administrative
Agent on or prior to the specified effective date) if such condition is not
satisfied.

2.07 Repayment of Loans.

Each Borrower shall repay to the Administrative Agent, for the account of the
applicable Lenders, on the Termination Date the aggregate principal amount of
Committed Loans made to such Borrower and outstanding on such date.

2.08 Interest.

(a) Subject to the provisions of Section 2.08(b) below, (i) each LIBO Rate Loan
shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the Adjusted LIBO Rate for such
Interest Period plus the Applicable Margin plus (in the case of a LIBO Rate Loan
of any Lender which is lent from a Lending Office in the United Kingdom or a
Participating Member State) the Mandatory Cost; (ii) each Canadian BA Rate Loan
shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the Canadian BA Rate for such
Interest Period plus the Applicable Margin; (iii) each BBR Rate Loan shall bear
interest on the outstanding principal amount thereof for each Interest Period at
a rate per annum equal to the Australian Bank Bill Rate for such Interest Period
plus the Applicable Margin; (iv) each TIBOR Rate Loan shall bear interest on the
outstanding principal amount thereof for each Interest Period at a rate per
annum equal to the TIBOR Rate for such Interest Period plus the Applicable
Margin; (v) each Domestic Prime Rate Loan shall bear interest on the outstanding
principal amount thereof from the applicable borrowing date at a rate per annum
equal to the Prime Rate plus the Applicable Margin; (vi) each Canadian Prime
Rate Loan and Canadian Base Rate Loan shall bear interest on the outstanding
principal amount thereof from the applicable borrowing date at a rate per annum
equal to the Canadian Prime Rate, or Canadian Base Rate, as applicable, plus the
Applicable Margin; (vii) each Australian Base Rate Loan shall bear interest on
the outstanding principal amount thereof from the applicable borrowing date at a
rate per annum equal to the Australian Base Rate plus the Applicable Margin; and
(viii) each Japanese Base Rate Loan shall bear interest on the outstanding
principal amount thereof from the applicable borrowing date at a rate per annum
equal to the Japanese Base Rate plus the Applicable Margin.

(b) (i) If any amount payable under any Loan Document is not paid when due
(after giving effect to any applicable grace periods), whether at stated
maturity, by acceleration or otherwise, such amount shall thereafter bear
interest at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Laws.

(ii) If any Event of Default exists, then the Administrative Agent, upon the
request of the Required Lenders shall, notify the Lead Borrower that all
outstanding Obligations under the Loan Documents shall thereafter bear interest
at a fluctuating interest rate per annum at all times

 

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equal to the Default Rate and thereafter such Loans and L/C Obligations shall
bear interest at the Default Rate to the fullest extent permitted by applicable
Laws for so long as such Event of Default is continuing; provided that the
Default Rate shall automatically apply to all such Obligations immediately and
without notice upon the occurrence of any Event of Default pursuant to
Section 8.01(a) or Section 8.01(f).

(iii) Accrued and unpaid interest on past due amounts (including interest on
past due interest to the fullest extent permitted by applicable Laws) shall be
due and payable upon demand (or automatically and immediately without any demand
upon the occurrence of any Event of Default pursuant to Section 8.01(a) or
Section 8.01(f)).

(c) Interest on each Loan shall be due and payable in arrears in cash on each
Interest Payment Date applicable thereto and at such other times as may be
specified herein at the Applicable Rate (or, as applicable, the Default Rate).
All accrued and unpaid interest shall be paid in cash on the Termination Date
and shall also be paid in cash on any date a prepayment or payment of principal
of Loans is made for any interest applicable to such principal being prepaid or
paid.

2.09 Fees. In addition to certain fees described in subsections (h) and (i) of
Section 2.03:

(a) Commitment Fee. The Domestic Borrowers shall pay to the Administrative
Agent, for the account of each Domestic Lender in accordance with its Applicable
Percentage of such Domestic Facility, a commitment fee (the “Commitment Fee”),
based upon the average daily unused portion of the Domestic Revolving Facility
equal to 0.50% per annum times the actual daily amount by which the Domestic
Commitments exceed the sum of (i) the Outstanding Amount of the Loans under the
Domestic Revolving Facility, and (ii) the Outstanding Amount of L/C Obligations
under the Domestic Revolving Facility. The Commitment Fee shall accrue at all
times during the Availability Period, including at any time during which one or
more of the conditions in Article IV is not met, and shall be due and payable
quarterly in arrears on the first Business Day of each calendar quarter,
commencing with the first such date to occur after the Effective Date, and on
the last day of the Availability Period. Commitment Fees shall be paid by the
Domestic Borrowers in Dollars.

(b) Other Fees. The Borrowers shall pay to the Administrative Agent and MLPFS
for their own respective accounts, in Dollars, fees in the amounts and at the
times specified in the Fee Letter. Such fees shall be fully earned when paid and
shall not be refundable for any reason whatsoever.

2.10 Computation of Interest and Fees.

(a) All computations of interest for Prime Rate Loans shall be made on the basis
of a year of 365 or 366 days, as the case may be, and actual days elapsed. All
computations of interest for Canadian BA Rate Loans and TIBOR Rate Loans shall
be made on the basis of a year of 365 days and actual days elapsed. All other
computations of fees and interest shall be made on the basis of a 360-day year
and actual days elapsed (which results in more fees or interest, as applicable,
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computed on the basis of a 365-day year), or, in the case of interest in respect
of Committed Loans denominated in Alternative Currencies as to which market
practice differs from the foregoing, in accordance with such market practice.
Interest shall accrue on each Loan for the day on which the Loan is made, and
shall not accrue on a Loan, or any portion thereof, for the day on which the
Loan or such portion is paid, provided that any Loan that is repaid on the same
day on which it is made shall, subject to Section 2.12(a), bear interest for one
day. Each determination by the Administrative Agent of an interest rate or fee
hereunder shall be conclusive and binding for all purposes, absent manifest
error.

(b) For the purposes of this Agreement, whenever interest to be paid hereunder
is to be calculated on the basis of a year of three hundred and sixty (360) days
or any other period of time that is less than a calendar year, the yearly rate
of interest which the rate determined pursuant to such calculation is equivalent
is the rate so determined multiplied by the actual number of days in the
calendar year in which the same is to be ascertained and divided by either three
hundred and sixty (360) or such other period of time, as the case may be.

(c) For the purposes of the Interest Act (Canada) and disclosure thereunder,
whenever any interest or any fee to be paid hereunder or in connection herewith
is to be calculated on the basis of a 360-day or any other period of time that
is less than a calendar year, the yearly rate of interest to which the rate used
in such calculation is equivalent is the rate so used multiplied by the actual
number of days in the calendar year in which the same is to be ascertained and
divided by three hundred and sixty (360) or the number of days in such period,
as applicable. The rates of interest under this Agreement are nominal rates, and
not effective rates or yields. The principle of deemed reinvestment of interest
does not apply to any interest calculation under this Agreement.

(d) If any provision of this Agreement or of any of the other Loan Documents
would obligate a Canadian Loan Party to make any payment of interest or other
amount payable to the Administrative Agent or any Lender under this Agreement or
any other Loan Document in an amount or calculated at a rate which would be
prohibited by law or would result in a receipt by the Administrative Agent or
any Lender of interest at a criminal rate (as such terms are construed under the
Criminal Code (Canada)) then, notwithstanding such provisions, such amount or
rate shall be deemed to have been adjusted with retroactive effect to the
maximum amount or rate of interest, as the case may be, as would not be so
prohibited by law or so result in a receipt by the Administrative Agent or any
Lender of interest at a criminal rate, such adjustment to be effected, to the
extent necessary, as follows: (1) firstly, by reducing the amount or rate of
interest required to be paid to the Administrative Agent, the Administrative
Agent or any Lender under this Section 2.10, and (2) thereafter, by reducing any
fees, commissions, premiums and other amounts required to be paid to the
Administrative Agent, the Administrative Agent or any Lender which would
constitute “interest” for purposes of Section 347 of the Criminal Code (Canada).
Notwithstanding the foregoing, and after giving effect to all adjustments
contemplated thereby, if the Administrative Agent or any Lender shall have
received an amount in excess of the maximum permitted by that Section of the
Criminal Code (Canada), the Canadian Loan Parties shall be entitled, by notice
in writing to the Administrative Agent or the applicable Lender, to obtain
reimbursement from such party in an amount equal to such excess and, pending
such

 

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reimbursement, such amount shall be deemed to be an amount payable by the
Administrative Agent or applicable Lender to the Canadian Borrower. Any amount
or rate of interest referred to in this Section 2.10 shall be determined in
accordance with generally accepted actuarial practices and principles as an
effective annual rate of interest over the term that the applicable loan remains
outstanding with the assumption that any charges, fees or expenses that fall
within the meaning of “interest” (as defined in the Criminal Code (Canada))
shall be included in the calculation of such effective rate and, in the event of
a dispute, a certificate of a Fellow of the Canadian Institute of Actuaries
appointed by the Administrative Agent shall be conclusive for the purposes of
such determination.

(e) All calculations of interest payable by the Loan Parties 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 which principle does not apply to any interest
calculated under this Agreement or any Loan Document. The parties hereto
acknowledge that there is a material difference between the stated nominal
interest 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.

2.11 Evidence of Debt.

(a) The Credit Extensions made by each Lender shall be evidenced by one or more
accounts or records maintained by the Administrative Agent (each, the “Loan
Account”) in the ordinary course of business. In addition, each Lender may
record in such Lender’s internal records, an appropriate notation evidencing the
date and amount of each Loan from such Lender, each payment and prepayment of
principal of any such Loan, and each payment of interest, fees and other amounts
due in connection with the Obligations due to such Lender. The accounts or
records maintained by the Administrative Agent and each Lender shall be
conclusive absent manifest error of the amount of the Credit Extensions made by
the Lenders to the Borrowers and the interest and payments thereon. Any failure
to so record or any error in doing so shall not, however, limit or otherwise
affect the obligation of the Borrowers hereunder to pay any amount owing with
respect to the Obligations. In the event of any conflict between the accounts
and records maintained by any Lender and the accounts and records of the
Administrative Agent in respect of such matters, the accounts and records of the
Administrative Agent shall control in the absence of manifest error. Upon the
request of any Lender made through the Administrative Agent (who shall notify
the applicable Borrowers), the applicable Borrowers (other than the Japanese
Borrower) shall execute and deliver to such Lender (through the Administrative
Agent) a Note, which shall evidence such Lender’s Loans in addition to such
accounts or records. Each Lender may attach schedules to its Note and endorse
thereon the date, Type (if applicable), amount, currency and maturity of its
Loans and payments with respect thereto. Any failure to so attach or endorse, or
any error in doing so, shall not, however, limit or otherwise affect the
obligation of the Borrowers hereunder to pay any amount owing with respect to
the Obligations or the Foreign Liabilities, as applicable. Upon receipt of an
affidavit and indemnity of a Lender as to the loss, theft, destruction or
mutilation of such Lender’s Note and upon cancellation of such Note, the
applicable Borrowers (other than the Japanese Borrower) will issue, in lieu
thereof, a replacement Note in favor of such Lender, in the same principal

 

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amount thereof and otherwise of like tenor (subject to adjustment in the case of
any assignments of such Lender’s Commitments).

(b) In addition to the accounts and records referred to in Section 2.11(a), each
Lender and the Administrative Agent shall maintain in accordance with its usual
practice accounts or records evidencing the purchases and sales by such Lender
of participations in Letters of Credit. In the event of any conflict between the
accounts and records maintained by the Administrative Agent and the accounts and
records of any Lender in respect of such matters, the accounts and records of
the Administrative Agent shall control in the absence of manifest error.

2.12 Payments Generally; Administrative Agent’s Clawback.

(a) General. All payments to be made by the Borrowers shall be made without
condition or deduction for any counterclaim, defense, recoupment or setoff.
Except as otherwise expressly provided herein and except with respect to
principal of and interest on Loans denominated in an Alternative Currency, all
payments by the Borrowers hereunder shall be made, as applicable, to the
Administrative Agent, for the account of the respective Lenders to which such
payment is owed, at the applicable Administrative Agent’s Office in Dollars, in
each case, in Same Day Funds not later than 2:00 p.m. on the date specified
herein. Except as otherwise expressly provided herein, all payments by the
Borrowers hereunder with respect to principal and interest on Loans denominated
in an Alternative Currency shall be made to the Administrative Agent, for the
account of the respective Lenders to which such payment is owed, at the
applicable Administrative Agent’s Office in such Alternative Currency and in
Same Day Funds not later than the Applicable Time specified by the
Administrative Agent on the dates specified herein. Without limiting the
generality of the foregoing, the Administrative Agent may require that any
payments due under this Agreement be made in the United States. If, for any
reason, any Borrower is prohibited by any Law from making any required payment
hereunder in an Alternative Currency, such Borrower shall make such payment in
Dollars in the Dollar Equivalent of the Alternative Currency payment amount. The
Administrative Agent will promptly distribute to each Lender its Applicable
Percentage (or other applicable share as provided herein) of such payment in
like funds as received by wire transfer to such Lender’s Lending Office in
accordance with the provisions of Section 2.14. All payments received by the
Administrative Agent (i) after 2:00 p.m., in the case of payments in Dollars, or
(ii) after the Applicable Time specified by the Administrative Agent in the case
of payments in an Alternative Currency, shall in each case solely for the
purpose of calculating interest and fees accruing hereunder, be deemed received
on the next succeeding Business Day and any applicable interest or fee shall
continue to accrue. If any payment (other than with respect to payment of a LIBO
Rate Loan, a BBR Rate Loan, a TIBOR Rate Loan or a Canadian BA Rate Loan) to be
made by the Borrowers shall come due on a day other than a Business Day, payment
shall be made on the next following Business Day, and such extension of time
shall be reflected in computing interest or fees, as the case may be.

(b) Currency. Except as otherwise set forth herein, (i) Loans shall be funded
and payments shall be made in respect of Alternative Currencies in the
applicable Alternative Currency, and (ii) Letters of Credit denominated in an
Alternative Currency shall be reimbursed by the applicable

 

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Borrower in that Alternative Currency. All obligations of the Lenders with
respect to Letters of Credit will be immediately due and payable in Dollars,
provided that the amount of any amounts denominated in an Alternative Currency
will be redenominated into Dollars.

(c) (i) Funding by Lenders; Presumption by Administrative Agent. Unless the
Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Committed Borrowing of LIBO Rate Loans, BBR Rate Loans,
TIBOR Rate Loans or Canadian BA Rate Loans, as applicable (or in the case of any
Committed Borrowing of Prime Rate Loans, prior to 1:00 p.m. on the date of such
Committed Borrowing) that such Lender will not make available to the
Administrative Agent such Lender’s share of such Committed Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with Section 2.02 (or in the case of a Committed
Borrowing of Prime Rate Loans, that such Lender has made such share available in
accordance with and at the time required by Section 2.02) and may, in reliance
upon such assumption, make available to the applicable Borrowers a corresponding
amount. In such event, if a Lender has not in fact made its share of the
applicable Committed Borrowing available to the Administrative Agent, then the
applicable Lender and the applicable Borrowers severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount in Same Day
Funds with interest thereon, for each day from and including the date such
amount is made available to such Borrowers to but excluding the date of payment
to the Administrative Agent at (A) in the case of a payment to be made by a
Lender, the Overnight Rate, plus any administrative processing or similar fees
customarily charged by the Administrative Agent in connection with the
foregoing, and (B) in the case of a payment to be made by any Borrowers, the
interest rate applicable to Prime Rate Loans. If the applicable Borrowers and
such Lender shall pay such interest to the Administrative Agent for the same or
an overlapping period, the Administrative Agent shall promptly remit to such
Borrowers the amount of such interest paid by such Borrowers for such period. If
such Lender pays its share of the applicable Committed Borrowing to the
Administrative Agent, then the amount so paid shall constitute such Lender’s
Committed Loan included in such Committed Borrowing. Any payment by the
Borrowers shall be without prejudice to any claim the Borrowers may have against
a Lender that shall have failed to make such payment to the Administrative
Agent.

(ii) Payments by Borrowers; Presumptions by Administrative Agent. Unless the
Administrative Agent shall have received notice from a Borrower prior to the
time at which any payment is due to the Administrative Agent for the account of
the Lenders or the L/C Issuer hereunder that such Borrower will not make such
payment, the Administrative Agent may assume that the Borrowers have made such
payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders or the L/C Issuer, as the case may be, the
amount due. In such event, if the Borrowers have not in fact made such payment,
then each of the Lenders or the L/C Issuer, as the case may be, severally agrees
to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender or the L/C Issuer, in Same Day Funds with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent at the
applicable Overnight Rate.

 

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A notice of the Administrative Agent to any Lender or the Lead Borrower with
respect to any amount owing under this Section 2.12(c) shall be conclusive,
absent manifest error.

(d) Failure to Satisfy Conditions Precedent. If any Lender makes available to
the Administrative Agent funds for any Loan to be made by such Lender as
provided in the foregoing provisions of this Article II, and such funds are not
made available to the Borrowers by the Administrative Agent because the
conditions to the applicable Credit Extension set forth in Article IV are not
satisfied or waived in accordance with the terms hereof (subject to the
provisions of the last paragraph of Section 4.02 hereof), the Administrative
Agent shall promptly return such funds (in like funds as received from such
Lender) to such Lender, without interest.

(e) Obligations of Lenders Several. The obligations of the Lenders hereunder to
make Committed Loans, to fund participations in Letters of Credit and to make
payments pursuant to Section 10.04(c) are several and not joint. The failure of
any Lender to make any Committed Loan, to fund any such participation or to make
any payment under Section 10.04(c) on any date required hereunder shall not
relieve any other Lender of its corresponding obligation to do so on such date,
and no Lender shall be responsible for the failure of any other Lender to so
make its Committed Loan, to purchase its participation or to make its payment
under Section 10.04(c).

(f) Funding Source. Nothing herein shall be deemed to obligate any Lender to
obtain the funds for any Loan in any particular place or manner or to constitute
a representation by any Lender that it has obtained or will obtain the funds for
any Loan in any particular place or manner.

2.13 Sharing of Payments by Lenders. If any Credit Party shall, by exercising
any right of setoff or counterclaim or otherwise, obtain payment in respect of
any principal of, interest, or other amounts with respect to, any of the
Obligations resulting in such Credit Party’s receiving payment of a proportion
of the aggregate amount of such Obligations or participations and accrued
interest thereon greater than its pro rata share thereof as provided herein
(including as in contravention of the priorities of payment set forth in
Section 8.03), then the Credit Party receiving such greater proportion shall
(a) notify the Administrative Agent of such fact, and (b) purchase (for cash at
face value) participations in the Obligations of the other applicable Credit
Parties, or make such other adjustments as shall be equitable, so that the
benefit of all such payments shall be shared by the Credit Parties ratably and
in the priorities set forth in Section 8.03, provided that:

(a) if any such participations or subparticipations are purchased and all or any
portion of the payment giving rise thereto is recovered, such participations or
subparticipations shall be rescinded and the purchase price restored to the
extent of such recovery, without interest; and

(b) the provisions of this Section shall not be construed to apply to (x) any
payment made by any Loan Party pursuant to and in accordance with the express
terms of this Agreement (including the application of funds arising from the
existence of a Defaulting Lender) or (y) any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its

 

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Committed Loans or sub-participations in L/C Obligations to any assignee or
participant, other than to the Borrowers or any Subsidiary thereof (as to which
the provisions of this Section shall apply).

Each Loan Party consents to the foregoing and agrees, to the extent it may
effectively do so under applicable Law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against such
Loan Party rights of setoff and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of such Loan Party in the
amount of such participation.

2.14 Settlement Amongst Lenders.

(a) The amount of each Lender’s Applicable Percentage of outstanding Loans shall
be computed weekly (or more frequently in the Administrative Agent’s discretion)
and shall be adjusted upward or downward based on all Loans and repayments of
Loans received by the Administrative Agent as of 3:00 p.m. on the first Business
Day (such date, the “Settlement Date”) following the end of the period specified
by the Administrative Agent.

(b) The Administrative Agent shall deliver to each of the Lenders, promptly
after a Settlement Date a summary statement of the amount of outstanding
Committed Loans for the period and the amount of repayments received for the
period. As reflected on the summary statement, (i) the Administrative Agent
shall transfer to each Lender its Applicable Percentage of repayments, and
(ii) each Lender shall transfer to the Administrative Agent or the
Administrative Agent shall transfer to each Lender, such amounts as are
necessary to insure that, after giving effect to all such transfers, the amount
of Committed Loans made by each Lender shall be equal to such Lender’s
Applicable Percentage of all applicable Committed Loans outstanding as of such
Settlement Date. If the summary statement requires transfers to be made to the
Administrative Agent by the Lenders and is received prior to 1:00 p.m. on a
Business Day, such transfers shall be made in Same Day Funds no later than 3:00
p.m. that day; and, if received after 1:00 p.m., then no later than 3:00 p.m. on
the next Business Day. The obligation of each Lender to transfer such funds is
irrevocable, unconditional and without recourse to or warranty by the
Administrative Agent. If and to the extent any Lender shall not have so made its
transfer to the Administrative Agent, such Lender agrees to pay to the
Administrative Agent forthwith on demand such amount, together with interest
thereon, for each day from such date until the date such amount is paid to the
Administrative Agent equal to the applicable Overnight Rate, plus any
administrative processing or similar fees customarily charged by the
Administrative Agent in connection with the foregoing.

2.15 [Reserved].

2.16 [Reserved].

2.17 Cash Collateral.

(a) Certain Credit Support Events. If (i) the L/C Issuer has honored any full or
partial drawing request under any Letter of Credit and such drawing has resulted
in an L/C Borrowing, (ii) as of

 

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the Letter of Credit Expiration Date, any L/C Obligation for any reason remains
outstanding, (iii) the Borrowers shall be required to provide Cash Collateral
pursuant to Section 8.02(c), or (iv) there shall exist a Defaulting Lender, the
applicable Borrowers shall immediately (in the case of clause (iii) above) or
within one Business Day (in all other cases) following any request by the
Administrative Agent or the L/C Issuer, provide Cash Collateral in an amount not
less than the applicable Minimum Collateral Amount (determined in the case of
Cash Collateral provided pursuant to clause (iv) above, after giving effect to
Section 2.18(a)(iv) and any Cash Collateral provided by the Defaulting Lender).
Additionally, if the Administrative Agent notifies the Lead Borrower at any time
that the Outstanding Amount of all L/C Obligations at such time exceeds 103% of
the Letter of Credit Sublimit then in effect, then, within two Business Days
after receipt of such notice, the applicable Borrowers shall provide Cash
Collateral for the Outstanding Amount of the L/C Obligations in an amount not
less than the amount by which the Outstanding Amount of all L/C Obligations
exceeds the Letter of Credit Sublimit.

(b) Grant of Security Interest. Each applicable Loan Party, and to the extent
provided by any Defaulting Lender, such Defaulting Lender, hereby grants to (and
subjects to the control of) the Administrative Agent or the Australian Security
Trustee, as applicable, for the benefit of the Administrative Agent, the L/C
Issuer and the applicable Lenders, and agrees to maintain, a first priority
security interest in all such cash, deposit accounts and all balances therein,
and all other property so provided as collateral pursuant hereto, and in all
proceeds of the foregoing, all as security for the Obligations to which such
Cash Collateral may be applied pursuant to Section 2.17(c). If at any time the
Administrative Agent reasonably determines that Cash Collateral is subject to
any right or claim of any Person (other than the Administrative Agent (for the
benefit of itself and the other applicable Credit Parties) and the DIP Term
Agent (subject to the DIP Intercreditor Agreement)) or that the total amount of
such Cash Collateral is less than the Minimum Collateral Amount, the applicable
Loan Parties will, promptly upon demand by the Administrative Agent or the
Australian Security Trustee, as applicable, pay or provide to the Administrative
Agent or the Australian Security Trustee, as applicable, additional Cash
Collateral in an amount sufficient to eliminate such deficiency. All Cash
Collateral (other than credit support not constituting funds subject to deposit)
shall be maintained in one or more blocked, non-interest bearing deposit
accounts at Bank of America. The applicable Loan Parties shall pay on demand
therefor from time to time all customary account opening, activity and other
administrative fees and charges in connection with the maintenance and
disbursement of Cash Collateral.

(c) Application. Notwithstanding anything to the contrary contained in this
Agreement, Cash Collateral provided under any of this Section 2.17 or
Sections 2.03, 2.05, 2.18 or 8.02 in respect of Letters of Credit shall be held
and applied to the satisfaction of the specific L/C Obligations, obligations to
fund participations therein (including, as to Cash Collateral provided by a
Defaulting Lender, any interest accrued on such obligation) and other
Obligations for which the Cash Collateral was so provided, prior to any other
application of such property as may otherwise be provided for herein.

(d) Release. Cash Collateral (or the appropriate portion thereof) provided to
reduce Fronting Exposure or to secure other Obligations shall be released
promptly following (i) the elimination of the applicable Fronting Exposure or
other Obligations giving rise thereto (including by the termination

 

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of Defaulting Lender status of the applicable Lender (or, as appropriate, its
assignee following compliance with Section 10.06(b)(iv))) or (ii) the
determination by the Administrative Agent and the L/C Issuer that there exists
excess Cash Collateral; provided, however, (x) any such release shall be without
prejudice to, and any disbursement or other transfer of Cash Collateral shall be
and remain subject to, any other Lien conferred under the Loan Documents and the
other applicable provisions of the Loan Documents, and (y) the Person providing
Cash Collateral and the L/C Issuer may agree that Cash Collateral shall not be
released but instead held to support future anticipated Fronting Exposure or
other obligations.

2.18 Certain Bankruptcy Matters.

(a) Except to the extent expressly provided otherwise in an Order, the Loan
Parties hereby agree that, subject only to Priority Permitted Encumbrances and
the Carve-Out, the Obligations shall (i) constitute DIP Superpriority Claims
over all administrative expense claims and claims against the Debtors now
existing or hereafter arising, of any kind or nature whatsoever, including,
without limitation, all administrative expense claims of the kind specified in
Sections 105, 326, 328, 330, 331, 365, 503(a), 503(b), 506(c) (subject to entry
of the Final Order), 507(a), 507(b), 546(c), 546(d), 726, 1113, 1114 or any
other provisions of the Bankruptcy Code and all super-priority administrative
expense claims granted to any other Person the establishment of which
super-priority shall have been approved and authorized by the Bankruptcy Court
and (ii) be secured pursuant to Sections 364(c)(2), (c)(3) and (d)(1) of the
Bankruptcy Code and, to the extent provided in any of the Orders.

(b) In the event of a conflict between, or inconsistency among, the Interim
Order or the Final Order, on the one hand, and any other Loan Document, on the
other hand, the Interim Order or the Final Order, as the case may be, shall
control.

(c) Notwithstanding anything to the contrary contained herein or elsewhere:

(i) the Credit Parties shall not be required to prepare, file, register or
publish any financing statements, mortgages, hypothecs, account control
agreements, notices of Lien or similar instruments in any jurisdiction or filing
or registration office, or to take possession of any Collateral or to take any
other action in order to validate, render enforceable or perfect the Liens on
the Collateral granted by or pursuant to this Agreement, the Orders or any other
Loan Document. If the Administrative Agent (at the Required Lenders’ direction,
which shall be in its sole discretion), from time to time elects to prepare,
file, register or publish any such financing statements, mortgages, hypothecs,
account control agreements, notices of Lien or similar instruments, take
possession of any Collateral, or take any other action to validate, render
enforceable or perfect all or any portion of the Administrative Agent’s Liens on
the Collateral, (A) all such documents and actions shall be deemed to have been
filed, registered, published or recorded or taken at the time and on the date
that the Interim Order is entered, and (B) shall not negate or impair the
validity or effectiveness of this Section 2.16(c) or of the perfection of any
other Liens in favor of the Administrative Agent, for the benefit of the Lenders
and the other Credit Parties, on the Collateral. Notwithstanding anything to the
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neither the Administrative Agent nor any Credit Party shall require the filing
of a Mortgage with respect to any Real Property of the Loan Parties unless an
Event of Default resulting from a breach of Section 8.01(a) has occurred and is
continuing.

(ii) Except as otherwise agreed to by the Lenders, the Liens, Lien priorities,
DIP Superpriority Claims and other rights and remedies granted to the Credit
Parties pursuant to this Agreement, the Orders or the other Loan Documents
(specifically including, but not limited to, the existence, perfection,
enforceability and priority of the Liens provided for herein and therein, and
the DIP Superpriority Claims provided herein and therein) shall not be modified,
altered or impaired in any manner by any other financing or extension of credit
or incurrence of indebtedness by any Borrower or any other Loan Party (pursuant
to Section 364 of the Bankruptcy Code or otherwise), or by dismissal or
conversion of any of the Cases, or by any other act or omission whatsoever.

(d) Without limiting the generality of the foregoing, notwithstanding any such
financing, extension, incurrence, dismissal, conversion, act or omission:

(e) subject only to Priority Permitted Encumbrances and the Carve-Out and to the
extent provided in any of the Orders and subject to the Orders, no costs or
expenses of administration which have been or may be incurred in the Cases or
any conversion of the same or in any other proceedings related thereto, and no
priority claims, are or will be prior to or on a parity with any claim of any
Lender or the Administrative Agent against the Debtors in respect of any
Obligations;

(f) other than as provided in the Orders or the Loan Documents, the
Administrative Agent’s Liens on the Collateral shall constitute valid,
enforceable and perfected first priority Liens, and shall be prior to all other
Liens (except for Priority Permitted Encumbrances), now existing or hereafter
arising, in favor of any other creditor or other Person; and

(g) the Administrative Agent’s Liens on the Collateral shall continue to be
valid, enforceable and perfected without the need for the Administrative Agent
or any Lender to prepare, file, register or publish any financing statements,
mortgages, hypothecs, account control agreements, notices of Lien or similar
instruments or to otherwise perfect the Administrative Agent’s Liens under
applicable non-bankruptcy law.

(h) In connection with any sale or Disposition of all or any portion of the
Collateral, including in each case pursuant to Sections 9-610 or 9-620 of the
UCC, at any sale thereof conducted under the provisions of the Bankruptcy Code,
including Section 363 of the Bankruptcy Code or as part of restructuring plan
subject to confirmation under Section 1129(b)(2)(A)(iii) of the Bankruptcy Code,
or at any sale or foreclosure conducted by Agent, in accordance with applicable
law and, with respect to any credit bid, Section 363(k) of the Bankruptcy Code,
each Borrower and each other Loan Party hereby gives the Administrative Agent
(at the direction of the Required Lenders) the power and right, without assent
by such Loan Party, to “credit bid” the full amount of all Obligations in order
to purchase (either directly or through one or more acquisition vehicles) all or
any portion of the Collateral.

 

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2.19 Defaulting Lenders.

(a) Adjustments. Notwithstanding anything to the contrary contained in this
Agreement, if any Lender becomes a Defaulting Lender, then, until such time as
such Lender is no longer a Defaulting Lender, to the extent permitted by
applicable Law:

(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or
disapprove any amendment, waiver or consent with respect to this Agreement shall
be restricted as set forth in the definition of “Required Lenders” and
Section 10.01.

(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees or
other amounts received by the Administrative Agent for the account of such
Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to
Article VIII or otherwise) or received by the Administrative Agent from a
Defaulting Lender pursuant to Section 10.08 shall be applied at such time or
times as may be determined by the Administrative Agent as follows: first, to the
payment of any amounts owing by such Defaulting Lender to the Administrative
Agent hereunder; second, to the payment on a pro rata basis of any amounts owing
by such Defaulting Lender to the L/C Issuer; third, to Cash Collateralize the
L/C Issuer’s Fronting Exposure with respect to such Defaulting Lender in
accordance with Section 2.17; fourth, as the Lead Borrower may request (so long
as no Default or Event of Default exists), to the funding of any Loan in respect
of which such Defaulting Lender has failed to fund its portion thereof as
required by this Agreement, as determined by the Administrative Agent; fifth, if
so determined by the Administrative Agent and the Lead Borrower, to be held in a
deposit account and released pro rata in order to (x) satisfy such Defaulting
Lender’s potential future funding obligations with respect to Loans under this
Agreement and (y) Cash Collateralize the L/C Issuer’s future Fronting Exposure
with respect to such Defaulting Lender with respect to future Letters of Credit
issued under this Agreement, in accordance with Section 2.17; sixth, to the
payment of any amounts owing to the Lenders, the L/C Issuer as a result of any
judgment of a court of competent jurisdiction obtained by any Lender, the L/C
Issuer against such Defaulting Lender as a result of such Defaulting Lender’s
breach of its obligations under this Agreement; seventh, so long as no Default
or Event of Default exists, to the payment of any amounts owing to the Loan
Parties as a result of any judgment of a court of competent jurisdiction
obtained by the Loan Parties against such Defaulting Lender as a result of such
Defaulting Lender’s breach of its obligations under this Agreement; and eighth,
to such Defaulting Lender or as otherwise directed by a court of competent
jurisdiction; provided that if (x) such payment is a payment of the principal
amount of any Loans or L/C Borrowings in respect of which such Defaulting Lender
has not fully funded its appropriate share, and (y) such Loans were made or the
related Letters of Credit were issued at a time when the conditions set forth in
Section 4.02 were satisfied or waived, such payment shall be applied solely to
pay the Loans of, and L/C Obligations owed to, all Non-Defaulting Lenders on a
pro rata basis prior to being applied to the payment of any Loans of, or L/C
Obligations owed to, such Defaulting Lender until such time as all Loans and
funded and unfunded participations in L/C Obligations are held by the Lenders
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the Commitments hereunder without giving effect to Section 2.18(a)(iv). Any
payments, prepayments or other amounts paid or payable to a Defaulting Lender
that are applied (or held) to pay amounts owed by a Defaulting Lender or to post
Cash Collateral pursuant to this Section 2.18(a)(ii) shall be deemed paid to and
redirected by such Defaulting Lender, and each Lender irrevocably consents
hereto.

(iii) Certain Fees.

(A) No Defaulting Lender shall be entitled to receive any Commitment Fee payable
under Section 2.09(a) for any period during which that Lender is a Defaulting
Lender (and the Borrowers shall not be required to pay any such fee that
otherwise would have been required to have been paid to that Defaulting Lender).

(B) Each Defaulting Lender shall be entitled to receive Letter of Credit Fees
for any period during which that Lender is a Defaulting Lender only to the
extent allocable to its Applicable Percentage of the stated amount of Letters of
Credit for which it has provided Cash Collateral pursuant to Section 2.17.

(C) With respect to any Commitment Fee payable under Section 2.09(a) or any
Letter of Credit Fee not required to be paid to any Defaulting Lender pursuant
to clause (A) or (B) above, the Borrowers shall (x) pay to each Non-Defaulting
Lender that portion of any such fee otherwise payable to such Defaulting Lender
with respect to such Defaulting Lender’s participation in L/C Obligations that
has been reallocated to such Non-Defaulting Lender pursuant to clause
(iv) below, (y) pay to the L/C Issuer the amount of any such fee otherwise
payable to such Defaulting Lender to the extent allocable to such L/C Issuer’s
Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the
remaining amount of any such fee.

(iv) Reallocation of Applicable Percentages to Reduce Fronting Exposure. All or
any part of such Defaulting Lender’s participation in L/C Obligations shall be
reallocated among the Non-Defaulting Lenders in accordance with their respective
Applicable Percentages (calculated without regard to such Defaulting Lender’s
Commitment) but only to the extent that (x) the conditions set forth in
Section 4.02 are satisfied at the time of such reallocation (and, unless the
Lead Borrower shall have otherwise notified the Administrative Agent at such
time, the Lead Borrower shall be deemed to have represented and warranted that
such conditions are satisfied at such time), and (y) such reallocation does not
cause the aggregate Outstanding Amount of Obligations of any Non-Defaulting
Lender to exceed such Non-Defaulting Lender’s Commitment. No reallocation
hereunder shall constitute a waiver or release of any claim of any party
hereunder against a Defaulting Lender arising from that Lender having become a
Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of
such Non-Defaulting Lender’s increased exposure following such reallocation.

 

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(v) Cash Collateral. If the reallocation described in clause (a)(iv) above
cannot, or can only partially, be effected, the Borrowers shall, without
prejudice to any right or remedy available to them hereunder or under applicable
Law, to Cash Collateralize the L/C Issuers’ Fronting Exposure in accordance with
the procedures set forth in Section 2.17.

(b) Defaulting Lender Cure. If the Lead Borrower, the Administrative Agent, and
the L/C Issuer agree in writing that a Lender is no longer a Defaulting Lender,
the Administrative Agent will so notify the parties hereto, whereupon as of the
effective date specified in such notice and subject to any conditions set forth
therein (which may include arrangements with respect to any Cash Collateral),
that Lender will, to the extent applicable, purchase at par that portion of
outstanding Loans of the other Lenders or take such other actions as the
Administrative Agent may determine to be necessary to cause the Committed Loans
and funded and unfunded participations in Letters of Credit to be held on a pro
rata basis by the Lenders in accordance with their Applicable Percentages
(without giving effect to Section 2.18(a)(iv)), whereupon such Lender will cease
to be a Defaulting Lender; provided that no adjustments will be made
retroactively with respect to fees accrued or payments made by or on behalf of
the Borrowers while that Lender was a Defaulting Lender; and provided, further,
that except to the extent otherwise expressly agreed by the affected parties, no
change hereunder from Defaulting Lender to Lender will constitute a waiver or
release of any claim of any party hereunder arising from that Lender’s having
been a Defaulting Lender.

2.20 CFC Payments. Any references to the Loan Parties (in the context of
payments, proceeds, liabilities or Obligations), Commitments, Collateral, L/C
Borrowings or Loans shall mean, in the case of and as applied to the foregoing,
with respect to any Obligations of the Domestic Loan Parties, only the Domestic
Loan Parties (or any of their Domestic Subsidiaries and only for their own
account), the Collateral that is property of Domestic Loan Parties, or L/C
Borrowings or Loans constituting Obligations of Domestic Loan Parties (or any of
their Domestic Subsidiaries), so that collections received from any Foreign Loan
Parties and proceeds of the Collateral that is property of such Foreign Loan
Parties shall be applied solely and exclusively to the payment of the Foreign
Liabilities. All provisions contained in any Loan Document or side letter shall
be interpreted consistently with this Section 2.19 to the extent possible, and
where such other provisions conflict with the provisions of this Section 2.19,
the provisions of this Section 2.19 shall govern.

ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY;

APPOINTMENT OF LEAD BORROWER

3.01 Taxes.

(a) Payments Free of Taxes; Obligation to Withhold; Payments on Account of
Taxes.

(i) Any and all payments by or on account of any obligation of any Loan Party
under any Loan Document shall be made without deduction or withholding for any
Taxes, except as required by applicable Laws. If any applicable Laws (as
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the good faith discretion of the Administrative Agent or a Loan Party) require
the deduction or withholding of any Tax from any such payment by the
Administrative Agent or a Loan Party, then the Administrative Agent or such Loan
Party shall be entitled to make such deduction or withholding, upon the basis of
the information and documentation to be delivered pursuant to subsection
(e) below.

(ii) If any Loan Party or the Administrative Agent shall be required by the Code
to withhold or deduct Taxes, including both United States Federal backup
withholding and withholding taxes, from any payment, then, (A) the
Administrative Agent or a Loan Party shall withhold or make such deductions as
are determined by the Administrative Agent or a Loan Party to be required taking
into account the information and documentation it has received pursuant to
subsection (e) below, (B) the Administrative Agent or a Loan Party, to the
extent required by the Code, shall timely pay the full amount withheld or
deducted to the relevant Governmental Authority in accordance with the Code,
(C) to the extent that the withholding or deduction is made on account of
Indemnified Taxes, the sum payable by the applicable Loan Party shall be
increased as necessary so that after any required withholding or the making of
all required deductions (including deductions applicable to additional sums
payable under this Section 3.01) the applicable Recipient receives an amount
equal to the sum it would have received had no such withholding or deduction
been made, and (D) reasonably promptly after paying such sum required by Law,
the Loan Party making such payments (if it is required to make deduction or
withholding) shall deliver to the Administrative Agent evidence reasonably
satisfactory to the other affected parties of such deduction or withholding and
of the remittance thereof to the relevant Governmental Authority (or if the
payment, deduction or withholding is made by the Administrative Agent, the
Administrative Agent shall furnish such evidence to the affected parties and the
Lead Borrower).

