**EXHIBIT 10.1**

 

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

Dated as of August 6, 2004

 

among

 

SEALY MATTRESS COMPANY,as Borrower

 

SEALY CANADA LTD./LTEE,as Canadian Borrower

 

CERTAIN SUBSIDIARIES OF BORROWER,as Guarantors

 

SEALY MATTRESS CORPORATION,as Holdings and a Guarantor

 

SEALY CORPORATION,as Parent

 

The Several Lendersfrom Time to Time Parties Hereto

 

JPMORGAN CHASE BANK,as Administrative Agent

 

J.P. MORGAN SECURITIES INC.,as Joint Lead Arranger and Joint Bookrunner

 

GOLDMAN SACHS CREDIT PARTNERS L.P.,as Joint Lead Arranger, Joint Bookrunner and Syndication Agent

 

GENERAL ELECTRIC CAPITAL CORPORATION,as Co-Documentation Agent

 

and

 

ROYAL BANK OF CANADA,

as Co-Documentation Agent

 

 

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TABLE OF CONTENTS

 
| SECTION 1. | Definitions                                                     |   |
|-----------------|-----------------------------------------------------------------|--------|
| 1.1.            | Defined  Terms                                                  |   |
| 1.2.            | Exchange  Rates                                                 |   |
|            |                                                            |   |
| SECTION 2. | Amount and Terms of Credit                                      |   |
| 2.1.            | Commitments                                                     |   |
| 2.2.            | Minimum Amount of Each Borrowing; Maximum  Number of Borrowings |   |
| 2.3.            | Notice of Borrowing                                             |   |
| 2.4.            | Disbursement  of Funds                                          |   |
| 2.5.            | Repayment of Loans; Evidence of Debt                            |   |
| 2.6.            | Conversions and Continuations                                   |   |
| 2.7.            | Pro Rata Borrowings                                             |   |
| 2.8.            | Interest                                                        |   |
| 2.9.            | Interest  Periods                                               |   |
| 2.10.           | Increased  Costs, Illegality, etc.                              |   |
| 2.11.           | Compensation                                                    |   |
| 2.12.           | Change of Lending Office                                        |   |
| 2.13.           | Notice of Certain Costs                                         |   |
| 2.14.           | Bankers’ Acceptances                                       |   |
| 2.15.           | Incremental Facilities                                          |   |
|            |                                                            |   |
| SECTION 3. | Letters of Credit                                               |   |
| 3.1.            | Letters  of Credit                                              |   |
| 3.2.            | Letter of Credit Requests                                       |   |
| 3.3.            | Letter of Credit Participations                                 |   |
| 3.4.            | Agreement  to Repay Letter of Credit Drawings                   |   |
| 3.5.            | Increased  Costs                                                |   |
| 3.6.            | Successor  Letter of Credit Issuer                              |   |
|            |                                                            |   |
| SECTION 4. | Fees; Commitments                                               |   |
| 4.1.            | Fees                                                            |   |
| 4.2.            | Voluntary Reduction of Revolving Credit Commitments             |   |
| 4.3.            | Mandatory Termination of Commitments                            |   |
|            |                                                            |   |
| SECTION 5. | Payments                                                        |   |
| 5.1.            | Voluntary Prepayments.                                          |   |
| 5.2.            | Mandatory Prepayments                                           |   |
| 5.3.            | Method  and Place of Payment                                    |   |
| 5.4.            | Net  Payments                                                   |   |
| 5.5.            | Computations of Interest and Fees                               |   |
| 5.6.            | Limit on Rate of Interest.                                      |   |
|            |                                                            |   |
| SECTION 6. | Conditions Precedent to Initial Borrowing                       |   |
| 6.1.            | Credit  Documents                                               |   |
| 6.2.            | Collateral                                                      |   |

 

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| 6.3.            | Legal  Opinions                                           |   |
|-----------------|-----------------------------------------------------------|--------|
| 6.4.            | No  Default                                               |   |
| 6.5.            | Consent                                                   |   |
| 6.6.            | [Reserved]                                                |   |
| 6.7.            | Effective Date Certificates                               |   |
| 6.8.            | Corporate Proceedings of Each Credit Party                |   |
| 6.9.            | Corporate  Documents                                      |   |
| 6.10.           | Fees                                                      |   |
| 6.11.           | Representations and Warranties                            |   |
| 6.12.           | Governmental Authorizations and Consents                  |   |
|            |                                                      |   |
| SECTION 7. | Conditions Precedent to All Credit Events                 |   |
| 7.1.            | No Default; Representations and Warranties                |   |
| 7.2.            | Notice of Borrowing; Letter of Credit  Request            |   |
|            |                                                      |   |
| SECTION 8. | Representations, Warranties and Agreements                |   |
| 8.1.            | Corporate  Status                                         |   |
| 8.2.            | Corporate  Power and Authority                            |   |
| 8.3.            | No  Violation                                             |   |
| 8.4.            | Litigation                                                |   |
| 8.5.            | Margin  Regulations                                       |   |
| 8.6.            | Governmental  Approvals                                   |   |
| 8.7.            | Investment  Company Act                                   |   |
| 8.8.            | True and Complete Disclosure                              |   |
| 8.9.            | Financial Condition; Financial Statements                 |   |
| 8.10.           | Tax  Returns and Payments                                 |   |
| 8.11.           | Compliance  with ERISA                                    |   |
| 8.12.           | Subsidiaries                                              |   |
| 8.13.           | Patents,  etc.                                            |   |
| 8.14.           | Environmental  Laws                                       |   |
| 8.15.           | Properties                                                |   |
|            |                                                      |   |
| SECTION 9. | Affirmative Covenants                                     |   |
| 9.1.            | Information Covenants                                     |   |
| 9.2.            | Books,  Records and Inspections                           |   |
| 9.3.            | Maintenance of Insurance                                  |   |
| 9.4.            | Payment  of Taxes                                         |   |
| 9.5.            | Consolidated Corporate Franchises                         |   |
| 9.6.            | Compliance with Statutes, Obligations, etc.               |   |
| 9.7.            | ERISA                                                     |   |
| 9.8.            | Good  Repair                                              |   |
| 9.9.            | Transactions with Affiliates                              |   |
| 9.10.           | End of Fiscal Years; Fiscal Quarters                      |   |
| 9.11.           | Additional Guarantors and Grantors                        |   |
| 9.12.           | Pledges of Additional Stock and Evidence of  Indebtedness |   |
| 9.13.           | Use  of Proceeds                                          |   |
| 9.14.           | Changes  in Business                                      |   |

 

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| 9.15.            | Further  Assurances                                         |   |
|------------------|-------------------------------------------------------------|--------|
| 9.16.            | Canadian  Borrower                                          |   |
|             |                                                        |   |
| SECTION 10. | Negative Covenants                                          |   |
| 10.1.            | Limitation on Indebtedness                                  |   |
| 10.2.            | Limitation on Liens                                         |   |
| 10.3.            | Limitation on Fundamental Changes                           |   |
| 10.4.            | Limitation on Sale of Assets                                |   |
| 10.5.            | Limitation on Investments                                   |   |
| 10.6.            | Limitation on Dividends                                     |   |
| 10.7.            | Limitations on Debt Payments and Amendments                 |   |
| 10.8.            | Limitations on Sale Leasebacks                              |   |
| 10.9.            | Consolidated Total Debt to Consolidated  EBITDA Ratio       |   |
| 10.10.           | Consolidated EBITDA to Consolidated  Interest Expense Ratio |   |
| 10.11.           | Capital  Expenditures                                       |   |
|             |                                                        |   |
| SECTION 11. | Events of Default                                           |   |
| 11.1.            | Payments                                                    |   |
| 11.2.            | Representations,  etc.                                      |   |
| 11.3.            | Covenants                                                   |   |
| 11.4.            | Default Under Other Agreements                              |   |
| 11.5.            | Bankruptcy,  etc.                                           |   |
| 11.6.            | ERISA                                                       |   |
| 11.7.            | Guarantee                                                   |   |
| 11.8.            | Pledge  Agreement                                           |   |
| 11.9.            | Security  Agreement                                         |   |
| 11.10.           | Mortgages                                                   |   |
| 11.11.           | Foreign  Guarantees                                         |   |
| 11.12.           | Canadian Security Documents                                 |   |
| 11.13.           | Subordination                                               |   |
| 11.14.           | Judgments                                                   |   |
| 11.15.           | Change  of Control                                          |   |
|             |                                                        |   |
| SECTION 12. | The Administrative Agent                                    |   |
| 12.1.            | Appointment                                                 |   |
| 12.2.            | Delegation of Duties                                        |   |
| 12.3.            | Exculpatory Provisions                                      |   |
| 12.4.            | Reliance by Administrative Agent                            |   |
| 12.5.            | Notice  of Default                                          |   |
| 12.6.            | Non-Reliance on Administrative Agent and  Other Lenders     |   |
| 12.7.            | Indemnification                                             |   |
| 12.8.            | Administrative Agent in its Individual  Capacity            |   |
| 12.9.            | Successor  Agent                                            |   |
| 12.10.           | Withholding  Tax                                            |   |
| 12.11.           | Canadian Administrative Agent.                              |   |
| 12.12.           | Quebec.                                                     |   |

 

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| SECTION 13. | Collateral Allocation Mechanism                         |   |
|------------------|---------------------------------------------------------|--------|
| 13.1.            | Implementation of CAM                                   |   |
| 13.2.            | Letters  of Credit                                      |   |
| 13.3.            | Net Payments Upon Implementation of CAM  Exchange       |   |
|             |                                                    |   |
| SECTION 14. | Miscellaneous                                           |   |
| 14.1.            | Amendments and Waivers                                  |   |
| 14.2.            | Notices                                                 |   |
| 14.3.            | No Waiver; Cumulative Remedies                          |   |
| 14.4.            | Survival of Representations and Warranties              |   |
| 14.5.            | Payment of Expenses and Taxes                           |   |
| 14.6.            | Successors and Assigns; Participations and  Assignments |   |
| 14.7.            | Replacements of Lenders under Certain  Circumstances    |   |
| 14.8.            | Adjustments; Set-off                                    |   |
| 14.9.            | Counterparts                                            |   |
| 14.10.           | Severability                                            |   |
| 14.11.           | Integration                                             |   |
| 14.12.           | GOVERNING  LAW                                          |   |
| 14.13.           | Submission to Jurisdiction; Waivers                     |   |
| 14.14.           | Acknowledgments                                         |   |
| **14.15.**       | **WAIVERS OF JURY TRIAL**                               |   |
| 14.16.           | Confidentiality                                         |   |
| 14.17.           | Judgment  Currency                                      |   |
| 14.18.           | USA  PATRIOT Act                                        |   |
| 14.19.           | Reaffirmation and Grant of Security  Interest           |   |
| 14.20.           | Amendment and Restatement                               |   |

 
| SCHEDULES              |                                                |   |
|------------------------|-----------------------------------------------------|--------|
|                   |                                                |   |
| Schedule 1.1 (b)  | Mortgaged Properties                                |   |
| Schedule 1.1 (c)  | Commitments and Addresses of Lenders                |   |
| Schedule 1.1(d)   | EBITDA Add-Backs                                    |   |
| Schedule 1.1(e)   | Excluded Subsidiaries                               |   |
| Schedule 2.1(a)   | Continuing Lenders                                  |   |
| Schedule 8.11(ii) | Canadian Pension Plan Disclosures                   |   |
| Schedule 8.12     | Subsidiaries                                        |   |
| Schedule 10.1     | Closing Date Indebtedness                           |   |
| Schedule 10.2     | Closing Date Liens                                  |   |
| Schedule 10.5     | Closing Date Investments                            |   |
| Schedule 10.5(o)  | Investments in newly formed Puerto Rican Subsidiary |   |

 
| EXHIBITS         |                       |   |
|------------------|----------------------------|--------|
|             |                       |   |
| Exhibit A-1 | Form of Canadian Guarantee |   |

 

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| Exhibit A-2      | Forms of Canadian Pledge Agreements                              |   |
|------------------|------------------------------------------------------------------|--------|
| Exhibit A-3      | Form of Canadian Security Agreement                              |   |
| Exhibit C        | Form of Guarantee                                                |   |
| Exhibit D        | Form of Mortgage (Real Property)                                 |   |
| Exhibit E        | Form of Perfection Certificate                                   |   |
| Exhibit F        | Form of Pledge Agreement                                         |   |
| Exhibit G        | Form of Security Agreement                                       |   |
| Exhibit H-1 | Form of US Letter of Credit Request                              |   |
| Exhibit H-2 | Form of Canadian Letter of Credit Request                        |   |
| Exhibit I-1 | Form of Legal Opinion of Simpson Thacher & Bartlett LLP |   |
| Exhibit I-2 | Form of Legal Opinions of Osler, Hoskin & Harcourt LLP       |   |
| Exhibit I-3      | Form of Legal Opinion of Calfee, Halter & Griswold LLP       |   |
| Exhibit I-4      | Form of Legal Opinion of general counsel                         |   |
| Exhibit J   | Form of Effective Date Certificate                               |   |
| Exhibit K   | Form of Assignment and Acceptance                                |   |
| Exhibit L-1 | Form of Promissory Note (Tranche C Term Loans)                   |   |
| Exhibit L-2 | Form of Promissory Note (Revolving Credit and Swingline Loans)   |   |
| Exhibit M        | Form of Joinder Agreement                                        |   |

 

v

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AMENDED AND RESTATED CREDIT AGREEMENT dated as of August 6, 2004,among SEALY MATTRESS COMPANY, an Ohio corporation (the “Borrower”),SEALY CANADA LTD./LTEE, a company organized under the laws of Canada (the “CanadianBorrower”), SEALY MATTRESS CORPORATION, a Delaware Corporation (“Holdings”)and SEALY CORPORATION, a Delaware corporation (“Parent”), the lendinginstitutions from time to time parties hereto (each a “Lender” and,collectively, the “Lenders”), J.P. MORGANSECURITIES INC., as Joint Lead Arranger and Joint Bookrunner, GOLDMAN SACHSCREDIT PARTNERS L.P., as Joint Lead Arranger, Joint Bookrunner and SyndicationAgent, JPMORGAN CHASE BANK, asAdministrative Agent (such term and each other capitalized term used but notdefined in this introductory statement having the meaning provided inSection 1), JPMORGAN CHASE BANK, TORONTOBRANCH, as Canadian Administrative Agent, and GENERAL ELECTRIC CAPITAL CORPORATIONand ROYAL BANK OF CANADA, as Co-Documentation Agents.

 

**WHEREAS**, Borrower, Canadian Borrower,Holdings, the Guarantors, certain financial institutions and other persons (the“Existing Lenders”), J.P. Morgan Securities Inc., as joint lead arrangerand joint bookrunner, Goldman Sachs Credit Partners L.P., as joint leadarranger, joint bookrunner and syndication agent, JPMorgan Chase Bank, asadministrative agent, JPMorgan Chase Bank, Toronto branch, as Canadian administrativeagent and General Electric Capital Corporation, and Royal Bank of Canada, asco-documentation agents, are parties to that certain Credit Agreement dated asof April 6, 2004 (as heretofore amended, supplemented or otherwisemodified, the “Existing Credit Agreement”), pursuant to which theExisting Lenders have extended certain credit facilities to Company, theproceeds of which have been used to consummate the Recapitalization and forworking capital and general corporate purposes;

 

**WHEREAS**, Borrower desires that certainExisting Lenders and other Lenders party hereto agree to amend and restate theExisting Credit Agreement in its entirety to (i) refinance the existing termloans made under the Existing Credit Agreement (the “Existing Term Loans”)with the Tranche C Term Loans made hereunder; and (ii) make certain otherchanges as more fully set forth herein, which amendment and restatement shallbecome effective upon satisfaction of the conditions precedent set forthherein;

 

**WHEREAS**, (i) theproceeds of the Tranche C Term Loans made on the Effective Date shall be usedby the Borrower to repay in full the outstanding Existing Term Loans; (ii) theproceeds of the Revolving Credit Loans and Swingline Loans made on and afterthe Effective Date will continue to be used by the Borrower and the CanadianBorrower for general corporate purposes (including Permitted Acquisitions); and(iii) Letters of Credit will continue to be used by the Borrower and theCanadian Borrower for general corporate purposes;

 

**WHEREAS**, Borrower has agreed to secure all ofits Obligations by reaffirming its grant to Administrative Agent, for thebenefit of Secured Parties, of a Lien on certain of its assets, including apledge of all of the Capital Stock of each of its

 

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Domestic Subsidiaries and 65% of all the Capital Stock of each of itsForeign Subsidiaries;

 

**WHEREAS**, it is the intent of the partieshereto that this Agreement not constitute a novation of the obligations andliabilities of the parties under the Existing Credit Agreement and that thisAgreement amend and restate in its entirety the Existing Credit Agreement; and

 

**WHEREAS**, it is the intent of the CreditParties to confirm that all Obligations of the Credit Parties under the otherCredit Documents shall continue in full force and effect and that, from andafter the Effective Date, all references to the “Credit Agreement”contained therein shall be deemed to refer to this Agreement.

 

The parties hereto hereby agree as follows:

 

SECTION 1.                                Definitions

 

1.1.          Defined Terms. (a)     As used herein, thefollowing terms shall have the meanings specified in this Section 1.1unless the context otherwise requires (it being understood that defined termsin this Agreement shall include in the singular number the plural and in the pluralthe singular):

 

“ABR” shall mean, for any day, a rate per annum (roundedupwards, if necessary, to the next 1/16 of 1%) equal to the greatest of(a) the Prime Rate in effect on such day and (b) the Federal FundsEffective Rate in effect on such day plus 1⁄2 of 1%.  Any change in the ABR due to a change in thePrime Rate or the Federal Funds Effective Rate shall be effective as of theopening of business on the effective day of such change in the Prime Rate orthe Federal Funds Effective Rate, respectively.

 

“ABR Loan” shall mean each Loan bearing interest at the rateprovided in Section 2.8(a) and, in any event, shall include all SwinglineLoans.

 

“Acquired EBITDA” shall mean, with respect to any AcquiredEntity or Business, any Converted Restricted Subsidiary, any Sold Entity orBusiness or any Converted Unrestricted Subsidiary (any of the foregoing, a “ProForma Entity”) for any period, the amount for such period of ConsolidatedEBITDA of such Pro Forma Entity (determined using such definitions as if referencesto Holdings and its Subsidiaries therein were to such Pro Forma Entity and itsSubsidiaries), all as determined on a consolidated basis for such Pro FormaEntity in accordance with GAAP.

 

“Acquired Entity or Business” shall have the meaning provided inthe definition of the term “Consolidated EBITDA”.

 

“Adjusted Canadian Total Revolving Credit Commitment” shall meanat any time the Canadian Total Revolving Credit Commitment less the aggregateCanadian Revolving Credit Commitments of all Defaulting Lenders.

 

2

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“Adjusted US Total Revolving Credit Commitment” shall mean atany time the US Total Revolving Credit Commitment less the aggregate USRevolving Credit Commitments of all Defaulting Lenders.

 

“Adjusted Total Term Loan Commitment” shall mean at any time theTotal Term Loan Commitment less the Tranche C Term Loan Commitments of allDefaulting Lenders.

 

“Administrative Agent” shall mean JPMorgan Chase Bank, togetherwith its affiliates, as the arranger of the Commitments and as theadministrative agent for the Lenders under this Agreement and the other CreditDocuments.  With respect to Borrowings bythe Canadian Borrower, the Canadian Administrative Agent may be an Affiliate ofJPMorgan Chase Bank for purposes of administering such Borrowings, and allreferences herein to the term “Administrative Agents” shall be deemed to referto both the Administrative Agent and the Canadian Administrative Agent, as thecontext requires.

 

“AdministrativeAgent’s Office” shall mean (a) in respect of all Credit Events for theaccount of the Borrower, the office of the Administrative Agent located at 270 Park Avenue, 5th Floor, New York, NY 10017,or such other office as the Administrative Agent may hereafter designate inwriting as such to the other parties hereto and (b) in respect of all CreditEvents for the account of the Canadian Borrower, the office of the CanadianAdministrative Agent located at 200 Bay Street, Royal Bank Plaza, South Tower,Toronto, Ontario M5J 2J2, or such other office in Canada as the CanadianAdministrative Agent may hereafter designate in writing as such to the otherparties hereto and all references to the term “Canadian Administrative Agent’sOffice” shall mean the office referred to in this clause (b).

 

“Affiliate” shall mean, with respect to any Person, any otherPerson directly or indirectly controlling, controlled by, or under direct orindirect common control with such Person. A Person shall be deemed to control a corporation if such Personpossesses, directly or indirectly, the power (a) to vote 10% or more ofthe securities having ordinary voting power for the election of directors ofsuch corporation or (b) to direct or cause the direction of the managementand policies of such corporation, whether through the ownership of votingsecurities, by contract or otherwise.

 

“Agents” shall mean each Joint Lead Arranger, the AdministrativeAgent, the Canadian Administrative Agent, the Syndication Agent and theDocumentation Agents.

 

“Aggregate Canadian Revolving Credit Outstanding” shall have themeaning provided in Section 5.2(b)(ii).

 

“Aggregate US Revolving Credit Outstanding” shall have themeaning provided in Section 5.2(b)(i).

 

3

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“Agreement” shall mean this Amended and Restated CreditAgreement, as the same may be amended, supplemented or otherwise modified fromtime to time.

 

“Amortization Amount” shall have the meaning provided inSection 5.2(c).

 

“Applicable ABR Margin” shall mean at any date, with respect toeach ABR Loan, Cdn ABR Loan and Canadian Prime Loan, the applicable percentageper annum set forth below based upon the Status in effect on such date:

 
| **Status**            | ** ** | **Applicable ABR Margin for  Revolving Credit and Swingline  Loans (including ABR Loans,  Cdn ABR Loans and Canadian  Prime Loans)** | ** ** | **Applicable ABR  Margin for  Tranche C Term  Loans** | ** ** |
|-----------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------|------------|
|                  |       |                                                                                                                                      |       |                                                       |       |
| Level I Status   |       | 1.25                                                                                                                                      | %          | 1.25                                                       | %          |
| Level II Status  |       | 1.00                                                                                                                                      | %          | 1.00                                                       | %          |
| Level III Status |       | 0.75                                                                                                                                      | %          | 1.00                                                       | %          |
| Level IV Status  |       | 0.50                                                                                                                                      | %          | 1.00                                                       | %          |

 

Notwithstanding the foregoing, (i) the term “Applicable ABR Margin”shall mean, (a) with respect to each ABR Loan that is a Tranche C Term Loan,1.25% per annum and (b) with respect to each ABR Loan, Cdn ABR Loan andCanadian Prime Loan that is a Revolving Credit Loan or a Swingline Loan, 1.25%per annum, during the period from and including the Closing Date to butexcluding the Initial Financial Statement Delivery Date and (ii) the ApplicableABR Margin, with respect to Tranche C Term Loans only, shall be reduced by 25basis points from the then applicable Status level, in the event the Tranche CTerm Loans have been assigned and maintain a credit rating by Moody’s andS&P of B1 and B+, respectively, in each case with a “stable” outlook.

 

“Applicable Eurodollar Margin” shall mean at any date, withrespect to each Eurodollar Loan, the applicable percentage per annum set forthbelow based upon the Status in effect on such date:

 
| **Status**            | ** ** | **Applicable Eurodollar  Margin for Revolving  Credit and Swingline Loans** | ** ** | **Applicable Eurodollar  Margin for Tranche C  Term Loans** | ** ** |
|-----------------------|------------|----------------------------------------------------------------------------------|------------|------------------------------------------------------------------|------------|
|                  |       |                                                                             |       |                                                             |       |
| Level I Status   |       | 2.50                                                                             | %          | 2.50                                                             | %          |
| Level II Status  |       | 2.25                                                                             | %          | 2.25                                                             | %          |
| Level III Status |       | 2.00                                                                             | %          | 2.25                                                             | %          |
| Level IV Status  |       | 1.75                                                                             | %          | 2.25                                                             | %          |

 

Notwithstanding the foregoing, (i) the term “Applicable EurodollarMargin” shall mean, (a) with respect to each Eurodollar Loan that is a TrancheC Term

 

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Loan, 2.50% per annum and (b) with respect to each Eurodollar Loan thatis a Revolving Credit Loan, 2.50% per annum, during the period from andincluding the Closing Date to but excluding the Initial Financial StatementDelivery Date and (ii) the Applicable Eurodollar Margin, with respect toTranche C Term Loans only, shall be reduced by 25 basis points from the thenapplicable Status level, in the event the Tranche C Term Loans have beenassigned and maintain a credit rating by Moody’s and S&P of B1 and B+,respectively, in each case with a “stable” outlook.

 

“ApplicableStamping Fee” shall mean, with respect to each accepted or advancedBA Loan by a Lender on any date, the applicable percentage per annum set forthbelow based on the Status in effect on such date:

 
| **Status**       | ** ** | **Applicable Stamping Fee** | ** ** |
|------------------|------------|-----------------------------|------------|
|             |       |                        |       |
| Level I Status   |       | 2.50                        | %          |
| Level II Status  |       | 2.25                        | %          |
| Level III Status |       | 2.00                        | %          |
| Level IV Status  |       | 1.75                        | %          |

 

Notwithstanding the foregoing, the term “Applicable Stamping Fee” shallmean, 2.50% per annum, during the period from and including the Closing Date tobut excluding the Initial Financial Statement Delivery Date.

 

“Approved Fund” shall have the meaning provided inSection 14.6.

 

“Asset Sale Prepayment Event” shall mean any sale, transfer orother disposition of any business units, assets or other properties of theBorrower or any of the Restricted Subsidiaries not in the ordinary course ofbusiness (including any sale, transfer or other disposition of any capitalstock of any Subsidiary of the Borrower owned by the Borrower or a RestrictedSubsidiary).  Notwithstanding theforegoing, the term “Asset Sale Prepayment Event” shall not include anytransaction permitted by Section 10.4, other than transactions permittedby Sections 10.4(b) and (e).

 

“Assignment and Acceptance” shall mean an assignment andacceptance substantially in the form of Exhibit K.

 

“Authorized Officer” shall mean the Chairman of the Board, thePresident, the Chief Financial Officer, the Treasurer or any other seniorofficer of the Borrower designated as such in writing to the AdministrativeAgent by the Borrower.

 

“Available Amount” shall mean, on any date (the “ReferenceDate”), an amount equal at such time to (a) the sum of, withoutduplication, (i) for the purposes of Section 10.5(j),Section 10.5(m), Section 10.11(b) and the first proviso to each ofSections 10.7(a) and 10.7(b) (to the extent, in the case of the first provisoto each of Sections 10.7(a) and 10.7(b), that the Consolidated Total Debt toConsolidated EBITDA Ratio at such time and after giving effect to theprepayment, repurchase, redemption or defeasance, as applicable, to becompleted on the Reference Date is less than 2.25 to 1.00), $125,000,000 inaggregate, (ii) an amount equal to (x) the cumulative amount of

 

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Excess Cash Flow for all fiscal years completed after the Closing Dateand prior to the Reference Date minus (y) the portion of suchExcess Cash Flow that has been after the Closing Date and on or prior to theReference Date (or will be) applied to the prepayment of Loans in accordancewith Section 5.2(a)(ii), (iii) the amount of any capital contributions(other than the Equity Proceeds) made in cash to the Borrower from andincluding the Business Day immediately following the Closing Date through andincluding the Reference Date, including contributions with the proceeds fromany issuance of equity securities by Holdings, (iv) the aggregate amountof all cash dividends and other cash distributions received by the Borrower orany Guarantor from any Minority Investments or Unrestricted Subsidiaries afterthe Closing Date and on or prior to the Reference Date (other than the portionof any such dividends and other distributions that is used by the Borrower orany Guarantor to pay taxes), (v) the aggregate amount of all cashrepayments of principal received by the Borrower or any Guarantor from any MinorityInvestments or Unrestricted Subsidiaries after the Closing Date and on or priorto the Reference Date in respect of loans made by the Borrower or any Guarantorto such Minority Investments or Unrestricted Subsidiaries and (vi) theaggregate amount of all net cash proceeds received by the Borrower or anyGuarantor in connection with the sale, transfer or other disposition of itsownership interest in any Minority Investment or Unrestricted Subsidiary afterthe Closing Date and on or prior to the Reference Date minus(b) the sum at such time of (i) the aggregate amount of anyinvestments (including loans) made by the Borrower or any Restricted Subsidiarypursuant to Section 10.5(j) or Section 10.5(m) after the Closing Dateand on or prior to the Reference Date, (ii) the aggregate amount of CapitalExpenditures made by the Borrower or any of the Restricted Subsidiaries afterthe Closing Date and on or prior to the Reference Date pursuant toSection 10.11(b) and (iii) the aggregate price paid by the Borrowerin connection with any prepayment, repurchase or redemption of the SubordinatedNotes or Senior Unsecured Term Loans pursuant to Section 10.7(a) or10.7(b), respectively, after the Closing Date and on or prior to the ReferenceDate.

 

“Available Canadian Commitment” shall mean an amount equal tothe excess, if any, of (a) the Dollar Equivalent of the amount of theCanadian Total Revolving Credit Commitment over (b) the sum of(i) the aggregate principal amount of all Canadian Revolving Credit Loans (butnot Swingline Loans) then outstanding and (ii) the aggregate CanadianLetter of Credit Outstanding at such time.

 

“Available US Commitment” shall mean an amount equal to theexcess, if any, of (a) the Dollar Equivalent of the amount of the US TotalRevolving Credit Commitment over (b) the sum of (i) the aggregateprincipal amount of all US Revolving Credit Loans (but not Swingline Loans)then outstanding and (ii) the aggregate US Letter of Credit Outstanding atsuch time.

 

“BA Discount Proceeds”shall mean, with respect to any BA Loan, an amount (rounded to the nearest fullCanadian cent with one-half of one Canadian cent being rounded up), calculatedon the date of acceptance or advance of such BA Loan which is equal to the faceor principal amount of such BA Loan divided by the sum of one plus the productof (i) the BA Discount Rate applicable to such BA Loan multiplied by(ii) a fraction, the numerator of which is the term of such BA Loanmeasured in days

 

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(commencing on the date of acceptance and purchase or advance andending on, but excluding, the maturity date thereof) and the denominator ofwhich is 365; with such product being rounded up or down to the fifth decimalplace and .000005 being rounded up.

 

“BA Discount Rate”shall mean:

 

(a) with respect to an issue of Bankers’ Acceptances to be accepted bya Schedule I Lender hereunder, the CDOR Rate at or about 10:00 a.m.on the date of issuance and acceptance of such Bankers’ Acceptance for bankers’acceptances having a comparable face value and an identical maturity date tothe face value and maturity date of such Bankers’ Acceptances; and

 

(b) with respect to an issue of Bankers’ Acceptances or a BA EquivalentLoan to be accepted or advanced by another Canadian Lender hereunder, thelesser of:

 

(i) the rate determined by the Canadian Administrative Agent as beingthe arithmetic average (rounded upwards to the nearest multiple of 0.01%) ofthe discount rates, calculated on the basis of a year of 365 days, of theSchedule II/III Reference Lenders determined in accordance with theirnormal practices at or about 10:00 a.m. (New York time) on the date ofissue and acceptance of such Bankers’ Acceptances or advance of such BAEquivalent Loans for bankers’ acceptances having a comparable face amount andan identical maturity date to the face or principal amount and maturity date ofsuch Bankers’ Acceptance or BA Equivalent Loans; and

 

(ii)  the rate established in (a)above plus 0.10% per annum.

 

“BA Equivalent Loans”shall mean, in relation to a Loan by way of BA Loans, an advance in CanadianDollars made by a Non-Acceptance Lender pursuant to Section 2.14(i).

 

“BA Loans” shallmean Bankers’ Acceptances and BA Equivalent Loans; provided that referenceto the amount or principal amount of a BA Loan shall mean the full face amountof the applicable Bankers’ Acceptances or Discount Notes issued in connectiontherewith.

 

“Bankers’ Acceptance”shall mean a Draft denominated in Dollars drawn by the Canadian Borrower andaccepted by a Canadian Lender as provided in Section 2.14 and includes adepository bill issued in accordance with the *DepositoryBills and Notes Act*(Canada).

 

“Bankruptcy Code” shall have the meaning provided inSection 11.5.

 

“Board” shall mean the Board of Governors of the Federal ReserveSystem of the United States (or any successor).

 

“Borrower” shall have the meaning provided in the preamble tothis Agreement.

 

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“Borrowing” shall mean and include (a) the incurrence ofSwingline Loans from the Swingline Lender on a given date, (b) theincurrence of one Type of Tranche C Term Loan on the Effective Date (orresulting from conversions on a given date after the Effective Date) having, inthe case of Eurodollar Term Loans, the same Interest Period (providedthat ABR Loans incurred pursuant to Section 2.10(b) shall be consideredpart of any related Borrowing of Eurodollar Term Loans) and (c) theincurrence of one Type of Revolving Credit Loan on a given date (or resultingfrom conversions on a given date) having, in the case of Eurodollar RevolvingCredit Loans or BA Loans, the same Interest Period (provided that ABRLoans, Cdn ABR Loans or Canadian Prime Loans incurred pursuant toSection 2.10(b) or 2.10(c)  shall beconsidered part of any related Borrowing of Eurodollar Revolving Credit Loansor BA Loans, as the case may be).

 

“Business Day” shall mean any day excluding Saturday, Sunday andany day that shall be in The City of New York or Toronto, Canada a legalholiday or a day on which banking institutions are authorized by law or othergovernmental actions to close.

 

“Calculation Date” means (a) the Closing Date, (b) each date onwhich a Borrowing of Canadian Revolving Credit Loans is made, (c) the lastBusiness Day of each calendar month, (d) if at any time (i) the AggregateUS Revolving Credit Outstandings exceed 75% of the US Total Revolving CreditCommitment or (ii) the Aggregate Canadian Revolving Credit Outstandings exceed75% of the Canadian Total Revolving Credit Commitment, the last Business Day ofeach week and (e) if a Default or an Event of Default shall have occurredand be continuing, such additional dates as the Administrative Agent or theRequired Lenders shall specify.

 

“CAM” shall mean the mechanism for the allocation and exchangeof interests in the Credit Facilities and collections thereunder establishedunder Section 13.

 

“CAM Exchange” shall mean the exchange of the Lender’s interestsprovided for in Section 13.1.

 

“CAM Exchange Date” shall mean the date on which (a) anyevent referred to in Section 11.5 shall occur in respect of any ofHoldings, the Borrower or any Specified Subsidiary or (b) an accelerationof the maturity of the Loans pursuant to Section 11 shall occur.

 

“CAM Percentage” shall mean, as to each Lender, a fraction,expressed as a decimal, of which (a) the numerator shall be the aggregateDollar Equivalent (determined on the basis of Exchange Rates prevailing on theCAM Exchange Date) of the Specified Obligations owed to such Lender and suchLender’s participation in the aggregate Letter of Credit Outstandingimmediately prior to the CAM Exchange Date and (b) the denominator shall be theaggregate Dollar Equivalent (as so determined) of the Specified Obligationsowed to all the Lenders and the aggregate Letter of Credit Outstandingimmediately prior to such CAM Exchange Date. For purposes of computing each Lender’s CAM Percentage, all SpecifiedObligations which are denominated in

 

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Canadian Dollars shall be translated into Dollars at the Exchange Ratein effect on the CAM Exchange Date.

 

“CanadianAdministrative Agent” shall mean JPMorgan Chase Bank, an authorized foreignbank under the *Bank Act*(Canada),acting through its Toronto Branch, as the Canadian administrative agent for theLenders under this Agreement and the other Credit Documents, together with anyof its permitted successors appointed pursuant to Section 12.

 

“CanadianBenefit Plans” shall mean all material employee benefit plans of any natureor kind whatsoever that are not Canadian Pension Plans and are maintained orcontributed to by any Credit Party in relation to employees that it may have inCanada.

 

“Canadian Borrower” shall have the meaning provided in thepreamble to this Agreement.

 

“Canadian Borrowing” shall mean a Borrowing by the CanadianBorrower.

 

“Canadian Dollars” and “C$” shall mean the lawful moneyof Canada.

 

“Canadian Guarantee” shall mean the Canadian GuaranteeAgreement, made by each of the Canadian Guarantors in favor of the CanadianAdministrative Agent for the benefit of the Lenders to the Canadian Borrower,substantially in the form of Exhibit A-1, as the same may be amended,supplemented or otherwise modified from time to time.

 

“Canadian Guarantors” shall mean (a) each Subsidiary of theCanadian Borrower on the Effective Date and (b) each Subsidiary of the Borrowerthat becomes a party to the Canadian Guarantee after the Effective Datepursuant to Section 9.11.

 

“CanadianHypothec” means a trust deed of hypothec granted or to be granted by anyCredit Party in favor of the Canadian Administrative Agent on moveable orimmoveable property pursuant to the laws of the Province of Quebec, togetherwith all bonds, debentures and pledges or hypothecs thereof, as amended,supplemented or otherwise modified from time to time.

 

“Canadian Lenders” means each Lender that has a Canadian RevolvingCredit Commitment or that holds Canadian Revolving Credit Loans; provided,that (a) as of the Effective Date, any such Lender shall be a Canadian Residentand (b) to the extent that all or any portion of such Loans or Commitments ofsuch Lender shall be allocated to the Borrower, the relevant Canadian Lender inrespect of such allocation shall also be a “United States person” as specifiedin Section 2.1(b)(ii) or the Related Affiliate of such Canadian RevolvingCredit Lender, if any, designated by such Lender in accordance withSection 2.1(b)(ii).

 

“Canadian Letter of Credit” shall mean a Letter of Credit issuedby the Canadian Letter of Credit Issuer.

 

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“Canadian Letter of Credit Commitment” shall mean $10,000,000,as the same may be reduced from time to time pursuant to Section 3.1.

 

“Canadian Letter of Credit Exposure” shall mean, with respect toany Canadian Lender, at any time, the sum of (a) the Dollar Equivalent of theamount of any Unpaid Drawings in respect of which such Canadian Lender has made(or is required to have made) payments to the Canadian Letter of Credit Issuerpursuant to Section 3.4(a) at such time and (b) such Canadian Lender’sCanadian Revolving Credit Commitment Percentage of the Canadian Letter ofCredit Outstanding at such time (excluding the portion thereof consisting ofUnpaid Drawings in respect of which the Canadian Lenders have made (or arerequired to have made) payments to the Canadian Letter of Credit Issuerpursuant to Section 3.4(a)).

 

“Canadian Letter of Credit Fee” shall have the meaning providedin Section 4.1(d).

 

“CanadianLetter of Credit Issuer” shall mean JPMorgan Chase Bank, Toronto Branch orany affiliate thereof, or any other Canadian Lender with a Canadian RevolvingCredit Commitment designated as the Canadian Letter of Credit Issuer in awritten notice from the Canadian Administrative Agent and the Canadian Borrowerto the Lenders with a Canadian Revolving Credit Commitment; providedthat to the extent that any Canadian Letter of Credit shall be issued for theaccount of the Borrower, the Canadian Issuing Lender shall, if it is not a “USperson” (as defined in Section 7701(a)(30) of the Code), make such Lettersof Credit available through its Related Affiliate in accordance withSection 3.1(a), and such Related Affiliate shall be deemed to be theCanadian Letter of Credit Issuer for such purpose.

 

“Canadian Letter of Credit Outstanding” shall mean, at any time,the sum of without duplication (a) the aggregate Stated Amount of outstandingCanadian Letters of Credit and (b) the aggregate amount of all Unpaid Drawingsin respect all Canadian Letters of Credit.

 

“Canadian Letter of Credit Request” shall have the meaningprovided in Section 3.2.

 

“Canadian Obligations” shall have the meaning assigned to suchterm in the Canadian Security Agreement.

 

“Canadian Pension Plans” shall mean each plan which is aregistered pension plan for the purposes of the Tax Act established, maintainedor contributed to by any Credit Party in relation to any employees that it mayhave in Canada.

 

“Canadian Pledge Agreements” shall mean the Canadian PledgeAgreement, entered into by the parent of the Canadian Borrower, the CanadianBorrower, certain other Restricted Subsidiaries and the Canadian AdministrativeAgent for the benefit of the Canadian Lenders in each case, substantially inthe form of Exhibit A-2, as the same may be amended, supplemented or otherwisemodified from time to time.

 

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“Canadian Prime Loan” shall mean a Loan the rate of interest ofwhich is based on the Canadian Prime Rate.

 

“Canadian Prime Rate” shall mean the higher of (a) the rate ofinterest publicly announced by the Canadian Administrative Agent as being itsreference rate then in effect for determining interest rates on C$ denominatedcommercial loans made in Canada, and (b) the one-month CDOR Rate plus 1% perannum.

 

“Canadian Resident” shall mean, at any time, a Person who atthat time is (a) not a non-resident of Canada for purposes of the Tax Act or(b) an authorized foreign bank deemed to be resident in Canada for purposes ofthe Tax Act in respect of all amounts paid or credited to such Person under theCanadian Revolving Credit Commitment or Canadian Letter of Credit Commitmentpursuant to this Agreement.

 

“Canadian Revolving Credit Commitment” shall mean, (a) withrespect to each Lender that is a Lender on the date hereof, the amount setforth opposite such Lender’s name on Schedule 1.1(c) as such Lender’s“Canadian Revolving Credit Commitment” and (b) in the case of any Lenderthat becomes a Lender after the date hereof, the amount specified as suchLender’s “Canadian Revolving Credit Commitment” in the Assignment andAcceptance pursuant to which such Lender assumed a portion of the CanadianTotal Revolving Credit Commitment, in each case as the same may be changed fromtime to time pursuant to the terms hereof. The aggregate amount of the Canadian Revolving Credit Commitments as ofthe Closing Date is US $25,000,000.

 

“Canadian Revolving Credit Commitment Percentage” shall mean atany time, for each Canadian Lender, the percentage obtained by dividing(a) such Lender’s Canadian Revolving Credit Commitment by (b) theaggregate amount of the Canadian Revolving Credit Commitments, providedthat at any time when the Canadian Total Revolving Credit Commitment shall havebeen terminated, each Canadian Lender’s Canadian Revolving Credit CommitmentPercentage shall be its Canadian Revolving Credit Commitment Percentage as ineffect immediately prior to such termination.

 

“Canadian Revolving Credit Exposure” shall mean, with respect toany Canadian Lender at any time, the sum of (a) the aggregate principalamount of the Dollar Equivalent of the Canadian Revolving Credit Loans of suchLender then outstanding, and (b) such Lender’s Canadian Letter of CreditExposure at such time.

 

“Canadian Revolving Credit Loans” shall have the meaningprovided in Section 2.1(b)(ii).

 

“Canadian Security Agreement” shall mean the Canadian SecurityAgreement entered into by the Canadian Borrower, certain other RestrictedSubsidiaries and the Canadian Administrative Agent for the benefit of theLenders to the Canadian Borrower, substantially in the form of Exhibit A-3, asthe same may be amended, supplemented or otherwise modified from time to time.

 

“Canadian Security Documents” shall mean, collectively, (a) theCanadian Guarantee, (b) the Canadian Pledge Agreements, (c) the CanadianSecurity Agreement,

 

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and the Canadian Hypothecs, if any, with respect to collateral locatedin Quebec, (d) any Mortgage or Canadian Hypothec, if applicable, over MortgagedProperty of a Canadian Subsidiary and (e) any security document entered into bya Canadian Subsidiary pursuant to Section 9.11 or 9.12.

 

“Canadian Subsidiary Guarantees” shall mean the Canadian Guaranteeand any guarantee agreement entered into by a Restricted Foreign Subsidiarypursuant to Section 9.11 or 9.12.

 

“Canadian Subsidiary Guarantors” shall mean the CanadianGuarantors and any Subsidiary that becomes a Canadian Subsidiary Guarantor pursuantto Section 9.11.

 

“Canadian Total Revolving Credit Commitment” shall mean the sumof the Canadian Revolving Credit Commitments.

 

“Capital Expenditures” shall mean, for any period, the aggregateof all expenditures (whether paid in cash or accrued as liabilities andincluding in all events all amounts expended or capitalized under CapitalLeases, but excluding any amount representing capitalized interest) by theBorrower and the Restricted Subsidiaries during such period that, in conformitywith GAAP, are or are required to be included as additions during such periodto property, plant or equipment reflected in the consolidated balance sheet ofthe Borrower and its Subsidiaries, provided that the term “CapitalExpenditures” shall not include (a) expenditures made in connection withthe replacement, substitution or restoration of assets (i) to the extentfinanced from insurance proceeds paid on account of the loss of or damage tothe assets being replaced or restored or (ii) with awards of compensationarising from the taking by eminent domain or condemnation of the assets beingreplaced, (b) the purchase price of equipment that is purchasedsimultaneously with the trade-in of existing equipment to the extent that thegross amount of such purchase price is reduced by the credit granted by theseller of such equipment for the equipment being traded in at such time,(c) the purchase of plant, property or equipment made within one year ofthe sale of any asset to the extent purchased with the proceeds of such sale or(d) expenditures that constitute any part of Consolidated Lease Expense.

 

“Capital Lease” shall mean, as applied to any Person, any leaseof any property (whether real, personal or mixed) by that Person as lesseethat, in conformity with GAAP, is, or is required to be, accounted for as acapital lease on the balance sheet of that Person.

 

“Capitalized Lease Obligations” shall mean, as applied to anyPerson, all obligations under Capital Leases of such Person or any of itsSubsidiaries, in each case taken at the amount thereof accounted for asliabilities in accordance with GAAP.

 

“CdnABR” shall mean, for any day, a rate per annum equal to the higher of (a)the rate of interest per annum publicly announced from time to time by theCanadian Administrative Agent as its reference rate of interest then in effectfor

 

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determininginterest rates on commercial loans denominated in Dollars made by it in Canadaand (b) the Federal Funds Effective Rate in effect on such day plus 1⁄2 of 1% perannum.

 

“CdnABR Loans” shall mean Loans the rate of interest applicable to which isbased upon the Cdn ABR.

 

“Cdn L/C Participants” shall have the meaning provided inSection 3.3(b).

 

“Cdn L/C Participation” shall have the meaning provided inSection 3.3(b).

 

“CDORRate” shall mean, as of any day with respect to a BA Loan andthe Interest Period selected by the Canadian Borrower for such BA Loan, orotherwise as applicable, the average interest rate equal to:

 

(a)                                  the average of the annual rates for Canadian Dollar bankersacceptances for a term equal to such Interest Period (or a term as closelypossible comparable to such Interest Period) or such other specified periodquoted (at approximately 10:00 a.m. New York time on such day) on theReuters Monitor Money Rates Service, CDOR page “Canadian Interbank Bid BARates”; and

 

(b)                                 if such rate is not available on such day, the rate for such datewill be the annual discount rate (rounded upward to the nearest whole multipleof 1/100 of 1%) as of 10:00 a.m. (New York time) on such day at which theCanadian Administrative Agent is then offering to purchase Canadian Dollarbankers acceptances for a term approximately equal to such Interest Period (ora term as closely possible comparable to such Interest Period), or such otherspecified period, accepted by it.

 

“Change of Control” shall mean and be deemed to have occurred if(a) (i) KKR, its Affiliates, Permitted Investors and the ManagementInvestors shall at any time not own, in the aggregate, directly or indirectly,beneficially and of record, at least 35% of the outstanding Voting Stock ofHoldings (other than as the result of one or more widely distributed offeringsof Holdings or Parent common stock, in each case whether by Holdings, Parent orby KKR, its Affiliates, Permitted Investors or the Management Investors) and/or(ii) any person, entity or “group” (within the meaning ofSection 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended)shall at any time have acquired direct or indirect beneficial ownership of apercentage of the outstanding Voting Stock of Holdings that exceeds thepercentage of such Voting Stock then beneficially owned, in the aggregate, byKKR, its Affiliates, Permitted Investors and the Management Group, unless, inthe case of either clause (i) or (ii) above, KKR, its Affiliates,Permitted Investors and the Management Investors have, at such time, the rightor the ability by voting power, contract or otherwise to elect or designate forelection a majority of the

 

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Board of Directors of Holdings; provided, however, forpurposes of this definition, Permitted Investors shall be deemed to own no morethan the aggregate amount of Voting Stock of Holdings that such PermittedInvestors owned as of the Effective Date; and/or (b) at any timeContinuing Directors shall not constitute a majority of the Board of Directorsof Holdings; and/or (c) any Person, other than Holdings acquires ownership,directly or indirectly, beneficially or of record, of any equity interest(other than any management or employee equity interests) of any nature in theBorrower; (d) any Person, other than Parent acquires ownership, directly orindirectly, beneficially or of record, of any equity interest of any nature inHoldings and/or (e) a Change of Control (as defined in the Subordinated NoteIndenture) shall have occurred.

 

“Class”, when used in reference to any Loan or Borrowing, refersto whether such Loan, or the Loans comprising such Borrowing, are RevolvingCredit Loans, New Revolving Loans, Canadian Revolving Credit Loans, Tranche CTerm Loans, New Term Loans of each Series or Swingline Loans and, when used inreference to any Commitment, refers to whether such Commitment is a RevolvingCredit Commitment, a New Revolving Loan Commitment, a Canadian Revolving CreditCommitment, Tranche C Term Loan Commitment or a New Term Loan Commitment.

 

“Closing Date” means the date of the initial Borrowing under theExisting Credit Agreement, which date was April 6, 2004.

 

“Code” shall mean the Internal Revenue Code of 1986, as amendedfrom time to time, and the regulations promulgated and rulings issuedthereunder.  Section references tothe Code are to the Code, as in effect at the date of this Agreement, and anysubsequent provisions of the Code, amendatory thereof, supplemental thereto orsubstituted therefor.

 

“Collateral” shall have the meaning provided in the PledgeAgreement, the Security Agreement, any Foreign Security Document or anyMortgage, as applicable.

 

“Commitment Fee Rate” shall mean, with respect to the AvailableUS Commitment and the Available Canadian Commitment on any day, the rate perannum set forth below opposite the Status in effect on such day:

 
| **Status**       | ** ** | **Commitment  Fee Rate** | ** ** |
|------------------|------------|--------------------------|------------|
|             |       |                     |       |
| Level I Status   |       | 0.500                    | %          |
| Level II Status  |       | 0.500                    | %          |
| Level III Status |       | 0.500                    | %          |
| Level IV Status  |       | 0.375                    | %          |

 

Notwithstanding the foregoing, the term “Commitment Fee Rate” shallmean 0.500%, during the period from and including the Closing Date to butexcluding the Initial Financial Statement Delivery Date.

 

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“Commitments” shall mean, with respect to each Lender, suchLender’s Tranche C Term Loan Commitment, Revolving Credit Commitment, New RevolvingLoan Commitment or New Term Loan Commitment.

 

“Confidential Information” shall have the meaning provided inSection 14.16.

 

“Confidential Information Memorandum” shall mean theConfidential Information Memorandum of the Borrower dated March, 2004, deliveredto the Lenders in connection with this Agreement.

 

“Consolidated Earnings” shall mean, for any period, “income(loss) before the deduction of income taxes” of Holdings, the Borrower and theRestricted Subsidiaries, excluding extraordinary items, for such period,determined in a manner consistent with the manner in which such amount wasdetermined in accordance with the audited financial statements referred to inSection 9.1(a).

