exv10w1







Exhibit 10.1




EXECUTION VERSION




 










REVOLVING CREDIT AGREEMENT




dated as of




December 3, 2009




among




EASTON-BELL SPORTS, INC.,

as U.S. Borrower,




4078624 CANADA INC.

ALL-AMERICAN SPORTS (CANADA) LTD.

BELL SPORTS CANADA INC.

EASTON SPORTS CANADA, INC.

as Canadian Borrowers,




The Subsidiary Guarantors Party Hereto,




The Lenders Party Hereto,




JPMORGAN CHASE BANK, N.A.,

as Administrative Agent




JPMORGAN CHASE BANK, N.A.,

as Collateral Agent,




J.P. MORGAN SECURITIES INC., AND

WACHOVIA CAPITAL FINANCE CORPORATION (NEW ENGLAND),

as Joint Bookrunners and Lead Arrangers,




BANK OF AMERICA, N.A., AND

WACHOVIA CAPITAL FINANCE CORPORATION (NEW ENGLAND),

as Co-Syndication Agents




and




U.S. BANK, NATIONAL ASSOCIATION,

as Documentation Agent




 



i 









 



 


Table of Contents




	 	 	 	 	 
	 	 	 	Page	 
	ARTICLE I Definitions
	 	 	1	 
	SECTION 1.01 Defined Terms
	 	 	1	 
	SECTION 1.02 Classification of Loans and Borrowings
	 	 	50	 
	SECTION 1.03 Terms Generally
	 	 	50	 
	SECTION 1.04 Accounting Terms; GAAP
	 	 	50	 
	SECTION 1.05 Currency Translations
	 	 	51	 
	SECTION 1.06 Pro Forma Calculations
	 	 	51	 
	 
	 	 	 	 
	ARTICLE II The Credits
	 	 	52	 
	SECTION 2.01 Commitments
	 	 	52	 
	SECTION 2.02 Loans and Borrowings
	 	 	53	 
	SECTION 2.03 Requests for Revolving Borrowings
	 	 	54	 
	SECTION 2.04 Protective Advances
	 	 	55	 
	SECTION 2.05 Swingline Loans
	 	 	56	 
	SECTION 2.06 Letters of Credit
	 	 	57	 
	SECTION 2.07 Funding of Borrowings
	 	 	63	 
	SECTION 2.08 Interest Elections
	 	 	64	 
	SECTION 2.09 Termination and Reduction of Commitments; Increase in Commitments
	 	 	65	 
	SECTION 2.10 Repayment of Loans; Evidence of Debt
	 	 	67	 
	SECTION 2.11 Prepayment of Loans
	 	 	68	 
	SECTION 2.12 Fees
	 	 	70	 
	SECTION 2.13 Interest
	 	 	71	 
	SECTION 2.14 Alternate Rate of Interest
	 	 	72	 
	SECTION 2.15 Increased Costs
	 	 	73	 
	SECTION 2.16 Break Funding Payments
	 	 	75	 
	SECTION 2.17 Taxes
	 	 	76	 
	SECTION 2.18 Payments Generally; Allocation of Proceeds; Sharing of Set-offs
	 	 	79	 
	SECTION 2.19 Mitigation Obligations; Replacement of Lenders
	 	 	83	 
	SECTION 2.20 Returned Payments
	 	 	84	 
	SECTION 2.21 Defaulting Lenders
	 	 	84	 
	 
	 	 	 	 
	ARTICLE III Representations and Warranties
	 	 	86	 
	SECTION 3.01 Organization; Powers
	 	 	86	 
	SECTION 3.02 Authorization; Enforceability
	 	 	86	 
	SECTION 3.03 Governmental Approvals; No Conflicts
	 	 	86	 
	SECTION 3.04 Financial Condition; No Material Adverse Change
	 	 	87	 
	SECTION 3.05 Properties
	 	 	87	 
	SECTION 3.06 Litigation and Environmental Matters
	 	 	88	 
	SECTION 3.07 Compliance with Laws and Agreements
	 	 	88	 
	SECTION 3.08 Investment Company Status
	 	 	88	 
	SECTION 3.09 Taxes
	 	 	88	 




ii 









 



 