(iii) If any Loan Party or the Administrative Agent shall be required by any
applicable Laws other than the Code to withhold or deduct any Taxes from any
payment, then (A) such Loan Party or the Administrative Agent, as required by
such Laws, shall withhold or make such deductions as are determined by it to be
required based upon the information and documentation it has received pursuant
to subsection (e) below, (B) such Loan Party or the Administrative Agent, to the
extent required by such Laws, shall timely pay the full amount withheld or
deducted to the relevant Governmental Authority in accordance with such Laws,
and (C) to the extent that the withholding or deduction is made on account of
Indemnified Taxes, the sum payable by the applicable Loan Party shall be
increased as necessary so that after any required withholding or the making of
all required deductions (including deductions applicable to additional sums
payable under this Section 3.01) the applicable Recipient receives an amount
equal to the sum it would have received had no such withholding or deduction
been made.

 

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(b) Payment of Other Taxes by the Loan Parties. Without limiting the provisions
of subsection (a) above, the Loan Parties shall timely pay to the relevant
Governmental Authority in accordance with applicable Law (without duplication of
the provisions of subsection (a) above), or at the option of the Administrative
Agent timely reimburse it for the payment of, any Other Taxes.

(c) Tax Indemnifications.

(i) Without duplication of the provisions of subsection (a) above, the Loan
Parties shall, and each Loan Party does hereby, jointly and severally indemnify
each Recipient, and shall make payment in respect thereof within 10 days after
demand therefor, for the full amount of any Indemnified Taxes (including
Indemnified Taxes imposed or asserted on or attributable to amounts payable
under this Section 3.01) paid by such Recipient or required to be withheld or
deducted from a payment to such Recipient, and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. A certificate as to the amount (and describing
the basis) of such payment or liability delivered to the Lead Borrower by a
Lender or the L/C Issuer (with a copy to the Administrative Agent), or by the
Administrative Agent on its own behalf or on behalf of any other Agent, a Lender
or the L/C Issuer, shall be conclusive absent manifest error.

(ii) Each Lender and the L/C Issuer shall, and does hereby, severally indemnify,
and shall make payment in respect thereof within 10 days after demand therefor,
(x) the Administrative Agent against any Indemnified Taxes attributable to such
Lender or the L/C Issuer (but only to the extent that any Loan Party has not
already indemnified the Administrative Agent for such Indemnified Taxes and
without limiting the obligation of the Loan Parties to do so), (y) the
Administrative Agent and the Loan Parties, as applicable, against any Taxes
attributable to such Lender’s failure to comply with the provisions of
Section 10.06(e) relating to the maintenance of a Participant Register and
(z) the Administrative Agent and the Loan Parties, as applicable, against any
Excluded Taxes attributable to such Lender or the L/C Issuer, in each case, that
are payable or paid by the Administrative Agent or a Loan Party in connection
with any Loan Document, and any reasonable expenses arising therefrom or with
respect thereto, whether or not such Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to any Lender by the Administrative Agent
or a Loan Party shall be conclusive absent manifest error. Each Lender and the
L/C Issuer hereby authorizes the Administrative Agent and the Loan Parties to
set off and apply any and all amounts at any time owing to such Lender or the
L/C Issuer, as the case may be, under this Agreement or any other Loan Document
against any amount due to the Administrative Agent and the Loan Parties under
this clause (ii).

 

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(d) Evidence of Payments. Upon request by the Lead Borrower or the
Administrative Agent, as the case may be, after any payment of Taxes by the Lead
Borrower or by the Administrative Agent or a Recipient to a Governmental
Authority as provided in this Section 3.01, the Lead Borrower shall deliver to
the Administrative Agent or the Administrative Agent shall deliver to the Lead
Borrower, as the case may be, the original or a certified copy of a receipt
issued by such Governmental Authority evidencing such payment, a copy of any
return required by Laws to report such payment or other evidence of such payment
reasonably satisfactory to the Lead Borrower or the Administrative Agent, as the
case may be.

(e) Status of Lenders; Tax Documentation.

(i) Any Lender and Recipient that is entitled to an exemption from or reduction
of withholding Tax with respect to payments made under any Loan Document shall
deliver to the Lead Borrower and the Administrative Agent, at the time or times
prescribed by applicable Law or reasonably requested by the Lead Borrower or the
Administrative Agent, such properly completed and executed documentation
prescribed by applicable Law or reasonably requested by the Lead Borrower or the
Administrative Agent as will permit such payments to be made without withholding
or at a reduced rate of withholding. Such delivery shall be required on the
Effective Date (or, in the case of an assignee, on the date of assignment) and
on or before the date such documentation expires or becomes obsolete or after
the occurrence of any event requiring a change in the most recent documentation
so delivered or as may reasonably be requested by the Lead Borrower or the
Administrative Agent. In addition, any Lender and Recipient, if reasonably
requested by the Lead Borrower or the Administrative Agent, shall deliver such
other documentation prescribed by applicable Law or reasonably requested by the
Lead Borrower or the Administrative Agent as will enable the Lead Borrower or
the Administrative Agent to determine whether or not such Lender or Recipient is
subject to any withholding (including backup withholding) or information
reporting requirements. Notwithstanding anything to the contrary in the
preceding two sentences, the completion, execution and submission of such
documentation (other than such documentation set forth in
Section 3.01(e)(ii)(A), (ii)(B) (ii)(D) and (ii)(E) below) shall not be required
if in the Lender’s reasonable judgment as a result of a Change in Law such
completion, execution or submission would subject such Lender to any material
unreimbursed cost or expense (it being understood that the Borrowers shall be
given a reasonable opportunity to reimburse such costs or expense) or would
materially prejudice the legal or commercial position of such Lender.

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

(A) any Lender that is a U.S. Person shall deliver to the Lead Borrower and the
Administrative Agent on or prior to the date on which such Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the
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the Lead Borrower or the Administrative Agent), executed originals of IRS Form
W-9 certifying that such Lender is exempt from U.S. federal backup withholding
tax (or substantively comparable subsequent versions thereof or successors
thereto);

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

(I) in the case of a Non-U.S. Lender claiming the benefits of an income tax
treaty to which the United States is a party (x) with respect to payments of
interest under any Loan Document, executed originals of IRS Form W-8BEN (or
substantively comparable subsequent versions thereof or successors thereto)
establishing an exemption from, or reduction of, U.S. federal withholding Tax
pursuant to the “interest” article of such tax treaty and (y) with respect to
any other applicable payments under any Loan Document, IRS Form W-8BEN (or
substantively comparable subsequent versions thereof or successors thereto)
establishing an exemption from, or reduction of, U.S. federal withholding Tax
pursuant to the “business profits” or “other income” article of such tax treaty;

(II) executed originals of IRS Form W-8ECI;

(III) in the case of a Non-U.S. Lender claiming the benefits of the exemption
for portfolio interest under Section 881(c) of the Code, (x) a certificate
substantially in the form of Exhibits M-1, M-2, M-3 or M-4 to the effect that
such Non-U.S. Lender is not a “bank” within the meaning of Section 881(c)(3)(A)
of the Code, a “10 percent shareholder” of the Borrower within the meaning of
Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation”
described in Section 881(c)(3)(C) of the Code (each a “U.S. Tax Compliance
Certificate”) and (y) executed originals of IRS Form W-8BEN or IRS Form W-8BEN-E
(or substantively comparable subsequent versions thereof or successors thereto);
or

(IV) to the extent a Non-U.S. Lender is not the beneficial owner, executed
originals of IRS Form W-8IMY (or substantively comparable subsequent versions
thereof or successors thereto), accompanied by IRS Form W-8ECI (or substantively
comparable subsequent versions thereof or successors thereto), IRS Form W-8BEN-E
or IRS Form W-8BEN (or substantively comparable subsequent versions thereof or
successors thereto), a U.S. Tax Compliance Certificate substantially in the form
of Exhibit M-2 or Exhibit M-3, IRS Form W-9 (or substantively comparable
subsequent versions thereof or successors

 

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thereto), and/or other certification documents from each beneficial owner, as
applicable; provided that if the Non-U.S. Lender is a partnership and one or
more direct or indirect partners of such Non-U.S. Lender are claiming the
portfolio interest exemption, such Non-U.S. Lender may provide a U.S. Tax
Compliance Certificate substantially in the form of Exhibit M-4 on behalf of
each such direct and indirect partner;

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

(D) the Administrative Agent shall deliver to the Lead Borrower on or prior to
the date on which the Administrative Agent becomes the Administrative Agent
under this Agreement (and from time to time thereafter as required by applicable
Law) two copies of IRS Form W-9 (or any substantively comparable subsequent
versions thereof or successors thereto) certifying that the Administrative Agent
is exempt from United States federal backup withholding tax and such other
documentation as will enable the Borrowers to determine whether or not the
Administrative Agent is subject to United States federal backup withholding tax
or information reporting requirements; and

(E) if a payment made to a Lender under any Loan Document would be subject to
U.S. federal withholding Tax imposed by FATCA if such Lender or other Recipient
were to fail to comply with the applicable reporting requirements of FATCA
(including those contained in Section 1471(b) or 1472(b) of the Code, as
applicable), such Lender or other Recipient shall deliver to the Lead Borrower
and the Administrative Agent at the time or times prescribed by law and at such
time or times reasonably requested by the Lead Borrower or the Administrative
Agent such documentation prescribed by applicable Law (including as prescribed
by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Lead Borrower or the Administrative Agent as may be
necessary for the Lead Borrower and the Administrative Agent to comply with
their obligations under FATCA and to determine that such Lender has complied
with such Lender’s or other Recipient’s obligations under FATCA or to determine
the amount to deduct and withhold from such payment. Solely

 

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for purposes of this clause (D), “FATCA” shall include any amendments made to
FATCA after the date of this Agreement.

(iii) In the event that a Lender or other Recipient will receive a payment under
this Agreement in the course of carrying on a business or enterprise in
Australia, that Lender or other Recipient is requested to deliver to the Lead
Borrower and the Administrative Agent on or prior to the date on which such
Lender or other Recipient becomes a Lender or other Recipient under this
Agreement the following details of the Lender or other Recipient (A) its
Australian tax file number, or (B) its Australian business number.

(iv) In the event that an Australian Credit Party will receive a payment under
this agreement, that Australian Credit Party shall indicate in writing to the
Lead Borrower and the Administrative Agent on or prior to the date on which it
becomes an Australian Credit Party under this agreement whether it (A) will
receive such payments in the course of carrying on a business or enterprise in
Australia at or through a permanent establishment in Australia, and (B) is a
Qualifying Australian Treaty Party.

(v) Each Lender or other Recipient agrees that if any form or certification it
previously delivered pursuant to this Section 3.01 expires or becomes obsolete
or inaccurate in any respect, it shall update such form or certification or
promptly notify the Lead Borrower and the Administrative Agent in writing of its
legal inability to do so.

(f) Treatment of Certain Refunds. Unless required by applicable Laws, at no time
shall the Administrative Agent have any obligation to file for or otherwise
pursue on behalf of a Lender or the L/C Issuer, or have any obligation to pay to
any Lender or the L/C Issuer, any refund of Taxes withheld or deducted from
funds paid for the account of such Lender or the L/C Issuer, as the case may be.
If any Recipient determines, in its sole discretion exercised in good faith,
that it has received a refund of any Taxes as to which it has been indemnified
by any Loan Party or with respect to which any Loan Party has paid additional
amounts pursuant to this Section 3.01, it shall pay to the Loan Party an amount
equal to such refund (but only to the extent of indemnity payments made, or
additional amounts paid, by a Loan Party under this Section 3.01 with respect to
the Taxes giving rise to such refund), net of all out-of-pocket expenses
(including Taxes) incurred by such Recipient in connection with such refund, and
without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund), provided that the Loan Party, upon the
request of the Recipient, agrees to repay the amount paid over to the Loan Party
(plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Recipient in the event the Recipient is required
to repay such refund to such Governmental Authority. Notwithstanding anything to
the contrary in this subsection, in no event will the applicable Recipient be
required to pay any amount to the Loan Party pursuant to this subsection the
payment of which would place the Recipient in a less favorable net after-Tax
position than such Recipient would have been in if the Tax subject to
indemnification and giving rise to such refund had not been deducted, withheld

 

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or otherwise imposed and the indemnification payments or additional amounts with
respect to such Tax had never been paid. This subsection shall not be construed
to require any Recipient to make available its tax returns (or any other
information relating to its taxes that it deems confidential) to any Loan Party
or any other Person.

(g) L/C Issuer. For the avoidance of doubt, for purposes of this Section 3.01,
the term “Lender” shall include any L/C Issuer.

(h) Survival. Each party’s obligations under this Section 3.01 shall survive the
resignation or replacement of the Administrative Agent or any assignment of
rights by, or the replacement of, a Lender or the L/C Issuer, the termination of
the Commitments and the repayment, satisfaction or discharge of all other
Obligations.

(i) GST.

(i) Unless expressly specified otherwise, all payments to be made by the
Australian Loan Parties under or in connection with any Loan Document have been
calculated or determined without regard to GST.

(ii) If all or part of any such payment is the consideration for a taxable
supply for GST purposes then, when that Australian Loan Party makes that
payment:

(A) it must pay to the Credit Parties an additional amount equal to that payment
or part payment multiplied by the appropriate rate of GST (currently 10%); and

(B) the Credit Parties will promptly provide to that Australian Loan Party a tax
invoice complying with the relevant GST legislation.

(j) Where under any Loan Document an Australian Loan Party is required to
reimburse or indemnify for an amount, that Australian Loan Party must pay the
relevant amount (including any sum in respect to GST) less any GST input tax
credit the Credit Parties determine that it is entitled to claim in respect of
that amount.

3.02 Illegality. If any Lender determines that any Law has made it unlawful, or
that any Governmental Authority has asserted that it is unlawful, for any Lender
or its applicable Lending Office to make, maintain or fund LIBO Rate Loans, BBR
Rate Loan, TIBOR Rate Loans or Canadian BA Rate Loans, as applicable (whether
denominated in Dollars or an Alternative Currency), or to determine or charge
interest rates based upon the LIBO Rate, the BA Rate, the BBR Rate or the TIBOR
Rate, as applicable, or any Governmental Authority has imposed material
restrictions on the authority of such Lender to purchase or sell, or to take
deposits of, Dollars or any Alternative Currency in the applicable interbank
market, then, on notice thereof by such Lender to the Lead Borrower through the
Administrative Agent, any obligation of such Lender to make or continue LIBO
Rate Loans, BBR Rate Loan, TIBOR Rate Loans or Canadian BA Rate Loans, as
applicable, in the affected currency or currencies or, in the case of LIBO Rate
Loans, Canadian BA Rate Loans, BBR Rate Loans or TIBOR Rate Loans in

 

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Dollars, to convert Prime Rate Loans to LIBO Rate Loans, BBR Rate Loans, TIBOR
Rate Loans or Canadian Prime Rate Loans to Canadian BA Rate Loans, as
applicable, shall be suspended until such Lender notifies the Administrative
Agent and the Lead Borrower that the circumstances giving rise to such
determination no longer exist. Upon receipt of such notice, the applicable
Borrowers shall, upon demand from such Lender (with a copy to the Administrative
Agent), prepay or, if applicable and such Loans are denominated in Dollars,
convert all LIBO Rate Loans, BBR Rate Loans, TIBOR Rate Loans of such Lender or
Canadian BA Rate Loans of such Lender into Canadian Prime Rate Loans, either on
the last day of the Interest Period therefor, if such Lender may lawfully
continue to maintain such LIBO Rate Loans, Canadian BA Rate Loans, TIBOR Rate
Loans, or Canadian BA Rate Loans, as applicable, to such day, or immediately, if
such Lender may not lawfully continue to maintain such LIBO Rate Loans, Canadian
BA Rate Loans, TIBOR Rate Loans or Canadian BA Rate Loans. Upon any such
prepayment or conversion, the applicable Borrowers shall also pay accrued
interest on the amount so prepaid or converted.

3.03 Inability to Determine Rates. If the Required Lenders determine that for
any reason in connection with any request for a LIBO Rate Loan, a BBR Rate Loan,
a TIBOR Rate Loan or a Canadian BA Rate Loan, or a conversion to or continuation
thereof that (a) deposits (whether in Dollars or an Alternative Currency) are
not being offered to banks in the applicable offshore interbank market for such
currency for the applicable amount and Interest Period of such LIBO Rate Loan,
BBR Rate Loans or TIBOR Rate Loans, (b) with respect to Canadian BA Rate Loans
only, there is no market for bankers acceptances, (c) adequate and reasonable
means do not exist for determining the LIBO Rate, the BBR Rate, the TIBOR Rate
or the BA Rate for any requested Interest Period with respect to a proposed LIBO
Rate Loan, BBR Rate Loan, TIBOR Rate Loan or Canadian BA Rate Loan (whether
denominated in Dollars or an Alternative Currency), or (d) the LIBO Rate, the
BBR Rate, the TIBOR Rate or the BA Rate for any requested Interest Period with
respect to a proposed LIBO Rate Loan, BBR Rate Loan, TIBOR Rate Loan or Canadian
BA Rate Loan does not adequately and fairly reflect the cost to such Lenders of
funding such Loan, the Administrative Agent will promptly so notify the Lead
Borrower and each applicable Lender. Thereafter, the obligation of the Lenders
to make or maintain LIBO Rate Loans, BBR Rate Loans, TIBOR Rate Loans or
Canadian BA Rate Loans, as applicable, in the affected currency or currencies
shall be suspended until the Administrative Agent (but in any case upon the
instruction of the Required Lenders) revokes such notice. Upon receipt of such
notice, the Lead Borrower may revoke any pending request for a Committed
Borrowing of, conversion to or continuation of LIBO Rate Loans, BBR Rate Loans,
TIBOR Rate Loans or Canadian BA Rate Loans, as applicable, in the affected
currency or currencies or, failing that, will be deemed to have converted such
request into either a request for a Committed Borrowing of Prime Rate Loans in
the amount specified therein.

3.04 Increased Costs; Reserves on LIBO Rate Loans.

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

(i) impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with
or for the account of, or credit extended or participated in by, any Lender
(except (A) any reserve

 

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requirement reflected in the LIBO Rate, and (B) the requirements of the Bank of
England and the Financial Services Authority or the European Central Bank
reflected in the Mandatory Cost, other than as set forth below) or the L/C
Issuer;

(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes,
(B) Taxes described in clauses (b) through (d) of the definition of Excluded
Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of
credit, commitments, or other obligations, or its deposits, reserves, other
liabilities or capital attributable thereto;

(iii) result in the failure of the Mandatory Cost, as calculated hereunder, to
represent the cost to any Lender of complying with the requirements of the Bank
of England and/or the Financial Services Authority or the European Central Bank
in relation to its making, funding or maintaining LIBO Rate Loans; or

(iv) impose on any Lender or the L/C Issuer or the London interbank market or
the Canadian bankers’ acceptance market any other condition, cost or expense
affecting this Agreement or LIBO Rate Loans, BBR Rate Loans, TIBOR Rate Loans or
Canadian BA Rate Loans made by such Lender or any Letter of Credit or
participation therein;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any LIBO Rate Loan, BBR Rate Loan, TIBOR Rate
Loan or Canadian BA Rate Loan (or of maintaining its obligation to make any such
Loan), or to increase the cost to such Lender or the L/C Issuer of participating
in, issuing or maintaining any Letter of Credit (or of maintaining its
obligation to participate in or to issue any Letter of Credit), or to reduce the
amount of any sum received or receivable by such Lender or the L/C Issuer
hereunder (whether of principal, interest or any other amount) then, upon
request of such Lender or the L/C Issuer and delivery of the certificate
contemplated by Section 3.04(c), the applicable Borrowers will pay to such
Lender or the L/C Issuer, as the case may be, such additional amount or amounts
as will compensate such Lender or the L/C Issuer, as the case may be, for such
additional costs incurred or reduction suffered. Notwithstanding the foregoing,
no Lender shall claim any amounts pursuant to Section 3.04(a)(ii) unless such
Lender is generally seeking similar compensation from borrowers under other
similar credit agreements.

(b) Capital Requirements. If any Lender or the L/C Issuer determines that any
Change in Law affecting such Lender or the L/C Issuer or any Lending Office of
such Lender or such Lender’s or the L/C Issuer’s holding company, if any,
regarding capital requirements has had, or would have, the effect of reducing
the rate of return on such Lender’s or the L/C Issuer’s capital or on the
capital of such Lender’s or the L/C Issuer’s holding company, if any, as a
consequence of this Agreement, the Commitments of such Lender or the Loans made
by, or participations in Letters of Credit held by, such Lender, or the Letters
of Credit issued by the L/C Issuer, to a level below that which such Lender or
the L/C Issuer or such Lender’s or the L/C Issuer’s holding company could have
achieved but for such Change in Law (taking into consideration such Lender’s or
the L/C Issuer’s policies and the policies of such Lender’s or the L/C Issuer’s
holding company with respect to capital adequacy), then from time to time upon
delivery of the certificate contemplated by Section 3.04(c), the applicable
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to such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding
company, as the case may be, such additional amount or amounts as will
compensate such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s
holding company, as the case may be, for any such reduction suffered.

(c) Certificates for Reimbursement. A certificate of a Lender or the L/C Issuer
setting forth the amount or amounts necessary to compensate such Lender or the
L/C Issuer or its holding company, as the case may be, as specified in
subsection (a) or (b) of this Section and delivered to the Lead Borrower shall
be conclusive absent manifest error. The applicable Borrowers shall pay such
Lender or the L/C Issuer, as the case may be, the amount shown as due on any
such certificate within 10 days after receipt thereof.

(d) Delay in Requests. Failure or delay on the part of any Lender or the L/C
Issuer to demand compensation pursuant to the foregoing provisions of this
Section 3.04 shall not constitute a waiver of such Lender’s or the L/C Issuer’s
right to demand such compensation, provided that the applicable Borrower shall
not be required to compensate a Lender or the L/C Issuer pursuant to the
foregoing provisions of this Section 3.04 for any increased costs incurred or
reductions suffered more than six (6) months prior to the date that such Lender
or the L/C Issuer, as the case may be, notifies the Lead Borrower of the Change
in Law giving rise to such increased costs or reductions and of such Lender’s or
the L/C Issuer’s intention to claim compensation therefor (except that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the six (6)-month period referred to above shall be extended to include the
period of retroactive effect thereof).

(e) Reserves on LIBO Rate Loans. The applicable Borrowers shall pay to each
Lender, as long as such Lender shall be required to maintain reserves with
respect to liabilities or assets consisting of or including Eurocurrency funds
or deposits (currently known as “Eurocurrency liabilities”), additional interest
on the unpaid principal amount of each LIBO Rate Loan equal to the actual costs
of such reserves allocated to such Loan by such Lender (as determined by such
Lender in good faith, which determination shall be conclusive), which shall be
due and payable on each date on which interest is payable on such Loan, provided
that, the Lead Borrower shall have received at least ten (10) days’ prior notice
(with a copy to the Administrative Agent) of such additional interest from such
Lender. If a Lender fails to give notice ten (10) days prior to the relevant
Interest Payment Date, such additional interest shall be due and payable ten
(10) days from receipt of such notice.

3.05 Compensation for Losses. Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, each Borrower shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of:

(a) any continuation, conversion, payment or prepayment of any LIBO Rate Loan,
BBR Rate Loan, TIBOR Rate Loan or Canadian BA Rate Loan made to such Borrower on
a day other than the last day of the Interest Period for such LIBO Rate Loan,
BBR Rate Loan, TIBOR Rate or Canadian BA Rate Loan (whether voluntary,
mandatory, automatic, by reason of acceleration, or otherwise);

 

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(b) any failure by such Borrower (for a reason other than the failure of such
Lender to make a Loan) to prepay, borrow, continue or convert any LIBO Rate
Loan, BBR Rate Loan, TIBOR Rate Loan or any Canadian BA Rate Loan made to such
Borrower on the date or in the amount notified by such Borrower;

(c) any failure by any Borrower to make payment of any Loan or drawing under any
Letter of Credit (or interest due thereon) denominated in an Alternative
Currency on its scheduled due date or any payment thereof in a different
currency; or

(d) any assignment of a LIBO Rate Loan, BBR Rate Loan, TIBOR Rate Loan or
Canadian BA Rate Loan made to such Borrower on a day other than the last day of
the Interest Period therefor as a result of a request by the Lead Borrower
pursuant to Section 10.13;

including any loss of anticipated profits, any foreign exchange losses and any
loss or expense arising from the liquidation or reemployment of funds obtained
by it to maintain such Loan or from fees payable to terminate the deposits from
which such funds were obtained or from the performance of any foreign exchange
contract. The applicable Borrower shall also pay any customary and reasonable
administrative fees charged by such Lender in connection with the foregoing.

For purposes of calculating amounts payable by a Borrower to the Lenders under
this Section 3.05, each Lender shall be deemed to have funded each LIBO Rate
Loan, BBR Rate Loan, or TIBOR Rate Loan made by it at the LIBO Rate, BBR Rate,
or TIBOR Rate for such Loan by a matching deposit or other borrowing in the
offshore interbank market for such currency for a comparable amount and for a
comparable period, whether or not such LIBO Rate Loan, BBR Rate Loan or TIBOR
Rate Loan was in fact so funded. A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this
Section and setting forth in reasonable detail the manner in which such amount
or amounts was determined shall be delivered to the Lead Borrower.

3.06 Mitigation Obligations; Replacement of Lenders.

(a) Designation of a Different Lending Office. If any Lender or L/C Issuer
requests compensation under Section 3.04, or the Borrowers are required to pay
any additional amount to any Lender or L/C Issuer or any Governmental Authority
for the account of any Lender or L/C Issuer pursuant to Section 3.01, or if any
Lender or L/C Issuer gives a notice pursuant to Section 3.02, then such Lender
or L/C Issuer shall use reasonable efforts to designate a different Lending
Office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Lender or L/C Issuer, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 3.01 or
Section 3.04, as the case may be, in the future, or eliminate the need for the
notice pursuant to Section 3.02, as applicable, and (ii) in each case, would not
subject such Lender or L/C Issuer to any unreimbursed cost or expense and would
not otherwise be disadvantageous to such Lender or L/C Issuer. The Borrowers
hereby agree to pay all reasonable costs and expenses incurred by any Lender or
L/C Issuer in connection with any such designation or assignment.

 

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(b) Replacement of Lenders. If any Lender requests compensation under
Section 3.04, or if any Loan Party is required to pay any additional amount to
any Lender or any Governmental Authority for the account of any Lender pursuant
to Section 3.01, the Borrowers may replace such Lender in accordance with
Section 10.13.

3.07 Survival. All of the obligations of each Loan Party under this Article III
shall survive termination of the Aggregate Total Commitments and repayment of
all other Obligations hereunder.

3.08 Designation of Lead Borrower as Borrowers’ Agent.

(a) Each Domestic Borrower hereby irrevocably designates and appoints each of
the Parent and the Lead Borrower as such Domestic Borrower’s agent to obtain
Credit Extensions, the proceeds of which shall be available to each Domestic
Borrower for such uses as are permitted under this Agreement. As the disclosed
principal for its agent, each Domestic Borrower shall be obligated to each
Credit Party on account of Credit Extensions so made as if made directly by the
applicable Credit Party to such Domestic Borrower, notwithstanding the manner by
which such Credit Extensions are recorded on the books and records of the Lead
Borrower and of any other Domestic Borrower. In addition, each Domestic Loan
Party other than the Domestic Borrowers hereby irrevocably designates and
appoints each of the Parent and the Lead Borrower as such Loan Party’s agent to
represent such Loan Party in all respects under this Agreement and the other
Loan Documents.

(b) Each Foreign Borrower hereby irrevocably designates and appoints the Parent
as such Foreign Borrower’s agent to obtain Credit Extensions, the proceeds of
which shall be available to such Foreign Borrower for such uses as are permitted
under this Agreement. In addition, each Foreign Loan Party other than the
Foreign Borrowers hereby irrevocably designates and appoints each of the Parent
and the applicable Foreign Borrower as such Foreign Loan Party’s agent to
represent such Loan Party in all respects under this Agreement and the other
Loan Documents.

(c) Each Borrower recognizes that credit available to it hereunder is in excess
of and on better terms than it otherwise could obtain on and for its own account
and that one of the reasons therefor is its joining in the applicable credit
facility contemplated herein with all other applicable Borrowers. Consequently,
subject to the terms and conditions of this Agreement, each Borrower hereby
assumes, guarantees payment and performance of, and agrees to discharge all
Obligations of each of the other Borrowers; provided that, notwithstanding
anything herein or in any of the other Loan Documents to the contrary, the
Foreign Loan Parties shall be liable only for the Foreign Liabilities.

(d) The Lead Borrower shall act as a conduit for each Borrower (including
itself, as a “Borrower”) on whose behalf the Lead Borrower has requested a
Credit Extension. Neither the Administrative Agent nor any other Credit Party
shall have any obligation to see to the application of such proceeds therefrom.

 

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ARTICLE IV

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

4.01 Conditions of Initial Credit Extension. The obligation of the L/C Issuer
and each Lender to make its initial Credit Extension hereunder is subject to
satisfaction (or waiver by the Required Lenders) of the following conditions
precedent:

(a) The Administrative Agent’s receipt of the following, each of which shall be
originals or telecopies or other electronic image scan transmission (e.g., “pdf”
or “tif” via e-mail) (followed promptly by originals) unless otherwise
specified, and each properly executed by a Responsible Officer of the signing
Loan Party (if applicable):

(i) executed counterparts of this Agreement;

(ii) executed counterparts of the DIP Intercreditor Agreement

(iii) a Note executed by each applicable Borrower (other than the Japanese
Borrower) in favor of each Lender requesting a Note;

(iv) such certificates of resolutions or other action, incumbency certificates
and/or other certificates of Responsible Officers of each Loan Party
(A) evidencing the authority of each Loan Party to enter into this Agreement and
the other Loan Documents to which such Loan Party is a party, (B) evidencing the
identity, authority and capacity of each Responsible Officer thereof authorized
to act as a Responsible Officer in connection with this Agreement and the other
Loan Documents to which such Loan Party is a party, and (C) in respect of the
Australian Loan Parties, certifying that each relevant Australian Loan Party is
not in breach of Chapter 2E of the Corporations Act;

(v) copies of each Loan Party’s certificate or articles of incorporation and
bylaws (or equivalent or comparable constitutive documents with respect to any
non-U.S. jurisdiction, if any) and a certificate of good standing (where
applicable, or such other customary functionally equivalent certificates, to the
extent available in the applicable jurisdiction) from such Loan Party’s
jurisdiction of organization and from each jurisdiction where such Loan Party’s
ownership, lease or operation of properties or the conduct of its business
requires such qualification, except to the extent that failure to so qualify in
such jurisdiction could not reasonably be expected to have a Material Adverse
Effect;

(vi) a favorable opinion of (A) Skadden, Arps, Slate, Meagher & Flom LLP,
special counsel to the Domestic Loan Parties, addressed to the Administrative
Agent and each Domestic Lender, as to customary matters concerning the Domestic
Loan Parties and the Loan Documents; (B) Fasken Martineau DuMoulin LLP, McInnes
Cooper LLP and other local counsel to the Canadian Loan Parties, addressed to
the Administrative Agent

 

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and each Canadian Lender, as to customary matters concerning the Canadian Loan
Parties and the Loan Documents; and (C) Nishimura & Asahi, special counsel to
the Japanese Loan Parties, addressed to the Administrative Agent and each
Japanese Lender, as to customary matters concerning the Japanese Loan Parties
and the Loan Documents;

(vii) a certificate signed by a Responsible Officer of the Borrower,
satisfactory in form and substance to the Administrative Agent and the Required
Lenders, certifying that the conditions in Sections 4.02(a) and 4.02(b) have
been satisfied;

(viii) with respect to each Loan Party organized under the laws of Japan, (a) a
certified copy of corporate registration (genzai jikou shoumei) in respect of
such Loan Party and a certificate of seal registration issued in respect of such
Loan Party by the competent legal affairs bureau in Japan, in each case no
earlier than three months prior to the date of the initial Credit Extension, and
(b) such other documents as may be requested by the Administrative Agent in
order to comply with the Act on Prevention of Transfer of Criminal Proceeds;

(ix) [reserved];

(x) instruments evidencing the Interim Order Intercompany Loans in form and
substance reasonably satisfactory to the Administrative Agent;

(xi) executed counterparts of the Reaffirmation Agreement;

(xii) all other Loan Documents set forth, each duly executed by the applicable
Loan Parties;

(xiii) [reserved];

(xiv) [reserved];

(xv) [reserved];

(xvi) (A) all UCC financing statements, PPSA financing statements and Australian
PPSA financing statements, required by Law or reasonably requested by the Agents
to be filed, registered or recorded to create, perfect or protect the Liens
intended to be created under the Loan Documents and

(B) all certificates of matters entered into the applicable registry in Japan to
create, perfect or protect the Liens intended to be created under the Loan
Documents or copies of applications for registration of such matters in form
reasonably satisfactory to the Agents and, to the extent applicable with respect
to any Liens intended to be created in any bank account, Account or insurance
policy of a Loan Party in Japan, a consent letter

 

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from the account bank where such bank account is domiciled consenting to the
creation of the Lien in respect of such bank account, Account debtor or insurer,
as applicable; and

(xvii) [reserved].

(b) Chief Restructuring Officer. A chief restructuring officer (“Chief
Restructuring Officer”) acceptable to the Lenders shall be appointed with
respect to the Borrowers (it being understood and agreed that the Acceptable
Chief Restructuring Officer shall be acceptable to the Lenders).

(c) Legal Matters. All legal matters incident to this Agreement and the
Borrowings hereunder shall be satisfactory to the Administrative Agent and the
Lenders.

(d) Boardriders Waiver. The Boardriders Waiver shall be in full force and
effect.

(e) Payment of Fees. The Borrowers shall have paid on before the Effective Date,
in cash (i) all reasonable and documented costs, fees, disbursements and
expenses of the Administrative Agent (including fees, costs, disbursements and
expenses of (A) their outside counsel, Riemer & Braunstein LLP, and their local
counsel (including, for the avoidance of doubt, foreign counsel) and (B) any
professional advisors retained by Bank of America (or any Affiliate thereof) or
their counsel and (ii) all fees required to be paid by the Borrowers to any of
the Agents or the Arranger on or before the Effective Date shall have been paid
in full, and all fees required to be paid by the Borrowers to the Lenders on or
before the Effective Date shall have been paid in full.

(f) Borrowing Base Certificate. The Administrative Agent shall have received a
Borrowing Base Certificate from each Borrower dated the Effective Date, relating
to the month ended immediately prior to the Petition Date, and executed by a
Responsible Officer of the Lead Borrower or the Parent.

(g) [Reserved]

(h) DIP Term Facility. An interim order approving the DIP Term on terms
reasonably satisfactory to the Agent shall have been entered in the Cases, the
DIP Term Facility shall be in full force and effect and the US Borrowers shall
have received gross proceeds from the initial borrowing under the DIP Term
Facility in the amount of $60,000,000 (from which certain costs, expenses, fees
and original issue discount shall be deducted).

(i) KYC. The Administrative Agent and the Lenders shall have received all
documentation and other information required by regulatory authorities under
applicable “know your customer” and anti-money laundering rules and regulations
including, without limitation, the Patriot Act.

 

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(j) Motions and Documents. All material motions and other material documents to
be filed with and submitted to the Bankruptcy Court (including any “first day”
motions and proposed orders) related to the commencement of the Cases or
transactions contemplated hereby and the other Loan Documents and the approval
thereof shall be in form and substance reasonably satisfactory to the Lenders.

(k) Interim Order. The Interim Order shall provide that the Administrative
Agent, for the benefit of the Credit Parties, shall have a valid and perfected
Lien on and security interest in the Collateral on the basis and with the
priority set forth herein.

(l) Liens. Each Order shall provide that the Administrative Agent, for the
benefit of the Credit Parties, shall have a valid and perfected Lien on and
security interest in the Collateral on the basis and with the priority set forth
herein, subject to the DIP Intercreditor Agreement.

(m) Budget. The Agent shall have received the Budget reasonably acceptable to
the Administrative Agent.

(n) [reserved].

(o) Petition Date. The Petition Date shall have occurred on or before
September 9, 2015.

(p) Interim Order Date. The Interim Order shall have been filed on or before
September 11, 2015.

(q) Adequate Protection.

(i) The Collateral Agent, for the benefit of the Existing ABL Lenders, shall
have received adequate protection in respect of the Liens securing the Existing
ABL Obligations and ABL Indemnity Obligations (as defined in the Orders),
including among other things (i) replacement claims and liens, and (ii) a
superpriority administrative expense claim against all Debtors, in each case
junior only to the Liens and superpriority administrative expense claims under
this Agreement granted and approved under the Orders; and

(ii) The Existing Senior Secured Noteholders shall have each received adequate
protection in respect of the liens securing the Existing Senior Secured Note
Obligations, as applicable, including among other things (i) replacement claims
and liens, and (ii) a superpriority administrative expense claim against all
Debtors junior only to superpriority administrative expense claims under this
Agreement and the DIP Term Loan Agreement.

Without limiting the generality of the provisions of Section 9.05, for purposes
of determining compliance with the conditions specified in this Section 4.01,
each Lender (other than an Agent or the Administrative Agent) that has signed
this Agreement shall be deemed to have Consented to, approved

 

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or accepted or to be satisfied with, each document or other matter required
thereunder to be Consented to or approved by or acceptable or satisfactory to a
Lender unless the Administrative Agent shall have received notice from such
Lender prior to the proposed Effective Date specifying its objection thereto.

4.02 Conditions to all Credit Extensions. The obligation of each Lender to honor
any Request for Credit Extension (other than a Committed Loan Notice requesting
only a conversion of a Committed Loan to another Type of Committed Loan, or a
continuation of LIBO Rate Loans, BBR Rate Loans, TIBOR Rate Loans or Canadian BA
Rate Loans) and of each L/C Issuer to issue each Letter of Credit is subject to
the following conditions precedent:

(a) The representations and warranties of the Borrowers and each other Loan
Party contained in Article V or any other Loan Document, shall be true and
correct in all material respects (or, in the case of any representation and
warranty qualified by materiality, in all respects) on and as of the date of
such Credit Extension, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they shall be
true and correct in all material respects (or in all respects, as applicable) as
of such earlier date, and except that for purposes of this Section 4.02, the
representations and warranties contained in subsections (a), (b) and (f) of
Section 5.05 shall be deemed to refer to the most recent statements, if any,
furnished pursuant to clauses (a), (b) and (e), respectively, of Section 6.01;

(b) No Default or Event of Default shall exist, or would result from such
proposed Credit Extension or from the application of the proceeds thereof;

(c) The DIP Term Facility shall be in full force and effect;

(d) The Administrative Agent, and if applicable, the L/C Issuer, shall have
received a Request for Credit Extension in accordance with the requirements
hereof;

(e) Since the Petition Date, no Material Adverse Effect shall have occurred;

(f) The proposed Credit Extension complies with the Budget (within Permitted
Variances);

(g) After giving effect to the proposed Credit Extension, no Overadvance shall
exist;

(h) The Boardriders Waiver shall be in full force and effect; and

(i) There shall not be pending any motion, complaint or other pleading
challenging the pre-petition claims under, or the security interests and liens
securing, the Existing ABL Credit Agreement or any other similar challenge under
Chapter 5 of the Bankruptcy Code.