 

“Consolidated EBITDA” shall mean, for any period, the sum,without duplication, of the amounts for such period of (a) ConsolidatedEarnings and to the extent already deducted in arriving at ConsolidatedEarnings: (b) Consolidated Interest Expense, (c) depreciationexpense, (d) amortization expense, including amortization of deferredfinancing fees, (e) extraordinary losses and unusual or non-recurringcharges (including severance, relocation costs and one-time compensationcharges), (f) non-cash charges (provided that if any such non-cash chargesrepresent an accrual or reserve for potential cash items in any future period,the cash payment in respect thereof in such future period shall be subtractedfrom Consolidated EBITDA to such extent, and excluding amortization of aprepaid cash item that was paid in a prior period), (g) losses on assetsales, (h) restructuring charges or reserves (including costs related toclosure of facilities), (i) in the case of any period that includes aperiod ending during the fiscal year ending November 28, 2004, TransactionExpenses, to the extent deducted in determining Consolidated Earnings,(j) any expenses or charges incurred in connection with any issuance ofdebt, equity securities or any refinancing transaction, (k) any fees andexpenses related to Permitted Acquisitions, (l) any deduction for minorityinterest expense, (m) the amount of management, monitoring, consulting andadvisory fees and related expenses paid to KKR and (n) those items described onSchedule 1.1(d) annexed hereto, less the sum of the amountsfor such period of (o) extraordinary gains and non-recurring gains,(p) non-cash gains (excluding any such non-cash gain to the extent itrepresents the reversal of an accrual or reserve for potential cash item in anyprior period) and (q) gains on asset sales, all as determined on aconsolidated basis for Holdings, the Borrower and the Restricted Subsidiariesin accordance with GAAP, provided that (i) except as provided inclause (iv) below, there shall be excluded from Consolidated Earnings forany period the income from continuing operations before income taxes andextraordinary items of all Unrestricted Subsidiaries for such period to theextent otherwise included in Consolidated Earnings, except to the extentactually received in cash by Holdings, the Borrower or its Restricted Subsidiariesduring such period through dividends or other distributions, (ii) there shallbe excluded from Consolidated Earnings for any period the income fromcontinuing operations before income taxes and

 

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extraordinary items of each Foreign Joint Venture for such periodcorresponding to the percentage of capital stock or other equity interests insuch Foreign Joint Venture not owned by the Borrower or its RestrictedSubsidiaries (other than Foreign Joint Ventures), (iii) there shall be excludedin determining Consolidated EBITDA non-operatingcurrency transaction gains and losses and (iv) (x) there shallbe included in determining Consolidated EBITDA for any period (A) theAcquired EBITDA of any Person, property, business or asset (other than anUnrestricted Subsidiary) acquired to the extent not subsequently sold,transferred or otherwise disposed of (but not including the Acquired EBITDA ofany related Person, property, business or assets to the extent not so acquired)by the Borrower or any Restricted Subsidiary during such period (each suchPerson, property, business or asset acquired and not subsequently so disposedof, an “Acquired Entity or Business”), and the Acquired EBITDA of anyUnrestricted Subsidiary that is converted into a Restricted Subsidiary duringsuch period (each, a “Converted Restricted Subsidiary”), in each casebased on the actual Acquired EBITDA of such Acquired Entity or Business orConverted Restricted Subsidiary for such period (including the portion thereofoccurring prior to such acquisition or conversion) and (B) for thepurposes of the definition of the term “Permitted Acquisition” andSections 10.3, 10.9 and 10.10, an adjustment in respect of each AcquiredEntity or Business equal to the amount of the Pro Forma Adjustment with respectto such Acquired Entity or Business for such period (including the portionthereof occurring prior to such acquisition or conversion) as specified in thePro Forma Adjustment Certificate delivered to the Lenders and theAdministrative Agent and (y) for purposes of determining the ConsolidatedTotal Debt to Consolidated EBITDA Ratio only, there shall be excluded indetermining Consolidated EBITDA for any period the Acquired EBITDA of any Person,property, business or asset (other than an Unrestricted Subsidiary) sold,transferred or otherwise disposed of, closed or classified as discontinuedoperations by the Borrower or any Restricted Subsidiary during such period(each such Person, property, business or asset so sold or disposed of, a “SoldEntity or Business”), and the Acquired EBITDA of any Restricted Subsidiarythat is converted into an Unrestricted Subsidiary during such period (each, a “ConvertedUnrestricted Subsidiary”), in each case based on the actual Acquired EBITDAof such Sold Entity or Business or Converted Unrestricted Subsidiary for suchperiod (including the portion thereof occurring prior to such sale, transfer,disposition or conversion).  Notwithstandinganything to the contrary contained herein, Consolidated EBITDA shall be deemedto be $49,900,000, $47,300,000 and $47,500,000, respectively, for the fiscalquarters ended August 31, 2003, November 30, 2003 andFebruary 29, 2004.

 

“Consolidated EBITDA to Consolidated Interest Expense Ratio”shall mean, as of any date of determination, the ratio of (a) ConsolidatedEBITDA for the relevant Test Period to (b) Consolidated Interest Expensefor such Test Period.

 

“Consolidated Interest Expense” shall mean, for any period, thecash interest expense (including that attributable to Capital Leases inaccordance with GAAP), net of cash interest income, of Holdings, the Borrowerand the Restricted Subsidiaries on a consolidated basis with respect to alloutstanding Indebtedness of Holdings, the Borrower and the RestrictedSubsidiaries, including all commissions, discounts and other fees and chargesowed with respect to letters of credit and bankers’ acceptance financing andnet costs under Hedge Agreements (other than currency swap agreements, currency

 

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future or option contracts and other similar agreements), butexcluding, however, amortization of deferred financing costs and any otheramounts of non-cash interest, all as calculated on a consolidated basis inaccordance with GAAP, provided that (a) except as provided inclause (b) below, there shall be excluded from Consolidated InterestExpense for any period the cash interest expense (or income) of allUnrestricted Subsidiaries for such period to the extent otherwise included inConsolidated Interest Expense and (b) for purposes of the definition ofthe term “Permitted Acquisition” and Sections 10.3, 10.9 and 10.10, thereshall be included in determining Consolidated Interest Expense for any periodthe cash interest expense (or income) of any Acquired Entity or Businessacquired during such period and of any Converted Restricted Subsidiaryconverted during such period, in each case based on the cash interest expense(or income) of such Acquired Entity or Business or Converted RestrictedSubsidiary for such period (including the portion thereof occurring prior tosuch acquisition or conversion) assuming any Indebtedness incurred or repaid inconnection with any such acquisition or conversion had been incurred or prepaidon the first day of such period. Notwithstanding anything to the contrarycontained herein, for purposes of determining Consolidated Interest Expense forany period ending prior to the first anniversary of the Closing Date, ConsolidatedInterest Expense shall be an amount equal to actual Consolidated InterestExpense from the Closing Date through the date of determination multiplied by afraction the numerator of which is 365 and the denominator of which is thenumber of days from the Closing Date through the date of determination.

 

“Consolidated Lease Expense” shall mean, for any period, allrental expenses of Holdings, the Borrower and the Restricted Subsidiariesduring such period under operating leases for real or personal property(including in connection with Permitted Sale Leasebacks), excluding real estatetaxes, insurance costs and common area maintenance charges and net of subleaseincome, other than (a) obligations under vehicle leases entered into inthe ordinary course of business, (b) all such rental expenses associated withassets acquired pursuant to a Permitted Acquisition to the extent that suchrental expenses relate to operating leases in effect at the time of (andimmediately prior to) such acquisition and (c) Capitalized LeaseObligations, all as determined on a consolidated basis in accordance with GAAP,provided that there shall be excluded from Consolidated Lease Expensefor any period the rental expenses of all Unrestricted Subsidiaries for suchperiod to the extent otherwise included in Consolidated Lease Expense.

 

“Consolidated Net Income” shall mean, for any period, theconsolidated net income (or loss) after the deduction of income taxes ofHoldings, the Borrower and the Restricted Subsidiaries, determined on aconsolidated basis in accordance with GAAP.

 

“Consolidated Net Sales” shall mean, for any fiscal year or anyTest Period, as the case may be, “net sales” of Holdings, the Borrower and theRestricted Subsidiaries as set forth in the Section 9.1 Financials withrespect to such Test Period or fiscal year, as applicable.

 

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“Consolidated Total Debt” shall mean, as of any date ofdetermination, (a) the sum of (i) all indebtedness of Holdings, theBorrower and the Restricted Subsidiaries for borrowed money outstanding on suchdate and (ii) all Capitalized Lease Obligations of Holdings, the Borrowerand the Restricted Subsidiaries outstanding on such date, all calculated on aconsolidated basis in accordance with GAAP minus (b) the aggregateamount of cash included in the cash accounts listed on the consolidated balancesheet of Holdings, the Borrower and the Restricted Subsidiaries as at such dateup to a maximum amount of $45,000,000 to the extent the use thereof forapplication to payment of Indebtedness is not prohibited by law or any contractto which the Borrower or any of the Restricted Subsidiaries is a party.

 

“Consolidated Total Debt to Consolidated EBITDA Ratio” shallmean, as of any date of determination, the ratio of (a) Consolidated TotalDebt as of the last day of the relevant Test Period to (b) ConsolidatedEBITDA for such Test Period.

 

“Consolidated Working Capital” shall mean, at any date, theexcess of (a) the sum of all amounts (other than cash, cash equivalents andbank overdrafts) that would, in conformity with GAAP, be set forth opposite thecaption “total current assets” (or any like caption) on a consolidated balancesheet of Holdings, the Borrower and the Restricted Subsidiaries at such dateover (b) the sum of all amounts that would, in conformity with GAAP, be setforth opposite the caption “total current liabilities” (or any like caption) ona consolidated balance sheet of Holdings, the Borrower and the RestrictedSubsidiaries on such date, but excluding (i) the current portion of any FundedDebt, (ii) without duplication of clause (i) above, all Indebtedness consistingof Loans and Letter of Credit Exposure to the extent otherwise included thereinand (iii) the current portion of deferred income taxes.

 

“Continuing Director” shall mean, at any date, an individual(a) who is a member of the Board of Directors of Holdings on the datehereof, (b) who, as at such date, has been a member of such Board ofDirectors for at least the 12 preceding months, (c) who has been nominatedto be a member of such Board of Directors, directly or indirectly, by KKR orone of its Affiliates or Persons nominated by KKR or one of its Affiliates or(d) who has been nominated to be a member of such Board of Directors by amajority of the other Continuing Directors then in office.

 

“Continuing Lenders” means the lenders under the Existing CreditAgreement identified as Continuing Lenders under Section 2.1(a).

 

“Converted Restricted Subsidiary” shall have the meaningprovided in the definition of the term “Consolidated EBITDA”.

 

“Converted Unrestricted Subsidiary” shall have the meaningprovided in the definition of the term “Consolidated EBITDA”.

 

“Credit Documents” shall mean this Agreement, the SecurityDocuments, each Letter of Credit and any promissory notes issued by theBorrower hereunder.

 

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“Credit Event” shall mean and include the making (but not theconversion or continuation) of a Loan and the issuance of a Letter of Credit.

 

“Credit Facility” shall mean a category of Commitments andextensions of credit thereunder.

 

“Credit Party” shall mean each of the Borrower, the CanadianBorrower, the Guarantors, the Canadian Subsidiary Guarantors and each otherSubsidiary of the Borrower that is a party to a Credit Document.

 

“Cumulative Consolidated Net Income Available to Stockholders”shall mean, as of any date of determination, Consolidated Net Income less cashdividends paid by Holdings with respect to its capital stock for the period(taken as one accounting period) commencing on the Closing Date and ending onthe last day of the most recent fiscal quarter for which Section 9.1Financials have been delivered to the Lenders under Section 9.1.

 

“Debt Incurrence Prepayment Event” shall mean any issuance orincurrence by the Borrower or any of the Restricted Subsidiaries of anyIndebtedness (including any issuance by the Borrower of Permitted AdditionalSubordinated Notes but excluding any other Indebtedness permitted to be issuedor incurred under Section 10.1A other than Section 10.1A(o)).

 

“Default” shall mean any event, act or condition that withnotice or lapse of time, or both, would constitute an Event of Default.

 

“Defaulting Lender” shall mean any Lender with respect to whicha Lender Default is in effect.

 

“Discount Note”shall mean a non-interest-bearing promissory note or depository note (withinthe meaning of the *Depository Bills**and**Notes Act*(Canada))denominated in Dollars issued by the Borrower to a Non-Acceptance Lender toevidence a BA Equivalent Loan.

 

“Dividends” shall have the meaning provided inSection 10.6.

 

“Documentation Agents” shall mean General ElectricCapital Corporation, together with its affiliates, and Royal Bank ofCanada, together with its affiliates, as the co-documentation agents for theLenders under this Agreement and the other Credit Documents.

 

“Dollar Borrowing” shall mean a Borrowing denominated inDollars.

 

“Dollar Equivalent” shall mean, on any date of determination,(a) with respect to any amount denominated in Dollars, such amount, and(b) with respect to any amount denominated in any Canadian Dollars, theequivalent in Dollars of such amount, determined by the Administrative Agentpursuant to Section 1.2(b) using the applicable

 

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Exchange Rate with respect to such Canadian Dollars at the time ineffect under the provisions of such Section 1.2.

 

“Dollars” and “$” shall mean dollars in lawful currencyof the United States of America.

 

“Domestic Subsidiary” shall mean each Subsidiary of the Borrowerthat is organized under the laws of the United States, any state thereof,or the District of Columbia.

 

“Drawing” shall have the meaning provided inSection 3.4(b).

 

“Effective Date” means the date upon which the conditions setforth in Section 6 are satisfied.

 

“Eligible Lender” shall mean, at any time, a Person who, on anydate on which interest is payable under this Agreement, is a Person which isbeneficially entitled to the interest payable to it under this Agreement.

 

“Environmental Claims” shall mean any and all administrative,regulatory or judicial actions, suits, demands, demand letters, claims, liens,notices of noncompliance or violation, investigations (other than internalreports prepared by the Borrower or any of the Subsidiaries (a) in the ordinarycourse of such Person’s business or (b) as required in connection with afinancing transaction or an acquisition or disposition of real estate) orproceedings relating in any way to any Environmental Law or any permit issued,or any approval given, under any such Environmental Law (hereinafter, “Claims”),including (i) any and all Claims by governmental or regulatory authoritiesfor enforcement, cleanup, removal, response, remedial or other actions ordamages pursuant to any applicable Environmental Law and (ii) any and allClaims by any third party seeking damages, contribution, indemnification, costrecovery, compensation or injunctive relief resulting from Hazardous Materialsor arising from alleged injury or threat of injury to health, safety or theenvironment.

 

“Environmental Law” shall mean any applicable Federal, state,foreign or local statute, law, rule, regulation, ordinance, code and rule ofcommon law now or hereafter in effect and in each case as amended, and anybinding judicial or administrative interpretation thereof, including anybinding judicial or administrative order, consent decree or judgment, relatingto the environment, human health or safety or Hazardous Materials.

 

“Equity Proceeds” shall have the meaning provided in theExisting Credit Agreement.

 

“ERISA” shall mean the Employee Retirement Income Security Actof 1974, as amended from time to time. Section references to ERISA are to ERISA as in effect at the dateof this Agreement and any subsequent provisions of ERISA amendatory thereof,supplemental thereto or substituted therefor.

 

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“ERISA Affiliate” shall mean each person (as defined inSection 3(9) of ERISA) that together with the Borrower or a Subsidiarywould be deemed to be a “single employer” within the meaning ofSection 414(b) or (c) of the Code or, solely for purposes of Section 302of ERISA and Section 412 of the Code, is treated as a single employerunder Section 414 of the Code.

 

“Eurodollar Loan” shall mean any Eurodollar Term Loan orEurodollar Revolving Credit Loan.

 

“Eurodollar Rate” shall mean, in the case of any Eurodollar TermLoan or Eurodollar Revolving Credit Loan, with respect to each day during eachInterest Period pertaining to such Eurodollar Loan, (a) the rate ofinterest determined on the basis of the rate for deposits in Dollars for aperiod equal to such Interest Period commencing on the first day of suchInterest Period appearing on Page 3750 of the Telerate screen as of11:00 a.m. (London time) two Business Days prior to the beginning of suchInterest Period multiplied by (b) the Statutory Reserve Rate.  In the event that any such rate does notappear on the applicable Page of the Telerate Service (or otherwise on suchservice), the “Eurodollar Rate” for the purposes of this paragraph shallbe determined by reference to such other publicly available service fordisplaying Eurodollar rates as may be agreed upon by the Administrative Agentand the Borrower or, in the absence of such agreement, the “Eurodollar Rate”for the purposes of this paragraph shall instead be the rate per annum notifiedto the Administrative Agent by the Reference Lender as the rate at which theReference Lender is offered Dollar deposits at or about 11:00 a.m. (Londontime) two Business Days prior to the beginning of such Interest Period in theinterbank Eurodollar market where the Eurodollar and foreign currency andexchange operations in respect of its Eurodollar Loans are then being conductedfor delivery on the first day of such Interest Period for the number of dayscomprised therein and in an amount comparable to the amount of its EurodollarTerm Loan or Eurodollar Revolving Credit Loan, as the case may be, to beoutstanding during such Interest Period.

 

“Eurodollar Revolving Credit Loan” shall mean any RevolvingCredit Loan bearing interest at a rate determined by reference to the EurodollarRate.

 

“Eurodollar Term Loan” shall mean any Tranche C Term Loanbearing interest at a rate determined by reference to the Eurodollar Rate.

 

“Event of Default” shall have the meaning provided inSection 11.

 

“Excess Cash Flow” shall mean, for any period, an amount equalto the excess of (a) the sum, without duplication, of (i) Consolidated NetIncome for such period, (ii) an amount equal to the amount of all non-cashcharges to the extent deducted in arriving at such Consolidated Net Income, (iii)decreases in Consolidated Working Capital for such period and (iv) an amountequal to the aggregate net non-cash loss on the sale, lease, transfer or otherdisposition of assets by the Borrower and the Restricted Subsidiaries duringsuch period (other than sales in the ordinary course of business) to the extentdeducted in arriving at such Consolidated Net Income over (b) the sum,without duplication, of (i) an amount equal to the amount of all non-cashcredits included in

 

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arriving at such Consolidated Net Income, (ii) the aggregate amountactually paid by the Borrower and the Restricted Subsidiaries in cash duringsuch period on account of Capital Expenditures (excluding the principal amountof Indebtedness incurred in connection with such Capital Expenditures, whetherincurred in such period or in a subsequent period), (iii) the aggregate amountof all prepayments of Revolving Credit Loans and Swingline Loans made duringsuch period to the extent accompanying reductions of the US Total RevolvingCredit Commitments except to the extent not financed with the proceeds of otherIndebtedness of Holdings or its Restricted Subsidiaries, (iv) theaggregate amount of all principal payments of Indebtedness of the Borrower orthe Restricted Subsidiaries (including any Tranche C Term Loans and theprincipal component of payments in respect of Capitalized Lease Obligations butexcluding Revolving Credit Loans, Swingline Loans and voluntary prepayments ofTranche C Term Loans pursuant to Section 5.1) made during such period(other than in respect of any revolving credit facility to the extent there isnot an equivalent permanent reduction in commitments thereunder) except to theextent not financed with the proceeds of other Indebtedness of Holdings or itsRestricted Subsidiaries, (v) an amount equal to the aggregate net non-cash gainon the sale, lease, transfer or other disposition of assets by the Borrower andthe Restricted Subsidiaries during such period (other than sales in theordinary course of business) to the extent included in arriving at suchConsolidated Net Income, (vi) increases in Consolidated Working Capitalfor such period, (vii) payments by the Borrower and the Restricted Subsidiariesduring such period in respect of long-term liabilities of the Borrower and theRestricted Subsidiaries other than Indebtedness, (viii) the amount ofinvestments made during such period pursuant to Section 10.5 to the extentthat such investments were financed with internally generated cash flow of theBorrower and the Restricted Subsidiaries, (ix) the amount of dividendspaid during such period pursuant to clause (b), (c), (d) or (e) of theproviso to Section 10.6 to the extent such dividends were paid with theproceeds of any amount referred to in paragraph (a) of this definition,(x) the aggregate amount of expenditures actually made by the Borrower andthe Restricted Subsidiaries in cash during such period (including expendituresfor the payment of financing fees) to the extent that such expenditures are notexpensed during such period and (xi) the aggregate amount of any premium,make-whole or penalty payments actually paid in cash by the Borrower and theRestricted Subsidiaries during such period that are required to be made inconnection with any prepayment of Indebtedness and that are accounted for asextraordinary items.

 

“Exchange Rate” shall mean on any day (i) with respect to anyForeign Currency, the rate at which such Foreign Currency may be exchanged intoDollars, as set forth at approximately 11:00 a.m. (London time) on suchday on the Reuters World Currency Page for such Foreign Currency; in the eventthat such rate does not appear on any Reuters World Currency Page, the ExchangeRate shall be determined by reference to such other publicly available servicefor displaying exchange rates as may be agreed upon by the Administrative Agentand the Borrower, or, in the absence of such agreement, such Exchange Rateshall instead be the arithmetic average of the spot rates of exchange of theAdministrative Agent in the market where its foreign currency exchangeoperations in respect of such Foreign Currency are then being conducted, at orabout 10:00 a.m. (New York time) on such date for the purchase of Dollarsfor delivery two Business Days later and (ii) with respect to calculationsin connection with Canadian

 

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Borrowings, the rate at which Canadian Dollars may be exchanged intoDollars, computed by the Canadian Administrative Agent at the Bank of Canadanoon spot rate, after 12:00 noon (New York time) on such day, providedthat if at the time of any such determination, for any reason, no such spotrate is being quoted, the Canadian Administrative Agent, after consultationwith the Borrower, may use any reasonable method it deems appropriate todetermine such rate, and such determination shall be conclusive absent manifesterror.

 

“Existing Credit Agreement” as defined in the recitals hereto.

 

“Existing Indenture” shall mean the Indenture, dated as ofDecember 18, 1997, among the Borrower, the subsidiary guarantors partythereto and The Bank of New York, as trustee.

 

“Existing Lenders” as defined in the recitals hereto.

 

“Existing Term Loans” as defined in the recitals hereto.

 

“Federal Funds Effective Rate” shall mean, for any day, theweighted average of the per annum rates on overnight federal funds transactionswith members of the Federal Reserve System arranged by federal funds brokers,as published on the next succeeding Business Day by the Federal Reserve Bank ofNew York, or, if such rate is not so published for any day that is aBusiness Day, the average of the quotations for the day of such transactionsreceived by the Administrative Agent from three federal funds brokers ofrecognized standing selected by it.

 

“Fees” shall mean all amounts payable pursuant to, or referredto in, Section 4.1.

 

“Final Date” shall mean the date on which the Revolving CreditCommitments shall have terminated, no Revolving Credit Loans shall beoutstanding and the Letter of Credit Outstandings shall have been reduced tozero.

 

“Foreign Borrowing Base Amount” shall mean, at any time, the sumof (i) 85% of the book value of all accounts receivable of all RestrictedForeign Subsidiaries of Holdings and (ii) 60% of the book value of allinventory of all Restricted Foreign Subsidiaries of Holdings.

 

“Foreign Currencies” shall mean Canadian Dollars, Euro andSterling.

 

“Foreign Joint Venture” shall mean any Restricted ForeignSubsidiary in which the Borrower and its Restricted Subsidiaries own,collectively, less than 100% of the equity interests and designated as such ina written notice to the Administrative Agent by the Borrower, providedthat in the event a Restricted Subsidiary not previously designated by theBorrower as a Foreign Joint Venture is subsequently re-designated as a ForeignJoint Venture, (x) such re-designation shall be deemed to be an investment onthe date of such re-designation in a Foreign Joint Venture in an amount equalto the product of (i) the net worth of such re-designated Restricted Subsidiaryimmediately prior to such

 

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re-designation (such net worth to be calculated without regard to anyguarantee provided by such re-designated Restricted Subsidiary) and (ii) thepercentage of capital stock or other equity interests in such Foreign JointVenture owned by the Borrower or its Restricted Subsidiaries (other thanForeign Joint Ventures) and (y) no Default or Event of Default would resultfrom such re-designation.

 

“Foreign Subsidiary” shall mean each Subsidiary of the Borrowerthat is not a Domestic Subsidiary, including the Canadian Borrower.

 

“Foreign Subsidiary Guarantors” shall mean any ForeignSubsidiary that becomes a Foreign Subsidiary Guarantor pursuant toSection 9.11.

 

“Fronting Fee” shall have the meaning provided inSection 4.1(c).

 

“Funded Debt” shall mean all indebtedness of the Borrower andthe Restricted Subsidiaries for borrowed money that matures more than one yearfrom the date of its creation or matures within one year from such date that isrenewable or extendable, at the option of the Borrower or one of the RestrictedSubsidiaries, to a date more than one year from such date or arises under a revolvingcredit or similar agreement that obligates the lender or lenders to extendcredit during a period of more than one year from such date, including allamounts of Funded Debt required to be paid or prepaid within one year from thedate of its creation and, in the case of the Borrower, Indebtedness in respectof the Loans.

 

“GAAP” shall mean generally accepted accounting principles inthe United States of America or Canada, as applicable, as in effect from timeto time; provided, however, that if there occurs after the datehereof any change in GAAP that affects in any respect the calculation of anycovenant contained in Section 10, the Lenders and the Borrower shallnegotiate in good faith amendments to the provisions of this Agreement that relateto the calculation of such covenant with the intent of having the respectivepositions of the Lenders and the Borrower after such change in GAAP conform asnearly as possible to their respective positions as of the date of thisAgreement and, until any such amendments have been agreed upon, the covenantsin Section 10 shall be calculated as if no such change in GAAP hasoccurred.

 

“Governmental Authority” shall mean any nation or government,any state, province, territory or other political subdivision thereof, and anyentity exercising executive, legislative, judicial, regulatory oradministrative functions of or pertaining to government.

 

“Guarantee” shall mean the Guarantee, made by each Guarantor infavor of the Administrative Agent for the benefit of the Secured Parties,substantially in the form of Exhibit C, as the same may be amended,supplemented or otherwise modified from time to time.

 

“Guarantee and Collateral Exception Amount” shall mean, at anytime: (a) $100,000,000 minus (b) the sum of (i) the aggregateamount of Indebtedness incurred or assumed prior to such time pursuant toSection 10.1(j) or (k) that is outstanding at such

 

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time and that was used to acquire, or was assumed in connection with theacquisition of, capital stock and/or assets in respect of which guarantees,pledges and security have not been given pursuant to Sections 9.11 and9.12, (ii) the lesser of (x) the aggregate Increased Commitment Amount atsuch time and (y) $50,000,000 and (iii) any Indebtedness incurred by anyForeign Joint Venture, provided that if such amount is a negativenumber, the Guarantee and Collateral Exception Amount shall be zero.

 

“Guarantee Obligations” shall mean, as to any Person, anyobligation of such Person guaranteeing or intended to guarantee anyIndebtedness of any other Person (the “primary obligor”) in any manner,whether directly or indirectly, including any obligation of such Person,whether or not contingent, (a) to purchase any such Indebtedness or anyproperty constituting direct or indirect security therefor (b) to advance orsupply funds (i) for the purchase or payment of any such Indebtedness or (ii)to maintain working capital or equity capital of the primary obligor orotherwise to maintain the net worth or solvency of the primary obligor, (c) topurchase property, securities or services primarily for the purpose of assuringthe owner of any such Indebtedness of the ability of the primary obligor tomake payment of such Indebtedness or (d) otherwise to assure or hold harmlessthe owner of such Indebtedness against loss in respect thereof; provided,however, that the term “Guarantee Obligations” shall not includeendorsements of instruments for deposit or collection in the ordinary course ofbusiness.  The amount of any GuaranteeObligation shall be deemed to be an amount equal to the stated or determinableamount of the Indebtedness in respect of which such Guarantee Obligation ismade or, if not stated or determinable, the maximum reasonably anticipatedliability in respect thereof (assuming such Person is required to performthereunder) as determined by such Person in good faith.

 

“Guarantors” shall mean Holdings, the US Subsidiary Guarantorsand the Foreign Subsidiary Guarantors, other than the immaterial Subsidiarieslisted on Schedule 1.1(e).

 

“Hazardous Materials” shall mean (a) any petroleum or petroleumproducts, radioactive materials, friable asbestos, urea formaldehyde foaminsulation, transformers or other equipment that contain dielectric fluidcontaining regulated levels of polychlorinated biphenyls, and radon gas; (b)any chemicals, materials or substances defined as or included in the definitionof “hazardous substances”, “hazardous waste”, “hazardous materials”, “extremelyhazardous waste”, “restricted hazardous waste”, “toxic substances”, “toxicpollutants”, “contaminants”, or “pollutants”, or words of similar import, underany applicable Environmental Law; and (c) any other chemical, material orsubstance, which is prohibited, limited or regulated by any Environmental Law.

 

“Hedge Agreements” shall mean interest rate swap, cap or collaragreements, interest rate future or option contracts, currency swap agreements,currency future or option contracts, commodity price protection agreements orother commodity price hedging agreements, and other similar agreements enteredinto by the Borrower or the Canadian Borrower in the ordinary course ofbusiness (and not for speculative purposes) in order to protect the Borrower,the Canadian Borrower or any of the

 

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Restricted Subsidiaries against fluctuations in interest rates,currency exchange rates or commodity prices.

 

“Historical Financial Statements” means as of the Closing Date,the audited financial statements of Parent and its Subsidiaries, for theimmediately preceding three fiscal years, consisting of balance sheets and therelated consolidated statements of income, stockholders’ equity and cash flowsfor such fiscal years.

 

“Holdings” shall have the meaning provided in the preamble tothis Agreement.

 

“Increased Amount Date” as defined in Section 2.15.

 

“Increased Commitment Amount” shall have the meaning given tothat term in Section 14.1.

 

“Indebtedness” of any Person shall mean (a) all indebtedness ofsuch Person for borrowed money, (b) the deferred purchase price of assets orservices that in accordance with GAAP would be included as liabilities in thebalance sheet of such Person, (c) the face amount of all letters of creditissued for the account of such Person and, without duplication, all draftsdrawn thereunder, (d) all Indebtedness of a second Person secured by any Lienon any property owned by such first Person, whether or not such Indebtednesshas been assumed, (e) all Capitalized Lease Obligations of such Person,(f) all obligations of such Person under interest rate swap, cap or collaragreements, interest rate future or option contracts, currency swap agreements,currency future or option contracts, commodity price protection agreements orother commodity price hedging agreements and other similar agreements and (g)without duplication, all Guarantee Obligations of such Person, providedthat Indebtedness shall not include trade payables and accrued expenses, ineach case payable directly or through a bank clearing arrangement and arisingin the ordinary course of business.

 

“Initial Financial Statement Delivery Date” shall mean the dateon which Section 9.1 Financials are delivered to the Lenders underSection 9.1 for the first full fiscal quarter commencing after the ClosingDate.

 

“Interest Period” shall mean, with respect to any Tranche C TermLoan or Revolving Credit Loan, the interest period applicable thereto, asdetermined pursuant to Section 2.9.

 

“JPMCB” shall mean JPMorgan Chase Bank, a New York bankingcorporation, and any successor thereto by merger, consolidation or otherwise.

 

“Joinder Agreement” means an agreement substantially in the formof Exhibit M.

 

“Judgment Currency” shall have the meaning set forth in Section 14.17.

 

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“Judgment Currency Conversion Date” shall have the meaning setforth in Section 14.17.

 

“Junior Subordinated Seller Notes” means the Junior SubordinatedSeller Notes issued in the initial principal amount of $25,000,000 onDecember 18, 1997 by Holdings in favor of Zell/Chilmark Fund, L.P., andany additional amount of such notes as are permitted to be issued under theExisting Credit Agreement.

 

“KKR” shall mean each of Kohlberg Kravis Roberts & Co., L.P.and KKR Associates, L.P.

 

“L/C Maturity Date” shall mean the date that is five BusinessDays prior to the Revolving Credit Maturity Date.

 

“L/CParticipants”: meanscollectively the Cdn L/C Participants and the US L/C Participants and each isan “L/C Participant”

 

“L/C Reserve Account” shall have the meaning provided inSection 13.2(a)

 

“Lender” shall have the meaning provided in the preamble to thisAgreement.

 

“Lender Default” shall mean (a) the failure (which has not beencured) of a Lender to make available its portion of any Borrowing or to fundits portion of any unreimbursed payment under Section 3.3 or (b) a Lenderhaving notified the Administrative Agent and/or the Borrower that it does notintend to comply with the obligations under Section 2.1(b), 2.1(d) or 3.3,in the case of either clause (a) or clause (b) above, as a result ofthe appointment of a receiver or conservator with respect to such Lender at thedirection or request of any regulatory agency or authority.

 

“Letter of Credit” shall mean each standby letter of creditissued pursuant to Section 3.1.

 

“Letter of Credit Fee” shall have the meaning provided inSection 4.1(b).

 

“Letter of Credit Issuers” means a collective reference to theUS Letter of Credit Issuer and the Canadian Letter of Credit Issuer and each isa “Letter of Credit Issuer.”

 

“Letter of Credit Request” shall have the meaning provided inSection 3.2.

 

“Level I Status” shall mean, on any date, the ConsolidatedTotal Debt to Consolidated EBITDA Ratio is greater than or equal to 5.25 to1.00 as of such date.

 

“Level II Status” shall mean, on any date, the circumstancethat Level I Status does not exist and the Consolidated Total Debt toConsolidated EBITDA Ratio is greater than or equal to 4.50 to 1.00 as of suchdate.

 

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“Level III Status” shall mean, on any date, thecircumstance that neither Level I Status nor Level II Status existsand the Consolidated Total Debt to Consolidated EBITDA Ratio is greater than orequal to 4.00 to 1.00 as of such date.

 

“Level IV Status” shall mean, on any date, the circumstancethat the Consolidated Total Debt to Consolidated EBITDA Ratio is less than 4.00to 1.00 as of such date.

 

“Lien” shall mean any mortgage, pledge, security interest,hypothecation, assignment, lien (statutory or other) or similar encumbrance(including any agreement to give any of the foregoing, any conditional sale orother title retention agreement or any lease in the nature thereof).

 

“Loan” shall mean any Revolving Credit Loan, Swingline Loan,Tranche C Term Loan or New Term Loan made by any Lender hereunder.

 

“Management Group” shall mean, at any time, the Chairman of theBoard, any President, any Executive Vice President or Vice President, anyManaging Director, any Treasurer and any Secretary of any of Holdings, theBorrower or any Subsidiaries at such time.

 

“Management Investors” means the management officers andemployees of Holdings and its Subsidiaries who are investors in Holdings on theEffective Date.

 

“Mandatory Borrowing” shall have the meaning provided inSection 2.1(d).

 

“Material Adverse Change” shall mean any change in the business,assets, operations, properties or financial condition of Holdings, the Borrowerand its Subsidiaries, taken as a whole, that would materially adversely affectthe ability of Holdings, the Borrower and the other Credit Parties, taken as awhole, to perform their obligations under this Agreement or any of the otherCredit Documents.

 

“Material Adverse Effect” shall mean a circumstance or conditionaffecting the business, assets, operations, properties or financial conditionof Holdings, the Borrower and the Subsidiaries, taken as a whole, that wouldmaterially adversely affect (a) the ability of Holdings, the Borrower andthe other Credit Parties, taken as a whole, to perform their obligations underthis Agreement or any of the other Credit Documents or (b) the rights andremedies of the Administrative Agent and the Lenders under this Agreement orany of the other Credit Documents.

 

“Material Subsidiary” shall mean, at any date of determination,each Restricted Subsidiary of the Borrower (a) whose total assets at thelast day of the Test Period ending on the last day of the most recent fiscalperiod for which Section 9.1 Financials have been delivered were equal toor greater than 5% of the consolidated total assets of the Borrower and theRestricted Subsidiaries at such date or (b) whose gross revenues for suchTest Period were equal to or greater than 5% of the consolidated gross

 

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revenues of the Borrower and the Restricted Subsidiaries for suchperiod, in each case determined in accordance with GAAP.

 

“Maturity Date” shall mean the Tranche C Term Loan Maturity Dateor the Revolving Credit Maturity Date.

 

“Merger” shall have the meaning provided in the Existing CreditAgreement.

 

“Merger Agreement” shall mean that certain Agreement and Plan ofMerger dated as of March 3, 2004, by and among Sealy Corporation and SAC (asassignee of the rights and obligations of Posturepedic Acquisition Corp.).

 

“Minimum Borrowing Amount” shall mean (a) with respect to aDollar Borrowing of Tranche C Term Loans or Revolving Credit Loans, $2,000,000,(b) with respect to a C$ - denominated Borrowing of Canadian Revolving Loans,C$1,000,000 and (c) with respect to a Borrowing of Swingline Loans,$100,000.

 

“Minority Investment” shall mean any Person (other than aSubsidiary) in which the Borrower or any Restricted Subsidiary owns capital stockor other equity interests.

 

“Moody’s” shall mean Moody’s Investors Service, Inc. or anysuccessor by merger or consolidation to its business.

 

“Mortgage” shall mean a Mortgage, Assignment of Leases andRents, Security Agreement and Financing Statement or other security documententered into by the owner of a Mortgaged Property and the Administrative Agentfor the benefit of the Lenders in respect of that Mortgaged Property,substantially in the form of Exhibit D or, in the case of Mortgaged Propertieslocated outside the United States of America, in such form as agreed betweenthe Borrower and the Administrative Agent or the Canadian Administrative Agent,as applicable, as the same may be amended, supplemented or otherwise modifiedfrom time to time.

 

“Mortgaged Property” shall mean, initially, each parcel of realestate and the improvements thereto owned by a Credit Party and identified onSchedule 1.1(b), and includes each other parcel of real property andimprovements thereto with respect to which a Mortgage is granted pursuant toSection 9.15.

 

“Net Cash Proceeds” shall mean, with respect to any PrepaymentEvent or the issuance after the Closing Date by the Borrower of any capitalstock, (a) the gross cash proceeds (including payments from time to timein respect of installment obligations, if applicable) received by or on behalfof Holdings, the Borrower or any of the Restricted Subsidiaries in respect ofsuch Prepayment Event or issuance, as the case may be, less (b) the sumof:

 

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(i)                                     in the case of any Prepayment Event,the amount, if any, of all taxes paid or estimated to be payable by any ofHoldings, the Borrower or any of the Restricted Subsidiaries in connection withsuch Prepayment Event,

 

(ii)                                  in the case of any Prepayment Event,the amount of any reasonable reserve established in accordance with GAAPagainst any liabilities (other than any taxes deducted pursuant to clause(i) above) (x) associated with the assets that are the subject ofsuch Prepayment Event and (y) retained by any of Holdings, the Borrower orany of the Restricted Subsidiaries, provided that the amount of any subsequent reduction of suchreserve (other than in connection with a payment in respect of any suchliability) shall be deemed to be Net Cash Proceeds of such a Prepayment Eventoccurring on the date of such reduction,

 

(iii)                               in the case of any Prepayment Event,the amount of any Indebtedness secured by a Lien on the assets that are thesubject of such Prepayment Event to the extent that the instrument creating orevidencing such Indebtedness requires that such Indebtedness be repaid uponconsummation of such Prepayment Event,

 

(iv)                              in the case of any Asset SalePrepayment Event (other than a transaction permitted by Section 10.4(e)),the amount of any proceeds of such Asset Sale Prepayment Event that theBorrower has reinvested (or intends to reinvest within one year of the date ofsuch Asset Sale Prepayment Event) in the business of the Borrower or any of theRestricted Subsidiaries (subject to Section 9.14), provided that any portion of such proceedsthat has not been so reinvested within such one-year period shall (x) bedeemed to be Net Cash Proceeds of an Asset Sale Prepayment Event occurring onthe last day of such one-year period and (y) be applied to the repaymentof Tranche C Term Loans in accordance with Section 5.2(a)(i); providedfurther that, for purposes of the precedingproviso, such one-year period shall be extended by up to twelve months (or, ifless, extended by up to the shortest period of time in excess of one year thatsuch a reinvestment period exists pursuant to, or may be extended under theterms of, any instrument governing any publicly offered or privately placedIndebtedness of Holdings or the Borrower) from the last day of such one-yearperiod so long as (A) such proceeds are to be reinvested within suchadditional twelve-month period under the Borrower’s business plan as mostrecently adopted in good faith by its Board of Directors and (B) the Borrowerbelieves in good faith that such proceeds will be so reinvested within suchadditional twelve-month period, and

 

(v)                                 in the case of any Prepayment Eventor the issuance by the Borrower of any capital stock, reasonable and customaryfees, commissions, expenses, issuance costs, discounts and other costs paid byHoldings, the Borrower or any of the Restricted Subsidiaries, as applicable, inconnection with such Prepayment Event or issuance, as the case may be (otherthan those payable to Holdings, the Borrower or any Subsidiary of theBorrower), in each case only

 

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tothe extent not already deducted in arriving at the amount referred to inclause (a) above.

 

“New RevolvingLoan Commitments” as defined in Section 2.15.

 

“New RevolvingLoan Lender” as defined in Section 2.15.

 

“New RevolvingLoans” as defined in Section 2.15.

 

“New Term LoanCommitments” as defined in Section 2.15.

 

“New Term LoanLender” as defined in Section 2.15.

 

“New Term LoanMaturity Date” means the date that New Term Loans of a Series shall becomedue and payable in full hereunder, as specified in the applicable JoinderAgreement, including by acceleration or otherwise.

 

“New Term Loans”as defined in Section 2.15.

 

“Non-AcceptanceLender” shall mean a Canadian Lender that does not accept Bankers’Acceptances.

 

“Non-Defaulting Lender” shall mean and include each Lender otherthan a Defaulting Lender.

 

“Non-Excluded Taxes” shall have the meaning provided inSection 5.4(a).

 

“Notice of Borrowing” shall have the meaning provided inSection 2.3.

 

“Notice of Conversion or Continuation” shall have the meaningprovided in Section 2.6.

 

“Obligations” shall have the meaning assigned to such term inthe Security Documents.

 

“Parent” shall have the meaning provided in the preamble to thisAgreement.

 

“Participant” shall have the meaning provided inSection 14.6(c)(i).

 

“PBGC” shall mean the Pension Benefit Guaranty Corporationestablished pursuant to Section 4002 of ERISA, or any successor thereto.

 

“Perfection Certificate” shall mean a certificate of theBorrower and the Canadian Borrower in the form of Exhibit E or any other formapproved by the Administrative Agent.

 

“Permitted Acquisition” shall mean the acquisition, by merger orotherwise, by the Borrower or any of the Restricted Subsidiaries of assets orcapital stock

 

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or other equity interests, so long as (a) such acquisition and alltransactions related thereto shall be consummated in accordance with applicablelaw; (b) such acquisition shall result in the issuer of such capital stockor other equity interests becoming (i) a Restricted Subsidiary and(ii) (x) in the case of a Restricted Domestic Subsidiary, a SubsidiaryGuarantor or (y) in the case of a Restricted Foreign Subsidiary, a ForeignSubsidiary Guarantor, in each case to the extent required by Section 9.11;(c) such acquisition shall result in the Administrative Agent or the CanadianAdministrative Agent, as applicable, for the benefit of the applicable Lenders,being granted a security interest in any capital stock or any assets soacquired to the extent required by Sections 9.11, 9.12 and/or 9.15;(d) after giving effect to such acquisition, no Default or Event ofDefault shall have occurred and be continuing; and (e) the Borrower shallbe in compliance, on a pro forma basis after giving effect to such acquisition(including any Indebtedness assumed or permitted to exist or incurred pursuantto Sections 10.1(j) and 10.1(k), respectively, and any related Pro FormaAdjustment), with the covenants set forth in Sections 10.9 and 10.10, assuch covenants are recomputed as at the last day of the most recently endedTest Period under such Sections as if such acquisition had occurred on thefirst day of such Test Period.

 

“Permitted Additional Subordinated Notes” shall meanSubordinated Notes other than Subordinated Notes issued as PermittedSubordinated Debt, provided that the aggregate principal amount ofPermitted Additional Subordinated Notes outstanding at any time shall notexceed $100,000,000, plus accrued interest thereon as provided in theSubordinated Note Indenture.

 

“Permitted Capital Expenditure Amount” shall have the meaninggiven to such term in Section 10.11.

 

“Permitted Investments” shall mean (a) securities issued orunconditionally guaranteed by the United States government or any agency orinstrumentality thereof, in each case having maturities of not more than 24months from the date of acquisition thereof; (b) securities issued by any stateof the United States of America or any political subdivision of any such stateor any public instrumentality thereof or any political subdivision of any suchstate or any public instrumentality thereof having maturities of not more than24 months from the date of acquisition thereof and, at the time of acquisition,having an investment grade rating generally obtainable from either S&P orMoody’s (or, if at any time neither S&P nor Moody’s shall be rating suchobligations, then from another nationally recognized rating service); (c)commercial paper issued by any Lender or any bank holding company owning anyLender; (d) commercial paper maturing no more than 12 months afterthe date of creation thereof and, at the time of acquisition, having a ratingof at least A-2 or P-2 from either S&P or Moody’s (or, if at any timeneither S&P nor Moody’s shall be rating such obligations, an equivalentrating from another nationally recognized rating service); (e) domestic andEurodollar certificates of deposit or bankers’ acceptances maturing no morethan two years after the date of acquisition thereof issued by any Lender orany other bank having combined capital and surplus of not less than$250,000,000 in the case of domestic banks and $100,000,000 (or the dollarequivalent thereof) in the case of foreign banks; (f) repurchase agreementswith a term of not more than 30 days for underlying securities of

 

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the type described in clauses (a), (b) and (e) above entered into withany bank meeting the qualifications specified in clause (e) above or securitiesdealers of recognized national standing; (g) marketable short-term moneymarket and similar securities, having a rating of at least A-2 or P-2 from eitherS&P or Moody’s (or, if at any time neither S&P nor Moody’s shall berating such obligations, an equivalent rating from another nationallyrecognized rating service); (h) shares of investment companies that areregistered under the Investment Company Act of 1940 and invest solely in one ormore of the types of securities described in clauses (a) through (g) above; and(i) in the case of investments by any Restricted Foreign Subsidiary orinvestments made in a country outside the United States of America, othercustomarily utilized high-quality investments in the country where suchRestricted Foreign Subsidiary is located or in which such investment is made.

 

“Permitted Investors” shall mean the Management Investors andcertain other investors in Parent as of the Effective Date.

 

“Permitted Liens” shall mean (a) Liens for taxes, assessments orgovernmental charges or claims not yet due or which are being contested in goodfaith and by appropriate proceedings for which appropriate reserves have beenestablished in accordance with GAAP; (b) Liens in respect of property or assetsof the Borrower or any of the Subsidiaries imposed by law, such as carriers’,warehousemen’s and mechanics’ Liens and other similar Liens arising in theordinary course of business, in each case so long as such Liens arise in theordinary course of business and do not individually or in the aggregate have aMaterial Adverse Effect; (c) Liens arising from judgments or decrees incircumstances not constituting an Event of Default under Section 11.14;(d) Liens incurred or deposits made in connection with workers’ compensation,unemployment insurance and other types of social security, or to secure theperformance of tenders, statutory obligations, surety and appeal bonds, bids,leases, government contracts, performance and return-of-money bonds and othersimilar obligations incurred in the ordinary course of business; (e) groundleases in respect of real property on which facilities owned or leased by theBorrower or any of its Subsidiaries are located; (f) easements, rights-of-way,restrictions, minor defects or irregularities in title and other similarcharges or encumbrances not interfering in any material respect with thebusiness of Holdings, the Borrower and its Subsidiaries, taken as a whole orthe Canadian Borrower and its Subsidiaries, taken as a whole; (g) any interestor title of a lessor or secured by a lessor’s interest under any leasepermitted by this Agreement; (h) Liens in favor of customs and revenueauthorities arising as a matter of law to secure payment of customs duties inconnection with the importation of goods; (i) Liens on goods the purchaseprice of which is financed by a documentary letter of credit issued for theaccount of the Borrower or any of its Subsidiaries, provided that suchLien secures only the obligations of the Borrower or such Subsidiaries inrespect of such letter of credit to the extent permitted underSection 10.1; (j) leases or subleases granted to others notinterfering in any material respect with the business of Holdings, the Borrowerand its Subsidiaries, taken as a whole; and (k) Liens created in theordinary course of business in favor of banks and other financial institutionsover credit balances of any bank accounts of any of Holdings, the Borrower andthe Restricted Subsidiaries held at such banks or financial institutions, asthe case may be, to facilitate the operation of cash pooling and/or

 

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interest set-off arrangements in respect of such bank accounts in theordinary course of business.

 

“Permitted Sale Leaseback” shall mean any Sale Leasebackconsummated by the Borrower or any of the Restricted Subsidiaries after theClosing Date, provided that such Sale Leaseback is consummated for fairvalue as determined at the time of consummation in good faith by the Borrowerand, in the case of any Sale Leaseback (or series of related Sales Leasebacks)the aggregate proceeds of which exceed $20,000,000, the Board of Directors ofthe Borrower (which such determination may take into account any retainedinterest or other investment of the Borrower or such Restricted Subsidiary inconnection with, and any other material economic terms of, such SaleLeaseback).

 

“Permitted Subordinated Debt” shall mean the Subordinated Notes,provided that the aggregate principal amount of such Subordinated Notesoutstanding at any time shall not exceed $490,000,000.

 

“Person” shall mean any individual, partnership, joint venture,firm, corporation, limited liability company, association, trust or otherenterprise or any Governmental Authority.

 

“Plan” shall mean any multiemployer or single-employer plan, asdefined in Section 4001 of ERISA and subject to Title IV of ERISA, that isor was within any of the preceding five plan years maintained or contributed toby (or to which there is or was an obligation to contribute or to make paymentsto) the Borrower, a Subsidiary or an ERISA Affiliate.

 

“Pledge Agreement” shall mean the Pledge Agreement, entered intoby any of Holdings, the Borrower, the other pledgors party thereto and theAdministrative Agent for the benefit of the Lenders, substantially in the formof Exhibit F, as the same may be amended, supplemented or otherwise modifiedfrom time to time.

 

“Prepayment Event” shall mean any Asset Sale Prepayment Event,Debt Incurrence Prepayment Event or any Permitted Sale Leaseback.

 

“Prime Rate” shall mean the rate of interest per annum publiclyannounced from time to time by the Administrative Agent as its reference ratein effect at its principal office in New York City (the Prime Rate not beingintended to be the lowest rate of interest charged by JPMCB in connection withextensions of credit to debtors).

 

“Pro Forma Adjustment” shall mean, for any test period thatincludes any of the six fiscal quarters first ending following any PermittedAcquisition, with respect to the Acquired EBITDA of the applicable AcquiredEntity or Business or the Consolidated EBITDA of the Borrower affected by suchacquisition, the pro forma increase or decrease in such Acquired EBITDA or suchConsolidated EBITDA, as the case may be, projected by the Borrower in goodfaith as a result of reasonably identifiable and factually supportable net costsavings or additional net costs, as the case may be, realizable during suchperiod by combining the operations of such Acquired Entity or Business with theoperations of the Borrower and its Subsidiaries, provided that so longas such net cost

 

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savings or additional net costs will be realizable at any time duringsuch six-quarter period, it may be assumed, for purposes of projecting suchpro forma increase or decrease to such Acquired EBITDA or suchConsolidated EBITDA, as the case may be, that such net cost savings oradditional net costs will be realizable during the entire such period; providedfurther that any such pro forma increase or decrease to suchAcquired EBITDA or such Consolidated EBITDA, as the case may be, shall bewithout duplication for net cost savings or additional net costs actuallyrealized during such period and already included in such Acquired EBITDA orsuch Consolidated EBITDA, as the case may be.

 

“Pro Forma Adjustment Certificate” shall mean any certificate ofan Authorized Officer of the Borrower delivered pursuant to Section 9.1(h)or setting forth the information described in clause (iv) toSection 9.1(d).

 

“Qualified PIK Securities” shall mean (1) any preferred capitalstock or preferred equity interest of Parent (a) that does not provide forany cash dividend payments or other cash distributions in respect thereof on orprior to the Tranche C Term Loan Maturity Date and (b) that by its terms(or by the terms of any security into which it is convertible or for which itis exchangeable or exercisable) or upon the happening of any event does not(i)(x) mature or become mandatorily redeemable pursuant to a sinking fundobligation or otherwise, (y) become convertible or exchangeable at theoption of the holder thereof for Indebtedness or preferred stock that is notQualified PIK Securities or (z) become redeemable at the option of theholder thereof (other than as a result of a change of control event), in wholeor in part, in each case on or prior to the first anniversary of the Tranche CTerm Loan Maturity Date and (ii) provide holders thereunder with anyrights upon the occurrence of a “change of control” event prior to therepayment of the Obligations under the Credit Documents and (2) anyIndebtedness of Parent which has payments terms at least as favorable to theBorrower and Lenders as described in clause (1)(a) above and is subordinatedand has other terms, other than with respect to interest rates, at least asfavorable to the Borrower and Lenders as the Subordinated Notes.

 

“Real Estate” shall have the meaning given to that term inSection 9.1(f).

 

“Recalculation Date” shall have the meaning provided inSection 1.2.

 

“Recapitalization” shall mean the consummation of the Merger andthe Refinancing (as such term is defined in the Existing Credit Agreement).

 

“Reference Lender” shall mean JPMCB.

 

 “Register” shall have themeaning provided in Section 14.6(b)(iv).

 

“Regulation D” shall mean Regulation D of the Board asfrom time to time in effect and any successor to all or a portion thereofestablishing reserve requirements.

 

“Regulation T” shall mean Regulation T of the Board asfrom time to time in effect and any successor to all or a portion thereofestablishing margin requirements.

 

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“Regulation U” shall mean Regulation U of the Board as fromtime to time in effect and any successor to all or a portion thereofestablishing margin requirements.

 

“Regulation X” shall mean Regulation X of the Board asfrom time to time in effect and any successor to all or a portion thereofestablishing margin requirements.

 

“RelatedAffiliate” shall mean with respect to any Lender with a Canadian RevolvingCredit Commitment, an Affiliate or lending office of such Lender designated byit to make its Canadian Revolving Credit Commitment, Canadian Letters of Creditand Canadian Revolving Credit Loans available to the Borrower under thisAgreement.

 

“Related Parties” means, with respect to any specified Person,such Person’s Affiliates and the directors, officers, employees, agents,trustees, advisors of such Person and any Person that possesses, directly orindirectly, the power to direct or cause the direction of the management orpolicies of such Person, whether through the ability to exercise voting power,by contract or otherwise.

 

“Repayment Amount” shall have the meaning provided inSection 2.5(b).

 

“Repayment Date” shall have the meaning provided inSection 2.5(b).

 

“Reportable Event” shall mean an event described inSection 4043 of ERISA and the regulations thereunder.

 

“Required Canadian Revolving Credit Lenders” shall mean, at anydate, (a) Non-Defaulting Lenders having or holding a majority of theDollar Equivalent of the Adjusted Canadian Total Revolving Credit Commitmentthat relates to Canadian Revolving Credit Loans at such date or (b) if theCanadian Total Revolving Credit Commitment has been terminated, the holders(excluding Defaulting Lenders) of a majority of the outstanding principalamount of the Dollar Equivalent of the Canadian Revolving Credit Loans in theaggregate at such date.