	 	 	 	 	 
	 	 	Page
	SECTION 3.10 ERISA
	 	 	89	 
	SECTION 3.11 Disclosure
	 	 	89	 
	SECTION 3.12 Margin Regulations
	 	 	89	 
	SECTION 3.13 Indebtedness, Liens
	 	 	89	 
	SECTION 3.14 No Default
	 	 	90	 
	SECTION 3.15 Solvency
	 	 	90	 
	SECTION 3.16 Insurance
	 	 	90	 
	SECTION 3.17 Capitalization and Subsidiaries
	 	 	91	 
	SECTION 3.18 Security Interest in Collateral
	 	 	91	 
	SECTION 3.19 Employment Matters
	 	 	91	 
	SECTION 3.20 Affiliate Transactions
	 	 	92	 
	SECTION 3.21 Common Enterprise
	 	 	92	 
	SECTION 3.22 Canadian Pension Plan and Benefit Plans
	 	 	92	 
	 
	 	 	 	 
	ARTICLE IV Conditions
	 	 	93	 
	SECTION 4.01 Effective Date
	 	 	93	 
	SECTION 4.02 Each Credit Event
	 	 	96	 
	 
	 	 	 	 
	ARTICLE V Affirmative Covenants
	 	 	97	 
	SECTION 5.01 Financial Statements; Borrowing Base and Other Information
	 	 	97	 
	SECTION 5.02 Notices of Material Events
	 	 	100	 
	SECTION 5.03 Existence
	 	 	101	 
	SECTION 5.04 Payment of Taxes
	 	 	101	 
	SECTION 5.05 Maintenance of Properties
	 	 	102	 
	SECTION 5.06 Books and Records; Inspection Rights
	 	 	102	 
	SECTION 5.07 Compliance with Laws
	 	 	102	 
	SECTION 5.08 Use of Proceeds
	 	 	103	 
	SECTION 5.09 Insurance
	 	 	104	 
	SECTION 5.10 Casualty and Condemnation
	 	 	104	 
	SECTION 5.11 Governmental Authorizations
	 	 	104	 
	SECTION 5.12 Depository Banks
	 	 	105	 
	SECTION 5.13 Appraisals
	 	 	105	 
	SECTION 5.14 Field Examinations
	 	 	105	 
	SECTION 5.15 Additional Collateral; Further Assurances
	 	 	105	 
	SECTION 5.16 Control Agreements
	 	 	107	 
	SECTION 5.17 Post-Closing Actions
	 	 	108	 
	 
	 	 	 	 
	ARTICLE VI Negative Covenants
	 	 	108	 
	SECTION 6.01 Indebtedness
	 	 	109	 
	SECTION 6.02 Liens
	 	 	112	 
	SECTION 6.03 Fundamental Changes; Business Activities
	 	 	114	 
	SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions
	 	 	114	 
	SECTION 6.05 Asset Sales
	 	 	116	 
	SECTION 6.06 Sale and Leaseback Transactions
	 	 	117	 
	SECTION 6.07 Swap Agreements
	 	 	118	 
	SECTION 6.08 Restricted Payments; Certain Payments of Indebtedness
	 	 	118	 
	SECTION 6.09 Transactions with Affiliates
	 	 	121	 




iii 









 



 


	 	 	 	 	 
	 	 	Page
	SECTION 6.10 Restrictive Agreements
	 	 	121	 
	SECTION 6.11 Amendment of Material Documents
	 	 	122	 
	SECTION 6.12 Fixed Charge Coverage Ratio
	 	 	122	 
	SECTION 6.13 Changes in Fiscal Periods
	 	 	122	 
	 
	 	 	 	 
	ARTICLE VII Events of Default and Remedies
	 	 	122	 
	SECTION 7.01 Events of Default
	 	 	122	 
	SECTION 7.02 Company’s Right to Cure
	 	 	126	 
	 
	 	 	 	 
	ARTICLE VIII The Administrative Agent; Collateral Agent; Other Agents
	 	 	127	 
	SECTION 8.01 The Administrative Agent
	 	 	127	 
	SECTION 8.02 The Collateral Agent
	 	 	130	 
	SECTION 8.03 Appointment of Fondé de Pouvoir
	 	 	132	 
	SECTION 8.04 Other Agents
	 	 	132	 
	 