Each Request for a Credit Extension (other than a Committed Loan Notice
requesting only a conversion of a Committed Loan to another Type of Committed
Loan or a continuation of LIBO Rate Loans, BBR Rate Loans, TIBOR Rate Loans or
Canadian BA Rate Loans) submitted any Borrower shall be deemed to be a

 

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representation and warranty by the Borrowers that the conditions specified in
this Section 4.02 have been satisfied on and as of the date of the applicable
Credit Extension. The conditions set forth in this Section 4.02 are for the sole
benefit of the Credit Parties but unless and until the Required Lenders
otherwise direct the Administrative Agent (in accordance with the terms of this
Agreement) to cease making Committed Loans, the Lenders will fund their
Applicable Percentage of all Loans that are requested by the Borrowers of all
L/C Advances required to be made hereunder and participate in all Letters of
Credit whenever made or issued in accordance with the provisions of this
Agreement, and which, notwithstanding the failure of the Loan Parties to comply
with the provisions of this Article IV, are agreed to by the Administrative
Agent, as applicable; provided that, the making of any such Loans or the
issuance of any Letters of Credit in the event the provisions of this Article IV
are not complied with shall not be deemed to be a modification or waiver by any
Credit Party of the provisions of this Article IV on any future occasion or a
waiver of any rights of the Credit Parties as a result of any such failure to
comply.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

To induce the Credit Parties to enter into this Agreement and to make Loans and
to issue Letters of Credit hereunder, each Loan Party and each applicable
Subsidiary represents and warrants to the Administrative Agent, the L/C Issuer
and the Lenders that:

5.01 Existence, Qualification and Power. Each Loan Party (other than Q.S.
Optics, Inc.) and each Subsidiary (a) is a corporation, limited liability
company, unlimited liability company, kabushiki kaisha, partnership or limited
partnership, duly organized or formed, validly existing and, where applicable,
in good standing under the Laws of the jurisdiction of its incorporation or
organization, (b) subject (in the case of each Domestic Loan Party only) to the
entry of the Interim Order or Final Order, as applicable, has all requisite
power and authority and all requisite governmental licenses, permits,
authorizations, consents and approvals to (i) own or lease its assets and carry
on its business and (ii) subject (in the case of each Domestic Loan Party only)
to the entry of the Interim Order or Final Order, as applicable, execute,
deliver and perform its obligations under the Loan Documents to which it is a
party, and (c) is duly qualified and is licensed and, where applicable, in good
standing under the Laws of each jurisdiction where its ownership, lease or
operation of properties or the conduct of its business requires such
qualification or license; except in each case referred to in clause (a) (in the
case of any Subsidiary that is not a Loan Party), (b)(i) or (c), to the extent
that failure to do so could not reasonably be expected to have a Material
Adverse Effect. Schedule 5.01 annexed hereto sets forth, in each case as of the
Effective Date, each Loan Party’s name as it appears in official filings in its
state or province of incorporation or organization, its state or province of
incorporation or organization, organization type, organization number, if any,
issued by its state of incorporation or organization (in the case of each
Domestic Loan Party), and its federal employer identification number (if any).

5.02 Authorization; No Contravention. The execution, delivery and performance by
each Loan Party of each Loan Document to which such Person is a party, subject
(in the case of each Domestic Loan Party only) to the entry of the Interim Order
or Final Order, as applicable, has been duly authorized

 

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by all necessary corporate or other organizational action, and does not and will
not (a) contravene the terms of any of such Person’s Organization Documents;
(b) conflict with or result in any breach, termination, or contravention of, or
constitute a default under, or require any payment to be made under (i) any
Material Contract or any Material Indebtedness to which such Person is a party
or affecting such Person or the properties of such Person or any of its
Subsidiaries (other than any Loan Document) or (ii) any order, injunction, writ
or decree of any Governmental Authority or any arbitral award to which such
Person or its property is subject, except in each case where enforcement is
stayed upon the commencement of the Cases; (c) result in or require the creation
of any Lien upon any asset of any Loan Party (other than Liens in favor of the
Administrative Agent under the Security Documents and other than in accordance
with the DIP Intercreditor Agreement); except, in the case of both clauses
(b) and (c) hereof, where enforcement is stayed upon the commencement of the
Cases or (d) violate any applicable Law in any material respect.

5.03 Governmental Authorization; Other Consents. Subject (in the case of each
Domestic Loan Party only) to the entry of the Interim Order or, following the
entry of the Final Order, the Final Order, no material approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority, and no material approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any other
Person is necessary or required in connection with the execution, delivery or
performance by, or enforcement against, any Loan Party of this Agreement or any
other Loan Document to which such Person is a party, except for (a) the
perfection or maintenance of the Liens created under the Security Documents,
(b) such as have been obtained or made and are in full force and effect, or
(c) the Interim Order and the Final Order, as applicable.

5.04 Binding Effect. Subject (in the case of each Domestic Loan Party only) to
the entry of the Interim Order or, following the entry of the Final Order, the
Final Order, this Agreement has been, and each other Loan Document, when
delivered, will have been, duly executed and delivered by each Loan Party that
is party thereto. Subject (in the case of each Domestic Loan Party only) to the
entry of the Interim Order or, following the entry of the Final Order, the Final
Order, this Agreement constitutes, and each other Loan Document when so
delivered will constitute, a legal, valid and binding obligation of each Loan
Party that is party thereto, enforceable against such Loan Party in accordance
with its terms, subject (in the case of the Foreign Loan Parties only) to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors’ rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.

5.05 Financial Statements; No Material Adverse Effect.

(a) The Audited Financial Statements (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein; (ii) fairly present in all material respects the
financial condition of the Parent and its Subsidiaries as of the date thereof
and their results of operations for the period covered thereby in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; and (iii) to the extent required by GAAP show
all Indebtedness and other liabilities, direct or

 

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contingent, of the Parent and its Subsidiaries as of the date thereof, including
liabilities for taxes, material commitments and Indebtedness.

(b) The unaudited Consolidated balance sheet of the Parent and its Subsidiaries
dated April 30, 2015, and the related Consolidated statements of income or
operations, Shareholders’ Equity and cash flows for the Fiscal Quarter ended on
that date, in each case, (i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein, and (ii) fairly present in all materials respects the financial
condition of the Parent and its Subsidiaries as of the date thereof and their
results of operations for the period covered thereby, subject, in the case of
clauses (i) and (ii), to the absence of footnotes and to normal year-end audit
adjustments. Schedule 5.05 sets forth all Material Indebtedness of the Parent
and its Americas/Foreign Subsidiaries (other than any intercompany Indebtedness)
outstanding as of the Effective Date (after giving effect to all the
transactions occurring on the Effective Date).

5.06 Litigation. Except for the Cases, there are no actions, suits, proceedings,
claims or disputes pending or, to the knowledge of the Loan Parties threatened
in writing, at law, in equity, in arbitration or before any Governmental
Authority, against any Loan Party or any of its Subsidiaries or against any of
its properties or revenues that (a) purport to affect or pertain to this
Agreement or any other Loan Document, or any of the transactions contemplated
hereby to occur on the Effective Date, or (b) either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

5.07 No Default. Except where enforcement is stayed upon the commencement of the
Cases, no Loan Party or any Subsidiary is in default in any material respect
under or with respect to any Material Contract or any Material Indebtedness. No
Default has occurred and is continuing or would result on the Effective Date
from the consummation of the transactions contemplated by this Agreement or any
other Loan Document.

5.08 Ownership of Property; Liens.

(a) Each of the Loan Parties and each Subsidiary thereof has good record and
marketable title in fee simple to or valid leasehold interests in, all real
property necessary or used in the ordinary conduct of its business, except for
such defects in title or failure to have such title or other interest as could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each of the Loan Parties and each Subsidiary has good title to,
valid leasehold interests in, or valid licenses or other rights to use all
personal property and assets material to the ordinary conduct of its business,
except where failure to have such title, interest, license or other right could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

(b) Schedule 5.08(b)(1) sets forth the address (including street address and
state, province or territory and postal or zip code) of all Real Estate that is
owned by the Loan Parties as of the Effective Date, together with a list of the
holders of any mortgage thereon as of the Effective Date. Schedule 5.08(b)(2)
sets forth the address (including street address and state or province or
territory) of,

 

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and, with respect to the Australian Loan Parties, details of title relating to,
all locations leased by the Loan Parties as of the Effective Date.

(c) The property of each Loan Party and each of the Subsidiaries is subject to
no Liens, other than Permitted Encumbrances.

(d) No Japanese Loan Party has granted, or permitted to exist, any Liens
pursuant to any constructive transfers (joto tampo by way of senyu kaitei) of
any property, assets or revenue of such Japanese Loan Party, other than any such
Liens in favor of the Administrative Agent under the Loan Documents.

5.09 Environmental Compliance.

(a) No Loan Party or any Subsidiary (i) is in violation of any Environmental Law
or has not obtained or, to its knowledge, has not complied with any
Environmental Permit required under any Environmental Law, (ii) is subject to
any Environmental Liability that remains outstanding, or (iii) has received
written notice of any claim alleging Environmental Liability by any of them,
except, in each case, as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.

(b) Except, in each case, as would not reasonably be expected to have a Material
Adverse Effect: (i) none of the properties currently owned by any Loan Party or
any Subsidiary, or to the knowledge of any Loan Party, leased by any Loan Party
or any Subsidiary, is listed or, to the knowledge of any Loan Party, proposed
for listing on the NPL or any analogous foreign, state, provincial, territorial,
municipal or local list; (ii) there are no underground storage tanks or any
surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous
Materials are being treated, stored or disposed of except in compliance with
applicable Environmental Laws on any property currently owned by any Loan Party
or any Subsidiary in violation of applicable Environmental Law and (iii) to the
knowledge of the Loan Parties, Hazardous Materials have not been released,
discharged or disposed on any property currently owned by any Loan Party or any
Subsidiary in violation of applicable Environmental Law.

(c) Except, in each case, as would not reasonably be expected to have a Material
Adverse Effect, no Loan Party or any Subsidiary is undertaking, either
individually or together with other “potentially responsible parties” (as that
term is defined in CERCLA), any investigation, assessment, or remedial or
response action to remove Hazardous Materials at any location, either
voluntarily or pursuant to the order of any Governmental Authority or the
requirements of any Environmental Law.

5.10 Insurance. The properties of the Loan Parties and their Americas/Foreign
Subsidiaries are insured with financially sound and reputable insurance
companies which are not Affiliates of the Loan Parties, in such amounts, with
such deductibles and covering such risks (including, without limitation,
workmen’s compensation, public liability, business interruption and property
damage insurance) as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where the Loan Parties or
the applicable Subsidiary operates. Each insurance policy is enforceable against
the relevant insurer in accordance with its terms and is not void or

 

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voidable. Schedule 5.10 sets forth a summary of all insurance maintained by or
on behalf of the Loan Parties as of the Effective Date. As of the Effective
Date, each insurance policy listed on Schedule 5.10 is in full force and effect
and all premiums in respect thereof that are due and payable have been paid.

5.11 Taxes. The Loan Parties and their Subsidiaries have filed all material
federal, state, provincial, local and other material tax returns and reports
required to be filed, and have paid all material federal, state, provincial,
territorial, municipal, local and other material taxes, assessments, fees and
other governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable, except those which are being
contested in good faith by appropriate proceedings for which adequate reserves
have been provided in accordance with GAAP, as to which taxes no Lien has been
filed and which contest effectively suspends the collection of the contested
obligation and the enforcement of any Lien securing such obligation and except
to the extent failure to do so is permitted by the Bankruptcy Code or pursuant
to the Orders. There is no proposed tax assessment against any Loan Party or any
Subsidiary that would, if made, have a Material Adverse Effect. No Loan Party or
any Subsidiary thereof is a party to any tax sharing agreement, other than any
tax sharing agreement between or among such Loan Party (or any Subsidiary
thereof) and any Affiliate of such Loan Party (or any Subsidiary thereof).

5.12 Plans.

(a) Except as would not be reasonably expected to have a Material Adverse
Effect, with respect to the Domestic Loan Parties: each Plan is in compliance
with the applicable provisions of ERISA, the Code and other Federal or state
laws. Each Pension Plan that is intended to be a qualified plan under
Section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service to the effect that the form of such Plan is
qualified under Section 401(a) of the Code and the trust related thereto has
been determined by the Internal Revenue Service to be exempt from federal income
tax under Section 501(a) of the Code, or an application for such a letter is
currently being processed by the Internal Revenue Service and, to the best
knowledge of the Lead Borrower, nothing has occurred that would prevent or cause
the loss of such tax-qualified status.

(b) With respect to the Domestic Loan Parties: there are no pending or, to the
best knowledge of the Lead Borrower, threatened claims, actions or lawsuits, or
action by any Governmental Authority, with respect to any Plan that could
reasonably be expected to have a Material Adverse Effect. There has been no
prohibited transaction or violation of the fiduciary responsibility rules with
respect to any Plan that has resulted or could reasonably be expected to result
in a Material Adverse Effect.

(c) (i) No ERISA Event has occurred, and neither the Lead Borrower nor any ERISA
Affiliate is aware of any fact, event or circumstance that could reasonably be
expected to constitute or result in an ERISA Event with respect to any Pension
Plan; (ii) each Domestic Loan Party and each ERISA Affiliate has met all
applicable requirements under the Pension Funding Rules in respect of each
Pension Plan, and no waiver of the minimum funding standards under the Pension
Funding Rules has been applied for or obtained; (iii) as of the most recent
valuation date for any Pension Plan, the funding target attainment percentage
(as defined in Section 430(d)(2) of the Code) is 80% or higher and neither a

 

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Domestic Loan Party nor any ERISA Affiliate knows of any facts or circumstances
that could reasonably be expected to cause the funding target attainment
percentage for any such plan to drop below 80% as of the most recent valuation
date; (iv) neither a Domestic Loan Party nor any ERISA Affiliate has incurred
any liability to the PBGC other than for the payment of premiums, and there are
no premium payments which have become due that are unpaid; (v) neither the Lead
Borrower nor any ERISA Affiliate has engaged in a transaction that could be
subject to Section 4069 or Section 4212(c) of ERISA; and (vi) no Pension Plan
has been terminated by the plan administrator thereof nor by the PBGC, and no
event or circumstance has occurred or exists that could reasonably be expected
to cause the PBGC to institute proceedings under Title IV of ERISA to terminate
any Pension Plan.

(d) As of the Effective Date, no Canadian Pension Plan in respect of employees
of any Canadian Loan Party or any of their Related Parties is a pension plan or
subject to any pension benefits legislation. As of the Effective Date, no
Canadian Loan Party has any Canadian Pension Plan.

(e) With respect to any scheme or arrangement mandated by a government other
than the United States and with respect to each employee benefit plan maintained
or contributed to by any Loan Party or any Subsidiary of any Loan Party that is
not subject to United States laws (such schemes, arrangements and employee
benefit plans, collectively, “Foreign Plans”), none of the following events or
conditions exists and is continuing that, either individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect:
(a) substantial non-compliance with its terms and with the requirements of any
and all applicable laws, statutes, rules, regulations and orders; (b) failure to
be maintained, where required, in good standing with applicable regulatory
authorities; (c) any obligation of any Loan Party or its Subsidiaries in
connection with the termination or partial termination of, or withdrawal from,
any such Foreign Plan; (d) any Lien on the property of any Loan Party or its
Subsidiaries in favor of a Governmental Authority as a result of any action or
inaction regarding such a Foreign Plan; (e) for each such foreign plan which is
a funded or insured plan, failure to be funded or insured on an ongoing basis to
the extent required by applicable non-U.S. law (using actuarial methods and
assumptions which are consistent with the valuations last filed with the
applicable Governmental Authorities); (f) any facts that, to the best knowledge
of the Parent or any of its Subsidiaries, exist that would reasonably be
expected to give rise to a dispute and any pending or threatened disputes that,
to the best knowledge of the Parent or any of its Subsidiaries, would reasonably
be expected to result in a material liability to the Parent or any of its
Subsidiaries concerning the assets of any such foreign plan (other than
individual claims for the payment of benefits); and (g) failure to make all
contributions in a timely manner to the extent required by applicable non-U.S.
law.

5.13 Subsidiaries; Equity Interests. As of the Effective Date, the Loan Parties
have no direct Subsidiaries other than those specifically disclosed in Part
(a) of Schedule 5.13, which Schedule sets forth, in each case as of the
Effective Date, the legal name, jurisdiction of incorporation or formation and
authorized Equity Interests of each such Subsidiary. All of the outstanding
Equity Interests owned by a Loan Party in such Subsidiaries have been validly
issued, are fully paid and non-assessable and are owned by a Loan Party in the
amounts specified on Part (a) of Schedule 5.13 free and clear of all Liens
except for Permitted Encumbrances. As of the Effective Date, the Loan Parties
have no equity

 

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investments in any other corporation or entity other than (i) Investments
described in clause (g) and (h) of the definition of “Permitted Investments” and
(ii) those specifically disclosed in Part (b) of Schedule 5.13. All of the
outstanding Equity Interests in the Loan Parties (other than the Parent) have
been validly issued, and are fully paid and non-assessable and, as of the
Effective Date, are owned in the amounts specified on Part (c) of Schedule 5.13
free and clear of all Liens except for Permitted Encumbrances.

5.14 Margin Regulations; Investment Company Act.

(a) None of the proceeds of the Credit Extensions shall be used directly or
indirectly for any purpose that would entail a violation of Regulations T, U, or
X issued by the FRB.

(b) None of the Loan Parties is, or is required to be registered as an
“investment company” under the Investment Company Act of 1940.

5.15 Disclosure. No financial statement, certificate or other factual written
information (excluding projections, forward-looking information and information
of a general economic or general industry nature, but including the Budget)
furnished by or on behalf of any Loan Party to the Administrative Agent or any
Lender in connection with the transactions contemplated hereby and the
negotiation of this Agreement or delivered hereunder or under any other Loan
Document (in each case, as modified or supplemented by other information so
furnished, and taken as a whole) contains any material misstatement of fact or
omits to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not materially
misleading; provided that, with respect to projected financial information
(including the Budget), the Loan Parties represent only that such information
was prepared in good faith based upon assumptions believed by them to be
reasonable at the time (it being understood that such projected financial
information is subject to significant uncertainties and contingencies, many of
which are beyond the control of the Loan Parties, that no assurance is given
that any particular projections will be realized, that actual results may differ
and that such differences may be material).

5.16 Compliance with Laws. Subject (in the case of each Domestic Loan Party
only) to the entry of the Interim Order or the Final Order, as applicable, each
of the Loan Parties and each Subsidiary is in compliance in all material
respects with the requirements of all Laws and all orders, writs, injunctions
and decrees applicable to it or to its properties, except in such instances in
which (a) such requirement of Law or order, writ, injunction or decree is being
contested in good faith by appropriate proceedings diligently conducted or
(b) the failure to comply therewith, either individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.

5.17 Intellectual Property; Licenses, Etc. Except, in each case, as would not
reasonably be expected to have a Material Adverse Effect, the Loan Parties and
their Americas/Foreign Subsidiaries own, or possess the right to use, all of the
Intellectual Property that is reasonably necessary for the operation of their
respective businesses as currently conducted, without violation of the rights of
any other Person. To the knowledge of the Lead Borrower, no slogan or other
advertising device, product,

 

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process, method, substance, part or other material now employed, by any Loan
Party infringes upon any rights held by any other Person, except, in each case,
as would not reasonably be expected to have a Material Adverse Effect. No claim
or litigation against any Loan Party alleging any such infringement is pending
or, to the knowledge of the Lead Borrower, threatened in writing, which, either
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.

5.18 Labor Matters.

There are no strikes, lockouts, slowdowns or other labor disputes against any
Loan Party or any Americas/Foreign Subsidiary thereof pending or, to the
knowledge of any Loan Party, threatened that, in any case, could reasonably be
expected to have a Material Adverse Effect. The hours worked by, and payments
made to employees of, the Loan Parties comply with the Fair Labor Standards Act
and any other applicable federal, state, provincial, territorial, municipal,
local or foreign Law dealing with such matters except to the extent that any
such violation could not reasonably be expected to have a Material Adverse
Effect. No Loan Party or any of its Americas/Foreign Subsidiaries has incurred
any liability or obligation under the Worker Adjustment and Retraining Act or
similar federal, state, provincial, local or foreign Law dealing with such
matters that, in any case, could reasonably be expected to have a Material
Adverse Effect. All payments due from any Loan Party and its Americas/Foreign
Subsidiaries, or for which any claim may be made against any Loan Party, on
account of wages and employee health and welfare insurance and other benefits,
have been paid or properly accrued in accordance with GAAP as a liability on the
books of such Loan Party except to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect. Except as disclosed on
Schedule 5.18, as of the Effective Date, no Loan Party or any Americas/Foreign
Subsidiary is a party to or bound by any collective bargaining agreement. There
are no representation proceedings pending or, to any Loan Party’s knowledge,
threatened to be filed with the National Labor Relations Board or other
applicable Governmental Authority, and no labor organization or group of
employees of any Loan Party or any Americas/Foreign Subsidiary has made a
pending demand for recognition that, in any case, could reasonably be expected
to have a Material Adverse Effect. There are no complaints, unfair labor
practice charges, grievances, arbitrations, unfair employment practices charges
or any other claims or complaints against any Loan Party or any Americas/Foreign
Subsidiary pending or, to the knowledge of any Loan Party, threatened to be
filed with any Governmental Authority or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment of any employee of any Loan Party or any of its Americas/Foreign
Subsidiaries that, in any case, could reasonably be expected to have a Material
Adverse Effect. The consummation of the transactions contemplated by the Loan
Documents will not give rise to any right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which any Loan Party or any of its Americas/Foreign Subsidiaries is bound.

5.19 Security Documents.

(a) With respect to all Loan Parties other than the Domestic Loan Parties, the
Security Documents create in favor of the Administrative Agent (for the benefit
of itself and the other applicable Credit Parties) or the Australian Security
Trustee, as applicable, and, with respect to the Liens

 

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granted by the Japanese Loan Parties, each of the Japanese Secured Parties, as
applicable, a legal, valid, continuing and enforceable security interest in the
Collateral (with respect to (a) the security interests in bank accounts under
Japanese Security Documents, upon the consent of the applicable account bank,
(b) the security interests (joto tampo) in Accounts under the Japanese Security
Documents, whereupon there is a contractual restriction on the grant of such
security interest (joto tampo), upon the consent of the relevant Account debtor,
and (c) the security interests in insurance claims under the Japanese Security
Documents, whereupon there is a contractual restriction on the grant of such
security interest, upon the consent of the relevant insurers, and the Security
Documents constitute, or will upon the filing of financing statements or other
requisite registrations and recordations or obtaining consents (including, with
respect to IP Collateral, the filing and recordation of the Intellectual
Property Security Agreement (or other appropriate documents) with the United
States Patent and Trademark Office, United States Copyright Office, Canadian
Intellectual Property Office, the Patent Office of Japan, the Agency for
Cultural Affairs or the Software Information Center, and any substitute or
successor agency) and/or the obtaining of “control”, in each case with respect
to the relevant Collateral as required under the applicable UCC or similar
legislation of any jurisdiction, including, without limitation, the PPSA, the
Civil Code of Quebec and the Australian PPSA, the creation of a perfected Lien
on, and security interest in, all right, title and interest of the Loan Parties
thereunder in such Collateral that may be perfected in the United States,
Canada, Australia or Japan by filing, recording or registering a financing
statement or analogous document (and, in the case of IP Collateral and any other
Intellectual Property, the filing and recordation of the Intellectual Property
Security Agreement (or other appropriate documents) with the United States
Patent and Trademark Office and the United States Copyright Office, the Canadian
Intellectual Property Office or the Patent Office of Japan, the Agency for
Cultural Affairs or the Software Information Center) or, to the extent required
by the Loan Documents (it being understood that subsequent recordings in the
United States Patent and Trademark Office, United States Copyright Office,
Canadian Intellectual Property Office, the Patent Office of Japan, the Agency
for Cultural Affairs or the Software Information Center, or a substitute or
successor agency may be necessary to perfect a Lien on Intellectual Property
acquired, register or applied for after the date hereof). Notwithstanding
anything to the contrary herein, the Loan Parties shall have no obligation to
perfect Liens on any IP Collateral or other Intellectual Property in any
jurisdiction outside the United States, Canada, Australia, or Japan.

(b) With respect to the Domestic Loan Parties, the Security Documents, taken
together with the Interim Order and/or the Final Order, are effective to create
in favor of the Administrative Agent (for the benefit of itself and the other
applicable Credit Parties) a legal, valid, continuing and enforceable security
interest in the Collateral pledged hereunder or thereunder, in each case subject
to no Liens other than Priority Permitted Encumbrances and the Carve-Out and
subject to the DIP Intercreditor Agreement. Pursuant to the terms of the Interim
Order and/or Final Order, no filing or other action will be necessary to perfect
or protect such Liens and security interests. Pursuant to and to the extent
provided in the Interim Order and/or the Final Order, the Obligations of the
Loan Parties under this Agreement will constitute allowed super-priority
administrative expense claims in the Cases under Section 364(c) of the
Bankruptcy Code, having priority over all administrative expense claims and
unsecured claims against such Loan Parties now existing or hereafter arising, of
any kind whatsoever, including, without limitation, all administrative expense
claims of the kind specified in Sections 503(b)

 

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and 507(b) of the Bankruptcy Code and all super-priority administrative expense
claims granted to any other Person (including, for the avoidance of doubt,
subject to the entry of the Final Order, the proceeds of Avoidance Actions),
subject only to the Carve-Out. Notwithstanding anything to the contrary herein,
the Carve-Out shall be senior to all Liens and claims (including administrative
and superpriority claims) securing the Obligations, the Loan Parties’
pre-petition obligations, adequate protection Liens, and all other Liens or
claims (including administrative claims and DIP Superpriority Claims), including
all other forms of adequate protection, Liens, or claims (including
administrative claims and DIP Superpriority Claims) securing the Obligations and
pre-petition obligations granted or recognized as valid, including the Liens,
security interests, and claims (including administrative claims and DIP
Superpriority Claims) granted to the Administrative Agent and the other Credit
Parties

5.20 [Reserved].

5.21 Deposit Accounts; Credit Card Arrangements.

(a) Annexed hereto as Schedule 5.21(a) is a list of all DDAs maintained by the
Loan Parties as of the Effective Date, which Schedule includes, with respect to
each DDA and in each case as of the Effective Date: (i) the name of the
depository; (ii) the account number(s) maintained with such depository; and
(iii) the identification of each Blocked Account Bank.

(b) Annexed hereto as Schedule 5.21(b) is a list of all arrangements as of the
Effective Date to which any Loan Party is a party with respect to the processing
and/or payment to such Loan Party of the proceeds of any credit card charges and
debit card charges for sales made by such Loan Party.

 

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5.22 Brokers. Except as disclosed on Schedule 5.22 no broker or finder brought
about the obtaining, making or closing of the Loans or transactions contemplated
by the Loan Documents, and no Loan Party or Affiliate thereof has any obligation
to any Person in respect of any finder’s or brokerage fees in connection
therewith.

5.23 Customer and Trade Relations. There exists no actual or, to the knowledge
of any Loan Party, threatened, termination or cancellation of, or any material
adverse modification or change in the business relationship of any Loan Party
with any supplier material to its operations except to the extent that any of
the foregoing could not reasonably be expected to have a Material Adverse Effect
or is a result of the commencement of the Cases.

5.24 Material Contracts. Schedule 5.24 sets forth a list of all Material
Contracts to which any Loan Party is a party as of the Effective Date (other
than the Loan Documents and the DIP Term Loan Documents). The Loan Parties have
delivered true, correct and complete copies of such Material Contracts to the
Administrative Agent on or before the date hereof. The Loan Parties are not in
breach or in default in any material respect of or under any Material Contract
and have not received any notice of the intention of any other party thereto to
terminate any Material Contract (other than the Parent or any Subsidiary in
connection with any repayment of Material Indebtedness except, in each case,
where enforcement is stayed upon the commencement of the Cases.

5.25 Casualty. Neither the businesses nor the properties of any Loan Party or
any of its Americas/Foreign Subsidiaries are affected by any fire, explosion,
accident, drought, storm, hail, earthquake, embargo, act of God or of the public
enemy or other casualty (whether or not covered by insurance) that, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

5.26 Anti-Social Forces. No Loan Party or any of its directors, officers or
employees are an Anti-Social Force. “Anti-Social Force” means a Person or group
which threatens or is likely to threaten the order or safety of the civil
society, and prevents or is likely to prevent the sound development of the
economy or society, which specifically means the following Persons:

(a) any organized crime group (meaning a group a member of which (including a
member of a group constituting such group), in an organized or habitual way, is
likely to encourage the committing of violent illegal acts or similar acts; the
same applies hereinafter;

(b) any organized crime group member (meaning a member of an organized crime
group; the same applies hereinafter) or any Person with respect to whom a period
of 5 years has not expired after such Person ceases to be an organized crime
group member;

(c) any organized crime group associated member (a Person other than an
organized crime group member who has a relationship with the organized crime
group and is likely to perform violent unlawful acts backed by the influence of
the organized crime group, or cooperates in, or is involved in, maintaining or
operating the organized crime group by supplying

 

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funds, weapons, or other items to the organized crime group or an organized
crime group member);

(d) any corporation related to the organized crime group (meaning a corporation
the management of which an organized crime group member is substantially
involved in, a corporation which is operated by any organized crime group
associated member or former organized crime group member and actively cooperates
in, or is involved in, maintaining or operating the organized crime group by
supplying funds or otherwise taking actions, or a corporation which actively
uses the organized crime group and cooperates in maintaining or operating the
organized crime group upon the performance of its business);

(e) any corporate racketeer (sokaiya) or other Person (meaning a Person who is
likely to perform a violent unlawful act in the pursuit of unjust profits
against a corporation or other entity and threatens the safety of civil life,
such as a corporate racketeer (sokaiya) or a corporate swindler (kaisha goro);

(f) any corporate swindler acting in the name of a social movement (shakai
undo-to hyobo goro) (meaning a Person who is likely to perform violent unlawful
acts in the pursuit of unjust profits by pretending to represent or acting in
the name of a social movement or political activity and threatens the safety of
civil life);

(g) any special intelligence violent group or other group (meaning a group or
individual, other than those listed in (a) through (f) above, that plays a key
part in structural injustice by using its powers or having a financial
connection with a organized crime group backed by a relationship with a
organized crime group);

(h) other Persons similar to those listed in (a) through (g) above;

(i) any Person who has a relationship in which a Person who is a Person or group
listed in (i) through (h) (the “Organized Crime Group Member Etc.”) is deemed to
control its management;

(j) any Person who has a relationship in which an Organized Crime Group Member
Etc. is deemed to be substantially involved its management;

(k) any Person who has a relationship in which the Person is deemed to be
unlawfully using an Organized Crime Group Member Etc. for purposes of pursuing
unjust profits for itself, its own company or a third party or causing damage to
a third party, or for other similar purposes;

(l) any Person who has a relationship in which he/she is deemed to be involved
in an Organized Crime Group Member Etc. such as by supplying funds or other
supplies or affording facilities; or

 

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(m) any Person whose officer or employee involved in management has a
relationship with an Organized Crime Group Member Etc. that should be subject to
social disapproval.

5.27 Tax Consolidation. Each Australian Loan Party is a member of a Tax
Consolidated Group for which the Head Company (as defined in the Income Tax
Assessment Act 1997 (Cth) of Australia) is Quiksilver Australia Pty Limited.

5.28 Budget. A true and complete copy of the Budget is attached as Exhibit N
hereto.

5.29 Commercial benefit. The entry into this document is for each Loan Party’s
commercial benefit.

5.30 No Immunity. Each Loan Party has no right of immunity from set-off, legal
action, suit or proceeding, attachment or execution or the jurisdiction of any
court with respect to the Collateral or its obligations under the Loan
Documents.

5.31 Orders. The Loan Parties are in compliance with the terms and conditions of
the Orders. Each of the Interim Order (to the extent necessary during the
Interim Order Period) or the Final Order (from after the date the Final Order is
entered) is in full force and effect and has not been vacated, reversed or
rescinded or, without the prior written consent of the Administrative Agent and
each Lender, no change, amendment or modification or any application or motion
for any change, amendment or modification to any of the Orders shall be made, in
each case, that is adverse to the interests of the Lenders.

ARTICLE VI

AFFIRMATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied (other than contingent
indemnification Obligations for which a claim has not then been asserted), or
any Letter of Credit shall remain outstanding, the Loan Parties shall, and shall
(except in the case of the covenants set forth in Sections 6.01, 6.02, and
6.03), cause each applicable Subsidiary to:

6.01 Financial Statements. Deliver to the Administrative Agent (for distribution
to each Lender):

(a) within ninety (90) days after the end of each Fiscal Year of the Parent,
(i) a Consolidated balance sheet of the Parent and its Subsidiaries as at the
end of such Fiscal Year, and the related Consolidated statements of income or
operations, Shareholders’ Equity and cash flows for such Fiscal Year, setting
forth in each case in comparative form the figures for the previous Fiscal Year,
all prepared in accordance with GAAP, such Consolidated statements to be audited
and accompanied by a report and opinion of a Registered Public Accounting Firm
of nationally recognized standing or otherwise reasonably acceptable to the
Administrative Agent,

 

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which report and opinion shall be prepared in accordance with generally accepted
auditing standards and shall state that such Consolidated financial statements
present fairly in all material respects the financial position for the periods
indicated in conformity with GAAP applied on a basis consistent with prior
years, and (ii) an Americas/Foreign Consolidated balance sheet of the Parent and
its Americas/Foreign Subsidiaries as at the end of such Fiscal Year, and the
related Americas/Foreign Consolidated statements of income or operations of the
Parent and its Americas/Foreign Subsidiaries and Americas/Foreign Consolidated
cash flows for such Fiscal Year, setting forth in each case (in the case of
clause (ii), to the extent practicable) in comparative form the figures for the
previous Fiscal Year;

(b) within forty-five (45) days after the end of each of the first three Fiscal
Quarters of each Fiscal Year of the Parent, (i) a Consolidated balance sheet of
the Parent and its Subsidiaries as at the end of such Fiscal Quarter, and the
related Consolidated statements of income or operations, Shareholders’ Equity
and cash flows for such Fiscal Quarter and for the portion of the Parent’s
Fiscal Year then ended, and (ii) an Americas/Foreign Consolidated balance sheet
of the Parent and its Americas/Foreign Subsidiaries as at the end of such Fiscal
Quarter, and the related Americas/Foreign Consolidated statements of income or
operations and Shareholders’ Equity of the Parent and its Americas/Foreign
Subsidiaries and Americas/Foreign Consolidated cash flows for such Fiscal
Quarter, setting forth in each case (to the extent practicable) in comparative
form the figures for (A) such period set forth in the projections delivered
pursuant to Section 6.01(f) hereof, (B) the corresponding Fiscal Quarter of the
previous Fiscal Year and (C) the corresponding portion of the previous Fiscal
Year, all in reasonable detail, such Americas/Foreign Consolidated statements to
be certified by a Responsible Officer of the Lead Borrower or the Parent as
fairly presenting in all material respects the financial condition, results of
operations, Shareholders’ Equity and cash flows of the Parent and its
Americas/Foreign Subsidiaries as of the end of such Fiscal Quarter in accordance
with GAAP, subject only to normal year-end audit adjustments and the absence of
footnotes;

(c) within forty-five (45) days after the end of each of the first three Fiscal
Quarters of each Fiscal Year of the Parent, (i) a balance sheet of each Foreign
Borrower and its Subsidiaries as at the end of such Fiscal Quarter, and the
related Consolidated statements of income or operations, Shareholders’ Equity
and cash flows for such Fiscal Quarter and for the portion of the Parent’s
Fiscal Year then ended, setting forth in each case (to the extent practicable)
in comparative form the figures for (A) such period set forth in the projections
delivered pursuant to Section 6.01(f) hereof, (B) the corresponding Fiscal
Quarter of the previous Fiscal Year and (C) the corresponding portion of the
previous Fiscal Year, all in reasonable detail, to be certified by a Responsible
Officer of the Lead Borrower or the Parent as fairly presenting in all material
respects the financial condition, results of operations, Shareholders’ Equity
and cash flows of each Foreign Borrower and its Subsidiaries as of the end of
such Fiscal Quarter in accordance with GAAP, subject only to normal year-end
audit adjustments and the absence of footnotes;

 

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(d) within thirty (30) days after the end of each of the Fiscal Months of each
Fiscal Year of the Parent, an Americas/Foreign Consolidated balance sheet of the
Parent and its Americas/Foreign Subsidiaries as at the end of such Fiscal Month,
and the related Americas/Foreign Consolidated statements of income or
operations, Shareholders’ Equity and Americas/Foreign Consolidated cash flows
for such Fiscal Month, and (to the extent practicable) for the portion of the
Parent’s Fiscal Year then ended, setting forth in each case (to the extent
practicable) in comparative form the figures for (A) such period set forth in
the projections delivered pursuant to Section 6.01(f) hereof, (B) the
corresponding Fiscal Month of the previous Fiscal Year and (C) the corresponding
portion of the previous Fiscal Year, all in reasonable detail and prepared in
accordance with GAAP, to the extent applicable, subject to normal year end audit
adjustments and in the absence of footnotes, and in any event, in a manner
consistent with the Parent’s accounting practices, such Americas/Foreign
Consolidated statements to be certified by a Responsible Officer of the Lead
Borrower or the Parent as fairly presenting in all material respects the
financial condition, results of operations, Shareholders’ Equity and cash flows
of the Parent and its Americas/Foreign Subsidiaries as of the end of such Fiscal
Month;

(e) within thirty (30) days after the end of each of the Fiscal Months of each
Fiscal Year of the Parent, (i) a balance sheet of each Foreign Borrower and its
Subsidiaries as at the end of such Fiscal Month, and the related Consolidated
statements of income or operations, Shareholders’ Equity and cash flows for such
Fiscal Month and for the portion of the Parent’s Fiscal Year then ended, setting
forth in each case (to the extent practicable) in comparative form the figures
for (A) such period set forth in the projections delivered pursuant to
Section 6.01(f) hereof, (B) the corresponding Fiscal Month of the previous
Fiscal Year and (C) the corresponding portion of the previous Fiscal Year, all
in reasonable detail, to be certified by a Responsible Officer of the Lead
Borrower or the Parent as fairly presenting in all material respects the
financial condition, results of operations, Shareholders’ Equity and cash flows
of each Foreign Borrower and its Subsidiaries as of the end of such Fiscal Month
in accordance with GAAP, subject only to normal year-end audit adjustments and
the absence of footnotes; and

(f) within thirty (30) days after the Petition Date, a proposed revised Budget
inclusive of periods through the Maturity Date, which shall be subject to the
sole discretion approval of Required Lenders, it being further agreed that, if
such proposal (or any further revision thereof) does not receive such approval,
the Lead Borrower shall use its commercially reasonable efforts to revise and
resubmit such proposal in response to comments received thereon from the
Administrative Agent or Required Lenders.