 

“Required Lenders” shall mean, at any date,(a) Non-Defaulting Lenders having or holding a majority of the sum of(i) the Adjusted US Total Revolving Credit Commitment at such date,(ii) the Adjusted Canadian Total Revolving Credit Commitment at such date,(iii) the Adjusted Total Term Loan Commitment at such date,  (iv) the outstanding principal amount ofthe Tranche C Term Loans (excluding the Tranche C Term Loans held by DefaultingLenders) at such date and (v) the outstanding principal amount of the New TermLoans (excluding the New Term Loans held by Defaulting Lenders) or (b) ifthe US Total Revolving Credit Commitment, the Canadian Total Revolving CreditCommitment and the Total Term Loan Commitment have been terminated or for thepurposes of acceleration pursuant to Section 11, the holders (excludingDefaulting Lenders) of a majority of the outstanding principal amount of theLoans and Letter of Credit Exposures (excluding the Loans and Letter of Credit Exposuresof Defaulting Lenders) in the aggregate at such date.

 

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“Required US Revolving Credit Lenders” shall mean, at any date,(a) Non-Defaulting Lenders having or holding a majority of theAdjusted US Total Revolving Credit Commitment that relates to US RevolvingCredit Loans at such date or (b) if the US Total Revolving CreditCommitment has been terminated, the holders (excluding Defaulting Lenders) of amajority of the outstanding principal amount of the US Revolving Credit Loansand Letter of Credit Exposures (excluding the Loans and Letter of CreditExposures of Defaulting Lenders) in the aggregate at such date.

 

“Required Term Lenders” shall mean, at any date, Non-DefaultingLenders having or holding a majority of the sum of (a) the portion of theAdjusted Total Term Loan Commitment that relates to Tranche C Term LoanCommitments at such date and (b) the outstanding principal amount of theTranche C Term Loans (excluding the Tranche C Term Loans held by DefaultingLenders) in the aggregate at such date.

 

“Requirement of Law” shall mean, as to any Person, theCertificate of Incorporation and By-Laws or other organizational or governingdocuments of such Person, and any law, treaty, rule or regulation ordetermination of an arbitrator or a court or other Governmental Authority, ineach case applicable to or binding upon such Person or any of its property orassets or to which such Person or any of its property or assets is subject.

 

“Restricted Domestic Subsidiary” shall mean each RestrictedSubsidiary that is also a Domestic Subsidiary.

 

“Restricted Foreign Subsidiary” shall mean a Foreign Subsidiarythat is a Restricted Subsidiary.

 

“Restricted Subsidiary” shall mean any Subsidiary of theBorrower other than an Unrestricted Subsidiary.

 

“Revolving Credit Loans” shall have the meaning provided inSection 2.1(b).

 

“Revolving Credit Maturity Date” shall mean the date that is sixyears after the Closing Date, or, if such date is not a Business Day, the nextpreceding Business Day.

 

“SAC” shall have the meaning provided in the Existing CreditAgreement.

 

“Sale Leaseback” shall mean any transaction or series of relatedtransactions pursuant to which the Borrower or any of the RestrictedSubsidiaries (a) sells, transfers or otherwise disposes of any property, realor personal, whether now owned or hereafter acquired, and (b) as part of suchtransaction, thereafter rents or leases such property or other property that itintends to use for substantially the same purpose or purposes as the propertybeing sold, transferred or disposed.

 

“S&P” shall mean Standard & Poor’s Ratings Servicesor any successor by merger or consolidation to its business.

 

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“Schedule II/III Reference Lenders” means specifiedCanadian Lenders that are banks named in Schedule II or Schedule IIIto the Bank Act (Canada) and approved by the Canadian Borrower and theCanadian Administrative Agent.

 

“SEC” shall mean the Securities and Exchange Commission or anysuccessor thereto.

 

“Section 9.1 Financials” shall mean the financialstatements delivered, or required to be delivered, pursuant toSection 9.1(a) or (b) together with the accompanying officer’s certificatedelivered, or required to be delivered, pursuant to Section 9.1(e).

 

“Secured Parties” shall have the meaning assigned to such termin the applicable Security Documents.

 

“Security Agreement” shall mean the Security Agreement enteredinto by the Borrower, the other grantors party thereto and the AdministrativeAgent for the benefit of the Lenders, substantially in the form of Exhibit G,as the same may be amended, supplemented or otherwise modified from time totime.

 

“Security Documents” shall mean, collectively, (a) theGuarantee, (b) the Pledge Agreement, (c) the Security Agreement, (d) theMortgages, (e) the Canadian Security Documents and (f) each other securityagreement or other instrument or document executed and delivered pursuant toSection 9.11 or 9.12 or pursuant to any of the Security Documents tosecure any of the Obligations.

 

“Senior Unsecured Term Loan Agreement” shall mean the SeniorUnsecured Term Loan Agreement, dated as of the Closing Date, among the Company,Holdings, J.P. Morgan Securities Inc., as joint lead arrangerand joint bookrunner, Goldman Sachs Credit Partners L.P., as joint lead arranger, jointbookrunner and syndication agent, JPMCB,as administrative agent and the other agents and the lenders party thereto asit may be amended, modified, renewed, refunded, replaced or refinanced in wholeor in part from time to time.

 

“Senior Unsecured Term Loans” shall mean the Indebtednessincurred under the Senior Unsecured Term Loan Agreement on the Closing Date inan aggregate principal amount of $100,000,000.

 

“Series” as defined in Section 2.15.

 

“Sold Entity or Business” shall have the meaning provided in thedefinition of the term “Consolidated EBITDA”.

 

“Solvent” means, with respect to the Borrower, that as of theClosing Date, both (i) (a) the sum of the Borrower’s debt (including contingentliabilities) does not exceed the present fair saleable value of the Borrower’spresent assets; (b) the Borrower’s capital is not unreasonably small inrelation to its business as contemplated on the Closing Date; and (c) the Borrowerhas not incurred and does not intend to incur, or believe that it will incur,debts including current obligations beyond its ability to pay

 

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such debts as they become due (whether at maturity or otherwise); and(ii) such Person is “solvent” within the meaning given that term and similarterms under applicable laws relating to fraudulent transfers andconveyances.  For purposes of thisdefinition, the amount of any contingent liability at any time shall becomputed as the amount that, in light of all of the facts and circumstancesexisting at such time, represents the amount that can reasonably be expected tobecome an actual or matured liability (irrespective of whether such contingentliabilities meet the criteria for accrual under Statement of FinancialAccounting Standard No.5).

 

“Specified Obligations” shall mean Obligations consisting of(a) the principal and interest on Loans and (b) reimbursementobligations in respect of Letters of Credit.

 

“Specified Subsidiary” shall mean, at any date of determination,(a) any Material Subsidiary or (b) any Unrestricted Subsidiary(i) whose total assets at the last day of the Test Period ending on thelast day of the most recent fiscal period for which Section 9.1 Financialshave been delivered were equal to or greater than 15% of the consolidated totalassets of the Borrower and the Subsidiaries at such date or (ii) whosegross revenues for such Test Period were equal to or greater than 15% of theconsolidated gross revenues of the Borrower and the Subsidiaries for suchperiod, in each case determined in accordance with GAAP.

 

“Stated Amount” of any Letter of Credit shall mean the maximumamount from time to time available to be drawn thereunder, determined withoutregard to whether any conditions to drawing could then be met.

 

“Status” shall mean, as to the Borrower as of any date, theexistence of Level I Status, Level II Status, Level III Status orLevel IV Status, as the case may be on such date.  Changes in Status resulting from changes inthe Consolidated Total Debt to Consolidated EBITDA Ratio shall become effective(the date of such effectiveness, the “Effective Date”) as of the firstday following the last day of the most recent fiscal year or period for which(a) Section 9.1 Financials are delivered to the Lenders underSection 9.1 and (b) an officer’s certificate is delivered by theBorrower to the Lenders setting forth, with respect to such Section 9.1Financials, the then-applicable Status, and shall remain in effect until thenext change to be effected pursuant to this definition, provided that(i) if the Borrower shall have made any payments in respect of interest orcommitment fees during the period (the “Interim Period”) from andincluding the Effective Date to but excluding the day any change in Status isdetermined as provided above, then the amount of the next such payment due onor after such day shall be increased or decreased by an amount equal to anyunderpayment or overpayment so made by the Borrower during such Interim Periodand (ii) each determination of the Consolidated Total Debt to ConsolidatedEBITDA Ratio pursuant to this definition shall be made with respect to the TestPeriod ending at the end of the fiscal period covered by the relevant financialstatements.

 

“Statutory Reserve Rate” shall mean for any day as applied toany Eurodollar Loan, a fraction (expressed as a decimal), the numerator ofwhich is the

 

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number one and the denominator of which is the number one minus theaggregate of the maximum reserve percentages that are in effect on that day(including any marginal, special, emergency or supplemental reserves),expressed as a decimal, as prescribed by the Board and to which theAdministrative Agent is subject, for eurocurrency funding (currently referredto as “Eurocurrency Liabilities” in Regulation D of the Board).  Such reserve percentages shall include thoseimposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding andto be subject to such reserve requirements without benefit of or credit forproration, exemptions or offsets that may be available from time to time to anyLender under such Regulation D or any comparable regulation.  The Statutory Reserve Rate shall be adjustedautomatically on and as of the effective date of any change in any reservepercentage.

 

“Subordinated Note Indenture” shall mean the Indenture dated asof the Closing Date, among the Borrower, the guarantors party thereto and TheBank of New York, as trustee, pursuant to which the Subordinated Notes areissued, as the same may be amended, supplemented or otherwise modified fromtime to time to the extent permitted by Section 10.7(c).

 

“Subordinated Notes” shall mean (a) the Subordinated Notesdefined in the Existing Credit Agreement and (b) any replacement orrefinancing thereof having terms no more adverse to the interests of theLenders than the terms thereof, provided that any such amendment,replacement or refinancing shall bear a rate of interest determined by theBoard of Directors of the Borrower to be a market rate of interest at the dateof such amendment, replacement or refinancing and have other terms customaryfor similar issuances under similar market conditions or otherwise be on termsreasonably acceptable to the Administrative Agent.

 

“Subsidiary” of any Person shall mean and include (a) anycorporation more than 50% of whose stock of any class or classes having by theterms thereof ordinary voting power to elect a majority of the directors ofsuch corporation (irrespective of whether or not at the time stock of any classor classes of such corporation shall have or might have voting power by reasonof the happening of any contingency) is at the time owned by such Persondirectly or indirectly through Subsidiaries and (b) any partnership,association, joint venture or other entity in which such Person directly orindirectly through Subsidiaries has more than a 50% equity interest at the time.  Unless otherwise expressly provided, allreferences herein to a “Subsidiary” shall mean a Subsidiary of the Borrower.

 

“Swingline Commitment” shall mean $25,000,000.

 

“Swingline Lender” shall mean JPMCB in its capacity as lender ofSwingline Loans hereunder.

 

“Swingline Loans” shall have the meaning provided inSection 2.1(c).

 

“Swingline Maturity Date” shall mean, with respect to anySwingline Loan, the date that is five Business Days prior to the RevolvingCredit Maturity Date.

 

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“Syndication Agent” shall mean JPMCB, together with itsaffiliates, as the syndication agent for the Lenders under this Agreement andthe other Credit Documents.

 

“Tax Act” means the *IncomeTax Act* (Canada), as amended from time to time, and regulationspromulgated thereunder.

 

 “Test Period” shall mean,for any determination under this Agreement, the four consecutive fiscalquarters of the Borrower then last ended; provided, however, thatfor any period ending prior to one year after the end of the first fiscalquarter ending after the Closing Date, pro forma adjustments shall be made withrespect to the relevant determination in accordance with Schedule 1.1(d).

 

“Total Commitment” shall mean the sum of the Total Term LoanCommitment, the US Total Revolving Credit Commitment and the Canadian TotalRevolving Credit Commitment.

 

“Total Credit Exposure” shall mean, at any date, the sum of (a)the US Total Revolving Credit Commitment at such date, (b) the CanadianTotal Revolving Credit Commitment at such date, (c) the Total Term LoanCommitment at such date and (d) the outstanding principal amount of allTranche C Term Loans at such date.

 

“Total Term Loan Commitment” shall mean the sum of the Tranche CTerm Loan Commitments and New Term Loan Commitments, if applicable, of all theLenders.

 

“Tranche C Term Loan” shall have the meaning provided inSection 2.1(a).

 

“Tranche C Term Loan Commitment” shall mean, (a) in thecase of each Lender that is a Lender on the date hereof, the amount set forthopposite such Lender’s name on Schedule 1.1(c) as such Lender’s “Tranche CTerm Loan Commitment” and (b) in the case of any Lender that becomes aLender after the date hereof, the amount specified as such Lender’s “Tranche CTerm Loan Commitment” in the Assignment and Acceptance pursuant to which suchLender assumed a portion of the Total Term Loan Commitment, in each case as thesame may be changed from time to time pursuant to the terms hereof.  The aggregate amount of the Tranche C TermLoan Commitments as of the Effective Date is $545,000,000.

 

“Tranche C Term Loan Maturity Date” shall mean the date that iseight years after the Closing Date, or, if such date is not a Business Day, thenext preceding Business Day.

 

“Transaction Expenses” shall mean any fees or expenses incurredor paid by Holdings or any of its Subsidiaries in connection with theRecapitalization, this Agreement and the other Credit Documents and thetransactions contemplated hereby and thereby.

 

“Transferee” shall have the meaning provided inSection 14.6(e).

 

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“Type” shall mean (a) as to any Tranche C Term Loan, its natureas an ABR Loan or a Eurodollar Term Loan, (b) as to any US RevolvingCredit Loan, its nature as an ABR Loan or a Eurodollar Revolving Credit Loanand (c) as to any Canadian Revolving Credit Loan, its nature as a BA Loan or aCanadian Prime Loan.

 

“Unfunded Current Liability” of any Plan shall mean the amount,if any, by which the present value of the accrued benefits under the Plan as ofthe close of its most recent plan year, determined in accordance with Statementof Financial Accounting Standards No. 87 as in effect on the date hereof, basedupon the actuarial assumptions that would be used by the Plan’s actuary in atermination of the Plan, exceeds the fair market value of the assets allocablethereto and inrelation to a Canadian Pension Plan shall mean the amount, if any, by which (A)the present value of the accrued benefits under the Canadian Pension Plan as ofthe close of business of its most recent plan year, determined in accordancewith (I) the Statement of Financial Accounting Standards No. 87 as in effect onthe date hereof, or (II) if in the normal course of business, no suchdetermination is made in relation to the Canadian Pension Plans, the Canadianequivalent of Statement of Financial Accounting Standards No. 87 as in effecton the date hereof, in either case such determination being based upon theactuarial assumptions that would be used by the actuary for the CanadianPension Plan in the termination of that Canadian Pension Plan, exceeds (B) thefair market value of the assets allocable thereto.

 

“Unpaid Drawing” shall have the meaning provided inSection 3.4(a).

 

 “Unrestricted Subsidiary”shall mean (a) any Subsidiary of the Borrower that is formed or acquiredafter the Closing Date (other than a Subsidiary that becomes or is required tobecome a Credit Party hereunder), provided that at such time (orpromptly thereafter) the Borrower designates such Subsidiary an UnrestrictedSubsidiary in a written notice to the Administrative Agent, (b) anyRestricted Subsidiary (other than a Restricted Subsidiary that is or becomes aCredit Party) subsequently re-designated as an Unrestricted Subsidiary by theBorrower in a written notice to the Administrative Agent, provided that(x) such re-designation shall be deemed to be an investment on the date of suchre-designation in an Unrestricted Subsidiary in an amount equal to the sum of(i) the net worth of such re-designated Restricted Subsidiary immediatelyprior to such re-designation (such net worth to be calculated without regard toany guarantee provided by such re-designated Restricted Subsidiary) and(ii) the aggregate principal amount of any Indebtedness owed by suchre-designated Restricted Subsidiary to the Borrower or any other RestrictedSubsidiary immediately prior to such re-designation, all calculated, except asset forth in the parenthetical to clause (i), on a consolidated basis in accordancewith GAAP and (y) no Default or Event of Default would result from suchre-designation and (c) each Subsidiary of an Unrestricted Subsidiary; provided,however, that at the time of any written re-designation by the Borrowerto the Administrative Agent that any Unrestricted Subsidiary shall no longerconstitute an Unrestricted Subsidiary, such Unrestricted Subsidiary shall ceaseto be an Unrestricted Subsidiary to the extent no Default or Event of Defaultwould result from such re-designation. On or promptly after the date of its formation, acquisition orre-designation, as applicable, each Unrestricted Subsidiary (other than anUnrestricted Subsidiary that is a Foreign Subsidiary) shall have entered into atax sharing agreement containing terms that, in the reasonable judgment of

 

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the Administrative Agent, provide for an appropriate allocation of taxliabilities and benefits.

 

“US L/C Participant” shall have the meaning provided inSection 3.3(a).

 

“US L/C Participation” shall have the meaning provided inSection 3.3(a).

 

“US Letter of Credit Commitment” shall mean $35,000,000, as thesame may be reduced from time to time pursuant to Section 3.1.

 

“US Letter of Credit Exposure” shall mean, with respect to anyLender, at any time, the sum of (a) the Dollar Equivalent of the amount of anyUnpaid Drawings in respect of which such Lender has made (or is required tohave made) payments to the US Letter of Credit Issuer pursuant toSection 3.4(a) at such time and (b) such Lender’s Revolving CreditCommitment Percentage of the US Letter of Credit Outstanding at such time(excluding the portion thereof consisting of Unpaid Drawings in respect ofwhich the Lenders have made (or are required to have made) payments to the USLetter of Credit Issuer pursuant to Section 3.4(a)).

 

“US Letter of Credit Issuer” shall mean JPMCB, any of itsAffiliates or any successor pursuant to Section 3.6.  The Letter of Credit Issuer may, in itsdiscretion, arrange for one or more Letters of Credit to be issued byAffiliates of the Letter of Credit Issuer, and in each such case the term“Letter of Credit Issuer” shall include any such Affiliate with respect toLetters of Credit issued by such Affiliate. In the event that there is more than one Letter of Credit Issuer at anytime, references herein and in the other Credit Documents to the Letter ofCredit Issuer shall be deemed to refer to the Letter of Credit Issuer inrespect of the applicable Letter of Credit or to all Letter of Credit Issuers,as the context requires.

 

“US Letters of Credit Outstanding” shall mean, at any time, thesum of, without duplication, (a) the aggregate Stated Amount of alloutstanding US Letters of Credit and (b) the aggregate amount of allUnpaid Drawings in respect of all US Letters of Credit.

 

“US Letter of Credit Request” shall have the meaning provided inSection 3.2.

 

“US Revolving Credit Commitment” shall mean, (a) with respect toeach Lender that is a Lender on the date hereof, the amount set forth oppositesuch Lender’s name on Schedule 1.1(c) as such Lender’s “US RevolvingCredit Commitment” and (b) in the case of any Lender that becomes a Lenderafter the date hereof, the amount specified as such Lender’s “US RevolvingCredit Commitment” in the Assignment and Acceptance pursuant to which suchLender assumed a portion of the US Total Revolving Credit Commitment, in eachcase of the same may be changed from time to time pursuant to termshereof.  The aggregate amount of the USRevolving Credit Commitment as of the Closing Date is $100,000,000.

 

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“US Revolving Credit Commitment Percentage” shall mean at anytime, for each Lender, the percentage obtained by dividing (a) such Lender’s USRevolving Credit Commitment by (b) the aggregate amount of the US RevolvingCredit Commitments, provided that at any time when the US TotalRevolving Credit Commitment shall have been terminated, each Lender’s USRevolving Credit Commitment Percentage shall be its US Revolving CreditCommitment Percentage as in effect immediately prior to such termination.

 

“US Revolving Credit Exposure” shall mean, with respect to anyLender at any time, the sum of (a) the aggregate principal amount of theUS Revolving Credit Loans of such Lender then outstanding, and (b) suchLender’s US Letter of Credit Exposure at such time.

 

“US Revolving Credit Loan” shall mean a Revolving Credit Loandenominated in Dollars and made pursuant to Section 2.1(b).

 

“US Subsidiary Guarantors” shall mean (a) each DomesticSubsidiary (other than an Unrestricted Subsidiary) on the Closing Date and (b)each Domestic Subsidiary that becomes a party to the Guarantee after theClosing Date pursuant to Section 9.11.

 

“US Total Revolving Credit Commitment” shall mean the sum of theUS Revolving Credit Commitments of all the Lenders.

 

“Voting Stock” shall mean, with respect to any Person, shares ofsuch Person’s capital stock having the right to vote for the election ofdirectors of such Person under ordinary circumstances.

 

(b)           The words “hereof,” “herein” and“hereunder” and words of similar import when used in this Agreement shall referto this Agreement as a whole and not to any particular provision of thisAgreement, and Section references are to Sections of this Agreement unlessotherwise specified.  The words“include,” “includes” and “including” shall be deemed to be followed by thephrase “without limitation”.

 

1.2.                              Exchange Rates. (a)     Not later than1:00 p.m. (New York time) on each Calculation Date, the AdministrativeAgent shall (i) determine the Exchange Rate as of such Calculation Datewith respect to Canadian Dollars to be used for calculating the DollarEquivalent and (ii) give notice thereof to the Lenders and the Borrower.  The Exchange Rates so determined shall becomeeffective on the first Business Day immediately following the relevantCalculation Date (a “Recalculation Date”), shall remain effective untilthe next succeeding Recalculation Date, and shall for all purposes of thisAgreement (other than any provision expressly requiring the use of a currentExchange Rate) be the Exchange Rates employed in converting any amounts betweenDollars and Canadian Dollars.

 

(b)                                 Not later than 5:00 p.m.(New York time) on each Recalculation Date and each date on which CanadianRevolving Loans are made, the Administrative Agent shall (i) determine theaggregate amount of the Dollar Equivalents of the principal

 

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amounts of the Canadian Revolving Loans then outstanding (after givingeffect to any Canadian Revolving Loans made or repaid on such date), and(ii) notify the Lenders and the Borrower of the results of suchdetermination.

 

(c)                                  For purposes of determiningcompliance under Sections 10.4, 10.5, 10.6, 10.9, 10.10 and 10.11 withrespect to any amount in a Foreign Currency, such amount shall be deemed toequal the Dollar Equivalent thereof based on the average Exchange Rate for aForeign Currency for the most recent twelve-month period immediately prior to thedate of determination determined in a manner consistent with that used incalculating Consolidated EBITDA for the related period.  For purposes of determining compliance withSections 10.1 and 10.2, with respect to any amount of Indebtedness in a ForeignCurrency, compliance will be determined at the time of incurrence thereof usingthe Dollar Equivalent thereof at the Exchange Rate in effect at the time ofsuch incurrence.

 

SECTION 2.                                Amountand Terms of Credit

 

2.1.                              Commitments. (a)     Subject to and upon theterms and conditions herein set forth, each of the Continuing Lenders listed onSchedule 2.1(a) agrees that the Existing Term Loans made by such ExistingLender under the Existing Credit Agreement shall remain outstanding on andafter the Effective Date as “Tranche C Term Loans” made pursuant to thisAgreement in the same pro rata amount of such Continuing Lenders pro rata shareof the Existing Term Loans and such Existing Term Loans shall on and after theEffective Date have all of the rights and benefits of Tranche C Term Loans asset forth in this Agreement and the other Credit Documents.

 

Subject to the terms and conditions herein set forth, each Lenderhaving a Tranche C Term Loan Commitment severally agrees to make a loan orloans (each a “Tranche C Term Loan”)to the Borrower in Dollars, which Tranche C Term Loans shall not exceed for anysuch Lender the Tranche C Term Loan Commitment of such Lender; and

 

Such Tranche C Term Loans (i) shall be made on the Effective Date,(ii) may at the option of the Borrower be incurred and maintained as,and/or converted into, ABR Loans or Eurodollar Term Loans, provided thatall such Tranche C Term Loans made by each of the Lenders pursuant to the sameBorrowing shall, unless otherwise specifically provided herein, consistentirely of Tranche C Term Loans of the same Type, (iii) may be repaid orprepaid in accordance with the provisions hereof, but once repaid or prepaid,may not be reborrowed, (iv) shall not exceed for any such Lender the Tranche CTerm Loan Commitment, of such Lender and (v) shall not exceed in theaggregate the total of all Tranche C Term Loan Commitments.  On the Tranche C Term Loan Maturity Date, allTranche C Term Loans shall be repaid in full.

 

(b)                                 (i) Subject to and upon the terms and conditions herein set forth, eachLender having a US Revolving Credit Commitment severally agrees to make a loanor loans denominated in Dollars (each a “US Revolving Credit Loan” and,collectively, the “US Revolving Credit Loans” and, together with the CanadianRevolving Credit

 

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Loans, the “Revolving Credit Loans”) to the Borrower which USRevolving Credit Loans (A) shall be made at any time and from time to timeon and after the Closing Date and prior to the Revolving Credit Maturity Date,(B) may, at the option of the Borrower be incurred and maintained as,and/or converted into, ABR Loans or Eurodollar Revolving Credit Loans, providedthat all US Revolving Credit Loans made by each of the Lenders pursuant to thesame Borrowing shall, unless otherwise specifically provided herein, consistentirely of US Revolving Credit Loans of the same Type, (C) may be repaidand reborrowed in accordance with the provisions hereof, (D) shall not, for anysuch Lender at any time, after giving effect thereto and to the application ofthe proceeds thereof, result in such Lender’s US Revolving Credit Exposure atsuch time exceeding such Lender’s US Revolving Credit Commitment at such timeand (E) shall not, after giving effect thereto and to the application of theproceeds thereof, result at any time in the aggregate amount of the Lenders’ USRevolving Credit Exposures at such time exceeding the US Total Revolving CreditCommitment then in effect.

 

(ii)                                  Subject to and upon the terms andconditions herein set forth, each Canadian Lender having a Canadian RevolvingCredit Commitment severally agrees to make a loan or loans denominated inCanadian Dollars or Dollars to the Canadian Borrower or a loan or loansdenominated in Dollars to the Borrower (each a “Canadian Revolving CreditLoan” and, collectively, the “Canadian Revolving Credit Loans”)which Canadian Revolving Credit Loans (A) shall be made at any time andfrom time to time on and after the Closing Date and prior to the RevolvingCredit Maturity Date, (B) shall be incurred and maintained (x) as CanadianPrime Loans or BA Loans if denominated in C$ or (y) as Cdn ABR Loans orEurodollar Loans if denominated in US$ and made to the Canadian Borrower, or(z) as ABR Loans or Eurodollar Loans if denominated in US$ and made to theBorrower; provided that all Canadian Revolving Credit Loans made by eachof the Canadian Lenders pursuant to the same Borrowing shall, unless otherwisespecifically provided herein, consist entirely of Canadian Revolving CreditLoans of the same Type made to the same Borrower, (C) may be repaid andreborrowed in accordance with the provisions hereof, (D) shall not, forany such Canadian Lender at any time, after giving effect thereto and to theapplication of the proceeds thereof, result in such Canadian Lender’s CanadianRevolving Credit Exposure allocated to the Canadian Borrower at such timeexceeding such Canadian Lender’s Canadian Revolving Credit Commitment allocatedto the Canadian Borrower at such time, (E) shall not, for any such CanadianLender at any time, after giving effect thereto and to the application of theproceeds thereof, result in such Lender’s Canadian Revolving Credit Exposureallocated to the Borrower at such time exceeding such Canadian Lender’sCanadian Revolving Credit Commitment allocated to the Borrower at such time,(F) shall not, after giving effect thereto and to the application of theproceeds thereof, result at any time in the aggregate amount of the CanadianLenders’ Canadian Revolving Credit Exposures at such time exceeding theCanadian Total Revolving Credit Commitment then in effect, and (G) if made tothe Canadian Borrower shall be made by a Canadian Lender that is a CanadianResident or a permitted assignee of such Canadian Lender pursuant toSection 14.6(b)(ii).  The allocationof the Canadian Total Revolving Credit Commitment as between the Borrower (the“Borrower Allocation”) on the one hand and the Canadian Borrower (the “CanadianBorrower Allocation”) on the other hand shall be fixed by the Borrower atthe beginning of each calendar month by

 

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providing written notice to the Administrative Agent and the CanadianAdministrative Agent (which notice must be received by each such agent prior to10:00 a.m. (New York time), three (3) Business Days before the date onwhich such allocations shall be revised) specifying the revised allocation ofthe Canadian Total Revolving Credit Commitment as between the Borrower and theCanadian Borrower, respectively.  As ofthe Closing Date, $0 of the Canadian Revolving Credit Commitment is allocatedto the Borrower and $25,000,000 of the Canadian Revolving Credit Commitment isallocated to the Canadian Borrower.  Theportion of each Canadian Lender’s Canadian Revolving Credit Commitmentallocated to the Borrower and the Canadian Borrower, respectively, shall be itsCanadian Revolving Credit Percentage of the Borrower Allocation and theCanadian Borrower Allocation, respectively. Each Canadian Lender, if it is not a “United States person” (as suchterm is defined in Section 7701(a)(30) of the Code), shall designate bynotice in writing to the Administrative Agent and the Canadian AdministrativeAgent on the Closing Date, and otherwise from time to time, a Related Affiliateof such Lender which is either a “United States person” (as such term isdefined in Section 7701(a)(30) of the Code) or is a Non-US Lender that hasfulfilled the requirements in Section 5.4(b), for the purposes of makingCanadian Revolving Credit Loans available to the Borrower.

 

(iii)                               Each Lender may at its option makeany Eurodollar Loan by causing any domestic or foreign branch or Affiliate ofsuch Lender to make such Loan, provided that (A) any exercise ofsuch option shall not affect the obligation of the Borrower or the CanadianBorrower, as the case may be, to repay such Loan, (B) in exercising suchoption, such Lender shall use its reasonable efforts to minimize any increasedcosts to the Borrower or the Canadian Borrower, as the case may be, resultingtherefrom (which obligation of the Lender shall not require it to take, orrefrain from taking, actions that it determines would result in increased costsfor which it will not be compensated hereunder or that it determines would beotherwise disadvantageous to it and in the event of such request for costs forwhich compensation is provided under this Agreement, the provisions ofSection 3.5 shall apply) and (C) if a Eurodollar Loan is made to theCanadian Borrower, it shall be made by a Canadian Lender that is a Canadianresident or a permitted assignee of such Canadian Lender pursuant toSection 14.6(b)(ii).  On theRevolving Credit Maturity Date, all Revolving Credit Loans shall be repaid infull.

 

(c)                                  Subject to and upon the terms andconditions herein set forth, the Swingline Lender in its individual capacityagrees, at any time and from time to time on and after the Closing Date andprior to the Swingline Maturity Date, to make a loan or loans (each a “SwinglineLoan” and, collectively, the “Swingline Loans”) to the Borrower inDollars, which Swingline Loans (i) shall be ABR Loans, (ii) shallhave the benefit of the provisions of Section 2.1(d), (iii) shall notexceed at any time outstanding the Swingline Commitment, (iv) shall not,after giving effect thereto and to the application of the proceeds thereof,result at any time in the aggregate amount of the Lenders’ US Revolving CreditExposures at such time exceeding the US Total Revolving Credit Commitment thenin effect and (v) may be repaid and reborrowed in accordance with the provisionshereof.  On the Swingline Maturity Date,each outstanding Swingline Loan shall be repaid in full.  The Swingline Lender shall not make anySwingline Loan after receiving a written notice from the Borrower, the CanadianBorrower or any Lender

 

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stating that a Default or Event of Default exists and is continuinguntil such time as the Swingline Lender shall have received written notice of(i) rescission of all such notices from the party or parties originallydelivering such notice or (ii) the waiver of such Default or Event ofDefault in accordance with the provisions of Section 14.1.

 

(d)                                 On any Business Day, the SwinglineLender may, in its sole discretion, give notice to the Lenders that allthen-outstanding Swingline Loans shall be funded with a Borrowing of USRevolving Credit Loans, in which case US Revolving Credit Loans constitutingABR Loans (each such Borrowing, a “Mandatory Borrowing”) shall be madeon the immediately succeeding Business Day by all Lenders proratabased on each Lender’s US Revolving Credit Commitment Percentage, and theproceeds thereof shall be applied directly to the Swingline Lender to repay theSwingline Lender for such outstanding Swingline Loans.  Each Lender hereby irrevocably agrees to makesuch US Revolving Credit Loans upon one Business Day’s notice pursuant to eachMandatory Borrowing in the amount and in the manner specified in the precedingsentence and on the date specified to it in writing by the Swingline Lender notwithstanding(i) that the amount of the Mandatory Borrowing may not comply with the minimumamount for each Borrowing specified in Section 2.2, (ii) whether anyconditions specified in Section 7 are then satisfied, (iii) whether aDefault or an Event of Default has occurred and is continuing, (iv) the date ofsuch Mandatory Borrowing or (v) any reduction in the Total Commitment after anysuch Swingline Loans were made.  In theevent that, in the sole judgment of the Swingline Lender, any MandatoryBorrowing cannot for any reason be made on the date otherwise required above(including as a result of the commencement of a proceeding under the BankruptcyCode in respect of the Borrower), each Lender hereby agrees that it shallforthwith purchase from the Swingline Lender (without recourse or warranty)such participation of the outstanding Swingline Loans as shall be necessary tocause the Lenders to share in such Swingline Loans ratably based upon theirrespective US Revolving Credit Commitment Percentages, provided that allprincipal and interest payable on such Swingline Loans shall be for the accountof the Swingline Lender until the date the respective participation ispurchased and, to the extent attributable to the purchased participation, shallbe payable to the Lender purchasing same from and after such date of purchase.

 

2.2.                              Minimum Amount of Each Borrowing;Maximum Number of Borrowings. The aggregate principal amount of each Borrowing of Tranche C Term Loansor Revolving Credit Loans shall be in a multiple of $1,000,000 or C$100,000 (inthe case of a Borrowing denominated in C$) and Swingline Loans shall be in amultiple of $100,000 and, in each case, shall not be less than the MinimumBorrowing Amount with respect thereto (except that Mandatory Borrowings shallbe made in the amounts required by Section 2.1(d)).  More than one Borrowing may be incurred onany date, provided that at no time shall there be outstanding more than20 Borrowings of Eurodollar Loans and BA loans under this Agreement.

 

2.3.                              Notice of Borrowing.  (a)  The Borrower shall give the Administrative Agent at the AdministrativeAgent’s Office (i) prior to 12:00 Noon (New York time) at least threeBusiness Days’ prior written notice (or telephonic notice promptly confirmed inwriting) of the Borrowing of Tranche C Term Loans if all or any

 

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of such Tranche C Term Loans are to be initially Eurodollar Loans, and(ii) prior written notice (or telephonic notice promptly confirmed inwriting) prior to 10:00 a.m. (New York time) on the date of the Borrowingof Tranche C Term Loans if all such Tranche C Term Loans are to be ABRLoans.  Such notice (together with eachnotice of a Borrowing of Revolving Credit Loans pursuant to Section 2.3(b)and each notice of a Borrowing of Swingline Loans pursuant toSection 2.3(d), a “Notice of Borrowing”) shall be irrevocable andshall specify (i) the aggregate principal amount of the Tranche C TermLoans to be made, (ii) the date of the borrowing (which shall be theEffective Date) and (iii) whether the Tranche C Term Loans shall consistof ABR Loans and/or Eurodollar Term Loans and, if the Tranche C Term Loans areto include Eurodollar Term Loans, the Interest Period to be initiallyapplicable thereto.  The AdministrativeAgent shall promptly give each Lender written notice (or telephonic noticepromptly confirmed in writing) of the proposed Borrowing of Tranche C TermLoans, of such Lender’s proportionate share thereof and of the other matterscovered by the related Notice of Borrowing.

 

(b)           Whenever the Borrower desires toincur US Revolving Credit Loans or Canadian Revolving Credit Loans in Dollars(subject to its allocated portion of the Canadian Revolving Credit Commitment)hereunder (other than Mandatory Borrowings or borrowings to repay UnpaidDrawings), it shall give the Administrative Agent at the Administrative Agent’sOffice, (i) prior to 12:00 Noon (NY Time) at least three Business Days’ priorwritten notice (or telephonic notice promptly confirmed in writing) of eachBorrowing of Eurodollar Revolving Credit Loans, and (ii) prior to12:00 Noon (New York time) at least one Business Day’s prior writtennotice (or telephonic notice promptly confirmed in writing) of each Borrowingof ABR Loans.  Each such Notice ofBorrowing, except as otherwise expressly provided in Section 2.10, shallbe irrevocable and shall specify (i) whether the Revolving Credit Loansare Canadian Revolving Credit Loans or US Revolving Credit Loans, asapplicable, (ii) the aggregate principal amount of the Revolving Credit Loansto be made pursuant to such Borrowing, (iii) the date of Borrowing (which shallbe a Business Day) and (iv) whether the respective Borrowing shall consist ofABR Loans or Eurodollar Revolving Credit Loans and, if Eurodollar RevolvingCredit Loans, the Interest Period to be initially applicable thereto.  The Administrative Agent shall promptly giveeach Lender written notice (or telephonic notice promptly confirmed in writing)of each proposed Borrowing of Revolving Credit Loans, of such Lender’sproportionate share thereof and of the other matters covered by the relatedNotice of Borrowing.

 

(c)                                  Whenever the Canadian Borrowerdesires to incur Canadian Revolving Credit Loans in Dollars or Canadian Dollars(subject to its allocated portion of the Canadian Revolving Credit Commitment)hereunder (other than Mandatory Borrowings or borrowings to repay UnpaidDrawings), it shall give the Canadian Administrative Agent at the CanadianAdministrative Agent’s Office, (i) prior to 12:00 Noon (New York time) at leastthree Business Days’ prior written notice (or telephonic notice promptlyconfirmed in writing) of each Canadian Borrowing of BA Loans or EurodollarLoans, and (ii) prior to 12:00 Noon (New York time) at least one BusinessDay’s prior written notice (or telephonic notice promptly confirmed in writing)of each Canadian Borrowing of Cdn ABR or Canadian Prime Loans.  Each such Notice of

 

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Borrowing, except as otherwise expressly provided in Section 2.10,shall be irrevocable and shall specify (i) the aggregate principal amountof the Revolving Credit Loans to be made pursuant to such Borrowing, (ii) thedate of Borrowing (which shall be a Business Day) and (iii) whether therespective Borrowing shall consist of BA Loans, Eurodollar Loans, CanadianPrime Loans or Cdn ABR Loans and, if BA Loans or Eurodollar Loans, the InterestPeriod to be initially applicable thereto. The Canadian Administrative Agent shall promptly give each Lenderwritten notice (or telephonic notice promptly confirmed in writing) of eachproposed Borrowing of Revolving Credit Loans, of such Lender’s proportionateshare thereof and of the other matters covered by the related Notice ofBorrowing.

 

(d)                                 Whenever the Borrower desires toincur Swingline Loans hereunder, it shall give the Administrative Agent writtennotice (or telephonic notice promptly confirmed in writing) of each Borrowingof Swingline Loans prior to 2:30 p.m. (New York time) on the date of suchBorrowing.  Each such notice shall beirrevocable and shall specify (i) the aggregate principal amount of theSwingline Loans to be made pursuant to such Borrowing and (ii) the date ofBorrowing (which shall be a Business Day). The Administrative Agent shall promptly give the Swingline Lenderwritten notice (or telephonic notice promptly confirmed in writing) of eachproposed Borrowing of Swingline Loans and of the other matters covered by therelated Notice of Borrowing.

 

(e)                                  Mandatory Borrowings shall be madeupon the notice specified in Section 2.1(d), with the Borrower irrevocablyagreeing, by its incurrence of any Swingline Loan, to the making of MandatoryBorrowings as set forth in such Section.

 

(f)                                    Borrowings to reimburse UnpaidDrawings shall be made upon the notice specified in Section 3.4(a).

 

(g)                                 Without in any way limiting theobligation of the Borrower or the Canadian Borrower, as the case may be, toconfirm in writing any notice it may give hereunder by telephone, theAdministrative Agent and the Canadian Administrative Agent may act prior toreceipt of written confirmation without liability upon the basis of suchtelephonic notice believed by the Administrative Agent and the CanadianAdministrative Agent in good faith to be from an Authorized Officer of theBorrower or the Canadian Borrower, as the case may be.  In each such case, the Borrower and theCanadian Borrower each hereby waives the right to dispute the AdministrativeAgent’s and the Canadian Administrative Agent’s record of the terms of any suchtelephonic notice.

 

2.4.                              Disbursement of Funds.  (a)    No later than 12:00 Noon (New York time) on the date specified in eachNotice of Borrowing (including Mandatory Borrowings), each Lender will makeavailable its pro rata portion, if any, of each Borrowing requested to be madeon such date in the manner provided below, provided that all Swingline Loansshall be made available in the full amount thereof by the Swingline Lender nolater than 3:00 p.m. (New York time) on the date requested.

 

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(b)                                 Each Lender shall make available allamounts it is to fund to the Borrower under any Borrowing in the applicablecurrency for its applicable Commitments, and in immediately available funds tothe Administrative Agent at the Administrative Agent’s Office and theAdministrative Agent will (except in the case of Mandatory Borrowings andBorrowings to repay Unpaid Drawings) make available to the Borrower, bydepositing to the Borrower’s account at the Administrative Agent’s Office theaggregate of the amounts so made available in Dollars.  Each Canadian Lender shall make available allamounts it is to fund to the Canadian Borrower under any Canadian Borrowing inthe applicable currency for its applicable Commitments, and in immediatelyavailable funds to the Canadian Administrative Agent at the CanadianAdministrative Agent’s Office and the Canadian Administrative Agent will(except in the case of Mandatory Borrowings and Borrowings to repay UnpaidDrawings) make available to the Canadian Borrower, by depositing to theCanadian Borrower’s account (as designated by it in a written notice to theCanadian Administrative Agent from time to time) the aggregate of the amountsso made available in Canadian Dollars or Dollars as applicable.  Unless the Administrative Agent and theCanadian Administrative Agent (in the case of Canadian Borrowings) shall havebeen notified by any Lender prior to the date of any such Borrowing that suchLender does not intend to make available to the Administrative Agent or theCanadian Administrative Agent (in the case of Canadian Borrowings) its portionof the Borrowing or Borrowings to be made on such date, the AdministrativeAgent or the Canadian Administrative Agent (in the case of Canadian Borrowings)may assume that such Lender has made such amount available to theAdministrative Agent or the Canadian Administrative Agent (in the case ofCanadian Borrowings) on such date of Borrowing, and the Administrative Agentand the Canadian Administrative Agent (in the case of Canadian Borrowings), inreliance upon such assumption, may (in its sole discretion and without anyobligation to do so) make available to the Borrower or the Canadian Borrower,as the case may be, a corresponding amount. If such corresponding amount is not in fact made available to theAdministrative Agent or the Canadian Administrative Agent (in the case ofCanadian Borrowings) by such Lender and the Administrative Agent or theCanadian Administrative Agent (in the case of Canadian Borrowings) has madeavailable same to the Borrower or the Canadian Borrower, as the case may be,the Administrative Agent or the Canadian Administrative Agent (in the case ofCanadian Borrowings) shall be entitled to recover such corresponding amountfrom such Lender.  If such Lender doesnot pay such corresponding amount forthwith upon the Administrative Agent’s orthe Canadian Administrative Agent (in the case of Canadian Borrowings) demandtherefor the Administrative Agent or the Canadian Administrative Agent (in thecase of Canadian Borrowings) shall promptly notify the Borrower or the CanadianBorrower, as the case may be, and the Borrower or the Canadian Borrower, as thecase may be, shall immediately pay such corresponding amount to theAdministrative Agent or the Canadian Administrative Agent (in the case ofCanadian Borrowings).  The AdministrativeAgent or the Canadian Administrative Agent (in the case of Canadian Borrowings)shall also be entitled to recover from such Lender or the Borrower or theCanadian Borrower, as the case may be, interest on such corresponding amount inrespect of each day from the date such corresponding amount was made availableby the Administrative Agent or the Canadian Administrative Agent (in the caseof Canadian

 

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Borrowings) to the Borrower or the Canadian Borrower, as the case maybe, to the date such corresponding amount is recovered by the AdministrativeAgent or the Canadian Administrative Agent (in the case of CanadianBorrowings), at a rate per annum equal to (i) if paid by such Lender, theFederal Funds Effective Rate (or, in the case of an amount owing in respect ofa Canadian Borrowing, the rate reasonably determined by the Canadian AdministrativeAgent to be the cost to it of funding such amount) or (ii) if paid by theBorrower or the Canadian Borrower, as the case may be, the then-applicable rateof interest or fees, calculated in accordance with Section 2.8, for therespective Loans.

 

(c)                                  Nothing in this Section 2.4shall be deemed to relieve any Lender from its obligation to fulfill itscommitments hereunder or to prejudice any rights that the Borrower or theCanadian Borrower, as the case may be, may have against any Lender as a resultof any default by such Lender hereunder (it being understood, however, that noLender shall be responsible for the failure of any other Lender to fulfill itscommitments hereunder).

 

2.5.                              Repayment of Loans; Evidence of Debt.  (a)    The Borrower shall repay to the Administrative Agent, for the benefit ofthe Lenders, (i) on the Tranche C Term Loan Maturity Date, the then-unpaidTranche C Term Loans, in Dollars.  TheBorrower shall repay to the Administrative Agent in Dollars, for the benefit ofthe applicable Lenders, on the Revolving Credit Maturity Date, the then-unpaidUS Revolving Credit Loans and Canadian Revolving Credit Loans made to theBorrower.  The Canadian Borrower shallrepay to the Canadian Administrative Agent in Dollars or C$, as the case maybe, for the benefit of the applicable Lenders, on the Revolving Credit MaturityDate, the then-unpaid Canadian Revolving Credit Loans made to the CanadianBorrower.  The Borrower shall repay tothe Administrative Agent in Dollars, for the account of the Swingline Lender,on the Swingline Maturity Date, the then-unpaid Swingline Loans.

 

(b)                                 The Borrower shall repay to theAdministrative Agent, in Dollars, for the benefit of the Lenders of Tranche CTerm Loans, on each date set forth below (each a “Repayment Date”), theprincipal amount of the Tranche C Term Loans equal to (x) the outstandingprincipal amount of Tranche C Term Loans immediately after closing on theEffective Date multiplied by (y) the percentage set forth below opposite suchRepayment Date (each a “Repayment Amount”):

 

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| **Number  of Months  From Effective Date** | ** ** | **Tranche C Term Loan  Repayment Amount** | ** ** |
|--------------------------------------------|------------|-------------------------------------------|------------|
|                                       |       |                                      |       |
| 6                                          |       |                                      | 0.0        | % |
| 9                                          |       |                                      | 0.0        | % |
| 12                                         |       |                                      | 0.0        | % |
| 15                                         |       |                                      | 0.0        | % |
| 18                                         |       |                                      | 0.0        | % |
| 21                                         |       |                                      | 0.0        | % |
| 24                                         |       |                                      | 0.0        | % |
| 27                                         |       |                                      | 0.0        | % |
| 30                                         |       |                                      | 0.0        | % |
| 33                                         |       |                                      | 0.07       | % |
| 36                                         |       |                                      | 0.26       | % |
| 39                                         |       |                                      | 0.26       | % |
| 42                                         |       |                                      | 0.26       | % |
| 45                                         |       |                                      | 0.26       | % |
| 48                                         |       |                                      | 0.26       | % |
| 51                                         |       |                                      | 0.26       | % |
| 54                                         |       |                                      | 0.26       | % |
| 57                                         |       |                                      | 0.26       | % |
| 60                                         |       |                                      | 0.26       | % |
| 63                                         |       |                                      | 0.26       | % |
| 66                                         |       |                                      | 0.26       | % |
| 69                                         |       |                                      | 0.26       | % |
| 72                                         |       |                                      | 0.26       | % |
| 75                                         |       |                                      | 0.26       | % |
| 78                                         |       |                                      | 0.26       | % |
| 81                                         |       |                                      | 0.26       | % |
| 84                                         |       |                                      | 0.26       | % |
| 87                                         |       |                                      | 0.26       | % |
| 90                                         |       |                                      | 0.26       | % |
| 93                                         |       |                                      | 0.26       | % |
| Tranche C Term Loan Maturity Date          |       | 94.79                                     | %          |

 

; provided, in the event any New Term Loans are made, such NewTerm Loans shall be repaid on each Installment Date occurring on or after theapplicable Increased Amount Date in an amount equal to (i) the aggregateprincipal amount of New Term Loans of the applicable Series of New Term Loans,times (ii) the ratio (expressed as a percentage) of (y) the amount of all otherTranche C Term Loans being repaid on such Installment Date and (z) the totalaggregate principal amount of all other Tranche C Term Loans outstanding onsuch Increased Amount Date.

 

(c)                                  Each Lender shall maintain inaccordance with its usual practice an account or accounts evidencing theindebtedness of the Borrower and the Canadian Borrower, as the case may be, tothe appropriate lending office of such Lender resulting

 

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from each Loan made by such lending office of such Lender from time totime, including the amounts of principal and interest payable and paid to suchlending office of such Lender from time to time under this Agreement.

 

(d)                                 The Administrative Agent shallmaintain the Register pursuant to Section 14.6(b), and a subaccount foreach Lender, in which Register and subaccounts (taken together) shall berecorded (i) the amount and currency of each Loan made hereunder, whether suchLoan is a Tranche C Term Loan, a US Revolving Credit Loan, a Canadian RevolvingCredit Loan or a Swingline Loan, the Type of each Loan made and the InterestPeriod applicable thereto, (ii) the amount of any principal or interestdue and payable or to become due and payable from the Borrower and the CanadianBorrower, as the case may be, to each Lender or the Swingline Lender hereunderand (iii) the amount of any sum received by the Administrative Agent and theCanadian Administrative Agent hereunder from the Borrower and the CanadianBorrower, as the case may be, and each Lender’s share thereof.

 

(e)           The entries made in the Register andaccounts and subaccounts maintained pursuant to paragraphs (c) and (d) of thisSection 2.5 shall, to the extent permitted by applicable law, be primafacie evidence of the existence and amounts of the obligations of the Borrowerand the Canadian Borrower therein recorded; provided, however,that the failure of any Lender or the Administrative Agent to maintain suchaccount, such Register or such subaccount, as applicable, or any error therein,shall not in any manner affect the obligation of the Borrower or the CanadianBorrower to repay (with applicable interest) the Loans made to the Borrower orthe Canadian Borrower by such Lender in accordance with the terms of thisAgreement.

 

2.6.                              Conversions and Continuations.  (a)    Each of the Borrower and the Canadian Borrower shall have the option onany Business Day to convert all or a portion equal to at least the MinimumBorrowing Amount of the outstanding principal amount of Tranche C Term Loans orRevolving Credit Loans made to such Borrower (as applicable) of one Type into aBorrowing or Borrowings of another Type in the same currency and the Borroweror the Canadian Borrower, as the case may be, shall have the option on anyBusiness Day to continue the outstanding principal amount of any EurodollarTerm Loans or Eurodollar Revolving Credit Loans as Eurodollar Term Loans orEurodollar Revolving Credit Loans, as the case may be, for an additionalInterest Period, provided that (i) no partial conversion of BA Loans or**Eurodollar Term Loans or EurodollarRevolving Credit Loans shall reduce the outstanding principal amount of BALoans or Eurodollar Term Loans or Eurodollar Revolving Credit Loans madepursuant to a single Borrowing to less than the Minimum Borrowing Amount, (ii)Cdn ABR Loans and ABR Loans may not be converted into Eurodollar Term Loans orEurodollar Revolving Credit Loans and Canadian Prime Loans may not be convertedinto BA Loans if a Default or Event of Default is in existence on the date ofthe conversion and the Administrative Agent has or the Required Lenders havedetermined in its or their sole discretion not to permit such conversion,(iii) BA Loans and Eurodollar Loans may not be continued as BA Loans orEurodollar Loans , respectively, for an additional Interest Period if a Defaultor Event of Default is in existence on the date of the proposed continuationand the Administrative Agent has or the Required Lenders have determined

 

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in its or their sole discretion not to permit such continuation, (iv)no conversion or continuation of BA Loans may be made on a day other than thelast day of the Interest Period applicable thereto and (v) Borrowingsresulting from conversions pursuant to this Section 2.6 shall be limitedin number as provided in Section 2.2. Each such conversion or continuation shall be effected by the Borroweror the Canadian Borrower, as the case may be, by giving the AdministrativeAgent or the Canadian Administrative Agent at the applicable AdministrativeAgent’s Office prior to 12:00 Noon (New York time) at least three BusinessDays’ (or one Business Day’s notice in the case of a conversion into Cdn ABRLoans and ABR Loans or Canadian Prime Loans) prior written notice (ortelephonic notice promptly confirmed in writing) (each a “Notice ofConversion or Continuation”) specifying the Tranche C Term Loans orRevolving Credit Loans to be so converted or continued, the Type of Tranche CTerm Loans or Revolving Credit Loans to be converted or continued into and, ifsuch Tranche C Term Loans or Revolving Credit Loans are to be converted into orcontinued as BA Loans or Eurodollar Loans, the Interest Period to be initiallyapplicable thereto.  The AdministrativeAgent (or the Canadian Administrative Agent, in the case of CanadianBorrowings) shall give each Lender notice as promptly as practicable of anysuch proposed conversion or continuation affecting any of its Tranche C TermLoans or Revolving Credit Loans.