	 	 	 	 
	ARTICLE IX Miscellaneous
	 	 	132	 
	SECTION 9.01 Notices
	 	 	132	 
	SECTION 9.02 Waivers; Amendments
	 	 	134	 
	SECTION 9.03 Expenses; Indemnity; Damage Waiver
	 	 	137	 
	SECTION 9.04 Successors and Assigns
	 	 	139	 
	SECTION 9.05 Survival
	 	 	143	 
	SECTION 9.06 Counterparts; Integration; Effectiveness
	 	 	143	 
	SECTION 9.07 Severability
	 	 	143	 
	SECTION 9.08 Right of Setoff
	 	 	144	 
	SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process
	 	 	144	 
	SECTION 9.10 WAIVER OF JURY TRIAL
	 	 	145	 
	SECTION 9.11 Headings
	 	 	145	 
	SECTION 9.12 Confidentiality
	 	 	145	 
	SECTION 9.13 Several Obligations; Nonreliance; Violation of Law
	 	 	146	 
	SECTION 9.14 USA PATRIOT Act
	 	 	146	 
	SECTION 9.15 Disclosure
	 	 	147	 
	SECTION 9.16 No Fiduciary Relationship
	 	 	147	 
	SECTION 9.17 Appointment for Perfection
	 	 	147	 
	SECTION 9.18 Interest Rate Limitation
	 	 	147	 
	SECTION 9.19 Intercreditor Arrangements
	 	 	147	 
	SECTION 9.20 Judgment Currency Conversion
	 	 	148	 
	 
	 	 	 	 
	ARTICLE X Loan Guaranty
	 	 	149	 
	SECTION 10.01 Guaranty
	 	 	149	 
	SECTION 10.02 Guaranty of Payment
	 	 	149	 
	SECTION 10.03 No Discharge or Diminishment of Loan Guaranty
	 	 	149	 
	SECTION 10.04 Defenses Waived
	 	 	150	 
	SECTION 10.05 Rights of Subrogation
	 	 	151	 
	SECTION 10.06 Reinstatement; Stay of Acceleration
	 	 	151	 
	SECTION 10.07 Information
	 	 	151	 
	SECTION 10.08 Taxes
	 	 	151	 
	SECTION 10.09 Maximum Liability
	 	 	151	 




iv 









 



 


	 	 	 	 	 
	 	 	Page
	SECTION 10.10 Contribution
	 	 	152	 
	SECTION 10.11 Liability Cumulative
	 	 	152	 




v 









 



 


	 	 	 
	SCHEDULES:
	 	 
	Schedule 1.01A —

	 	Commitment Schedule
	Schedule 1.01B -

	 	Excluded Domestic Subsidiaries
	Schedule 2.01 —

	 	Existing Letters of Credit
	Schedule 3.05(a) —

	 	Owned Properties
	Schedule 3.05(b) —

	 	Leased Properties
	Schedule 3.05(c) —

	 	Intellectual Property
	Schedule 3.06 —

	 	Disclosed Matters
	Schedule 3.09 —

	 	Taxes
	Schedule 3.13 —

	 	Indebtedness and Liens
	Schedule 3.16 —

	 	Insurance
	Schedule 3.17 —

	 	Capitalization and Subsidiaries
	Schedule 3.20 —

	 	Affiliate Transactions
	Schedule 3.22 —

	 	Canadian Pension Plans and Benefits Plans
	Schedule 4.01(l) —

	 	Pledged Stock
	Schedule 5.01(g) —

	 	Borrowing Base Supplemental Documentation
	Schedule 6.01 —

	 	Existing Indebtedness
	Schedule 6.02 —

	 	Existing Liens
	Schedule 6.04(b) —

	 	Existing Investments
	Schedule 6.09 —

	 	Transactions with Affiliates
	Schedule 6.10 —

	 	Existing Restrictions
	 
	 	 
	EXHIBITS:
	 	 
	 
	 	 
	Exhibit A

	 	— Form of Assignment and Assumption
	Exhibit B

	 	— Form of Legal Opinion
	Exhibit C-1

	 	— Form of Aggregate Borrowing Base Certificate
	Exhibit C-2

	 	— Form of U.S. Borrowing Base Certificate
	Exhibit C-3

	 	— Form of Canadian Borrowing Base Certificate
	Exhibit D

	 	— Form of Compliance Certificate
	Exhibit E

	 	— Joinder Agreement
	Exhibit F

	 	— Form of Borrowing Request
	Exhibit G

	 	— Form of Interest Election Request
	Exhibit H

	 	— Form of Intercreditor Agreement
	Exhibit I

	 	— Form of U.S. Tax Compliance Certificate




vi 









 



 