6.02 Certificates; Other Information. Deliver to the Administrative Agent (for
distribution to each Lender):

(a) [reserved];

(b) concurrently with the delivery of the financial statements referred to in
Sections 6.01(a), (b), (c), (d) and (e), a copy of management’s discussion and
analysis with respect to

 

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such financial statements. In the event of any change in GAAP used in the
preparation of such financial statements, the Lead Borrower or the Parent shall
also provide a statement of reconciliation conforming such financial statements
to GAAP;

(c) on Wednesday of each week (or, if any Wednesday is not a Business Day, on
the next succeeding Business Day), Borrowing Base Certificates showing each
Borrowing Base, as of the close of business on the immediately preceding
Saturday; provided that supporting documentation for each Borrowing Base
Certificate may be delivered no later than five (5) days after delivery of each
such Borrowing Base Certificate;

(d) promptly upon receipt, copies of the final versions of any detailed audit
reports, management letters or recommendations submitted to the board of
directors (or the audit committee of the board of directors) of any Loan Party
by its Registered Public Accounting Firm in connection with the accounts or
books of the Loan Parties or any Subsidiary, or any audit of any of them,
including, without limitation, specifying any Internal Control Event;

(e) promptly after the same are available, copies of each annual report, proxy
or financial statement or other report which any Loan Party files with the SEC
and copies of all annual, regular, periodic and special reports and registration
statements which any Loan Party files with the SEC under Sections 13 or 15(d) of
the Securities Exchange Act of 1934 or with any national or foreign securities
exchange or applicable Governmental Authority, and in any case not otherwise
required to be delivered to the Administrative Agent pursuant hereto;

(f) the financial and collateral reports described on Schedule 6.02 hereto, no
later than the times set forth in such Schedule, provided that certain of the
reports listed on Schedule 6.02 may not be required if such delivery is not
required by the Administrative Agent;

(g) promptly after the furnishing thereof, copies of any statement or report
furnished to any holder of debt securities of any Loan Party pursuant to the
terms of any document, agreement or indenture relating to Material Indebtedness
and not otherwise required to be furnished to the Lenders pursuant to
Section 6.01 or any other clause of this Section 6.02; provided that such
statements or reports need to delivered to the Credit Parties only to the extent
that they relate to the failure of any Loan Party to comply with the terms of
any document, agreement or indenture relating to such Material Indebtedness or
which relate to matters which would cause a Default or have an adverse effect on
the Credit Parties;

(h) within sixty (60) days after the end of each Fiscal Year of the Loan
Parties, a report summarizing the insurance coverage (specifying type, amount
and carrier), including all renewal certificates and, with respect to the
Australian Loan Parties, certificates of currency in effect for each Loan Party
and its Americas/Foreign Subsidiaries and containing such additional information
as the Administrative Agent, the Collateral Agent, or any Lender through the
Administrative Agent, may reasonably specify;

 

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(i) every Wednesday during the Cases, (i) commencing on the Wednesday following
the first full calendar week after the Effective Date, a weekly cash flow
forecast for the subsequent 13-week period, and (ii) commencing on the second
Wednesday following the first full calendar week after the Effective Date, a
variance report (the “Variance Report”) setting forth actual cash receipts and
disbursements of the Loan Parties for the preceding one calendar week period and
setting forth all the variances (including Variances), on a line-item and
aggregate basis, from the amount set forth for such calendar week as compared to
(1) the Budget on a weekly and cumulative basis, and (2) the most recent weekly
cash flow forecast delivered by the Loan Parties, in each case, on a weekly and
cumulative basis (and each such Variance Report shall include reasonably
detailed explanations for all material variances (including Permitted Variances)
and shall be certified by the chief financial officer of the Lead Borrower;

(j) substantially concurrently with the delivery of the weekly cash flow
forecast pursuant to Section 6.02(i), a “flash” cash report detailing all cash
and Cash Equivalents on-hand of each of the Borrower and its Subsidiaries
(broken out by entity) as of the close of business on such date;

(k) promptly, and in any event within five (5) Business Days after receipt
thereof by any Loan Party or any Subsidiary thereof, copies of each notice or
other correspondence received from any Governmental Authority (including,
without limitation, the SEC (or comparable agency in any applicable non-U.S.
jurisdiction)) concerning any proceeding with, or investigation or possible
investigation or other inquiry by such Governmental Authority regarding
financial or other operational results of any Loan Party or any Subsidiary
thereof or any other matter which could reasonably be expected to have a
Material Adverse Effect;

(l) promptly, written notice of any actions, suits, proceedings, claims or
disputes (other than the Cases) pending or, to the knowledge of the Loan Parties
threatened in writing, at law, in equity, in arbitration or before any
Governmental Authority, against any Loan Party or any of its Subsidiaries or
against any of its properties or revenues that (a) purport to affect or pertain
to this Agreement or any other Loan Document, or any of the transactions
contemplated hereby to occur on the Effective Date, or (b) either individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect;

(m) contemporaneously with the delivery of each Borrowing Base Certificate in
any calendar week, a summary of the then Reported Fee Accruals as of the end of
the previous calendar week; and

(n) promptly, such additional information regarding the business affairs,
financial condition or operations of any Loan Party or any Americas/Foreign
Subsidiary, or compliance with the terms of the Loan Documents, as the
Administrative Agent, the Collateral Agent, or any Lender (through the
Administrative Agent) may from time to time reasonably request.

 

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The Loan Parties hereby acknowledge that (a) the Administrative Agent and/or
MLPFS may, at its sole discretion, make available to the Lenders and the L/C
Issuer materials and/or information provided by or on behalf of the Loan Parties
hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials
on Debt Domain, IntraLinks, Syndtrak or another similar electronic system (the
“Platform”) and (b) certain of the Lenders may be “public-side” Lenders (i.e.,
Lenders that do not wish to receive material non-public information with respect
to the Loan Parties or their securities) (each, a “Public Lender”). The Loan
Parties hereby agree that so long as any Loan Party is the issuer of any
outstanding debt or equity securities that are registered or issued pursuant to
a private offering they will use commercially reasonable efforts to identify
that portion of the Borrower Materials that may be distributed to the Public
Lenders and that (w) the Lead Borrower shall use commercially reasonable efforts
to provide that such Borrower Materials shall be clearly and conspicuously
marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall
appear prominently on the first page thereof; (x) by marking Borrower Materials
“PUBLIC,” the Loan Parties shall be deemed to have authorized the Administrative
Agent, MLPFS, the L/C Issuer and the Lenders to treat such Borrower Materials as
not containing any material non-public information (although it may be sensitive
and proprietary) with respect to the Loan Parties or their securities for
purposes of all applicable securities Laws; (y) all Borrower Materials marked
“PUBLIC” are permitted to be made available through a portion of the Platform
designated “Public Investor”; and (z) the Administrative Agent and MLPFS shall
be entitled to treat any Borrower Materials that are not marked “PUBLIC” as
being suitable only for posting on a portion of the Platform not designated
“Public Investor.”

6.03 Notices. Promptly, and in any event within five (5) Business Days (except
with respect to clauses (a), (b), (h) or (m) below, one (1) Business Day) after
any Responsible Officer of any Loan Party obtains knowledge thereof, notify the
Administrative Agent of:

(a) the occurrence of any Default or Event of Default;

(b) any matter that has resulted or could reasonably be expected to result in a
Material Adverse Effect;

(c) the occurrence of any ERISA Event or any similar events under any other
applicable Law;

(d) any material change in accounting policies or financial reporting practices
by any Loan Party;

(e) any change in the Parent’s senior executive officers;

(f) the discharge by any Loan Party of its present Registered Public Accounting
Firm or any withdrawal or resignation by such Registered Public Accounting Firm;

(g) any collective bargaining agreement to which a Loan Party becomes a party;

 

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(h) after the Petition Date, the filing of any Lien for unpaid Taxes against any
Loan Party in excess of $1,000,000;

(i) any casualty or other insured damage to any material portion of the
Collateral or the commencement of any action or proceeding for the taking of any
interest in a material portion of the Collateral under power of eminent domain
or by condemnation or similar proceeding or if any material portion of the
Collateral is damaged or destroyed;

(j) any failure by any Loan Party to pay rent at (i) five (5%) or more of such
Loan Party’s locations, (ii) any location which is a distribution center or
warehouse, or (iii) any of such Loan Party’s locations if such failure continues
for more than ten (10) days following the day on which such rent first came due
and, in any such case, such failure would be reasonably likely to result in a
Material Adverse Effect;

(k) any Permitted Disposition (other than sales of Inventory in the ordinary
course of business), casualty or condemnation, in each case involving assets of
a Loan Party included in the applicable Borrowing Base with a Cost of more than
$1,000,000 in any single transaction or series of related transactions;

(l) in the case of any Australian Loan Party or Japanese Loan Party, any
retention of title, hire purchase, constructive transfer, conditional sale or
other similar arrangements with respect to any trade supply contract; and

(m) (i) of any negative pledge included in any lease contract, or (ii) any
restriction on assignment with respect to an Account or Inventory, in each case,
to the extent such negative pledge or restriction on assignment prevents the
Agents from obtaining a Lien on any Inventory or Account of any Loan Party.

(n) promptly (but, in any event, within two days) after (i) entering into or
receiving thereof, a copy of (A) any notice of any kind pertaining to or
relating to, (B) any document, agreement or instrument entered into or received
in connection with, and (C) any amendment, waiver, consent, extension,
supplement, restatement or other modification of, any Boardriders Notes or
(ii) any holder of any Boardriders Notes (or any agent or representative thereof
including the Boardriders Notes Trustee) exercises (or threatens to exercise)
any rights or remedies under the Boardriders Notes or the Boardriders Notes
Indenture;

(o) any notices delivered by or received from to the DIP Term Agent or the DIP
Term Lender pursuant to the DIP Term Facility, and provide the Administrative
Agent with copies thereof.

Each notice pursuant to this Section 6.03 shall be accompanied by a statement of
a Responsible Officer of the Lead Borrower or the Parent setting forth details
of the occurrence referred to therein and stating what action the Lead Borrower
has taken and proposes to take with respect thereto. Each notice

 

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pursuant to Section 6.03(a) shall describe with reasonable particularity the
provisions of this Agreement and any other Loan Document that have been
breached.

6.04 Payment of Obligations. Pay and discharge as the same shall become due and
payable, all its obligations and liabilities, including (a) all tax liabilities,
assessments and governmental charges or levies upon it or its properties or
assets, (b) all lawful claims (including, without limitation, claims of
landlords, warehousemen, customs brokers, freight forwarders, consolidators and
carriers) which, if unpaid, would by law become a Lien upon its property; and
(c) all Indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness and the other provisions of Section 7.07, to the extent
applicable, except, in each case, where (a) (i) the validity or amount thereof
is being contested in good faith by appropriate proceedings, (ii) such Loan
Party has set aside on its books adequate reserves with respect thereto in
accordance with GAAP, (iii) such contest effectively suspends collection of the
contested obligation and enforcement of any Lien securing such obligation, and
(iv) no Lien has been filed with respect thereto or (b) the failure to pay or
discharge the same could not reasonably be expected to result in a Material
Adverse Effect; provided that, with respect to the Domestic Loan Parties, their
obligations hereunder are subject to the provisions of the Bankruptcy Code and
any required approvals by an applicable order of the Bankruptcy Court; and
further provided that the Domestic Loan Parties shall be obligated only to pay
all of the foregoing to the extent constituting post-petition obligations that
constitute administrative expenses under Section 503(b) of the Bankruptcy Code
in the Cases and to perform all material obligations arising from Contractual
Obligations entered into after the Petition Date or from Contractual Obligations
entered into prior to the Petition Date and assumed. Nothing contained herein
shall be deemed to limit the rights of the Agents with respect to establishing
or modifying Reserves in manner permitted by this Agreement.

6.05 Preservation of Existence, Etc.

(a) Preserve, renew and maintain in full force and effect its legal existence
and good standing under the Laws of the jurisdiction of its organization or
formation except (i) in a transaction permitted by Section 7.04 or 7.05 or
(ii) in the case of any Subsidiary that is not a Loan Party, to the extent that
failure to do so would not reasonably be expected to have a Material Adverse
Effect.

(b) Take all reasonable action to maintain all material rights, privileges,
permits, licenses and franchises necessary or desirable in the normal conduct of
its business, except (i) to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect or (ii) pursuant to a
transaction permitted by Section 7.04 or 7.05.

(c) Preserve or renew all of its Intellectual Property, except (i) to the extent
such Intellectual Property is no longer used or useful in the conduct of the
business of such Loan Party, (ii) pursuant to a transaction permitted by
Section 7.04 or 7.05 or (iii) to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect.

 

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6.06 Maintenance of Properties. Maintain, preserve and protect all of its
material properties and Equipment necessary in the operation of its business in
good working order and condition, ordinary wear and tear and casualty or
condemnation events excepted, and make all necessary repairs thereto and
renewals and replacements thereof, except in each case where the failure to do
so could not reasonably be expected to have a Material Adverse Effect.

6.07 [Reserved].

6.08 Maintenance of Insurance.

(a) Maintain with financially sound and reputable insurance companies reasonably
acceptable to the Agents (which insurance companies are not Affiliates of the
Loan Parties), insurance with respect to its properties and business against
loss or damage of the kinds customarily insured against by Persons engaged in
the same or similar business and operating in the same or similar locations or
as is required by applicable Law, of such types and in such amounts as are
customarily carried under similar circumstances by such other Persons and as are
reasonably acceptable to the Agents.

(b) Fire and extended coverage policies maintained with respect to any
Collateral shall name the Administrative Agent and/or, as applicable, the
Australian Security Trustee as a lender’s loss payee and shall be endorsed or
otherwise amended to include (i) a lenders’ loss payable clause (regarding
personal property), in form and substance satisfactory to the Agents, which
endorsements or amendments shall provide that the insurer shall pay all proceeds
otherwise payable to the Loan Parties under the policies jointly to Loan Parties
and the Administrative Agent and/or, to the extent applicable, the Australian
Security Trustee, provided that after the occurrence of an Event of Default,
such proceeds shall be payable only to the Administrative Agent and/or, to the
extent applicable, the Australian Security Trustee, (ii) a provision to the
effect that none of the Loan Parties, Credit Parties or any other Person shall
be a co-insurer and (iii) such other provisions as the Agents may reasonably
require from time to time to protect the interests of the Credit Parties.
Commercial general liability policies with respect to the Loan Parties shall be
endorsed to name the Administrative Agent or, as applicable, the Australian
Security Trustee as an additional insured. Business interruption policies with
respect to the Loan Parties shall name the Administrative Agent and/or, as
applicable, the Australian Security Trustee as a lender’s loss payee and shall
be endorsed or amended to include (i) a provision that, from and after the
Effective Date, the insurer shall pay all proceeds otherwise payable to the Loan
Parties under the policies jointly to the Loan Parties and the Administrative
Agent and, if applicable, the Australian Security Trustee (subject to the rights
of (x) the Existing Senior Secured Note Agent as described in the Intercreditor
Agreement and (y) the DIP Term Agent as described in the DIP Intercreditor
Agreement), provided that after the occurrence of an Event of Default, such
proceeds shall be payable only to the Administrative Agent and/or, to the extent
applicable, the Australian Security Trustee, (ii) a provision to the effect that
none of the Loan Parties, the Agents or any other party shall be a co-insurer
and (iii) such other provisions as the Agents may reasonably require from time
to time to protect the interests of the Credit Parties. Notwithstanding the
foregoing, the Japanese Loan Parties shall deliver insurance security agreements
by and between the applicable Japanese Loan Parties and the Japanese Secured
Parties and

 

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shall use commercially reasonable efforts to comply with the covenants set forth
above with respect to fire and extended coverage and business interruption
policies. Each such policy referred to in this Section 6.08(a) shall also
provide that it shall not be canceled, modified or not renewed (i) by reason of
nonpayment of premium except upon not less than ten (10) days’ prior written
notice thereof by the insurer to the Administrative Agent and, to the extent
applicable, the Australian Security Trustee (giving such Person the right to
cure defaults in the payment of premiums) or (ii) for any other reason except
upon not less than thirty (30) days’ prior written notice thereof by the insurer
to the Administrative Agent and, to the extent applicable, the Australian
Security Trustee. The Lead Borrower shall deliver to the Agents, on or prior to
(or with respect to the Japanese Loan Parties, as soon as practically possible
after) the date of the cancellation or expiration of any such policy of
insurance, or modification materially reducing the scope or amount of coverage
of such policies of insurance, a copy of any applicable renewal or replacement
insurance certificate. Further, the Japanese Loan Parties shall take such
actions as may be required under the Japanese Security Documents to continue the
perfection of the Administrative Agent’s Lien in any such renewal policy.

(c) None of the Credit Parties, or their agents or employees shall be liable for
any loss or damage insured by the insurance policies required to be maintained
under this Section 6.08. Each Loan Party shall look solely to its insurance
companies or any other parties other than the Credit Parties for the recovery of
such loss or damage and such insurance companies shall have no rights of
subrogation against any Credit Party or its agents or employees. If, however,
the insurance policies do not provide waiver of subrogation rights against such
parties, as required above, then the Loan Parties hereby agree, to the extent
permitted by law, to waive their right of recovery, if any, against the Credit
Parties and their agents and employees. The designation of any form, type or
amount of insurance coverage by the any Credit Party under this Section 6.08
shall in no event be deemed a representation, warranty or advice by such Credit
Party that such insurance is adequate for the purposes of the business of the
Loan Parties or the protection of their properties.

(d) Maintain for themselves and their Subsidiaries, a Directors and Officers
insurance policy with responsible companies in such amounts as are customarily
and covering such risks carried by business entities engaged in similar
businesses similarly situated, and will upon request by any Agent, furnish the
Administrative Agent certificates evidencing renewal of each such policy.

 

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6.09 Compliance with Laws. Comply, and cause each Subsidiary to comply, with the
requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its business or property, except in such instances in
which (a)(i) such requirement of Law or order, writ, injunction or decree is
being contested in good faith by appropriate proceedings diligently conducted
and with respect to which adequate reserves have been set aside and maintained
by the Loan Parties in accordance with GAAP; and (ii) such contest effectively
suspends enforcement of the contested Laws, or (b) the failure to comply
therewith could not reasonably be expected to have a Material Adverse Effect.
Nothing contained herein shall be deemed to limit the rights of the Agents with
respect to establishing or modifying Reserves in a manner permitted by this
Agreement.

6.10 Books and Records.

(i) Maintain proper books of record and account, in which entries full, true and
correct in all material respects and in conformity with GAAP consistently
applied shall be made of all financial transactions and matters involving the
assets and business of the Loan Parties or such Subsidiary, as the case may be;
and (ii) maintain such books of record and account in material conformity with
all applicable requirements of any Governmental Authority having regulatory
jurisdiction over the Loan Parties or such Subsidiary, as the case may be.

6.11 Inspection Rights.

(a) Permit representatives and independent contractors of the Collateral Agent
(acting in consultation with the Administrative Agent) to visit and inspect any
of its properties, to examine its corporate, financial and operating records,
and insurance policies, and make copies thereof or abstracts therefrom, and to
discuss its affairs, finances and accounts with its directors, officers, and (in
the presence of a Responsible Officer of the Parent or the Lead Borrower)
Registered Public Accounting Firm, all at the expense of the Loan Parties and at
such reasonable times during normal business hours and as often as may be
reasonably desired, upon reasonable advance notice to the Lead Borrower;
provided, however, that when an Event of Default exists the Collateral Agent
(acting in consultation with the Administrative Agent) (or any of their
representatives or independent contractors) may do any of the foregoing at the
expense of the Loan Parties at any time during normal business hours and without
advance notice.

(b) Upon the request of any Agent, after reasonable prior notice (which notice
need not be furnished if an Event of Default is then continuing), permit the
Administrative or professionals (including investment bankers, consultants,
accountants, lawyers and appraisers) retained by the Administrative Agent to
conduct appraisals, commercial finance examinations and other evaluations,
including, without limitation, of (i) any Borrower’s practices in the
computation of its Borrowing Base, and (ii) the assets included in the each
Borrowing Base, respectively, and related financial information such as, but not
limited to, sales, gross margins, payables, accruals and reserves; provided that
appraisals shall be limited to assets of the Borrowing Base Parties. Subject to
the following sentence, the Loan Parties shall pay the reasonable and documented
out-of-pocket fees and expenses of any Agent and such professionals with respect
to such evaluations and appraisals. Without limiting the

 

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foregoing, the Loan Parties acknowledge that the Agents may undertake one
(1) inventory appraisal and one (1) commercial finance examination in each
twelve (12) month period for each of the Borrowing Base Parties at the Loan
Parties’ expense, Notwithstanding the foregoing, any Agent may cause additional
appraisals and commercial finance examinations to be undertaken (i) as it in its
discretion deems necessary or appropriate, at its own expense or, (ii) if
required by applicable Law or if an Event of Default shall have occurred and be
continuing, at the expense of the Loan Parties. In all events, any professional
engaged to perform any evaluations, appraisals, commercial finance examinations
or other services pursuant to this clause (b) shall be retained by the
Administrative Agent and no other Person. For clarity, any commercial finance
examinations and inventory appraisals undertaken prior to the Effective Date
shall not be considered in determining the number of commercial finance
examinations and inventory appraisals which may be undertaken at the Loan
Parties’ expense under this Section 6.11(b).

(c) Notwithstanding anything to the contrary in this Section 6.11, none of the
Parent or any of its Subsidiaries will be required to disclose, permit the
inspection, examination or making of extracts, or discussion of, any documents,
information or other matter that (i) constitutes non-financial trade secrets or
non-financial proprietary information, (ii) in respect of which disclosure to
the Agents or any Lender (or any of their respective representatives) is then
prohibited by Law or any agreement binding on the Parent or any of its
Subsidiaries or (iii) is subject to attorney-client or similar privilege or
constitutes attorney work-product.

6.12 Use of Proceeds. Use the proceeds of the Credit Extensions only (i) to
finance: (i) the repayment of certain indebtedness under the Existing ABL Credit
Agreement (other than the Japanese Liabilities, and it being agreed that any
letters of credit issued for the account of the Domestic Borrowers under the
Existing ABL Credit Agreement shall be deemed issued hereunder), including,
without limitation, the Foreign Liabilities owed to General Electric Capital
Corporation and Wells Fargo Bank, National Association and their respective
affiliates, (ii) the payment of transaction expenses, (iii) the payment of fees,
expenses and costs incurred in connection with the Cases, (iv) the payment of
any adequate protection payments approved in the Orders, and (v) in accordance
with the terms of the Orders, for working capital, capital expenditures, and
other general corporate purposes of the Domestic Loan Parties, in each case to
the extent not prohibited under applicable Law and the Loan Documents (including
without limitation Bankruptcy Court-approved professional fees and other
administrative fees arising in the Cases).

6.13 Additional Loan Parties.

(a) Notify the Administrative Agent promptly after any Person becomes a Domestic
Subsidiary that is a direct Wholly Owned Subsidiary of any Domestic Loan Party
(other than any CFC or Subsidiary of a CFC), and promptly thereafter (and in any
event within thirty (30) days or such longer period as the Administrative Agent
may agree), (a) cause any such Domestic Subsidiary that is a direct Wholly Owned
Subsidiary (other than any CFC or Subsidiary of a CFC) to (i) become a Borrower
or Guarantor by executing and delivering to the Administrative Agent a Joinder
Agreement, and, in the case of a Guarantor, a Facility Guaranty (or a
counterpart or supplement thereto), (ii) grant a Lien to the

 

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Administrative Agent on such Person’s assets to the extent required by the
Security Documents, and (iii) deliver to the Administrative Agent documents of
the types referred to in clauses (iv), (v), (v) and (xvi) of Section 4.01(a)
and, if requested by the Administrative Agent, customary opinions of counsel to
such Person (which shall cover, among other things, the legality, validity,
binding effect and enforceability of the documentation referred to in clause
(a)), and (b) if any Equity Interests or Indebtedness of such Person are owned
by any Domestic Loan Party, such Domestic Loan Party shall pledge such Equity
Interests and promissory notes evidencing such Indebtedness (if any) (except
that, if such Subsidiary is a CFC or a Subsidiary of a CFC, the Equity Interests
of such Subsidiary will not be required to be pledged), in the manner and format
required by the Pledge Agreement; provided that, no Equity Interests of any
Foreign Subsidiary which is not a Foreign Loan Party shall be required to be
pledged.

(b) Notify the Administrative Agent promptly after any Person becomes a
Subsidiary that is a direct Wholly Owned Subsidiary of any Foreign Loan Party
(other than any Subsidiary that is not organized under the Laws of Canada or any
province thereof, Australia or Japan), and promptly thereafter (and in any event
within thirty (30) days or such longer period as the Administrative Agent may
agree), (a) cause any such Subsidiary that is a direct Wholly Owned Subsidiary
(other than any Subsidiary that is not organized under the Laws of Canada or any
province thereof, Australia or Japan)) to (i) become a Foreign Borrower or a
Guarantor of the Foreign Liabilities by executing and delivering to the
Administrative Agent a Joinder Agreement and, in the case of a Guarantor, a
Facility Guaranty (or a counterpart or supplement thereto), (ii) grant a Lien to
the Administrative Agent on such Person’s assets (to the extent required by the
Security Documents) to secure the Foreign Liabilities by executing and
delivering to the Administrative Agent, appropriate Security Documents, and
(iii) deliver to the Administrative Agent documents of the types referred to in
clauses (iv) and (v) of Section 4.01(a) and, if requested by the Administrative
Agent, customary opinions of counsel to such Person (which shall cover, among
other things, the legality, validity, binding effect and enforceability of the
documentation referred to in clause (a)), and (b) if any Equity Interests or
Indebtedness of such Person are owned by any Foreign Loan Party, such Foreign
Loan Party shall pledge such Equity Interests and promissory notes evidencing
such Indebtedness (if any), in the manner and format required by the Pledge
Agreement, the Canadian Security Documents, the Australian Security Documents or
the Japanese Security Documents, as applicable; provided that, no Equity
Interests of any Foreign Subsidiary which is not a Foreign Loan Party, and no
Equity Interests of any unlimited company incorporated or amalgamated and
existing under the laws of the Province of Nova Scotia, shall be required to be
pledged.

(c) In no event shall compliance with this Section 6.13 waive or be deemed a
waiver or Consent to any transaction giving rise to the need to comply with this
Section 6.13 if such transaction was not otherwise expressly permitted by this
Agreement or constitute or be deemed to constitute, with respect to any
Subsidiary, an approval of such Person as a Borrowing Base Party or permit the
inclusion of any acquired assets in the computation of any Borrowing Base.

 

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6.14 Cash Management.

(a) On or prior to the Effective Date (to the extent not previously delivered
and to the extent requested by the Administrative Agent,):

(i) deliver to the Administrative Agent copies of notifications (each, a “Credit
Card Notification”) in form and substance satisfactory to the Administrative
Agent which have been executed on behalf of such Loan Party and delivered to
such Loan Party’s Credit Card Issuers and Credit Card Processors listed on
Schedule 5.21(b) (or with respect to the Japanese Loan Parties, to JMS Co.,
Ltd., as its collection agent for proceeds from its Credit Card Issuers and
Credit Card Processors);

(ii) enter into a Blocked Account Agreement with each Blocked Account Bank
maintained by the Loan Parties as of the Effective Date with respect to each DDA
specified by the Agents (other than the Term Loan Priority Accounts, Existing
ABL Credit Agreement Collateral Account and payroll and other specific DDAs as
may be acceptable to the Agents) established or maintained by any Loan Party as
of the Effective Date with such Blocked Account Bank (collectively, the “Blocked
Accounts”); and

(iii) deliver to the Administrative Agent copies of notifications (each, a
“Lessor Notification”) in form and substance satisfactory to the Administrative
Agent which have been executed on behalf of each Japanese Loan Party and
delivered to such Japanese Loan Party’s lessors listed on Schedule 6.14 and any
other lessor which collects receipts from any portion of the Collateral of the
Japanese Loan Parties and subsequently remits such payments to the Japanese Loan
Parties.

(b) The Loan Parties shall ACH or wire transfer no less frequently than once
each Business Day (and whether or not there are then any outstanding
Obligations) to a Blocked Account all amounts on deposit in each such DDA (net
of such minimum balance consistent with past practices, but not to exceed
(i) $200,000 in the aggregate for all DDAs of the Domestic Loan Parties and
Canadian Loan Parties, (ii) $100,000 in the aggregate for all Australian Loan
Parties, (iii) $100,000 in the aggregate for all Japanese Loan Parties, and
(iv) $400,000 in the aggregate for all DDAs of all Loan Parties and with respect
to the Japanese Loan Parties only, exclusive of amounts on deposit in any
segregated sales and other tax accounts) and all payments received by any Loan
Party from Credit Card Issuers and Credit Card Processors.

(c) The Loan Parties shall cause each Blocked Account Bank and each Japanese
Depository Bank to ACH or wire transfer no less frequently than once each
Business Day (and whether or not there are then any outstanding Obligations) to
a Concentration Account all cash receipts and collections by the Loan Parties
including, without limitation, the following (in each case, other than Cash
Equivalents being held in accordance with the terms of the proviso at the end of
the definition of “Permitted Investments”, cash maintained in the cash registers
in the Stores in the normal course of business and consistent with past
practices, and with respect to the Japanese Loan Parties only,

 

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amounts on deposit in any segregated sales and other tax accounts and cash
proceeds held by any lessor of a Store in a mall and any minimum balance
required to be maintained in any DDA (not to exceed (i) $200,000 in the
aggregate for all DDAs of the Domestic Loan Parties and Canadian Loan Parties,
(ii) $100,000 in the aggregate for all Australian Loan Parties, (iii) $100,000
in the aggregate for all Japanese Loan Parties, and (iv) $400,000 in the
aggregate for all DDAs of all Loan Parties)):

(i) all available cash receipts of the Loan Parties from the sale of Inventory
and other assets (other than cash maintained in the cash registers in the Stores
in the normal course of business and consistent with past practices);

(ii) all proceeds of collections of Accounts and Credit Card Receivables of the
Loan Parties;

(iii) all other cash payments received by a Loan Party from any Person or from
any source or on account of any sale or other transaction or event;

(iv) except for the Term Loan Priority Accounts, Existing ABL Credit Agreement
Collateral Account and except as provided in this clause (c), the then cash
balance of each DDA;

(v) the then entire ledger balance of each Blocked Account; and

(vi) the cash proceeds of all credit card charges received by any Loan Party;

(d) The Concentration Accounts shall at all times be under the sole dominion and
control of the Administrative Agent or the Australian Security Trustee, as the
case may be. The Loan Parties hereby acknowledge and agree that (i) the Loan
Parties have no right of withdrawal from the Concentration Accounts, unless the
Administrative Agent, in its discretion, agrees to permit collected funds in
such Concentration Account to be disbursed to, or for the account of, the
applicable Loan Parties, (ii) the funds on deposit in each Concentration Account
maintained for the account of the Domestic Loan Parties shall at all times be
collateral security for the Secured Obligations (as defined in the Security
Agreement), (iii) the funds on deposit in each Foreign Concentration Account
shall at all times be collateral security for all of the Foreign Liabilities and
(iv) the funds on deposit in the Concentration Accounts shall be applied as
provided in Section 2.05 or Section 8.03 of this Agreement, as applicable. With
respect to the Australian Facility and the Japanese Facility and cash receipts
and collections of any Australian Loan Party and any Japanese Loan Party, the
Administrative Agent shall furnish the applicable Foreign Borrower with three
(3) Business Days’ notice prior to such application (unless an Event of Default
then exists, in which case no such notice shall be required).

(e) In the event that, notwithstanding the provisions of this Section 6.14, any
Loan Party receives or otherwise has dominion and control of any such proceeds
or collections (other than the minimum balances for all DDAs to the extent
permitted under this Section 6.14, Cash Equivalents being held in accordance
with the terms of the proviso at the end of the definition of “Permitted
Investments” and cash maintained in the cash registers in the Stores in the
normal course of business and consistent

 

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with past practices), such proceeds and collections shall be held in trust by
such Loan Party for the Administrative Agent or the Australian Security Trustee,
as applicable, and shall not be commingled with any of such Loan Party’s other
funds or deposited in any account of such Loan Party and shall, not later than
the Business Day after receipt thereof, be deposited into the applicable
Concentration Account, or dealt with in such other fashion as such Loan Party
may be instructed by the Administrative Agent or the Australian Security
Trustee, as applicable;

(f) Upon the request of the Administrative Agent, the Loan Parties shall cause
bank statements and/or other reports to be delivered to the Administrative Agent
not less often than monthly, accurately setting forth all amounts deposited in
each Blocked Account and each Japanese Depository Bank to ensure the proper
transfer of funds as set forth above. Subject to Section 8.02, the Foreign Loan
Parties may direct, and shall have sole control over, the manner of disposition
of funds in the Blocked Accounts maintained by each of them. Any amounts held or
received in any Concentration Account maintained for any Foreign Loan Party at
any time (except as provided in Section 8.02) shall be promptly remitted to an
account of such Foreign Borrower or as such Foreign Borrower may otherwise
direct.

(g) Notwithstanding anything to the contrary herein contained, no Foreign Loan
Party shall enter into any cash pooling arrangement.

(h) Notwithstanding anything to the contrary contained herein or in any other
Loan Document, the obligation of the Domestic Loan Parties to enter into Blocked
Account Agreements or other control agreements with any Agent or otherwise grant
any Agent control, in each case with respect to any DDA, securities account or
commodities account, shall not apply to any Term Loan Priority Accounts,
Existing ABL Credit Agreement Collateral Account.

(i) The Australian Borrower agrees that the amounts paid to it in discharge of
all Accounts and all proceeds of Collateral must be deposited into the Blocked
Accounts held in the name of the Australian Borrower with the Australian
Security Trustee and identified in the general security agreement between the
Australian Borrower and the Australian Security Trustee dated 24 May 2013 or
such other accounts which the Australian Security Trustee notifies the
Australian Borrower from time to time.

6.15 Information Regarding the Collateral.

Furnish to the Administrative Agent at least fifteen (15) days’ (or such shorter
period as the Administrative Agent shall agree) prior written notice of any
change in: (i) any Loan Party’s legal name; (ii) the location of any Loan
Party’s chief executive office or its principal place of business, any office in
which it maintains books or records relating to Collateral owned by it or any
office or facility at which Collateral owned by it is located (including the
establishment of any such new office or facility), but only with respect to
Canadian Loan Parties and Japanese Loan Parties and only if, (A) the Collateral
at such new location is in excess of $250,000 and (B) as a result of such
change, any further action is required for the Administrative Agent (and with
respect to the security interest under the Japanese Security

 

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Documents, each of the Japanese Secured Parties), to have a valid, legal and
perfected security interest in the Collateral at such changed or new location;
(iii) any Loan Party’s organizational type or jurisdiction of incorporation or
formation; or (iv) any Loan Party’s Federal Taxpayer Identification Number or
organizational identification number assigned to it by its jurisdiction of
organization. The Loan Parties agree not to effect or permit any change referred
to in the preceding sentence unless all filings have been made under the UCC,
PPSA, Australian PPSA or otherwise that are required in order for the
Administrative Agent or the Australian Security Trustee, as applicable (and with
respect to the security interest under the Japanese Security Documents, each of
the Japanese Secured Parties), to continue, following such change, to have a
valid, legal and perfected security interest in the Collateral for its own
benefit and the benefit of the other applicable Credit Parties (to the extent a
security interest in such Collateral can be perfected by the filing of a
financing statement under the UCC or a filing under the PPSA or a financing
statement under the Australian PPSA or as required under applicable Laws of
Japan).

6.16 Physical Inventories.

(a) Cause cycle counts of the Inventory of the Loan Parties to be undertaken, at
the expense of the Loan Parties, in each case, consistent with past practices,
which physical inventories and cycle counts shall be conducted by a Loan Party
or such other inventory takers as are reasonably satisfactory to the Collateral
Agent and shall follow such methodology as is consistent with the methodology
used in the immediately preceding physical inventory or cycle count, as
applicable, or as otherwise may be reasonably satisfactory to the Collateral
Agent. The Collateral Agent, at the expense of the Loan Parties, may participate
in and/or observe each scheduled physical inventory or cycle count of Inventory
which is undertaken on behalf of any Loan Party. At the request of the
Administrative Agent, the Lead Borrower shall, as soon as reasonably
practicable, provide the Administrative Agent with a summary of the results of
any such physical inventory or cycle count.

(b) Any Agent, in its discretion, if any Event of Default exists, may cause
additional physical inventories or cycle counts of the Loan Parties to be taken
as such Agent determines (each, at the expense of the Loan Parties).

6.17 Environmental Laws.

(a) Conduct, and cause each Subsidiary to conduct, its operations in compliance
with all Environmental Laws, except where the failure to do so would not
reasonably be expected to have a Material Adverse Effect; (b) obtain and renew,
and cause each Subsidiary to obtain and renew, all Environmental Permits
required for its operations, except where the failure to do so would not
reasonably be expected to have a Material Adverse Effect; (c) implement, and
cause each Subsidiary to implement, any and all investigation, remediation,
removal and response actions that are required under applicable Environmental
Laws to prevent the release of any Hazardous Materials on, at, or from any of
its Real Estate; provided, however, that neither a Loan Party nor any of its
Subsidiaries shall be required to undertake any such investigation, cleanup,
removal, remedial or other action to the extent that (i) its obligation to do so
is being contested in good faith and by proper proceedings and adequate reserves
have been set aside and are being maintained by the Loan Parties with respect to
such

 

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circumstances in accordance with GAAP or (ii) failure to undertake any
investigation, clean up, removal, remedial or other action would not reasonably
be expected to have a Material Adverse Effect; and (d) promptly notify the
Administrative Agent of: (i) any claim, proceeding or investigation in relation
to any Environmental Law which is current, pending or threatened against a Loan
Party, where such claim, proceeding or investigation could reasonably be
expected to have a Material Adverse Effect; or (ii) any facts or circumstances
that may result in any claim being commenced or threatened against a Loan Party
where that claim could reasonably be expected to have a Material Adverse Effect.
Nothing contained herein shall be deemed to limit the rights of the Agents with
respect to establishing or modifying Reserves in a manner permitted by this
Agreement.

6.18 Further Assurances.

(a) Execute any and all further documents, financing statements, filings,
agreements and instruments, and take all such further actions (including the
filing and recording of financing statements, amendments to financing statements
or other documents under the UCC, the PPSA, the Australian PPSA or any other
similar legislation), that may be required under any applicable Law, or which
any Agent may reasonably request, to grant, preserve, protect or perfect the
Liens created or intended to be created by the Security Documents or the
validity or priority of any such Lien, all at the expense of the Loan Parties
and to the extent required by, and subject to the limitations set forth in, the
Security Documents and this Agreement.

(b) If any assets, whether personal property or real property, are acquired by
any Loan Party after the Effective Date (other than assets constituting
Collateral under the Security Documents that become subject to the Lien of the
Security Documents upon acquisition thereof), notify the Agents thereof (in the
case of Intellectual Property, solely with respect to Intellectual Property
which is the subject of a registration or application with the PTO, Copyright
Office, CIPO or other applicable Governmental Authority and within the time
frames set forth in Schedule 6.02), and the Loan Parties will cause such assets
to be subjected to a perfected Lien securing the Secured Obligations (as defined
in the Security Agreement) of the Domestic Loan Parties (in the case of a
Domestic Loan Party) or the Foreign Liabilities (in the case of a Foreign Loan
Party), as applicable, and will take such actions as shall be necessary
(including updating all registrations pursuant to the Japanese Security
Documents to the extent required in respect of new types of Inventory and new
types of goods sold creating any Accounts) or shall be requested by any Agent to
grant and perfect such Liens, in each case to the extent required by, and
subject to the limitations set forth in, the Security Documents and this
Agreement, including actions described in paragraph (a) of this Section 6.18,
all at the expense of the Loan Parties. In no event shall compliance with this
Section 6.18(b) waive or be deemed a waiver or Consent to any transaction giving
rise to the need to comply with this Section 6.18(b) if such transaction was not
otherwise expressly permitted by this Agreement or constitute or be deemed to
constitute Consent to the inclusion of any acquired assets in the computation of
the Borrowing Base.

(c) [reserved].