 

(b)                                 If any Default or Event of Defaultis in existence at the time of any proposed continuation of any BA Loans orEurodollar Loans, as the case may be, and the Administrative Agent has or theRequired Lenders have determined in its or their sole discretion not to permitsuch continuation, such BA Loans or Eurodollar Loans shall be automaticallyconverted on the last day of the current Interest Period (i) in respect ofEurodollar Loans, into ABR Loans or Cdn ABR Loans (in the case of the CanadianBorrower) and (ii) in respect of BA Loans, into Canadian Prime Loans.  If upon the expiration of any Interest Periodin respect of BA Loans or Eurodollar Loans, the Borrower or the CanadianBorrower, as the case may be, has failed to elect a new Interest Period to beapplicable thereto as provided in paragraph (a) above, the Borrower or theCanadian Borrower, as the case may be, shall be deemed to have elected tocontinue such Borrowing of BA Loans or Eurodollar Loans, as the case may be,into a Borrowing of Canadian Prime Loans or ABR Loans or Cdn ABR Loans (in thecase of the Canadian Borrower), as the case may be, effective as of theexpiration date of such current Interest Period.

 

2.7.                              Pro Rata Borrowings.  Each Borrowing of Tranche C Term Loans underthis Agreement shall be granted by the Lenders pro rata on the basis of theirthen-applicable Tranche C Term Loan Commitments.  Each Borrowing of US Revolving Credit Loansunder this Agreement shall be granted by the Lenders pro rata on the basis oftheir then-applicable US Revolving Credit Commitments. Each Borrowing ofCanadian Revolving Credit Loans under this Agreement shall be granted by theCanadian Lenders (or their Related Affiliates if applicable) pro rata on thebasis of their then-applicable Canadian Revolving Credit Commitments allocatedto the Canadian Borrower or the Borrower, as applicable.  Each Borrowing of New Term Loans under thisAgreement shall be granted by the Lenders pro rata on the basis of theirthen-applicable New Term Loan Commitments. It is understood that no Lender shall be responsible for any default byany other Lender in its obligation to make Loans hereunder and that each

 

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Lender shall be obligated to make the Loans provided to be made by ithereunder, regardless of the failure of any other Lender to fulfill itscommitments hereunder.

 

2.8.          Interest. (a)     (i) The unpaid principalamount of each ABR Loan shall bear interest from the date of the Borrowingthereof until maturity (whether by acceleration or otherwise) at a rate perannum that shall at all times be the Applicable ABR Margin plus the ABR ineffect from time to time, (ii) the unpaid principal amount of each Cdn ABR Loanshall bear interest from the date of the Borrowing thereof until maturity(whether by acceleration or otherwise) at a rate per annum that shall at alltimes be the Applicable ABR Margin plus the Cdn ABR in effect from time totime, and (iii) the unpaid principal amount of each Canadian Prime Loan shallbear interest from the date of the Borrowing thereof until maturity (whether byacceleration or otherwise) at a rate per annum that shall at all times be theApplicable ABR Margin plus the Canadian Prime Rate in effect from time to time.

 

(b)                                 (i) The unpaid principal amount ofeach Eurodollar Loan shall bear interest from the date of the Borrowing thereofuntil maturity thereof (whether by acceleration or otherwise) at a rate perannum that shall at all times be the Applicable Eurodollar Margin in effectfrom time to time plus the relevant Eurodollar Rate and (ii) the CanadianBorrower shall pay to each Lender that accepts or advances a BA Loan, as acondition of and at the time of such acceptance or advance, a fee at the rateof the then Applicable Stamping Fee calculated on the basis of a year of365 days on the face amount at maturity (or the principal amount in thecase of a BA Equivalent Loan) of such Bankers’ Acceptance for the period fromand including the date of acceptance (or advance in the case of a BA EquivalentLoan) of such Bankers’ Acceptance for the period from and including the date ofacceptance to but excluding the maturity date of such Bankers’ Acceptance.

 

(c)                                  If all or a portion of (i) theprincipal amount of any Loan or (ii) any interest payable thereon shallnot be paid when due (whether at the stated maturity, by acceleration orotherwise), such overdue amount shall bear interest at a rate per annum that is(x) in the case of overdue principal, the rate that would otherwise beapplicable thereto plus 2% or (y) in the case of any overdueinterest, to the extent permitted by applicable law, the rate described inSection 2.8(a) plus 2% from and including the date of suchnon-payment to but excluding the date on which such amount is paid in full(after as well as before judgment).

 

(d)           Interest on each Loan shall accruefrom and including the date of any Borrowing to but excluding the date of anyrepayment thereof and shall be payable (i) in respect of each Canadian PrimeLoan, Cdn ABR Loan and ABR Loan, quarterly in arrears on the last day of eachMarch, June, September and December, (ii) in respect of each EurodollarLoan, on the last day of each Interest Period applicable thereto and, in thecase of an Interest Period in excess of three months, on each date occurring atthree-month intervals after the first day of such Interest Period,(iii) in respect of each Loan (except, other than in the case ofprepayments, any Canadian Prime Loan, Cdn ABR Loan or ABR Loan), on anyprepayment (on the amount prepaid), at maturity (whether by acceleration orotherwise) and, after such maturity, on demand.

 

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(e)                                  All computations of interesthereunder shall be made in accordance with Section 5.5.

 

(f)                                    The Administrative Agent, upondetermining the interest rate for any Borrowing of Eurodollar Loans, shallpromptly notify the Borrower (on its own behalf and on behalf of the CanadianBorrower) and the relevant Lenders thereof. Each such determination shall, absent clearly demonstrable error, befinal and conclusive and binding on all parties hereto.

 

2.9.                              Interest Periods.

 

(a)                                  At the time the Borrower or theCanadian Borrower, as applicable, gives a Notice of Borrowing or Notice ofConversion or Continuation in respect of the making of, or conversion into orcontinuation as, a Borrowing of Eurodollar Loans (in the case of the initialInterest Period applicable thereto) or prior to 10:00 a.m. (New York time) onthe third Business Day prior to the expiration of an Interest Period applicableto a Borrowing of Eurodollar Loans, the Borrower or the Canadian Borrower, asapplicable, shall have the right to elect by giving the Administrative Agent orthe Canadian Administrative Agent (in the case of the Canadian Borrower)written notice (or telephonic notice promptly confirmed in writing) theInterest Period applicable to such Borrowing, which Interest Period shall, atthe option of the Borrower or the Canadian Borrower, as applicable, be a one,two, three, six or (in the case of Revolving Credit Loans, if available to allthe Lenders making such loans as determined by such Lenders in good faith basedon prevailing market conditions) a nine or twelve month period, provided thatthe initial Interest Period may be for a period less than one month if agreedupon by the Borrower (on its own behalf and on behalf of the Canadian Borrower)and the Agents.  Notwithstanding anythingto the contrary contained above:

 

(i)                                     the initial Interest Period for anyBorrowing of Eurodollar Loans shall commence on the date of such Borrowing(including the date of any conversion from a Borrowing of ABR Loans or Cdn ABRLoans, as applicable) and each Interest Period occurring thereafter in respectof such Borrowing shall commence on the day on which the next precedingInterest Period expires;

 

(ii)                                  if any Interest Period relating to aBorrowing of Eurodollar Credit Loans begins on the last Business Day of acalendar month or begins on a day for which there is no numericallycorresponding day in the calendar month at the end of such Interest Period,such Interest Period shall end on the last Business Day of the calendar monthat the end of such Interest Period;

 

(iii)                               if any Interest Period wouldotherwise expire on a day that is not a Business Day, such Interest Periodshall expire on the next succeeding Business Day, provided that if anyInterest Period in respect of a Eurodollar Loan would otherwise expire on a daythat is not a Business Day but is a day of the month after which no furtherBusiness Day occurs in such month, such Interest Period shall expire on thenext preceding Business Day; and

 

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(iv)                              the Borrower shall not be entitledto elect any Interest Period in respect of any Eurodollar Loan if such InterestPeriod would extend beyond the applicable Maturity Date of such Loan.

 

(b)                                 At the time the Canadian Borrowergives a Notice of Borrowing or Notice of Continuation in respect of the makingof, or continuation into or continuation as, a Borrowing of BA Loans prior to12:00 noon. (New York time) on the third Business Day prior to the applicabledate of making or continuation of such BA Loans, the Canadian Borrower shallhave the right to elect by giving the Canadian Administrative Agent writtennotice (or telephonic notice promptly confirmed in writing) of the InterestPeriod applicable to such Borrowing, which Interest Period shall, at the optionof the Canadian Borrower, be one, two, three or six months (or in the case ofCanadian Revolving Credit Loans, if available to all the Lenders making suchloans as determined by such Lenders in good faith based on prevailing marketconditions), a nine or twelve month period as well; provided that, in eachcase, the initial Interest Period for BA Loans advanced on the Closing Date maybe for a period less than one month if agreed upon by the Canadian Borrower andthe Canadian Administrative Agent. Notwithstanding anything to the contrary contained above:

 

(i)                the initialInterest Period for any Borrowing of BA Loans shall commence on the date ofsuch Borrowing (including the date of any continuation from a Borrowing ofCanadian Prime Loans) and each Interest Period occurring thereafter in respectof such Borrowing shall commence on the day on which the next precedingInterest Period expires;

 

(ii)                                      the Canadian Borrower shall not be entitledto elect any Interest Period in respect of any BA Loan if such Interest Periodwould extend beyond the applicable Maturity Date of such Loan;

 

(iii)                                   no BA Loan shall mature on a day which isnot a Business Day and if any Interest Period would otherwise expire on a daythat is not a Business Day, such Interest Period shall expire on the nextsucceeding Business Day; and

 

(iv)                                  if the Canadian Borrower fails to provide aNotice of Continuation within the time period required in Section 2.6(a)in respect of BA Loans, such BA Loans shall automatically be converted intoCanadian Prime Loans on the last day of the Interest period applicable thereto.

 

2.10.                        Increased Costs, Illegality, etc.  (a)    In the event that (x) in the case of clause (i) below, theAdministrative Agent or (y) in the case of clauses (ii) and (iii)below, any Lender shall have reasonably determined (which determination shall,absent clearly demonstrable error, be final and conclusive and binding upon allparties hereto):

 

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(i)                                     on any date for determining theEurodollar Rate for any Interest Period that (x) deposits in the principalamounts of the Loans comprising such Eurodollar Borrowing are not generallyavailable in the relevant market or (y) by reason of any changes arising on orafter the Closing Date affecting the interbank Eurodollar market, adequate andfair means do not exist for ascertaining the applicable interest rate on thebasis provided for in the definition of Eurodollar Rate; or

 

(ii)                                  at any time, that such Lender shallincur increased costs or reductions in the amounts received or receivablehereunder with respect to any Eurodollar Loans (other than any such increase orreduction attributable to taxes) because of (x) any change since the datehereof in any applicable law, governmental rule, regulation, guideline or order(or in the interpretation or administration thereof and including theintroduction of any new law or governmental rule, regulation, guideline ororder), such as, for example, without limitation, a change in official reserverequirements, and/or (y) other circumstances affecting the interbank Eurodollarmarket or the position of such Lender in such market; or

 

(iii)                               at any time, that the making orcontinuance of any Eurodollar Loan has become unlawful by compliance by suchLender in good faith with any law, governmental rule, regulation, guideline ororder (or would conflict with any such governmental rule, regulation, guidelineor order not having the force of law even though the failure to complytherewith would not be unlawful), or has become impracticable as a result of acontingency occurring after the date hereof that materially and adverselyaffects the interbank Eurodollar market;

 

then, and in any such event, such Lender (or the Administrative Agent,in the case of clause (i) above) shall within a reasonable time thereaftergive notice (if by telephone, confirmed in writing) to the Borrower (on its ownbehalf and on behalf of the Canadian Borrower) and to the Administrative Agentof such determination (which notice the Administrative Agent shall promptlytransmit to each of the other Lenders). Thereafter (x) in the case of clause (i) above, EurodollarTerm Loans and Eurodollar Revolving Credit Loans shall no longer be availableuntil such time as the Administrative Agent notifies the Borrower (on its ownbehalf and on behalf of the Canadian Borrower) and the Lenders that thecircumstances giving rise to such notice by the Administrative Agent no longerexist (which notice the Administrative Agent agrees to give at such time whensuch circumstances no longer exist), and any Notice of Borrowing or Notice ofConversion given by the Borrower or the Canadian Borrower with respect toEurodollar Term Loans or Eurodollar Revolving Credit Loans that have not yetbeen incurred shall be deemed rescinded by the Borrower or the CanadianBorrower (y) in the case of clause (ii) above, the Borrower or theCanadian Borrower, as the case may be, shall pay to such Lender, promptly afterreceipt of written demand therefor such additional amounts (in the form of anincreased rate of, or a different method of calculating, interest or otherwiseas such Lender in its reasonable discretion shall determine) as shall berequired to compensate such Lender for such increased costs or reductions inamounts

 

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receivable hereunder (it being agreed that a written notice as to theadditional amounts owed to such Lender, showing in reasonable detail the basisfor the calculation thereof, submitted to the Borrower or the CanadianBorrower, as the case may be, by such Lender shall, absent clearly demonstrableerror, be final and conclusive and binding upon all parties hereto) and(z) in the case of clause (iii) above, the Borrower or the CanadianBorrower, as the case may be, shall take one of the actions specified inSection 2.10(b) as promptly as possible and, in any event, within the timeperiod required by law.

 

(b)           At any time that any Eurodollar Loanis affected by the circumstances described in Section 2.10(a)(ii) or(iii), the Borrower or the Canadian Borrower, as the case may be, may (and inthe case of a Eurodollar Loan affected pursuant to Section 2.10(a)(iii)shall) either (x) if the affected Eurodollar Loan is then being made pursuantto a Borrowing, cancel said Borrowing by giving the Administrative Agenttelephonic notice (confirmed promptly in writing) thereof on the same date thatthe Borrower or the Canadian Borrower, as the case may be, was notified by aLender pursuant to Section 2.10(a)(ii) or (iii) or (y) if theaffected Eurodollar Loan is then outstanding, upon at least three BusinessDays’ notice to the Administrative Agent, require the affected Lender toconvert each such Eurodollar Revolving Credit Loan and Eurodollar Term Loaninto an ABR Loan or Cdn ABR Loan, if applicable, provided that if morethan one Lender is affected at any time, then all affected Lenders must betreated in the same manner pursuant to this Section 2.10(b).

 

(c)           In the event that the CanadianAdministrative Agent shall have reasonably determined (which determinationshall, absent clearly demonstrable error, be final and conclusive and bindingupon all parties hereto) that there does not exist a normal market in Canadafor the purchase and sale of bankers’ acceptances, then, and in any such event,the Administrative Agent shall within a reasonable time thereafter give notice(if by telephone confirmed in writing) to the Borrower, the Canadian Borrowerand each of the other Lenders of such determination.  Thereafter BA Loans shall no longer beavailable until such time as the Administrative Agent notifies the Borrower,the Canadian Borrower and the Lenders that the circumstances giving rise tosuch notice by the Administrative Agent no longer exist (which notice theAdministrative Agent agrees to give at such time when such circumstances nolonger exist), and any Notice of Borrowing or Notice of Continuation given by theBorrower with respect to BA Loans that have not yet been incurred shall bedeemed rescinded by the Borrower.  Anymaturing BA Loans shall thereafter, and until contrary notice is provided bythe Administrative Agent, be continued as a Canadian Prime Loan.

 

(d)                                 If, after the date hereof, theadoption of any applicable law, rule or regulation regarding capital adequacy,or any change therein, or any change in the interpretation or administrationthereof by any governmental authority, the National Association of InsuranceCommissioners, central bank or comparable agency charged with theinterpretation or administration thereof, or compliance by a Lender or itsparent with any request or directive made or adopted after the date hereofregarding capital adequacy (whether or not having the force of law) of any suchauthority, association, central bank or comparable agency, has or would havethe effect of reducing the rate of return on such Lender’s or its parent’s orits Related Affiliate’s capital or assets as a

 

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consequence of such Lender’s commitments or obligations hereunder to alevel below that which such Lender or its parent or its Related Affiliate couldhave achieved but for such adoption, effectiveness, change or compliance(taking into consideration such Lender’s or its parent’s policies with respectto capital adequacy), then from time to time, promptly after demand by suchLender (with a copy to the Administrative Agent), the Borrower or the CanadianBorrower, as the case may be, shall pay to such Lender such additional amountor amounts as will compensate such Lender or its parent for such reduction, itbeing understood and agreed, however, that a Lender shall not be entitled tosuch compensation as a result of such Lender’s compliance with, or pursuant toany request or directive to comply with, any such law, rule or regulation as ineffect on the date hereof.  Each Lender,upon determining in good faith that any additional amounts will be payable pursuantto this Section 2.10(d), will give prompt written notice thereof to theBorrower (on its own behalf and on behalf of the Canadian Borrower) whichnotice shall set forth in reasonable detail the basis of the calculation ofsuch additional amounts, although the failure to give any such notice shallnot, subject to Section 2.13, release or diminish any of the Borrower’s orthe Canadian Borrower’s, as the case may be, obligations to pay additionalamounts pursuant to this Section 2.10(d) upon receipt of such notice.

 

(e)           Notwithstanding the foregoing, in thecase of Canadian Revolving Credit Loans affected by the circumstances describedin Section 2.10(a)(i), as promptly as practicable but in no event laterthan three Business Days after the giving of the required notice by theCanadian Administrative Agent with respect to such circumstances, theAdministrative Agent (in consultation with the Lenders) shall negotiate withthe Borrower in good faith in order to ascertain whether a substitute interestrate (a “Substitute Rate”) may be agreed upon for the maintaining ofexisting Canadian Revolving Credit Loans. If a Substitute Rate is agreed uponby the Borrower and all the Lenders, such Substitute Rate shall apply.  If a Substitute Rate is not so agreed upon bythe Borrower and all the Lenders within such time, each Lender’s CanadianRevolving Credit Loans shall thereafter bear interest at a rate equal to thesum of (i) the rate certified by such Lender to be its costs of funds(from such sources as it may reasonably select out of those sources thenavailable to it) for such Canadian Revolving Credit Loans, plus(ii) the Applicable Eurodollar Margin.

 

2.11.        Compensation. If (a) any payment of principal of any BA Loan or Eurodollar Loanis made by the Borrower or the Canadian Borrower, as the case may be, to or forthe account of a Lender other than on the last day of the Interest Period forsuch BA Loan or Eurodollar Loan as a result of a payment or conversion pursuantto Section 2.5, 2.6, 2.10, 5.1, 5.2 or 14.7, as a result of accelerationof the maturity of the Loans pursuant to Section 11 or for any otherreason, (b) any Borrowing of BA Loan or Eurodollar Loans is not made as aresult of a withdrawn Notice of Borrowing, (c) any ABR Loan is not convertedinto a Eurodollar Loan as a result of a withdrawn Notice of Conversion orContinuation, (d) any Canadian Prime Loan is not continued into a BA Loanas a result of a withdrawn Notice of Continuation, (e) any BA Loan orEurodollar Loan is not continued as a BA Loan or Eurodollar Loan, as the casemay be, as a result of a withdrawn Notice of Conversion or Continuation or(f) any prepayment of principal of any BA Loan or Eurodollar Loan is notmade as a result of a withdrawn notice of

 

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prepayment pursuant to Section 5.1 or 5.2, the Borrower or theCanadian Borrower, as the case may be, shall, after receipt of a writtenrequest by such Lender (which request shall set forth in reasonable detail thebasis for requesting such amount), pay to the Administrative Agent for theaccount of such Lender any amounts required to compensate such Lender for anyadditional losses, costs or expenses that such Lender may reasonably incur as aresult of such payment, failure to convert, failure to continue or failure toprepay, including any loss, cost or expense (excluding loss of anticipatedprofits) actually incurred by reason of the liquidation or reemployment ofdeposits or other funds acquired by any Lender to fund or maintain such BA Loanor Eurodollar Loan.

 

2.12.        Change of Lending Office.  Each Lender agrees that, upon the occurrenceof any event giving rise to the operation of Section 2.10(a)(ii),2.10(a)(iii), 2.10(b), 2.10(c), 3.5 or 5.4 with respect to such Lender, it will,if requested by the Borrower or the Canadian Borrower, as the case may be, usereasonable efforts (subject to overall policy considerations of such Lender) todesignate another lending office for any Loans affected by such event, providedthat such designation is made on such terms that such Lender and its lendingoffice suffer no economic, legal or regulatory disadvantage, with the object ofavoiding the consequence of the event giving rise to the operation of any suchSection.  Nothing in this Section 2.12shall affect or postpone any of the obligations of the Borrower or the CanadianBorrower, as the case may be, or the right of any Lender provided inSection 2.10, 3.5 or 5.4.

 

2.13.        Notice of Certain Costs.  Notwithstanding anything in this Agreement tothe contrary, to the extent any notice required by Section 2.10, 2.11, 3.5or 5.4 is given by any Lender more than 180 days after such Lender hasknowledge (or should have had knowledge) of the occurrence of the event givingrise to the additional cost, reduction in amounts, loss, tax or otheradditional amounts described in such Sections, such Lender shall not beentitled to compensation under Section 2.10, 2.11, 3.5 or 5.4, as the casemay be, for any such amounts incurred or accruing prior to the giving of suchnotice to the Borrower or the Canadian Borrower, as the case may be.

 

2.14.        Bankers’ Acceptances

 

(a)           The Canadian Administrative Agent,promptly following receipt of a Notice of Borrowing or Notice of Continuation,requesting BA Loans, shall advise each applicable Canadian Lender of the faceor principal amount and term of each BA Loan to be accepted (and purchased) oradvanced by it.  The aggregate face orprincipal amount of BA Loans to be accepted or advanced by a Canadian Lendershall be determined by the Canadian Administrative Agent by reference to thatCanadian Lender’s applicable pro rata portion of the issue or advance of BALoans, except that the aggregate face amount of Bankers’ Acceptances to beaccepted by the applicable Canadian Lenders shall be increased or reduced bythe Canadian Administrative Agent in its sole discretion as may be necessary toensure that the face amount of the Bankers’ Acceptance to be accepted by eachapplicable Canadian Lender would be C$100,000 or a whole multiple thereof.  For greater certainty, the foregoingC$100,000 minimum face amount of Bankers’ Acceptances for each Lender shall notapply to BA Equivalent Loans.

 

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(b)           On the date specified in a Notice ofBorrowing or Notice of Continuation on which a BA Loan is to be made, theCanadian Administrative Agent shall advise the Canadian Borrower as to theCanadian Administrative Agent’s determination of the BA Discount Rate for theBA Loans to be purchased or advanced, as the case may be.

 

(c)           The Canadian Borrower shall sell andeach Canadian Lender shall purchase the Bankers’ Acceptance accepted by it atthe applicable BA Discount Rate.  Subjectto clause (d) below, each Canadian Lender shall provide the CanadianAdministrative Agent, for the account of the Canadian Borrower, the BA DiscountProceeds less the Applicable Stamping Fee payable by the Canadian Borrower withrespect to the Bankers’ Acceptance.

 

(d)           In the event the Canadian Borrowerrequests a continuation of BA Loans for a further Interest Period, or requestsconversion from Canadian Prime Loans into BA Loans in accordance withSection 2.6, the Canadian Administrative Agent shall make arrangementssatisfactory to it to ensure the BA Discount Proceeds from the replacement BALoans are applied to repay the face amount of the maturing BA Loans or theprincipal amount of such loans to be converted (the “Maturing Amount”)and the Canadian Borrower should concurrently pay to the CanadianAdministrative Agent any positive difference between the Maturing Amount andsuch BA Discount Proceeds.

 

(e)           Each Canadian Lender may from time totime hold, sell, rediscount or otherwise dispose of any or all Bankers’Acceptances accepted and purchased by it.

 

(f)            In order to facilitate the issuanceof Bankers’ Acceptances pursuant to this Agreement, the Canadian Borrowerhereby authorizes each of the Canadian Lenders, and appoints each of theCanadian Lenders as the Canadian Borrower’s attorney, to complete, sign and endorsedrafts or depository bills (as defined in the *DepositoryBills and Notes Act* (Canada) (each such executed draft or bill beingherein referred to as a “Draft”)on its behalf in handwritten form or by facsimile or mechanical signature orotherwise in accordance with the applicable Notice of Borrowing or Notice ofContinuation and, once so completed, signed and endorsed to accept them asBankers’ Acceptances under this Agreement and then if applicable, purchase,discount or negotiate such Bankers’ Acceptances in accordance with theprovisions of this Agreement.  Drafts socompleted, signed, endorsed and negotiated on behalf of the Canadian Borrowerby a Canadian Lender shall bind the Canadian Borrower as fully and effectivelyas if so performed by an Authorized Officer of the Canadian Borrower.  Each draft of a Bankers’ Acceptancecompleted, signed or endorsed by a Canadian Lender shall mature on the last dayof the term thereof.  All Bankers’Acceptances to be accepted by a particular Canadian Lender shall, at the optionof such Canadian Lender, be issued in the form of depository bills made payableoriginally to and deposited with The Depository for Securities Limited pursuantto the *Depository Bills and Notes Act* (Canada).

 

(g)                                 Any Drafts to be used for Bankers’Acceptances which are held by a Canadian Lender shall be held in safekeepingwith the same degree of care as if they

 

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were such Canadian Lender’s own property being kept at the place atwhich they are to be held.  The CanadianBorrower may, by written notice to the Canadian Administrative Agent, designatepersons other than Authorized Officers authorized to give the CanadianAdministrative Agent instructions regarding the manner in which Drafts are tobe completed and the times at which they are to be issued; provided howeverthat receipt by the Canadian Administrative Agent of a Notice of Borrowing orNotice of Continuation requesting an advance or continuation into, Bankers’Acceptances shall be deemed to be sufficient authority from Authorized Officersor such designated persons for each of the Canadian Lenders to complete, andissue drafts in accordance with such notice. None of the Canadian Administrative Agent or the Canadian Lenders norany of their respective directors, officers, employees or representatives shallbe liable for any action taken or omitted to be taken by any of them under thisSection 2.14(g) except for their own respective gross negligence orwillful misconduct as determined by a final judgment of a court of competentjurisdiction.

 

(h)                                 The Canadian Borrower waivespresentment for payment and any other defense to the payment of any amounts dueto a Canadian Lender in respect of a Bankers’ Acceptance accepted and purchasedby it pursuant to this Agreement which might exist solely by reason of theBankers’ Acceptance being held, at the maturity thereof, by the Canadian Lenderin its own right and the Canadian Borrower agrees not to claim any days ofgrace if the Canadian Lender as holder sues the Canadian Borrower on theBankers’ Acceptance for payment of the amount payable by the Canadian Borrowerthereunder.  Each Bankers’ Acceptanceshall mature and the face amount thereof shall be due and payable on the lastday of the Interest Period applicable thereto.

 

(i)                                     Whenever the Canadian Borrowerrequests a Loan under this Agreement by way of Bankers’ Acceptances, eachNon-Acceptance Lender shall, in lieu of accepting a Bankers’ Acceptance, make aBA Equivalent Loan by way of Discount Note in an amount equal to theNon-Acceptance Lender’s *pro rata*portion of the BA Loan.  All terms ofthis Agreement applicable to Bankers’ Acceptances shall apply equally toDiscount Notes evidencing BA Equivalent Loans with such changes as may in thecontext be necessary.  For greatercertainty:

 

(i)                                         the term of a Discount Note shall be thesame as the Interest Period for Bankers’ Acceptances accepted on the same dateof the Borrowing in respect of the same BA Loan;

 

(ii)                                      an acceptance fee will be payable in respectof a Discount Note and shall be calculated at the same rate and in the samemanner as the Applicable Stamping Fee in respect of a Bankers’ Acceptance; and

 

(iii)                                   the proceeds from a BA Equivalent Loan shallbe equal to the BA Discount Proceeds of the Discount Note.

 

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2.15.        Incremental Facilities

 

Borrower may by written notice to Syndication Agent elect to request(A) prior to the Revolving Credit Commitment Maturity Date, an increase to theexisting US Revolving Credit Commitments (any such increase, the “NewRevolving Loan Commitments”) and/or (B) the establishment of one or morenew term loan commitments (the “New Term Loan Commitments”), by anamount not in excess of $100,000,000 in the aggregate and not less than$25,000,000 individually (or such lesser amount which shall be approved byAdministrative Agent and Syndication Agent or such lesser amount that shallconstitute the difference between $100,000,000 and all such New Revolving LoanCommitments and New Term Loan Commitments obtained prior to such date), andintegral multiples of $5,000,000 in excess of that amount.  Each such notice shall specify (A) the date(each, an “Increased Amount Date”) on which Borrower proposes that theNew Revolving Loan Commitments or New Term Loan Commitments, as applicable,shall be effective, which shall be a date not less than 10 Business Days afterthe date on which such notice is delivered to Syndication Agent and (B) theidentity of each Lender or other Person that is an eligible assignee pursuantto Section 14.6(b)  (each, a “NewRevolving Loan Lender” or “New Term Loan Lender”, as applicable) towhom Borrower proposes any portion of such New Revolving Loan Commitments orNew Term Loan Commitments, as applicable, be allocated and the amounts of suchallocations; provided that Borrower shall first approach the Lenders toprovide all of the New Revolving Loan Commitments or New Term Loan Commitmentsprior to approaching any other Person that is an eligible assignee pursuant toSection 14.6(b); providedfurther that any Lender approachedto provide all or a portion of the New Revolving Loan Commitments or New TermLoan Commitments may elect or decline, in its sole discretion, to provide a NewRevolving Loan Commitment or a New Term Loan Commitment.  Such New Revolving Loan Commitments or NewTerm Loan Commitments shall become effective, as of such Increased Amount Date;provided that (1) no Default or Event of Default shall exist onsuch Increased Amount Date before or after giving effect to such New RevolvingLoan Commitments or New Term Loan Commitments, as applicable; (2) bothbefore and after giving effect to the making of any Series of New Term Loans,each of the conditions set forth in Section 7 shall be satisfied;(3) Borrower and its Subsidiaries shall be in pro forma compliance witheach of the covenants set forth in Sections 10.9 and 10.10 as of the last dayof the most recently ended fiscal quarter after giving effect to such NewRevolving Loan Commitments or New Term Loan Commitments, as applicable;(4) the New Revolving Loan Commitments or New Term Loan Commitments, asapplicable, shall be effected pursuant to one or more Joinder Agreementsexecuted and delivered by Borrower, Syndication Agent and Administrative Agent,and each of which shall be recorded in the Register and shall be subject to therequirements set forth in Section 5.4(b); (5) Borrower shall make anypayments required pursuant to Section 2.11 in connection with the New RevolvingLoan Commitments or New Term Loan Commitments, as applicable; and (6) Borrowershall deliver or cause to be delivered any legal opinions or other documentsreasonably requested by Administrative Agent in connection with any suchtransaction. Any New Term Loans made on an Increased Amount Date shall bedesignated, a separate series (a “Series”) of New Term Loans for allpurposes of this Agreement.

 

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On any Increased Amount Date on which New Revolving Loan Commitmentsare effected, subject to the satisfaction of the foregoing terms andconditions, (a) each of the Lenders with US Revolving Credit Commitments shallassign to each of the New Revolving Loan Lenders, and each of the New RevolvingLoan Lenders shall purchase from each of the Lenders with US Revolving CreditCommitments, at the principal amount thereof (together with accrued interest),such interests in the US Revolving Credit Loans outstanding on such IncreasedAmount Date as shall be necessary in order that, after giving effect to allsuch assignments and purchases, such US Revolving Credit Loans will be held byexisting Lenders with US Revolving Credit Loans and New Revolving Loan Lendersratably in accordance with their US Revolving Credit Commitments after givingeffect to the addition of such New Revolving Loan Commitments to the USRevolving Credit Commitments, (b) each New Revolving Loan Commitment shall bedeemed for all purposes a US Revolving Credit Commitment and each Loan made thereunder(a **“New Revolving Loan”**) shall bedeemed, for all purposes, a US Revolving Credit Loan and (c) each New RevolvingLoan Lender shall become a Lender with respect to the New Revolving LoanCommitment and all matters relating thereto.

 

On any Increased Amount Date on which any New Term Loan Commitments ofany Series are effective, subject to the satisfaction of the foregoing termsand conditions, (i) each New Term Loan Lender of any Series shall make a Loanto Company (a “**New Term Loan**”) inan amount equal to its New Term Loan Commitment of such Series, and (ii) eachNew Term Loan Lender of any Series shall become a Lender hereunder with respectto the New Term Loan Commitment of such Series and the New Term Loans of suchSeries made pursuant thereto.

 

Administrative Agent shall notify Lenders promptly upon receipt ofBorrower’s notice of each Increased Amount Date and in respect thereof (y) theNew Revolving Loan Commitments and the New Revolving Loan Lenders or the Seriesof New Term Loan Commitments and the New Term Loan Lenders of such Series, asapplicable, and (z) in the case of each notice to any Lender with US RevolvingCredit Loans, the respective interests in such Lender’s Revolving Credit Loans,in each case subject to the assignments contemplated by this Section.

 

The terms and provisions of the New Term Loans and New Term LoanCommitments of any Series shall be, except as otherwise set forth herein or inthe Joinder Agreement, identical to the Tranche C Term Loans to the extent theyare secured by the Collateral on a *paripassu*basis with the Tranche C Term Loans.  The terms and provisions of the New RevolvingLoans shall be identical to the US Revolving Credit Loans.  In any event (i) the weighted average life tomaturity of all New Term Loans of any Series shall be no shorter than theweighted average life to maturity of the Revolving Credit Loans and the TermsLoans, (ii) the applicable New Term Loan Maturity Date of each Series shall beno shorter than the final maturity of the Revolving Credit Loans and theTranche C Term Loans, (iii) the rate of interest applicable to the New TermLoans of each Series shall be determined by Borrower and the applicable newLenders and shall be set forth in each applicable Joinder Agreement; providedhowever that the interest rate margin applicable to the New Term Loansshall not be greater than the highest interest

 

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rate that may, under any circumstances (including, without limitation,any issuance at a discount or as a result of the payment of any fees), bepayable with respect to the Tranche C Term Loans plus 0.25% per annumunless the interest rate margin with respect to the Tranche C Term Loans isincreased so as to be equal to, or be 0.25% per annum lower than, the interestrate margin applicable to the New Term Loans, provided that suchlimitation shall not apply to the extent such New Term Loans are junior incollateral rights to the Tranche C Term Loans, in which case customary termsshall apply consistent with the other provisions of this Agreement and the thenprevailing market conditions.  EachJoinder Agreement may, without the consent of any other Lenders, effect suchamendments to this Agreement and the other Credit Documents as may be necessaryor appropriate, in the opinion of the Syndication Agent and AdministrativeAgent, to effect the provision of this Section 2.15.

 

SECTION 3.                                Lettersof Credit

 

3.1.                              Letters of Credit.  (a)    Subject to and upon the terms and conditions herein set forth, at anytime and from time to time after the Closing Date and prior to the L/C MaturityDate, (i) the Borrower, may request that the US Letter of Credit Issuer issuefor the account of the Borrower a standby letter of credit or letters of creditin Dollars (the “US Letters of Credit”) and (ii) the Canadian Borrowermay request that the Canadian Letter of Credit Issuer issue for the account ofthe Canadian Borrower a standby letter of credit or letters of credit inCanadian Dollars (the “Canadian Letters of Credit” and with the USLetters of Credit, the “Letters of Credit” and each a “Letter ofCredit”) in such form as may be approved by the US Letter of Credit Issueror the Canadian Letter of Credit Issuer, as the case may be, in its reasonablediscretion.

 

(b)           Notwithstanding the foregoing, (i) noUS Letter of Credit shall be issued the Stated Amount of which, when added tothe US Letter of Credit Outstanding at such time, would exceed the US Letter ofCredit Commitment then in effect; (ii) no US Letter of Credit shall beissued the Stated Amount of which would cause the aggregate amount of theLender’s US Revolving Credit Exposures at such time to exceed the US RevolvingCredit Commitment then in effect; (iii) no Canadian Letter of Credit shall beissued the Stated Amount of which when added to Canadian Letter of CreditOutstanding would exceed the Canadian Letter of Credit Commitment then ineffect, (iv) no Canadian Letter of Credit shall be issued the Stated Amount ofwhich would cause the aggregate amount of the Canadian Lender’s RevolvingCredit Exposure at such time to exceed the Canadian Revolving CreditCommitment, (v) each Letter of Credit shall have an expiration date occurringno later than one year after the date of issuance thereof, unless otherwise agreedupon by the Administrative Agent or the Canadian Administrative Agent, asapplicable, and the Letter of Credit Issuer, provided that in no eventshall such expiration date occur later than the L/C Maturity Date; (vi)each US Letter of Credit shall be denominated in Dollars; (vii) each CanadianLetter of Credit shall be denominated in US Dollars or Canadian Dollars,(viii) no Letter of Credit shall be issued if it would be illegal underany applicable law for the beneficiary of the Letter of Credit to have a Letterof Credit issued in its favor; (ix) no Letter of Credit shall be issued bya Letter of Credit Issuer after it has received a written notice from theBorrower or the Canadian Borrower or any Lender stating that a Default or Eventof Default has occurred and is continuing

 

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until such time as the Letter of Credit Issuer shall have received awritten notice of (x) rescission of such notice from the party or partiesoriginally delivering such notice or (y) the waiver of such Default orEvent of Default in accordance with the provisions of Section 14.1; and(x) any Letter of Credit issued for the account of the Canadian Borrower shallbe made by a Canadian Lender described in clause (a) of that definition or apermitted assigned of such Canadian Lender that is a Canadian Resident.  Notwithstanding anything herein to thecontrary, the issuance of US Letters of Credit for the account of the Borrowershall be deemed a utilization of the US Revolving Credit Commitments allocatedto the Borrower, and the issuance of the Canadian Letters of Credit for theaccount of the Canadian Borrower shall be deemed a utilization of the CanadianRevolving Credit Commitments.

 

(c)           Upon at least one Business Day’sprior written notice (or telephonic notice promptly confirmed in writing) tothe Administrative Agent and the US Letter of Credit Issuer (which notice theAdministrative Agent shall promptly transmit to each of the applicableLenders), the Borrower shall have the right, on any day, permanently toterminate or reduce the US Letter of Credit Commitment in whole or in part, providedthat, after giving effect to such termination or reduction, the US Letter ofCredit Outstanding shall not exceed the US Letter of Credit Commitment.

 

3.2.          Letter of Credit Requests.  (a)    Whenever the Borrower desires that a US Letter of Credit be issued forits account, it shall give the Administrative Agent and the US Letter of CreditIssuer at least five (or such lesser number as may be agreed upon by theAdministrative Agent and the Letter of Credit Issuer) Business Days’ writtennotice thereof.  Each notice shall beexecuted by the Borrower and shall be in the form of Exhibit H-1 (each a “USLetter of Credit Request”). The Administrative Agent shall promptlytransmit copies of each US Letter of Credit Request to each Lender.

 

(b)           Whenever the Canadian Borrowerdesires that a Canadian Letter of Credit be issued for its account, it shallgive the Canadian Administrative Agent and the Canadian Letter of Credit Issuerat least five (or such lesser number as may be agreed upon by the CanadianAdministrative Agent and the Canadian Letter of Credit Issuer) Business Days’written notice thereof in the form of an executed Canadian Letter of CreditRequest in the form of Exhibit H-2 (which shall, among other things, specifywhether such Letter of Credit is to be denominated in Dollars or CanadianDollars) (each a “Canadian Letter of Credit Request” and, together withthe US Letter of Credit Request, the “Letter of Credit Request”).

 

(c)           The making of each Letter of CreditRequest shall be deemed to be a representation and warranty by the Borrower orthe Canadian Borrower, as the case may be, that the Letter of Credit may beissued in accordance with, and will not violate the requirements of,Section 3.1(b).

 

3.3.          Letter of Credit Participations.    (a)    Immediately upon the issuance by the US Letter of Credit Issuer of anyUS Letter of Credit, the US Letter of Credit Issuer shall be deemed to havesold and transferred to each other Lender that has a US Revolving CreditCommitment (each such other Lender, in its capacity under this

 

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Section 3.3, an “US L/C Participant”), and each such US L/CParticipant shall be deemed irrevocably and unconditionally to have purchasedand received from the US Letter of Credit Issuer, without recourse or warranty,an undivided interest and participation (each an “US L/C Participation”),to the extent of such US L/C Participant’s US Revolving Credit CommitmentPercentage in such Letter of Credit, each substitute letter of credit, eachdrawing made thereunder and the obligations of the Borrower under thisAgreement with respect thereto, and any security therefor or guarantypertaining thereto (although Letter of Credit Fees will be paid directly to theAdministrative Agent for the ratable account of the US L/C Participants asprovided in Section 4.1(b) and the US L/C Participants shall have no rightto receive any portion of any Fronting Fees).

 

(b)                                 Immediately upon the issuance by theCanadian Letter of Credit Issuer of any Canadian Letter of Credit on theaccount of the Canadian Borrower, the Canadian Letter of Credit Issuer shall bedeemed to have sold and transferred to each other Canadian Lender that has aCanadian Revolving Credit Commitment, to the extent the Canadian Letter ofCredit Obligations are owed by the Canadian Borrower, (each such other Lender,in its capacity under this Section 3.3, an “Cdn L/C Participant”  and collectively the “Cdn L/CParticipants”), and each such Cdn L/C Participant shall be deemedirrevocably and unconditionally to have purchased and received from theCanadian Letter of Credit Issuer, without recourse or warranty, an undivided interestand participation (each a “CdnL/C Participation”), to the extentof such Cdn L/C Participant’s Canadian Revolving Credit Commitment Percentagein such Canadian Letter of Credit, each substitute letter of credit, eachdrawing made thereunder and the obligations of the Borrower and the CanadianBorrower, as the case may be, under this Agreement with respect thereto, andany security therefor or guaranty pertaining thereto.

 

(c)                                  Letterof Credit Fees will be paid directly to the Canadian Administrative Agent forthe ratable account of the Cdn L/C Participants for Letters of Credit issued onbehalf of the Canadian Borrower as provided in Section 4.1(d).  The Cdn L/C Participants shall have no rightto receive any portion of any Fronting Fees.

 

(d)           In determining whether to pay underany Letter of Credit, the relevant Letter of Credit Issuer shall have noobligation relative to the L/C Participants other than to confirm that anydocuments required to be delivered under such Letter of Credit have been deliveredand that they appear to comply on their face with the requirements of suchLetter of Credit.  Any action taken oromitted to be taken by the relevant Letter of Credit Issuer under or inconnection with any Letter of Credit issued by it, if taken or omitted in theabsence of gross negligence or willful misconduct, shall not create for theLetter of Credit Issuer any resulting liability.

 

(e)                                  In the event that the Letter ofCredit Issuer makes any payment under any Letter of Credit issued by it and theBorrower or the Canadian Borrower, as applicable, shall not have repaid suchamount in full to the respective Letter of Credit Issuer pursuant toSection 3.4(a), the Letter of Credit Issuer shall promptly notify theAdministrative Agent or the Canadian Administrative Agent, as applicable, andeach applicable L/C Participant of such failure, and each such L/C Participantshall promptly and unconditionally pay to the Administrative Agent or theCanadian Administrative 

 

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Agent, as applicable,, for the account of the Letter of Credit Issuer,the amount of such L/C Participant’s Revolving Credit Commitment Percentage ofsuch unreimbursed payment in Dollars and in immediately available funds; provided,however, that no L/C Participant shall be obligated to pay to theAdministrative Agent or the Canadian Administrative Agent, as applicable, forthe account of the respective Letter of Credit Issuer its Revolving CreditCommitment Percentage of such unreimbursed amount arising from any wrongfulpayment made by the Letter of Credit Issuer under a Letter of Credit as aresult of acts or omissions constituting willful misconduct or gross negligenceon the part of the Letter of Credit Issuer. If the Letter of Credit Issuer so notifies, prior to 11:00 a.m. (NewYork time) on any Business Day, any L/C Participant required to fund a paymentunder a Letter of Credit, such L/C Participant shall make available to theAdministrative Agent or the Canadian Administrative Agent, as applicable, forthe account of the Letter of Credit Issuer such L/C Participant’s RevolvingCredit Commitment Percentage of the amount of such payment on such Business Dayin immediately available funds.  If andto the extent such L/C Participant shall not have so made its Revolving CreditCommitment Percentage of the amount of such payment available to theAdministrative Agent or the Canadian Administrative Agent, as applicable, forthe account of the Letter of Credit Issuer, such L/C Participant agrees to payto the Administrative Agent or the Canadian Administrative Agent, asapplicable, for the account of the Letter of Credit Issuer, forthwith ondemand, such amount, together with interest thereon for each day from such dateuntil the date such amount is paid to the Administrative Agent or the CanadianAdministrative Agent, as applicable, for the account of the Letter of CreditIssuer at the Federal Funds Effective Rate. The failure of any L/C Participant to make available to theAdministrative Agent or the Canadian Administrative Agent, as applicable, forthe account of the Letter of Credit Issuer its Revolving Credit CommitmentPercentage of any payment under any Letter of Credit shall not relieve anyother L/C Participant of its obligation hereunder to make available to theAdministrative Agent or the Canadian Administrative Agent, as applicable, forthe account of the Letter of Credit Issuer its Revolving Credit CommitmentPercentage of any payment under such Letter of Credit on the date required, asspecified above, but no L/C Participant shall be responsible for the failure ofany other L/C Participant to make available to the Administrative Agent or theCanadian Administrative Agent, as applicable, such other L/C Participant’sRevolving Credit Commitment Percentage of any such payment.

 

(f)            Whenever the Letter of Credit Issuerreceives a payment in respect of an unpaid reimbursement obligation as to whichthe Administrative Agent has received for the account of the Letter of CreditIssuer any payments from the L/C Participants pursuant to paragraph (c) above,the Letter of Credit Issuer shall pay to the Administrative Agent and theAdministrative Agent shall promptly pay to each L/C Participant that has paidits Revolving Credit Commitment Percentage of such reimbursement obligation, inDollars and in immediately available funds, an amount equal to such L/CParticipant’s share (based upon the proportionate aggregate amount originallyfunded by such L/C Participant to the aggregate amount funded by all L/CParticipants) of the principal amount of such reimbursement obligation andinterest thereon accruing after the purchase of the respective L/CParticipations.

 

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(g)           The obligations of the L/CParticipants to make payments to the Administrative Agent or the CanadianAdministrative Agent for the account of a Letter of Credit Issuer with respectto Letters of Credit shall be irrevocable and not subject to counterclaim,set-off or other defense or any other qualification or exception whatsoever andshall be made in accordance with the terms and conditions of this Agreementunder all circumstances, including under any of the following circumstances:

 

(i)            any lack of validity orenforceability of this Agreement or any of the other Credit Documents;

 

(ii)           the existence of any claim, set-off,defense or other right that the Borrower may have at any time against abeneficiary named in a Letter of Credit, any transferee of any Letter of Credit(or any Person for whom any such transferee may be acting), the AdministrativeAgent, the Canadian Administrative Agent the Letter of Credit Issuer, anyLender or other Person, whether in connection with this Agreement, any Letterof Credit, the transactions contemplated herein or any unrelated transactions(including any underlying transaction between the Borrower and the beneficiarynamed in any such Letter of Credit);

 

(iii)          any draft, certificate or any otherdocument presented under any Letter of Credit proving to be forged, fraudulent,invalid or insufficient in any respect or any statement therein being untrue orinaccurate in any respect;

 

(iv)          the surrender or impairment of anysecurity for the performance or observance of any of the terms of any of theCredit Documents; or

 

(v)           the occurrence of any Default orEvent of Default;

 

provided, however, that no L/CParticipant shall be obligated to pay to the Administrative Agent or theCanadian Administrative Agent for the account of the Letter of Credit Issuerits US Revolving Credit Commitment Percentage or Canadian Revolving CreditCommitment Percentage of any unreimbursed amount arising from any wrongfulpayment made by the Letter of Credit Issuer under a Letter of Credit as a resultof acts or omissions constituting willful misconduct or gross negligence on thepart of the Letter of Credit Issuer.

 

3.4.          Agreement toRepay Letter of Credit Drawings. (a)     The Borrower and theCanadian Borrower hereby agree to reimburse the relevant Letter of CreditIssuer, by making payment in the currency in which the relevant Letter ofCredit was denominated to the Administrative Agent (in the case ofreimbursement made by the Borrower) or the Canadian Administrative Agent (inthe case of reimbursement made by the Canadian Borrower) in immediatelyavailable funds for any payment or disbursement made by the Letter of CreditIssuer under any Letter of Credit (each such amount so paid until reimbursed,an “Unpaid Drawing”) immediately after, and in any event on the date of,such payment, with interest on the amount so paid or disbursed by the Letter ofCredit Issuer, to the extent not reimbursed prior to 5:00 p.m. (New Yorktime) on the date of

 

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such payment or disbursement, from and including the date paid ordisbursed to but excluding the date the Letter of Credit Issuer is reimbursedtherefor at a rate per annum that shall at all times be the Applicable ABRMargin plus the ABR (or the Cdn ABR or Canadian Prime Rate, as applicable, inthe case of the Canadian Letter of Credit Issuer) as in effect from time totime, provided that, notwithstanding anything contained in this Agreement tothe contrary, (i) unless the Borrower (or the Canadian Borrower) shallhave notified the Administrative Agent (or the Canadian Administrative Agent)and the relevant Letter of Credit Issuer prior to 10:00 a.m. (New Yorktime) on the date of such drawing that the Borrower or the Canadian Borrower,as the case may be, intends to reimburse the relevant Letter of Credit Issuerfor the amount of such drawing with funds other than the proceeds of Loans, theBorrower or the Canadian Borrower, as the case may, be shall be deemed to havegiven a Notice of Borrowing requesting that (A) with respect to US Letters ofCredit, that the Lenders with US Revolving Credit Commitments make US RevolvingCredit Loans (which shall be ABR Loans) and (B) with respect to CanadianLetters of Credit, the Lenders with Canadian Revolving Credit Commitment makeCanadian Revolving Credit Loans (in the currency in which the Canadian Letterof Credit is denominated which shall initially be Cdn ABR Loans or CanadianPrime Rate Loans, as applicable) on the date on which such drawing is honoredin an amount equal to the amount of such drawing and (ii) theAdministrative Agent or the Canadian Administrative Agent shall promptly notifyeach relevant L/C Participant of such drawing and the amount of its RevolvingCredit Loan to be made in respect thereof, and each L/C Participant shall beirrevocably obligated to make a Revolving Credit Loan to the Borrower or theCanadian Borrower, as applicable, in the manner deemed to have been requestedin the amount of its Revolving Credit Commitment Percentage of the applicableUnpaid Drawing by 12:00 noon (New York time) on such Business Day by making theamount of such Revolving Credit Loan available to the Administrative Agent (orthe Canadian Administrative Agent, as applicable).  Such Revolving Credit Loans shall be madewithout regard to the Minimum Borrowing Amount. The Administrative Agent (or the Canadian Administrative Agent, asapplicable) shall use the proceeds of such Revolving Credit Loans solely forpurpose of reimbursing the Letter of Credit Issuer for the related UnpaidDrawing.

 

(b)           The obligations of the Borrower andthe Canadian Borrower under this Section 3.4 to reimburse the Letter ofCredit Issuer with respect to Unpaid Drawings (including, in each case,interest thereon) shall be absolute and unconditional under any and allcircumstances and irrespective of any set-off, counterclaim or defense topayment that the Borrower, the Canadian Borrower or any other Person may haveor have had against the Letter of Credit Issuer, the Administrative Agent, theCanadian Administrative Agent or any Lender (including in its capacity as anL/C Participant), including any defense based upon the failure of any drawingunder a Letter of Credit (each a “Drawing”) to conform to the terms ofthe Letter of Credit or any non-application or misapplication by thebeneficiary of the proceeds of such Drawing, provided that neither theBorrower nor the Canadian Borrower shall be obligated to reimburse the Letterof Credit Issuer for any wrongful payment made by the Letter of Credit Issuerunder the Letter of Credit issued by it as a result of acts or omissionsconstituting willful misconduct or gross negligence on the part of the Letterof Credit Issuer.