     This REVOLVING CREDIT AGREEMENT, dated as of December 3, 2009 (as it may be amended,
supplemented or otherwise modified from time to time, this “Agreement”), among EASTON-BELL
SPORTS INC., a Delaware corporation (the “Company”), 4078624 CANADA INC., ALL-AMERICAN
SPORTS (CANADA) LTD., BELL SPORTS CANADA INC., and EASTON SPORTS CANADA, INC., each organized under
the laws of Canada (collectively, the “Canadian Borrowers”, and together with the Company,
the “Borrowers”), the subsidiary guarantors from time to time party hereto, the lenders
from time to time party hereto, JPMORGAN CHASE BANK, N.A., as collateral agent (in such capacity,
the “Collateral Agent”), JPMORGAN CHASE BANK, N.A., as Administrative Agent, J.P. MORGAN
SECURITIES INC. and WACHOVIA CAPITAL FINANCE CORPORATION (NEW ENGLAND), as Joint Lead Arrangers,
WACHOVIA CAPITAL FINANCE CORPORATION (NEW ENGLAND) and BANK OF AMERICA, N.A., as Co-Syndication
Agents and U.S. BANK, NATIONAL ASSOCIATION, as Documentation Agent.



          The parties hereto agree as follows:



ARTICLE I




Definitions




          SECTION 1.01 Defined Terms. As used in this Agreement, the following terms have the
meanings specified below:



          “ABL First Priority Collateral” means the portion of the Collateral as to which the
Lenders have a first-priority Lien, including, cash and cash equivalents, deposit accounts,
inventory, accounts receivable, other personal property relating to such inventory and all proceeds
of the foregoing, as more fully described in the Collateral Documents.



          “ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to
(a) with respect to Loans or Borrowings denominated in Dollars, the U.S. Alternate Base Rate and
(b) with respect to Loans or Borrowings denominated in Canadian Dollars, the Canadian Alternate
Base Rate.



          “Account” has the meaning assigned to such term in the applicable Security Agreement.



          “Account Debtor” means any Person obligated on an Account.



          “Accounts Reserves” means, without duplication, the Dilution Reserve and any other
reserves related to Accounts which the Collateral Agent deem necessary, in their Permitted
Discretion.



          “Adjusted Eurocurrency Rate” means, with respect to any Eurocurrency Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%)
equal to (a) the Eurocurrency Rate for such Interest Period multiplied by (b) the Statutory Reserve
Rate.









 



2


          “Administrative Agent” means JPMorgan Chase Bank, N.A. or any of its offices and
affiliates (including, without limitation, JPMorgan Chase Bank, N.A., Toronto Branch), in its
capacity as administrative agent for the Lenders hereunder, and its successors in such capacity as
provided in Article VIII.



          “Administrative Questionnaire” means an administrative questionnaire in a form
supplied by the Administrative Agent.



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



          “Aggregate Availability” means, with respect to the Borrowers, at any time, an amount
equal to (a) the lesser of (i) the Total Commitment and (ii) the Aggregate Borrowing Base
minus (b) the Aggregate Credit Exposure.



          “Aggregate Borrowing Base” means the aggregate amount of the U.S. Borrowing Base and
the Canadian Borrowing Base; provided that the maximum amount of the Canadian Borrowing
Base which may be included as part of the Aggregate Borrowing Base is the Canadian Facility
Commitment.



          “Aggregate Borrowing Base Certificate” means a certificate, signed and certified as
accurate and complete by a Financial Officer of the Company, in substantially the form of
Exhibit C-1 or another form which is acceptable to the Collateral Agent in its sole
discretion.



          “Aggregate Canadian Facility Credit Exposure” means, at any time, the aggregate Credit
Exposure of all the Canadian Facility Lenders.



          “Aggregate Credit Exposure” means, at any time, the aggregate Credit Exposure of all
the Lenders.



          “Aggregate Gross Availability” means, with respect to the Borrowers, at any time, an
amount equal to (a) the lesser of (i) the Total Commitment and (ii) the Aggregate Gross Borrowing
Base minus (b) the Aggregate Credit Exposure.



          “Aggregate Gross Borrowing Base” means the aggregate amount of the U.S. Gross
Borrowing Base and the Canadian Gross Borrowing Base; provided that the maximum amount of
the Canadian Gross Borrowing Base which may be included as part of the Aggregate Gross Borrowing
Base is the Canadian Facility Commitment.



          “Aggregate U.S. Facility Credit Exposure” means, at any time, the aggregate Credit
Exposure of all the U.S. Facility Lenders.