 

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6.19 Maintenance of New York Process Agent. In the case of a Foreign Loan Party,
maintain in New York, New York or at such other location in the United States as
may be reasonably satisfactory to the Administrative Agent a Person acting as
agent to receive on its behalf and on behalf of its property service of process.

6.20 Material Contracts. In each case, exclusive of the Existing Senior Secured
Note Loan Documents or any other Material Contract relating to Material
Indebtedness, perform and observe all the terms and provisions of each Material
Contract to be performed or observed by it, maintain each such Material Contract
in full force and effect (other than expirations pursuant to the terms thereof
and any replacements thereof), and enforce each such Material Contract in
accordance with its terms.

6.21 Canadian Pension Benefit Plans.

Each Canadian Loan Party shall cause each of its Canadian Pension Plans to be
duly qualified and administered in all respects in compliance with, as
applicable, the Supplemental Pension Plans Act (Quebec) and the Pension Benefits
Act (Ontario) and all other applicable laws (including regulations, orders and
directives), and the terms of the Canadian Pension Plans and any agreements
relating thereto. Each Canadian Loan Party shall ensure:

(a) it has no unfunded, solvency, or deficiency on windup liability and no
accumulated funding deficiency (whether or not waived), or any amount of
unfunded benefit liabilities in respect of any Canadian Pension Plan, including
any Canadian Pension Plan to be established and administered by it or them;

(b) all amounts required to be paid by it or them are paid when due;

(c) no liability upon it or them or Lien on any of its or their asset property
arises or exists in respect of any Canadian Pension Plan;

(d) it makes all required contributions to any Canadian Pension Plan when due;

(e) it does not engage in a prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Canadian Pension Plan that could
reasonably be expected to result in liability; and

(f) it does not maintain, contribute or have any liability with respect to a
Canadian Pension Plan which provides benefits on a defined benefit basis.

6.22 Use of Property; Rejection and Assumption of Contracts; Post-Filing
Pleadings. On or after the Petition Date, each Loan Party agrees that it shall
not, without the Required Lenders’ prior written consent, file any motions or
pleadings with the Bankruptcy Court (a) seeking authority for any Loan Party to
(i) use any of the material properties or assets of the Loan Parties outside the
ordinary course of business, (ii) satisfy material prepetition claims of the
Loan Parties or (iii) incur material administrative costs, in each case, to the
extent such relief is inconsistent with this Agreement (including the Budget),
(b) seeking to reject or assume any material contract, agreement, lease or other
agreement

 

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to which any Loan Party is a party, or (c) seeking relief that is otherwise
inconsistent with this Agreement, the Orders, or the Plan Sponsor Agreement or
Sponsored Plan.

6.23 [Reserved].

6.24 Additional Information Obligations.

(a) Case Documents and Motions. As soon as practicable in advance of filing with
the Bankruptcy Court of all documents, motions and pleadings, including with
respect to the Orders, the Lead Borrower shall deliver to Administrative Agent
and the Lenders all such documents to be filed and provide the Lenders with a
reasonable opportunity to review and comment on all such documents.

(b) Progress Calls. The Lead Borrower shall hold weekly progress conference
calls for the Lenders, starting on the Thursday after the first day of the
second week following the Effective Date and continuing on each Thursday
thereafter, until the Termination Date. During such conference calls a
Responsible Officer of the Lead Borrower shall provide the participating Lenders
with a reasonably comprehensive update on the Cases, variances with respect to
the Budget and any other material information relating to the business,
condition (financial or otherwise), operation, performance, properties or
prospects of any of the Loan Parties and any other information that may be
reasonably requested by the Administrative Agent or any Lender.

(c) Other Information. Deliver to the Lenders promptly after the same are
available, copies of all applications, judicial information, financial
information and other documents filed on behalf of any Debtor or any other Loan
Party with the Bankruptcy Court in any of the Cases, or distributed by or on
behalf of any Debtor or any other Loan Party to any official committee appointed
in any of the Cases.

(d) Access to Advisors. The Loan Parties shall allow the Administrative Agent
and the Lenders access to, upon reasonable notice during normal business hours,
all financial professionals (including the Acceptable Chief Restructuring
Officer) engaged by the Loan Parties (which engagement, with respect to any
financial professionals engaged after the Effective Date, shall be on terms and
conditions reasonably satisfactory to the Required Lenders).

6.25 Compliance with Terms of Leaseholds.

(a) Except in each case as would not reasonably be expected to have a Material
Adverse Effect or except as contemplated by the Budget or to the extent required
under the Bankruptcy Code or the Orders, (a) make all payments and otherwise
perform all obligations in respect of all Leases to which any Loan Party is a
party, (b) keep such Leases in full force and effect, (c) not allow such Leases
to lapse or be terminated or any rights to renew such Leases to be forfeited or
cancelled, and (d) cause each of its Subsidiaries to do the foregoing. Notify
the Administrative Agent of any default by any Loan Party with respect to any
Leases to which such

 

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Loan Party is a party if such default would reasonably be expected to have a
Material Adverse Effect and cooperate with the Administrative Agent in all
respects to cure any such default.

(b) [reserved].

6.26 Plan of Reorganization.

Within 30 days after the Petition Date, the Domestic Loan Parties shall file a
Plan of Reorganization and Disclosure Statement, which plan and disclosure
statement shall provide for payment in full of the Obligations on the
consummation of the plan and shall otherwise be reasonably acceptable to the
Administrative Agent, which plan shall have become effective no later than the
Maturity Date.

ARTICLE VII

NEGATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied (other than contingent
indemnification Obligations for which a claim has not then been asserted), or
any Letter of Credit shall remain outstanding, no Loan Party shall, nor shall it
permit any applicable Subsidiary to, directly or indirectly:

7.01 Liens; Retention of Title, Constructive Transfers.

(a) Create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired, or sign or file (or
authorize the filing) under the UCC, the PPSA, the Australian PPSA or any
similar Law or statute of any jurisdiction a financing statement or similar
document that names any Loan Party or any Americas/Foreign Subsidiary as debtor;
or sign or authorize any security agreement authorizing any Person thereunder to
file such financing statement or similar document other than, as to all of the
above, Permitted Encumbrances.

(b) Permit, in the case of any Australian Loan Party or any Japanese Loan Party,
any retention of title or conditional sale arrangements with respect to any
trade supply contract with respect to Inventory permitted under clauses (y) and
(z) of the definition of Permitted Encumbrances, unless the applicable Loan
Party shall have furnished written notice to the Administrative Agent pursuant
to Section 6.03(l) and an Availability Reserve in an amount equal to the balance
of the purchase price due to such vendor has been established in the applicable
Borrowing Base. In connection with the foregoing, the Loan Parties acknowledge
that any Agent may undertake an updated PPSR search with respect to the
Australian Loan Parties no more often than once in any three month period, at
the Australian Loan Parties’ expense.

7.02 Investments. Make any Investments, except Permitted Investments. For
purposes of Section 7.02, notwithstanding anything contrary set forth herein,
(i) in the event the Parent or any Subsidiary (an “Initial Investing Person”)
transfers an amount of cash or other property (the “Invested

 

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Amount”) for purposes of permitting the Parent or one or more other Subsidiaries
to ultimately make an Investment of the Invested Amount in any Subsidiary or any
Person in which such Investment is ultimately made, the “Subject Person”)
through a series of substantially concurrent intermediate transfers of the
Invested Amount to one or more other Subsidiaries other than the Subject Person
(each an “Intermediate Investing Person”), including through the incurrence or
repayment of intercompany Indebtedness, capital contributions or redemptions of
Equity Interests, then, for all purposes of Section 7.02, any transfers of the
Invested Amount to Intermediate Investing Persons in connection therewith shall
be disregarded and such transaction, taken as a whole, shall be deemed to have
been solely an Investment of the Invested Amount by the Initial Investing Person
in the Subject Person and not an Investment in any Intermediate Investing
Person; and (ii) if an Investment is denominated in a foreign currency, no
fluctuation in currency shall result in a breach of any covenant in this
Section 7.02.

7.03 Indebtedness. Create, incur, assume, guarantee, suffer to exist or
otherwise become or remain liable with respect to, any Indebtedness, except
Permitted Indebtedness. The accrual of interest and the accretion or
amortization of original issue discount on Indebtedness and the payment of
interest in the form of additional Indebtedness originally incurred in
accordance with this Section 7.03 will not constitute an incurrence of
Indebtedness. For purposes of determining compliance with any Dollar-denominated
restriction on the incurrence of Indebtedness, the Alternative Currency
Equivalent principal amount of Indebtedness denominated in a foreign currency
shall be calculated based on the relevant currency exchange rate in effect on
the date such Indebtedness was incurred, in the case of term debt, or first
committed, in the case of revolving credit debt; provided that if such
Indebtedness is incurred to extend, replace, refund, refinance, renew or defease
other Indebtedness denominated in a foreign currency, and such extension,
replacement, refunding, refinancing, renewal or defeasance would cause the
applicable Dollar-denominated restriction to be exceeded if calculated at the
relevant currency exchange rate in effect on the date of such extension,
replacement, refunding, refinancing, renewal or defeasance, such
Dollar-denominated restriction shall be deemed not to have been exceeded so long
as the principal amount of such refinancing Indebtedness allocated to any such
Indebtedness being extended, replaced, refunded, refinanced, renewed or
defeased.

7.04 Fundamental Changes. Merge, amalgamate, dissolve, liquidate, consolidate
with or into another Person.

7.05 Dispositions. Make any Disposition, except Permitted Dispositions. To the
extent any Collateral is Disposed of as permitted by this Section 7.05 to any
Person other than any Loan Party, such Collateral shall be sold free and clear
of the Liens created by the Loan Documents.

7.06 Restricted Payments. Declare or make, directly or indirectly, any
Restricted Payment, except each Loan Party (other than Parent) and each
Subsidiary thereof may make Restricted Payments to any Loan Party or any other
Subsidiary (and in the case of a Restricted Payment by a non-Wholly Owned
Subsidiary, to the Parent and any other Loan Party and to each other owner of
Equity Interests of such Subsidiary based upon their relative ownership
interests of the relevant class of Equity Interests); provided that no Loan
Party may make any Restricted Payment to any non-Loan Party.

 

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7.07 Prepayments of Indebtedness. Except as required by this Agreement or the
Orders (including with respect to adequate protection payments required in
connection with the Existing Senior Secured Indenture and the Existing ABL
Credit Agreement), prepay, redeem, purchase, defease or otherwise satisfy prior
to the scheduled maturity thereof in any manner any Permitted Indebtedness
(including without limitation any Subordinated Indebtedness prior to its
scheduled maturity or set aside any funds for such purpose (other than any
payments to critical vendors to the extent permitted by the Bankruptcy Court
pursuant to any first or second day motion or as expressly set forth in the
Budget), or (ii) agree to any amendment, restatement, supplement or other
modifications to the Existing Senior Secured Note Documents or (iii) make any
interest payment in respect of any Indebtedness (including without limitation
any Subordinated Indebtedness) other than (a) payments of the Obligations,
(b) as expressly permitted by the Orders, (c) payments required under the
Boardriders Notes, (d) mandatory payments with respect to the DIP Term Facility,
(e) prepayment of the Interim Order Intercompany Loans (f) payments with respect
to the Existing ABL Obligations and (g) prepayment of intercompany Indebtedness
owed by and between Domestic Loan Parties.

7.08 Change in Nature of Business. Engage in any line of business substantially
different from the lines of business conducted by such Loan Parties and their
Subsidiaries on the date hereof or any business reasonably related or incidental
thereto.

7.09 Transactions with Affiliates. Enter into, renew, extend or be a party to
any transaction of any kind with any Affiliate of any Loan Party, whether or not
in the ordinary course of business, other than on fair and reasonable terms
substantially as favorable to the Loan Parties or such Subsidiary as would be
obtainable by the Loan Parties or such Subsidiary 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) a transaction between or among
the Loan Parties not prohibited hereunder; (b) transactions not otherwise
prohibited hereunder between or among the Parent or any Subsidiary or
Subsidiaries or any entity that becomes a Subsidiary as a result of such
transaction; (c) Restricted Payments permitted under Section 7.06; (d) the
transactions occurring on the Effective Date and the payment of fees and
expenses related thereto; (e) [reserved]; (f) transactions, arrangements,
reimbursements and indemnities permitted between or among such parties under
this Agreement; (g) the payment of reasonable fees and out-of-pocket costs to
directors, and compensation and employee benefit arrangements paid to, and
indemnities provided for the benefit of, directors, officers or employees of the
Parent or any of its Subsidiaries, solely to the extent consistent with the
Budget (within Permitted Variances); (h) [reserved]; (i) any transfers by or
among any Affiliates to pay tax liabilities, or (j) transactions pursuant to and
in connection with the Existing Senior Secured Note Documents or (k) Investments
permitted pursuant to clauses (i), (k), (q) and (w) of the definition of
“Permitted Investments”.

7.10 Burdensome Agreements.

Enter into any Contractual Obligation (other than (w) this Agreement or any
other Loan Document, (x) the DIP Term Facility, (y) the Existing Senior Secured
Note Documents, or (z) the Boardriders Notes and the Boardriders Notes Indenture
that limits the ability (i) of any Subsidiary that is

 

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not a Loan Party to make Restricted Payments to any Loan Party or (ii) of the
Loan Parties to create, incur, assume or suffer to exist Liens on property of
such Person in favor of the Administrative Agent, or as applicable, the
Australian Security Trustee, under the Loan Documents; provided, however, that
none of the foregoing shall prohibit (A) any negative pledge incurred or
provided in favor of any holder of Indebtedness permitted under clauses (c) or
(f) of the definition of “Permitted Indebtedness” solely to the extent any such
negative pledge relates to the property financed by or the subject of such
Indebtedness; (B) customary anti-assignment provisions in contracts restricting
the assignment thereof or in contracts for the Disposition of any assets or any
Person, provided that the restrictions in any such contract shall apply only to
the assets or Person that is to be Disposed of; (C) provisions in leases of real
property that prohibit mortgages or pledges of the lessee’s interest under such
lease or restricting subletting or assignment of such lease; (D) customary
provisions in joint venture agreements and other similar agreements applicable
to joint ventures to the extent such joint ventures are not prohibited
hereunder; (E) customary restrictions arising under licenses and other contracts
entered into in the ordinary course of business; (F) customary restrictions
arising under licenses and other contracts entered into in the ordinary course
of business; (G) Contractual Obligations which are binding on a Subsidiary at
the time such Subsidiary first becomes a Subsidiary, so long as such Contractual
Obligations were not entered into in contemplation of such Person becoming a
Subsidiary; or (H) Contractual Obligations which exist on the date hereof and
(to the extent not otherwise permitted by this Section 7.10) are listed on
Schedule 7.10 hereto.

7.11 Use of Proceeds. Use the proceeds of any Credit Extension in a manner
inconsistent with Section 6.12 or in any manner which violates Regulations T, U
or X of the FRB.

7.12 Amendment of Material Documents.

Amend, modify or waive any of a Loan Party’s rights under (a) its Organization
Documents in a manner materially adverse to the Credit Parties, or (b) any
Material Contract (other than any Loan Document) or Material Indebtedness
including any DIP Term Documents (except in connection with an increase of the
maximum commitments thereunder to the maximum amount allowed hereunder), the
Existing Senior Secured Note Documents, or the Boardriders Notes and the
Boardriders Notes Indenture, or (c) the E-Commerce Agreement in a manner that
adversely affects the Lien of the Administrative Agent on the Collateral held on
consignment by GSI, or that is otherwise materially adverse to the Lenders
(provided that the foregoing shall not limit the right of the Loan Parties to
terminate the E-Commerce Agreement), in each case, without the prior written
consent of the Administrative Agent (which consent shall not be unreasonably
withheld or delayed).

7.13 Fiscal Year; Accounting Policies.

Change the Fiscal Year of any Loan Party or change any accounting policies
(including, without limitation, any change which materially affect the
calculation of the Cost of Eligible Inventory included in the Borrowing Base, in
each case, without the prior written consent of the Administrative Agent or as
required by GAAP.

 

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7.14 Deposit Accounts; Credit Card Processors.

(a) In the case of any Loan Party (other than the Japanese Loan Parties, as to
which clause (b) below shall apply), open new Blocked Accounts or engage any new
Credit Card Issuers or Credit Card Processors unless such Loan Party shall have
delivered to the Administrative Agent or the Australian Security Trustee, as
applicable, appropriate Blocked Account Agreements or Credit Card Notifications,
as applicable, consistent with the provisions of Section 6.14 or otherwise
reasonably satisfactory to the Agents.

(b) In the case of any Japanese Loan Party (i) open any new Blocked Accounts or
other DDAs (other than with an existing Japanese Depository Bank) unless such
Japanese Loan Party has provided the Administrative Agent with five (5) Business
Days’ prior notice thereof (any such new depository with whom a new DDA is
opened by any of the Japanese Loan Parties shall constitute a Japanese
Depository Bank for all purposes of this Agreement and shall be subject to the
provisions of Section 6.14 hereof) and has taken all such actions as may be
required with respect to any such DDA pursuant to the Japanese Security
Documents, or (ii) engage any new Credit Card Issuers or Credit Card Processors,
or terminate, or permit the termination of, the appointment of JMS Co., Ltd. as
its collection agent with respect to any Credit Card Processors or Credit Card
Issuers for the account of the Japanese Loan Parties, or engage any new
collection agent, unless such Japanese Loan Party has provided the
Administrative Agent with five (5) Business Days’ prior written notice thereof
and has delivered to the Administrative Agent copies of Credit Card
Notifications, which have been executed on behalf of such Japanese Loan Party
and delivered to the applicable Credit Card Processors, Credit Card Issuers
and/or collection agent, in substantially the forms delivered by the Japanese
Borrower on the Effective Date (or such other form as the Administrative Agent
may reasonably request in light of the circumstances) and has taken all such
actions as may be required with respect thereto pursuant to the Japanese
Security Documents, and provided that, such Japanese Loan Party shall use
commercially reasonable efforts to deliver to the Administrative Agent, within
sixty (60) days following the date of each such Credit Card Notification, in
form and substance reasonably satisfactory to the Administrative Agent, waivers
and acknowledgments with respect to any such Credit Card Processors, Credit Card
Issuers and/or collection agents.

7.15 [Reserved].

7.16 Limitation on the Creation of Subsidiaries. Establish, create or acquire
after the Effective Date any Domestic Subsidiary.

7.17 Anti-Social Force.

Become an Anti-Social Force.

7.18 Chapter 11 Claims. Until payment in full of the Obligations under this
Agreement (other than contingent indemnification Obligations to the extent no
claim giving rise thereto has been asserted), except for and to the extent
permitted under the Carve-Out and the Priority Permitted

 

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Encumbrances, the Debtors shall not, directly or indirectly, incur, create,
assume, suffer to exist or permit any administrative expense claim or Lien which
is pari passu with or senior to the claims or Liens, as the case may be, of the
Administrative Agent and the other Secured Parties against the Debtors hereunder
or under the Orders, or apply to the Bankruptcy Court for authority to do so.

7.19 Compliance with Budget.

(a) Except as otherwise provided herein or approved by the Required Lenders,
directly or indirectly (i) use any cash or the proceeds of any Loans in a manner
or for a purpose other than those consistent with this Agreement, the Orders and
the Budget (and Permitted Variances related thereto), (ii) permit a disbursement
causing any variance other than Permitted Variances without the prior written
consent of the Required Lenders or (iii) make any payment (as adequate
protection or otherwise), or application for authority to pay, on account of any
claim or Indebtedness arising prior to the Petition Date other than payments
authorized by the Bankruptcy Court.

(b) Prior to the occurrence of an Event of Default, the Debtors shall be
permitted to pay compensation and reimbursement of fees and expenses solely to
the extent that such fees and expenses are in accordance with the Budget (within
Permitted Variances) and authorized to be paid under Sections 330 and 331 of the
Bankruptcy Code pursuant to an order of the Bankruptcy Court, as the same may be
due and payable. Upon receipt of the Carve-Out Trigger Notice, the right of the
Debtors to pay professional fees outside the Carve-Out shall terminate, and the
Debtors shall provide immediate notice to all professionals informing them that
such notice was delivered and further advising them that the Debtors’ ability to
pay such professionals is subject to and limited by the Carve-Out.

7.20 Use of Collateral. Use or permit the use of Collateral, proceeds of Loans,
portion of the Carve-Out or any other amounts directly or indirectly by any of
the Loan Parties, the Committee, if any, or any trustee or other estate
representative appointed in the Cases (or any successor case) or any other
Person (or to pay any professional fees, disbursements, costs or expenses
incurred in connection therewith):

(a) to seek authorization to obtain Liens or security interests that are senior
to, or on a parity with, the Liens granted under the Loan Documents or the DIP
Superpriority Claims other than in connection with any replacement
debtor-in-possession financing that will pay the Lenders in “full” in cash; or

(b) to investigate (including by way of examinations or discovery proceedings),
prepare, assert, join, commence, support or prosecute any action for any claim,
counter-claim, action, proceeding, application, motion, objection, defense, or
other contested matter seeking any order, judgment, determination or similar
relief against, or adverse to the interests of, in any capacity, against
Administrative Agent, the Lenders, the other Secured Parties or the Prepetition
Parties, and each of their respective officers, directors, controlling persons,

 

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employees, agents, attorneys, affiliates, assigns, or successors of each of the
foregoing, with respect to any transaction, occurrence, omission, action or
other matter (including formal discovery proceedings in anticipation thereof),
including, without limitation, (i) any Avoidance Actions; (ii) any so-called
“lender liability” claims and causes of action; (iii) any action with respect to
the validity, enforceability, priority and extent of, or asserting any defense,
counterclaim, or offset to, the Obligations, the DIP Superpriority Claims, the
Liens granted under the Loan Documents, the Loan Documents, the DIP Term Claims,
the DIP Term Documents, the DIP Term Documents, the Existing Senior Secured Note
Documents, the Existing Senior Secured Note Obligations, the Existing Senior
Secured Note Liens, the Existing ABL Credit Agreement, the Existing ABL
Obligations or the Existing ABL Liens; (iv) any action seeking to invalidate,
modify, reduce, expunge, disallow, set aside, avoid or subordinate, in whole or
in part, the Obligations, the DIP Term Claims or the Existing Senior Secured
Note Obligations (including, for the avoidance doubt, any prepayment premium
provided in the Existing Senior Secured Note Documents); or (v) any action
seeking to modify any of the rights, remedies, priorities, privileges,
protections and benefits granted to either (A) the Administrative Agent or the
Lenders hereunder or under any of the other Loan Documents, (B) the agent or the
lenders under the DIP Term Documents or (C) the Existing Senior Secured Note
Collateral Agent, the Existing Senior Secured Noteholders, the Existing ABL
Agent, or the Existing ABL Lenders (in each case, as applicable, including,
without limitation, claims, proceedings or actions that might prevent, hinder or
delay any of their respective assertions, enforcements, realizations or remedies
on or against the Collateral in accordance with the applicable Loan Documents
and the Orders). Notwithstanding anything to the contrary herein, the Committee
may use up to $50,000 in the aggregate amount of the Carve-Out, any
cash-collateral, or proceeds of the Loan to investigate the Prepetition Parties
(the “Committee Investigation Budget”). Any and all claims incurred by the
Committee in excess of the Committee Investigation Budget (the “Unbudgeted
Investigation Claims”) shall not constitute any allowed administrative expense
claim (including, without limitation, Section 1129(a)(9)(A) of the Bankruptcy
Code), and the Unbudgeted Investigation Claims shall not be satisfied by the
Carve-Out, any cash collateral or proceeds of the Loan, and shall be satisfied
solely from the unencumbered assets of the Loan Parties (if any) (the
“Unencumbered Assets”), thereby reducing recoveries to the holders of unsecured
claims (other than any deficiency claim held by the Prepetition Parties);
provided, however, that to the extent there are no Unencumbered Assets available
to satisfy the Unbudgeted Investigation Claims, then such claims shall be
automatically disallowed without further action by any party or Court order and
shall not receive a recovery in the Cases and any Successor Cases.

7.21 Bankruptcy Related Negative Covenants.

The Domestic Loan Parties will not consent to or permit to exist any of the
following:

 

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(a) Any order which authorizes the rejection or assumption of any Leases of any
Domestic Loan Party without the Administrative Agent’s prior consent, whose
consent shall not be unreasonably withheld;

(b) Any modification, stay, vacation or amendment to the Orders to which the
Administrative Agent and the Required Lenders have not consented in writing;

(c) A priority claim or administrative expense or unsecured claim against any
Borrower (now existing or hereafter arising or any kind or nature whatsoever,
including, without limitation, any administrative expense of the kind specified
in Sections 105, 326, 328, 330, 331, 364(c), 503(a), 503(b), 506(c), 507(a),
507(b), 546(c), 546(d), 726 or 1114 of the Bankruptcy Code) equal or superior to
the priority claim of the Agents and the Lenders in respect of the Obligations
and the Pre-Petition Liabilities, except with respect to Permitted Encumbrances
and the Carve-Out, (i) statutory Liens and charges not capable of being
subordinated by the entry of the Initial Order, (ii) the Directors’ Charge, and
(iii) the Administration Charge;

(d) Any order which authorizes the return of any of the Loan Parties’ property
pursuant to Section 546(h) of the Bankruptcy Code;

(e) Any order which authorizes the payment of any Indebtedness (other than the
Existing ABL Credit Agreement, Indebtedness reflected in the approved Budget,
and other Indebtedness approved by the Administrative Agent) incurred prior to
the Petition Date or the grant of “adequate protection” (whether payment in cash
or transfer of property) with respect to any such Indebtedness which is secured
by a Lien (other than as expressly set forth in the Orders or the Budget); or

(f) Any order seeking authority to take any action that is prohibited by the
terms of this Agreement or the other Loan Documents or refrain from taking any
action that is required to be taken by the terms of this Agreement or any of the
other Loan Documents.

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES

8.01 Events of Default. Any of the following shall constitute an Event of
Default:

(a) Non-Payment. Any Borrower or any other Loan Party fails to pay when and as
required to be paid herein, and in the currency required hereunder, (i) any
amount of principal of any Loan or any L/C Obligation, or deposit any funds as
Cash Collateral in respect of L/C Obligations, or (ii) any interest on any Loan
or on any L/C Obligation, or any fee due hereunder, which failure continues for
three (3) Business Days, or (iii) any other amount payable hereunder or under
any other Loan Document which failure continues for five (5) Business Days; or

(b) Specific Covenants. Any Loan Party fails to perform or observe any term,
covenant or agreement contained in any of Section 6.01, 6.02 (exclusive of
Section 6.02(f)), 6.03, 6.05(a)(as it relates to a Loan Party), 6.08, 6.11,
6.12, 6.13, 6.14, 6.15 or Article VII; or any

 

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Loan Party fails to deliver any one or more of the financial and collateral
reports described on Schedule 6.02 hereto, no later than the times set forth in
such Schedule, and such failure continues for three (3) Business Days after
notice thereof by the Administrative Agent to the Lead Borrower, or

(c) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in subsection (a) or (b) above) contained
in any Loan Document on its part to be performed or observed and such failure
continues for 30 days after notice thereof by the Administrative Agent to the
Lead Borrower; or

(d) Representations and Warranties. Any representation, warranty, certification
or statement of fact made or deemed made by or on behalf of any Borrower or any
other Loan Party herein or in any other Loan Document, shall be incorrect or
misleading in any material respect (or in the case of any representation or
warranty qualified by materiality, in any respect) when made or deemed made; or

(e) Cross-Default. (i) Any Loan Party or any Subsidiary thereof (A) fails to
make any payment when due, after giving effect to any applicable grace period
(whether by scheduled maturity, required prepayment, acceleration, demand, or
otherwise) in respect of any Material Indebtedness, or (B) fails to observe or
perform any other agreement or condition relating to any such Material
Indebtedness (with respect to any Domestic Loan Party, to the extent such
Material Indebtedness is incurred after the Petition Date) or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event occurs, the effect of which default or other event is to cause, or to
permit the holder or holders of such Material Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause, with the giving of notice
if required, such Indebtedness to be demanded or to become due or to be
repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an
offer to repurchase, prepay, defease or redeem such Indebtedness to be made, in
each case, prior to its stated maturity; provided that any such failure is
unremedied and is not waived by the holders of such Indebtedness; provided
further that this clause (i)(B) shall not apply to (x) secured Indebtedness of a
Loan Party or a Subsidiary that becomes due upon the sale or transfer by such
Loan Party or Subsidiary of the property or assets securing such Indebtedness;
or (y) scheduled payments, defeasances or redemptions of Indebtedness on the
dates set forth in the instruments and agreements governing such Indebtedness;
or (ii) there occurs under any Swap Contract an Early Termination Date (as
defined in such Swap Contract) resulting from (A) any event of default under
such Swap Contract as to which a Loan Party or any Subsidiary thereof is the
Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event
(as so defined) under such Swap Contract as to which a Loan Party or any
Subsidiary thereof is an Affected Party (as so defined) and, in either event,
the Swap Termination Value owed by the Loan Party or such Subsidiary as a result
thereof is greater than $15,000,000; provided that such failure is unremedied
and is not waived by the applicable counterparty to such Swap Contract; or

 

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(f) Insolvency Proceedings, Etc. Any Loan Party (other than a Domestic Loan
Party) or any of its Subsidiaries institutes or consents to the institution of
any proceeding or makes any filing under any Debtor Relief Law (or, with respect
to the Australian Loan Parties, any corporate action, legal proceedings or other
procedure or step is taken in relation to the suspension of payments, a
moratorium of any indebtedness, winding up, dissolution, administration or
reorganization (by way of voluntary arrangement, scheme of arrangement or
otherwise) of any Australian Loan Party other than a solvent liquidation or
reorganization of an Australian Subsidiary which is not a Loan Party), or makes
a composition, an assignment or arrangement for the benefit of creditors; or
applies for or consents to the appointment of any receiver, administrator,
receiver and manager, Controller, interim receiver, trustee, monitor, custodian,
conservator, liquidator (other than in respect of a solvent liquidation of a
Subsidiary which is not a Loan Party), compulsory manager, rehabilitator or
similar officer for it or for all or any material part of its property; or a
proceeding shall be commenced or a petition filed, without the application or
consent of such Person, seeking or requesting the appointment of any
administrator, receiver, interim receiver, receiver and manager, trustee,
monitor, custodian, conservator, liquidator, rehabilitator compulsory manager or
similar officer and such administrator, receiver, receiver and manager, trustee,
custodian, conservator, liquidator, rehabilitator, compulsory manager or similar
officer is appointed and the appointment continues undischarged, undismissed or
unstayed for 45 calendar days (other than with respect to the Australian Loan
Parties, as to which the 45 calendar day period shall not apply and an Event of
Default shall immediately arise); or any proceeding under any Debtor Relief Law
relating to any such Loan Party or Subsidiary thereof or to all or any material
part of its property is instituted without the consent of such Loan Party or
Subsidiary and continues undismissed or unstayed for 45 calendar days (other
than with respect to the Australian Loan Parties, as to which the 45 calendar
day period shall not apply and an Event of Default shall immediately arise), or
an order for relief is entered in any such proceeding; or

(g) Creditors’ Process. Any expropriation, attachment, sequestration, distress
or execution affects any asset or assets of an Australian Loan Party; or

(h) Inability to Pay Debts; Attachment. (i) Any Loan Party (other than a
Domestic Loan Party) or any Subsidiary thereof becomes unable or admits in
writing its inability or fails generally to pay its debts as they become due in
the ordinary course of business, (ii) any writ or warrant of attachment or
execution or similar process is issued or levied against all or any material
part of the property of any such Person and is not released, vacated or fully
bonded within thirty (30) days after its issuance or levy or (iii) any Loan
Party (other than a Domestic Loan Party)is ordered by a clearinghouse to suspend
transactions with banks and financial institutions; or

(i) Reserved; or

(j) Cases, Motions, Etc. Any of the following shall occur in any Case:

 

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(i) the filing by any Debtor of a plan of reorganization other than a Sponsored
Plan;

(ii) the filing by any Debtor of any motion or pleading that is inconsistent
with the prosecution of a Sponsored Plan;

(iii) any of the Debtors shall file a pleading seeking to vacate or modify any
of the Orders in a manner adverse to the Lenders and/or the Administrative
Agent;

(iv) entry of an order without the prior consent of the Required Lenders
amending, supplementing or otherwise modifying any Order in a manner adverse to
the Lenders and/or the Administrative Agent;

(v) reversal, vacation or stay of the effectiveness of any Order;

(vi) any violation of the terms of any Order;

(vii) dismissal of any of the Cases or conversion of any of the Cases to a case
under Chapter 7 of the Bankruptcy Code;

(viii) appointment of a Chapter 11 trustee or an examiner with expanded powers;

(ix) the consummation of any sale of all or substantially all assets of the Loan
Parties pursuant to Section 363 of the Bankruptcy Code;

(x) granting of relief from the automatic stay in the Cases to permit
foreclosure or enforcement on, or any right or remedy with respect to, assets of
any Debtor in excess of $1,000,000 in the aggregate;

(xi) the Debtors’ filing of (or supporting another party in the filing of) a
motion seeking entry of, or the entry of an order, granting any superpriority
claim or Lien (except as contemplated herein) that is senior to or pari passu
with the Lenders’ claims under the Loan Documents and the transactions
contemplated thereby, except for the Priority Permitted Encumbrances;

(xii) payment of or granting adequate protection with respect to prepetition
debt, other than as expressly set forth in the Orders or the Budget;

(xiii) except (A) as otherwise provided in the Interim Order or the Final Order
or (B) as expressly permitted by the Plan Sponsor Agreement or a Sponsored Plan,
any of the Loan Parties seek or if there is entered, an order under Section 365
of the Bankruptcy Code rejecting a material lease (i) to which any Loan Party is
a party, and (ii) that is part of (or whose premises contain any of) the
Collateral; and

 

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(xiv) any of the Liens or the DIP Superpriority Claims granted hereunder cease
to be valid, perfected and enforceable in any respect; or

(k) Budget. Any Variance shall occur, other than a Permitted Variance; or

(l) Chief Restructuring Officer. The failure of an Acceptable Chief
Restructuring Officer to be employed by the Parent at any time to assist the
Loan Parties with preparation of the Budget (and updates thereto) and the other
financial and collateral reporting required to be delivered to the
Administrative Agent pursuant to this Agreement; provided that the Parent shall
have five (5) Business Days to engage a replacement Acceptable Chief
Restructuring Officer following the resignation of any Acceptable Chief
Restructuring Officer; or

(m) Subrogation. Any of the Loan Parties shall assert other than for purposes of
disclosure) any right of subrogation or contribution against any other Loan
Party prior to the payment in full of the Obligations, the DIP Term Claims and
the Existing Senior Secured Note Obligations; or

(n) Judgments. There is entered against any Loan Party or any Subsidiary
thereof(with respect to any Domestic Loan Party, with respect to any
post-petition liabilities) (i) one or more final judgments for the payment of
money in an aggregate amount (as to all such final judgments) exceeding
$10,000,000 (to the extent not covered by independent third-party insurance as
to which the insurer is rated at least “A” by A.M. Best Company, has been
notified of the potential claim and does not dispute coverage), or (ii) any one
or more non-monetary judgments that have, or would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect and, in either
case such judgment is not, within 30 days after the entry thereof, satisfied,
vacated, discharged or execution thereof stayed or bonded pending appeal, or
such final judgment is not satisfied, vacated or discharged prior to the
expiration of any such stay; or

(o) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of any Loan Party under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $10,000,000
or which would reasonably be expected to result in a Material Adverse Effect, or
(ii) a Loan Party or any ERISA Affiliate fails to pay when due, after the
expiration of any applicable grace period, any installment payment with respect
to its withdrawal liability under Section 4201 of ERISA under a Multiemployer
Plan in an aggregate amount in excess of $10,000,000 or which would reasonably
be expected to result in a Material Adverse Effect; or

(p) Canadian Pension Plan. Any event or condition shall occur or exist with
respect to a Canadian Pension Plan that could reasonably be expected to subject
any Canadian Loan Party to any tax, penalty or other liabilities under the
Supplemental Pension Plans Act (Quebec) and the Pension Benefits Act (Ontario)
or any other applicable Laws, or if a Canadian Loan Party

 

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is in default with respect to required payments to a Canadian Pension Plan or
any Lien arises (save for contribution amounts not yet due) in connection with
any Canadian Pension Plan, and which could reasonably be expected to result in a
Material Adverse Effect; or

(q) Foreign Pension Plans; An event occurs with respect to a Pension Plan of the
Australian Loan Parties or the Japanese Loan Parties which has resulted or could
reasonably be expected to result in liability of any Australian Loan Party or
Japanese Loan Party, as applicable, in an aggregate amount in excess of
$10,000,000 or which would reasonably be expected to result in a Material
Adverse Effect, or

(r) Invalidity of Loan Documents. (i) Any provision of any material Loan
Document, at any time after its execution and delivery and for any reason other
than as expressly permitted hereunder or thereunder or satisfaction in full of
all the Obligations, ceases to be in full force and effect; or any Loan Party
contests in any manner the validity or enforceability of any provision of any
Loan Document; or any Loan Party denies that it has any or further liability or
obligation under any provision of any Loan Document, or purports to revoke,
terminate, repudiate or rescind any provision of any Loan Document or seeks to
avoid, limit or otherwise adversely affect any Lien purported to be created
under any Security Document; or (ii) any Lien purported to be created under any
Security Document shall cease to be, or shall be asserted by any Loan Party or
any Subsidiary not to be, a valid and (to the extent required by the Security
Documents and this Agreement) perfected Lien on any Collateral (other than an
immaterial portion of the Collateral), with the priority required by the
applicable Security Document; or

(s) Change of Control. There occurs any Change of Control; or

(t) Cessation of Business. Except as otherwise expressly permitted hereunder or
pursuant to any Order, any Loan Party shall take any action to suspend the
operation of the business of the Loan Parties, taken as a whole, or liquidate
all or a material portion of the assets of the Loan Parties, taken as a whole;
or

(u) Loss of Collateral. There occurs any uninsured loss to any material portion
of the Collateral or any of the Japanese Loan Parties request a “fixing of the
principal secured” (ganpon no kautei); or

(v) Reserved; or

(w) Indictment. The indictment against any Loan Party or any Subsidiary thereof,
under any federal, state, provincial, territorial, municipal, foreign or other
criminal statute, rule, regulation, order, or other requirement having the force
of law for a felony and such indictment remains unquashed or undismissed for a
period of ninety (90) days or more, unless the Administrative Agent, in its
reasonable discretion, determines that the indictment is not material; or

 

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(x) Guaranty. The termination, revocation or attempted termination or revocation
by any Loan Party of any Facility Guaranty except as expressly permitted
hereunder or under any other Loan Document; or

(y) [Reserved].

(z) Chapter 11 Cases Milestones. The failure to meet any of the following
milestones:

(i) file the Chapter 11 Cases on the Petition Date;

(ii) obtain entry of the Interim Order within 2 Business Days of the Petition
Date;

(iii) obtain entry of the Final Order on or before the date that is 30 days
after the Petition Date;

(iv) file a Sponsored Plan together with the accompanying disclosure statement
pursuant to section 1125 of the Bankruptcy Code (the “Disclosure Statement”),
plan solicitation materials and motion seeking approval of the Bankruptcy Court
to the Disclosure Statement within 30 days of the Petition Date;

(v) obtain entry of an order approving the Disclosure Statement as containing
“adequate information” within the meaning of section 1125 of the Bankruptcy Code
within 75 days after the Petition Date;

(vi) within 30 days after the Petition Date, the Domestic Loan Parties shall
have filed a motion requesting, and within 75 days after the commencement of
Chapter 11 Cases, shall have obtained, an order of the Bankruptcy Court
extending the time period of the Domestic Loan Parties to assume or reject
leases to not less than 210 days from the Petition Date; and

(vii) the effective date of a Sponsored Plan shall occur within 120 days
following the date of the Confirmation Order pursuant to clause (x) hereof.