 

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3.5.          Increased Costs.  If after the date hereof, the adoption of anyapplicable law, rule or regulation, or any change therein, or any change in theinterpretation or administration thereof by any Governmental Authority, centralbank or comparable agency charged with the interpretation or administrationthereof, or actual compliance by the Letter of Credit Issuer or any L/CParticipant with any request or directive made or adopted after the date hereof(whether or not having the force of law), by any such authority, central bankor comparable agency shall either (a) impose, modify or make applicable anyreserve, deposit, capital adequacy or similar requirement against letters ofcredit issued by the Letter of Credit Issuer, or any L/C Participant’s L/CParticipation therein, or (b) impose on the Letter of Credit Issuer or any L/CParticipant any other conditions affecting its obligations under this Agreementin respect of Letters of Credit or L/C Participations therein or any Letter ofCredit or such L/C Participant’s L/C Participation therein, and the result ofany of the foregoing is to increase the cost to the Letter of Credit Issuer orsuch L/C Participant of issuing, maintaining or participating in any Letter ofCredit, or to reduce the amount of any sum received or receivable by the Letterof Credit Issuer or such L/C Participant hereunder (other than any suchincrease or reduction attributable to taxes) in respect of Letters of Credit orL/C Participations therein, then, promptly after receipt of written demand tothe Borrower by the Letter of Credit Issuer or such L/C Participant, as thecase may be, (a copy of which notice shall be sent by the Letter of CreditIssuer or such L/C Participant to the Administrative Agent (with respect toLetter of Credit issued on account of the Borrower) and to the CanadianAdministrative Agent with respect to Letters of Credit issued on account of theCanadian Borrower)), the Borrower or the Canadian Borrower, as applicable,shall pay to the Letter of Credit Issuer or such L/C Participant suchadditional amount or amounts as will compensate the Letter of Credit Issuer orsuch L/C Participant for such increased cost or reduction, it being understoodand agreed, however, that the Letter of Credit Issuer or a L/C Participantshall not be entitled to such compensation as a result of such Person’scompliance with, or pursuant to any request or directive to comply with, anysuch law, rule or regulation as in effect on the date hereof.  A certificate submitted to the Borrower orthe Canadian Borrower, as applicable, by the relevant Letter of Credit Issueror a L/C Participant, as the case may be, (a copy of which certificateshall be sent by the Letter of Credit Issuer or such L/C Participant tothe Administrative Agent (with respect to Letters of Credit issued on accountof the Borrower) and to the Canadian Administrative Agent with respect toLetters of Credit issued on account of the Canadian Borrower)) setting forth inreasonable detail the basis for the determination of such additional amount or amountsnecessary to compensate the Letter of Credit Issuer or such L/C Participant asaforesaid shall be conclusive and binding on the Borrower or the CanadianBorrower, as applicable, absent clearly demonstrable error.

 

3.6.          Successor Letter of Credit Issuer.  A Letter of Credit Issuer may resign asLetter of Credit Issuer upon 60 days’ prior written notice to theAdministrative Agent, the Canadian Administrative Agent, the Lenders and theBorrower.  If the US Letter of CreditIssuer shall resign as US Letter of Credit Issuer under this Agreement, thenthe Borrower shall appoint from among the Lenders with US Revolving CreditCommitments a successor issuer of US Letters of Credit, whereupon suchsuccessor issuer shall succeed to the rights, powers and duties of the USLetter of Credit Issuer, and the term “US Letter of Credit Issuer” shall meansuch successor issuer effective upon

 

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such appointment.  At the time such resignation shall becomeeffective, the Borrower shall pay to the resigning US Letter of Credit Issuerall accrued and unpaid fees pursuant to Sections 4.1(c) and (e).  The acceptance of any appointment as the USLetter of Credit Issuer hereunder by a successor Lender shall be evidenced byan agreement entered into by such successor, in a form satisfactory to theBorrower and the Administrative Agent and, from and after the effective date ofsuch agreement, such successor Lender shall have all the rights and obligationsof the previous Letter of Credit Issuer under this Agreement and the otherCredit Documents.  If the Canadian Letterof Credit Issuer shall resign as Canadian Letter of Credit Issuer under thisAgreement, then the Canadian Borrower shall appoint from among the Lenders withCanadian Revolving Credit Commitments a successor issuer of Canadian Letters ofCredit, whereupon such successor issuer shall succeed to the rights, powers andduties of the Canadian Letter of Credit Issuer, and the term “Canadian Letterof Credit Issuer” shall mean such successor issuer effective upon suchappointment.  At the time suchresignation shall become effective, the Canadian Borrower and the Borrower, asapplicable shall pay to the resigning Letter of Credit Issuer all accrued andunpaid fees pursuant to Sections 4.1(d ) and (e).  After the resignation of the Letter of CreditIssuer hereunder, the resigning Letter of Credit Issuer shall remain a partyhereto and shall continue to have all the rights and obligations of a Letter ofCredit Issuer under this Agreement and the other Loan Documents with respect toLetters of Credit issued by it prior to such resignation, but shall not berequired to issue additional Letters of Credit. After any retiring Letter of Credit Issuer’s resignation as Letter ofCredit Issuer, the provisions of this Agreement relating to the Letter ofCredit Issuer shall inure to its benefit as to any actions taken or omitted tobe taken by it (a) while it was Letter of Credit Issuer under this Agreement or(b) at any time with respect to Letters of Credit issued by such Letter ofCredit Issuer.

 

SECTION 4.                                Fees;Commitments

 

4.1.          Fees.  (a)

 

(i)            The Borrower agrees to pay to theAdministrative Agent in Dollars, for the account of each Lender having a USRevolving Credit Commitment (in each case pro rata according to the respectiveUS Revolving Credit Commitments of all such Lenders), a commitment fee for eachday from and including the Closing Date to but excluding the Final Date.  Such commitment fee shall be payable inarrears (i) on the last day of each March, June, September andDecember (for the three-month period (or portion thereof) ended on suchday for which no payment has been received) and (ii) on the Final Date(for the period ended on such date for which no payment has been receivedpursuant to clause (i) above), and shall be computed for each dayduring such period at a rate per annum equal to the Commitment Fee Rate ineffect on such day on the Available US Commitments in effect on such day.

 

(ii)           The Canadian Borrower agrees to payto the Canadian Administrative Agent for the account of each Canadian Lenderwith a Canadian Revolving Credit Commitment allocated to the Canadian Borrower(in each case pro rata according to the respective Canadian Revolving CreditCommitments of

 

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allsuch Lenders), a commitment fee for each day from and including the ClosingDate to but excluding the Final Date. Such commitment fee shall be payable inarrears (i) on the last day of each March, June, September andDecember (for the three-month period (or portion thereof) ended on suchday for which no payment has been received) and (ii) on the Final Date(for the period ended on such date for which no payment has been received pursuantto clause (i) above), and shall be computed for each day during suchperiod at a rate per annum equal to the Commitment Fee Rate in effect on suchday on the portion of the Available Canadian Commitments allocated to theCanadian Borrower on such day.

 

(iii)          The Borrower agrees to pay to theAdministrative Agent for the account of each Canadian Lender with a CanadianRevolving Credit Commitment allocated to the Borrower (in each case pro rataaccording to the respective Canadian Revolving Credit Commitments of all suchLenders), a commitment fee for each day from and including the Closing Date tobut excluding the Final Date. Such commitment fee shall be payable in arrears(i) on the last day of each March, June, September andDecember (for the three-month period (or portion thereof) ended on suchday for which no payment has been received) and (ii) on the Final Date(for the period ended on such date for which no payment has been receivedpursuant to clause (i) above), and shall be computed for each dayduring such period at a rate per annum equal to the Commitment Fee Rate ineffect on such day on the portion of the Available Canadian Commitmentsallocated to the Borrower on such day.

 

(iv)          Notwithstanding the foregoing,neither the Borrower nor the Canadian Borrower shall be obligated to pay anyamounts to any Defaulting Lender pursuant to this Section 4.1.

 

(b)           The Borrower agrees to pay to theAdministrative Agent in Dollars for the account of the Lenders prorataon the basis of their respective Letter of Credit Exposure, a fee in respect ofeach Letter of Credit (the “Letter of Credit Fee”), for the period fromand including the date of issuance of such Letter of Credit to but excludingthe termination date of such Letter of Credit computed at the per annum ratefor each day equal to the Applicable Eurodollar Margin for Revolving CreditLoans minus 0.125% per annum on the average daily Stated Amount of such Letterof Credit.  Such Letter of Credit Feesshall be due and payable quarterly in arrears on the last day of each March,June, September and December and on the date upon which the US TotalRevolving Credit Commitment terminates and the Letter of Credit Outstandingshall have been reduced to zero.

 

(c)           The Borrower agrees to pay to theAdministrative Agent in Dollars for the account of the US Letter of CreditIssuer a fee in respect of each US Letter of Credit issued by it (the “FrontingFee”), for the period from and including the date of issuance of such USLetter of Credit to but excluding the termination date of such US Letter ofCredit, computed at the rate for each day equal to 0.125% per annum on theaverage daily Stated Amount of such US Letter of Credit.  Such Fronting Fees shall be due and payablequarterly in arrears on the last day of each March, June, September and

 

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December and onthe date upon which the US Total Revolving Credit Commitment terminates and theUS Letter of Credit Outstandings shall have been reduced to zero.

 

(d)           The Canadian Borrower agrees to payto the Canadian Administrative Agent in for the account of the Lenders with aCanadian Revolving Credit Commitment prorata on the basis oftheir respective Canadian Letter of Credit Exposure, a fee in respect of eachCanadian Letter of Credit (the “Canadian Letter of Credit Fee”), for theperiod from and including the date of issuance of such Canadian Letter ofCredit to but excluding the termination date of such Canadian Letter of Creditcomputed at the per annum rate for each day equal to the Applicable EurodollarMargin for Revolving Credit Loans minus 0.125% per annum on the average dailyStated Amount of such Letter of Credit. Such Letter of Credit Fees shall be due and payable quarterly in arrearson the last day of each March, June, September and December and onthe date upon which the Canadian Total Revolving Credit Commitment terminatesand the Canadian Letter of Credit Outstandings shall have been reduced to zero.

 

(e)           The Borrower agrees to pay directlyto the Letter of Credit Issuer in Dollars upon each issuance of, drawing under,and/or amendment of, a Letter of Credit issued by it such amount as the Letterof Credit Issuer and the Borrower shall have agreed upon for issuances of,drawings under or amendments of, letters of credit issued by it.

 

4.2.          Voluntary Reduction of Revolving CreditCommitments.  Upon at least oneBusiness Day’s prior written notice (or telephonic notice promptly confirmed inwriting) to the Administrative Agent at the Administrative Agent’s Office(which notice the Administrative Agent shall promptly transmit to each of theLenders), the Borrower (on behalf of itself and the Canadian Borrower) shallhave the right, without premium or penalty, on any day, permanently toterminate or reduce the Revolving Credit Commitments in whole or in part,provided that (a) any such reduction shall apply proportionately andpermanently to reduce the US Revolving Credit Commitment or the CanadianRevolving Credit Commitment, as the case may be, of each of the Lenders, (b) anypartial reduction pursuant to this Section 4.2 shall be in the amount ofat least the Dollar Equivalent of $1,000,000 and (c) after giving effectto such termination or reduction and to any prepayments of the Loans made onthe date thereof in accordance with this Agreement, (i) the aggregate amount ofthe Lenders’ US Revolving Credit Exposures shall not exceed the US TotalRevolving Credit Commitment (ii) the aggregate amount of the Canadian Lenders’Canadian Revolving Credit Exposure to the Canadian Borrower shall not exceedthe portion of the Canadian Total Revolving Credit Commitment allocated to theCanadian Borrower and (iii) the aggregate amount of the Canadian Lenders’Canadian Revolving Credit Exposures to the Borrower shall not exceed the portionof the Canadian Total Revolving Credit Commitment allocated to the Borrower.

 

4.3.          Mandatory Termination of Commitments.  (a)   The Total Term Loan Commitments shall terminate at 5:00 p.m.(New York time) on the Effective Date.

 

(b)           (i) The US Total Revolving CreditCommitment shall terminate at 5:00 p.m. (New York time) on theRevolving Credit Maturity Date and (ii) the Canadian

 

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Total RevolvingCredit Commitment shall terminate at 5:00 p.m. (New York time) on theRevolving Credit Maturity Date.

 

(c)           The Swingline Commitment shallterminate at 5:00 p.m. (New York time) on the Swingline Maturity Date.

 

SECTION 5.                                Payments

 

5.1.          VoluntaryPrepayments.    The Borrower shall have theright to prepay Tranche C Term Loans, US Revolving Credit Loans and SwinglineLoans, and the Canadian Borrower shall have the right to prepay CanadianRevolving Credit Loans, in each case, without premium or penalty, in whole orin part from time to time on the following terms and conditions: (a) theBorrower (on its own behalf and on behalf of the Canadian Borrower) shall givethe Administrative Agent and the Canadian Administrative Agent at theapplicable Administrative Agent’s Office written notice (or telephonic noticepromptly confirmed in writing) of its or the Canadian Borrower’s intent to makesuch prepayment, the amount of such prepayment and (in the case of BA Loans andEurodollar Loans) the specific Borrowing(s) pursuant to which made, whichnotice shall be given by the Borrower no later than (i) in the case of TrancheC Term Loans or Revolving Credit Loans, 10:00 a.m. (New York time) oneBusiness Day prior to, or (ii) in the case of Swingline Loans, 10:00 a.m. (NewYork time) on, the date of such prepayment and shall promptly be transmitted bythe Administrative Agent or the Canadian Administrative Agent, as applicable,to each of the Lenders or the Swingline Lender, as the case may be; (b) eachpartial prepayment of any Borrowing of Tranche C Term Loans or Revolving CreditLoans shall be in a multiple of the Dollar Equivalent of $100,000 or C$100,000and in an aggregate principal amount of the Dollar Equivalent of at least$1,000,000 or C$1,000,000 and each partial prepayment of Swingline Loans shallbe in a multiple of the Dollar Equivalent of $100,000 and in an aggregateprincipal amount of at least the Dollar Equivalent of $100,000, provided thatno partial prepayment of Eurodollar Term Loans or Eurodollar Revolving CreditLoans made pursuant to a single Borrowing shall reduce the outstandingEurodollar Term Loans or Eurodollar Revolving Credit Loans made pursuant tosuch Borrowing to an amount less than the Minimum Borrowing Amount forEurodollar Term Loans or Eurodollar Revolving Credit Loans; (c) any prepaymentof Eurodollar Term Loans or Eurodollar Revolving Credit Loans pursuant to thisSection 5.1 on any day other than the last day of an Interest Periodapplicable thereto shall be subject to compliance by the Borrower or theCanadian Borrower, as the case may be, with the applicable provisions ofSection 2.11 and (d) BA Loans may not be repaid on any day other than thelast day of an Interest Period applicable thereto except as may be otherwiseprovided in this Agreement.  Eachprepayment in respect of any tranche of Tranche C Term Loans pursuant to thisSection 5.1 shall be (a) applied to Tranche C Term Loans in suchmanner as the Borrower may determine and (b) applied to reduce RepaymentAmounts in such order as the Borrower may determine.  At the Borrower’s election (on its own behalfand on behalf of the Canadian Borrower) in connection with any prepaymentpursuant to this Section 5.1, such prepayment shall not be applied to anyTranche C Term Loan or Revolving Credit Loan of a Defaulting Lender.

 

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5.2.          Mandatory Prepayments.  (a)    Tranche C Term Loan Prepayments.  (i)  On each occasion that a Prepayment Eventoccurs, the Borrower shall, within one Business Day after the occurrence of aDebt Incurrence Prepayment Event and within five Business Days after theoccurrence of any other Prepayment Event, prepay, in accordance withparagraph (c) below, the principal amount of Tranche C Term Loans in anamount equal to 100% of the Net Cash Proceeds from such Prepayment Event,provided that, at the option of the Borrower, the Net Cash Proceeds from anytransaction permitted by Section 10.4(e) (including pursuant to anysecuritization) may be applied to repay Revolving Credit Loans, which repaymentshall automatically result in the reduction of the Revolving Credit Commitmentof each Lender by an amount equal to the amount of the Revolving Credit Loansprepaid to such Lender.

 

(ii)           Not later than the date that isninety days after the last day of any fiscal year (commencing with the fiscalyear ending December 31, 2004),  theBorrower shall prepay, in accordance with paragraph (c) below, theprincipal of Tranche C Term Loans in an amount equal to (x) 50% of ExcessCash Flow for such fiscal year (provided such percentage shall be reduced to25% if the Consolidated Total Debt to Consolidated EBITDA Ratio as of the endof such fiscal year is less than 4.00 to 1.00), minus (y) the amount of any suchExcess Cash Flow that the Borrower has, after the end of such fiscal year andprior to such date, reinvested in the business of the Borrower or any of itsSubsidiaries (subject to Section 9.14) and minus (z) the principal amount ofTranche C Term Loans voluntarily prepaid pursuant to Section 5.1 duringsuch fiscal year.

 

(b)           Repayment of Revolving CreditLoans.

 

(i)            Aggregate US Revolving CreditOutstandings.  If on any date theaggregate amount of the Lenders’ US Revolving Credit Exposures (all theforegoing, collectively, the “Aggregate US Revolving Credit Outstandings”)exceeds 100% of the US Total Revolving Credit Commitment as then in effect, theBorrower shall forthwith repay on such date the principal amount of SwinglineLoans and, after all Swingline Loans have been paid in full, Revolving CreditLoans in an amount equal to such excess. If, after giving effect to the prepayment of all outstanding SwinglineLoans and Revolving Credit Loans, the Aggregate US Revolving CreditOutstandings exceed the US Total Revolving Credit Commitment then in effect,the Borrower shall pay to the Administrative Agent an amount in cash equal tosuch excess and the Administrative Agent shall hold such payment for thebenefit of the Lenders as security for the obligations of the Borrowerhereunder (including obligations in respect of Letter of Credit Outstandings)pursuant to a cash collateral agreement to be entered into in form andsubstance satisfactory to the Administrative Agent (which shall permit certaininvestments in Permitted Investments satisfactory to the Administrative Agent,until the proceeds are applied to the secured obligations).

 

(ii)           Aggregate Canadian Revolving CreditOutstandings.  If on any date theaggregate amount of the Canadian Lenders’ Canadian Revolving Credit Exposures(all the foregoing, collectively, the “Aggregate Canadian

 

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RevolvingCredit Outstandings”) exceeds 103% of the Canadian Total Revolving CreditCommitment as then in effect, each of the Borrower and the Canadian Borrower,as the case may be, shall forthwith repay on such date Canadian RevolvingCredit Loans owing by each of them, respectively, in an aggregate amount equalto such excess.  If, after giving effectto the prepayment of all outstanding Canadian Revolving Credit Loans (otherthan BA Loans), the Aggregate Canadian Revolving Credit Outstandings exceed theCanadian Total Revolving Credit Commitment then in effect, the Borrower and/orthe Canadian Borrower as the case may be, shall pay to the CanadianAdministrative Agent an amount in cash equal to such excess and the CanadianAdministrative Agent shall hold such payment for the benefit of the applicableLenders as security for the obligations of the Borrower and the CanadianBorrower hereunder (including obligations in respect of Canadian Letter of CreditOutstandings and BA Loans) pursuant to a cash collateral agreement to beentered into in form and substance satisfactory to the Canadian AdministrativeAgent (which shall permit certain investments in Permitted Investmentssatisfactory to the Canadian Administrative Agent, until the proceeds areapplied to the secured obligations).

 

(c)           Application to Repayment Amounts. Each prepayment of Tranche C Term Loans required by Section 5.2(a)shall be applied to reduce Repayment Amounts in such order as the Borrower maydetermine up to an amount equal to the aggregate amount of the applicableRepayment Amounts required to be made by the Borrower pursuant toSection 2.5(b) during the two year period immediately following the dateof the prepayment (such amount being, the “Amortization Amount”),provided that to the extent that the amount of the prepayment exceeds theAmortization Amount, such excess shall be applied ratably to reduce the thenremaining Repayment Amounts.  Withrespect to each such prepayment, (i) the Borrower will, not later than the datespecified in Section 5.2(a) for offering to make such prepayment, give theAdministrative Agent telephonic notice (promptly confirmed in writing)requesting that the Administrative Agent provide notice of such prepayment toeach Tranche C Term Loan Lender, (ii) each Tranche C Term Loan Lender willhave the right to refuse any such prepayment by giving written notice of suchrefusal to the Borrower within fifteen Business Days after such Lender’sreceipt of notice from the Administrative Agent of such prepayment (and theBorrower shall not prepay any such Tranche C Term Loans until the date that isspecified in the immediately following clause), (iii) the Borrower willmake all such prepayments not so refused upon the earlier of (x) suchfifteenth Business Day and (y) such time as the Borrower has receivednotice from each Lender that it consents to or refuses such prepayment and(iv) any prepayment so refused may be retained by the Borrower, providedthat any prepayment so refused that relates to Net Cash Proceeds from a DebtIncurrence Prepayment Event in respect of the issuance of Permitted AdditionalSubordinated Notes shall be allocated to the then outstanding Tranche C TermLoans and shall be applied as set forth above in this paragraph (c).

 

(d)           Application to Tranche C Term Loans.  With respect to eachprepayment of Tranche C Term Loans required by Section 5.2(a), theBorrower may designate the Types of Loans that are to be prepaid and thespecific Borrowing(s) pursuant to which made, provided that(i) Eurodollar Term Loans may be designated for

 

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prepayment pursuantto this Section 5.2 only on the last day of an Interest Period applicablethereto unless all Eurodollar Term Loans with Interest Periods ending on suchdate of required prepayment and all ABR Loans have been paid in full; and(ii) Eurodollar Term Loans made pursuant to a single Borrowing shallreduce the outstanding Tranche C Term Loans made pursuant to such Borrowing toan amount less than the Minimum Borrowing Amount for Eurodollar Loans suchBorrowing shall immediately be converted into ABR Loans .  In the absence of a designation by theBorrower as described in the preceding sentence, the Administrative Agentshall, subject to the above, make such designation in its reasonable discretionwith a view, but no obligation, to minimize breakage costs owing underSection 2.11.

 

(e)           Application to Revolving CreditLoans.  With respect to each prepayment of RevolvingCredit Loans elected by the Borrower pursuant to Section 5.2(a) orrequired by Section 5.2(b), the Borrower (on its own behalf and on behalfof the Canadian Borrower) may designate (i) the Types of Loans that are to beprepaid and the specific Borrowing(s) pursuant to which made and (ii) the USRevolving Credit Loans or Canadian Revolving Credit Loans to be prepaid, providedthat (w) Eurodollar Revolving Credit Loans may be designated for prepaymentpursuant to this Section 5.2 only on the last day of an Interest Periodapplicable thereto unless all Eurodollar Loans with Interest Periods ending onsuch date of required prepayment and all ABR Loans have been paid in full; (x)if any prepayment by the Borrower or the Canadian Borrower of EurodollarRevolving Credit Loans made pursuant to a single Borrowing shall reduce theoutstanding Dollar Equivalent of the Revolving Credit Loans made pursuant tosuch Borrowing to an amount less than the Minimum Borrowing Amount forEurodollar Revolving Credit Loans, as the case may be, such Borrowing shallimmediately be converted into Cdn ABR Loans or ABR Loans, as applicable; (y)each prepayment of any Loans made pursuant to a Borrowing shall be applied prorata among such Loans; and (z) notwithstanding the provisions ofthe preceding clause (y), no prepayment made pursuant to Section 5.2(a) orSection 5.2(b) of Revolving Credit Loans shall be applied to the RevolvingCredit Loans of any Defaulting Lender. In the absence of a designation by the Borrower as described in thepreceding sentence, the Administrative Agent shall, subject to the above, makesuch designation in its reasonable discretion with a view, but no obligation,to minimize breakage costs owing under Section 2.11.

 

(f)            BA and Eurodollar Interest Periods. In lieu of making any payment pursuant to this Section 5.2 inrespect of any BA Loan or Eurodollar Loan other than on the last day of theInterest Period therefor so long as no Default or Event of Default shall haveoccurred and be continuing, the Borrower or the Canadian Borrower, as the casemay be, at its option may deposit with the Administrative Agent an amount equalto the amount of the BA Loan or Eurodollar Loan to be prepaid and such BA Loanor Eurodollar Loan, as the case may be, shall be repaid on the last day of theInterest Period therefor in the required amount.  Such deposit shall be held by theAdministrative Agent in a corporate time deposit account established on termsreasonably satisfactory to the Administrative Agent, earning interest at thethen-customary rate for accounts of such type. Such deposit shall constitute cash collateral for the Obligations, providedthat the Borrower or the Canadian Borrower, as the case may be, may at any timedirect that such deposit be applied to make the applicable payment requiredpursuant to this Section 5.2.

 

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(g)           Minimum Amount. No prepayment shall be required pursuant to Section 5.2(a)(i)unless and until the amount at any time of Net Cash Proceeds from PrepaymentEvents required to be applied at or prior to such time pursuant to suchSection and not yet applied at or prior to such time to prepay Tranche CTerm Loans pursuant to such Section exceeds the Dollar Equivalent of$15,000,000 in the aggregate for all such Prepayment Events.

 

(h)           Foreign Asset Sales. Notwithstanding any other provisions of this Section 5.2,(i) to the extent that any of or all the Net Cash Proceeds of any assetsale by a Restricted Foreign Subsidiary giving rise to an Asset Sale PrepaymentEvent (a “Foreign Asset Sale”) or Excess Cash Flow are prohibited ordelayed by applicable local law from being repatriated to the United States**,**the portion of such Net Cash Proceeds orExcess Cash Flow so affected will not be required to be applied to repayTranche C Term Loans at the times provided in this Section 5.2 but may beretained by the applicable Restricted Foreign Subsidiary so long, but only solong, as the applicable local law will not permit repatriation to the United States(the Borrower and the Canadian Borrower hereby agreeing to cause the applicableRestricted Foreign Subsidiary to promptly take all actions required by theapplicable local law to permit such repatriation), and once such repatriationof any of such affected Net Cash Proceeds or Excess Cash Flow is permittedunder the applicable local law, such repatriation will be immediately effectedand such repatriated Net Cash Proceeds or Excess Cash Flow will be promptly(and in any event not later than two Business Days after suchrepatriation) applied (net of additional taxes payable or reserved against as aresult thereof) to the repayment of the Tranche C Term Loans pursuant to thisSection 5.2 and (ii) to the extent that the Borrower (on its own behalfand on behalf of the Canadian Borrower) has determined in good faith thatrepatriation of any of or all the Net Cash Proceeds of any Foreign Asset Saleor Excess Cash Flow would have a material adverse tax cost consequence withrespect to such Net Cash Proceeds or Excess Cash Flow, the Net Cash Proceeds orExcess Cash Flow so affected may be retained by the applicable RestrictedForeign Subsidiary, provided that, in the case of this clause (ii),on or before the date on which any Net Cash Proceeds so retained wouldotherwise have been required to be applied to reinvestments or prepaymentspursuant to Section 5.2(a) (or such Excess Cash Flow would have been sorequired if it were Net Cash Proceeds), (x) the Borrower or the CanadianBorrower, as the case may be, applies an amount equal to such Net Cash Proceedsor Excess Cash Flow to such reinvestments or prepayments as if such Net CashProceeds or Excess Cash Flow had been received by the Borrower or the CanadianBorrower, as the case may be, rather than such Restricted Foreign Subsidiary,less the amount of additional taxes that would have been payable or reservedagainst if such Net Cash Proceeds or Excess Cash Flow had been repatriated (or,if less, the Net Cash Proceeds or Excess Cash Flow that would be calculated ifreceived by such Foreign Subsidiary) or (y) such Net Cash Proceeds orExcess Cash Flow are applied to the repayment of Indebtedness of a RestrictedForeign Subsidiary.

 

5.3.          Method and Place of Payment.  (a)    Except as otherwise specifically provided herein, all payments underthis Agreement shall be made by the Borrower or the Canadian Borrower, withoutset-off, counterclaim or deduction of any kind, to the Administrative Agent forthe ratable account of the Lenders entitled thereto,

 

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the Letter of Credit Issuer, the CanadianLetter of Credit Issuer or the Swingline Lender, as the case may be, not laterthan 12:00 Noon (New York time) on the date when due and shall be made(i) in the case of amounts payable in Dollars, in immediately availablefunds at the Administrative Agent’s Office and (ii) in the case of amountspayable in a Canadian Dollars, in immediately available funds at theAdministrative Agent’s Office or at such other office as the AdministrativeAgent shall specify for such purpose by notice to the Borrower, it beingunderstood that written or facsimile notice by the Borrower or the CanadianBorrower, as the case may be, to the Administrative Agent to make a paymentfrom the funds in the Borrower’s or the Canadian Borrower’s, as the case maybe, account at the Administrative Agent’s Office shall constitute the making ofsuch payment to the extent of such funds held in such account.  All payments under each Credit Document(whether of principal, interest or otherwise) shall be made (i) in thecase of the principal of and interest on each Loan, in the currency in whichsuch Loan is denominated, (ii) in the case of reimbursement obligations inrespect of Letters of Credit, in the currency in which such Letter of Credit isdenominated or (iii) in the case of any indemnification or expensereimbursement payment, in Dollars, except as otherwise expressly providedherein.  The Administrative Agent willthereafter cause to be distributed on the same day (if payment was actuallyreceived by the Administrative Agent prior to 2:00 p.m. (New York time) on suchday) like funds relating to the payment of principal or interest or Feesratably to the Lenders entitled thereto.

 

(b)           Any payments under this Agreementthat are made later than 2:00 p.m. (New York time) shall be deemed to havebeen made on the next succeeding Business Day. Whenever any payment to be made hereunder shall be stated to be due on aday that is not a Business Day, the due date thereof shall be extended to thenext succeeding Business Day and, with respect to payments of principal,interest shall be payable during such extension at the applicable rate ineffect immediately prior to such extension.

 

5.4.          NetPayments.  (a)     Subject to the following sentence, allpayments made by or on behalf of the Borrower and the Canadian Borrower underthis Agreement or any other Credit Document shall be made free and clear of,and without deduction or withholding for or on account of, any current orfuture income, stamp or other taxes, levies, imposts, duties, charges, fees,deductions or withholdings, now or hereafter imposed, levied, collected,withheld or assessed by any Governmental Authority, excluding (i) netincome taxes and franchise taxes (imposed in lieu of net income taxes) andcapital taxes imposed on the Administrative Agent, the Canadian AdministrativeAgent or any Lender and (ii) any taxes imposed on the AdministrativeAgent, the Canadian Administrative Agent or any Lender as a result of a currentor former connection between the Administrative Agent, the CanadianAdministrative Agent or such Lender and the jurisdiction of the GovernmentalAuthority imposing such tax or any political subdivision or taxing authoritythereof or therein (other than any such connection arising solely from theAdministrative Agent, the Canadian Administrative Agent or such Lender havingexecuted, delivered or performed its obligations or received a payment under,or enforced, this Agreement).  If anysuch non-excluded taxes, levies, imposts, duties, charges, fees, deductions orwithholdings (“Non-Excluded Taxes”) are required to be withheld from anyamounts payable under this Agreement, the Borrower or

 

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the Canadian Borrower, as applicable, shallincrease the amounts payable to the Administrative Agent, the CanadianAdministrative Agent or such Lender to the extent necessary to yield to theAdministrative Agent, the Canadian Administrative Agent or such Lender (afterpayment of all Non-Excluded Taxes) interest or any such other amounts payablehereunder at the rates or in the amounts specified in this Agreement; provided,however, that the Borrower shall not be required to increase any such amountspayable to any Lender that is not organized under the laws of the United Statesof America or a state thereof (a “Non-U.S. Lender”) if such Lender failsto comply with the requirements of paragraph (b) of this Section 5.4.  Whenever any Non-Excluded Taxes are payableby the Borrower or the Canadian Borrower, as the case may be, as promptly aspossible thereafter such Borrower or Canadian Borrower shall send to theAdministrative Agent or the Canadian Administrative Agent for its own accountor for the account of such Lender, as the case may be, a certified copy of anoriginal official receipt (or other evidence acceptable to such Lender, actingreasonably) received by such Borrower or Canadian Borrower showing paymentthereof.  If the Borrower or the CanadianBorrower, as the case may be, fails to pay any Non-Excluded Taxes when due tothe appropriate taxing authority or fails to remit to the Administrative Agentor the Canadian Administrative Agent the required receipts or other requireddocumentary evidence, such Borrower or Canadian Borrower shall indemnify theAdministrative Agent, the Canadian Administrative Agent and the Lenders for anyincremental taxes, interest, costs or penalties that may become payable by theAdministrative Agent, the Canadian Administrative Agent or any Lender as aresult of any such failure.  Theagreements in this Section 5.4(a) shall survive the termination of thisAgreement and the payment of the Loans and all other amounts payable hereunder.

 

(b)           Each Non-U.S. Lender (other than aCanadian Lender making Loans only to the Canadian Borrower) shall:

 

(i)            deliver to the Borrower and theAdministrative Agent two copies of either (x) in the case of Non-U.S.Lender claiming exemption from U.S. Federal withholding tax underSection 871(h) or 881(c) of the Code with respect to payments of“portfolio interest”, United States Internal Revenue Service Form W-8BEN(together with a certificate representing that such Non-U.S. Lender is not abank for purposes of Section 881(c) of the Code, is not a 10-percentshareholder (within the meaning of Section 871(h)(3)(B) of the Code) ofthe Borrower and is not a controlled foreign corporation related to theBorrower (within the meaning of Section 864(d)(4) of the Code)), or (y)Internal Revenue Service Form W-8BEN or Form W-8ECI, in each case properlycompleted and duly executed by such Non-U.S. Lender claiming complete exemptionfrom, or reduced rate of, U.S. Federal withholding tax on payments by theBorrower under this Agreement;

 

(ii)           deliver to the Borrower and theAdministrative Agent two further copies of any such form or certification (orany applicable successor form) on or before the date that any such form orcertification expires or becomes obsolete and after the occurrence of any eventrequiring a change in the most recent form previously delivered by it to theBorrower; and

 

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(iii)          obtain such extensions of time forfiling and complete such forms or certifications as may reasonably be requestedby the Borrower or the Administrative Agent;

 

unless in any such case any change in treaty, law or regulation hasoccurred prior to the date on which any such delivery would otherwise berequired that renders any such form inapplicable or would prevent such Lenderfrom duly completing and delivering any such form with respect to it and suchLender so advises the Borrower and the Administrative Agent.  Each Person that shall become a Participantpursuant to Section 14.6 or a Lender pursuant to Section 14.6 shall,upon the effectiveness of the related transfer, be required to provide all theforms and statements required pursuant to this Section 5.4(b), providedthat in the case of a Participant such Participant shall furnish all suchrequired forms and statements to the Lender from which the relatedparticipation shall have been purchased.

 

(c)           The Borrower shall not be requiredto indemnify any Non-U.S. Lender, or to pay any additional amounts to anyNon-U.S. Lender, in respect of U.S. Federal withholding tax pursuant toparagraph (a) above to the extent that (i) the obligation to withholdamounts with respect to U.S. Federal withholding tax existed on the date suchNon-U.S. Lender became a party to this Agreement (or, in the case of aParticipant that is not organized under the laws of the United States ofAmerica or a state thereof (a “Non-U.S. Participant”), on the date suchNon-U.S. Participant became a Participant hereunder); provided, however,that this clause (i) shall not apply to the extent that (x) the indemnitypayments or additional amounts any Lender (or Participant) would be entitled toreceive (without regard to this clause (i)) do not exceed the indemnitypayment or additional amounts that the person making the assignment,participation or transfer to such Lender (or Participant) would have beenentitled to receive in the absence of such assignment, participation ortransfer, or (y) such assignment, participation or transfer had beenrequested by the Borrower or the Canadian Borrower, (ii) the obligation topay such additional amounts would not have arisen but for a failure by suchNon-U.S. Lender or Non-U.S. Participant to comply with the provisions ofparagraph (b) above or (iii) any of the representations orcertifications made by a Non-U.S. Lender or Non-U.S. Participant pursuant toparagraph (b) above are incorrect at the time a payment hereunder is made,other than by reason of any change in treaty, law or regulation having effectafter the date such representations or certifications were made. The CanadianBorrower shall not be required to indemnify or pay additional amounts to aLender or Administrative Agent in respect of Canadian withholding tax pursuantto paragraph (a) above to the extent that such Non-Excluded Taxes result from afailure by the Lender or Administrative Agent to comply with any certification,identification, information, documentation or other reporting requirement(collectively referred to in this Section 5.4(c) as a “ReportingRequirement”) if (i) compliance is required by law, regulation,administrative practice or any applicable tax treaty as a precondition toexemption from or a reduction in the rate of deduction or withholding ofNon-Excluded Taxes, and (ii) the Canadian Borrower has first made writtenrequest to the Lender or the Canadian Administrative Agent, as applicable, thatthe Lender or Administrative Agent comply with the particular ReportingRequirement (identified specifically in such request) and the Lender orAdministrative Agent, as applicable, has not complied with such ReportingRequirement within 30 Business Days of such written request; provided, howeverthat the

 

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Canadian Borrowershall not be relieved of its obligation to indemnify or pay additional amountsto a Lender or Administrative Agent (x) in respect of certain payments wherethe obligation to indemnify or pay additional amounts in respect of thosepayments arose prior to Canadian Borrower’s written request to the Lender orCanadian Administrative Agent, as applicable, respecting such ReportingRequirement, (y) if, by reason of any change in any law, regulation,administrative practice or applicable tax treaty occurring after the datehereof, the Lender or Administrative Agent, as applicable, is unable to dulycomply with such Reporting Requirement, or (z) to the extent that theadditional payment or indemnity compensates the Lender or Administrative Agentfor an amount to which the Lender or Administrative Agent would have beenentitled to receive under paragraph (a) had the Lender or Administrative Agent,as applicable complied with the Reporting Requirement.

 

(d)           If the Borrower or the CanadianBorrower determines in good faith that a reasonable basis exists for contestingany taxes for which indemnification has been demanded hereunder, the relevantLender, the Canadian Administrative Agent or the Administrative Agent, asapplicable, shall cooperate with such Borrower or Canadian Borrower inchallenging such taxes at Borrower’s or Canadian Borrower’s expense if sorequested by Borrower or Canadian Borrower. If any Lender, the Canadian Administrative Agent or the AdministrativeAgent, as applicable, receives a refund of a tax for which a payment has beenmade by the Borrower or the Canadian Borrower pursuant to this Agreement, whichrefund in the good faith judgment of such Lender, the Canadian AdministrativeAgent or Administrative Agent, as the case may be, is attributable to suchpayment made by such Borrower or Canadian Borrower, then the Lender, theCanadian Administrative Agent or the Administrative Agent, as the case may be,shall reimburse Borrower or Canadian Borrower for such amount (together withany interest received thereon) as the Lender, the Canadian Administrative Agentor Administrative Agent, as the case may be, determines to be the proportion ofthe refund as will leave it, after such reimbursement, in no better or worseposition than it would have been in if the payment had not been required.  A Lender, the Canadian Administrative Agentor Administrative Agent shall claim any refund that it determines is availableto it, unless it concludes in its reasonable discretion that it would beadversely affected by making such a claim. Neither the Lender, the Canadian Administrative Agent nor theAdministrative Agent shall be obliged to disclose any information regarding itstax affairs or computations to the Borrower or the Canadian Borrower inconnection with this paragraph (d) or any other provision of thisSection 5.4.

 

(e)           Each Lender represents and agreesthat, on the date hereof and at all times during the term of this Agreement, itis not and will not be a conduit entity participating in a conduit financingarrangement (as defined in Section 7701(1) of the Code and the regulationsthereunder) with respect to the Borrowings hereunder unless the Borrower hasconsented to such arrangement prior thereto.

 

(f)            NotwithstandingSection 5.4(a), the Canadian Borrower shall not be required to indemnifyor pay any additional amounts in respect of Canadian withholding tax imposedunder Part XIII of the Tax Act applicable to any amount payable with respect toCanadian Revolving Credit Loans or Canadian Letters of Credit

 

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pursuant to Section 5.4(a) above to any Lenderthat is not a Canadian Resident for the purposes of the Tax Act, except if anysuch Loans were assigned, participated or transferred to such Lender at therequest of the Borrower or the Canadian Borrower or were assigned, participatedor transferred to such Lender following the occurrence of and during thecontinuance of an Event of Default pursuant to Section 11.1 or 11.5.

 

5.5.          Computations of Interest and Fees.  (a)    Interest on Eurodollar Loans and, except as provided in the nextsucceeding sentence, ABR Loans shall be calculated on the basis of a 360-dayyear for the actual days elapsed. Interest on (i) Canadian Prime Loans and (ii) ABR Loans inrespect of which the rate of interest is calculated on the basis of the PrimeRate and interest on overdue interest shall be calculated on the basis of a365- (or 366-, as the case may be) day year for the actual days elapsed.

 

(b)           Fees and Letter of Credit Outstandingshall be calculated on the basis of a 365- (or 366-, as the case may be) dayyear for the actual days elapsed.

 

5.6.          Limit on Rate ofInterest.

 

(a)           No Payment shall exceed Lawful Rate. Notwithstanding any other term of this Agreement, neither the Borrowernor the Canadian Borrower shall be obliged to pay any interest or other amountsunder or in connection with this Agreement in excess of the amount or ratepermitted under or consistent with any applicable law, rule or regulation.  In particular, the Canadian Borrower shallnot be obliged to pay any interest or other amounts which would result in thereceipt by any Lender of interest on credit advanced at a rate in excess of therate permitted under the *Criminal Code*(Canada).  For purposes of thisSection 5.6, “interest” and “credit advanced” have the meanings ascribedin the *Criminal Code* (Canada) andthe “effective annual rate of interest” shall be calculated in accordance withgenerally accepted actuarial principles and practices.

 

(b)           Payment at Highest Lawful Rate. If either the Borrower or the Canadian Borrower is not obliged to make apayment which it would otherwise be required to make, as a result ofSection 5.6(a), the Borrower or the Canadian Borrower, as applicable,shall make such payment to the maximum extent permitted by or consistent withapplicable laws, rules and regulations.

 

(c)           Adjustment if any Payment exceedsLawful Rate.     Ifany provision of this Agreement or any of the other Credit Documents wouldobligate the Borrower or the Canadian Borrower to make any payment of interestor other amount payable to any Lender in an amount or calculated at a ratewhich would be prohibited by any applicable law, rule or regulation, or in thecase of the Canadian Borrower, would result in a receipt by that Lender ofinterest at a criminal rate (as such terms are construed under the *Criminal Code* (Canada)), thennotwithstanding such provision, such amount or rate shall be deemed to havebeen adjusted with retroactive effect to the maximum amount or rate ofinterest, as the case may be, as would not be so prohibited by law (in the caseof the Borrower or the Canadian Borrower) or so result in a receipt by that

 

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Lender of interest ata criminal rate (in the case of the Canadian Borrower), such adjustment to beeffected, to the extent necessary, as follows:

 

(i)            firstly, by reducing the amount orrate of interest required to be paid by the Borrower or the Canadian Borrowerto the affected Lender under Section 2.8; and

 

(ii)           thereafter, by reducing any fees,commissions, premiums and other amounts required to be paid by the Borrower orthe Canadian Borrower to the affected Lender where, in the case of the CanadianBorrower, such amounts would constitute interest for purposes ofSection 347 of the *Criminal Code*(Canada).

 

Notwithstanding the foregoing, and after giving effect to alladjustments contemplated thereby, if any Lender shall have received from theBorrower or the Canadian Borrower an amount in excess of the maximum permittedby any applicable law, rule or regulation or in the case of the CanadianBorrower, an amount in excess of the maximum permitted under the *Criminal Code* (Canada), then the Borroweror the Canadian Borrower, as applicable, shall be entitled, by notice inwriting to the Administrative Agent or the Canadian Administrative Agent, asapplicable, to obtain reimbursement from that Lender in an amount equal to suchexcess, and pending such reimbursement, such amount shall be deemed to be anamount payable by that Lender to the Borrower or the Canadian Borrower, asapplicable.  Any amount or rate ofinterest referred to in this Section 5.6(c) shall be determined inaccordance with generally accepted actuarial practices and principles as aneffective annual rate of interest over the term that any Loan remainsoutstanding on the assumption, with respect to Canadian Borrowings, that anycharges, fees or expenses that fall within the meaning of “interest” (asdefined in the *Criminal Code*(Canada)) shall, if the relate to a specific period of time, be *pro-rated* over that period of time andotherwise be *pro-rated* over theperiod from the Closing Date to the Maturity Date.

 

SECTION 6.                                ConditionsPrecedent to Initial Borrowing

 

The initial Borrowing of Tranche C Term Loans under this Agreement issubject to the satisfaction of the following conditions precedent:

 

6.1.          Credit Documents.  The Administrative Agent shall have receivedthis Agreement, executed and delivered by a duly authorized officer of each ofthe Holdings, the Borrower, the Canadian Borrower, Required Lenders under theExisting Credit Agreement (whom may provide written consent via a consentsupplement to this Agreement) and each Tranche C Term Loan Lender.

 

6.2.          Collateral. All documents and instruments, including Uniform Commercial Code orother applicable personal property security financing statements, required bylaw or reasonably requested by the Administrative Agent to be filed, registeredor recorded to create the Liens intended to be created by the SecurityAgreement and perfect such Liens to the extent required by, and with thepriority

 

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required by, the Security Agreement shallhave been filed, registered or recorded or delivered to the AdministrativeAgent for filing, registration or recording.

 

6.3.          Legal Opinions.  The Administrative Agent shall have receivedthe executed legal opinions of (a) Simpson Thacher & Bartlett LLP,special New York counsel to the Borrower, substantially in the form of ExhibitI-1 and (b) Kenneth L. Walker, General Counsel to the Borrower.  The Borrower, the Canadian Borrower, theother Credit Parties and the Administrative Agent hereby instruct such counselto deliver such legal opinions.

 

6.4.          No Default. After giving effect to the Borrowings on the Effective Date and theother transactions contemplated hereby, no Default or Event of Default hasoccurred and is continuing.

 

6.5.          Consent. Borrower, Holdings, Required Lenders (as such term is defined under theExisting Credit Agreement and whom may provide written consent via a consentsupplement to this Agreement) and the Tranche C Term Loan Lenders shall haveindicated their consent by the execution and delivery of the signature pageshereof to the Administrative Agent.

 

6.6.          [Reserved]

 

6.7.          Effective Date Certificates.  The Administrative Agent shall have receiveda certificate of each Credit Party, dated the Effective Date, substantially inthe form of Exhibit J, with appropriate insertions, executed by the Presidentor any Vice President and the Secretary or any Assistant Secretary of suchCredit Party, and attaching the documents referred to in Sections 6.8 and 6.9(if applicable).

 

6.8.          Corporate Proceedings of Each CreditParty.  The Administrative Agentshall have received a copy of the resolutions, in form and substancesatisfactory to the Administrative Agent, of the Board of Directors of eachCredit Party (or a duly authorized committee thereof) authorizing (a) theexecution, delivery and performance of the Credit Documents (and any agreementsrelating thereto) to which it is a party and (b) in the case of the Borrowerand the Canadian Borrower, the extensions of credit contemplated hereunder;provided that in lieu of delivery of each of the resolutions set forth in thisSection 6.8, the Borrower may deliver a certificate executed by thePresident or any Vice President of such Credit Party certifying that there havebeen no material amendments to those resolutions previously delivered to theAdministrative Agent on the Closing Date pursuant to Section 6.8 of theExisting Credit Agreement.

 

6.9.          Corporate Documents.  The Administrative Agent shallhave received true and complete copies of the certificate of incorporationand by-laws (or equivalent organizational documents) of each Credit Party;provided that in lieu of delivery of each of the documents set forth in thisSection 6.9, the Borrower may deliver a certificate executed by thePresident or any Vice President of such Credit Party certifying that there havebeen no material amendments to those documents previously

 

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delivered to the Administrative Agent on theClosing Date pursuant to Section 6.9 of the Existing Credit Agreement.

 

6.10.        Fees.  (a)     The Lenders shall have received the feesin the amounts previously agreed in writing by the Agents and such Lenders tobe received on the Effective Date and all expenses (including the reasonablefees, disbursements and other charges of counsel) for which invoices have beenpresented on or prior to the Effective Date shall have been paid.

 

6.11.        Representations and Warranties.  On the Effective Date, the representationsand warranties made by each of Holdings, the Borrower and the Canadian Borrowerin Section 8, as they relate to the Credit Parties at such time, shall betrue and correct in all material respects.

 

6.12.        Governmental Authorizations andConsents.  Each Credit Party shallhave obtained all approval and authorizations of Governmental Authoritiesand all consents of other Persons, in each case that are necessary inconnection with the transactions contemplated by the Credit Documents and eachof the foregoing shall be in full force and effect.  All applicable waiting periods shall haveexpired without any action being taken or threatened by any competent authoritywhich would restrain, prevent or otherwise impose adverse conditions on thetransactions contemplated by the Credit Documents and no action, request forstay, petition for review or rehearing, reconsideration, or appeal with respectto any of the foregoing shall be pending, and the time for any applicableagency to take action to set aside its consent on its own motion shall haveexpired.

 

SECTION 7.                                ConditionsPrecedent to All Credit Events

 

The agreement of each Lender to make any Loan requested to be made byit on any date (excluding Mandatory Borrowings) and the obligation of theLetter of Credit Issuer to issue Letters of Credit on any date is subject tothe satisfaction of the following conditions precedent:

 

7.1.          No Default; Representations andWarranties.  At the time of eachCredit Event and also after giving effect thereto (a) no Default or Eventof Default shall have occurred and be continuing and (b) all representationsand warranties made by any Credit Party contained herein or in the other CreditDocuments shall be true and correct in all material respects with the sameeffect as though such representations and warranties had been made on and as ofthe date of such Credit Event (except where such representations and warrantiesexpressly relate to an earlier date, in which case such representations andwarranties shall have been true and correct in all material respects as of suchearlier date).

 

7.2.          Notice of Borrowing; Letter of CreditRequest.  (a)     Prior to the making of each Tranche C TermLoan, each Revolving Credit Loan (other than any Revolving Credit Loan madepursuant to Section 3.4(a)) and each Swingline Loan, the

 

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Administrative Agent shall have received aNotice of Borrowing (whether in writing or by telephone) meeting therequirements of Section 2.3.

 

(b)           Prior to the issuance of each Letterof Credit, the Administrative Agent and the Letter of Credit Issuer shall havereceived a Letter of Credit Request meeting the requirements ofSection 3.2(a).

 

The acceptance of the benefits of each Credit Event shall constitute arepresentation and warranty by each Credit Party to each of the Lenders thatall the applicable conditions specified above exist as of that time.

 

SECTION 8.                                Representations,Warranties and Agreements

 

In order to induce the Lenders to enter into this Agreement, to makethe Loans and issue or participate in Letters of Credit as provided for herein,Holdings, the Borrower and the Canadian Borrower make the followingrepresentations and warranties to, and agreements with, the Lenders, all ofwhich shall survive the execution and delivery of this Agreement and the makingof the Loans and the issuance of the Letters of Credit:

 

8.1.          Corporate Status.  Holdings, the Borrower, the Canadian Borrowerand each Material Subsidiary (a) is a duly organized and validly existingcorporation or other entity in good standing under the laws of the jurisdictionof its organization and has the corporate or other organizational power andauthority to own its property and assets and to transact the business in whichit is engaged and (b) has duly qualified and is authorized to do business andis in good standing in all jurisdictions where it is required to be so qualified,except where the failure to be so qualified could not reasonably be expected toresult in a Material Adverse Effect.

 

8.2.          Corporate Power and Authority.  Each Credit Party has the corporate or otherorganizational power and authority to execute, deliver and carry out the termsand provisions of the Credit Documents to which it is a party and has taken allnecessary corporate or other organizational action to authorize the execution,delivery and performance of the Credit Documents to which it is a party.  Each Credit Party has duly executed anddelivered each Credit Document to which it is a party and each such CreditDocument constitutes the legal, valid and binding obligation of such CreditParty enforceable in accordance with its terms, except as the enforceabilitythereof may be limited by bankruptcy, insolvency or similar laws affectingcreditors’ rights generally and subject to general principles of equity.

 

8.3.          No Violation. Neither the execution, delivery or performance by any Credit Party ofthe Credit Documents to which it is a party nor compliance with the terms andprovisions thereof nor the consummation of the Recapitalization and the othertransactions contemplated hereby or thereby will (a) contravene anyapplicable provision of any material law, statute, rule, regulation, order,writ, injunction or decree of any court or governmental instrumentality,(b) result in any breach of any of the terms, covenants, conditions orprovisions of, or constitute a default under, or result in the creation or

 

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imposition of (or the obligation to create orimpose) any Lien upon any of the property or assets of any of Holdings, theBorrower, the Canadian Borrower or any of the Restricted Subsidiaries (otherthan Liens created under the Credit Documents) pursuant to, the terms of anymaterial indenture (including the Subordinated Note Indenture), loan agreement,lease agreement, mortgage, deed of trust, agreement or other materialinstrument to which Holdings, the Borrower, the Canadian Borrower or any of theRestricted Subsidiaries is a party or by which it or any of its property orassets is bound or (c) violate any provision of the certificate ofincorporation, By-Laws or other constitutional documents of Holdings, theBorrower, the Canadian Borrower or any of the Restricted Subsidiaries.

 

8.4.          Litigation. There are no actions, suits or proceedings (including EnvironmentalClaims) pending or, to the knowledge of Holdings, the Borrower or the CanadianBorrower, threatened with respect to Holdings, the Borrower, the CanadianBorrower or any of its Subsidiaries that could reasonably be expected to resultin a Material Adverse Effect.

 

8.5.          Margin Regulations.  Neither the making of any Loan hereunder northe use of the proceeds thereof will violate the provisions of Regulation T, Uor X of the Board.

 

8.6.          Governmental Approvals.  No order, consent, approval, license,authorization, or validation of, or filing, recording or registration with, orexemption by, any Governmental Authority is required to authorize or isrequired in connection with (a) the execution, delivery and performance of anyCredit Document or (b) the legality, validity, binding effect or enforceabilityof any Credit Document, except any of the foregoing the failure to obtain ormake could not reasonably be expected to have a Material Adverse Effect.