          “Agreement” has the meaning assigned to such term in the preamble hereto.



          “All-American Sports (Canada) Ltd.” means All-American Sports (Canada) Ltd., a
corporation organized under the laws of Canada.









 



3


          “All-American Sports Corporation” means All-American Sports Corporation, a corporation
organized under the laws of Delaware.



          “Applicable Commitment Fee Rate” means, for any day, with respect to the commitment
fees payable hereunder, (a) 0.75% per annum until the completion of two full fiscal quarters after
the Effective Date and (b) thereafter, the applicable rate per annum set forth below, based upon
the daily average Commitment Utilization Percentage during the most recent fiscal quarter of the
Company:



	 	 	 	 	 
	 	 	 	 	Applicable
	 	 	Commitment Utilization	 	Commitment
	Level	 	Percentage	 	Fee Rate
	I
	 	> 50%
	 	0.50%
	II
	 	£50%
	 	0.75%





For purposes of the foregoing, the Applicable Commitment Fee Rate shall be determined as of the end
of each fiscal month of the Company; provided that the Commitment Utilization Percentage
shall be deemed to be in Level II (A) at any time that a Specified Event of Default (other than a
Specified Event of Default triggered by non-compliance with the requirements of Section 5.01(g))
has occurred and is continuing or (B) upon prior written notice to the Company, at the option of
the Administrative Agent or at the request of the Required Lenders if the Company fails to deliver
the annual, quarterly or monthly consolidated financial statements required to be delivered by it
pursuant to Section 5.01(a), (b) or (c), as applicable, during the period from the expiration of
the time for delivery thereof until such consolidated financial statements are delivered.




          “Applicable Canadian Facility Percentage” means, with respect to any Canadian Facility
Lender, the percentage of the Total Canadian Facility Commitment represented by such Canadian
Facility Lender’s Canadian Facility Commitment; provided, that if the Canadian Facility
Commitments have terminated or expired, the Applicable Canadian Facility Percentages shall be
determined based upon the Total Canadian Facility Commitment most recently in effect, after giving
effect to any assignments.



          “Applicable Percentage” means, at any time with respect to any Lender, a percentage
equal to a fraction, the numerator of which is such Lender’s Commitment and the denominator of
which is the Total Commitment, in each case at such time; provided that for purposes of
Section 2.21 when a Defaulting Lender shall exist, “Applicable Percentage” shall mean the
percentage of the Total Commitment (disregarding any Defaulting Lender’s Commitment) represented by
such Lender’s Commitment. If, however, the Commitments have terminated or expired, the Applicable
Percentages shall be determined based upon the Total Commitment most recently in effect, giving
effect to any assignments and to any Lender’s status as a Defaulting Lender at the time of
determination.



          “Applicable Rate” means, for any day with respect to any ABR Loan, Eurocurrency Loan
or CDOR Rate Loan, as the case may be, the applicable rate per annum set forth below under the
caption “ABR Spread” or “Eurocurrency Spread/CDOR Spread”, as the case may be, based









 



4



upon the daily average Aggregate Availability during the most recent fiscal month of the
Company; provided that until the completion of two full fiscal quarters after the Effective
Date, the Applicable Rate for each Eurocurrency Loan, CDOR Rate Loan and ABR Loan shall be 375 bps
and 275 bps, respectively:



	 	 	 	 	 	 	 
	 	 	 	 	Eurocurrency	 	 
	 	 	Average Aggregate	 	Spread/CDOR	 	 
	Level	 	Availability	 	Rate Spread	 	ABR Spread
	I
	 	> $175,000,000
	 	325 bps
	 	225 bps
	II
	 	> $100,000,000, but

£ $175,000,000
	 	350 bps
	 	250 bps
	III
	 	£ $100,000,000
	 	375 bps
	 	275 bps





For purposes of the foregoing, the Applicable Rate shall be determined as of the end of each fiscal
month of the Company based upon the Aggregate Borrowing Base Certificate that is delivered from
time to time pursuant to Section 5.01, provided that the average Aggregate Availability
shall be deemed to be in Level III (A) at any time that a Specified Event of Default (other than a
Specified Event of Default triggered by non-compliance with the requirements of Section 5.01(g))
has occurred and is continuing or (B) upon prior written notice to the Company, at the option of
the Administrative Agent or at the request of the Required Lenders if the Borrowers fail to deliver
any Borrowing Base Certificate that is required to be delivered by them pursuant to Section
5.01(g), as applicable, during the period from the expiration of the time for delivery thereof
until each such Borrowing Base Certificate is so delivered.