(aa) Boardriders Defaults. The exercise of any rights or remedies by any holder
of the Boardriders Notes (or any trustee, agent or representative on behalf of
such holder or holders including the Boardriders Notes Trustee) with respect to
any event of default thereunder , or the Boardriders Waiver ceases to be in full
force and effect, other than pursuant to its terms;

(bb) Restrainment. 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 the Loan Parties and their
Subsidiaries, taken as a whole;

 

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(cc) Challenge. Any Loan Party engages in or supports any challenge to the
validity, perfection, priority, extent or enforceability of any of the Existing
ABL Credit Agreement or the Liens securing the Existing ABL Credit Agreement,
including without limitation seeking to equitably subordinate or avoid the Liens
securing the Existing ABL Obligations; or (B) any Loan Party engages in or
supports any investigation or asserts any claims or causes of action (or
directly or indirectly support assertion of the same) against the Administrative
Agent, the Lenders, the Existing ABL Agent (or other agent thereunder) or the
Existing ABL Lenders; provided, however, that it shall not constitute an Event
of Default if the Loan Parties provide information with respect to the Existing
ABL Credit Agreement to a party in interest, or are compelled to provide
information by an order of the Bankruptcy Court so long as the Loan Parties
provide prior written notice to the Administrative Agent and the Lenders of any
intention or requirement to do so;

(dd) 506(a). From and after entry of the Final Order, any Person shall obtain a
Section 506(a) judgment or similar determination with respect to the Existing
ABL Obligations that is unacceptable to the Existing ABL Agent; or

(ee) 506(c) and 552(b). From and after entry of the Final Order, entry of an
order by the Bankruptcy Court authorizing or directing payment of any claim or
claims under Section 506(c) or 552(b) of the Bankruptcy Code against or with
respect to any of the Collateral.

8.02 Remedies Upon Event of Default. Notwithstanding anything in Section 362 of
the Bankruptcy Code, but subject to the Orders, as applicable to the Domestic
Loan Parties, upon the occurrence and during the continuance of any Event of
Default, the Administrative Agent shall, at the request of the Required Lenders,
take any or all of the following actions, at the same time or different times,
in each case without further order of or application to the Bankruptcy Court
(provided, that with respect to the enforcement of Liens or other remedies with
respect to the Collateral under clause (d) below, the Administrative Agent shall
provide the Borrower with five Business Days’ written notice (with a copy to
counsel for any Committee and to the United States Trustee for the District of
Delaware) prior to taking the action contemplated thereby; in any hearing after
the giving of the aforementioned notice, the only issue that may be raised by
any party in opposition thereto being whether, in fact, an Event of Default has
occurred and is continuing):

(a) declare the Commitments of each Lender to make Loans and any obligation of
the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such
Commitments and obligation shall be terminated;

(b) declare the unpaid principal amount of all outstanding Loans, all interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder or
under any other Loan Document to be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Loan Parties;

 

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(c) require that the Domestic Borrowers Cash Collateralize the Domestic L/C
Obligations (other than L/C Borrowings), and require that the Foreign Loan
Parties Cash Collateralize the Australian L/C Obligations (other than L/C
Borrowings); and

(d) whether or not the maturity of the Obligations shall have been accelerated
pursuant hereto, proceed to protect, enforce and exercise all rights and
remedies of the Credit Parties under this Agreement, any of the other Loan
Documents or applicable Law, including, but not limited to, by suit in equity,
action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Agreement and the
other Loan Documents or any instrument pursuant to which the Obligations are
evidenced, and, if such amount shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any other legal or
equitable right of the Credit Parties;

provided, however, that upon the entry of an order for relief with respect to
any Loan Party (other than a Domestic Loan Party) or any Subsidiary thereof
under any Debtor Relief Law, the obligation of each Lender to make Loans and any
obligation of the L/C Issuer to make L/C Credit Extensions shall automatically
terminate, the unpaid principal amount of all outstanding Loans and all interest
and other amounts as aforesaid shall automatically become due and payable, and
the obligation of the Loan Parties to Cash Collateralize the L/C Obligations
(other than L/C Borrowings) as aforesaid shall automatically become effective,
in each case without further act of the Agents, the L/C Issuer, or any Lender.

Neither the Loan Parties, the Committee, nor any other party-in-interest shall
have the right to contest the enforcement of remedies set forth in the Orders
and the Loan Documents on any basis other than an assertion that an Event of
Default has not occurred or has been cured within the cure periods expressly set
forth in the applicable Loan Documents. The Loan Parties shall cooperate fully
with the Administrative Agent and the Lenders in their exercise of rights and
remedies, whether against the Collateral or otherwise. The Loan Parties hereby
waive any right to seek relief under the Bankruptcy Code, including under
Section 105 thereof, to the extent such relief would restrict or impair the
rights and remedies of the Administrative Agent and the Lenders set forth in the
Orders and in the Loan Documents.

In case any one or more of the covenants and/or agreements set forth in this
Agreement or any other Loan Document shall have been breached by any Loan Party,
then the Administrative Agent or any Lender may proceed to protect and enforce
the Lenders’ rights either by suit in equity and/or by action at law, including
an action for damages as a result of any such breach and/or an action for
specific performance of any such covenant or agreement contained in this
Agreement or such other Loan Document. Without limitation of the foregoing, the
Borrowers agree that failure to comply with any of the covenants contained
herein will cause irreparable harm and that specific performance shall be
available in the event of any breach thereof. The Administrative Agent and any
Lender acting pursuant to this paragraph shall be indemnified by the Borrowers
against all liability, loss or damage, together with all reasonable costs and
expenses related thereto (including reasonable legal and accounting fees and
expenses) in accordance with the terms hereof.

 

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No remedy herein is intended to be exclusive of any other remedy and each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or any other provision of Law.

8.03 Application of Funds.

(a) After the exercise of remedies provided for in Section 8.02 (or after the
Loans have automatically become immediately due and payable and the L/C
Obligations have automatically been required to be Cash Collateralized as set
forth in the proviso to Section 8.02), any amounts received from any Domestic
Loan Party, from the liquidation of any Collateral of any Domestic Loan Party,
or on account of the Obligations shall be applied by the Administrative Agent
against the Obligations in the following order:

First, to payment of that portion of the Obligations (excluding the Other
Liabilities and the Foreign Liabilities) constituting fees, indemnities, Credit
Party Expenses and other amounts (including fees, charges and disbursements of
counsel to the Administrative Agent and the Collateral Agent and amounts payable
under Article III) payable to the Administrative Agent and the Collateral Agent,
each in its capacity as such;

Second, to payment of that portion of the Obligations (excluding the Other
Liabilities) constituting indemnities, Credit Party Expenses, and other amounts
(other than principal, interest and fees) payable to the Domestic Lenders and
the L/C Issuer (on account of Domestic Letters of Credit) (including fees,
charges and disbursements of counsel to the respective Domestic Lenders and the
L/C Issuer (on account of Domestic Letters of Credit) and amounts payable under
Article III), ratably among them in proportion to the amounts described in this
clause Second payable to them;

Third, to the extent not previously reimbursed by the Domestic Lenders, to
payment to the Domestic Lenders of that portion of the Obligations constituting
principal and accrued and unpaid interest on any Permitted Domestic
Overadvances, ratably among the Domestic Lenders in proportion to the amounts
described in this clause Third payable to them;

Fourth, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Domestic Loans, Domestic L/C Borrowings and other
Obligations (other than the Foreign Liabilities), and fees, ratably among the
Domestic Lenders and the L/C Issuer in proportion to the respective amounts
described in this clause Fourth payable to them;

Fifth, to payment of that portion of the Obligations constituting unpaid
principal of the Domestic Loans and Domestic L/C Borrowings, ratably among the
Domestic Lenders and the L/C Issuer in proportion to the respective amounts
described in this clause Fifth held by them;

Sixth, to the Administrative Agent for the account of the L/C Issuer, to Cash
Collateralize that portion of Domestic L/C Obligations comprised of the
aggregate undrawn amount of Domestic Letters of Credit;

 

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Seventh, subject to Section 8.03(c), to the Administrative Agent to be held by
the Administrative Agent, for the ratable benefit of the Foreign Lenders as cash
collateral to payment of that portion of the Foreign Liabilities (excluding the
Other Liabilities) constituting fees, indemnities, Credit Party Expenses and
other amounts (including fees, charges and disbursements of counsel to the
Administrative Agent and amounts payable under Article III) payable to the
Administrative Agent, in its capacity as such;

Eighth, subject to Section 8.03(c), to the Administrative Agent to be held by
the Administrative Agent, for the ratable benefit of the Foreign Lenders and the
L/C Issuer as cash collateral to payment of that portion of the Foreign
Liabilities (excluding the Other Liabilities) constituting indemnities, Credit
Party Expenses, and other amounts (other than principal, interest and fees)
payable to the Foreign Lenders and the L/C Issuer (on account of Foreign Letters
of Credit) (including fees, charges and disbursements of counsel to the
respective Foreign Lenders and the L/C Issuer (on account of Foreign Letters of
Credit) and amounts payable under Article III), ratably among them in proportion
to the amounts described in this clause Tenth payable to them;

Ninth, to the extent not previously reimbursed by the Foreign Lenders and
subject to Section 8.03(c), to the Administrative Agent to be held by the
Administrative Agent, for the ratable benefit of the Foreign Lenders as cash
collateral to payment to the Foreign Lenders of that portion of the Foreign
Liabilities constituting principal and accrued and unpaid interest on any
Permitted Foreign Overadvances, ratably among the Foreign Lenders in proportion
to the amounts described in this clause Ninth payable to them;

Tenth, subject to Section 8.03(c), to the Administrative Agent to be held by the
Administrative Agent, for the ratable benefit of the Foreign Lenders and the L/C
Issuer as cash collateral to payment of that portion of the Foreign Liabilities
constituting accrued and unpaid interest on the Foreign Loans, Australian L/C
Borrowings, and other Foreign Liabilities, and fees (including Letter of Credit
Fees not paid pursuant to clause Fourth above), ratably among the Foreign
Lenders and the L/C Issuer in proportion to the respective amounts described in
this clause Tenth payable to them;

Eleventh, subject to Section 8.03(c), to the Administrative Agent to be held by
the Administrative Agent, for the ratable benefit of the Foreign Lenders and the
L/C Issuer, to Cash Collateralize that portion of Australian L/C Obligations
comprised of the aggregate undrawn amount of Foreign Letters of Credit;

Twelfth, to payment of all other Obligations (including without limitation the
cash collateralization of unliquidated indemnification obligations for which a
claim has been made as provided in Section 10.04), ratably among the Credit
Parties in proportion to the respective amounts described in this clause Twelfth
held by them;

 

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Thirteenth, to payment of that portion of the Obligations arising from Cash
Management Services to the extent secured under the Security Documents, ratably
among the Credit Parties in proportion to the respective amounts described in
this clause held by them;

Fourteenth, to payment of all other Obligations arising from Bank Products to
the extent secured under the Security Documents, ratably among the Credit
Parties in proportion to the respective amounts described in this clause
Fourteenth held by them; and

Last, the balance, if any, after all of the Obligations have been indefeasibly
paid in full, to the Domestic Loan Parties or as otherwise required by Law.

Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate
undrawn amount of Domestic Letters of Credit pursuant to clause Sixth above
shall be applied to satisfy drawings under such Domestic Letters of Credit as
they occur. If any amount remains on deposit as Cash Collateral after all
Domestic Letters of Credit have either been fully drawn or expired, such
remaining amount shall be applied to the other Obligations, if any, in the order
set forth above.

(b) After the exercise of remedies provided for in Section 8.02 (or after the
Loans have automatically become immediately due and payable and the L/C
Obligations have automatically been required to be Cash Collateralized as set
forth in the proviso to Section 8.02), any amounts received from any Foreign
Loan Party, from the liquidation of any Collateral of any Foreign Loan Party, or
on account of the Foreign Liabilities, shall be applied, subject to any
applicable Laws to the contrary, by the Administrative Agent (or as directed by
the Administrative Agent) against the Foreign Liabilities in the following
order:

First, to payment of that portion of the Foreign Liabilities (excluding the
Other Liabilities) constituting fees, indemnities, Credit Party Expenses and
other amounts (including fees, charges and disbursements of counsel to the
Administrative Agent and amounts payable under Article III) payable to the
Administrative Agent, in its capacity as such;

Second, to payment of that portion of the Foreign Liabilities (excluding the
Other Liabilities) constituting indemnities, Credit Party Expenses, and other
amounts (other than principal, interest and fees) payable to the Foreign Lenders
and the L/C Issuer (on account of Foreign Letters of Credit) (including fees,
charges and disbursements of counsel to the respective Domestic Lenders and the
L/C Issuer (on account of Foreign Letters of Credit) and amounts payable under
Article III), ratably among them in proportion to the amounts described in this
clause Second payable to them;

Third, to the extent not previously reimbursed by the Foreign Lenders, to the
Administrative Agent to be held by the Administrative Agent, for the ratable
benefit of the Foreign Lenders as cash collateral to payment to the Foreign
Lenders of that portion of the Foreign Liabilities constituting principal and
accrued and unpaid interest on any Permitted Foreign Overadvances, ratably among
the Foreign Lenders in proportion to the amounts described in this clause Third
payable to them;

 

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Fourth, to payment of that portion of the Foreign Liabilities constituting
accrued and unpaid interest on the Foreign Loans, Australian L/C Borrowings and
other Foreign Liabilities, and fees (including Letter of Credit Fees due on
account of Foreign Letters of Credit), ratably among the Foreign Lenders and the
L/C Issuer in proportion to the respective amounts described in this clause
Fourth payable to them;

Fifth, to payment of that portion of the Foreign Liabilities constituting unpaid
principal of the Foreign Loans and Australian L/C Borrowings, ratably among the
Foreign Lenders and the L/C Issuer in proportion to the respective amounts
described in this clause Fifth held by them;

Sixth, to the Administrative Agent for the account of the L/C Issuer, to Cash
Collateralize that portion of Australian L/C Obligations comprised of the
aggregate undrawn amount of Foreign Letters of Credit;

Seventh, to payment of all other Foreign Liabilities (including without
limitation the cash collateralization of unliquidated indemnification
obligations as provided in Section 10.04, but excluding any Other Liabilities),
ratably among the Credit Parties in proportion to the respective amounts
described in this clause Seventh held by them;

Eighth, to payment of that portion of the Foreign Liabilities arising from Cash
Management Services to the extent secured under the Security Documents, ratably
among the Credit Parties in proportion to the respective amounts described in
this clause Eighth held by them;

Ninth, to payment of all other Foreign Liabilities arising from Bank Products to
the extent secured under the Security Documents, ratably among the Credit
Parties in proportion to the respective amounts described in this clause Ninth
held by them; and

Last, the balance, if any, after all of the Foreign Liabilities have been
indefeasibly paid in full, to the Foreign Loan Parties or as otherwise required
by Law.

Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate
undrawn amount of Foreign Letters of Credit pursuant to clause Eighth above
shall be applied to satisfy drawings under such Foreign Letters of Credit as
they occur. If any amount remains on deposit as Cash Collateral after all
Foreign Letters of Credit have either been fully drawn or expired, such
remaining amount shall be applied to the other Foreign Liabilities, if any, in
the order set forth above.

Notwithstanding the foregoing, all amounts received from or on account of each
Foreign Loan Party or its Collateral shall be first applied to the outstanding
Loans and Letters of Credit of such Foreign Loan Party (i.e. proceeds from any
Australian Loan Party shall be first applied to the Australian Liabilities,
proceeds from any Canadian Loan Party shall first be applied to the Canadian
Liabilities and proceeds from any Japanese Loan Party shall first be applied to
the Japanese Liabilities, as applicable) prior to application to the Foreign
Liabilities of any other Foreign Loan Party.

 

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(c) Any amounts received by the Administrative Agent pursuant to clauses Seventh
through Fifteenth of Section 8.03(a) shall be held as cash collateral for the
applicable Foreign Liabilities until the earlier of (i) the Substantial
Liquidation of the Collateral granted by the Foreign Loan Parties to secure the
Foreign Liabilities, or (ii) such date that the Administrative Agent shall
otherwise determine.

(d) Notwithstanding anything contained in this Section 8.03, Excluded Swap
Obligations with respect to any Guarantor shall not be paid with amounts
received from such Guarantor but appropriate adjustments shall be made with
respect to payments from the other Loan Parties to preserve the allocation of
the Obligations otherwise set forth above in this Section 8.03.

8.04 Waivers By Loan Parties

Except as otherwise provided for in this Agreement or by applicable Law, each
Loan Party waives (a) presentment, demand and protest and notice of presentment,
dishonor, notice of intent to accelerate, notice of acceleration, protest,
default, nonpayment, maturity, release, compromise, settlement, and hereby
ratifies and confirms whatever the Administrative Agent may do in this regard,
(b) all rights to notice and a hearing prior to the Administrative Agent’s
taking possession or control of, or to the Administrative Agent’s replevy,
attachment or levy upon, the Collateral or any bond or security that might be
required by any court prior to allowing the Administrative Agent to exercise any
of its remedies, and (c) the benefit of all valuation, appraisal, marshaling and
exemption Laws.

ARTICLE IX

AGENTS AND LENDERS

9.01 Appointment and Authority.

(a) Each of the Domestic Lenders and the L/C Issuer (with respect to Domestic
Letters of Credit) hereby irrevocably appoints Bank of America to act on its
behalf as the Administrative Agent hereunder and under the other Loan Documents
and authorizes the Administrative Agent to take such actions on its behalf and
to exercise such powers as are delegated to the Administrative Agent by the
terms hereof or thereof, together with such actions and powers as are reasonably
incidental thereto. The provisions of this Article IX are for the benefit of the
Agents, the Domestic Lenders and the L/C Issuer, and no Loan Party or any
Subsidiary thereof shall have rights as a third party beneficiary of any of such
provisions (other than the provisions of Section 9.07).

(b) Each of the Foreign Lenders and the L/C Issuer (with respect to Foreign
Letters of Credit) hereby irrevocably appoints Bank of America acting through
its branches and Affiliates to act on its behalf as the Administrative Agent
hereunder and under the other Loan Documents and authorizes the Administrative
Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Administrative Agent by the terms hereof or thereof, together
with such actions and powers as are reasonably incidental thereto. The
provisions of this Article IX are for the benefit of the Administrative Agent,
the Foreign Lenders and the L/C Issuer, and no Loan Party or any Subsidiary
thereof shall have rights as a third party beneficiary of any of such provisions
(other than the provisions of Section 9.07).

 

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(c) It is understood and agreed that the use of the term “agent” herein or in
any other Loan Documents (or any other similar term) with reference to the
Administrative 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 as a matter of market custom, and is intended to
create or reflect only an administrative relationship between contracting
parties.

(d) Without limiting the generality of the foregoing Section 9.01(b), for the
purposes of creating a solidarité active in accordance with article 1541 of the
Civil Code of Québec between each Credit Party that is owed any Canadian
Liabilities, taken individually, on the one hand, and the Administrative Agent,
on the other hand, each Canadian Loan Party and each such Credit Party
acknowledge and agree with the Administrative Agent that such Credit Party and
the Administrative Agent are hereby conferred the legal status of solidary
creditors of the Canadian Loan Parties in respect of all Canadian Liabilities,
present and future, owed by any Canadian Loan Party to each such Credit Party
and the Administrative Agent (collectively, for the purposes of this paragraph,
the “solidary claim”). Accordingly, but subject (for the avoidance of doubt) to
article 1542 of the Civil Code of Québec, the Canadian Loan Parties are
irrevocably bound towards the Administrative Agent and each such Credit Party in
respect of the entire solidary claim of the Administrative Agent and such Credit
Party. As a result of the foregoing, the Canadian Loan Parties confirm and agree
that subject to Section 9.01(b), above, the rights of the Administrative Agent
and each of the Credit Parties who are owed Canadian Liabilities from time to
time a party to this Agreement or any of the other Loan Documents by way of
assignment or otherwise are solidary and, as regards the Canadian Liabilities
owing from time to time to each such Credit Party, each of the Administrative
Agent and such Credit Party is entitled, when permitted pursuant to
Section 8.01, to: (i) demand payment of all outstanding amounts from time to
time in respect of the Canadian Liabilities; (ii) exact the whole performance of
such Canadian Liabilities from the Canadian Loan Parties; (iii) benefit from the
Administrative Agent’s Liens in the Collateral in respect of such Canadian
Liabilities; (iv) give a full acquittance of such Canadian Liabilities (each
Credit Party that is owed Canadian Liabilities hereby agreeing to be bound by
any such acquittance); and (v) exercise all rights and recourses under the Loan
Documents with respect to those Canadian Liabilities. The Canadian Liabilities
of the Canadian Loan Parties will be secured by the Administrative Agent’s Liens
in the Collateral and the Administrative Agent and the Credit Parties who are
owed Canadian Liabilities will have a solidary interest therein. In its capacity
as the Administrative Agent, for the purposes of holding any hypothec granted
pursuant to the laws of the Province of Quebec, each Credit Party hereby
irrevocably appoints and authorizes the Administrative Agent and, to the extent
necessary, ratifies the appointment and authorization of the Administrative
Agent, to act as the hypothecary representative of the applicable Credit Parties
as contemplated under Article 2692 of the Civil Code of Quebec, and to enter
into, to take and to hold on their behalf, and for their benefit, any hypothec,
and to exercise such powers and duties that are conferred upon the
Administrative Agent under any related deed of hypothec. The Administrative
Agent shall have the sole and exclusive right and authority to exercise, except
as may be otherwise specifically restricted by the terms hereof, all rights and
remedies given to the Administrative Agent pursuant to any such deed of hypothec
and applicable law. Any person who becomes a Credit Party shall, by its
execution of an Assignment and Assumption, be deemed to have consented to and
confirmed the Administrative Agent as the person acting as hypothecary

 

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representative holding the aforesaid hypothecs as aforesaid and to have
ratified, as of the date it becomes a Credit Party, all actions taken by the
Administrative Agent in such capacity. The substitution of the Administrative
Agent pursuant to the provisions of this Article IX also constitute the
substitution of the Administrative Agent as hypothecary representative as
aforesaid.

(e) Each of the Lenders (in its capacities as a Lender) and the L/C Issuer
hereby authorizes the Administrative Agent, to the extent permitted by
applicable Law, to act as the agent of such Lender and the L/C Issuer for
purposes of acquiring, holding and enforcing any and all Liens on Collateral
granted by any of the Loan Parties to secure any of the Obligations, together
with such powers and discretion as are reasonably incidental thereto.

9.02 Appointment of Australian Security Trustee by Foreign Credit Parties.

(a) The Australian Security Trustee is (a) appointed by the other Foreign Credit
Parties to act as the Australian Security Trustee for the purpose of the Loan
Documents; and (b) irrevocably authorized to enter into the Loan Documents in
its capacity as Australian Security Trustee and to take the action and to
exercise the rights that are expressly or by implication delegated to the
Australian Security Trustee by a Loan Document and any other action or rights
that are reasonably incidental.

(b) A Foreign Lender must not assign, encumber, declare a trust over or
otherwise deal with any of its rights or novate any of its rights and
obligations under any of the Loan Documents to any person other than as
permitted by this Agreement and the other Loan Documents.

(c) A Foreign Credit Party must promptly notify the Administrative Agent of any
assignment, encumbrance, declaration of trust over or other dealing with or
novation of that Foreign Credit Party’s rights, benefits or obligations under
any Loan Document.

(d) If at any time the Australian Security Trustee receives money under a Loan
Document that is available for distribution, whether or not it represents the
proceeds of recovery action taken under any Loan Document, then the Australian
Security Trustee must, subject to any applicable Law to the contrary including
section 140 of the Australian PPS Law, distribute that money in accordance with
this Agreement.

(e) Money referred to in Section 9.02(d) above includes money that is received
by the Australian Security Trustee before enforcement proceedings are commenced
under a Loan Document in relation to any Collateral but which has not been
distributed by that time.

(f) Subject to a contrary decision by the Administrative Agent (acting on the
instructions of the relevant Required Lenders), the money referred to in
Section 9.02(d) does not constitute recovered money (being the aggregate amount
received in accordance with Section 8.03 that has not been distributed under
this Agreement) if the money is deposited in an interest bearing suspense
account under a Loan Document.

 

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(g) The Australian Security Trustee must: (i) promptly send to each Foreign
Credit Party details of each communication and document received by it from the
Administrative Agent or an Australian Lender in connection with the Loan
Documents, unless the details are of a purely routine or administrative nature;
(ii) subject to the other provisions of this Agreement, act in accordance with
any instructions from the Administrative Agent (acting on the instructions of
the Required Lenders) or, if so instructed by the Administrative Agent, refrain
from exercising rights vested in it under the Loan Documents; and (iii) promptly
notify the Administrative Agent of any Event of Default of which the Australian
Security Trustee, acting in its capacity as Australian Security Trustee,
acquires actual knowledge and of which the Administrative Agent does not have
actual knowledge.

(h) Subject to the other provisions of this Section 9.02 and except in relation
to amounts due to the Australian Security Trustee in its own right, the
Australian Security Trustee agrees to act in accordance with the instructions of
the Administrative Agent (acting on the instructions of the relevant Required
Lenders) in exercising its rights under the Loan Documents.

(i) The Australian Security Trustee in its capacity as Australian Security
Trustee must not, without the prior written instructions of the Administrative
Agent, (i) exercise rights delegated to or conferred on it under the Loan
Documents; or (ii) waive any breach of or otherwise excuse performance of any
obligation of any Australian Loan Party under any Loan Document.

(j) Any instruction given to or action taken by the Australian Security Trustee
in accordance with this Agreement or any other Loan Document is binding on all
Foreign Credit Parties and each Foreign Credit Party authorizes the Australian
Security Trustee to give any consent and do any other matter or thing necessary
or appropriate to give effect to the instruction.

(k) The instructions referred to in this Section 9.02(k) (and any other
provisions in this Section 9.02 requiring the Administrative Agent to seek or
act in accordance with the Required Lenders’ consent, authority or instructions)
are deemed to be given in accordance with this Agreement, if the Administrative
Agent communicates such consent, authority or instructions to the Australian
Security Trustee and states that the consent, authority or instructions were
given or obtained in accordance with this Agreement. In such event, the
Australian Security Trustee need not enquire whether the Required Lenders have
given the requisite consent, authority or instructions to the Administrative
Agent.

(l) If (in the reasonable opinion of the Administrative Agent) the Australian
Security Trustee fails to act in accordance with any instructions given to it
under this Agreement (and within a time deemed reasonable by the Administrative
Agent), each Foreign Credit Party has a right to exercise the rights of the
Australian Security Trustee to enable that instruction to be effected.

 

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(m) The Australian Security Trustee may (i) perform any of its duties,
obligations and responsibilities under the Loan Documents by or through its
agents and representatives; (ii) refrain from exercising any rights vested in it
under the Loan Documents until it has received instructions from the
Administrative Agent (acting on the instructions of the Required Lenders), as to
whether (and, if it is to be exercised, the way in which) that right is to be
exercised and in all cases will not incur any liability when (a) acting in
accordance with those instructions or (b) refraining from acting, either in
accordance with those instructions or in the absence of those instructions;
(iii) refrain from doing anything that would or might in its opinion be contrary
to any applicable Law or directive or otherwise render it liable to any Person
and may do anything which is, in its opinion, necessary to comply with any
applicable Law or directive; (iv) refrain from taking any step (or further step)
to protect or enforce the rights of any Foreign Credit Party under the Loan
Documents until it has been indemnified or secured to its reasonable
satisfaction against any and all claims which it would or might sustain or incur
as a result; (v) hold any of the Loan Documents and any other related documents
with any financial institution or reputable Person whose business includes
undertaking the safe custody of documents or any lawyer or firm of lawyers
selected by the Australian Security Trustee, and the Australian Security Trustee
is not responsible for any claims incurred in connection with the deposit of
those documents and may pay all sums required to be paid on account or in
respect of any deposit of those documents; (vi) in the conduct of any trust,
instead of acting personally, employ and pay an agent, being a lawyer, or other
professional person, to transact or conduct, or concur in doing all acts
required to be done by the Australian Security Trustee (including the receipt
and payment of money); and (viii) appoint further or additional trustees for the
purpose of giving valid receipts without being liable for the actions of those
trustees.

(n) The Australian Security Trustee may at any time request (through the
Administrative Agent or directly) a Foreign Credit Party to provide a statement
setting out (i) as at the date of the statement or any other relevant date
specified by the Australian Security Trustee, the Foreign Liabilities owing to
such Foreign Credit Party; (ii) any other information (including documents) that
the Australian Security Trustee may reasonably require in relation to the
details and calculations of the amounts under this Section 9.02(n); (iii) if the
Australian Security Trustee requests a Foreign Credit Party to provide a
statement under this Section 9.02(n), the Foreign Credit Party must provide that
statement within a reasonable time; (iv) the Australian Security Trustee, as
between itself and the other Foreign Credit Parties, may rely on the statement
referred to in this Section 9.02(n) as conclusive evidence of its contents,
unless (A) the contrary is proved, or (B) the Australian Security Trustee
determines it is not reasonably satisfied as to the correctness of those
amounts.

(o) If the Australian Security Trustee, in its sole discretion, considers that
delegation is desirable in assisting the Australian Security Trustee to perform
its functions under the Loan Documents, the Australian Security Trustee may
delegate to any person or fluctuating body of persons all or any of the duties,
trusts, powers, authorities and discretions vested in the Australian Security
Trustee under or in connection with the Loan Documents; and (ii) any

 

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delegation under this Section 9.02(o) may be (a) by power of attorney or in any
other manner as the Australian Security Trustee may think fit; and (b) made on
the terms and conditions (including power to sub delegate) as the Australian
Security Trustee may think fit (but the terms and conditions must not be
inconsistent with any of the provision of the Loan Documents).

(p) The Australian Security Trustee may (i) rely on any communication or
document believed by it to be genuine; (ii) rely, as to any matter of fact that
might reasonably be expected to be within the knowledge of a Loan Party, on a
statement by or on their behalf; (iii) obtain and pay for legal or other expert
advice or services that may to it seem necessary or desirable and rely on that
advice; (iv) retain for its own benefit, and without liability to account, any
fee or other sum receivable by it for its own account; and (v) accept deposits
from, lend money to, provide any advisory or other services to or engage in any
kind of banking or other business with any party to the Loan Documents and any
Affiliates of any party (and, in each case, may do so without liability to
account).

(q) The Australian Security Trustee, in its capacity as a Foreign Credit Party
(if applicable), has the same rights under this document as any other Foreign
Credit Party and may exercise those rights as if it were not acting as
Australian Security Trustee.

(r) The Australian Security Trustee is not (i) responsible for the adequacy,
accuracy or completeness of any representation, warranty, statement or
information in the Loan Documents or any notice or other document delivered
under or referred to in the Loan Documents; (ii) responsible for the execution,
delivery, validity, legality, adequacy, enforceability or admissibility in
evidence of the Loan Documents; (iii) required to (a) take any action with
respect to the Australian PPS Law, other than as directed by the Administrative
Agent; or (b) monitor the Australia PPSA Law or the implementation of it;
(c) obliged to enquire as to the occurrence or continuation of an Event of
Default or Default; (d) under any obligations other than those for which express
provision is made in a Loan Document to which it is a party; (e) liable for
anything done or not done by it under or in connection with the Loan Documents
except in the case of fraud, gross negligence or willful misconduct by the
Australian Security Trustee or any of its agents or representatives, as
determined by a final and non-appealable judgment of a court of competent
jurisdiction; or (f) liable for anything done or not done by any receiver or
manager under or in connection with the Collateral.

(s) This Agreement and the other Loan Documents only bind the Australian
Security Trustee in its capacity as Australian Security Trustee and any
obligation of the Australian Security Trustee under this Agreement or the other
Loan Documents applies to the Australian Security Trustee in its capacity as
Australian Security Trustee.

(t) No Person to whom the Australian Security Trustee is liable under this
Agreement or any other Loan Document is entitled to have recourse in
satisfaction of such liability to any assets held by the Australian Security
Trustee in its personal capacity or in its capacity as trustee of any trust
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Security Trust Deed and clause (9) (Limitation of Liability) of the Security
Trust Deed applies to this Agreement mutatis mutandis as if set forth in full
herein. The Australian Security Trustee is not liable for any act (or omission)
if it acts (or refrains from acting) in accordance with the instructions of
Administrative Agent.

(u) Neither the Australian Security Trustee nor any of its directors, officers,
employees, agents, attorneys or Affiliates is responsible or liable to any
person (i) because a Loan Party does not perform its obligations under the Loan
Documents; (ii) for the financial condition of the Loan Parties; (iii) because
any statement, representation or warranty in a Loan Document given by a party
other than the Australian Security Trustee is incorrect or misleading; (iv) for
the effectiveness, genuineness, validity, admissibility in evidence or
sufficiency of the Loan Documents or any document signed or delivered in
connection with the Loan Documents; (v) for the enforceability of the Loan
Documents or any other document signed or delivered in connection with the Loan
Documents against any person (other than the Australian Security Trustee);
(vi) for any loss or damage occurring as a result of it exercising, failing to
exercise or purporting to exercise any right or power under this Agreement or
other Loan Documents; (vii) subject to this Agreement; (viii) for the default,
negligence or fault of any directors, officers, employees, agents, delegates,
attorneys or Affiliates of the Australian Security Trustee; (ix) for any mistake
or omission made by it or any directors, officers, employees, agents, delegates,
attorneys or Affiliates of the Australian Security Trustee; (x) for any other
matter or thing done, or not done, in relation to the Loan Documents; (xi) for
any absence of, or defect in title or for its inability to exercise any of its
powers under the Loan Documents; (xii) for any failure by a Loan Party to
perform its obligations under any Loan Document; (xiii) for acting in accordance
with the provisions of any Loan Document to which it is a party; or (xiv) for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of any Loan Document or any certificate or document given under any of them;
except to the extent that the act or omission amounts to fraud, gross negligence
or willful misconduct by the Australian Security Trustee or any directors,
officers, employees, agents, delegates, attorneys or Affiliates of the
Australian Security Trustee or a gross or willful breach by it of its
obligations under this Agreement, as determined by a final and non-appealable
judgment of a court of competent jurisdiction. Without limiting this
Section 9.02(u) or the terms of the Security Trust Deed, the Australian Security
Trustee is not responsible or liable to any Person for anything done or not done
in connection with this Agreement and the Security Trust Deed by the Australian
Security Trustee or its directors, officers, employees, agents, attorneys or
Affiliates except to the extent that the act or omission amounts to fraud, gross
negligence or willful misconduct by the Australian Security Trustee or a gross
or willful breach by it of its obligations under this Agreement and the Security
Trust Deed, as determined by a final and non-appealable judgment of a court of
competent jurisdiction.

(v) The Australian Security Trustee (i) subject to the appointment of a
successor may, and must if the Administrative Agent requires, retire at any time
from its position as Australian Security Trustee under the Loan Documents
without assigning any reason, and (ii)

 

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must give notice of its intention to retire by giving to the other Foreign
Credit Parties not less than 30 days’ nor more than 60 days’ notice.

(w) The Administrative Agent may appoint a successor to the Australian Security
Trustee, during the period of notice in Section 9.02(v). If no successor is
appointed by the Administrative Agent, the Australian Security Trustee (after
consulting with Administrative Agent) may appoint its successor. The Foreign
Credit Parties shall promptly enter into any agreements that the successor may
reasonably require to effect its appointment.

(x) From the date that the appointment of the successor is effected under
Section 9.02(w) above, the retiring Australian Security Trustee must be
discharged from any further obligations under the Loan Documents as Australian
Security Trustee, and the successor to the Australian Security Trustee and each
of the other Foreign Credit Parties have the same rights and obligations between
themselves as they would have had if the successor had been a party to those
Loan Documents.

(y) To the extent that the Loan Parties do not do so on demand or are not
obliged to do so, each Foreign Credit Party must on demand indemnify the
Australian Security Trustee against any claims sustained or incurred by the
Australian Security Trustee in (i) complying with any instructions from the
Administrative Agent or the Foreign Credit Parties; (ii) otherwise sustained or
incurred by it in connection with the Loan Documents or its duties, obligations
and responsibilities under the Loan Documents; or (iii) as a result of
appointing a receiver or manager under any of the Collateral, except to the
extent that the claim is sustained or incurred as a result of the fraud, gross
negligence or willful misconduct of the Australian Security Trustee or any of
its representatives, as determined by a final and non-appealable judgment of a
court of competent jurisdiction. When there are no Foreign Liabilities
(including, anything that is reasonably foreseeable as falling within the
definition of Foreign Liabilities) in relation to any Foreign Credit Party and
the relevant Foreign Credit Party is not committed or obliged to make advances
or provide any other financial accommodation to the Loan Parties, the relevant
Foreign Credit Party ceases to be a Foreign Credit Party on notice in writing to
that effect from the Administrative Agent and the Australian Security Trustee.

 

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9.03 Rights as a Lender. The Persons serving as the Agents hereunder shall have
the same rights and powers in their capacity as a Lender as any other Lender and
may exercise the same as though they were not the Administrative Agent,
Australian Security Trustee or the Collateral Agent and the term “Lender” or
“Lenders” shall, unless otherwise expressly indicated or unless the context
otherwise requires, include the Person serving as the Administrative Agent,
Australian Security Trustee or the Collateral Agent hereunder in its individual
capacity. Such Person and its Lender Affiliates may accept deposits from, lend
money to, act as the financial advisor or in any other advisory capacity for and
generally engage in any kind of business with the Loan Parties or any Subsidiary
or other Affiliate thereof as if such Person were not the Administrative Agent,
Australian Security Trustee or the Collateral Agent hereunder and without any
duty to account therefor to the Lenders.

9.04 Exculpatory Provisions. The Agents shall not have any duties or obligations
except those expressly set forth herein and in the other Loan Documents. Without
limiting the generality of the foregoing, the Agents:

(a) shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default or Event of Default has occurred and is continuing;

(b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
or the Collateral Agent, as applicable, is required to exercise as directed in
writing by the Required Lenders (or such other number or percentage of the
Lenders as shall be expressly provided for herein or in the other Loan
Documents), provided that no Agent shall be required to take any action that, in
its respective opinion or the opinion of its counsel, may expose such Agent to
liability or that is contrary to any Loan Document or applicable Law, including
for the avoidance of doubt any action that may be in violation of the automatic
stay under any Debtor Relief Law or that may effect a forfeiture, modification
or termination of property of a Defaulting Lender in violation of any Debtor
Relief Law; and

(c) shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Loan Parties or any of its Affiliates
that is communicated to or obtained by the Person serving as the Administrative
Agent, the Collateral Agent or any of its Lender Affiliates in any capacity.

No Agent shall be liable to any Credit Party for any action taken or not taken
by it (i) with the Consent or at the request of the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary, or as such
Agent shall believe in good faith shall be necessary, under the circumstances as
provided in Sections 10.01 and 8.02) or (ii) in the absence of its own gross
negligence or willful misconduct as determined by a final and non-appealable
judgment of a court of competent jurisdiction.

 

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No Agent shall be deemed to have knowledge of any Default unless and until
notice describing such Default is given to such Agent by the Loan Parties, a
Lender or the L/C Issuer. In the event that any Agent obtains such actual
knowledge or receives such a notice, such Agent shall give prompt notice thereof
to each of the other Agents and Lenders. Upon the occurrence of an Event of
Default, the Agents shall take such action with respect to such Default or Event
of Default as shall be reasonably directed by the Required Lenders. Unless and
until the Agents shall have received such direction, the Agents may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to any such Default or Event of Default as they shall deem advisable in
the best interest of the Credit Parties. In no event shall the Agents be
required to comply with any such directions to the extent that any Agent
believes that its compliance with such directions would be unlawful.