 

8.7.          Investment Company Act.  Neither Holdings nor the Borrower is an“investment company” within the meaning of the Investment Company Act of 1940,as amended.

 

8.8.          True and Complete Disclosure.  (a)    None of the factual information and data (taken as a whole) heretoforeor contemporaneously furnished by any of Holdings, the Borrower, the CanadianBorrower, any of the Subsidiaries or any of their respective authorizedrepresentatives in writing to the Administrative Agent and/or any Lender on orbefore the Closing Date (including (i) the Confidential InformationMemorandum and (ii) all information contained in the Credit Documents) forpurposes of or in connection with this Agreement or any transactioncontemplated herein contained any untrue statement or omitted to state anymaterial fact necessary to make such information and data (taken as a whole)not misleading at such time in light of the circumstances under which suchinformation or data was furnished, it being understood and agreed that forpurposes of this Section 8.8(a), such factual information and data shallnot include projections and pro forma financial information.

 

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(b)           The projections and pro formafinancial information contained in the information and data referred to inparagraph (a) above were based on good faith estimates and assumptionsbelieved by such Persons to be reasonable at the time made, it being recognizedby the Lenders that such projections as to future events are not to be viewedas facts and that actual results during the period or periods covered by anysuch projections may differ from the projected results.

 

8.9.          Financial Condition; Financial Statements.  The (a) unaudited historical consolidatedfinancial information of the Parent as set forth in the ConfidentialInformation Memorandum, and (b) the Historical Financial Statements, ineach case present or will, when provided, present fairly in all materialrespects the combined financial position of the Borrower at the respectivedates of said information, statements and results of operations for therespective periods covered thereby.  Thefinancial statements referred to in clause (b) of this Section 8.9have been prepared in accordance with GAAP consistently applied except to theextent provided in the notes to said financial statements.  There has been no Material Adverse Changesince November 30, 2003, other than solely as a result of changes ingeneral economic conditions.

 

8.10.        Tax Returns and Payments.  Each of Holdings, the Borrower, the CanadianBorrower and the Subsidiaries has filed all federal income tax returns and allother material tax returns, domestic and foreign, required to be filed by itand has paid all material taxes and assessments payable by it that have becomedue, other than those not yet delinquent or contested in good faith.  Each of Holdings, the Borrower, the CanadianBorrower and each of the Subsidiaries have paid, or have provided adequatereserves (in the good faith judgment of the management of the Borrower) inaccordance with GAAP for the payment of, all material federal, state,provincial and foreign income taxes applicable for all prior fiscal years andfor the current fiscal year to the Effective Date.

 

8.11.        Compliance with ERISA.  (i) Each Plan is in compliance with ERISA,the Code and any applicable Requirement of Law; no Reportable Event hasoccurred (or is reasonably likely to occur) with respect to any Plan; no Planis insolvent or in reorganization (or is reasonably likely to be insolvent orin reorganization), and no written notice of any such insolvency orreorganization has been given to any of Holdings, the Borrower, any Subsidiaryor any ERISA Affiliate; no Plan (other than a multiemployer plan) has anaccumulated or waived funding deficiency (or is reasonably likely to have sucha deficiency); none of Holdings, the Borrower, any Subsidiary or any ERISAAffiliate has incurred (or is reasonably likely expected to incur) anyliability to or on account of a Plan pursuant to Section 409, 502(i),502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971or 4975 of the Code or has been notified in writing that it will incur anyliability under any of the foregoing Sections with respect to any Plan; noproceedings have been instituted (or are reasonably likely to be instituted) toterminate or to reorganize any Plan or to appoint a trustee to administer any Plan,and no written notice of any such proceedings has been given to any ofHoldings, the Borrower, any Subsidiary or any ERISA Affiliate; and no lienimposed under the Code or ERISA on the assets of any of Holdings, the Borroweror any Subsidiary or any ERISA Affiliate exists (or is reasonably likely toexist) nor has Holdings, the Borrower, any Subsidiary or any ERISA Affiliatebeen notified in writing that such a lien will be

 

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imposed on the assets of any of Holdings, theBorrower, any Subsidiary or any ERISA Affiliate on account of any Plan, exceptto the extent that a breach of any of the representations, warranties oragreements in this Section 8.11(i) would not result, individually or inthe aggregate, in an amount of liability that would be reasonably likely tohave a Material Adverse Effect or relates to any matter disclosed in thefinancial statements of the Borrower contained in the Confidential InformationMemorandum.  No Plan (other than a multiemployerplan) has an Unfunded Current Liability that would, individually or when takentogether with any other liabilities referenced in this Section 8.11(i), bereasonably likely to have a Material Adverse Effect.  With respect to Plans that are multiemployerplans (as defined in Section 3(37) of ERISA), the representations andwarranties in this Section 8.11(i), other than any made with respect to(a) liability under Section 4201 or 4204 of ERISA or (b) liability fortermination or reorganization of such Plans under ERISA, are made to the bestknowledge of the Borrower.

 

(ii)           **the**Canadian Pension Plans are duly registered under all applicable provincialpension benefits legislation; all material obligations of each Credit Party andits Subsidiaries (including fiduciary, funding, investment and administrationobligations) required to be performed in connection with the Canadian PensionPlans, the Canadian Benefit Plans and the funding agreements therefore havebeen performed in **accordance with applicable laws and regulations**;there are no outstanding disputes concerning the assets held pursuant to anysuch funding agreement; all contributions or premiums required to be made byany Credit Party and any of its Subsidiaries to the Canadian Pension Plans andthe Canadian Benefit Plans have been made within the time limits required by,and in accordance with, the terms of such plans and applicable laws andregulations; all employee contributions to the Canadian Pension Plans and theCanadian Benefit Plans required to be made by way of authorized payrolldeduction have been properly withheld and fully paid into such plans within thetime limits required by, and in **accordance with, the terms of suchplans and applicable laws and regulations**; all reportsand disclosures relating to the Canadian Pension Plans and Canadian BenefitPlans required by any applicable laws or regulations have been filed ordistributed in **accordance with applicable laws and regulations;**no**Credit Party has made any******improperwithdrawals, or applications of, the assets of any of the Canadian PensionPlans; other than as disclosed in Schedule 8.11(ii), there have been nopartial terminations of any Canadian Pension Plan with a defined benefitprovision; no amount is owing by any of the Canadian Pension Plans under theTax Act; no Credit Party has any knowledge, nor any grounds for believing, thatany of the Canadian Pension Plans is the subject of an investigation, any otherproceeding, an action or a claim**other than a routine claim forbenefits**; except to the extent that a breach of any ofthe foregoing representations, warranties or agreements in thisSection 8.11(ii) would not result, individually or in the aggregate, in anamount of liability that would be reasonably likely to have a Material AdverseEffect, or relates to any matter disclosed in **the financial statements of theBorrower contained in the Confidential Information Memorandum;**No Canadian Pension Plan has an Unfunded Current Liability that would,individually or when taken together with any other liabilities referenced inthis Section 8.11(ii) be reasonably likely to have a Material AdverseEffect;

 

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8.12.        Subsidiaries. On the Effective Date, Holdings does not have any Subsidiaries otherthan the Borrower and its Subsidiaries. Schedule 8.12 lists each Subsidiary of the Borrower (and the directand indirect ownership interest of the Borrower therein), in each case existingon the Effective Date.  To the knowledgeof the Borrower, after due enquiry, each Material Subsidiary as of theEffective Date has been so designated on Schedule 8.12.

 

8.13.        Patents, etc. Holdings, the Borrower, the Canadian Borrower and each of the RestrictedSubsidiaries have obtained all patents, trademarks, servicemarks, trade names,copyrights, licenses and other rights, free from burdensome restrictions, thatare necessary for the operation of their respective businesses as currentlyconducted and as proposed to be conducted, except where the failure to obtainany such rights could not reasonably be expected to have a Material AdverseEffect.

 

8.14.        Environmental Laws.  (a)    Except as could not reasonably be expected to have a Material AdverseEffect: (i) each of Holdings, the Borrower, the Canadian Borrower and each ofthe Subsidiaries are in compliance with all Environmental Laws in alljurisdictions in which Holdings, the Borrower and each of the Subsidiaries arecurrently doing business (including having obtained all material permitsrequired under Environmental Laws); (ii) each of Holdings, the Borrowerand the Canadian Borrower will comply and cause each of the Subsidiaries tocomply with all such Environmental Laws (including all permits required underEnvironmental Laws); and (iii) none of Holdings, the Borrower, the CanadianBorrower and each of the Subsidiaries has become subject to any EnvironmentalClaim or any other liability under any Environmental Law.

 

(b)           None of Holdings, the Borrower, theCanadian Borrower or any of the Subsidiaries has treated, stored, transported,released or disposed of Hazardous Materials at or from any currently orformerly owned Real Estate or facility relating to its business in a mannerthat could reasonably be expected to have a Material Adverse Effect.

 

8.15.        Properties. Each of Holdings, the Borrower, the Canadian Borrower and each of theSubsidiaries have good and marketable title to or leasehold interest in allproperties that are necessary for the operation of their respective businessesas currently conducted and as proposed to be conducted, free and clear of allLiens (other than any Liens permitted by this Agreement) and except where thefailure to have such good title could not reasonably be expected to have aMaterial Adverse Effect.

 

SECTION 9.                                AffirmativeCovenants

 

Each of Holdings, the Borrower and the Canadian Borrower herebycovenants and agrees that on the Effective Date and thereafter, until theCommitments, the Swingline Commitment and each Letter of Credit have terminatedand the Loans and Unpaid Drawings, together with interest, Fees and all otherObligations incurred hereunder, are paid in full:

 

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9.1.          Information Covenants.  Holdings or the Borrower will furnish to eachLender and the Administrative Agent:

 

(a)           Annual Financial Statements.  As soon as available and in any event on orbefore the date on which such financial statements are required to be filedwith the SEC (or, if such financial statements are not required to be filedwith the SEC, on or before the date that is 90 days after the end of eachsuch fiscal year), the consolidated balance sheet of (i) Holdings, theBorrower and the Restricted Subsidiaries and (ii) Holdings and itsSubsidiaries, in each case as at the end of such fiscal year, and the relatedconsolidated statement of operations and cash flows for such fiscal year,setting forth comparative consolidated figures for the preceding fiscal year,and certified by independent certified public accountants of recognizednational standing whose opinion shall not be qualified as to the scope of auditor as to the status of Holdings, the Borrower, the Canadian Borrower or any ofthe Material Subsidiaries as a going concern, together in any event with acertificate of such accounting firm stating that in the course of its regularaudit of the business of Holdings, the Borrower, the Canadian Borrower and theMaterial Subsidiaries, which audit was conducted in accordance with generallyaccepted auditing standards, such accounting firm has obtained no knowledge ofany Default or Event of Default relating to Section 10.9 or 10.10 that hasoccurred and is continuing or, if in the opinion of such accounting firm such aDefault or Event of Default has occurred and is continuing, a statement as to thenature thereof.  The requirements of thisSection 9.1(a) shall be satisfied by delivery of financial statements ofParent and its Subsidiaries which otherwise meet the requirements hereof andare accompanied by reconciliations for any difference between what is deliveredhereunder and what would have been delivered by Holdings and its Subsidiariespursuit to this Section 9.1(a).

 

(b)           Quarterly Financial Statements.  As soon as available and in any event on orbefore the date on which such financial statements are required to be filedwith the SEC with respect to each of the first three quarterly accountingperiods in each fiscal year of Holdings (or, if such financial statements arenot required to be filed with the SEC, on or before the date that is 45 daysafter the end of each such quarterly accounting period), the consolidatedbalance sheet of (i) Holdings, the Borrower and the RestrictedSubsidiaries and (ii) Holdings and its Subsidiaries, in each case as atthe end of such quarterly period and the related consolidated statement ofoperations for such quarterly accounting period and for the elapsed portion ofthe fiscal year ended with the last day of such quarterly period, and therelated consolidated statement of cash flows for the elapsed portion of thefiscal year ended with the last day of such quarterly period, and setting forthcomparative consolidated figures for the related periods in the prior fiscalyear or, in the case of such consolidated balance sheet, for the last day ofthe prior fiscal year, all of which shall be certified by an Authorized Officerof the Borrower, subject to changes resulting from audit and normal year-endaudit adjustments. The requirements of this Section 9.1(b) shall besatisfied by delivery of financial statements of Parent and its Subsidiarieswhich otherwise meet the requirements hereof and are accompanied byreconciliations for any difference between what is delivered hereunder and whatwould have been delivered by Holdings and its Subsidiaries pursuit to this Section 9.1(b).

 

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(c)                                  Budgets. Within 60 days after the commencement of each fiscal year ofHoldings and the Borrower, budgets of Holdings, the Borrower and the CanadianBorrower in reasonable detail for the fiscal year as customarily prepared bymanagement of Holdings, the Borrower and the Canadian Borrower for theirinternal use consistent in scope with the financial statements providedpursuant to Section 9.1(a), setting forth the principal assumptions uponwhich such budgets are based.

 

(d)                                 Officer’s Certificates. At the time of the delivery of the financial statements provided for inSections 9.1(a) and (b), a certificate of an Authorized Officer of the Borrowerto the effect that no Default or Event of Default exists or, if any Default orEvent of Default does exist, specifying the nature and extent thereof, whichcertificate shall set forth (i) the calculations required to establish whetherHoldings, the Borrower and the Subsidiaries were in compliance with theprovisions of Sections 10.9 and 10.10 as at the end of such fiscal year orperiod, as the case may be, (ii) a specification of any change in the identityof the Restricted Subsidiaries, Unrestricted Subsidiaries and ForeignSubsidiaries as at the end of such fiscal year or period, as the case may be,from the Restricted Subsidiaries, Unrestricted Subsidiaries and ForeignSubsidiaries, respectively, provided to the Lenders on the Closing Date or themost recent fiscal year or period, as the case may be, (iii) the thenapplicable Status and (iv) the amount of any Pro Forma Adjustment notpreviously set forth in a Pro Forma Adjustment Certificate or any change in theamount of a Pro Forma Adjustment set forth in any Pro Forma AdjustmentCertificate previously provided and, in either case, in reasonable detail, the calculationsand basis therefor.  At the time of thedelivery of the financial statements provided for in Section 9.1(a),(i) a certificate of an Authorized Officer of the Borrower setting forthin reasonable detail the Available Amount as at the end of the fiscal year towhich such financial statements relate and (ii) a certificate of an AuthorizedOfficer and the chief legal officer of the Borrower (x) setting forth theinformation required pursuant to Section 2 of the Perfection Certificateor confirming that there has been no change in such information since theClosing Date or the date of the most recent certificate delivered pursuant tothis subsection (d)(ii), as the case may be, and (ii) certifying thatall Uniform Commercial Code and Personal Property Security Act financingstatements (including fixture filings, as applicable) or other appropriatefilings, recordings or registrations, including all refilings, rerecordings andreregistrations, containing a description of the Collateral have been filed ofrecord in each governmental, municipal or other appropriate office in eachjurisdiction identified pursuant to clause (x) above to the extentnecessary to protect and perfect the security interests under the SecurityDocuments.

 

(e)                                  Notice of Default or Litigation. Promptly after an Authorized Officer of any of Holdings, the Borrower,the Canadian Borrower or any of the Subsidiaries obtains knowledge thereof,notice of (i) the occurrence of any event that constitutes a Default or Eventof Default, which notice shall specify the nature thereof, the period ofexistence thereof and what action any of Holdings, the Borrower or the CanadianBorrower proposes to take with respect thereto, and (ii) any litigation orgovernmental proceeding pending against any of Holdings, the Borrower, theCanadian Borrower or any of the Subsidiaries that could reasonably be expectedto result in a Material Adverse Effect.

 

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(f)                                    Environmental Matters. Holdings, the Borrower and the Canadian Borrower will promptly advisethe Lenders in writing after obtaining knowledge of any one or more of thefollowing environmental matters, unless such environmental matters would not,individually or when aggregated with all other such matters, be reasonablyexpected to result in a Material Adverse Effect:

 

(i)                                     Any pending or threatenedEnvironmental Claim against any of Holdings, the Borrower, the CanadianBorrower or any of the Subsidiaries or any Real Estate;

 

(ii)                                  Any condition or occurrence on anyReal Estate that (x) results in noncompliance by any of Holdings, the Borrower,the Canadian Borrower or any of the Subsidiaries with any applicableEnvironmental Law or (y) could reasonably be anticipated to form the basis ofan Environmental Claim against any of Holdings, the Borrower, the CanadianBorrower or any of the Subsidiaries or any Real Estate;

 

(iii)                               Any condition or occurrence on anyReal Estate that could reasonably be anticipated to cause such Real Estate tobe subject to any restrictions on the ownership, occupancy, use ortransferability of such Real Estate under any Environmental Law; and

 

(iv)                              The taking of any removal orremedial action in response to the actual or alleged presence of any HazardousMaterial on any Real Estate.

 

All such notices shall describe in reasonable detail the nature of theclaim, investigation, condition, occurrence or removal or remedial action andthe response thereto.  The term “RealEstate” shall mean land, buildings and improvements owned or leased by anyof Holdings, the Borrower, the Canadian Borrower or any of the Subsidiaries,but excluding all operating fixtures and equipment, whether or not incorporatedinto improvements.

 

(g)                                 Other Information. Promptly upon filing thereof, copies of any filings (including onForm 10-K, 10-Q or 8-K) or registration statements with, and reports to,the SEC or any analogous Government Authority in any relevant jurisdiction byany of Holdings, the Borrower, the Canadian Borrower or any of the Subsidiaries(other than amendments to any registration statement (to the extent suchregistration statement, in the form it becomes effective, is delivered to theLenders), exhibits to any registration statement and, if applicable, anyregistration statements on Form S-8) and copies of all financial statements,proxy statements, notices and reports that Holdings, the Borrower, the CanadianBorrower or any of the Subsidiaries shall send to the holders of any publiclyissued debt of Holdings, the Borrower, the Canadian Borrower and/or any of theSubsidiaries (including any Subordinated Notes (whether publicly issued ornot)) in their capacity as such holders (in each case to the extent nottheretofore delivered to the Lenders pursuant to this Agreement) and, withreasonable promptness, such other information (financial or otherwise) as theAdministrative Agent on its own behalf or on behalf of any Lender mayreasonably request in writing from time to time.

 

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(h)                                 Pro Forma Adjustment Certificate. Not later than the consummation of the acquisition of any AcquiredEntity or Business by the Borrower or any Restricted Subsidiary for which thereshall be a Pro Forma Adjustment or not later than any date on which financialstatements are delivered with respect to any four-quarter period in which a ProForma Adjustment is made as a result of the consummation of the acquisition ofany Acquired Entity or Business by the Borrower or any Restricted Subsidiaryfor which there shall be a Pro Forma Adjustment, a certificate of an AuthorizedOfficer of the Borrower setting forth the amount of such Pro Forma Adjustmentand, in reasonable detail, the calculations and basis therefor.

 

(i)                                     Perfection Certificate. The Borrower shall deliver to the Administrative Agent on the ClosingDate a completed Perfection Certificate dated the Closing Date and signed by anAuthorized Officer and the chief legal officer of the Borrower, together withall attachments contemplated thereby.

 

9.2.                              Books, Records and Inspections. Each of Holdings,the Borrower and the Canadian Borrower will, and will cause each of theSubsidiaries to, permit officers and designated representatives of theAdministrative Agent or the Required Lenders to visit and inspect any of theproperties or assets Holdings, the Borrower, the Canadian Borrower and any suchSubsidiary in whomsoever’s possession to the extent that it is within suchparty’s control to permit such inspection, and to examine the books of accountHoldings, the Borrower, the Canadian Borrower and any such Subsidiary anddiscuss the affairs, finances and accounts Holdings, the Borrower, the CanadianBorrower and of any such Subsidiary with, and be advised as to the same by, itsand their officers and independent accountants, all at such reasonable timesand intervals and to such reasonable extent as the Administrative Agent or theRequired Lenders may desire.

 

9.3.                              Maintenance of Insurance.  Each of Holdings, the Borrower and theCanadian Borrower will, and will cause each of the Material Subsidiaries to, atall times maintain in full force and effect, with insurance companies that theBorrower believes (in the good faith judgment of the management of theBorrower) are financially sound and responsible at the time the relevant coverageis placed or renewed, insurance in at least such amounts and against at leastsuch risks (and with such risk retentions) as are usually insured against inthe same general area by companies engaged in the same or a similar business;and will furnish to the Lenders, upon written request from the AdministrativeAgent, information presented in reasonable detail as to the insurance socarried.

 

9.4.                              Payment of Taxes.  Each of Holdings, the Borrower and theCanadian Borrower will pay and discharge, and will cause each of theSubsidiaries to pay and discharge, all material taxes, assessments andgovernmental charges or levies imposed upon it or upon its income or profits,or upon any properties belonging to it, prior to the date on which materialpenalties attach thereto, and all lawful material claims that, if unpaid, couldreasonably be expected to become a material Lien upon any properties of theBorrower, the Canadian Borrower or any of the Restricted Subsidiaries, providedthat neither Holdings, the Borrower, the Canadian Borrower nor any of theSubsidiaries shall be required to pay any such tax, assessment, charge, levy orclaim that

 

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is being contested in good faith and by proper proceedings if it hasmaintained adequate reserves (in the good faith judgment of the management ofthe Borrower) with respect thereto in accordance with GAAP.

 

9.5.                              Consolidated Corporate Franchises..  Each of Holdings, the Borrower and theCanadian Borrower will do, and will cause each Material Subsidiary to do, orcause to be done, all things necessary to preserve and keep in full force andeffect its existence, corporate rights and authority, except to the extent thatthe failure to do so could not reasonably be expected to have a MaterialAdverse Effect; provided, however, that the Borrower and its Subsidiaries mayconsummate any transaction permitted under Section 10.3, 10.4 or 10.5.

 

9.6.                              Compliance with Statutes,Obligations, etc.  Each of Holdings,the Borrower and the Canadian Borrower will, and will cause each Subsidiary to,comply with all applicable laws, rules, regulations and orders, except to theextent the failure to do so could not reasonably be expected to have a MaterialAdverse Effect.

 

9.7.                              ERISA.  Promptlyafter Holdings, the Borrower or any Subsidiary or any ERISA Affiliate knows orhas reason to know of the occurrence of any of the following events that,individually or in the aggregate (including in the aggregate such eventspreviously disclosed or exempt from disclosure hereunder, to the extent theliability therefor remains outstanding), would be reasonably likely to have aMaterial Adverse Effect, the Parent Companies, Holdings or the Borrower willdeliver to each of the Lenders a certificate of an Authorized Officer or anyother senior officer of the Borrower setting forth details as to suchoccurrence and the action, if any, that Holdings, the Borrower, such Subsidiaryor such ERISA Affiliate is required or proposes to take, together with any notices(required, proposed or otherwise) given to or filed with or by Holdings, theBorrower, such Subsidiary, such ERISA Affiliate, the PBGC, a Plan participant(other than notices relating to an individual participant’s benefits) or thePlan administrator with respect thereto: that a Reportable Event has occurred;that an accumulated funding deficiency has been incurred or an application isto be made to the Secretary of the Treasury for a waiver or modification of theminimum funding standard (including any required installment payments) or anextension of any amortization period under Section 412 of the Code withrespect to a Plan; that a Plan having an Unfunded Current Liability has been oris to be terminated, reorganized, partitioned or declared insolvent under TitleIV of ERISA (including the giving of written notice thereof); that a Plan hasan Unfunded Current Liability that has or will result in a lien under ERISA orthe Code; that proceedings will be or have been instituted to terminate a Planhaving an Unfunded Current Liability (including the giving of written noticethereof); that a proceeding has been instituted against the Borrower, aSubsidiary or an ERISA Affiliate pursuant to Section 515 of ERISA tocollect a delinquent contribution to a Plan; that the PBGC has notifiedHoldings, the Borrower, any Subsidiary or any ERISA Affiliate of its intentionto appoint a trustee to administer any Plan; that Holdings, the Borrower, anySubsidiary or any ERISA Affiliate has failed to make a required installment orother payment pursuant to Section 412 of the Code with respect to a Plan;or that Holdings, the Borrower, any Subsidiary or any ERISA Affiliate hasincurred or will incur (or has been notified in writing that it will incur) anyliability (including any contingent or secondary

 

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liability) to or on account of a Plan pursuant to Section 409,502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA orSection 4971 or 4975 of the Code.

 

9.8.                              Good Repair. Each of Holdings,  the Borrowerand the Canadian Borrower will, and will cause each of the RestrictedSubsidiaries to, ensure that its properties and equipment used or useful in itsbusiness in whomsoever’s possession they may be to the extent that it is withinthe control of such party to cause same, are kept in good repair, working orderand condition, normal wear and tear excepted, and that from time to time thereare made in such properties and equipment all needful and proper repairs, renewals,replacements, extensions, additions, betterments and improvements thereto, tothe extent and in the manner customary for companies in similar businesses andconsistent with third party leases, except in each case to the extent thefailure to do so could not be reasonably expected to have a Material AdverseEffect.

 

9.9.                              Transactions with Affiliates.  Each of Holdings, the Borrower and theCanadian Borrower will conduct, and cause each of the Restricted Subsidiariesto conduct, all transactions with any of its Affiliates on terms that aresubstantially as favorable to Holdings, the Borrower, the Canadian Borrower orsuch Restricted Subsidiary as it would obtain in a comparable arm’s-lengthtransaction with a Person that is not an Affiliate, provided that the foregoingrestrictions shall not apply to (a) the payment of customary annual feesto KKR and/or its Affiliates for management, consulting and financial servicesrendered to Holdings, the Borrower, the Canadian Borrower and the Subsidiariesand customary investment banking fees paid to KKR and its Affiliates forservices rendered to Holdings, the Borrower, the Canadian Borrower and theSubsidiaries in connection with divestitures, acquisitions, financings andother transactions, (b) customary fees paid to members of the Board ofDirectors Holdings, the Borrower, the Canadian Borrower and the Subsidiariesand (c) transactions permitted by Section 10.6.

 

9.10.                        End of Fiscal Years; Fiscal Quarters.  Holdings and the Borrower will, for financialreporting purposes, cause (a) each of its, and each of its Subsidiaries’,fiscal years to end on the Sunday closest to November 30 of each year (butin no event later than December 2) and (b) each of its, and each of itsSubsidiaries’, fiscal quarters to end on dates consistent with such fiscalyear-end and Holdings and the Borrower’s past practice; provided, however, thatHoldings and the Borrower may, upon written notice to the Administrative Agent,change the financial reporting convention specified above to any otherfinancial reporting convention reasonably acceptable to the AdministrativeAgent, in which case Holdings and the Borrower and the Administrative Agentwill, and are hereby authorized by the Lenders to, make any adjustments to thisAgreement that are necessary in order to reflect such change in financialreporting.

 

9.11.                        Additional Guarantors and Grantors.  (a)                          Exceptas provided in Section 10.1(j) or (k), each of Holdings, the Borrower andthe Canadian Borrower will cause (i) any direct or indirect Domestic Subsidiary(other than any Unrestricted Subsidiary) formed or otherwise purchased oracquired after the date hereof (including pursuant to a Permitted Acquisition),(ii) any Subsidiary (other than any Unrestricted Subsidiary) that is not aDomestic Subsidiary on the date hereof but subsequently

 

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becomes a Domestic Subsidiary (other than any Unrestricted Subsidiary)and (iii) any inactive Subsidiary listed on Schedule 1.1(e) (unless suchSubsidiary is designated an Unrestricted Subsidiary in accordance with terms ofthis Agreement) which acquires any material assets or is otherwise no longerdeemed inactive, in each case to execute a supplement to each of the Guaranteeand the Security Agreement, substantially in the form of Annex B or Annex 1, asapplicable, to the respective agreement in order to become a Guarantor underthe Guarantee and a grantor under the Security Agreement.

 

(b)                                 Except as provided inSection 10.1(j) or (k), each of Holdings, the Borrower and the CanadianBorrower will cause each Foreign Subsidiary that is a Restricted ForeignSubsidiary, or that is required to become a Restricted Foreign Subsidiary foran investment to constitute a Permitted Acquisition, in each case that makes aninvestment constituting a Permitted Acquisition pursuant toSection 10.5(j) to enter into guarantee and security arrangements inrelation to the Obligations of the Borrower and/or the Canadian Obligations ofthe Canadian Borrower, as the case may be, in respect of the capital stockand/or assets acquired pursuant to such Permitted Acquisition, in a form and toan extent agreed between the Borrower and the Administrative Agent, but to besubstantially consistent (taking into account the scope of customary collateralarrangements in the applicable jurisdiction) with the scope of the guaranteeand collateral arrangements entered into pursuant to the Guarantees and theSecurity Documents, and to comply with Section 9.15 in respect of sucharrangements, provided that no such Restricted Foreign Subsidiary shallbe required to enter into such arrangements to the extent that sucharrangements would (i) be prohibited by the law of the jurisdiction ofincorporation or formation of such Restricted Subsidiary or of the entity whosecapital stock is acquired or (ii) have material adverse tax consequencesfor any of Holdings, the Borrower or any of the Restricted Subsidiaries.

 

9.12.                        Pledges of Additional Stock andEvidence of Indebtedness. (a)                                               Exceptas provided in Section 10.1(j) or (k), the Borrower will pledge, and, ifapplicable, will cause each Domestic Subsidiary to pledge, to theAdministrative Agent, for the benefit of the Secured Parties, (i) all thecapital stock of each Domestic Subsidiary (other than any UnrestrictedSubsidiary) and each Foreign Subsidiary (other than an Unrestricted Subsidiaryor any capital stock representing in excess of 65% of the issued andoutstanding capital stock in any Foreign Subsidiary) held by the Borrower or aDomestic Subsidiary, in each case, formed or otherwise purchased or acquiredafter the date hereof, in each case pursuant to a supplement to the PledgeAgreement in form and substance reasonably satisfactory to the AdministrativeAgent, (ii) all evidences of Indebtedness in excess of $5,000,000 receivedby the Borrower or any of the Domestic Subsidiaries (other than anyUnrestricted Subsidiary) in connection with any disposition of assets pursuantto Section 10.4(b), in each case pursuant to a supplement to the Pledge Agreement,substantially in the form of Annex A thereto and (iii) any globalpromissory notes executed after the date hereof evidencing Indebtedness of anyof Holdings, the Borrower and each Subsidiary that is owing to any of theBorrower or any Domestic Subsidiary (other than any Unrestricted Subsidiary),in each case pursuant to a supplement to the Pledge Agreement, substantially inthe form of Annex A thereto.

 

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(b)                                 Except as provided inSection 10.1(j) or (k), the Borrower will pledge, and, if applicable, willcause each Subsidiary (other than any Foreign Joint Venture) to pledge, to theCanadian Administrative Agent, for the benefit of the Lenders, to the CanadianBorrower, (i) all the capital stock of each Subsidiary of the CanadianBorrower and of any Canadian Subsidiary Guarantor formed or otherwise purchasedor acquired after the date hereof, in each case pursuant to a supplement to theapplicable Canadian Security Documents in form and substance reasonablysatisfactory to the Administrative Agent (or pledge arrangements in relation tothe Canadian Obligations of the Canadian Borrower, in a form and to an extentagreed between the Borrower and the Administrative Agent, but to besubstantially consistent (taking into account the scope of customary collateralarrangements in the applicable jurisdiction) with the scope of the pledgearrangements entered into pursuant to the Canadian Security Documents) and(ii) all evidences of Indebtedness with a Dollar Equivalent in excess of$5,000,000 received by any of the Canadian Subsidiary Guarantors in connectionwith any disposition of assets pursuant to Section 10.4(b), in each casepursuant to a supplement to the applicable Canadian Security Documents in form andsubstance reasonably satisfactory to the Administrative Agent (or pledgearrangements in relation to the Obligations of the Canadian Borrower, in a formand to an extent agreed between the Borrower and the Administrative Agent, butto be substantially consistent (taking into account the scope of customarycollateral arrangements in the applicable jurisdiction) with the scope of thepledge arrangements entered into pursuant to the Canadian Security Documents).

 

(c)                                  Holdings will pledge to theAdministrative Agent, for the benefit of the Lenders, all capital stock of theBorrower acquired by it after the Effective Date (including any capital stockissued in connection with (i) loans and advances made pursuant toSection 10.5(c)(i) and (ii) dividends paid by the Borrower solely inits capital stock pursuant to Section 10.6) and the Borrower will pledgeto the Administrative Agent, for the benefit of the Secured Parties, pursuantto the Pledge Agreement or the Canadian Pledge Agreements, as the case may be,all capital stock of the Canadian Borrower acquired by it after the EffectiveDate.

 

(d)                                 Holdings, the Borrower and theCanadian Borrower agree that all Indebtedness in excess of $5,000,000 of any ofHoldings, the Borrower and each Subsidiary that is owing to any Credit Party tothe Pledge Agreement shall be evidenced by one or more global promissory notes.

 

9.13.                        Use of Proceeds.  The Borrower and the Canadian Borrower willuse the Letters of Credit and the proceeds of all Loans for the purposes setforth in the recitals to this Agreement.

 

9.14.                        Changes in Business.  Holdings, the Borrower, the Canadian Borrowerand the Subsidiaries, taken as a whole, will not fundamentally andsubstantively alter the character of their business, taken as a whole, from thebusiness conducted by Holdings, the Borrower, the Canadian Borrower and theSubsidiaries, taken as a whole, on the Closing Date and other businessactivities incidental or related to any of the foregoing.

 

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9.15.                        Further Assurances.  (a)               Eachof Holdings, the Borrower and the Canadian Borrower will, and will cause eachother Credit Party to, execute any and all further documents, financingstatements, agreements and instruments, and take all such further actions(including the filing and recording of financing statements, fixture filings,mortgages, deeds of trust and other documents), which may be required under anyapplicable law, or which the Administrative Agent or the Required Lenders mayreasonably request, in order to grant, preserve, protect and perfect thevalidity and priority of the security interests created or intended to becreated by the Security Agreement, the Pledge Agreement or any Mortgage, all atthe expense of Holdings, the Borrower and the Restricted Subsidiaries.

 

(b)                                 If any assets (including any realestate or improvements thereto or any interest therein) with a book value orfair market value in excess of $1,000,000 are acquired by the Borrower, theCanadian Borrower or any other Credit Party after the Closing Date (other thanassets constituting Collateral under the Security Agreement that become subjectto the Lien of the Security Agreement upon acquisition thereof) that are of thenature secured by the Security Agreement or any Mortgage, as the case may be,the Borrower will notify the Administrative Agent and the Lenders thereof, and,if requested by the Administrative Agent or the Required Lenders, the Borrowerwill cause such assets to be subjected to a Lien securing the applicable Obligationsand will take, and cause the other Credit Parties to take, such actions asshall be necessary or reasonably requested by the Administrative Agent to grantand perfect such Liens consistent with the applicable requirements of theSecurity Documents, including actions described in paragraph (a) of thisSection, all at the expense of the Credit Parties.  Any Mortgage delivered to the AdministrativeAgent in accordance with the preceding sentence shall be accompanied by (x) apolicy or policies of title insurance issued by a nationally recognized titleinsurance company insuring the Lien of each Mortgage as a valid first Lien onthe Mortgaged Property described therein, free of any other Liens except asexpressly permitted by Section 10.2, together with such endorsements,coinsurance and reinsurance as the Administrative Agent may reasonably requestand (y) an opinion of local counsel to the Borrower (or in the event aSubsidiary of the Borrower is the Mortgagor, to such Subsidiary) substantiallyin the form of Exhibit I-3.

 

9.16.                        CanadianBorrower.  Holdings andthe Borrower shall ensure that the Canadian Borrower is on the Effective Date,and shall at all times thereafter be, an indirect or direct wholly ownedSubsidiary of the Borrower, Holdings and the Borrower agree that the CanadianBorrower is not permitted to be sold, transferred or otherwise disposed ofpursuant to Section 10.4.

 

SECTION 10.                          NegativeCovenants

 

Each of Holdings, the Borrower and the Canadian Borrower herebycovenant and agree that on the Effective Date and thereafter, until theCommitments, the Swingline Commitment and each Letter of Credit have terminatedand the Loans and Unpaid Drawings, together with interest, Fees and all otherObligations incurred hereunder, are paid in full:

 

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10.1.                        Limitation on Indebtedness.  (A) The Borrower will not, and will not permit any of the RestrictedSubsidiaries to, create, incur, assume or suffer to exist any Indebtedness,except:

 

(a)                                  Indebtedness arising under theCredit Documents;

 

(b)                                 Indebtedness of (i) theBorrower to any Subsidiary of the Borrower and (ii) any Subsidiary to theBorrower or any other Restricted Subsidiary of the Borrower;

 

(c)                                  Indebtedness in respect of anybankers’ acceptance, letter of credit, warehouse receipt or similar facilitiesentered into in the ordinary course of business;

 

(d)                                 except as provided in clauses (j)and (k) below, Guarantee Obligations incurred by (i) RestrictedSubsidiaries in respect of Indebtedness of the Borrower or other RestrictedSubsidiaries that is permitted to be incurred under this Agreement and(ii) the Borrower in respect of Indebtedness of the RestrictedSubsidiaries that is permitted to be incurred under this Agreement, providedthat there shall be no Guarantee (a) by a Restricted Foreign Subsidiary ofany Indebtedness of the Borrower and (b) in respect of the PermittedSubordinated Debt, unless such Guarantee is made by a Guarantor and suchGuarantee is unsecured and subordinated to the Obligations to the same extentas the applicable Permitted Subordinated Debt;

 

(e)                                  Guarantee Obligations incurred inthe ordinary course of business in respect of obligations of suppliers,customers, franchisees, lessors and licensees;

 

(f)                                    (i) Indebtedness (includingIndebtedness arising under Capital Leases) incurred within 270 days of theacquisition, construction or improvement of fixed or capital assets to financethe acquisition, construction or improvement of such fixed or capital assets orotherwise incurred in respect of Capital Expenditures permitted bySection 10.11, (ii) Indebtedness arising under Capital Leases enteredinto in connection with Permitted Sale Leasebacks and (iii) Indebtednessarising under Capital Leases, other than Capital Leases in effect on the datehereof and Capital Leases entered into pursuant to subclauses (i) and (ii)above, provided that the aggregate amount of Indebtedness incurredpursuant to this subclause (iii) shall not exceed $25,000,000 at any timeoutstanding, and (iv) any refinancing, refunding, renewal or extension ofany Indebtedness specified in subclause (i), (ii) or (iii) above, providedthat the principal amount thereof is not increased above the principal amountthereof outstanding immediately prior to such refinancing, refunding, renewalor extension;

 

(g)                                 Indebtedness outstanding on the datehereof and listed on Schedule 10.1 and any refinancing, refunding, renewalor extension thereof, provided that (i) the principal amountthereof is not increased above the principal amount thereof outstandingimmediately prior to such refinancing, refunding, renewal or extension, exceptto the extent otherwise permitted hereunder and (ii) the direct andcontingent obligors with respect to such Indebtedness are not changed;

 

(h)                                 Indebtedness in respect of HedgeAgreements;

 

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(i)                                     Indebtedness in respect of PermittedSubordinated Debt;

 

(j)                                     (i) Indebtedness of a Person orIndebtedness attaching to assets of a Person that, in either case, becomes aRestricted Subsidiary or Indebtedness attaching to assets that are acquired bythe Borrower or any Restricted Subsidiary, in each case after the Closing Dateas the result of a Permitted Acquisition, provided that (w) suchIndebtedness existed at the time such Person became a Restricted Subsidiary orat the time such assets were acquired and, in each case, was not created inanticipation thereof, (x) such Indebtedness is not guaranteed in anyrespect by the Borrower or any Restricted Subsidiary (other than any suchperson that so becomes a Restricted Subsidiary), (y)(A) the capital stockof such Person is pledged to the Administrative Agent to the extent requiredunder Section 9.12 and (B) such Person executes a supplement to each ofthe Guarantee, the Security Agreement and the Pledge Agreement (or alternativeguarantee and security arrangements in relation to the Obligations) to theextent required under Sections 9.11 or 9.12, as applicable, providedthat the requirements of this subclause (y) shall not apply to anaggregate amount at any time outstanding of up to (and including) the Guaranteeand Collateral Exception Amount at such time of the aggregate of (1) suchIndebtedness and (2) all Indebtedness as to which the proviso to clause (k)(i)(y)below then applies, and (z) the aggregate amount of such Indebtedness andall Indebtedness incurred under clause (k) below, when taken together,does not exceed $150,000,000 in the aggregate at any time outstanding, and (ii) anyrefinancing, refunding, renewal or extension of any Indebtedness specified insubclause (i) above, provided that, except to the extent otherwisepermitted hereunder, (x) the principal amount of any such Indebtedness isnot increased above the principal amount thereof outstanding immediately priorto such refinancing, refunding, renewal or extension and (y) the directand contingent obligors with respect to such Indebtedness are not changed;

 

(k)                                  (i) Indebtedness of theBorrower or any Restricted Subsidiary incurred to finance a PermittedAcquisition, provided that (x) such Indebtedness is not guaranteedin any respect by any Restricted Subsidiary (other than any Person acquired(the “acquired Person”) as a result of such Permitted Acquisition or theRestricted Subsidiary so incurring such Indebtedness) or, in the case ofIndebtedness of any Restricted Subsidiary, by the Borrower, (y)(A) theBorrower pledges the capital stock of such acquired Person to theAdministrative Agent to the extent required under Section 9.12 and (B) suchacquired Person executes a supplement to the Guarantee, the Security Agreementand the Pledge Agreement (or alternative guarantee and security arrangements inrelation to the Obligations) to the extent required under Sections 9.11 or9.12, as applicable, provided that the requirements of thissubclause (y) shall not apply to an aggregate amount at any timeoutstanding of up to (and including) the amount of the Guarantee and CollateralException Amount at such time of the aggregate of (1) such Indebtednessand (2) all Indebtedness as to which the proviso to clause (j)(i)(y)above then applies, and (z) the aggregate amount of such Indebtedness and allIndebtedness assumed or permitted to exist under clause (j) above, whentaken together, does not exceed $150,000,000 in the aggregate at any timeoutstanding, and (ii) any refinancing, refunding, renewal or extension ofany Indebtedness specified in subclause (i) above, provided that(x) the principal amount of any such Indebtedness is not increased above theprincipal amount thereof outstanding immediately prior to such refinancing,

 

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refunding, renewal orextension and (y) the direct and contingent obligors with respect to suchIndebtedness are not changed, except to the extent otherwise permittedhereunder;

 

(l)                                     Indebtedness of Restricted ForeignSubsidiaries in an aggregate amount at any time outstanding not to exceed theDollar Equivalents of (i) the greater of (x) $70,000,000 (which amount shallinclude the aggregate outstanding amount at any time of any Indebtedness ofRestricted Foreign Subsidiaries existing at the Closing Date) or (y) theForeign Borrowing Base Amount in effect at such time minus (ii) theamount, if any, by which the aggregate amount of Indebtedness incurred andoutstanding at such time pursuant to clause (n) belowexceeds the Dollar Equivalent of $100,000,000;

 

(m)                               (i) Indebtedness incurred inconnection with any Permitted Sale Leaseback and (ii) any refinancing,refunding, renewal or extension of any Indebtedness specified insubclause (i) above, provided that, except to the extent otherwisepermitted hereunder, (x) the principal amount of any such Indebtedness isnot increased above the principal amount thereof outstanding immediately priorto such refinancing, refunding, renewal or extension and (y) the directand contingent obligors with respect to such Indebtedness are not changed;

 

(n)                                 (i) additional Indebtedness, providedthat the aggregate amount of Indebtedness incurred and remaining outstandingpursuant to this clause (n) shall not at any time exceed the sum of (x)$100,000,000 and (y) the amount, if any, by which $70,000,000exceeds the aggregate amount of Indebtedness then outstanding underclause (l) above, and (ii) any refinancing, refunding, renewal orextension of any Indebtedness specified in subclause (i) above; provided,further, at no time shall Indebtedness of Restricted ForeignSubsidiaries in an aggregate amount at any time outstanding pursuant tosubclause (l) above and this subclause (n) exceed the aggregate amountpermitted by subclause (l) above;

 

(o)                                 Indebtedness in respect of PermittedAdditional Subordinated Notes to the extent that the Net Cash Proceedstherefrom are, immediately after the receipt thereof, applied to the prepaymentof Tranche C Term Loans in accordance with Section 5.2; and

 

(p)                                 Indebtedness in respect of theSenior Unsecured Term Loans.

 

(B)                                NeitherParent nor Holdings will create, incur, assume or suffer to exist anyIndebtedness except (1) with respect to Parent, Qualified PIK Securitiesand (2) the guarantee obligations of Parent and Holdings of the SeniorUnsecured Term Loans under the Senior Unsecured Term Loan Agreement and theSubordinated Notes under the Subordinated Note Indenture (provided thatHoldings shall not guarantee the Subordinated Notes unless (i) Holdingsalso has guaranteed the Obligations pursuant to the Guarantee, (ii) suchguarantee of the Subordinated Notes is unsecured and subordinated to suchguarantee of the Obligations on terms no less favorable to the Lenders than thesubordination provisions of the Subordinated Notes and (iii) suchguarantee of the Subordinated Notes provides for the release and terminationthereof,

 

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without action by any party, upon any release and termination of suchguarantee of the Obligations).

 

(C)                                Neitherof Parent, Holdings nor the Borrower will, nor will they permit any Subsidiaryto, issue any preferred stock or other preferred equity interests, other than,in the case of Parent, Qualified PIK Securities.

 

10.2.                        Limitation on Liens.  (A) The Borrower and the Canadian Borrowerwill not, and will not permit any of the Restricted Subsidiaries to, create,incur, assume or suffer to exist any Lien upon any property or assets of anykind (real or personal, tangible or intangible) of the Borrower or anyRestricted Subsidiary, whether now owned or hereafter acquired, except:

 

(a)                                  Liens arising under the CreditDocuments;

 

(b)                                 Permitted Liens;

 

(c)                                  Liens securing Indebtednesspermitted pursuant to Section 10.1(f), provided that such Liensattach at all times only to the assets so financed, and Liens on the assets ofForeign Subsidiaries securing Indebtedness permitted pursuant toSection 10.1(l);

 

(d)                                 Liens existing on the date hereofand listed on Schedule 10.2;

 

(e)                                  the replacement, extension orrenewal of any Lien permitted by clauses (a) through (d) above and clauses (f)and (g) of this Section 10.2 upon or in the same assets theretofore subjectto such Lien or the replacement, extension or renewal (without increase in theamount or change in any direct or contingent obligor except to the extentotherwise permitted hereunder) of the Indebtedness secured thereby;

 

(f)                                    Liens existing on the assets of anyPerson that becomes a Restricted Subsidiary, or existing on assets acquired,pursuant to a Permitted Acquisition to the extent the Liens on such assetssecure Indebtedness permitted by Section 10.1(j), provided thatsuch Liens attach at all times only to the same assets that such Liens attachedto, and secure only the same Indebtedness that such Liens secured, immediatelyprior to such Permitted Acquisition;

 

(g)                                 (i) Liens placed upon thecapital stock of any Restricted Subsidiary acquired pursuant to a PermittedAcquisition to secure Indebtedness of the Borrower or any other RestrictedSubsidiary incurred pursuant to Section 10.1(k) in connection with suchPermitted Acquisition and (ii) Liens placed upon the assets of suchRestricted Subsidiary to secure a guarantee by such Restricted Subsidiary orany such Indebtedness of the Borrower or any other Restricted Subsidiary; and

 

(h)                                 additional Liens so long as theaggregate principal amount of the obligations so secured does not exceed$25,000,000 at any time outstanding.

 

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(B)                                NeitherParent nor Holdings will create, incur, assume or suffer to exist any Lien onany property or asset now owned or hereafter acquired by it, or assign or sellany income or revenues (including accounts receivable) or rights in respectthereof, except (a) liens of the nature set forth in clauses (a), (c)and (h) of the definition of the term “Permitted Liens” and (b) Lienscreated under the Pledge Agreement.

 

10.3.                        Limitation on Fundamental Changes.  (A) Except as expressly permitted bySection 10.4 or 10.5, each of Holdings, the Borrower and the CanadianBorrower will not, and will not permit any of the Restricted Subsidiaries to,enter into any merger, consolidation or amalgamation, or liquidate, wind up ordissolve itself (or suffer any liquidation or dissolution), or convey, sell,lease, assign, transfer or otherwise dispose of, all or substantially all itsbusiness units, assets or other properties, except that:

 

(a)                                  any Subsidiary of the Borrower orany other Person may be merged or consolidated with or into the Borrower, providedthat (i) the Borrower shall be the continuing or surviving corporation orthe Person formed by or surviving any such merger or consolidation (if otherthan the Borrower) shall be an entity organized or existing under the laws ofthe United States, any state thereof, the District of Columbia or any territorythereof (the Borrower or such Person, as the case may be, being herein referredto as the “Successor Borrower”), (ii) the Successor Borrower (ifother than the Borrower) shall expressly assume all the obligations of theBorrower under this Agreement and the other Credit Documents pursuant to asupplement hereto or thereto in form reasonably satisfactory to theAdministrative Agent, (iii) no Default or Event of Default would resultfrom the consummation of such merger or consolidation, (iv) the SuccessorBorrower shall be in compliance, on a pro forma basis after giving effect to suchmerger or consolidation, with the covenants set forth in Sections 10.9 and10.10, as such covenants are recomputed as at the last day of the most recentlyended Test Period under such Section as if such merger or consolidationhad occurred on the first day of such Test Period, (v) each Guarantor,unless it is the other party to such merger or consolidation, shall have by asupplement to the Guarantee confirmed that its Guarantee shall apply to theSuccessor Borrower’s obligations under this Agreement, (vi) each Subsidiarygrantor and each Subsidiary pledgor, unless it is the other party to suchmerger or consolidation, shall have by a supplement to the Security Agreementor the Pledge Agreement, as applicable, confirmed that its obligationsthereunder shall apply to the Successor Borrower’s obligations under thisAgreement, (vii) each mortgagor of a Mortgaged Property, unless it is the otherparty to such merger or consolidation, shall have by an amendment to orrestatement of the applicable Mortgage confirmed that its obligationsthereunder shall apply to the Successor Borrower’s obligations under thisAgreement, and (viii) the Borrower shall have delivered to the AdministrativeAgent an officer’s certificate and an opinion of counsel, each stating thatsuch merger or consolidation and such supplement to this Agreement or anySecurity Document comply with this Agreement; providedfurtherthat if the foregoing are satisfied, the Successor Borrower (if other than theBorrower) will succeed to, and be substituted for, the Borrower under thisAgreement;

 

(b)                                 any Subsidiary of the CanadianBorrower or any other Person may be merged, amalgamated or consolidated with orinto the Canadian Borrower, provided

 

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that (i) the CanadianBorrower shall be the continuing or surviving corporation or the Person formedby or surviving any such merger, amalgamation or consolidation (if other thanthe Canadian Borrower) shall be a corporation organized or existing under thelaws of Canada (the Canadian Borrower or such Person, as the case may be, beingherein referred to as the “Successor Canadian Borrower”), (ii) theSuccessor Canadian Borrower (if other than the Canadian Borrower) shallexpressly assume all the obligations of the Canadian Borrower under thisAgreement and the other Credit Documents pursuant to a supplement hereto orthereto in form reasonably satisfactory to the Administrative Agent,(iii) no Default or Event of Default would result from the consummation ofsuch merger, amalgamation or consolidation, (iv) the Borrower shall be incompliance, on a pro forma basis after giving effect to such merger,amalgamation or consolidation, with the covenants set forth inSections 10.9 and 10.10, as such covenants are recomputed as at the lastday of the most recently ended Test Period under such Section as if suchmerger, amalgamation or consolidation had occurred on the first day of suchTest Period, (v) the Borrower, each Guarantor and each Foreign SubsidiaryGuarantor, unless it is the other party to such merger, amalgamation orconsolidation, shall have by a supplement to the Guarantee or CanadianSubsidiary Guarantee, as the case may be, confirmed that its Guarantee orCanadian Subsidiary Guarantee, as the case may be, shall apply to the SuccessorCanadian Borrower’s obligations under this Agreement, (vi) each grantor andeach pledgor, unless it is the other party to such merger, amalgamation orconsolidation, shall have by a supplement to the applicable Security Documentconfirmed that its obligations thereunder shall apply to the Successor CanadianBorrower’s obligations under this Agreement, (vii) each mortgagor of aMortgaged Property, unless it is the other party to such merger, amalgamationor consolidation, shall have by an amendment to or restatement of theapplicable Mortgage confirmed that its obligations thereunder shall apply tothe Successor Canadian Borrower’s obligations under this Agreement, and (viii)the Canadian Borrower shall have delivered to the Administrative Agent anofficer’s certificate and an opinion of counsel, each stating that such merger,amalgamation or consolidation, such supplement to this Agreement or anySecurity Document and such amendment or restatement to any applicable Mortgage,as the case may be, comply with this Agreement; providedfurtherthat if the foregoing are satisfied, the Successor Canadian Borrower (if otherthan the Canadian Borrower) will succeed to, and be substituted for, theCanadian Borrower under this Agreement;

 

(c)                                  any Subsidiary of the Borrower(other than the Canadian Borrower) or any other Person may be merged,amalgamated or consolidated with or into any one or more Subsidiaries of theBorrower (other than the Canadian Borrower), provided that (i) inthe case of any merger, amalgamation or consolidation involving one or moreRestricted Subsidiaries, (A) a Restricted Subsidiary shall be thecontinuing or surviving corporation or (B) the Borrower shall take allsteps necessary to cause the Person formed by or surviving any such merger,amalgamation or consolidation (if other than a Restricted Subsidiary) to becomea Restricted Subsidiary, (ii) in the case of any merger, amalgamation orconsolidation involving one or more Guarantors and/or Canadian SubsidiaryGuarantors, as the case may be, a Guarantor or Canadian Subsidiary Guarantor,as the case may be, shall be the continuing or surviving corporation or thePerson formed by or surviving any such merger, amalgamation or consolidation(if other than a Guarantor or Canadian Subsidiary Guarantor, as the case maybe) shall execute a

 

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supplement to theGuarantee Agreement, the Pledge Agreement and the Security Agreement and anyapplicable Mortgage or the analogous Canadian Security Documents, as the casemay be, in form and substance reasonably satisfactory to the AdministrativeAgent in order to become a Guarantor or Canadian Subsidiary Guarantor, as thecase may be, and pledgor, mortgagor and grantor of Collateral for the benefitof the Secured Parties, (iii) no Default or Event of Default would resultfrom the consummation of such merger, amalgamation or consolidation,(iv) the Borrower shall be in compliance, on a pro forma basis aftergiving effect to such merger, amalgamation or consolidation, with the covenantsset forth in Sections 10.9 and 10.10, as such covenants are recomputed asat the last day of the most recently ended Test Period under suchSection as if such merger or consolidation had occurred on the first dayof such Test Period, and (v) the Borrower shall have delivered to theAdministrative Agent an Officers’ Certificate stating that such merger,amalgamation or consolidation and such supplements to any Security Documentcomply with this Agreement;

 

(d)                                 any Restricted Subsidiary that isnot a Guarantor or a Foreign Subsidiary Guarantor may sell, lease, transfer orotherwise dispose of any or all of its assets (upon voluntary liquidation orotherwise) to the Borrower, the Canadian Borrower, a Guarantor, a Foreign SubsidiaryGuarantor or any other Restricted Subsidiary of the Borrower;

 

(e)                                  any Guarantor or any ForeignSubsidiary Guarantor may sell, lease, transfer or otherwise dispose of any orall of its assets (upon voluntary liquidation or otherwise) to the Borrower,the Canadian Borrower or any other Guarantor or Foreign Subsidiary Guarantor;and

 

(f)                                    any Restricted Subsidiary (otherthan the Canadian Borrower) may liquidate or dissolve if (x) the Borrowerdetermines in good faith that such liquidation or dissolution is in the bestinterests of the Borrower and is not materially disadvantageous to the Lendersand (y) to the extent such RestrictedSubsidiary is a Credit Party, any assets or business not otherwise disposed ofor transferred in accordance with Section 10.4 or 10.5, or, in the case ofany such business, discontinued, shall be transferred to, or otherwise owned orconducted by, another Credit Party after giving effect to such liquidation ordissolution.