          “Applicable U.S. Facility Percentage” means, with respect to any U.S. Facility Lender,
the percentage of the Total U.S. Facility Commitment represented by such U.S. Facility Commitment;
provided, that if the U.S. Facility Commitments have terminated or expired, the Applicable
U.S. Facility Percentages shall be determined based upon the Total U.S. Facility Commitment most
recently in effect, after giving effect to any assignments.



          “Approved Fund” has the meaning assigned to such term in Section 9.04.



          “Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any Person whose consent is required by Section 9.04),
and accepted by the Administrative Agent, in the form of Exhibit A or any other form
approved by the Administrative Agent.



          “Availability Period” means the period from and including the Effective Date to but
excluding the Maturity Date.



          “Available Commitment” means, at any time, the Total Commitment then in effect
minus the Aggregate Credit Exposure at such time; provided, that in calculating the
Aggregate Credit Exposure for the purpose of determining the Available Commitment pursuant to
Section 2.12(a), the aggregate principal amount of Swingline Loans and Protective Advances then
outstanding shall be deemed to be zero.









 



5


          “Banking Services” means each and any of the following bank services provided to any
Loan Party by any Lender or any of its Affiliates: (a) credit cards for commercial customers
(including, without limitation, “commercial credit cards” and purchasing cards), (b) stored value
cards, (c) treasury management services (including, without limitation, controlled disbursement,
automated clearinghouse transactions, return items, overdrafts and interstate depository network
services) or any similar transactions, and (d) other banking products or services requested by a
Loan Party.



          “Banking Services Obligations” of the Loan Parties means any and all obligations of
the Loan Parties, whether absolute or contingent and howsoever and whensoever created, arising,
evidenced or acquired (including all renewals, extensions and modifications thereof and
substitutions therefor) in connection with Banking Services.



          “Banking Services Reserves” means all Reserves which the Collateral Agent from time to
time establishes, in its Permitted Discretion, for Banking Services then provided or outstanding.



          “Board” means the Board of Governors of the Federal Reserve System of the United
States of America (or any successor thereto).



          “Borrowers” has the meaning assigned to such term in the preamble to this Agreement.



          “Borrowing” means (a) Revolving Loans of the same Type, made, converted or continued
on the same date and, in the case of Eurocurrency Loans or CDOR Rate Loans, as to which a single
Interest Period is in effect, (b) a Swingline Loan and (c) a Protective Advance.



          “Borrowing Base” means, individually and collectively, each of the Aggregate Borrowing
Base, the U.S. Borrowing Base and the Canadian Borrowing Base.



          “Borrowing Base Certificate” means, individually and collectively, each of the
Aggregate Borrowing Base Certificate, the U.S. Borrowing Base Certificate and the Canadian
Borrowing Base Certificate.



          “Borrowing Base Supplemental Documentation” means the items described on Schedule
5.01(g).



          “Borrowing Request” means a request by a Borrower for a Borrowing of Revolving Loans
in accordance with Section 2.03.



          “Business Day” means any day that is not a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to remain closed;
provided that, (a) when used in connection with a Eurocurrency Loan, the term “Business
Day” shall also exclude any day on which banks are not open for dealings (i) in Dollar deposits
in the case of a Eurocurrency Loan denominated in Dollars and (ii) in Canadian Dollars in the case
of a Loan denominated in Canadian Dollars, in the London interbank market and (b) when used in
connection with any Canadian Facility Loan, the term “Business Day” shall also exclude any
day









 



6



in which commercial banks in Toronto, Canada are required or authorized by law to remain
closed.



          “Canadian Alternate Base Rate” means for any day, a rate per annum determined by the
Administrative Agent to be the greater of (i) the Reference Rate in effect on such date and (ii)
the 30-day CDOR Rate in effect on such date plus 1%. Any change in the Canadian Alternate
Base Rate due to a change in the Reference Rate or the CDOR Rate shall be effective from and
including the effective date of such change in the Reference Rate or CDOR Rate, respectively.



          “Canadian Benefit Plans” means any plan, fund, program, or policy, whether oral or
written, formal or informal, funded or unfunded, insured or uninsured, providing employee benefits,
including medical, hospital care, dental, sickness, accident, disability, life insurance, pension,
retirement or savings benefits, under which any Loan Party or any Subsidiary of any Loan Party has
any liability with respect to any employee or former employee, but excluding any Canadian Pension
Plans.