The Agents shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection with
this Agreement or any other Loan Document, (ii) the contents of any certificate,
report or other document delivered hereunder or thereunder or in connection
herewith or therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein or therein
or the occurrence of any Default or Event of Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document or the creation,
perfection or priority of any Lien purported to be created by the Security
Documents, (v) the value or the sufficiency of any Collateral, or (vi) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to the
Agents.

9.05 Reliance by Agents.

Each Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument,
document or other writing (including, but not limited to, any electronic
message, Internet or intranet website posting or other distribution) believed by
it to be genuine and to have been signed, sent or otherwise authenticated by the
proper Person. Each Agent also may rely upon any statement made to it orally or
by telephone and believed by it to have been made by the proper Person, and
shall not incur any liability for relying thereon. In determining compliance
with any condition hereunder to the making of a Loan, or the issuance,
extension, renewal or increase of a Letter of Credit, that by its terms must be
fulfilled to the satisfaction of a Lender or the L/C Issuer, each Agent may
presume that such condition is satisfactory to such Lender or the L/C Issuer
unless such Agent shall have received written notice to the contrary from such
Lender or the L/C Issuer prior to the making of such Loan or the issuance,
extension, renewal or increase of such Letter of Credit. Each Agent may consult
with legal counsel (who may be counsel for any Loan Party), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.

9.06 Delegation of Duties. Each Agent may perform any and all of its duties and
exercise its rights and powers hereunder or under any other Loan Document by or
through any one or more sub-agents appointed by such Agent. Each Agent and any
such sub-agent may perform any and all of its duties and exercise its rights and
powers by or through their respective Related Parties. The exculpatory

 

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provisions of this Article shall apply to any such sub-agent and to the Related
Parties of the Agents and any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as such Agent. No Agent
shall be responsible for the negligence or misconduct of any sub-agents except
to the extent that a court of competent jurisdiction determines in a final and
non-appealable judgment that such Agent acted with gross negligence or willful
misconduct in the selection of such sub-agents.

9.07 Resignation of Agents. Any Agent may at any time give written notice of its
resignation to the Lenders, the L/C Issuer and the Lead Borrower. Upon receipt
of any such notice of resignation, the Required Lenders shall have the right, in
consultation with the Lead Borrower, to appoint a successor, which, in the case
of any Agent (other than the Australian Security Trustee), shall be a bank with
an office in the United States, or a Lender Affiliate of any such bank with an
office in the United States and shall, unless an Event of Default has occurred
and is continuing at the time of such appointment, be reasonably acceptable to
the Lead Borrower (whose consent shall not be unreasonably withheld or delayed).
If no such successor shall have been so appointed by the Required Lenders and
shall have accepted such appointment within 30 days after the retiring Agent
gives notice of its resignation, then the retiring Agent may on behalf of the
Lenders and the L/C Issuer, appoint a successor Agent, as applicable, meeting
the qualifications set forth above; provided that if the retiring Agent shall
notify the Lead Borrower and the Lenders that no qualifying Person has accepted
such appointment, then such resignation shall nonetheless become effective in
accordance with such notice and (1) the retiring Agent shall be discharged from
its duties and obligations hereunder and under the other Loan Documents (except
that in the case of any Collateral held by such Person on behalf of the Lenders
or the L/C Issuer under any of the Loan Documents, the retiring Agent shall
continue to hold such collateral security until such time as a successor Agent
is appointed) and (2) in the event of resignation of the Administrative Agent,
all payments, communications and determinations provided to be made by, to or
through the Administrative Agent shall instead be made by or to each Lender and
the L/C Issuer directly, until such time as the Required Lenders appoint a
successor Administrative Agent as provided for above in this Section 9.07. Upon
the acceptance of a successor’s appointment as an Agent hereunder, such
successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring (or retired) Agent and the retiring Agent
shall be discharged from all of its duties and obligations hereunder or under
the other Loan Documents (if not already discharged therefrom as provided above
in this Section 9.07). The fees payable by the Borrowers to a successor Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Lead Borrower and such successor. After the retiring Agent’s
resignation hereunder and under the other Loan Documents, the provisions of this
Article and Section 10.04 shall continue in effect for the benefit of such
retiring Agent, its sub-agents and their respective Related Parties in respect
of any actions taken or omitted to be taken by any of them while the retiring
Agent was acting as Agent hereunder.

Any resignation by Bank of America as Administrative Agent pursuant to this
Section 9.07 shall also constitute its resignation as Security Trustee,
Collateral Agent and L/C Issuer. Upon the acceptance of a successor’s
appointment as Administrative Agent hereunder, (a) such successor shall succeed
to and become vested with all of the rights, powers, privileges and duties of
the retiring Security Trustee,

 

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Collateral Agent and L/C Issuer, (b) the retiring Security Trustee, Collateral
Agent and L/C Issuer shall be discharged from all of their respective duties and
obligations hereunder or under the other Loan Documents, and (c) the successor
L/C Issuer shall issue letters of credit in substitution for the Letters of
Credit, if any, outstanding at the time of such succession or make other
arrangements satisfactory to the retiring L/C Issuer to effectively assume the
obligations of the retiring L/C Issuer with respect to such Letters of Credit.

9.08 Non-Reliance on Agents and Other Lenders. Each Lender and the L/C Issuer
acknowledges that it has, independently and without reliance upon the Agents or
any other Lender or any of their Related Parties and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender and the L/C Issuer also
acknowledges that it will, independently and without reliance upon the Agents or
any other Lender or any of their Related Parties and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or any related agreement or any document furnished
hereunder or thereunder. Except as provided in Section 9.13, the Agents shall
not have any duty or responsibility to provide any Credit Party with any other
credit or other information concerning the affairs, financial condition or
business of any Loan Party that may come into the possession of the Agents.

9.09 No Other Duties, Etc. Notwithstanding anything to the contrary in this
Agreement or any of the other Loan Documents, no Person who is or becomes an
Arranger, a Bookrunner or a Syndication Agent shall have any powers, rights,
duties, responsibilities or liabilities with respect to this Agreement and the
other Loan Documents.

9.10 Administrative Agent May File Proofs of Claim. In case of the pendency of
any proceeding under any Debtor Relief Law or any other judicial proceeding
relative to any Loan Party, the Administrative Agent (irrespective of whether
the principal of any Loan or L/C Obligation shall then be due and payable as
herein expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on the Loan Parties) shall be
entitled and empowered, by intervention in such proceeding or otherwise

(a) to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Loans, L/C Obligations and all other
Obligations that are owing and unpaid and to file such other documents as may be
necessary or advisable in order to have the claims of the Lenders, the L/C
Issuer, the Administrative Agent and the other Credit Parties (including any
claim for the reasonable compensation, expenses, disbursements and advances of
the Lenders, the L/C Issuer, the Administrative Agent, such Credit Parties and
their respective agents and counsel and all other amounts due the Lenders, the
L/C Issuer the Administrative Agent and such Credit Parties under Sections
2.03(h), 2.03(i), 2.09 and 10.04) allowed in such judicial proceeding; and

 

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(b) to collect and receive any monies or other property payable or deliverable
on any such claims and to distribute the same;

and any custodian, receiver, receiver and manager, Controller, interim receiver,
assignee, trustee, monitor, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender and the L/C
Issuer to make such payments to the Administrative Agent and, if the
Administrative Agent shall consent to the making of such payments directly to
the Lenders and the L/C Issuer, to pay to the Administrative Agent any amount
due for the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.09 and 10.04.

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender or the L/C
Issuer any plan of reorganization, arrangement, adjustment, compromise or
composition or proposal affecting the Obligations or the rights of any Lender or
the L/C Issuer or to authorize the Administrative Agent to vote in respect of
the claim of any Lender or the L/C Issuer in any such proceeding.

9.11 Collateral and Guaranty Matters. The Credit Parties irrevocably authorize
the Agents, and the Agents hereby agree:

(a) to release any Lien on any property granted to or held by the Administrative
Agent or the Australian Security Trustee, as applicable (and with respect to the
Lien under the Japanese Security Documents, each of the Japanese Secured
Parties) under any Loan Document (i) upon termination of the Aggregate Total
Commitments and Payment in Full (other than contingent indemnification
obligations for which no claim has been asserted) and the expiration or
termination of all Letters of Credit, (ii) solely with respect to any Lien on
any property of any of the Australian Loan Parties, upon termination of the
Australian Commitments pursuant to Section 2.06 and Payment in Full of all
Australian Liabilities (other than contingent indemnification obligations for
which no claim has been asserted) and the expiration or termination of all
applicable Australian Letters of Credit, (iii) solely with respect to any Lien
on any property of any of the Japanese Loan Parties, upon termination of the
Japanese Commitments pursuant to Section 2.06 and Payment in Full of all
Japanese Liabilities (other than contingent indemnification obligations for
which no claim has been asserted), (iv) solely with respect to any Lien on any
property of any of the Canadian Loan Parties, upon termination of the Canadian
Commitments pursuant to Section 2.06 and Payment in Full of all Canadian
Liabilities (other than contingent indemnification obligations for which no
claim has been asserted), (v) that is Disposed of or to be Disposed of as part
of or in connection with any Disposition permitted hereunder or under any other
Loan Document, or (vi) if approved, authorized or ratified in writing by the
Required Lenders in accordance with Section 10.01;

(b) Reserved;

 

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(c) to subordinate any Lien on any property granted to or held by the
Administrative Agent or the Australian Security Trustee, as applicable (and with
respect to the Lien under the Japanese Security Documents, each of the Japanese
Secured Parties) under any Loan Document to the holder of any Lien on such
property that is permitted by clauses (h) or (x) of the definition of Permitted
Encumbrances;

(d) to release any Loan Party from its obligations under any Facility Guaranty
and each other applicable Loan Document if such Person ceases to be a Subsidiary
as a result of a transaction permitted hereunder; and

(e) to release (i) the Australian Loan Parties upon termination of the
Australian Commitments pursuant to Section 2.06 and Payment in Full of all
Australian Liabilities (other than contingent indemnification obligations for
which no claim has been asserted) and the expiration or termination of all
applicable Australian Letters of Credit, (ii) the Japanese Loan Parties upon
termination of the Japanese Commitments pursuant to Section 2.06 and Payment in
Full of all Japanese Liabilities (other than contingent indemnification
obligations for which no claim has been asserted), and (iii) the Canadian Loan
Parties upon termination of the Canadian Commitments pursuant to Section 2.06
and Payment in Full of all Canadian Liabilities (other than contingent
indemnification obligations for which no claim has been asserted).

Upon request by any Agent at any time, the Required Lenders (or such other
number or percentage of the Lenders as shall be expressly provided for herein or
in the other Loan Documents) will confirm in writing such Agent’s authority to
release or subordinate its interest in particular types or items of property, or
to release any Guarantor from its obligations under the Facility Guaranty and
each other applicable Loan Document pursuant to this Section 9.11. In each case
as specified in this Section 9.11, the Agents will, at the Loan Parties’
expense, execute and deliver to the applicable Loan Party such documents as such
Loan Party may reasonably request to evidence the release of such item of
Collateral from the assignment and Lien granted under the Security Documents or
to subordinate its interest in such item, or to release such Guarantor from its
obligations under the Facility Guaranty, in each case in accordance with the
terms of the Loan Documents and this Section 9.11.

9.12 Notice of Transfer.

The Agents may deem and treat a Lender party to this Agreement as the owner of
such Lender’s portion of the Loans and Commitments for all purposes, unless and
until, and except to the extent, an Assignment and Assumption shall have become
effective as set forth in Section 10.06.

9.13 Reports and Financial Statements.

By signing this Agreement, each Lender:

(a) agrees to furnish the Administrative Agent (at such frequency as the
Administrative Agent may reasonably request) with a summary of all Other
Liabilities due or to become due to such Lender. In connection with any
distributions to be made hereunder, the

 

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Administrative Agent shall be entitled to assume that no amounts are due to any
Lender on account of Other Liabilities unless the Administrative Agent has
received written notice thereof from such Lender and if such notice is received,
the Administrative Agent shall be entitled to assume that the only amounts due
to such Lender on account of Other Liabilities is the amount set forth in such
notice;

(b) is deemed to have requested that the Administrative Agent furnish such
Lender, promptly after they become available, copies of all financial
statements, notices or other written communications required to be delivered by
any Loan Party hereunder and all commercial finance examinations and appraisals
of the Collateral received by the Agents (collectively, the “Reports”) and the
Administrative Agent hereby agrees to honor each such request;

(c) expressly agrees and acknowledges that the Administrative Agent makes no
representation or warranty as to the accuracy of the Borrowing Base
Certificates, financial statements or Reports, and shall not be liable for any
information contained in any Borrowing Base Certificate, financial statement or
Report;

(d) expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that the Agents or any other party performing any audit
or examination will inspect only specific information regarding the Loan Parties
and will rely significantly upon the Loan Parties’ books and records, as well as
on representations of the Loan Parties’ personnel;

(e) agrees to keep all Borrowing Base Certificates, financial statements and
Reports confidential in accordance with the provisions of Section 10.07 hereof;
and

(f) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold the Agents and any such other
Lender preparing a Report harmless from any action the indemnifying Lender may
take or conclusion the indemnifying Lender may reach or draw from any Report in
connection with any Credit Extensions that the indemnifying Lender has made or
may make to the Borrowers, or the indemnifying Lender’s participation in, or the
indemnifying Lender’s purchase of, a Loan or Loans; and (ii) to pay and protect,
and indemnify, defend, and hold the Agents and any such other Lender preparing a
Report harmless from and against, the claims, actions, proceedings, damages,
costs, expenses, and other amounts (including attorney costs) incurred by the
Agents 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.

9.14 Agency for Perfection.

Each Credit Party hereby appoints each other Credit Party as agent for the
purpose of perfecting Liens for the benefit of the applicable Credit Parties, in
assets which, in accordance with Article 9 of the UCC, the PPSA, the Australian
PPSA or any other applicable Law of the United States, Canada or Australia can
be perfected only by possession or control. Should any Credit Party (other than
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possession or control of any such Collateral, such Credit Party shall notify the
Agents thereof, and, promptly upon the Administrative Agent’s request therefor,
shall deliver such Collateral to the Administrative Agent or the Australian
Security Trustee, as applicable, or otherwise deal with such Collateral in
accordance with the Administrative Agent’s instructions or the Australian
Security Trustee’s instructions, as applicable.

9.15 Indemnification of Agents.

The Lenders shall indemnify the Agents (to the extent not reimbursed by the Loan
Parties and without limiting the obligations of Loan Parties hereunder), ratably
according to their Applicable Percentages, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against any Agent, any sub-agent of the
foregoing, the L/C Issuer and their respective Related Parties in any way
relating to or arising out of this Agreement or any other Loan Document or any
action taken or omitted to be taken by any Agent, any sub-agent of the
foregoing, the L/C Issuer and their respective Related Parties in connection
therewith; provided, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Agent’s, such sub-agent’s,
the L/C Issuer’s or their respective Related Parties’ gross negligence or
willful misconduct as determined by a final and non-appealable judgment of a
court of competent jurisdiction.

9.16 Relation among Lenders. The Lenders are not partners or co-venturers, and
no Lender shall be liable for the acts or omissions of, or (except as otherwise
set forth herein in case of the Agents) authorized to act for, any other Lender.

9.17 Risk Participation.

(a) Upon the earlier of Substantial Liquidation or the Determination Date, if
all Foreign Liabilities have not been repaid in full (other than the Other
Liabilities of the Foreign Borrowers and their Subsidiaries), then each Domestic
Lender (or its Lender Affiliates) shall purchase from the Foreign Lenders (on
the date of Substantial Liquidation or the Determination Date, as applicable)
such portion of such Foreign Liabilities (other than Other Liabilities relating
to the Foreign Borrowers and their Subsidiaries) so that such Lender (and its
applicable Lender Affiliates) shall, after giving effect to any such purchases,
hold its Liquidation Percentage of all such outstanding Foreign Liabilities and
all other Obligations.

(b) Upon the earlier of Substantial Liquidation or the Determination Date, if
all Obligations of the Domestic Borrowers (excluding those Obligations relating
to the Foreign Liabilities or the Other Liabilities) have not been repaid in
full, then each Foreign Lender (or its Lender Affiliates) shall purchase from
the Domestic Lenders (on the date of Substantial Liquidation or the
Determination Date, as applicable) such portion of such Obligations so that such
Lender (and its Lender Affiliates) shall, after giving effect to any such
purchases, hold its Liquidation Percentage of all outstanding Obligations of the
Domestic Borrowers and the Foreign Liabilities.

 

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(c) All purchases of Obligations under this Section 9.17 shall be at par, for
cash, with no premium, discount or reduction and each such purchase shall be
evidenced by an appropriate Assignment and Assumption.

(d) No Lender shall be responsible for any default of any other Lender in
respect of any other Lender’s obligations under this Section 9.17, nor shall the
obligations of any Lender hereunder be increased as a result of such default of
any other Lender. Each Lender shall be obligated to the extent provided herein
regardless of the failure of any other Lender to fulfill its obligations
hereunder.

(e) Each Lender shall execute such instruments, documents and agreements and do
such other actions as may be necessary or proper in order to carry out more
fully the provisions and purposes of this Section 9.16 and the purchase of
Obligations or the Foreign Liabilities, as applicable, as provided herein.

(f) The obligations of each Lender under this Section 9.17 are irrevocable and
unconditional and shall not be subject to any qualification or exception
whatsoever including, without limitation, lack of validity or enforceability of
this Agreement or any of the Loan Documents or the existence of any claim,
setoff, defense or other right which any Loan Party may have at any time against
any of the Lenders.

(g) No fees required to be paid on any assignment pursuant to Section 10.06 of
this Agreement shall be payable in connection with any assignment under this
Section 9.17.

(h) Notwithstanding anything contained herein to the contrary, this Section 9.17
is solely between the Lenders and other Credit Parties, and the Loan Parties
shall not be a third party beneficiary or have any rights or remedies in respect
of this Section 9.17, including the right to enforce this Section 9.17.

9.18 Actions In Concert. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement or any other Loan Document (including exercising any rights of setoff)
without first obtaining the prior written consent of the Agents and the Required
Lenders, it being the intent of Lenders that any such action to protect or
enforce rights under this Agreement and the other Loan Documents shall be taken
in concert and at the direction or with the consent of the Agents or the
Required Lenders.

9.19 [Reserved].

ARTICLE X

MISCELLANEOUS

10.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement
or any other Loan Document, and no Consent to any departure by any Loan Party
therefrom, shall be effective unless in writing signed by the Required Lenders
(or the Administrative Agent, with the Consent of the

 

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Required Lenders or the Australian Security Trustee, acting on the instructions
of the Administrative Agent), and the Lead Borrower or the applicable Loan
Party, as the case may be, and each such waiver or Consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that no such amendment, waiver or consent shall:

(a) extend or increase the Commitment of any Lender (or reinstate any Commitment
terminated pursuant to Section 8.02) without the written Consent of such Lender;

(b) postpone any date fixed by this Agreement or any other Loan Document for any
payment or mandatory prepayment of principal, interest or fees due to the
applicable Lenders (or any of them) hereunder without the written Consent of
each Lender entitled to such payment;

(c) reduce the principal of, or the rate of interest specified herein on, any
Loan or L/C Borrowing, or any fees payable hereunder, without the written
Consent of each Lender entitled to such amount; provided, however, that only the
Consent of the Required Lenders shall be necessary to amend the definition of
“Default Rate” or to waive any obligation of the Borrowers to pay interest or
Letter of Credit Fees at the Default Rate;

(d) change Section 2.13, Section 8.03 or Section 9.17 in a manner that would
alter the pro rata sharing of payments required thereby without the written
Consent of each Lender;

(e) amend Section 1.09 or the definition of “Alternative Currency” without the
written Consent of each Lender;

(f) change any provision of this Section or change the definition of “Required
Lenders”, “Supermajority Lenders”, or any other provision hereof specifying the
number or percentage of Lenders required to amend, waive or otherwise modify any
rights hereunder or make any determination or grant any consent hereunder,
without the written Consent of each Lender;

(g) except as expressly permitted hereunder or under any other Loan Document,
(i) release a material portion of the aggregate value of the Guarantees made by
the Guarantors pursuant to the Facility Guaranty, or (ii) release or limit the
liability of, any Borrower, in each case, without the written Consent of each
Lender; provided, however, that no Consent of any Lender shall be required in
connection with the release of any Foreign Loan Party pursuant to Section 9.11
hereof in connection with the termination of the Commitments to such Foreign
Borrower pursuant to Section 2.06 (and notwithstanding that the Facility
Guaranty from such Foreign Loan Party may also guarantee Foreign Liabilities of
other Foreign Borrowers);

(h) except for Permitted Dispositions and for releases authorized under
Section 9.11, release all or substantially all of the Collateral from the Liens
of the Security Documents without the written Consent of each Lender; provided,
however, that no Consent of any Lender shall be required in connection with the
release of any Collateral from any Foreign Loan Party

 

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pursuant to Section 9.11 hereof in connection with the termination of the
Commitments to such Foreign Borrower pursuant to Section 2.06 (and
notwithstanding that the Collateral from such Foreign Loan Party may also secure
Foreign Liabilities of other Foreign Borrowers);

(i) increase in the advance rates in any Borrowing Base, without the written
Consent of each Lender;

(j) otherwise change the definition of the term “Domestic Borrowing Base”, any
“Foreign Borrowing Base” or any component definition of either term, if as a
result thereof the amount of credit available to the Borrowers hereunder would
be increased without the written Consent of the Supermajority Lenders, provided
that, subject to Section 2.01(e) and Section 9.19 hereof, the foregoing shall
not limit the discretion of any Agent to change, establish or eliminate any
Reserves with respect to any Borrowing Base, even if such change or elimination
results in an increase in the amount of credit available to the Borrowers
hereunder;

(k) modify the definition of “Permitted Domestic Overadvance” or the definition
of “Permitted Foreign Overadvance” so as to increase the amount thereof or,
except as provided in such definitions, the time period for a Permitted Domestic
Overadvance or any Permitted Foreign Overadvance without the written Consent of
each Lender;

(l) except as expressly permitted herein or in any other Loan Document,
subordinate any of the Obligations hereunder or under the other Loan Documents,
to any other Indebtedness without the written Consent of each Lender affected
thereby; and

(m) [reserved];

and, provided further, that (i) no amendment, waiver or Consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above,
affect the rights or duties of the L/C Issuer under this Agreement or any Issuer
Document relating to any Letter of Credit issued or to be issued by it;
(ii) [reserved]; (iii) no amendment, waiver or Consent shall, unless in writing
and signed by the applicable Agent in addition to the Lenders required above,
affect the rights or duties of the applicable Agent under this Agreement or any
other Loan Document (other than the modification or revocation of the Agents’
rights to make Permitted Overadvances under Section 10.01(k) which shall require
the Consent solely of the Required Lenders); (iv) no amendment, waiver or
Consent shall, unless in writing and signed by the Collateral Agent in addition
to the Lenders required above, affect the rights or duties of the Collateral
Agent under this Agreement or any other Loan Document; and (v) the Fee Letter
may be amended, or rights or privileges thereunder waived, in a writing executed
only by the parties thereto. Notwithstanding anything to the contrary herein, no
Defaulting Lender shall have any right to approve or disapprove any amendment,
waiver or Consent hereunder, except that the Commitment of such Lender may not
be increased or extended without the consent of such Lender.

Notwithstanding anything to the contrary in this Agreement or any other Loan
Document, (x) no provider or holder of any Bank Products or Cash Management
Services 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

 

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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 any Loan Party, and (y) any Loan
Document may be amended, supplemented and waived with the consent of the
Administrative Agent at the request of the Lead Borrower without the need to
obtain the consent of any other Lender if such amendment, supplement or waiver
is delivered in order (i) to comply with any local requirement of Law or advice
of local counsel, (ii) to cure ambiguities, mistakes or defects or (iii) to
cause any Loan Document to be consistent with this Agreement and the other Loan
Documents.

If any Lender does not Consent (a “Non-Consenting Lender”) to a proposed
amendment, waiver, consent or release with respect to any Loan Document that
requires the Consent of each or each affected Lender and that has been approved
by the Required Lenders, the Lead Borrower may replace such Non-Consenting
Lender in accordance with Section 10.13; provided that such amendment, waiver,
consent or release can be effected as a result of the assignment contemplated by
such Section (together with all other such assignments required by the Lead
Borrower to be made pursuant to this paragraph).

10.02 Notices; Effectiveness; Electronic Communications.

(a) Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in
subsection (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by facsimile as follows, and all
notices and other communications expressly permitted hereunder to be given by
telephone shall be made to the applicable telephone number, as follows:

(i) if to the Loan Parties, any of the Agents, or the L/C Issuer, to the
address, facsimile number, electronic mail address or telephone number specified
for such Person on Schedule 10.02; and

(ii) if to any other Lender, to the address, facsimile number, electronic mail
address or telephone number specified in its Administrative Questionnaire.

Notices and other communications sent by hand or overnight courier service, or
mailed by certified or registered mail, shall be deemed to have been given when
received; notices and other communications sent 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). Notices delivered through
electronic communications to the extent provided in subsection (b) below, shall
be effective as provided in such subsection (b).

(b) Electronic Communications. Notices and other communications to the Lenders
and the L/C Issuer hereunder may be delivered or furnished by electronic
communication (including e-mail and Internet or intranet websites) pursuant to
procedures approved by the Administrative Agent provided that the foregoing
shall not apply to notices to any Lender or the L/C Issuer pursuant to Article

 

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II if such Lender or the L/C Issuer, as applicable, has notified the
Administrative Agent that it is incapable of receiving notices under such
Article by electronic communication. The Administrative Agent or the Lead
Borrower or any other Borrower may, in their discretion, agree to accept notices
and other communications to it hereunder by electronic communications pursuant
to procedures approved by it, provided that approval of such procedures may be
limited to particular notices or communications.

Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), and (ii) notices or communications posted to an
Internet or intranet website shall be deemed received upon the deemed receipt by
the intended recipient at its e-mail address as described in the foregoing
clause (i) of notification that such notice or communication is available and
identifying the website address therefor; provided that, for both clauses
(i) and (ii), if such notice, email or other communication is not sent during
the normal business hours of the recipient, such notice, email or communication
shall be deemed to have been sent at the opening of business on the next
business day for the recipient.

(c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT
PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE
BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM
LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF
ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT
PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event
shall the Agents or any of their Related Parties (collectively, the “Agent
Parties”) have any liability to any Loan Party, any Lender, the L/C Issuer or
any other Person for losses, claims, damages, liabilities or expenses of any
kind (whether in tort, contract or otherwise) arising out of the Loan Parties’
or the Agent Parties’ transmission of Borrower Materials through the Internet,
except to the extent that such losses, claims, damages, liabilities or expenses
are determined by a court of competent jurisdiction by a final and
non-appealable judgment to have resulted from the gross negligence or willful
misconduct of such Agent Party; provided, however, that in no event shall any
Agent Party have any liability to any Loan Party, any Lender, the L/C Issuer or
any other Person for indirect, special, incidental, consequential or punitive
damages (as opposed to direct or actual damages).

(d) Change of Address, Etc. Each of the Loan Parties, the Agents, and the L/C
Issuer may change its address, facsimile or telephone number for notices and
other communications hereunder by notice to the other parties hereto. Each other
Lender may change its address, facsimile or telephone number for notices and
other communications hereunder by notice to the Lead Borrower, the Agents, and
the L/C Issuer. In addition, each Lender agrees to notify the Administrative
Agent from time to time to ensure that the Administrative Agent has on record
(i) an effective address, contact

 

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name, telephone number, facsimile number and electronic mail address to which
notices and other communications may be sent and (ii) accurate wire instructions
for such Lender.

(e) Reliance by Agents, L/C Issuer and Lenders. The Agents, the L/C Issuer and
the Lenders shall be entitled to rely and act upon any notices (including
electronic Committed Loan Notices) purportedly given by or on behalf of the Loan
Parties even if (i) such notices were not made in a manner specified herein,
were incomplete or were not preceded or followed by any other form of notice
specified herein, or (ii) the terms thereof, as understood by the recipient,
varied from any confirmation thereof. The Loan Parties shall indemnify the
Agents, the L/C Issuer, each Lender and the Related Parties of each of them from
all losses, costs, expenses and liabilities resulting from the reliance by such
Person on each notice purportedly given by or on behalf of the Loan Parties. All
telephonic communications with the Agents may be recorded by the Agents, and
each of the parties hereto hereby consents to such recording.

10.03 No Waiver; Cumulative Remedies. No failure by any Credit Party to
exercise, and no delay by any such Person in exercising, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder or
under any other Loan Document preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges provided herein and in the other Loan Documents
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law. Without limiting the generality of the foregoing, the making of
a Loan or issuance of a Letter of Credit shall not be construed as a waiver of
any Default or Event of Default, regardless of whether any Credit Party may have
had notice or knowledge of such Default or Event of Default at the time.

10.04 Expenses; Indemnity; Damage Waiver.

(a) Costs and Expenses. The Borrowers shall pay all Credit Party Expenses
(provided that the Foreign Borrowers shall be obligated to pay only those Credit
Party Expenses which constitute Credit Party Expenses incurred by the
Administrative Agent, the Australian Security Trustee or the Foreign Lenders in
connection with the Foreign Loans and Foreign Letters of Credit).

(b) Indemnification by the Loan Parties. The Loan Parties shall indemnify the
Agents (and any of their sub-agents), each other Credit Party, and each Related
Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless (on an after-tax basis)
from, any and all losses, claims, causes of action, damages, liabilities,
settlement payments, costs and related expenses (including the fees, charges and
disbursements of any counsel for any Indemnitee, but excluding Taxes which shall
be governed by Section 3.01), incurred by any Indemnitee or asserted against any
Indemnitee by any third party or by any Borrower or any other Loan Party arising
out of, in connection with, or as a result of (i) the execution or delivery of
this Agreement, any other Loan Document or any agreement or instrument
contemplated hereby or thereby, the performance by the parties hereto of their
respective obligations hereunder or thereunder or the consummation of the
transactions contemplated hereby or thereby, or, in the case of the Agents

 

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(and any of their sub-agents) and their Related Parties only, the administration
of this Agreement and the other Loan Documents, (ii) any Loan or Letter of
Credit or the use or proposed use of the proceeds therefrom (including any
refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit
if the documents presented in connection with such demand do not strictly comply
with the terms of such Letter of Credit), any bank advising or confirming a
Letter of Credit and any other Person seeking to enforce the rights of a
Borrower, beneficiary, transferee, or assignee or Letter of Credit proceeds or
the holder of an instrument or document related to any Letter of Credit,
(iii) any actual or alleged presence or release of Hazardous Materials on or
from any property owned or operated by any Loan Party or any of its
Subsidiaries, or any Environmental Liability related in any way to any Loan
Party or any of its Subsidiaries, (iv) any claims of, or amounts paid by any
Credit Party to, a Japanese Depository Bank or to Blocked Account Bank or other
Person which has entered into a control agreement with any Credit Party
hereunder, or (v) any actual or prospective claim, litigation, investigation or
proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory, whether brought by a third party or by any Borrower or any
other Loan Party or any of the Loan Parties’ directors, shareholders or
creditors, and regardless of whether any Indemnitee is a party thereto, in all
cases, whether or not caused by or arising, in whole or in part, out of the
comparative, contributory or sole negligence of the Indemnitee; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or related expenses (x) are determined
by a court of competent jurisdiction by final and non-appealable judgment to
have resulted from the gross negligence or willful misconduct of such Indemnitee
or (y) result from a claim brought by a Borrower or any other Loan Party against
an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder
or under any other Loan Document, if such Borrower or such Loan Party has
obtained a final and non-appealable judgment in its favor on such claim as
determined by a court of competent jurisdiction; provided that with respect to
the Foreign Loan Parties, “Indemnitees” shall only refer to the Foreign Credit
Parties and each Related Party of the Foreign Credit Parties. Without limiting
the provisions of Section 3.01(c), this Section 10.04(b) shall not apply with
respect to Taxes other than any Taxes that represent losses, claims, damages,
etc. arising from any non-Tax claim.

(c) Reimbursement by Lenders. Without limiting their obligations under
Section 9.15 hereof, to the extent that the Loan Parties for any reason fail to
indefeasibly pay any amount required under subsection (a) or (b) of this Section
to be paid by it, each Lender severally agrees to pay to the Agents (and any of
their sub-agents), the L/C Issuer or such Related Party, as the case may be,
such Lender’s Applicable Percentage (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such unpaid
amount, provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or
asserted against the Agents (and any of their sub-agents) or the L/C Issuer in
its capacity as such, or against any Related Party of any of the foregoing
acting for the Agents (and any of their sub-agents) or L/C Issuer in connection
with such capacity. The obligations of the Lenders under this subsection (c) are
subject to the provisions of Section 2.12(e).

(d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by
applicable Law, the Loan Parties and Indemnitees shall not assert, and hereby
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any Indemnitee or any Loan Party, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this Agreement,
any other Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or Letter of Credit or the
use of the proceeds thereof. No Indemnitee shall be liable for any damages
arising from the use by unintended recipients of any information or other
materials distributed to such unintended recipients by such Indemnitee through
telecommunications, electronic or other information transmission systems in
connection with this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby other than for direct or actual damages resulting
from the gross negligence or willful misconduct of such Indemnitee as determined
by a final and nonappealable judgment of a court of competent jurisdiction.

(e) Payments. All amounts due under this Section shall be payable on demand
therefor.

(f) Survival. The agreements in this Section shall survive the resignation of
any Agent or the L/C Issuer, the assignment of any Commitment or Loan by any
Lender, the replacement of any Lender, the termination of the Aggregate Total
Commitments or the Commitments for any Revolving Facility and Payment in Full
and the termination of this Agreement.

10.05 Reinstatement; Payments Set Aside. This Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by or
against any Loan Party for liquidation or reorganization or otherwise under any
Debtor Relief Law, should any Loan Party become insolvent or make an assignment
for the benefit of any creditor or creditors or should a receiver, interim
receiver, receiver and manager, Controller, trustee, monitor, custodian,
conservator, liquidator, rehabilitator or similar officer be appointed for all
or any significant part of any Loan Party’s assets, and shall continue to be
effective or to be reinstated, as the case may be, if at any time payment and
performance of the Obligations, or any part thereof, is, pursuant to applicable
Law, rescinded or reduced in amount, or must otherwise be restored or returned
by any obligee of the Obligations, whether as a “voidable preference”,
“fraudulent conveyance”, or otherwise, all as though such payment or performance
had not been made. To the extent that any payment by or on behalf of the Loan
Parties is made to any Credit Party, or any Credit Party exercises its right of
setoff, and such payment or the proceeds of such setoff or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by such Credit
Party in its discretion) to be repaid to a receiver, interim receiver, receiver
and manager, Controller, trustee, monitor, custodian, conservator, liquidator,
rehabilitator or similar officer, or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of
such recovery, the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such setoff had not occurred, (b) each Domestic
Lender and the L/C Issuer (with respect to Domestic Letters of Credit) severally
agrees to pay to the Agents upon demand its Applicable Percentage (without
duplication) of any amount so recovered from or repaid by the Agents, plus
interest thereon from the date of such demand to the date

 

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such payment is made at a rate per annum equal to the applicable Overnight Rate
from time to time in effect, in the applicable currency of such recovery or
payment, and (c) each Foreign Lender and the L/C Issuer (with respect to Foreign
Letters of Credit) severally agrees to pay to the Administrative Agent upon
demand its Applicable Percentage (without duplication) of any amount so
recovered from or repaid by the Administrative Agent, plus interest thereon from
the date of such demand to the date such payment is made at a rate per annum
equal to the applicable Overnight Rate from to time in effect, in the applicable
currency of such recovery or payment. The obligations of the Lenders and the L/C
Issuer under clause (b) and clause (c) of the preceding sentence shall survive
Payment in Full and the termination of this Agreement.

10.06 Successors and Assigns.

(a) Successors and Assigns Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that no Loan Party may assign or
otherwise transfer any of its rights or obligations hereunder or under any other
Loan Document without the prior written Consent of the Administrative Agent and
each Lender and no Lender may assign or otherwise transfer any of its rights or
obligations hereunder except (i) to an Eligible Assignee in accordance with the
provisions of Section 10.06(b), (ii) by way of participation in accordance with
the provisions of Section 10.06(e), or (iii) by way of pledge or assignment of a
security interest subject to the restrictions of Section 10.06(g) (and any other
attempted assignment or transfer by any party hereto shall be null and void).
Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any Person (other than the parties hereto, their respective successors and
assigns permitted hereby, Participants to the extent provided in subsection
(e) of this Section and, to the extent expressly contemplated hereby, the
Related Parties of each of the Credit Parties) any legal or equitable right,
remedy or claim under or by reason of this Agreement. In connection with the
assignment by any Lender of such Lender’s Japanese Commitments pursuant hereto,
each Japanese Loan Party hereby agrees to execute and deliver (at such Lender’s
cost, except that assignments pursuant to Section 10.13 hereof shall be at the
Loan Parties’ expense) such consent agreements or related documents as may be
required by the Administrative Agent to enable such Lender to transfer such
Lender’s interest in any Japanese Security Documents concurrently with such
assignment of Japanese Commitments. In connection with the assignment by any
Lender of such Lender’s Australian Commitments pursuant hereto, each Australian
Loan Party hereby agrees to execute and deliver (at such Lender’s cost, except
that assignments pursuant to Section 10.13 hereof shall be at the Loan Parties’
expense) such consent agreements or related documents as may be required by the
Australian Security Trustee to enable such Lender to transfer such Lender’s
interest in any Australian Security Documents and for a new Lender to accede to
the Security Trust Deed concurrently with such assignment of such Australian
Commitments.

(b) Assignments by Lenders. Any Lender may at any time assign to one or more
Eligible Assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment(s) and the Loans
(including for purposes of this Section 10.06(b),

 

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participations in L/C Obligations) at the time owing to it); provided that any
such assignment shall be subject to the following conditions:

(i) Minimum Amounts

(A) in the case of an assignment of the entire remaining amount of the assigning
Lender’s Commitments and the Loans at the time owing to it or in the case of an
assignment to a Lender or a Lender Affiliate of a Lender or an Approved Fund
with respect to a Lender, no minimum amount need be assigned; and

(B) in any case not described in subsection (b)(i)(A) of this Section, the
aggregate amount of the Commitments (which for this purpose includes Loans
outstanding thereunder) or, if the Commitments are not then in effect, the
principal outstanding balance of the Loans of the assigning Lender subject to
each such assignment, determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative Agent or, if
“Trade Date” is specified in the Assignment and Assumption, as of the Trade
Date, shall not be less than $5,000,000 unless each of the Administrative Agent
and, so long as no Event of Default has occurred and is continuing, the Lead
Borrower otherwise consents (each such consent not to be unreasonably withheld
or delayed or conditioned); provided, however, that concurrent assignments to
members of an Assignee Group and concurrent assignments from members of an
Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and
members of its Assignee Group) will be treated as a single assignment for
purposes of determining whether such minimum amount has been met;

(ii) Proportionate Amounts. Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loans or the Commitments
assigned;

(iii) Required Consents. No consent shall be required for any assignment except
to the extent required by subsection (b)(i)(B) of this Section and, in addition:

(A) the consent of the Lead Borrower (such consent not to be unreasonably
withheld or delayed or conditioned) shall be required unless (1) an Event of
Default has occurred and is continuing at the time of such assignment or
(2) such assignment is to a Lender, a Lender Affiliate of a Lender or an
Approved Fund; and

(B) the consent of the Administrative Agent (such consent not to be unreasonably
withheld or delayed or conditioned) shall be required for assignments in respect
of any Commitment if such assignment is to a Person that is not a Lender, a
Lender Affiliate of such Lender or an Approved Fund with respect to such Lender;
and

(C) the consent of the L/C Issuer (such consent not to be unreasonably withheld
or delayed or conditioned) shall be required for any assignment in

 

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respect of the assignment of any Commitment if such assignment is to a Person
that is not a Lender, a Lender Affiliate of such Lender or an Approved Fund with
respect to such Lender; and

(D) [reserved].