 

(B)                                Holdingswill not engage in any business or activity other than (a) the ownershipof all the outstanding shares of capital stock of the Borrower,(b) maintaining its corporate existence, (c) participating in tax,accounting and other administrative matters as a member of the consolidatedgroup of Holdings and Borrower, (d) the performance of the CreditDocuments to which it is a party, (e) making any Dividend permitted bySection 10.6 or holding any cash received in connection with Dividendsmade by the Borrower in accordance with Section 10.6 pending applicationthereof by Holdings in the manner contemplated by Section 10.6 and (f)activities incidental to the businesses or activities described inclauses (a) to (e) of this Section 10.3(B).  Holdings will not own or acquire any assets(other than shares of capital stock of the Borrower, cash and PermittedInvestments) or incur any liabilities (other than liabilities under the CreditDocuments, liabilities under its guarantee of the Subordinated

 

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Notes and liabilities imposed by law, including tax liabilities, andother liabilities incidental to its existence and business and activitiespermitted by this Agreement).

 

(C)                                Parentwill not engage in any business or activity other than (a) the ownershipof all the outstanding shares of capital stock of Holdings,(b) maintaining its corporate existence, (c) participating in tax,accounting and other administrative matters as a member of the consolidatedgroup of Holdings and Borrower, (d) the performance of the CreditDocuments to which it is a party, (e) holding any cash received inconnection with Dividends made by Holdings in accordance with Section 10.6pending application thereof by Parent in the manner contemplated bySection 10.6, (f) activities related to Qualified PIK Securities and otherpermitted capital stock and (g) activities incidental to the businesses oractivities described in clauses (a) to (e) of thisSection 10.3(C).  Parent will notown or acquire any assets (other than shares of capital stock of Holdings, cashand Permitted Investments) or incur any liabilities (other than thoseliabilities permitted by Section 10.1(B) or liabilities imposed by law,including tax liabilities, and other liabilities incidental to its existenceand business and activities permitted by this Agreement).

 

10.4.                        Limitation on Sale of Assets.  Each of Holdings, the Borrower and theCanadian Borrower will not, and will not permit any of the RestrictedSubsidiaries to, (i) convey, sell, lease, assign, transfer or otherwisedispose of any of its property, business or assets (including receivables andleasehold interests), whether now owned or hereafter acquired (other than anysuch sale, transfer, assignment or other disposition resulting from anycasualty or condemnation, of any assets of the Borrower or the RestrictedSubsidiaries) or (ii) sell to any Person (other than the Borrower, aGuarantor or a Restricted Foreign Subsidiary) any shares owned by it of anyRestricted Subsidiary’s capital stock, except that:

 

(a)                                  the Borrower and the RestrictedSubsidiaries may sell, transfer or otherwise dispose of used or surplusequipment, vehicles, inventory and other assets in the ordinary course ofbusiness;

 

(b)                                 the Borrower and the RestrictedSubsidiaries may sell, transfer or otherwise dispose of other assets (otherthan accounts receivable) for fair value, provided that (i) theaggregate amount of such sales, transfers and disposals by the Borrower and theRestricted Subsidiaries, taken as a whole, pursuant to this clause (b)shall not exceed in the aggregate $200,000,000, (ii) any consideration inexcess of $5,000,000 received by the Borrower or any Guarantor in connectionwith such sales, transfers and other dispositions of assets pursuant to thisclause (b) that is in the form of Indebtedness shall be pledged to theAdministrative Agent pursuant to Section 9.12, (iii) with respect toany such sale, transfer or disposition (or series of related sales, transfersor dispositions) in an aggregate amount in excess of $10,000,000 the Borrowershall be in compliance, on a pro forma basis after giving effect to such sale,transfer or disposition, with the covenants set forth in Sections 10.9 and10.10, as such covenants are recomputed as at the last day of the most recentlyended Test Period under such Sections as if such sale, transfer or dispositionhad occurred on the first day of such Test Period and (iv) after givingeffect to

 

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any such sale,transfer or disposition, no Default or Event of Default shall have occurred andbe continuing;

 

(c)                                  the Borrower and the RestrictedSubsidiaries may make sales of assets to the Borrower or to any RestrictedSubsidiary, provided that any such sales to Restricted ForeignSubsidiaries shall be for fair value;

 

(d)                                 any Restricted Subsidiary may effectany transaction permitted by Section 10.3; and

 

(e)                                  in addition to selling ortransferring accounts receivable pursuant to the other provisions hereof, theBorrower and the Restricted Subsidiaries may (i) sell or discount withoutrecourse accounts receivable arising in the ordinary course of business inconnection with the compromise or collection thereof and (ii) sell or transferaccounts receivable and related rights pursuant to customary receivablesfinancing facilities so long as, in the case of clauses (i) and (ii), the NetCash Proceeds thereof to the Borrower and its Restricted Subsidiaries (exceptin the case of transactions permitted by Section 10.4(e)(i) to the extentthe Net Cash Proceeds of any such transaction do not exceed $10,000) arepromptly applied to the prepayment and/or commitment reductions as provided forin Section 5.2.

 

10.5.                        Limitation on Investments.  Holdings and the Borrower will not, and willnot permit any of the Restricted Subsidiaries to, make any advance, loan,extensions of credit or capital contribution to, or purchase any stock, bonds,notes, debentures or other securities of or any assets of, or make any otherinvestment in, any Person, except:

 

(a)                                  extensions of trade credit and assetpurchases in the ordinary course of business;

 

(b)                                 Permitted Investments;

 

(c)                                  loans and advances to officers,directors and employees of Holdings or any of its Subsidiaries (i) tofinance the purchase of capital stock of Holdings (provided that theamount of such loans and advances used to acquire such capital stock shall becontributed by Holdings to the Borrower in cash as common equity) and(ii) for additional purposes not contemplated by subclause (i) abovein an aggregate principal amount at any time outstanding with respect to thisclause (ii) not exceeding $10,000,000;

 

(d)                                 investments existing on the datehereof and listed on Schedule 10.5 and any extensions, renewals orreinvestments thereof, so long as the aggregate amount of all investmentspursuant to this clause (d) is not increased at any time above the amountof such investments existing on the date hereof;

 

(e)                                  investments in Hedge Agreementspermitted by Section 10.1(h);

 

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(f)                                    investments received in connectionwith the bankruptcy or reorganization of suppliers or customers and insettlement of delinquent obligations of, and other disputes with, customersarising in the ordinary course of business;

 

(g)                                 investments to the extent thatpayment for such investments is made solely with capital stock of Holdings;

 

(h)                                 investments constituting non-cashproceeds of sales, transfers and other dispositions of assets to the extentpermitted by Section 10.4;

 

(i)                                     investments in any Guarantor (otherthan Holdings), the Borrower, the Canadian Borrower or any Foreign SubsidiaryGuarantor;

 

(j)                                     investments constituting PermittedAcquisitions, provided that the aggregate amount of any such investment,as valued at the fair market value of such investment at the time each suchinvestment is made, made by the Borrower or any Restricted Subsidiary in anyRestricted Foreign Subsidiary, to the extent that such Restricted ForeignSubsidiary does not become a Foreign Subsidiary Guarantor pursuant toSection 9.11 and does not enter into the guarantee and collateralarrangements contemplated thereby, shall not exceed the Available Amount at thetime of such investment plus an amount equal to any repayments, interest,returns, profits, distributions, income and similar amounts actually receivedin cash in respect of any such investment (which amount shall not exceed theamount of such investment valued at the fair market value of such investment atthe time such investment was made);

 

(k)                                  investments in the equity interestsof one or more newly formed persons that are received in consideration of thecontribution by the Borrower or its applicable Restricted Subsidiaries ofassets (including capital stock) to such person or persons, providedthat (i) the fair market value of such assets, determined on arms-lengthbasis, so contributed pursuant to this paragraph (k) shall not in the aggregateexceed $50,000,000, (ii) with respect to investments in Foreign Joint Ventures,the sum of all investments in Foreign Joint Ventures made pursuant to thisSection 10.5 (k) prior to the date thereof and all investment in ForeignJoint Ventures made pursuant to Section 10.5(m) below prior to the datethereof, when taken together, as valued at the fair market value of suchinvestment at the time each such investment is made, does not exceed$50,000,000 plus an amount equal to any repayments, interest, returns, profits,distributions, income and similar amounts actually received in cash in respectof any such investment (which amount shall not exceed the amount of suchinvestment valued at the fair market value of such investment at the time suchinvestment was made) in the aggregate and (iii) in respect of each suchcontribution, an Authorized Officer of the Borrower shall certify, in a form tobe agreed upon by the Borrower and the Administrative Agent (x) aftergiving effect to such contribution, no Default or Event of Default shall haveoccurred and be continuing, (y) the fair market value of the assets socontributed and (z) that the requirements of paragraph (i) of thisproviso remain satisfied;

 

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(l)                                     investments made to repurchase orretire common stock of Holdings owned by any employee stock ownership plan or keyemployee stock ownership plan of Holdings or the Borrower;

 

(m)                               additional investments (includinginvestments in Minority Investments and Unrestricted Subsidiaries), as valuedat the fair market value of such investment at the time each such investment ismade, in an aggregate amount at the time of such investment not in excess ofthe Available Amount at such time plus an amount equal to any repayments,interest, returns, profits, distributions, income and similar amounts actuallyreceived in cash in respect of any such investment (which amount shall notexceed the amount of such investment valued at the fair market value of suchinvestment at the time such investment was made), provided, that withrespect to investments in Foreign Joint Ventures, the sum of all investments inForeign Joint Ventures made pursuant to Section 10.5 (k) above prior tothe date thereof and all investment in Foreign Joint Ventures made pursuant tothis Section 10.5(m) prior to the date thereof, when taken together, asvalued at the fair market value of such investment at the time each suchinvestment is made, does not exceed $50,000,000 plus an amount equal to anyrepayments, interest, returns, profits, distributions, income and similaramounts actually received in cash in respect of any such investment (whichamount shall not exceed the amount of such investment valued at the fair marketvalue of such investment at the time such investment was made) in theaggregate;

 

(n)                                 investments permitted underSection 10.6; and

 

(o)                                 the initialinvestment in a newly formed Puerto Rican Subsidiary as described on Schedule 10.5(o).

 

10.6.                        Limitation on Dividends.  None of Holdings, the Borrower or theCanadian Borrower will declare or pay any dividends (other than, (a) inrespect of  Holdings, dividends payablesolely in its capital stock or rights, warrants or options to purchase itscapital stock and (b) in respect of the Borrower, dividends payable solelyin its capital stock) or return any capital to its stockholders or make anyother distribution, payment or delivery of property or cash to its stockholdersas such, or redeem, retire, purchase or otherwise acquire, directly orindirectly, for consideration, any shares of any class of its capital stock orthe capital stock of any direct or indirect parent now or hereafter outstanding(or any options or warrants or stock appreciation rights issued with respect toany of its capital stock), or set aside any funds for any of the foregoingpurposes, or permit any of the Restricted Subsidiaries to purchase or otherwiseacquire for consideration (other than in connection with an investmentpermitted by Section 10.5) any shares of any class of the capital stock ofHoldings or the Borrower, now or hereafter outstanding (or any options orwarrants or stock appreciation rights issued with respect to any of its capitalstock) (all of the foregoing “Dividends”), provided that, so longas no Default or Event of Default exists or would exist after giving effectthereto, (a) Holdings or the Borrower may redeem in whole or in part any of itscapital stock for another class of capital stock or rights to acquire itscapital stock or with proceeds from substantially concurrent equitycontributions or issuances of new shares of its capital stock, provided thatsuch other class of capital stock contains terms and provisions at least as

 

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advantageous to the Lenders in all respectsmaterial to their interests as those contained in the capital stock redeemedthereby, (b) Holdings or the Borrower may or may pay Dividends to Parentto repurchase shares of its or Parent’s capital stock (or any options orwarrants or stock appreciation rights issued with respect to any of its orParent’s capital stock) held by officers, directors and employees of Parent,Holdings and its Subsidiaries, with the proceeds of dividends from, seriatim,the Borrower and Holdings, as applicable, which shall also be permitted, solong as such repurchase is pursuant to, and in accordance with the terms of,management and/or employee stock plans, stock subscription agreements orshareholder agreements, (c) the Borrower and the Restricted Subsidiariesmay make investments permitted by Section 10.5, (d) Holdings may declareand pay dividends on its capital stock, with the proceeds of dividends from,seriatim, the Borrower, which shall also be permitted, provided that(i) the aggregate amount of such dividends paid by Holdings pursuant tothis clause (d) shall not at any time exceed 50% of Cumulative ConsolidatedNet Income Available to Stockholders at such time less the amount of dividendspreviously paid pursuant to this clause (d) following the last day of themost recent fiscal quarter for which Section 9.1 Financials have beendelivered to the Lenders under Section 9.1 and (ii) at the time ofthe payment of any such dividends and after giving effect thereto, theConsolidated Total Debt to Consolidated EBITDA Ratio on the date of suchpayment of such dividends shall be less than 3.50:1.00 and (e) the Borrower andHoldings may declare and pay dividends and/or make distributions on its capitalstock, as applicable, the proceeds of which will be used by Parent or Holdingssolely to pay taxes of Parent, Holdings, the Borrower and the Subsidiaries aspart of a consolidated tax filing group for U.S. federal, state or local taxpurposes, along with franchise taxes, administrative and similar expensesrelated to its existence and ownership of the Borrower, as applicable, providedthat the amount of such dividends does not exceed in any fiscal year the amountof such taxes and expenses payable for such fiscal year (it being understoodthat such expenses shall in no event exceed $1,000,000 in the aggregate perfiscal year).

 

10.7.                        Limitations on Debt Payments and Amendments.  (a)        TheBorrower will not prepay, repurchase or redeem or otherwise defease anySubordinated Notes (it being understood that any payment of principal prior toApril 6, 2014 shall be deemed a prepayment for purposes of thisSection 10.7); provided, however, that so long as no Defaultor Event of Default has occurred and is continuing, the Borrower may prepay,repurchase or redeem Subordinated Notes (x) for an aggregate price not inexcess of the Available Amount at the time of such prepayment, repurchase orredemption, or (y) with the proceeds of subordinated Indebtedness that(1) is permitted by Section 10.1 (other than Permitted AdditionalSubordinated Notes) and (2) has terms material to the interests of theLenders not materially less advantageous to the Lenders than those of theSubordinated Notes.

 

(b)                                 The Borrower will not prepay anySenior Unsecured Term Loans; provided, however, that so long asno Default or Event of Default has occurred and is continuing, the Borrower mayprepay Senior Unsecured Term Loans (x) for an aggregate price not inexcess of the Available Amount at the time of such prepayment, repurchase orredemption, or (y) with the proceeds of subordinated Indebtedness that(1) is permitted

 

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by Section 10.1and (2) has terms material to the interests of the Lenders not materiallyless advantageous to the Lenders than those of the Senior Unsecured Term Loans.

 

(c)                                  The Borrower will not waive, amend,modify, terminate or release the Subordinated Note Indenture or the SeniorUnsecured Term Loan Agreement to the extent that any such waiver, amendment,modification, termination or release would be adverse to the Lenders in anymaterial respect.

 

10.8.                        Limitations on Sale Leasebacks.  Holdings and the Borrower will not, and willnot permit any of the Restricted Subsidiaries to, enter into or effect any SaleLeasebacks, other than Permitted Sale Leasebacks.

 

10.9.                        Consolidated Total Debt toConsolidated EBITDA Ratio. Holdings and the Borrower will not permit the Consolidated Total Debt toConsolidated EBITDA Ratio for any Test Period ending during any period setforth below to be greater than the ratio set forth below opposite such period:

 
| **Period**                                        | ** ** | **Ratio**    |
|---------------------------------------------------|------------|--------------|
|                                              |       |         |
| May 31, 2004 to August 29, 2004              |       | 7.50 to 1.00 |
| August 30 2004 to November 28,  2004    |       | 7.50 to 1.00 |
| November 29, 2004 to February 27,  2005 |       | 7.50 to 1.00 |
| February 28, 2005  to May 29, 2005      |       | 7.25 to 1.00 |
| May 30, 2005 to August 28, 2005              |       | 7.25 to 1.00 |
| August 29 2005 to November 27,  2005    |       | 7.00 to 1.00 |
| November 28, 2005 to February 26,  2006 |       | 6.75 to 1.00 |
| February 27, 2006  to May 28, 2006      |       | 6.75 to 1.00 |
| May 29, 2006 to August 27, 2006              |       | 6.50 to 1.00 |
| August 28 2006 to November 26,  2006    |       | 6.25 to 1.00 |
| November 27, 2006 to February 25,  2007 |       | 6.00 to 1.00 |
| February 26, 2007 to May 27, 2007            |       | 5.75 to 1.00 |
| May 28, 2007  to August 26, 2007        |       | 5.75 to 1.00 |
| August 27, 2007 December 2, 2007        |       | 5.50 to 1.00 |
| December 3, 2007 to March 2, 2008       |       | 5.50 to 1.00 |
| March 3, 2008 to June 1, 2008           |       | 5.25 to 1.00 |
| June 2, 2008 to August 31, 2008         |       | 5.25 to 1.00 |
| September 1, 2008 to November 30,  2008 |       | 5.00 to 1.00 |
| December 1, 2008 to March 1, 2009       |       | 5.00 to 1.00 |
| March 2, 2009 to May 31, 2009                |       | 4.75 to 1.00 |
| June 1, 2009 to August 30, 2009         |       | 4.75 to 1.00 |
| August 31, 2009 to November 29,  2009   |       | 4.50 to 1.00 |
| November 30, 2009 to February 28,  2010 |       | 4.50 to 1.00 |
| March 1, 2010 to May 30, 2010                |       | 4.25 to 1.00 |
| June 1, 2010 to August 29, 2010         |       | 4.25 to 1.00 |
| August 30, 2010 to November 28,  2010   |       | 4.00 to 1.00 |
| November 29, 2010 and thereafter             |       | 4.00 to 1.00 |

 

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10.10.                  Consolidated EBITDA to ConsolidatedInterest Expense Ratio.  Holdings andthe Borrower will not permit the Consolidated EBITDA to ConsolidatedInterest Expense Ratio for any Test Period ending during any period set forthbelow to be less than the ratio set forth below opposite such period:

 
| **Period**                                        | ** ** | **Ratio**    |
|---------------------------------------------------|------------|--------------|
|                                              |       |         |
| May 31, 2004 to August 29, 2004              |       | 2.00 to 1.00 |
| August 30 2004 to November 28,  2004    |       | 2.00 to 1.00 |
| November 29, 2004 to February 27,  2005 |       | 2.00 to 1.00 |
| February 28, 2005  to May 29, 2005      |       | 2.00 to 1.00 |
| May 30, 2005 to August 28, 2005              |       | 2.00 to 1.00 |
| August 29 2005 to November 27,  2005    |       | 2.00 to 1.00 |
| November 28, 2005 to February 26,  2006 |       | 2.10 to 1.00 |
| February 27, 2006  to May 28, 2006      |       | 2.10 to 1.00 |
| May 29, 2006 to August 27, 2006              |       | 2.10 to 1.00 |
| August 28 2006 to November 26,  2006    |       | 2.10 to 1.00 |
| November 27, 2006 to February 25,  2007 |       | 2.10 to 1.00 |
| February 26, 2007 to May 27, 2007            |       | 2.10 to 1.00 |
| May 28, 2007  to August 26, 2007        |       | 2.20 to 1.00 |
| August 27, 2007 December 2, 2007        |       | 2.20 to 1.00 |
| December 3, 2007 to March 2, 2008       |       | 2.30 to 1.00 |
| March 3, 2008 to June 1, 2008           |       | 2.30 to 1.00 |
| June 2, 2008 to August 31, 2008         |       | 2.30 to 1.00 |
| September 1, 2008 to November 30,  2008 |       | 2.30 to 1.00 |
| December 1, 2008 to March 1, 2009       |       | 2.40 to 1.00 |
| March 2, 2009 to May 31, 2009                |       | 2.40 to 1.00 |
| June 1, 2009 to August 30, 2009         |       | 2.50 to 1.00 |
| August 31, 2009 to November 29,  2009   |       | 2.50 to 1.00 |
| November 30, 2009 to February 28,  2010 |       | 2.50 to 1.00 |
| March 1, 2010 to May 30, 2010                |       | 2.50 to 1.00 |
| June 1, 2010 to August 29, 2010         |       | 2.75 to 1.00 |
| August 30, 2010 to November 28,  2010   |       | 2.75 to 1.00 |
| November 29, 2010 and thereafter             |       | 2.75 to 1.00 |

 

10.11.                  Capital Expenditures.  Holdings, the Borrower and the CanadianBorrower will not, and will not permit any of the Restricted Subsidiaries to,make any Capital Expenditures (other than Permitted Acquisitions thatconstitute Capital Expenditures), that would cause the aggregate amount of suchCapital Expenditures made by the Borrower and the Restricted Subsidiaries inany fiscal year of the Borrower set forth below to exceed (i) the sum of(a) the greater of (x) the amount set forth in the table below oppositesuch fiscal year and (y) an amount equal to 6.00% multiplied byConsolidated Net Sales for such fiscal year (such greater amount, the “PermittedCapital Expenditure Amount”) and (b) the Available Amount as of the lastday of such fiscal year (provided that no portion of the Available Amount maybe used for Capital Expenditures until the entire amount of the sum of (x) thePermitted Capital Expenditure Amount for such year and (y) the carry-forwardamount (as defined below in this Section 10.11) for

 

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such year shall have been used to makeCapital Expenditures) less (ii) to the extent deducted in arriving atConsolidated Earnings in the prior fiscal year, the amount of expenses relatedto the implementation of enterprise resource planning systems of such priorfiscal year.

 
| **Period**                                         | ** ** | **Amount** |   |
|----------------------------------------------------|------------|------------|--------|
| March 1, 2004  to November 28, 2004 |       |       | $      | 35,000,000 |   |
| November 29, 2004 to November 27,  2005  |       |       | $      | 45,000,000 |   |
| November 28, 2005 to November 26,  2006  |       |       | $      | 50,000,000 |   |
| November 27, 2006 to December 2,  2007   |       |       | $      | 40,000,000 |   |
| December 3, 2007 to November 30,  2008   |       |       | $      | 40,000,000 |   |
| December 1, 2008 to November 29,  2009   |       |       | $      | 40,000,000 |   |
| November 30, 2009 to November 28,  2010  |       |       | $      | 40,000,000 |   |
| November 29, 2010 to the Maturity Date        |       |       | $      | 40,000,000 |   |

 

To the extent that Capital Expenditures (other than PermittedAcquisitions that constitute Capital Expenditures) made by the Borrower and theRestricted Subsidiaries during any fiscal year are less than the PermittedCapital Expenditure Amount for such fiscal year, 100% of such unused amount(each such amount, a “carry-forward amount”) may be carried forward tothe immediately succeeding fiscal year and utilized to make such CapitalExpenditures in such succeeding fiscal year in the event the amount set forthabove for such succeeding fiscal year has been used (it being understood andagreed that (a) no carry-forward amount may be carried forward beyond thefirst two fiscal years immediately succeeding the fiscal year in which itarose, (b) no portion of the carry-forward amount available for any fiscalyear may be used until the entire amount of the Permitted Capital ExpenditureAmount for such fiscal year (without giving effect to such carry-forwardamount) shall have been used to make Capital Expenditures and (c) if thecarry-forward amount available for any fiscal year is the sum of amountscarried forward from each of the two immediately preceding fiscal years, noportion of such carry-forward amount from the earlier of the two immediatelypreceding fiscal years may be used until the entire portion of suchcarry-forward amount from the more recent immediately preceding fiscal yearshall have been used for such Capital Expenditures made in such fiscal year).

 

SECTION 11.                          Eventsof Default

 

Upon the occurrence of any of the following specified events (each an “Eventof Default”):

 

11.1.                        Payments. The Borrower or the Canadian Borrower shall (a) default in the paymentwhen due of any principal of the Loans or (b) default, and such default shallcontinue for five or more days, in the payment when due of any interest orstamping fees on the Loans or any Fees or any Unpaid Drawings or of any otheramounts owing hereunder or under any other Credit Document; or

 

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11.2.                        Representations, etc.  Any representation, warranty or statementmade or deemed made by any Credit Party herein or in any Security Document orany certificate delivered or required to be delivered pursuant hereto orthereto shall prove to be untrue in any material respect on the date as ofwhich made or deemed made; or

 

11.3.                        Covenants. Any Credit Party shall (a) default in the due performance or observanceby it of any term, covenant or agreement contained in Section 9.1(e),Section 9.16 or Section 10 or (b) default in the due performance orobservance by it of any term, covenant or agreement (other than those referredto in Section 11.1 or 11.2 or clause (a) of this Section 11.3)contained in this Agreement, or any Security Document and such default shallcontinue unremedied for a period of at least 30 days after receipt of writtennotice by the Borrower from the Administrative Agent or the Required Lenders;or

 

11.4.                        Default Under Other Agreements.  (a) Any of Holdings, the Borrower, theCanadian Borrower or any of the Restricted Subsidiaries shall (i) default inany payment with respect to any Indebtedness (other than the Obligations) inexcess of $20,000,000 in the aggregate, for Holdings, the Borrower, theCanadian Borrower and such Subsidiaries, beyond the period of grace, if any,provided in the instrument or agreement under which such Indebtedness wascreated or (ii) default in the observance or performance of any agreementor condition relating to any such Indebtedness or contained in any instrumentor agreement evidencing, securing or relating thereto, or any other event shalloccur or condition exist (other than, with respect to Indebtedness consistingof any Hedge Agreements, termination events or equivalent events pursuant tothe terms of such Hedge Agreements), the effect of which default or other eventor condition is to cause, or to permit the holder or holders of suchIndebtedness (or a trustee or agent on behalf of such holder or holders) tocause, any such Indebtedness to become due prior to its stated maturity; or (b) withoutlimiting the provisions of clause (a) above, any such Indebtedness shallbe declared to be due and payable, or required to be prepaid other than by aregularly scheduled required prepayment or as a mandatory prepayment (and, withrespect to Indebtedness consisting of any Hedge Agreements, other than due to atermination event or equivalent event pursuant to the terms of such HedgeAgreements), prior to the stated maturity thereof; or

 

11.5.                        Bankruptcy, etc.  Holdings, the Borrower, the Canadian Borroweror any Specified Subsidiary shall commence a voluntary case, proceeding oraction concerning itself under (a) Title 11 of the United States Codeentitled “Bankruptcy,” or (b) in the case of the Canadian Borrower and anyForeign Subsidiary that is a Specified Subsidiary, any domestic or foreign lawrelating to bankruptcy, insolvency reorganization or relief of debtorslegislation of its jurisdiction of incorporation, in each case as now orhereafter in effect, or any successor thereto (collectively, the “BankruptcyCode”); or an involuntary case, proceeding or action is commenced againstany of Holdings, the Borrower, the Canadian Borrower or any SpecifiedSubsidiary and the petition is not controverted within 10 days aftercommencement of the case, proceeding or action; or an involuntary case,proceeding or action is commenced against any of Holdings, the Borrower, theCanadian Borrower or any Specified Subsidiary and the petition is not dismissedwithin 60 days after commencement of the case, proceeding or action; or a

 

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custodian (as defined in the Bankruptcy Code)receiver, receiver manager, trustee or similar person is appointed for, ortakes charge of, all or substantially all of the property of any of Holdings,the Borrower, the Canadian Borrower or any Specified Subsidiary; or any ofHoldings, the Borrower, the Canadian Borrower or any Specified Subsidiarycommences any other proceeding or action under any reorganization, arrangement,adjustment of debt, relief of debtors, dissolution, insolvency or liquidationor similar law of any jurisdiction whether now or hereafter in effect relatingto any of Holdings, the Borrower, the Canadian Borrower or any SpecifiedSubsidiary; or there is commenced against any of Holdings, the Borrower, theCanadian Borrower or any Specified Subsidiary any such proceeding or actionthat remains undismissed for a period of 60 days; or any of Holdings, theBorrower, the Canadian Borrower or any Specified Subsidiary is adjudicatedinsolvent or bankrupt; or any order of relief or other order approving any suchcase or proceeding or action is entered; or any of Holdings, the Borrower, theCanadian Borrower or any Specified Subsidiary suffers any appointment of anycustodian receiver, receiver manager, trustee or the like for it or anysubstantial part of its property to continue undischarged or unstayed for aperiod of 60 days; or any of Holdings, the Borrower, the Canadian Borrower orany Specified Subsidiary makes a general assignment for the benefit ofcreditors; or any corporate action is taken by any of Holdings, the Borrower,the Canadian Borrower or any Specified Subsidiary for the purpose of effectingany of the foregoing; or

 

11.6.                        ERISA. (a) Any Plan shall fail to satisfy the minimum funding standardrequired for any plan year or part thereof or a waiver of such standard orextension of any amortization period is sought or granted underSection 412 of the Code; any Plan is or shall have been terminated or isthe subject of termination proceedings under ERISA (including the giving ofwritten notice thereof); an event shall have occurred or a condition shallexist in either case entitling the PBGC to terminate any Plan or to appoint atrustee to administer any Plan (including the giving of written noticethereof); any Plan shall have an accumulated funding deficiency (whether or notwaived); any of Holdings, the Borrower or any Subsidiary or any ERISA Affiliatehas incurred or is likely to incur a liability to or on account of a Plan underSection 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 ofERISA or Section 4971 or 4975 of the Code (including the giving of writtennotice thereof); (b) there could result from any event or events set forth inclause (a) of this Section 11.6 the imposition of a lien, the granting ofa security interest, or a liability, or the reasonable likelihood of incurringa lien, security interest or liability; and (c) such lien, security interest orliability will or would be reasonably likely to have a Material Adverse Effect;or

 

11.7.                        Guarantee. The Guarantees or any material provision thereof shall cease to be infull force or effect or any Guarantor thereunder or any Credit Party shall denyor disaffirm in writing any Guarantor’s obligations under the Guarantee; or

 

11.8.                        Pledge Agreement.  The Pledge Agreements or any materialprovision thereof shall cease to be in full force or effect (other thanpursuant to the terms hereof or thereof or as a result of acts or omissions ofthe Administrative Agent or any Lender) or any pledgor thereunder or any CreditParty shall deny or disaffirm in writing any pledgor’s obligations under thePledge Agreement; or

 

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11.9.                        Security Agreement.  The Security Agreements or any materialprovision thereof shall cease to be in full force or effect (other thanpursuant to the terms hereof or thereof or as a result of acts or omissions ofthe Administrative Agent or any Lender) or any grantor thereunder or any CreditParty shall deny or disaffirm in writing any grantor’s obligations under theSecurity Agreement; or

 

11.10.                  Mortgages. Any Mortgage or any material provision of any Mortgage relating to anymaterial portion of the Collateral shall cease to be in full force or effect(other than pursuant to the terms hereof or thereof or as a result of acts oromissions of the Administrative Agent or any Lender) or any Mortgagorthereunder or any Credit Party shall deny or disaffirm in writing any Mortgagor’sobligations under any Mortgage; or

 

11.11.                  Foreign Guarantees.  The Canadian Guarantee or any materialprovision of the Canadian Guarantee shall cease to be in full force or effector any grantor thereunder or any Credit Party shall deny or disaffirm inwriting any grantors obligations under the Canadian Guarantee; or

 

11.12.                  Canadian Security Documents.  Any Canadian Security Document or anymaterial provision of any Canadian Security Document shall cease to be in fullforce or effect (other than pursuant to the terms hereof or thereof or as aresult of acts or omissions of the Administrative Agent or any Lender) or anygrantor thereunder or any Credit Party shall deny or disaffirm in writing anygrantors obligations under any Canadian Security Document; or

 

11.13.                  Subordination.  The Obligations of the Borrower and theCanadian Borrower, or the obligations of Holdings or any Subsidiaries pursuantto the Guarantee or the Canadian Guarantee, shall cease to constitute seniorindebtedness under the subordination provisions of any document or instrumentevidencing the Subordinated Notes or any other permitted subordinatedIndebtedness or such subordination provisions shall be invalidated or otherwisecease to be legal, valid and binding obligations of the parties thereto,enforceable in accordance with their terms; or

 

11.14.                  Judgments.  Oneor more judgments or decrees shall be entered against the Borrower, theCanadian Borrower or any of the Restricted Subsidiaries involving a liabilityof $20,000,000 or more in the aggregate for all such judgments and decrees forthe Borrower and the Restricted Subsidiaries (to the extent not paid or fullycovered by insurance provided by a carrier not disputing coverage) and any suchjudgments or decrees shall not have been satisfied, vacated, discharged orstayed or bonded pending appeal within 60 days from the entry thereof; or

 

11.15.                  Change of Control.  A Change of Control shall occur;

 

then, and in any such event, and at any time thereafter, if any Eventof Default shall then be continuing, the Administrative Agent shall, upon thewritten request of the Required Lenders, by written notice to the Borrower,take any or all of the following actions, without prejudice to the rights ofthe Administrative Agent, the Canadian Administrative

 

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Agent or any Lender to enforce its claims against the Borrower and theCanadian Borrower, except as otherwise specifically provided for in thisAgreement (provided that, if an Event of Default specified inSection 11.5 shall occur with respect to the Borrower, the CanadianBorrower or any Specified Subsidiary, the result that would occur upon thegiving of written notice by the Administrative Agent as specified in clauses(i), (ii) and (iv) below shall occur automatically without the giving of anysuch notice):  (i) declare the USTotal Revolving Credit Commitment terminated and the Canadian Total RevolvingCredit Commitment terminated, whereupon the Commitments and SwinglineCommitment, if any, of each Lender or the Swingline Lender, as the case may be,shall forthwith terminate immediately and any Fees theretofore accrued shallforthwith become due and payable without any other notice of any kind;(ii) declare the principal of and any accrued interest and fees in respectof all Loans and all Obligations owing hereunder and thereunder to be,whereupon the same shall become, forthwith due and payable without presentment,demand, protest or other notice of any kind, all of which are hereby waived bythe Borrower and the Canadian Borrower; (iii) terminate any Letter ofCredit that may be terminated in accordance with its terms; and/or (iv) directthe Borrower and the Canadian Borrower to pay (and the Borrower and theCanadian Borrower agree that upon receipt of such notice, or upon theoccurrence of an Event of Default specified in Section 11.5 with respectto the Borrower, the Canadian Borrower or any Specified Subsidiary, it willpay) to the Administrative Agent or the Canadian Administrative Agent, asapplicable, at its Administrative Agent’s Office such additional amounts ofcash, to be held as security for the Borrower’s and the Canadian Borrower’srespective reimbursement obligations for (x) Drawings that may subsequentlyoccur thereunder, equal to the aggregate Stated Amount of all Letters of Creditissued and then outstanding and (y) the full face amount of Bankers’Acceptances outstanding prior to their maturity dates.

 

SECTION 12.                          The Administrative Agent

 

12.1.                        Appointment. Each Lender hereby irrevocably designates and appoints theAdministrative Agent as the agent of such Lender under this Agreement and theother Credit Documents, and each such Lender irrevocably authorizes theAdministrative Agent, in such capacity, to take such action on its behalf underthe provisions of this Agreement and the other Credit Documents and to exercisesuch powers and perform such duties as are expressly delegated to theAdministrative Agent by the terms of this Agreement and the other CreditDocuments, together with such other powers as are reasonably incidentalthereto.  Notwithstanding any provisionto the contrary elsewhere in this Agreement, the Administrative Agent shall nothave any duties or responsibilities, except those expressly set forth herein,or any fiduciary relationship with any Lender, and no implied covenants,functions, responsibilities, duties, obligations or liabilities shall be readinto this Agreement or any other Credit Document or otherwise exist against theAdministrative Agent.  Neither theSyndication Agent nor the Documentation Agents, in their respective capacitiesas such, shall have any obligations, duties or responsibilities under thisAgreement but shall be entitled to all benefits of this Section 12.

 

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12.2.                        Delegation of Duties.  The Administrative Agent may execute any ofits duties under this Agreement and the other Credit Documents by or throughagents or attorneys-in-fact and shall be entitled to advice of counsel concerningall matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence ormisconduct of any agents or attorneys-in-fact selected by it with reasonablecare.

 

12.3.                        Exculpatory Provisions.  Neither the Administrative Agent nor any ofits officers, directors, employees, agents, attorneys-in-fact or Affiliatesshall be (a) liable for any action lawfully taken or omitted to be taken by itor such Person under or in connection with this Agreement or any other CreditDocument (except for its or such Person’s own gross negligence or willfulmisconduct) or (b) responsible in any manner to any of the Lenders for anyrecitals, statements, representations or warranties made by the Borrower, theCanadian Borrower, any Guarantor, any Canadian Subsidiary Guarantor, any otherCredit Party or any officer thereof contained in this Agreement or any otherCredit Document or in any certificate, report, statement or other documentreferred to or provided for in, or received by the Administrative Agent underor in connection with, this Agreement or any other Credit Document or for thevalue, validity, effectiveness, genuineness, enforceability or sufficiency ofthis Agreement or any other Credit Document or for any failure of the Borrower,the Canadian Borrower, any Guarantor, any Canadian Subsidiary Guarantor or anyother Credit Party to perform its obligations hereunder or thereunder.  The Administrative Agent shall not be underany obligation to any Lender to ascertain or to inquire as to the observance orperformance of any of the agreements contained in, or conditions of, thisAgreement or any other Credit Document, or to inspect the properties, books orrecords of the Borrower or the Canadian Borrower.

 

12.4.                        Reliance by Administrative Agent.  The Administrative Agent shall be entitled torely, and shall be fully protected in relying, upon any writing, resolution,notice, consent, certificate, affidavit, letter, telecopy, telex or teletypemessage, statement, order or other document or conversation believed by it tobe genuine and correct and to have been signed, sent or made by the properPerson or Persons and upon advice and statements of legal counsel (includingcounsel to the Borrower and/or the Canadian Borrower), independent accountantsand other experts selected by the Administrative Agent.  The Administrative Agent may deem and treatthe Lender specified in the Register with respect to any amount owing hereunderas the owner thereof for all purposes unless a written notice of assignment,negotiation or transfer thereof shall have been filed with the AdministrativeAgent.  The Administrative Agent shall befully justified in failing or refusing to take any action under this Agreementor any other Credit Document unless it shall first receive such advice orconcurrence of the Required Lenders as it deems appropriate or it shall firstbe indemnified to its satisfaction by the Lenders against any and all liabilityand expense that may be incurred by it by reason of taking or continuing totake any such action.  The AdministrativeAgent shall in all cases be fully protected in acting, or in refraining fromacting, under this Agreement and the other Credit Documents in accordance witha request of the Required Lenders, and such request and any action taken orfailure to act pursuant thereto shall be binding upon all the Lenders and allfuture holders of the Loans.

 

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12.5.        Notice of Default.  The Administrative Agent shall not be deemedto have knowledge or notice of the occurrence of any Default or Event ofDefault hereunder unless the Administrative Agent has received notice from aLender or the Borrower referring to this Agreement, describing such Default orEvent of Default and stating that such notice is a “notice of default”.  In the event that the Administrative Agentreceives such a notice, the Administrative Agent shall give notice thereof tothe Lenders.  The Administrative Agentshall take such action with respect to such Default or Event of Default asshall be reasonably directed by the Required Lenders, provided that unless anduntil the Administrative Agent shall have received such directions, the AdministrativeAgent may (but shall not be obligated to) take such action, or refrain fromtaking such action, with respect to such Default or Event of Default as itshall deem advisable in the best interests of the Lenders (except to the extentthat this Agreement requires that such action be taken only with the approvalof the Required Lenders or each of the Lenders, as applicable).

 

12.6.        Non-Reliance on AdministrativeAgent and Other Lenders. Each Lender expressly acknowledges that neither the Administrative Agentnor any of its officers, directors, employees, agents, attorneys-in-fact orAffiliates has made any representations or warranties to it and that no act bythe Administrative Agent hereinafter taken, including any review of the affairsof the Borrower, the Canadian Borrower, any Guarantor, any Canadian SubsidiaryGuarantor or any other Credit Party, shall be deemed to constitute anyrepresentation or warranty by the Administrative Agent to any Lender.  Each Lender represents to the AdministrativeAgent that it has, independently and without reliance upon the AdministrativeAgent or any other Lender, and based on such documents and information as ithas deemed appropriate, made its own appraisal of and investigation into thebusiness, operations, property, financial and other condition andcreditworthiness of the Borrower, the Canadian Borrower, any Guarantor, anyCanadian Subsidiary Guarantor and any other Credit Party and made its owndecision to make its Loans hereunder and enter into this Agreement.  Each Lender also represents that it will,independently and without reliance upon the Administrative Agent or any otherLender, and based on such documents and information as it shall deemappropriate at the time, continue to make its own credit analysis, appraisalsand decisions in taking or not taking action under this Agreement and the otherCredit Documents, and to make such investigation as it deems necessary toinform itself as to the business, operations, property, financial and othercondition and creditworthiness of the Borrower, the Canadian Borrower, anyGuarantor, any Canadian Subsidiary Guarantor and any other Credit Party.  Except for notices, reports and otherdocuments expressly required to be furnished to the Lenders by theAdministrative Agent hereunder, the Administrative Agent shall not have anyduty or responsibility to provide any Lender with any credit or otherinformation concerning the business, assets, operations, properties, financialcondition, prospects or creditworthiness of the Borrower, the CanadianBorrower, any Guarantor, any Canadian Subsidiary Guarantor or any other CreditParty that may come into the possession of the Administrative Agent or any ofits officers, directors, employees, agents, attorneys-in-fact or Affiliates.

 

12.7.        Indemnification.  The Lenders agree to indemnify theAdministrative Agent in its capacity as such (to the extent not reimbursed bythe

 

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Borrower or the Canadian Borrower and without limiting the obligationof the Borrower and the Canadian Borrower to do so), ratably according to theirrespective portions of the Total Credit Exposure in effect on the date on whichindemnification is sought (or, if indemnification is sought after the date uponwhich the Commitments shall have terminated and the Loans shall have been paidin full, ratably in accordance with their respective portions of the TotalCredit Exposure in effect immediately prior to such date), from and against anyand all liabilities, obligations, losses, damages, penalties, actions,judgments, suits, costs, expenses or disbursements of any kind whatsoever thatmay at any time (including at any time following the payment of the Loans) beimposed on, incurred by or asserted against the Administrative Agent in any wayrelating to or arising out of, the Commitments, this Agreement, any of theother Credit Documents or any documents contemplated by or referred to hereinor therein or the transactions contemplated hereby or thereby or any actiontaken or omitted by the Administrative Agent under or in connection with any ofthe foregoing, provided that no Lender shall be liable for the payment of anyportion of such liabilities, obligations, losses, damages, penalties, actions,judgments, suits, costs, expenses or disbursements resulting from theAdministrative Agent’s gross negligence or willful misconduct.  The agreements in this Section 12.7shall survive the payment of the Loans and all other amounts payable hereunder.

 

12.8.        Administrative Agent in itsIndividual Capacity.  TheAdministrative Agent and its Affiliates may make loans to, accept deposits fromand generally engage in any kind of business with the Borrower, the CanadianBorrower, any Guarantor, any Canadian Subsidiary Guarantor and any other CreditParty as though the Administrative Agent were not the Administrative Agenthereunder and under the other Credit Documents. With respect to the Loans made by it, the Administrative Agent shallhave the same rights and powers under this Agreement and the other CreditDocuments as any Lender and may exercise the same as though it were not theAdministrative Agent, and the terms “Lender” and “Lenders” shall include theAdministrative Agent in its individual capacity.

 

12.9.        Successor Agent.  The Administrative Agent may resign asAdministrative Agent upon 20 days’ prior written notice to the Lenders and theBorrower.  If the Administrative Agentshall resign as Administrative Agent under this Agreement and the other CreditDocuments, then the Required Lenders shall appoint from among the Lenders asuccessor agent for the Lenders, which successor agent shall be approved by theBorrower (which approval shall not be unreasonably withheld), whereupon suchsuccessor agent shall succeed to the rights, powers and duties of theAdministrative Agent, and the term “Administrative Agent” shall mean suchsuccessor agent effective upon such appointment and approval, and the formerAdministrative Agent’s rights, powers and duties as Administrative Agent shallbe terminated, without any other or further act or deed on the part of suchformer Administrative Agent or any of the parties to this Agreement or anyholders of the Loans.  After any retiringAdministrative Agent’s resignation as Administrative Agent, the provisions ofthis Section 12 shall inure to its benefit as to any actions taken or omittedto be taken by it while it was Administrative Agent under this Agreement andthe other Credit Documents.

 

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12.10.      WithholdingTax.  To the extent required byany applicable law, the Administrative Agent may withhold from any interestpayment to any Lender an amount equivalent to any applicable withholdingtax.  If the Internal Revenue Service orany authority of the United States or other jurisdiction asserts a claim thatthe Administrative Agent did not properly withhold tax from amounts paid to orfor the account of any Lender (because the appropriate form was not delivered,was not properly executed, or because such Lender failed to notify theAdministrative Agent of a change in circumstances which rendered the exemptionfrom, or reduction of, withholding tax ineffective, or for any other reason),such Lender shall indemnify the Administrative Agent fully for all amountspaid, directly or indirectly, by the Administrative Agent as tax or otherwise,including penalties and interest, together with all expenses incurred,including legal expenses, allocated staff costs and any out of pocket expenses.

 

12.11.      Canadian Administrative Agent.  Each of the Lenders hereby agrees andconfirms that the provisions of this Section 12 shall apply to JPMorgan ChaseBank, Toronto Branch, as Canadian Administrative Agent with respect to theCanadian Revolving Credit Loans upon the same terms and subject to the sameconditions as provided in this Section 12 mutatis mutandis; provided,that any successor Canadian Administrative Agent shall be a Canadian Residentwith an office in Toronto, Canada or Montreal, Canada having a combined capitaland surplus of at least $500,000,000 or an Affiliate of any such bank which isalso a bank.

 

12.12.      Quebec.  For greater certainty, and without limitingthe powers of the Agents or any other Person acting as an agent,attorney-in-fact or mandatary for the Agents under this Agreement or under anyof the other Credit Documents, each Lender, hereby (a) irrevocablyconstitutes, to the extent necessary, the Canadian Administrative Agent as theholder of an irrevocable power of attorney (fondé de pouvoir within themeaning of Article 2692 of the Civil Code of Québec) for the purposes ofholding any Liens, including hypothecs, granted or to be granted by any CreditParty on movable or immovable property pursuant to the laws of the Province ofQuebec to secure obligations of a Credit Party under any bond issued by aCredit Party; and (b) appoints and agrees that the Canadian AdministrativeAgent, acting as agent for the Lenders, may act as the bondholder and mandatarywith respect to any bond that may be issued and pledged from time to time forthe benefit of the Lenders.

 

The saidconstitution of the fondé de pouvoir**(withinthe meaning of Article 2692 of the Civil Code of Quebec) as the holderof such irrevocable power of attorney and of the Canadian Administrative Agentas bondholder and mandatary with respect to any bond that may be issued andpledged from time to time for the benefit of the Lenders shall be deemed tohave been ratified and confirmed by any assignee by the execution of anAssignment and Acceptance.

 

Notwithstandingthe provisions of Section 32 of An Act respecting the special powers oflegal persons (Quebec), the Canadian Administrative Agent may purchase,acquire and be the holder of any bond issued by any Credit Party.  Each Credit Party hereby acknowledges thatany such bond shall constitute a title of indebtedness, as such term is used inArticle 2692 of the Civil Code of Quebec.

 

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The CanadianAdministrative Agent herein appointed as fondé de pouvoir shall have thesame rights, powers and immunities as the Agents as stipulated in this ArticleXII, which shall apply mutatis mutandis. Without limitation, the provisions of Section 12.9 of this Agreementshall apply mutatis mutandis to the resignation and appointment of asuccessor to the Canadian Administrative Agent acting as fondé de pouvoir.

 

SECTION 13.         Collateral Allocation Mechanism

 

13.1.        Implementation of CAM.  (a)     On the CAM Exchange Date, (i) theCommitments shall automatically and without further act be terminated asprovided in Section 11, (ii) the Lenders shall automatically andwithout further act (and without regard to the provisions of Section 14.6)be deemed to have exchanged interests in the Credit Facilities such that inlieu of the interest of each Lender in each Credit Facility in which it shallparticipate as of such date (including such Lender’s interest in the SpecifiedObligations of each Credit Party in respect of each such Credit Facility), suchLender shall hold an interest in every one of the Credit Facilities (includingthe Specified Obligations of each Credit Party in respect of each such CreditFacility and each L/C Reserve Account established pursuant to Section 13.2below), whether or not such Lender shall previously have participated therein,equal to such Lender’s CAM Percentage thereof and (iii) simultaneouslywith the deemed exchange of interests pursuant to clause (ii) above, in thecase of (A) any Canadian Lender that has prior to the date thereof notified theCanadian Administrative Agent and the Borrower in writing that it has electedto have this clause (iii) apply to it, and (B) any other Lender that hasnotified the Administrative Agent in writing that it desires to have its deemedparticipation following the CAM Exchange Date converted to Dollars, theinterests in the Canadian Obligations to be received by such Lender in suchdeemed exchange shall, automatically and with no further action required, beconverted into the Dollar Equivalent, determined using the Exchange Ratecalculated as of such date, of such amount and on and after such date allamounts accruing and owed to such Lender in respect of such Obligations shallaccrue and be payable in Dollars at the rate otherwise applicable hereunder,provided that such CAM Exchange will not affect the aggregate amount of theObligations of the Borrower and the Canadian Borrower to the Lenders under theCredit Documents.  Each Lender and eachCredit Party hereby consents and agrees to the CAM Exchange, and each Lenderagrees that the CAM Exchange shall be binding upon its successors and assignsand any person that acquires a participation in its interests in any CreditFacility.  Each Credit Party agrees fromtime to time to execute and deliver to the Administrative Agent all promissorynotes and other instruments and documents as the Administrative Agent shallreasonably request to evidence and confirm the respective interests of theLenders after giving effect to the CAM Exchange, and each Lender agrees tosurrender any promissory notes originally received by it in connection with itsLoans hereunder to the Administrative Agent against delivery of new promissorynotes evidencing its interests in the Credit Facilities; provided, however,that the failure of any Credit Party to execute or deliver or of any Lender toaccept any such promissory note, instrument or document shall not affect thevalidity or effectiveness of the CAM Exchange.