          “Canadian Borrowers” has the meaning assigned to such term in the preamble to this
Agreement.



          “Canadian Borrowing Base” means, at any time, an amount equal to the sum of (a) the
product of (i) 85% multiplied by (ii) the Canadian Loan Parties’ Eligible Accounts at such time
minus the Accounts Reserves related to the Canadian Loan Parties, plus (b) the
lesser of (i) the product of (x) 70% multiplied by (y) the Canadian Loan Parties’ Eligible
Inventory, valued at the lower of cost or market value, determined on a first-in-first-out basis,
at such time and (ii) the product of 85% multiplied by the Net Orderly Liquidation Value percentage
identified in the most recent inventory appraisal ordered by the Collateral Agent multiplied by the
Canadian Loan Parties Eligible Inventory, valued at the lower of cost or market value, determined
on a first-in-first-out basis, at such time, plus (c) the lesser of (i) the product of (x)
70% multiplied by (y) the Canadian Loan Parties’ Eligible Letter of Credit Inventory, valued at the
lower of cost or market value, determined on a first-in-first-out basis, at such time and (ii) the
product of 85% multiplied by the Net Orderly Liquidation Value percentage identified in the most
recent inventory appraisal ordered by the Collateral Agent multiplied by the Canadian Loan Parties
Eligible Letter of Credit Inventory, valued at the lower of cost or market value, determined on a
first-in-first-out basis, at such time minus without duplication of any Reserves of the
Canadian Loan Parties accounted for in clause (b) above, Reserves related to the Eligible Letter of
Credit Inventory of the Canadian Loan Parties, plus (d) the Canadian Loan Parties’ cash and
cash equivalents (provided that such cash and cash equivalents shall be subject to special blocked
account arrangements with such accounts to be held at the Administrative Agent) minus (e)
without duplication, Reserves related to the Canadian Loan Parties established by the Collateral
Agent in its Permitted Discretion.



          The Collateral Agent may, in its Permitted Discretion, adjust Reserves related to the Canadian
Loan Parties or reduce (or eliminate any restrictions it has imposed on) one or more of the other
elements used in determining standards of eligibility set forth in the respective definitions of
“Eligible Accounts”, “Eligible Inventory” and “Eligible Letter of Credit Inventory”, including
reserves with respect to sums that the respective Canadian Loan Parties are or will be required to
pay (such as sales, excise or similar taxes, assessments, insurance









 



7



premiums, or, in the case of leased or subleased assets, rents or other amounts payable under
such leases or subleases as applicable) and have not yet paid; provided that, the
Collateral Agent shall have provided the Company five Business Days (or, during any Cash Dominion
Period, three Business Days) prior written notice thereof, setting forth in reasonable detail the
basis therefor; and provided, further, that (A) except in respect of taxes, the
Collateral Agent may only establish or increase a reserve or impose additional restrictions to
standards of eligibility after the date hereof based on an event, condition or other circumstance
arising after the Effective Date, or based on facts not known to the Collateral Agent as of the
Effective Date; (B) any additional restrictions to standards of eligibility and the amount of any
new or increased reserves established by the Collateral Agent shall have a reasonable relationship
to the event, condition, circumstance or fact that is the basis therefor; (C) to the extent the
Collateral Agent may establish additional, or revise existing, restrictions to standards of
eligibility for Eligible Accounts, Eligible Inventory or Eligible Letter of Credit Inventory so as
to address any such event, condition, circumstance or fact in a manner reasonably satisfactory to
the Collateral Agent, the Collateral Agent shall not establish or increase a reserve for the same
purpose; (D) any such establishment or increase in reserves or imposition of additional
restrictions to standards of eligibility shall become effective for purposes of the first Canadian
Borrowing Base Certificate that is delivered pursuant to Section 5.01(g) at least five Business
Days after the date of receipt by the Company of such written notice; and (E) any such
establishment or increase in reserves or imposition of additional restrictions to standards of
eligibility shall be removed if the Collateral Agent has determined in its Permitted Discretion
that the event, condition or other matter that is the basis for such establishment or increase in
reserves or imposition of additional restrictions to standards of eligibility no longer exists.
The Collateral Agent may, in its Permitted Discretion, adjust Reserves related to the Canadian Loan
Parties or reduce one or more of the other elements used in computing the Canadian Borrowing Base,
with any such changes to be effective five days (or, during any Cash Dominion Period, three days)
after delivery of notice thereof to the Canadian Borrowers and the Lenders. The Canadian Borrowing
Base shall be determined by reference to the Canadian Borrowing Base Certificate most recently
delivered to the Collateral Agent pursuant to Section 5.01(g), subject to adjustments and changes
made by the Collateral Agent in its Permitted Discretion as provided above. Upon the disposition
of a Canadian Loan Party, or a sale of all or substantially all of the assets of a Canadian Loan
Party, the Canadian Borrowers shall promptly give the Collateral Agent written notice of such
disposition together with such information as shall be required for the Collateral Agent to adjust
the Canadian Borrowing Base to reflect such disposition.