(iv) Assignment and Assumption. The parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Assumption, together with
a processing and recordation fee of $3,500, provided, however, that the
Administrative Agent may, in its sole discretion, elect to waive such processing
and recordation fee in the case of any assignment. The assignee, if it shall not
be a Lender, shall deliver to the Administrative Agent an administrative
questionnaire in form and substance satisfactory to the Administrative Agent.

Subject to acceptance and recording thereof by the Administrative Agent pursuant
to subsection (d) of this Section, from and after the effective date specified
in each Assignment and Assumption, the Eligible Assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 3.01, 3.04, 3.05, and 10.04 with
respect to facts and circumstances occurring prior to the effective date of such
assignment; provided, that except to the extent otherwise expressly agreed by
the affected parties, no assignment by a Defaulting Lender will constitute a
waiver or release of any claim of any party hereunder arising from that Lender’s
having been a Defaulting Lender. Upon request, the applicable Borrowers (at
their expense) shall execute and deliver a Note to the assignee Lender. Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this subsection shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with Section 10.06(e).

(c) Certain Additional Payments. In connection with any assignment of rights and
obligations of any Defaulting Lender hereunder, no such assignment shall be
effective unless and until, in addition to the other conditions thereto set
forth herein, the parties to the assignment shall make such additional payments
to the Administrative Agent in an aggregate amount sufficient, upon distribution
thereof as appropriate (which may be outright payment, purchases by the assignee
of participations or sub-participations, or other compensating actions,
including funding, with the consent of the Lead Borrower and the Administrative
Agent, the applicable pro rata share of Loans previously requested but not
funded by the Defaulting Lender, to each of which the applicable assignee and
assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment
liabilities then owed by such Defaulting Lender to the Administrative Agent, the
L/C Issuer or any Lender hereunder (and interest accrued thereon) and
(y) acquire (and fund as appropriate) its full pro rata share of all Loans and
participations in Letters of Credit in accordance with its Applicable
Percentage. Notwithstanding the foregoing, in the event that any assignment of
rights and obligations of any Defaulting Lender hereunder shall become effective
under any applicable requirement of Law without compliance with the provisions

 

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of this paragraph, then the assignee of such interest shall be deemed to be a
Defaulting Lender for all purposes of this Agreement until such compliance
occurs.

(d) Register. The Administrative Agent, acting solely for this purpose as an
agent of the Loan Parties (and such agency being solely for tax purposes), shall
maintain at the Administrative Agent’s Office a copy of each Assignment and
Assumption delivered to it (or the equivalent thereof in electronic form) and a
register for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amounts (and stated interest) of the Loans and L/C
Obligations owing to, each Lender pursuant to the terms hereof from time to time
(the “Register”). The entries in the Register shall be conclusive, absent
manifest error, and the Loan Parties, the Administrative Agent and the Lenders
may treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Lead Borrower, any Foreign Borrower and any Lender at any
reasonable time and from time to time upon reasonable prior notice. This
Section 10.06(d) shall be construed so that the Obligations are at all times
maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2)
and 881(c)(2) of the Code and any regulations promulgated thereunder (and any
other relevant or successor provisions of the Code or such regulations).

(e) Participations.

(i) Any Lender may at any time, without the consent of, or notice to, the Loan
Parties or any Agent, sell participations to any Person (other than a natural
person or the Loan Parties or any of the Loan Parties’ Affiliates or
Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s
rights and/or obligations under this Agreement (including all or a portion of
its Commitments and/or the Loans (including such Lender’s participations in L/C
Obligations) owing to it); provided that (i) such Lender’s obligations under
this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Loan Parties, the Agents, the Lenders and the L/C Issuer shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement.

(ii) Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification described in clauses (a) through
(d) of the first proviso to Section 10.01 that affects such Participant. Subject
to subsection (f) of this Section, the Loan Parties agree that each Participant
shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same
extent as if it were a Lender and had acquired its interest by assignment
pursuant to Section 10.06(b), provided that such Participant’s participation is
recorded in the Register as set forth in Section 10.06(d) as though it were a
Lender. To the extent permitted by Law, each Participant also shall be entitled
to the

 

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benefits of Section 10.08 as though it were a Lender, provided such Participant
agrees to be subject to Section 2.13 as though it were a Lender.

(iii) Each Lender that sells a participation shall, acting solely for this
purpose as an agent of the Borrowers, maintain a register on which it enters the
name and address of each Participant and the principal amounts (and stated
interest) of each Participant’s interest in the Loans or other obligations under
the Loan Documents (the “Participant Register”); provided that no Lender shall
have any obligation to disclose all or any portion of the Participant Register
(including the identity of any Participant or any information relating to a
Participant’s interest in any commitments, loans, letters of credit or its other
obligations under any Loan Document) to any Person except to the extent that
such disclosure is necessary to establish that such commitment, loan, letter of
credit or other obligation is in registered form under Section 5f.103-1(c) of
the United States Treasury Regulations. The entries in the Participant Register
shall be conclusive absent manifest error, and such Lender shall treat each
Person whose name is recorded in the Participant Register as the owner of such
participation for all purposes of this Agreement notwithstanding any notice to
the contrary. For the avoidance of doubt, the Administrative Agent (in its
capacity as Administrative Agent) shall not have any responsibility for
maintaining a Participant Register.

(f) Limitations upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Section 3.01 or 3.04 than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Lead Borrower’s prior written consent. A
Participant shall not be entitled to the benefits of Section 3.01 unless the
Lead Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Loan Parties, to comply with
Section 3.01 as though it were a Lender.

(g) Certain Pledges. Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement (including
under its Note, if any) to secure obligations of such Lender, including any
pledge or assignment to secure obligations to a Federal Reserve Bank; provided
that no such pledge or assignment shall release such Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.

(h) Resignation as L/C Issuer after Assignment or Resignation as Administrative
Agent. Resignation as L/C Issuer after Assignment or Resignation as
Administrative Agent. Notwithstanding anything to the contrary contained herein,
if at any time Bank of America assigns all of its Commitments and Loans pursuant
to subsection (b) above or resigns as Administrative Agent in accordance with
the provisions of Section 9.07, Bank of America may, without duplication of any
notice required under Section 9.07, upon 30 days’ notice to the Lead Borrower
and the Lenders, resign as L/C Issuer. In the event of any such resignation as
L/C Issuer, the Lead Borrower shall be entitled to appoint from among the
Lenders a successor L/C Issuer hereunder; provided, however, that no failure by
the Lead Borrower to appoint any such successor shall affect the resignation of
Bank of America as L/C Issuer. If Bank of America resigns as L/C Issuer, it
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of the L/C Issuer hereunder with respect to all Letters of Credit issued by Bank
of America or its Lender Affiliates outstanding as of the effective date of its
resignation as L/C Issuer and all L/C Obligations with respect thereto
(including the right to require the Lenders to make Prime Rate Loans or fund
risk participations in Unreimbursed Amounts pursuant to Section 2.03(c)). Upon
the appointment of a successor L/C Issuer, (a) such successor shall succeed to
and become vested with all of the rights, powers, privileges and duties of the
retiring L/C Issuer, and (b) the successor L/C Issuer shall issue letters of
credit in substitution for the Letters of Credit, if any, outstanding at the
time of such succession or make other arrangements satisfactory to Bank of
America (including its global branches and Affiliates, including, without
limitation, its Canada branch, and Hong Kong branch, as applicable), to
effectively assume the obligations of Bank of America (including its global
branches and Affiliates, including, without limitation, its Canada branch and
Hong Kong branch, as applicable), with respect to such Letters of Credit. Any
resignation by Bank of America as Administrative Agent pursuant to this Section
shall also constitute its resignation as L/C Issuer.

 

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10.07 [Reserved].

10.08 Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender, the L/C Issuer and each of their respective Lender
Affiliates is hereby authorized at any time and from time to time, after
obtaining the prior written consent of the Administrative Agent or the Required
Lenders, to the fullest extent permitted by applicable Law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final,
in whatever currency) at any time held and other obligations (in whatever
currency) at any time owing by such Lender, the L/C Issuer or any such Lender
Affiliate to or for the credit or the account of the Borrowers or any other Loan
Party against any and all of the Obligations existing under this Agreement or
any other Loan Document then due and owing to such Lender or the L/C Issuer,
regardless of the adequacy of the Collateral, and irrespective of whether or not
such Lender or the L/C Issuer shall have made any demand under this Agreement or
any other Loan Document and although such obligations of the Borrowers or such
Loan Party are owed to a branch or office of such Lender or the L/C Issuer
different from the branch or office holding such deposit or obligated on such
indebtedness; provided, that in the event that any Defaulting Lender shall
exercise any such right of setoff, (x) all amounts so set off shall be paid over
immediately to the Administrative Agent for further application in accordance
with the provisions of Section 2.18 and, pending such payment, shall be
segregated by such Defaulting Lender from its other funds and deemed held in
trust for the benefit of the Administrative Agent and the other Credit Parties,
and (y) the Defaulting Lender shall provide promptly to the Administrative Agent
a statement describing in reasonable detail the Obligations owing to such
Defaulting Lender as to which it exercised such right of setoff. The rights of
each Lender, the L/C Issuer and their respective Lender Affiliates under this
Section are in addition to other rights and remedies (including other rights of
setoff) that such Lender, the L/C Issuer or their respective Lender Affiliates
may have. Each Lender and the L/C Issuer agrees to notify the Lead Borrower and
the Administrative Agent promptly after any such setoff and application,
provided that the failure to give such notice shall not affect the validity of
such setoff and application. Notwithstanding the foregoing, any amounts of the
Foreign Loan Parties so offset shall be applied solely to the Foreign
Liabilities.

10.09 Interest Rate Limitation. Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or
any Lender shall receive interest in an amount that exceeds the Maximum Rate,
the excess interest shall be applied to the principal of the Loans and other
Obligations or, if it exceeds such unpaid principal, refunded to the applicable
Borrowers. In determining whether the interest contracted for, charged, or
received by the Administrative Agent or a Lender exceeds the Maximum Rate, such
Person may, to the extent permitted by applicable Law, (a) characterize any
payment that is not principal as an expense, fee, or premium rather than
interest, (b) exclude voluntary prepayments and the effects thereof, and
(c) amortize, prorate, allocate, and spread in equal or unequal parts the total
amount of interest throughout the contemplated term of the Obligations
hereunder.

 

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10.10 Counterparts; Integration; Effectiveness. This Agreement may be executed
in counterparts (and by different parties hereto in different counterparts),
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement and the other Loan Documents
constitute the entire contract among the parties relating to the subject matter
hereof and supersede any and all previous letters of intent, commitment letters,
agreements and understandings, oral or written, relating to the subject matter
hereof; provided that the Fee Letter shall survive the execution and delivery of
this Agreement and shall continue to be a binding obligation of each of the
parties thereto. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof that, when
taken together, bear the signatures of each of the other parties hereto.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy or other electronic image scan transmission (e.g., “pdf” or “tif” via
e-mail) shall be as effective as delivery of a manually executed counterpart of
this Agreement.

10.11 Survival. All representations and warranties made hereunder and in any
other Loan Document or other document delivered pursuant hereto or thereto or in
connection herewith or therewith shall survive the execution and delivery hereof
and thereof. Such representations and warranties have been or will be relied
upon by the Credit Parties, regardless of any investigation made by any Credit
Party or on their behalf and notwithstanding that any Credit Party may have had
notice or knowledge of any Default or Event of Default at the time of any Credit
Extension, and shall continue in full force and effect as long as any Loan or
any other Obligation hereunder (other than contingent indemnity obligations for
which claims have not been asserted) shall remain unpaid or unsatisfied or any
Letter of Credit shall remain outstanding. Further, the provisions of Article
III, Article IX and Section 10.04 all survive and remain in full force and
effect after the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof and
Payment in Full (including, without limitation, those arising under Article III,
Article IX and Section 10.04) hereunder. In connection with the termination of
this Agreement and the release and termination of the security interests in the
Collateral, any Agent may require such indemnities and collateral security as
they shall reasonably deem necessary or appropriate to protect the Credit
Parties against (x) loss on account of credits previously applied to the
Obligations that may subsequently be reversed or revoked, (y) any obligations
that may thereafter arise with respect to the Other Liabilities, and (z) any
Obligations that may thereafter arise under Section 10.04 thereof.

10.12 Severability. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Without limiting the foregoing provisions of this
Section 10.12, if and to the extent that the enforceability of any provisions in
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Debtor Relief Laws, as determined in good faith by the Administrative Agent, the
L/C Issuer then such provisions shall be deemed to be in effect only to the
extent not so limited.

10.13 Replacement of Lenders. If any Lender requests compensation under
Section 3.04, or if any Lender delivers a notice described in Section 3.02, the
Loan Parties are required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 3.01,
or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the
Lead Borrower may, at the Borrowers’ (in the case of any Foreign Borrower, only
in respect of any applicable Foreign Lender) sole expense and effort, upon
notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in, and consents required by, Section 10.06), all of its
interests, rights (other than its existing rights to payments pursuant to
Sections 3.01 and 3.04) and obligations under this Agreement and the related
Loan Documents to an assignee that shall assume such obligations (which assignee
may be another Lender, if a Lender accepts such assignment), provided that:

(a) the applicable Borrowers or assignee shall have paid to the Administrative
Agent the assignment fee specified in Section 10.06(b);

(b) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and L/C Advances, accrued interest thereon,
accrued fees in respect thereof and all other amounts payable to it hereunder
and under the other Loan Documents in respect thereof (including any amounts
under Section 3.05) from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrowers (in the case of all
other amounts);

(c) in the case of any such assignment resulting from a claim for compensation
under Section 3.04 or payments required to be made pursuant to Section 3.01,
such assignment will result in a reduction in such compensation or payments
thereafter;

(d) such assignment does not conflict with applicable Laws;

(e) in the case of an assignment resulting from a Lender becoming a
Non-Consenting Lender, the applicable assignee shall have consented to the
applicable amendment, waiver or consent; and

(f) the failure of any such Lender to execute an Assignment and Assumption shall
not render such sale and purchase (and corresponding assignment) invalid and
such assignment shall be recorded in the Register.

A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrowers to require such assignment and delegation
cease to apply.

 

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10.14 Governing Law; Jurisdiction; Etc.

(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

(b) SUBMISSION TO JURISDICTION. EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED
STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE
COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT
OF ANY JUDGMENT, AND EACH OF THE LOAN PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE
LOAN 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 IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT ANY CREDIT
PARTY 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. NOTWITHSTANDING ANY OTHER PROVISION OF THIS
SECTION 10.14, TO THE EXTENT APPLICABLE TO THE DOMESTIC LOAN PARTIES, THE
BANKRUPTCY COURT SHALL HAVE EXCLUSIVE JURISDICTION OVER ANY ACTION OR DISPUTE
INVOLVING, RELATING TO OR ARISING OUT OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS.

(c) WAIVER OF VENUE. EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED
TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE LOAN PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT.

(d) SERVICE OF PROCESS. EACH LOAN PARTY IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW.

(e) ACTIONS COMMENCED BY LOAN PARTIES. EACH LOAN PARTY AGREES THAT ANY ACTION
COMMENCED BY ANY LOAN PARTY ASSERTING ANY CLAIM OR COUNTERCLAIM ARISING UNDER OR
IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT
SOLELY IN A COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY OR ANY
FEDERAL

 

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COURT SITTING THEREIN AS THE ADMINISTRATIVE AGENT MAY ELECT IN ITS SOLE
DISCRETION AND CONSENTS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS WITH
RESPECT TO ANY SUCH ACTION.

10.15 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

10.16 No Advisory or Fiduciary Responsibility. In connection with all aspects of
each transaction contemplated hereby, the Loan Parties each acknowledge and
agree that: (i) the credit facilities provided for hereunder and any related
arranging or other services in connection therewith (including in connection
with any amendment, waiver or other modification hereof or of any other Loan
Document) are an arm’s-length commercial transaction between the Loan Parties,
on the one hand, and the Credit Parties, on the other hand, and each of the Loan
Parties is capable of evaluating and understanding and understands and accepts
the terms, risks and conditions of the transactions contemplated hereby and by
the other Loan Documents (including any amendment, waiver or other modification
hereof or thereof); (ii) in connection with the process leading to such
transaction, each Credit Party is and has been acting solely as a principal and
is not the financial advisor, agent or fiduciary, for the Loan Parties or any of
their respective Affiliates, stockholders, creditors or employees or any other
Person; (iii) none of the Credit Parties has assumed or will assume an advisory,
agency or fiduciary responsibility in favor of the Loan Parties with respect to
any of the transactions contemplated hereby or the process leading thereto,
including with respect to any amendment, waiver or other modification hereof or
of any other Loan Document (irrespective of whether any of the Credit Parties
has advised or is currently advising any Loan Party or any of its Affiliates on
other matters) and none of the Credit Parties has any obligation to any Loan
Party or any of its Affiliates with respect to the transactions contemplated
hereby except those obligations expressly set forth herein and in the other Loan
Documents; (iv) the Credit Parties and their respective Lender Affiliates may be
engaged in a broad range of transactions that involve interests that differ from
those of the Loan Parties and their respective Lender Affiliates, and none of
the Credit Parties has any obligation to disclose any of such interests by
virtue of any advisory, agency or fiduciary relationship; and (v) the Credit
Parties have not provided and will not provide any legal, accounting, regulatory
or tax advice with respect to any of the transactions contemplated hereby
(including any amendment, waiver or other modification hereof or of any other
Loan Document) and each of the Loan Parties has consulted its own legal,
accounting, regulatory and tax advisors to the extent it has deemed appropriate.
Each of the Loan Parties hereby

 

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waives and releases, to the fullest extent permitted by law, any claims that it
may have against each of the Credit Parties with respect to any breach or
alleged breach of agency or fiduciary duty.

10.17 USA PATRIOT Act Notice; Proceeds of Crime Act. Each Lender that is subject
to the Patriot Act and the Administrative Agent (for itself and not on behalf of
any Lender) hereby notifies the Loan Parties that pursuant to the requirements
of the Patriot Act and all applicable “know your customer” rules, regulations
and procedures applicable to such Lender in Canada, Australia and Japan), it is
required to obtain, verify and record information that identifies each Loan
Party, which information includes the name and address of each Loan Party and
other information that will allow such Lender or the Administrative Agent to
identify each Loan Party in accordance with the Act. Each Loan Party is in
compliance, in all material respects, with the Patriot Act and the Proceeds of
Crime (Money Laundering) and Terrorist Financing Act (Canada) (the “Proceeds of
Crime Act”). If any Agent has ascertained the identity of the Canadian Borrower
or any authorized signatories of the Canadian Borrower for the purposes of the
Proceeds of Crime Act and other applicable anti-money laundering, anti-terrorist
financing, economic or trade sanctions and “know your client” policies,
regulations, laws or rules (the Proceeds of Crime Act and such other applicable
policies, regulations, laws or rules, collectively, including any guidelines or
orders thereunder, “AML Legislation”), then such Agent shall be deemed to have
done so as an agent for each Canadian Lender, and this Agreement shall
constitute a “written agreement” in such regard between each Canadian Lender and
such Agent within the meaning of the applicable AML Legislation; and shall
provide to each Canadian Lender copies of all information obtained in such
regard without any representation or warranty as to its accuracy or
completeness. Notwithstanding the preceding sentence and except as may otherwise
be agreed in writing, each of the Canadian Lenders agrees that no Agent has any
obligation to ascertain the identity of the Canadian Borrower or any authorized
signatories of the Canadian Borrower on behalf of any Canadian Lender, or to
confirm the completeness or accuracy of any information it obtains from the
Canadian Borrower or any such authorized signatory in doing so. No part of the
proceeds of the Loans will be used by the Loan Parties, directly or indirectly,
for any purpose which would contravene or breach the Proceeds of Crime Act or
for any payments to any governmental official or employee, political party,
official of a political party, candidate for political office, or anyone else
acting in an official capacity, in order to obtain, retain or direct business or
obtain any improper advantage, in violation of the United States Foreign Corrupt
Practices Act of 1977, as amended. The Loan Parties shall, promptly following a
request in writing by the Administrative Agent or any Lender (through the
Administrative Agent), provide all documentation and other information that the
Administrative Agent or such Lender requests in order to comply with its ongoing
obligations under applicable “know your customer” and anti-money laundering
rules and regulations, including the Patriot Act.

10.18 Foreign Asset Control Regulations. Neither of the advance of the Loans,
the issuance of the Letters of Credit, nor the use of the proceeds of any
thereof will violate the Trading With the Enemy Act (50 U.S.C. § 1 et seq., as
amended) (the “Trading With the Enemy Act”) or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) (the “Foreign Assets Control Regulations”) or any
enabling legislation or executive order relating thereto (which for the
avoidance of doubt shall include, but shall not be limited to (a) Executive

 

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Order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg.
49079 (2001)) (the “Executive Order”) and (b) the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (Public Law 107-56)). Furthermore, none of the Loan
Parties or their Affiliates (a) is or will become a “blocked person” as
described in the Executive Order, the Trading With the Enemy Act or the Foreign
Assets Control Regulations or (b) engages or will engage in any dealings or
transactions, or be otherwise associated, with any such “blocked person” or in
any manner violative of any such order.

10.19 [Reserved].

10.20 Time of the Essence. Time is of the essence of the Loan Documents.

10.21 Foreign Subsidiaries.

Notwithstanding any provision of any Loan Document to the contrary, (including
any provision that would otherwise apply notwithstanding other provisions or
that is the beneficiary of other overriding language), (i) no Foreign Subsidiary
shall guarantee or support any Obligation of the Domestic Loan Parties or any
Excluded Swap Obligations, and (ii) no security or similar interest shall be
granted in the assets of any Foreign Subsidiary, which security or similar
interest guarantees or supports any Obligation of the Domestic Loan Parties or
any Excluded Swap Obligations. The parties agree that any pledge, guaranty or
similar interest made or granted in contravention of this Section 10.21 shall be
void ab initio. For purposes of this Section 10.21, a Foreign Subsidiary shall
include a Domestic Subsidiary substantially all of the assets of which consist
of Equity Interests in one or more Foreign Subsidiaries.

10.22 Press Releases.

(a) Each Credit Party executing this Agreement agrees that neither it nor its
Lender Affiliates will in the future issue any press releases or other public
disclosure using the name of any Lender or any Agent or such Person’s Lender
Affiliates or referring to this Agreement or the other Loan Documents without at
least two (2) Business Days’ prior notice to such Lender or such Agent and
without the prior written consent of such Lender or such Agent unless (and only
to the extent that) such Credit Party or Lender Affiliate is required to do so
under applicable Law and then, in any event, such Credit Party or Lender
Affiliate will consult with such Lender or such Agent before issuing such press
release or other public disclosure.

(b) Each Credit Party agrees that neither it nor its Lender Affiliates will in
the future issue any press releases or other public disclosure using the name of
the Parent or its Subsidiaries without at least two (2) Business Days’ prior
notice to the Administrative Agent and without the prior written consent of the
Administrative Agent unless (and only to the extent that) such Credit Party or
Lender Affiliate is required to do so under applicable Law and then, in any
event, such Credit Party or Lender Affiliate will consult with the Lead Borrower
before issuing such press release or other public disclosure. Subject to the
foregoing, each Loan Party consents to the publication by Administrative Agent
or any Lender of advertising material relating to the financing transactions
contemplated by this

 

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Agreement using any Loan Party’s name, product photographs, logo or trademark.
The Administrative Agent or such Lender shall provide a draft reasonably in
advance of any advertising material to the Lead Borrower for review and comment
prior to the publication thereof and reasonably cooperate with Lead Borrower in
connection with any modifications requested by Lead Borrower. The Administrative
Agent reserves the right to provide to industry trade organizations information
necessary and customary for inclusion in league table measurements.

10.23 Additional Waivers.

(a) Except as provided herein or in any other Loan Document or pursuant to any
amendment or waiver executed pursuant to Section 10.01, the Obligations
(including, for avoidance of doubt, the Foreign Liabilities) are the joint and
several obligation of each Loan Party; provided that the Foreign Loan Parties
shall be liable only for the Foreign Liabilities. To the fullest extent
permitted by applicable Law, the obligations of each Loan Party shall not be
affected by (i) the failure of any Credit Party to assert any claim or demand or
to enforce or exercise any right or remedy against any other Loan Party under
the provisions of this Agreement, any other Loan Document or otherwise, (ii) any
release of any other Loan Party from any of the terms or provisions of, this
Agreement or any other Loan Document, or (iii) the failure to perfect any
security interest in, or the release of, any of the Collateral or other security
held by or on behalf of the Administrative Agent, the Collateral Agent or any
other Credit Party.

(b) Except as provided herein or in any other Loan Document or pursuant to any
amendment or waiver executed pursuant to Section 10.01, the Obligations of each
Loan Party shall not be subject to any reduction, limitation, impairment or
termination for any reason (other than the indefeasible Payment in Full),
including any claim of waiver, release, surrender, alteration or compromise of
any of the Obligations, and shall not be subject to any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of any of the Obligations or otherwise. Without
limiting the generality of the foregoing, the Obligations of each Loan Party
shall not be discharged or impaired or otherwise affected by the failure of any
Agent or any other Credit Party to assert any claim or demand or to enforce any
remedy under this Agreement, any other Loan Document or any other agreement, by
any waiver or modification of any provision of any thereof, any default, failure
or delay, willful or otherwise, in the performance of any of the Obligations, or
by any other act or omission that may or might in any manner or to any extent
vary the risk of any Loan Party or that would otherwise operate as a discharge
of any Loan Party as a matter of law or equity (other than the indefeasible
Payment in Full).

(c) To the fullest extent permitted by applicable Law, each Loan Party waives
any defense based on or arising out of any defense of any other Loan Party or
the unenforceability of the Obligations or any part thereof from any cause, or
the cessation from any cause of the liability of any other Loan Party, other
than the indefeasible Payment in Full. The Administrative Agent and the other
Credit Parties may, at their election, foreclose on any security held by one or
more of them by one or more judicial or non-judicial sales, accept an assignment
of any such security in lieu of foreclosure, compromise or adjust any part of
the Obligations, make any other accommodation with any other Loan

 

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Party, or exercise any other right or remedy available to them against any other
Loan Party, without affecting or impairing in any way the liability of any Loan
Party hereunder except to the extent that all the Obligations have been
indefeasibly Paid in Full. Each Loan Party waives any defense arising out of any
such election even though such election operates, pursuant to applicable Law, to
impair or to extinguish any right of reimbursement or subrogation or other right
or remedy of such Loan Party against any other Loan Party, as the case may be,
or any security.

(d) Each Domestic Borrower is obligated to repay the Obligations as joint and
several obligors under this Agreement. Each Foreign Borrower is obligated to
repay the Foreign Liabilities as joint and several obligors under this
Agreement. Upon payment by any Loan Party of any Obligations, all rights of such
Loan Party against any other Loan Party arising as a result thereof by way of
right of subrogation, contribution, reimbursement, indemnity or otherwise shall
in all respects be subordinate and junior in right of payment to the prior
indefeasible Payment in Full. Any Indebtedness of any Loan Party now or
hereafter held by any other Loan Party is hereby subordinated in right of
payment to the prior indefeasible Payment in Full but may be paid in the
ordinary course of business or as permitted pursuant to Section 7.07 hereof. If
any amount shall be paid to any Loan Party erroneously or in violation of the
provisions of this Agreement on account of (i) such subrogation, contribution,
reimbursement, indemnity or similar right or (ii) any such Indebtedness of any
Loan Party, such amount shall be held in trust for the benefit of the Credit
Parties and shall, subject to the terms of the DIP Intercreditor Agreement,
forthwith be paid to the Administrative Agent to be credited against the payment
of the applicable Obligations, whether matured or unmatured, in accordance with
the terms of this Agreement and the other Loan Documents.

Without limiting the generality of the foregoing, or of any other waiver or
other provision set forth in this Agreement, each Loan Party hereby absolutely,
knowingly, unconditionally, and expressly waives any and all claim, defense or
benefit arising directly or indirectly under any one or more of Sections 2787 to
2855 inclusive of the California Civil Code or any similar law of California.

10.24 Judgment Currency. If, for the purposes of obtaining judgment in any court
in any jurisdiction with respect to this Agreement or any other Loan Document,
it becomes necessary to convert into a particular currency (the “Judgment
Currency”) any amount due under this Agreement or under any other Loan Document
in any currency other than the Judgment Currency (the “Currency Due”), then
conversion shall be made at the rate of exchange prevailing on the Business Day
before the day on which judgment is given. For this purpose “rate of exchange”
means the rate at which the applicable Agent is able, on the relevant date, to
purchase the Currency Due with the Judgment Currency in accordance with its
normal practice. In the event that there is a change in the rate of exchange
prevailing between the Business Day before the day on which the judgment is
given and the date of receipt by the Administrative Agent of the amount due the
Administrative Agent, the applicable Loan Party will, on the date of receipt by
the Administrative Agent pay such additional amounts, if any, as may be
necessary to ensure that the amount received by the Administrative Agent on such
date, as applicable, is the amount in the Judgment Currency which when converted
at the rate of exchange prevailing on the date of receipt by the Administrative
Agent is the amount then due under this

 

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Agreement or such other Loan Document in the Currency Due. If the amount of the
Currency Due which the applicable Agent is so able to purchase is less than the
amount of the Currency Due originally due to it, the applicable Loan Party shall
indemnify and save the Agents, the L/C Issuer and the Lenders harmless from and
against all loss or damage arising as a result of such deficiency. This
indemnity shall constitute an obligation separate and independent from the other
obligations contained in this Agreement and the other Loan Documents, shall give
rise to a separate and independent cause of action, shall apply irrespective of
any indulgence granted by any Agent from time to time and shall continue in full
force and effect notwithstanding any judgment or order for a liquidated sum in
respect of an amount due under this Agreement or any other Loan Document or
under any judgment or order.

10.25 No Strict Construction. The parties hereto have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.

10.26 Attachments. The exhibits and schedules attached to this Agreement are
incorporated herein and shall be considered a part of this Agreement for the
purposes stated herein, except that in the event of any conflict between any of
the provisions of such exhibits (other than the Intercreditor Agreement or the
DIP Intercreditor Agreement, as applicable) and the provisions of this
Agreement, the provisions of this Agreement shall prevail.

10.27 Conflict of Terms; Intercreditor Agreement

Except as otherwise provided in this Agreement or any of the other Loan
Documents by specific reference to the applicable provisions of this Agreement,
if any provision contained in this Agreement conflicts with any provision in any
of the other Loan Documents (other than the Intercreditor Agreement or the DIP
Intercreditor Agreement, as applicable), the provision contained in this
Agreement shall govern and control. If any provision contained in this Agreement
conflicts with any provision of the DIP Intercreditor Agreement, the provision
contained in the DIP Intercreditor Agreement shall govern and control.

 

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10.28 Electronic Execution of Assignments and Certain Other Documents. The words
“execute,” “execution,” “signed,” “signature,” and words of like import in any
Assignment and Assumption or in any amendment or other modification hereof
(including waivers and consents) shall be deemed to include electronic
signatures, the electronic matching of assignment terms and contract formations
on electronic platforms approved by the Administrative Agent, or the keeping of
records in electronic form, each of which shall be of the same legal effect,
validity or enforceability as a manually executed signature or the use of a
paper-based recordkeeping system, as the case may be, to the extent and as
provided for in any applicable law, including the Federal Electronic Signatures
in Global and National Commerce Act, the New York State Electronic Signatures
and Records Act, or any other similar state laws based on the Uniform Electronic
Transactions Act.

10.29 Obligations and Collateral of the Foreign Loan Parties.

Notwithstanding anything contained herein or in the other Loan Documents to the
contrary, none of the Foreign Loan Parties shall be liable or jointly and
severally liable for any Excluded Swap Obligations of such Foreign Loan Party or
of any Domestic Loan Party or for any Obligations (other than the Foreign
Liabilities) of the Parent or any other Domestic Loan Party (collectively, the
“Domestic Obligations”), and none of the Collateral pledged by the Foreign Loan
Parties shall secure any Domestic Obligations (other than the Foreign
Liabilities). In addition, any insurance proceeds from any Collateral pledged by
the Foreign Loan Parties shall not be available to pay any Domestic Obligations
(other than the Foreign Liabilities).

10.30 Language.

The parties herein have expressly requested that this Agreement and all related
documents be drawn up in the English language. A la demande expresse des parties
aux présentes, cette convention et tout document y afférent ont été rédigés en
langue anglaise.

10.31 Keepwell.

Subject to the provisions of Section 10.29, each Loan Party that is a Qualified
ECP Guarantor at the time its Guarantee or the grant of a security interest
under the Loan Documents becomes effective with respect to any Swap Obligation,
hereby jointly and severally, absolutely, unconditionally and irrevocably
undertakes to provide such funds or other support to each Specified Loan Party
with respect to such Swap Obligation as may be needed by such Specified Loan
Party from time to time to honor all of its obligations under the Loan Documents
in respect of such Swap Obligation (but, in each case, only up to the maximum
amount of such liability that can be hereby incurred without rendering such
Qualified ECP Guarantor’s obligations and undertakings under this Article X
voidable under applicable law relating to fraudulent conveyance or fraudulent
transfer, and not for any greater amount). The obligations and undertakings of
each Qualified ECP Guarantor under this Section 10.31 shall remain in full force
and effect until Payment in Full. Each Loan Party intends this Section 10.31 to
constitute, and this Section 10.31 shall be deemed to constitute, a guarantee of
the obligations of, and a “keepwell, support, or

 

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other agreement” for the benefit of, each Specified Loan Party for all purposes
of the Commodity Exchange Act.

10.32 Amendment and Restatement. This Agreement is an amendment and restatement
of the Existing ABL Credit Agreement, it being acknowledged and agreed that as
of the Effective Date all obligations outstanding under or in connection with
the Existing ABL Credit Agreement and any of the other Loan Documents (such
obligations, collectively, the “Existing Obligations”) constitute Obligations
under this Agreement (unless paid on the Effective Date). This Agreement is in
no way intended to constitute a novation of the Existing ABL Credit Agreement or
the Existing Obligations. With respect to (i) any date or time period occurring
and ending prior to the Effective Date, the Existing ABL Credit Agreement and
the other Loan Documents shall govern the respective rights and obligations of
any party or parties hereto also party thereto and shall for such purposes
remain in full force and effect; and (ii) any date or time period occurring or
ending on or after the Effective Date, the rights and obligations of the parties
hereto shall be governed by this Agreement (including, without limitation, the
exhibits and schedules hereto) and the other Loan Documents. From and after the
Effective Date, any reference to the Existing ABL Credit Agreement in any of the
other Loan Documents executed or issued by and/or delivered to any one or more
parties hereto pursuant to or in connection therewith shall be deemed to be a
reference to this Agreement, and the provisions of this Agreement shall prevail
in the event of any conflict or inconsistency between such provisions and those
of the Existing ABL Credit Agreement. The Credit Parties authorize the Agents to
execute a Confirmation and Ratification of Ancillary Loan Documents and any
amendments and/or amendments and restatements and/or supplements to the Existing
ABL Credit Agreement, in each case as the Administrative Agent may deem
appropriate in connection with such Loan Documents.

10.33 Money Lending Business Law. The Loan Parties hereby agree to the
submission by each of the Japanese Lenders as a Money Lender (kashikin gyo-sha)
under Money Lending Business Law of Japan to the Loan Parties of any writings
under the Money Lending Business Law of Japan and other regulations related
thereto, by electronic means in lieu of delivery of paper documents.

[SIGNATURE PAGES FOLLOW]

 

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

 

QS WHOLESALE, INC.,

as the Lead Borrower

By:

   

Name:

 

Title:

 

DC SHOES, INC.,

as a Domestic Borrower

By:

   

Name:

 

Title:

 

HAWK DESIGNS, INC.,

as a Domestic Borrower

By:

   

Name:

 

Title:

 

QS RETAIL, INC.,

as a Domestic Borrower

By:

   

Name:

 

Title:

 

Signature Page to Second Amended and Restated

and Senior Secured Super-Priority Debtor-In-Possession Credit Agreement

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

QUIKSILVER, INC., as a Guarantor By:     Name:   Title:  

Q. S. OPTICS, INC.,

as a Guarantor

By:     Name:   Title:  

QUIKSILVER WETSUITS, INC.,

as a Guarantor

By:     Name:   Title:  

Signature Page to Second Amended and Restated

and Senior Secured Super-Priority Debtor-In-Possession Credit Agreement

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

MT. WAIMEA, INC., as a Guarantor By:     Name:   Title:   QUIKSILVER
ENTERTAINMENT, INC., as a Guarantor By:     Name:   Title:   FIDRA, INC., as a
Guarantor By:     Name:   Title:  

DC DIRECT, INC.,

as a Guarantor

By:     Name:   Title:  

Signature Page to Second Amended and Restated

and Senior Secured Super-Priority Debtor-In-Possession Credit Agreement

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

QUIKSILVER CANADA CORP., as the Canadian Borrower By:     Name:   Title:  

Signature Page to Second Amended and Restated

and Senior Secured Super-Priority Debtor-In-Possession Credit Agreement

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

QUIKSILVER JAPAN CO., LTD. as the Japanese Borrower

By:

   

Name:

 

Title:

 

Signature Page to Second Amended and Restated

and Senior Secured Super-Priority Debtor-In-Possession Credit Agreement

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

Executed by Ug Manufacturing Co. Pty Ltd ACN 005 047 941 in accordance with
section 127 of the Corporations Act 2001:     

 

    

 

Director      Secretary

 

    

 

Name of Director

(BLOCK LETTERS)

    

Name of Secretary

(BLOCK LETTERS)

Signature Page to Second Amended and Restated

and Senior Secured Super-Priority Debtor-In-Possession Credit Agreement

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

BANK OF AMERICA, N.A., as Administrative Agent, as Collateral Agent and as
Australian Security Trustee By:  

 

Name:   Roger Malouf Title:   Vice President

Signature Page to Second Amended and Restated and

Senior Secured Super-Priority Debtor-In-Possession Credit Agreement

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

BANK OF AMERICA, N.A., (acting through its Hong Kong branch) as Administrative
Agent and as a Collateral Agent By:  

 

Name:   Roger Malouf Title:   Vice President

Signature Page to Second Amended and Restated and

Senior Secured Super-Priority Debtor-In-Possession Credit Agreement

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

BANK OF AMERICA, N.A. (acting through its Australia branch) as an Australian
Lender By:  

 

Name:   Title:  

Signature Page to Second Amended and Restated and

Senior Secured Super-Priority Debtor-In-Possession Credit Agreement

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

BANK OF AMERICA, N.A., as a Domestic Lender, L/C Issuer By:  

 

Name:   Roger Malouf Title:   Vice President

Signature Page to Second Amended and Restated and

Senior Secured Super-Priority Debtor-In-Possession Credit Agreement

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

BANK OF AMERICA, N.A. (acting through its Canada branch), as a Canadian Lender,
By:  

 

Name:   Medina Sales De Andrade Title:   Vice President

Signature Page to Second Amended and Restated and

Senior Secured Super-Priority Debtor-In-Possession Credit Agreement

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

BANK OF AMERICA, N.A. (acting through its Tokyo branch), as a Japanese Lender
By:  

 

Name:   Title:  

Signature Page to Second Amended and Restated and

Senior Secured Super-Priority Debtor-In-Possession Credit Agreement