 

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(b)           As a result of the CAM Exchange,upon and after the CAM Exchange Date, each payment received by theAdministrative Agent pursuant to any Credit Document in respect of theSpecified Obligations, and each distribution made by the Administrative Agentpursuant to any Credit Document in respect of the Specified Obligations, shallbe distributed to the Lenders pro rata in accordance with their respective CAMPercentages.  Any direct payment receivedby a Lender upon or after the CAM Exchange Date, including by way of setoff, inrespect of a Specified Obligation shall be paid over to the AdministrativeAgent for distribution to the Lenders in accordance herewith.

 

13.2.        Letters of Credit.  (a)     In the event that on the CAM Exchange Dateany Letter of Credit shall be outstanding and undrawn in whole or in part, orany amount drawn under a Letter of Credit shall constitute an Unpaid Drawing,each Lender with a Revolving Credit Commitment or Canadian Commitment, asapplicable, in respect of Unpaid Drawings on Letters of Credit shall, beforegiving effect to the CAM Exchange, promptly pay over to the AdministrativeAgent, in immediately available funds and in the currency that such Letters ofCredit are denominated (or at the request of a Lender, such amount in theDollar Equivalent thereof at such time), an amount equal to such Lender’sRevolving Credit Commitment Percentage (as notified to such Lender by theAdministrative Agent), of such Letter of Credit’s undrawn face amount or (tothe extent it has not already done so) such Letter of Credit’s Unpaid Drawing,as the case may be, together with interest thereon from the CAM Exchange Dateto the date on which such amount shall be paid to the Administrative Agent atthe rate that would be applicable at the time to a Revolving Credit Loan thatis an ABR Loan in a principal amount equal to such amount, as the case maybe.  The Administrative Agent shallestablish a separate account or accounts for each Lender (each, an “L/CReserve Account”) for the amounts received with respect to each such Letterof Credit pursuant to the preceding sentence. The Administrative Agent shall deposit in each Lender’s L/C ReserveAccount such Lender’s CAM Percentage of the amounts received from the Lendersas provided above.  The AdministrativeAgent shall have sole dominion and control over each L/C Reserve Account, andthe amounts deposited in each L/C Reserve Account shall be held in suchL/C Reserve Account until withdrawn as provided in paragraph (b), (c), (d)or (e) below.  The AdministrativeAgent shall maintain records enabling it to determine the amounts paid over toit and deposited in the L/C Reserve Accounts in respect of each Letter ofCredit and the amounts on deposit in respect of each Letter of Creditattributable to each Lender’s CAM Percentage. The amounts held in each Lender’s L/C Reserve Account shall be held as areserve against the Letter of Credit Exposure, shall be the property of suchLender, shall not constitute Loans to or give rise to any claim of or againstany Credit Party and shall not give rise to any obligation on the part of theBorrower or the Canadian Borrower to pay interest to such Lender, it beingagreed that the reimbursement obligations in respect of Letters of Credit shallarise only at such times as drawings are made thereunder, as provided inSection 3.

 

(b)           In the event that after the CAMExchange Date any drawing shall be made in respect of a Letter of Credit, theAdministrative Agent shall, at the request of the Letter of Credit Issuerwithdraw from the L/C Reserve Account of each Lender any amounts, up to theamount of such Lender’s CAM Percentage of such drawing, deposited

 

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inrespect of such Letter of Credit and remaining on deposit and deliver such amountsto the Letter of Credit Issuer in satisfaction of the reimbursement obligationsof the Lenders under Section 3 (but not of the Borrower and the CanadianBorrower under Section 3, respectively). In the event any Lender shall default on its obligation to pay over anyamount to the Administrative Agent in respect of any Letter of Credit asprovided in this Section 13.2, the Letter of Credit Issuer shall, in theevent of a drawing thereunder, have a claim against such Lender to the sameextent as if such Lender had defaulted on its obligations under Section 2.5(e),but shall have no claim against any other Lender in respect of such defaultedamount, notwithstanding the exchange of interests in the reimbursementobligations pursuant to Section 9.01. Each other Lender shall have a claim against such defaulting Lender forany damages sustained by it as a result of such default, including, in theevent such Letter of Credit shall expire undrawn, its CAM Percentage of thedefaulted amount.

 

(c)           In the event that after the CAMExchange Date any Letter of Credit shall expire undrawn, the AdministrativeAgent shall withdraw from the L/C Reserve Account of each Lender the amountremaining on deposit therein in respect of such Letter of Credit and distributesuch amount to such Lender.

 

(d)           With the prior written approval ofthe Administrative Agent and the Letter of Credit Issuer, any Lender maywithdraw the amount held in its L/C Reserve Account in respect of the undrawnamount of any Letter of Credit.  AnyLender making such a withdrawal shall be unconditionally obligated, in theevent there shall subsequently be a drawing under such Letter of Credit, to payover to the  Administrative Agent, forthe account of the Letter of Credit Issuer on demand, its CAM Percentage ofsuch drawing.

 

(e)           Pending the withdrawal by any Lenderof any amounts from its L/C Reserve Account as contemplated by the aboveparagraphs, the Administrative Agent will, at the direction of such Lender andsubject to such rules as the Administrative Agent may prescribe for theavoidance of inconvenience, invest such amounts in Permitted Investments.  Each Lender that has not withdrawn its CAMPercentage of amounts in its L/C Reserve Account as provided in paragraph (d)above shall have the right, at intervals reasonably specified by theAdministrative Agent, to withdraw the earnings on investments so made by theAdministrative Agent with amounts in its L/C Reserve Account and to retain suchearnings for its own account.

 

13.3.        Net Payments Upon Implementationof CAM Exchange. Notwithstanding any other provision of this Agreement, if, as a directresult of the implementation of the CAM Exchange, the Borrower or the CanadianBorrower is required to withhold Non-Excluded Taxes from amounts payable to theAdministrative Agent, any Lender or any Participant hereunder, the amounts sopayable to the Administrative Agent, such Lender or such Participant shall beincreased to the extent necessary to yield to the Administrative Agent, suchLender or such Participant (after payment of all Non-Excluded Taxes) interestor any such other amounts payable hereunder at the rates or in the amountsspecified in this Agreement; provided, however, that the Borrowerand the Canadian Borrower shall not be required to increase any such

 

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amounts payable to such Lender or Participant under this Section 13.3(but, rather, shall be required to increase any such amounts payable to suchLender or Participant to the extent required by Section 5.4) if such Lender orParticipant was prior to or on the CAM Exchange Date already a Lender orParticipant with respect to such Borrower or Canadian Borrower.  If a Non-U.S. Lender (or Non-U.S. Participant),in its good faith judgment, is eligible for an exemption from, or reduced rateof, U.S. Federal withholding tax on payments by the Borrower under thisAgreement, the Borrower shall not be required to increase any such amountspayable to such Non-U.S. Lender (or Non-U.S. Participant) if such Non-U.S.Lender (or Non-U.S. Participant) fails to comply with the requirements ofparagraph (b) of Section 5.4.  TheCanadian Borrower shall not be required to indemnify or pay any additionalamounts to any Lender in respect of Canadian withholding tax pursuant to thisSection 13.3 to the extent that such taxes result from a failure by the Lenderto comply with any Reporting Requirement described in Section 5.4(c) of thisAgreement if (i) compliance is required by law, regulation, administrativepractice or any applicable tax treaty as a precondition to exemption from or areduction in the rate of deduction or withholding of tax, and (ii) the Canadianborrower has first made written request to the Lender that such Lender complywith the particular Reporting Requirement (identified specifically in suchrequest) and the Lender has not complied with such Reporting Requirement within30 Business Days of such written request; provided, however thatthe Canadian Borrower shall not be relieved of its obligation to indemnify orpay additional amounts to a Lender (x) where such obligation arose prior to theCanadian Borrower’s written request to the Lender respecting such ReportingRequirement, (y) if, by reason of any change in any law, regulation,administrative practice or applicable tax treaty occurring after the datehereof, the Lender, as applicable, is unable to duly comply with such ReportingRequirement, or (z) to the extent that the additional payment or indemnitycompensates the Lender for an amount to which the Lender would have beenentitled to received under this Section 13.3 had the Lender complied with theReporting Requirement.  Upon a CAMExchange, a Lender (or Participant) will use commercially reasonable efforts,and complete any procedural formalities necessary, to become an Eligible Lenderwith respect to the Canadian Borrower and, if such Lender (or Participant)fails to do so, the Canadian Borrower shall not be required to increase anysuch amounts payable to such Lender (or Participant) (unless such Lender isprohibited from becoming a Canadian Lender by its governing documents).  If the Borrower or the Canadian Borrower, asthe case may be, fails to pay any such Non-Excluded Taxes when due to theappropriate taxing authority or fails to remit to the Administrative Agent therequired receipts or other required documentary evidence, such Borrower orCanadian Borrower shall indemnify the Administrative Agent, the Lenders and theParticipants for any incremental taxes, interest, costs or penalties that maybecome payable by the Administrative Agent, such Lenders or such Participantsas a result of any such failure.

 

SECTION 14.         Miscellaneous

 

14.1.        Amendments and Waivers.  Neither this Agreement nor any other CreditDocument, nor any terms hereof or thereof may be amended, supplemented ormodified except in accordance with the provisions of this Section 14.1.  The Required Lenders may, or, with thewritten consent of the Required Lenders, the Administrative

 

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Agent may, from time to time, (a) enter into with the relevant CreditParty or Credit Parties written amendments, supplements or modifications heretoand to the other Credit Documents for the purpose of adding any provisions tothis Agreement or the other Credit Documents or changing in any manner therights of the Lenders or of the Credit Parties hereunder or thereunder or (b)waive, on such terms and conditions as the Required Lenders or theAdministrative Agent, as the case may be, may specify in such instrument, anyof the requirements of this Agreement or the other Credit Documents or anyDefault or Event of Default and its consequences; provided, however,that no such waiver and no such amendment, supplement or modification shalldirectly (i) forgive any portion of any Loan or extend the final scheduledmaturity date of any Loan or reduce the stated rate, or forgive any portion, orextend the date for the payment, of any interest or fee payable hereunder(other than as a result of waiving the applicability of any post-defaultincrease in interest rates), or extend the final expiration date of anyLender’s Commitment or extend the final expiration date of any Letter of Creditbeyond the L/C Maturity Date, or increase the aggregate amount of the Commitmentsof any Lender, or amend or modify any provisions of Section 14.8(a), in eachcase without the written consent of each Lender directly and adversely affectedthereby, or (ii) amend, modify or waive any provision of thisSection 14.1 or reduce the percentages specified in the definitions of theterms “Required Canadian Revolving Credit Lenders”, “Required US RevolvingCredit Lenders”, “RequiredLenders” and “Required TermLenders” or consent to the assignment or transfer by the Borrower or the CanadianBorrower of its rights and obligations under any Credit Document to which it isa party (except as permitted pursuant to Section 10.3), in each casewithout the written consent of each Lender directly and adversely affectedthereby, or (iii) amend, modify or waive any provision of Section 12 withoutthe written consent of the then-current Administrative Agent, or (iv) amend,modify or waive any provision of Section 3 without the written consent of theLetter of Credit Issuer, or (v) amend, modify or waive any provisionshereof relating to Swingline Loans without the written consent of the SwinglineLender, or (vi) change any Revolving Credit Commitment to a Tranche C Term LoanCommitment, or change any Tranche C Term Loan Commitment to a Revolving CreditCommitment, in each case without the prior written consent of each Lenderdirectly and adversely affected thereby, or (vii) release all orsubstantially all of the Guarantors under the Guarantee (except as expresslypermitted by the Guarantee), release all or substantially all of the CanadianSubsidiary Guarantors under any Canadian Subsidiary Guarantee (except aspermitted by any Canadian Subsidiary Guarantee) or release all or substantiallyall of the Collateral under the Pledge Agreement, the Security Agreement, theCanadian Security Documents and the Mortgages, in each case without the priorwritten consent of each Lender, or (viii) amend Section 2.9(a) so as to permitInterest Period intervals greater than six months without regard toavailability to Lenders, without the written consent of each Lender directlyand adversely affected thereby, or (ix) decrease any Repayment Amount,extend any scheduled Repayment Date or decrease the amount or allocation of anymandatory prepayment to be received by any Lender holding any Tranche C TermLoans, in each case without the written consent of the Required Term Lendersand; provided further, that at any time that no Default or Event of Default hasoccurred and is continuing, the Revolving Credit Commitment of any Lender maybe increased to finance a Permitted Acquisition, with the consent of suchLender, the

 

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Borrower and the Administrative Agent (which consent, in the case ofthe Administrative Agent, shall not be unreasonably withheld) and without theconsent of the Required Lenders, so long as (i) the Increased CommitmentAmount at such time, when added to the amount of Indebtedness incurred pursuantto Section 10.1(k) and outstanding at such time, does not exceed thelimits set forth therein, (ii) the Borrower or its applicable RestrictedSubsidiary shall pledge the capital stock of any person acquired pursuantthereto to the Administrative Agent for the benefit of the Lenders to theextent required under Section 9.12 and (iii) to the extent determinedby the Administrative Agent to be necessary to ensure pro rata borrowingscommencing with the initial borrowing after giving effect to such increase, theBorrower shall prepay any BA Loans or Eurodollar Loans outstanding immediatelyprior to such initial borrowing; as used herein, the “Increased CommitmentAmount” means, at any time, aggregate amount of all increases pursuant tothis proviso made at or prior to such time less the aggregate amount of allvoluntary reductions of the Revolving Credit Commitments made prior to suchtime.  Any such waiver and any suchamendment, supplement or modification shall apply equally to each of theaffected Lenders and shall be binding upon the Borrower, the Canadian Borrower,such Lenders, the Administrative Agent and all future holders of the affectedLoans.  In the case of any waiver, theBorrower, the Lenders and the Administrative Agent shall be restored to theirformer positions and rights hereunder and under the other Credit Documents, andany Default or Event of Default waived shall be deemed to be cured and notcontinuing, it being understood that no such waiver shall extend to anysubsequent or other Default or Event of Default or impair any right consequentthereon.

 

14.2.        Notices.  All notices, requests and demands to or uponthe respective parties hereto to be effective shall be in writing (including byfacsimile transmission), and, unless otherwise expressly provided herein, shallbe deemed to have been duly given or made when delivered, or three days afterbeing deposited in the mail, postage prepaid, or, in the case of telecopynotice, when received, addressed as follows in the case of the Borrower, theCanadian Borrower and the Administrative Agent, and as set forth on Schedule1.1(c) in the case of the other parties hereto, or to such other address as maybe hereafter notified by the respective parties hereto:

 
| The Borrower and the Canadian Borrower: |   | Sealy Mattress Company                  |
|-----------------------------------------|--------|-----------------------------------------|
|                                    |   | One Office Parkway                      |
|                                    |   | Trinity, NC  27370                 |
|                                    |   | Attention:                              | Kenneth L. Walker |
|                                    |   | Fax:                                    | +-336-861-3786 |
|                                    |   |                                    |
|                                    |   | with a copy to:                         |
|                                    |   |                                    |
|                                    |   | Kohlberg Kravis Roberts & Co., L.P. |
|                                    |   | 9 West 57th Street                      |
|                                    |   | Suite 4200                              |
|                                    |   | New York, NY  10019                |
|                                    |   | Attention:                              | Brian Carroll |

 

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|                               |   | Fax:                                | 212-750-0003               |
|------------------------------------|--------|-------------------------------------|----------------------------|
|                               |   |                                |
| The Administrative Agent:          |   | JPMorgan Chase Bank                 |
|                               |   | Agent Bank Services Group           |
|                               |   | 1111 Fannin, 10th Floor             |
|                               |   | Houston,  Texas  77002         |
|                               |   | Attention:                          | Vaughan Nguyen             |
|                               |   | Fax:                                | (713) 750-2932             |
|                               |   |                                |
|                               |   | with a copy to:                     |
|                               |   |                                |
|                               |   | JPMorgan Chase Bank                 |
|                               |   | 270  Park Avenue, 4th Floor         |
|                               |   | New  York, New York 10017           |
|                               |   | Attention:                          | Kathryn  Duncan            |
|                               |   | Fax:                                | 212-270-6637               |
|                               |   |                                |
| The Canadian Administrative Agent: |   | JPMorgan Chase Bank, Toronto Branch |
|                               |   | 200 Bay Street, Suite 1800          |
|                               |   | Royal Bank Plaza, South Tower       |
|                               |   | Toronto, Ontario M5J 2J2            |
|                               |   | Attention:                          | Corporate  Banker          |
|                               |   | Fax:                                | 416-981-9138               |
|                               |   |                                |
|                               |   | with a copy to:                     |
|                               |   |                                |
|                               |   | JPMorgan Chase Bank, Toronto Branch |
|                               |   | 200 Bay Street, Suite 1800          |
|                               |   | Royal Bank Plaza, South Tower       |
|                               |   | Toronto, Ontario M5J 2J2            |
|                               |   | Attention:                          | Corporate  Banking Officer |
|                               |   | Fax:                                | 416-981-9128               |

 

providedthat any notice, request or demand to or upon the Administrative Agent or theLenders pursuant to Sections 2.3, 2.6, 2.9, 4.2 and 5.1 shall not beeffective until received.

 

14.3.        No Waiver; Cumulative Remedies.  No failure to exercise and no delay inexercising, on the part of the Administrative Agent or any Lender, any right,remedy, power or privilege hereunder or under the other Credit Documents shalloperate as a waiver thereof, nor shall any single or partial exercise of anyright, remedy, power or privilege hereunder preclude any other or furtherexercise thereof or the exercise of any other right, remedy, power orprivilege.  The rights, remedies, powersand privileges herein provided are cumulative and not exclusive of any rights,remedies, powers and privileges provided by law.

 

14.4.        Survival of Representations andWarranties.  Allrepresentations and warranties made hereunder, in the other Credit Documentsand in any document,

 

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certificate or statement delivered pursuant hereto or in connectionherewith shall survive the execution and delivery of this Agreement and themaking of the Loans hereunder.

 

14.5.        Payment of Expenses and Taxes.  The Borrower and the Canadian Borrower agree(a) to pay or reimburse the Agents for all their reasonable out-of-pocket costsand expenses incurred in connection with the development, preparation andexecution of, and any amendment, supplement or modification to, this Agreementand the other Credit Documents and any other documents prepared in connectionherewith or therewith, and the consummation and administration of thetransactions contemplated hereby and thereby, including the reasonable fees,disbursements and other charges of counsel to the Agents, (b) to pay orreimburse each Lender and the Administrative Agent for all its reasonable anddocumented costs and expenses incurred in connection with the enforcement orpreservation of any rights under this Agreement, the other Credit Documents andany such other documents, including the reasonable fees, disbursements andother charges of counsel to each Lender and of counsel to the AdministrativeAgent, (c) to pay, indemnify, and hold harmless each Lender and theAdministrative Agent from, any and all recording and filing fees and any andall liabilities with respect to, or resulting from any delay in paying, stamp,excise and other similar taxes, if any, that may be payable or determined to bepayable in connection with the execution and delivery of, or consummation oradministration of any of the transactions contemplated by, or any amendment,supplement or modification of, or any waiver or consent under or in respect of,this Agreement, the other Credit Documents and any such other documents, and(d) to pay, indemnify, and hold harmless each Lender and the AdministrativeAgent and their respective directors, officers, employees, trustees and agentsfrom and against any and all other liabilities, obligations, losses, damages,penalties, actions, judgments, suits, costs, expenses or disbursements of anykind or nature whatsoever, including reasonable and documented fees,disbursements and other charges of counsel, with respect to the execution,delivery, enforcement, performance and administration of this Agreement, theother Credit Documents and any such other documents, including any of theforegoing relating to the violation of, noncompliance with or liability under,any Environmental Law or any actual or alleged presence of Hazardous Materialsapplicable to the operations of the Borrower, any of its Subsidiaries or any ofthe Real Estate (all the foregoing in this clause (d), collectively, the “indemnifiedliabilities”), provided that the Borrower and the Canadian Borrower shallhave no obligation hereunder to the Administrative Agent or any Lender nor anyof their respective directors, officers, employees and agents with respect toindemnified liabilities arising from (i) the gross negligence or willful misconductof the party to be indemnified or (ii) disputes among the AdministrativeAgent, the Lenders and/or their transferees. The agreements in this Section 14.5 shall survive repayment of the Loansand all other amounts payable hereunder.

 

14.6.        Successors and Assigns;Participations and Assignments. (a)     The provisions of thisAgreement shall be binding upon and inure to the benefit of the parties heretoand their respective successors and assigns permitted hereby (including anyAffiliate of the Letter of Credit Issuer that issues any Letter of Credit),except that (i) the Borrower and the Canadian Borrower may not assign orotherwise transfer any of its rights or obligations hereunder without the priorwritten consent of each Lender (and any

 

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attempted assignment or transfer by the Borrower or the CanadianBorrower without such consent shall be null and void) and (ii) no Lender mayassign or otherwise transfer its rights or obligations hereunder except inaccordance with this Section.  Nothing inthis Agreement, expressed or implied, shall be construed to confer upon anyPerson (other than the parties hereto, their respective successors and assignspermitted hereby (including any Affiliate of the Letter of Credit Issuer thatissues any Letter of Credit), Participants (to the extent provided in paragraph(c) of this Section) and, to the extent expressly contemplated hereby, theRelated Parties of each of the Administrative Agent, the Letter of Credit Issuerand the Lenders) any legal or equitable right, remedy or claim under or byreason of this Agreement.

 

(b)           (i) Subject to the conditions set forth in paragraph (b)(ii) below, anyLender may assign to one or more assignees all or a portion of its rights andobligations under this Agreement (including all or a portion of its Commitmentsand the Loans at the time owing to it) with the prior written consent (suchconsent not be unreasonably withheld; it being understood that, withoutlimitation, the Borrower shall have the right to withhold its consent to anyassignment if, in order for such assignment to comply with applicable law, theBorrower would be required to obtain the consent of, or make any filing orregistration with, any Governmental Authority) of:

 

(A)          the Borrower, provided that no consentof the Borrower shall be required for an assignment to a Lender, an Affiliateof a Lender (unless increased costs would result therefrom except if an Eventof Default under Section 11.1 or Section 11.5 has occurred and is continuing),an Approved Fund or, if an Event of Default under Section 11.1 or Section 11.5has occurred and is continuing, any other assignee; and

 

(B)           the Administrative Agent, and, in the caseof Revolving Credit Commitments or Revolving Credit Loans or Canadian Lettersof Credit only, the Swingline Lender and the applicable Letter of CreditIssuer, provided that no consent of the Administrative Agent, theSwingline Lender or the Letter of Credit Issuer shall be required for anassignment of (1) any Commitment to an assignee that is a Lender with aCommitment of the same Class immediately prior to giving effect to suchassignment or (2) any Tranche C Term Loan to a Lender, an Affiliate of a Lenderor an Approved Fund.

 

(ii)           Assignments shall be subject to thefollowing additional conditions:

 

(A)          except in the case of an assignment to aLender, an Affiliate of a Lender or an Approved Fund or an assignment of theentire remaining amount of the assigning Lender’s Commitment or Loans of anyClass, the amount of the Commitment or Loans of the assigning Lender subject toeach such assignment (determined as of the date the Assignment and Acceptancewith respect to such assignment is delivered to the

 

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Administrative Agent) shall not be less than the Dollar Equivalent of$2,500,000 or, in the case of a Tranche C Term Loan Commitment or Tranche CTerm Loan, the Dollar Equivalent of $1,000,000 unless each of the Borrower andthe Administrative Agent otherwise consents, provided that no suchconsent of the Borrower shall be required if an Event of Default under Section11.1 or Section 11.5 has occurred and is continuing; providedfurtherthat contemporaneous assignments to a single assignee made by Affiliate Lendersshall be aggregated for purposes of meeting the minimum assignment amountrequirements stated above;

 

(B)           each partial assignment shall be made as anassignment of a proportionate part of all the assigning Lender’s rights andobligations under this Agreement, provided that this clause shall not beconstrued to prohibit the assignment of a proportionate part of all theassigning Lender’s rights and obligations in respect of one Class ofCommitments or Loans;

 

(C)           the parties to each assignment shall executeand deliver to the Administrative Agent an Assignment and Acceptance, togetherwith a processing and recordation fee of $3,500, provided that only onesuch fee shall be payable in the event of simultaneous assignments to or fromtwo or more Approved Funds;

 

(D)          the assignee, if it shall not be a Lender,shall deliver to the Administrative Agent an Administrative Questionnaire in aform approved by the Administrative Agent; and

 

(E)           solong as no Event of Default has occurred and is continuing, with respect to anyassignment of the Canadian Revolving Credit Commitments allocated to theCanadian Borrower in accordance with Section 2.1(b)(ii), the Assignee shall bea Canadian Resident and a pro rata portion of the Canadian Revolving CreditCommitments of the Canadian Lender or its Related Affiliate, as applicable,allocated to the Borrower in accordance with Section 2.1(b)(ii) shall beassigned to a Related Affiliate, if applicable, of such assignee, that iseither a “United States person” (as such term is defined in Section 7701(a)(30)of the Code) or is a Non-US Lender that has fulfilled the requirements ofSection 5.4(b).

 

For thepurpose of this Section 14.6(b), the term “Approved Fund” has the followingmeaning:

 

“ApprovedFund” means any Person (other than a natural person) that is engaged inmaking, purchasing, holding or investing in bank loans and similar extensionsof credit in the ordinary course of its business and that is administered,advised or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) anentity or an Affiliate of an entity that administers, advises or manages aLender.

 

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(iii)          Subject to acceptance and recordingthereof pursuant to paragraph (b)(v) of this Section, from and after theeffective date specified in each Assignment and Acceptance, the assigneethereunder shall be a party hereto and, to the extent of the interest assignedby such Assignment and Acceptance, have the rights and obligations of a Lenderunder this Agreement, and the assigning Lender thereunder shall, to the extentof the interest assigned by such Assignment and Acceptance, be released fromits obligations under this Agreement (and, in the case of an Assignment andAcceptance covering all of the assigning Lender’s rights and obligations underthis Agreement, such Lender shall cease to be a party hereto but shall continueto be entitled to the benefits of Sections 2.10, 2.11, 3.5, 5.4 and 14.5).  Any assignment or transfer by a Lender ofrights or obligations under this Agreement that does not comply with thisSection 14.6 shall be treated for purposes of this Agreement as a sale bysuch Lender of a participation in such rights and obligations in accordancewith paragraph (c) of this Section.

 

(iv)          The Administrative Agent, acting forthis purpose as an agent of the Borrower and the Canadian Borrower, shallmaintain at the Administrative Agent’s Office a copy of each Assignment andAcceptance delivered to it and a register for the recordation of the names andaddresses of the Lenders, and the Commitments of, and principal amount of theLoans and any payment made by the Letter of Credit Issuer under any Letter ofCredit owing to, each Lender pursuant to the terms hereof from time to time(the “Register”).  In the case ofa Lender in respect of a Canadian Revolving Credit Commitment or a CanadianLetter of Credit Commitment, the Register shall also record the address of thelending office of the Lender through which such Lender acts under thisAgreement and whether or not the Lender is a Canadian Resident.  Further, the Register shall contain the nameand address of the Administrative Agent and the Canadian Administrative Agentand the lending office through which each such Person acts under this Agreement.  The entries in the Register shall beconclusive, and the Borrower, the Canadian Borrower, the Administrative Agent,the Letter of Credit Issuer and the Lenders may treat each Person whose name isrecorded in the Register pursuant to the terms hereof as a Lender hereunder forall purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available forinspection by the Borrower, the Canadian Borrower, the Letter of Credit Issuerand any Lender, at any reasonable time and from time to time upon reasonableprior notice.

 

(v)           Upon its receipt of a duly completedAssignment and Acceptance executed by an assigning Lender and an assignee, theassignee’s completed Administrative Questionnaire (unless the assignee shallalready be a Lender hereunder), the processing and recordation fee referred toin paragraph (b) of this Section and any written consent to such assignmentrequired by paragraph (b) of this Section, the Administrative Agent shallaccept such Assignment and Acceptance and record the information containedtherein in the Register.  No assignmentshall be effective for purposes of this Agreement unless it has been recordedin the Register as provided in this paragraph.

 

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(c)           (i) Any Lender may, without the consent of the Borrower, the CanadianBorrower, the Administrative Agent, the Letter of Credit Issuer or theSwingline Lender, sell participations to one or more banks or other entities(each, a “Participant”) in all or a portion of such Lender’s rights andobligations under this Agreement (including all or a portion of its Commitmentsand the Loans owing to it), provided that (A) such Lender’s obligationsunder this Agreement shall remain unchanged, (B) such Lender shall remainsolely responsible to the other parties hereto for the performance of suchobligations and (C) the Borrower, the Canadian Borrower, the AdministrativeAgent, the Letter of Credit Issuer and the other Lenders shall continue to dealsolely and directly with such Lender in connection with such Lender’s rightsand obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such aparticipation shall provide that such Lender shall retain the sole right toenforce this Agreement and to approve any amendment, modification or waiver ofany provision of this Agreement or any other Credit Document, providedthat such agreement or instrument may provide that such Lender will not,without the consent of the Participant, agree to any amendment, modification orwaiver described in the first proviso to Section 14.1 that affects suchParticipant.  Subject toparagraph (c)(ii) of this Section, the Borrower and the Canadian Borroweragree that each Participant shall be entitled to the benefits of Sections 2.10,2.11 and 5.4 to the same extent as if it were a Lender and had acquired itsinterest by assignment pursuant to paragraph (b) of this Section.  To the extent permitted by law, each Participantalso shall be entitled to the benefits of Section  14.8(b) as though itwere a Lender, provided such Participant agrees to be subject to Section14.8(a) as though it were a Lender.

 

(ii)           A Participant shall not be entitledto receive any greater payment under Section 2.10 or 5.4 than the applicableLender would have been entitled to receive with respect to the participationsold to such Participant, unless the sale of the participation to suchParticipant is made with the Borrower’s prior written consent.  A Participant that would be a Non-U.S. Lenderif it were a Lender shall not be entitled to the benefits of Section 5.4unless the Borrower is notified of the participation sold to such Participantand such Participant agrees, for the benefit of the Borrower and the CanadianBorrower, to comply with Section 5.4(b) as though it were a Lender.

 

(d)           Any Lender may, without the consentof the Borrower or the Administrative Agent, at any time pledge or assign asecurity interest in all or any portion of its rights under this Agreement tosecure obligations of such Lender, including any pledge or assignment to secureobligations to a Federal Reserve Bank, and this Section shall not apply to anysuch pledge or assignment of a security interest, provided that no suchpledge or assignment of a security interest shall release a Lender from any ofits obligations hereunder or substitute any such pledgee or assignee for suchLender as a party hereto.  In order tofacilitate such pledge or assignment, the Borrower and the Canadian Borrowerhereby agree that, upon request of any Lender at any time and from time to timeafter the Borrower has made its initial borrowing hereunder, the Borrower orthe Canadian Borrower, as the case may be, shall provide to such Lender, at theBorrower’s or the Canadian Borrower’s own expense, a promissory note,substantially in the form of Exhibit L-1 or L-2, as the case may be, evidencingthe Tranche C Term

 

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Loansand Revolving Credit Loans and Swingline Loans, respectively, owing to suchLender.

 

(e)           Subject to Section 14.16, theBorrower and the Canadian Borrower authorize each Lender to disclose to anyParticipant, secured creditor of such Lender or assignee (each, a “Transferee”)and any prospective Transferee any and all financial information in suchLender’s possession concerning the Borrower and its Affiliates that has beendelivered to such Lender by or on behalf of the Borrower and its Affiliatespursuant to this Agreement or which has been delivered to such Lender by or onbehalf of the Borrower and its Affiliates in connection with such Lender’scredit evaluation of the Borrower and its Affiliates prior to becoming a partyto this Agreement.

 

(f)            Each Person that is or becomes aLender or Administrative Agent in respect of the Canadian Revolving CreditCommitment or Canadian Letter of Credit Commitment shall (i) promptly directthe Administrative Agent to record in the Register the information described inSection 14.6(b)(iv) of this Agreement, (ii) upon written request made byCanadian Borrower, deliver to the Canadian Borrower and the AdministrativeAgent such certificates, forms, documents, or other evidence as may beapplicable and determined by the Canadian Borrower, acting reasonably, to bereasonably satisfactory to determine whether such Person is a CanadianResident, and (iii) promptly direct the Administrative Agent to amend theRegister to reflect any change in the information contained therein withrespect to such Person.

 

14.7.        Replacements of Lenders underCertain Circumstances. The Borrower (on its own behalf and on behalf of the Canadian Borrower)shall be permitted to replace any Lender that (a) requests reimbursement foramounts owing pursuant to Section 2.10, 2.12, 3.5 or 5.4, (b) is affectedin the manner described in Section 2.10(a)(iii) and as a result thereof any ofthe actions described in such Section is required to be taken or (c) becomes aDefaulting Lender, with a replacement bank or other financial institution,provided that (i) such replacement does not conflict with any Requirement ofLaw, (ii) no Event of Default shall have occurred and be continuing at the timeof such replacement, (iii) the Borrower and/or the Canadian Borrower, asapplicable shall repay (or the replacement bank or institution shall purchase,at par) all Loans and other amounts (other than any disputed amounts), pursuantto Section 2.10, 2.11, 2.12, 3.5 or 5.4, as the case may be) owing to suchreplaced Lender prior to the date of replacement, (iv) the replacement bank orinstitution, if not already a Lender, and the terms and conditions of suchreplacement, shall be reasonably satisfactory to the Administrative Agent, (v)the replaced Lender shall be obligated to make such replacement in accordancewith the provisions of Section 14.6 (provided that the Borrower shall beobligated to pay the registration and processing fee referred to therein) and(vi) any such replacement shall not be deemed to be a waiver of any rightsthat the Borrower, the Canadian Borrower, the Administrative Agent or any otherLender shall have against the replaced Lender.

 

14.8.        Adjustments; Set-off.  (a)    If any Lender (a “benefited Lender”) shall at any time receiveany payment of all or part of its Loans, or interest thereon, or receive anycollateral in respect thereof (whether voluntarily or involuntarily, byset-off,

 

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pursuant to events or proceedings of the nature referred to in Section11.5, or otherwise), in a greater proportion than any such payment to orcollateral received by any other Lender, if any, in respect of such otherLender’s Loans, or interest thereon, such benefited Lender shall purchase forcash from the other Lenders a participating interest in such portion of eachsuch other Lender’s Loan, or shall provide such other Lenders with the benefitsof any such collateral, or the proceeds thereof, as shall be necessary to causesuch benefited Lender to share the excess payment or benefits of suchcollateral or proceeds ratably with each of the Lenders; provided, however,that if all or any portion of such excess payment or benefits is thereafterrecovered from such benefited Lender, such purchase shall be rescinded, and thepurchase price and benefits returned, to the extent of such recovery, butwithout interest.

 

(b)           After the occurrence and during thecontinuance of an Event of Default, in addition to any rights and remedies ofthe Lenders provided by law, each Lender shall have the right, without priornotice to the Borrower or the Canadian Borrower, any such notice beingexpressly waived by the Borrower and the Canadian Borrower to the extentpermitted by applicable law, upon any amount becoming due and payable by theBorrower or the Canadian Borrower hereunder (whether at the stated maturity, byacceleration or otherwise) to set-off and appropriate and apply against suchamount any and all deposits (general or special, time or demand, provisional orfinal), in any currency, and any other credits, indebtedness or claims, in any currency,in each case whether direct or indirect, absolute or contingent, matured orunmatured, at any time held or owing by such Lender or any branch or agencythereof to or for the credit or the account of the Borrower or the CanadianBorrower, as the case may be.  EachLender agrees promptly to notify the Borrower or the Canadian Borrower, as thecase may be, and the Administrative Agent after any such set-off andapplication made by such Lender, provided that the failure to give suchnotice shall not affect the validity of such set-off and application.

 

14.9.        Counterparts. This Agreement may be executed by one or more of the parties to thisAgreement on any number of separate counterparts (including by facsimile orother electronic transmission), and all of said counterparts taken togethershall be deemed to constitute one and the same instrument.  A set of the copies of this Agreement signedby all the parties shall be lodged with the Borrower and the AdministrativeAgent.

 

14.10.      Severability. Any provision of this Agreement that is prohibited or unenforceable inany jurisdiction shall, as to such jurisdiction, be ineffective to the extentof such prohibition or unenforceability without invalidating the remainingprovisions hereof, and any such prohibition or unenforceability in anyjurisdiction shall not invalidate or render unenforceable such provision in anyother jurisdiction.

 

14.11.      Integration. This Agreement and the other Credit Documents represent the agreement ofthe Borrower, the Canadian Borrower, the Administrative Agent and the Lenderswith respect to the subject matter hereof, and there are no promises,undertakings, representations or warranties by the Administrative Agent or any

 

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Lender relative to subject matter hereof not expressly set forth orreferred to herein or in the other Credit Documents.

 

14.12.      GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDERSHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWOF THE STATE OF NEW YORK.

 

14.13.      Submission to Jurisdiction; Waivers.  The Borrower and the Canadian Borrower eachhereby irrevocably and unconditionally:

 

(a)           submits for itself and its propertyin any legal action or proceeding relating to this Agreement and the otherCredit Documents to which it is a party, or for recognition and enforcement ofany judgment in respect thereof, to the non-exclusive general jurisdiction ofthe courts of the State of New York, the courts of the United States ofAmerica for the Southern District of New York and appellate courts fromany thereof;

 

(b)           consents that any such action orproceeding may be brought in such courts and waives any objection that it maynow or hereafter have to the venue of any such action or proceeding in any suchcourt or that such action or proceeding was brought in an inconvenient courtand agrees not to plead or claim the same;

 

(c)           agrees that service of process inany such action or proceeding may be effected by mailing a copy thereof byregistered or certified mail (or any substantially similar form of mail),postage prepaid, to the Borrower at its address set forth in Section 14.2 or atsuch other address of which the Administrative Agent shall have been notifiedpursuant thereto;

 

(d)           agrees that nothing herein shallaffect the right to effect service of process in any other manner permitted bylaw or shall limit the right to sue in any other jurisdiction; and

 

(e)           waives, to the maximum extent notprohibited by law, any right it may have to claim or recover in any legalaction or proceeding referred to in this Section 14.13 any special,exemplary, punitive or consequential damages.

 

14.14.      Acknowledgments.  The Borrower and the Canadian Borrower eachhereby acknowledge that:

 

(a)           it has been advised by counsel inthe negotiation, execution and delivery of this Agreement and the other CreditDocuments;

 

(b)           neither the Administrative Agent norany Lender has any fiduciary relationship with or duty to the Borrower or theCanadian Borrower arising out of or in connection with this Agreement or any ofthe other Credit Documents, and the relationship between Administrative Agentand Lenders, on one hand, and the Borrower or the Canadian Borrower, on theother hand, in connection herewith or therewith is solely that of debtor andcreditor; and

 

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(c)           no joint venture is created herebyor by the other Credit Documents or otherwise exists by virtue of thetransactions contemplated hereby among the Lenders or among the Borrower, theCanadian Borrower and the Lenders.

 

14.15.     **WAIVERS OF JURY TRIAL****.  THE BORROWER,THE CANADIAN BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBYIRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION ORPROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANYCOUNTERCLAIM THEREIN.**

** **

14.16.      Confidentiality.  The Administrative Agent and each Lendershall hold all non-public information furnished by or on behalf of the Borroweror the Canadian Borrower in connection with such Lender’s evaluation of whetherto become a Lender hereunder or obtained by such Lender or the AdministrativeAgent pursuant to the requirements of this Agreement (“Confidential Information”),confidential in accordance with its customary procedure for handlingconfidential information of this nature and (in the case of a Lender that is abank) in accordance with safe and sound banking practices and in any event maymake disclosure as required or requested by any governmental agency orrepresentative thereof or pursuant to legal process or to such Lender’s or theAdministrative Agent’s attorneys, or to any direct or indirect contractualcounterparty in swap agreements or such contractual counterparty’s professionaladvisor (so long as such contractual counterparty or professional advisor tosuch contractual party agrees to be bound by the provisions of this Section14.16.) or independent auditors or Affiliates, provided that unless specificallyprohibited by applicable law or court order, each Lender and the AdministrativeAgent shall notify the Borrower of any request by any governmental agency orrepresentative thereof (other than any such request in connection with anexamination of the financial condition of such Lender by such governmentalagency) for disclosure of any such non-public information prior to disclosureof such information, and provided furtherthat in no event shall any Lender or the Administrative Agent be obligated orrequired to return any materials furnished by the Borrower or any Subsidiary ofthe Borrower.  Each Lender and theAdministrative Agent agrees that it will not provide to prospective Transfereesor to prospective direct or indirect contractual counterparties in swapagreements to be entered into in connection with Loans made hereunder any ofthe Confidential Information unless such Person is advises of and agrees to bebound by the provisions of this Section 14.16.

 

Notwithstandinganything express or implied to the contrary herein or by the documents referredto or incorporated by reference herein, or any other prior or future oral orwritten statements by any parties hereto with respect to the transactionscontemplated herein or by the other Credit Documents, and whether or not any ofthem are legally binding, the obligations of confidentiality contained hereinand therein, as they relate to the transactions contemplated by this Agreement,shall not apply to the tax structure or tax treatment of such transactions, andeach recipient (and its employees, representatives, or other agents) mayimmediately disclose to any and all persons, without limitation of any kind,the U.S. Federal income tax structure and such recipient’s U.S. Federal incometax treatment of such transactions and any opinions or other tax analyses thathave been

 

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provided bythe parties hereto (or any agent thereof) to the recipient regarding such taxstructure or tax treatment.  However, nosuch recipient shall disclose any information relating to such tax structure ortax treatment to the extent that non-disclosure is reasonably necessary tocomply with applicable securities law. This paragraph is intended to cause the transactions contemplated bythis Agreement not to be treated as having been offered under conditions ofconfidentiality for purposes of Section 1.6011-4(b)(3) (or any successorprovision) of the Treasury Regulations promulgated under Section 6011 of theInternal Revenue Code of 1986, as amended, and shall be construed in a mannerconsistent with such purpose.

 

14.17.      Judgment Currency.  (a)    The obligations of the Borrower and the Canadian Borrower hereunder andunder the other Loan Documents to make payments in Dollars or in CanadianDollars, as the case may be (the “Obligation Currency”), shall not bedischarged or satisfied by any tender or recovery pursuant to any judgmentexpressed in or converted into any currency other than the Obligation Currency,except to the extent that such tender or recovery results in the effectivereceipt by the Administrative Agent, the Canadian Administrative Agent or aLender of the full amount of the Obligation Currency expressed to be payable tothe Administrative Agent, the Canadian Administrative Agent or Lender underthis Agreement or the other Credit Documents. If, for the purpose of obtaining or enforcing judgment against theBorrower, the Canadian Borrower or any other Credit Party in any court or inany jurisdiction, it becomes necessary to convert into or from any currencyother than the Obligation Currency (such other currency being hereinafterreferred to as the “Judgment Currency”) an amount due in the ObligationCurrency, the conversion shall be made, at the rate of exchange prevailing, ineach case, as of the date immediately preceding the day on which the judgmentis given (such Business Day being hereinafter referred to as the “JudgmentCurrency Conversion Date”).

 

(b)           If there is a change in the rate ofexchange prevailing between the Judgment Currency Conversion Date and the dateof actual payment of the amount due, the Borrower and the Canadian Borrowereach covenant and agree to pay, or cause to be paid, such additional amounts,if any (but in any event not a lesser amount), as may be necessary to ensurethat the amount paid in the Judgment Currency, when converted at the rate ofexchange prevailing on the date of payment, will produce the amount of theObligation Currency which could have been purchased with the amount of JudgmentCurrency stipulated in the judgment or judicial award at the rate of exchangeprevailing on the Judgment Currency Conversion Date.

 

(c)           For purposes of determining theprevailing rate of exchange, such amounts shall include any premium and costspayable in connection with the purchase of the Obligation Currency.

 

14.18.      USA PATRIOT Act.  Each Lender hereby notifies the Borrower thatpursuant to the requirements of the USA Patriot Act (Title III of Pub. L.107-56 (signed into law October 26, 2001)) (the **“Patriot Act”**), it is required to obtain, verify and recordinformation that identifies the Borrower, which information includes the name

 

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and address of the Borrower and other information that will allow suchLender to identify the Borrower in accordance with the Patriot Act.

 

14.19.      Reaffirmation and Grant ofSecurity Interest. (a)  Each Credit Party has (i)guarantied the Obligations and (ii) created Liens in favor of Lenders oncertain Collateral to secure its obligations hereunder, under the Guarantee andthe Canadian Guarantee, as the case may be. Each Credit Party hereby acknowledges that it has reviewed the terms andprovisions of this Agreement and consents to the amendment and restatement ofthe Existing Credit Agreement effected pursuant to this Agreement.  Each Credit Party hereby (i) confirms thateach Credit Document to which it is a party or is otherwise bound and allCollateral encumbered thereby will continue to guarantee or secure, as the casemay be, to the fullest extent possible in accordance with the Credit Documents,the payment and performance of the Obligations and all Guarantee Obligations,as the case may be, including without limitation the payment and performance ofall such Obligations and all Guarantee Obligations which are joint and severalobligations of each grantor now or hereafter existing, and (ii) grants to theAdministrative Agent for the benefit of the Secured Parties a continuing lienon and security interest in and to such Credit Party’s right, title andinterest in, to and under all Collateral as collateral security for the promptpayment and performance in full when due of the Obligations and all GuaranteeObligations (whether at stated maturity, by acceleration or otherwise).

 

(b)           Each Credit Party acknowledges andagrees that any of the Credit Documents to which it is a party or otherwisebound shall continue in full force and effect and that all of its obligationsthereunder shall be valid and enforceable and shall not be impaired or limitedby the execution or effectiveness of the amendment and restatement of theExisting Credit Agreement.  Each CreditParty represents and warrants that all representations and warranties containedin the Credit Documents to which it is a party or otherwise bound are true,correct and complete in all material respects on and as of the Effective Dateto the same extent as though made on and as of that date, except to the extentsuch representations and warranties specifically relate to an earlier date, inwhich case they were true, correct and complete in all material respects on andas of such earlier date.

 

14.20.           Amendment and Restatement.  It is the intention of each of the partieshereto that the Existing Credit Agreement be amended and restated so as topreserve the perfection and priority of all security interests securingindebtedness and obligations under the Existing Credit Agreement and that allIndebtedness and Obligations  andGuarantee Obligations of Borrower and its Subsidiaries hereunder and thereundershall be secured by the Security Documents and that this Agreement does notconstitute a novation of the obligations and liabilities existing under theExisting Credit Agreements.  The partieshereto further acknowledge and agree that this Agreement constitutes anamendment of the Existing Credit Agreement made under and in accordance withthe terms of subsection 14.1 of the Existing Credit Agreement.  In addition, unless specifically amendedhereby, each of the Credit Documents, the Exhibits and Schedules to theExisting Credit Agreement shall continue in full force and effect and

 

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that, from and after the Effective Date, all references to the “CreditAgreement” contained therein shall be deemed to refer to this Agreement.

 

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IN WITNESS WHEREOF, each of the partieshereto has caused a counterpart of this Agreement to be duly executed anddelivered as of the date first above written.

 
|   | SEALY  MATTRESS COMPANY     |
|--------|-----------------------------|
|   |                        |
|   |                        |
|   | By:                         | /s/ Kenneth L. Walker |   |
|   |                        | Name: Kenneth L. Walker |
|   |                        | Title: Vice President, General Counsel and  Secretary |
|   |                        |   |
|   |                        |   |
|   | SEALY  MATTRESS CORPORATION |
|   |                        |   |
|   |                        |   |
|   | By:                         | /s/ Kenneth L. Walker |   |
|   |                        | Name: Kenneth L. Walker |
|   |                        | Title: Vice President, General Counsel and  Secretary |
|   |                        |   |
|   |                        |   |
|   | SEALY  CORPORATION          |
|   |                        |   |
|   |                        |   |
|   | By:                         | /s/ Kenneth L. Walker |   |
|   |                        | Name: Kenneth L. Walker |
|   |                        | Title: Vice President, General Counsel and  Secretary |
|   |                        |   |
|   |                        |   |
|   | SEALY CANADA  LTD./LTEE     |
|   |                        |   |
|   |                        |   |
|   | By:                         | /s/ Kenneth L. Walker |   |
|   |                        | Name: Kenneth L. Walker |
|   |                        | Title: Vice President, General Counsel and  Secretary |

 

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SUBSIDIARY GUARANTORS:

SEALY MATTRESS COMPANY OF PUERTO RICO

OHIO-SEALY MATTRESS MANUFACTURING CO., INC.

OHIO-SEALY MATTRESS MANUFACTURING CO.

SEALY MATTRESS COMPANY OF KANSAS CITY, INC.

SEALY MATTRESS COMPANY OF MEMPHIS

SEALY MATTRESS COMPANY OF ILLINOIS

SEALY MATTRESS COMPANY OF ALBANY, INC.

SEALY OF MARYLAND AND VIRGINIA, INC.

SEALY OF MINNESOTA, INC.

NORTH AMERICAN BEDDING COMPANY

SEALY, INC.

MATTRESS HOLDINGS INTERNATIONAL LLC

THE OHIO MATTRESS COMPANY LICENSING AND COMPONENTS GROUP

SEALY MATTRESS MANUFACTURING COMPANY, INC.

SEALY TECHNOLOGY LLC

SEALY KOREA, INC.

SEALY REAL ESTATE, INC.

SEALY TEXAS MANAGEMENT, INC.

SEALY TEXAS HOLDINGS LLC

SEALY TEXAS L.P.

WESTERN MATTRESS COMPANYGESTION CENTURION INC.

 
|   | By:    | /s/ Kenneth L. Walker                                 |   |
|--------|--------|-------------------------------------------------------|--------|
|   |   | Name: Kenneth L. Walker                               |
|   |   | Title: Vice President, General Counsel and  Secretary |

 

 
|   | JPMORGAN  CHASE BANK, as Administrative  Agent and as a Lender                                    |
|--------|---------------------------------------------------------------------------------------------------|
|   |                                                                                              |   |   |
|   |                                                                                              |   |   |
|   | By:                                                                                               | /s/ Kathryn A. Duncan |   |
|   |                                                                                              | Name: Kathryn A. Duncan |
|   |                                                                                              | Title: Vice President |
|   |                                                                                              |   |
|   |                                                                                              |   |
|   | JPMORGAN  CHASE BANK, TORONTO  BRANCH, as Canadian Administrative Agent and  as a Canadian Lender |
|   |                                                                                              |
|   |                                                                                              |
|   | By:                                                                                               | /s/ John C. Riordan |   |
|   |                                                                                              | Name: John C. Riordan |
|   |                                                                                              | Title:  Vice President |

 

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|   | GOLDMAN  SACHS CREDIT PARTNERS, L.P.,  as Joint Lead Arranger, Joint Bookrunner,  Syndication Agent and as a Lender |
|--------|---------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                |   |   |
|   |                                                                                                                |   |   |
|   | By:                                                                                                                 | /s/ William W. Archer |   |
|   |                                                                                                                | Name: William W. Archer |
|   |                                                                                                                | Title: Managing Director |

 

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|   | GENERAL ELECTRIC  CAPITAL  CORPORATION, as Co-Documentation Agent and  as a Lender, |
|--------|-------------------------------------------------------------------------------------|
|   |                                                                                |   |   |
|   |                                                                                |   |   |
|   | By:                                                                                 | /s/ Robert Kadlick |   |
|   |                                                                                | Name: Robert Kadlick |
|   |                                                                                | Title: Duly Authorized Signatory |

 

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|   | Merrill  Lynch Capital, a division of Merrill Lynch  Business Financial Services, Inc.,  as a Lender, |
|--------|-------------------------------------------------------------------------------------------------------|
|   |                                                                                                  |   |   |
|   |                                                                                                  |   |   |
|   | By:                                                                                                   | /s/ Kelli O’Connell |   |
|   |                                                                                                  | Name: Kelli O’Connell |
|   |                                                                                                  | Title: Vice President |

 

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|   | Chase  Lincoln First Commercial Corporation,  as a Lender, |
|--------|------------------------------------------------------------|
|   |                                                       |   |   |
|   |                                                       |   |   |
|   | By:                                                        | /s/ Louis J. Cerrotta |   |
|   |                                                       | Name: | Louis J. Cerrotta |   |
|   |                                                       | Title: VP |
|        |                                                            |  |  |  |  |

 

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**SCHEDULE1.1(d****)**

 

**EBITDA ADD-BACKS**

 

1.             Costsassociated with the introduction of new products and incurred prior to May 31,2004.

 

2.             Expenses related tothe implementation of enterprise resource planning systems in an aggregateamount not greater than $45,000,000 less the amount of expenditures relatedthereto that are capitalized.

 

3              The amount ofmanagement, monitoring, consulting and advisory fees and related expenses paidto Bain Capital, LLC to the extent such fees are incurred prior to the ClosingDate.

 

4.             Expenses associatedwith the following items, which expenses are incurred prior to the ClosingDate:

 

a)             Workers compensation expenses;

b)            Facilitiesrationalization;

c)             Write-offsrelated to Affiliates;

d)            Stockbased compensation;

e)             A/Rprocess improvement; and

f)             Deferreddebt write-offs.

 

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