          “Canadian Borrowing Base Certificate” means a certificate, signed and certified as
accurate and complete in all material respects by a Financial Officer of the Company, in
substantially the form of Exhibit C-3 or another form which is acceptable to the Collateral
Agent in its reasonable discretion.



          “Canadian Collection Account” has the meaning assigned to such term in the Canadian
Security Agreement.



          “Canadian Dollars” refers to the lawful money of Canada.



          “Canadian Dollar LC Exposure” means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Canadian Dollar Letters of Credit at such time plus (b) the









 



8



aggregate amount of all LC Disbursements in respect of Canadian Dollar Letters of Credit that
have not yet been reimbursed by or on behalf of any Loan Party at such time. The Canadian Dollar
LC Exposure of any Canadian Facility Lender at any time shall be its Applicable Canadian Facility
Percentage of the total Canadian Dollar LC Exposure at such time.



          “Canadian Dollar Letter of Credit” means Letters of Credit denominated in Canadian
Dollars.



          “Canadian Facility” means the Canadian Facility Commitment and the provisions herein
related to the extensions of credit made thereunder.



          “Canadian Facility Availability” means, at any time, the Canadian Facility Maximum
minus the Aggregate Canadian Credit Exposure.



          “Canadian Facility Borrowers” means the Canadian Borrowers.



          “Canadian Facility Commitment” means, as to each Canadian Facility Lender, the
obligation of such Canadian Facility Lender to make Revolving Loans denominated in Dollars and
Canadian Dollars and to acquire participations in Canadian Dollar Letters of Credit hereunder,
expressed as a Dollar amount representing the Dollar Equivalent of the maximum aggregate amount of
such Lender’s Revolving Canadian Facility Credit Exposure hereunder, as such commitment may be (a)
reduced from time to time pursuant to Section 2.09 and (b) reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 9.04; provided that no
Lender shall be permitted to have a Canadian Facility Commitment in excess of such Lender’s U.S.
Facility Commitment. The initial amount of each Lender’s Canadian Facility Commitment is set forth
on the Commitment Schedule or in the Assignment and Assumption pursuant to which such Lender shall
have assumed its Canadian Facility Commitment. The initial aggregate amount of the Total Canadian
Facility Commitment is $30,000,000.



          “Canadian Facility Lender” means (a) on the Effective Date, the Lenders designated as
having Canadian Facility Commitments on the Commitment Schedule under the heading “Canadian
Facility Lenders” and (b) thereafter, the Lenders from time to time holding Loans made pursuant to
Canadian Facility Commitments or holding Canadian Facility Commitments, after giving effect to any
assignments thereof permitted by Section 9.04(b).



          “Canadian Facility Loan” means a Revolving Loan under the Canadian Facility.



          “Canadian Facility Maximum” means, at any time, the lesser of (a) the Total Canadian
Facility Commitment and (b) the Canadian Borrowing Base.



          “Canadian Facility Protective Advance” has the meaning assigned to such term in
Section 2.04.



          “Canadian Facility Swingline Exposure” means, at any time, the aggregate principal
amount of all Canadian Facility Swingline Loans outstanding at such time. The Canadian Facility
Swingline Exposure of any Canadian Facility Lender at any time shall be its









 



9



Applicable Canadian Facility Percentage of the Canadian Facility Swingline Exposure at such
time.



          “Canadian Facility Swingline Loan” means a loan made under Section 2.05(a) that is
denominated in Canadian Dollars.



          “Canadian Gross Borrowing Base” means the Canadian Borrowing Base without a reduction
for Specified Reserves related to the Canadian Loan Parties.



          “Canadian Guaranteed Obligations” has the meaning assigned to such term in Section
10.01.



          “Canadian Guarantor” means, individually and collectively, any Guarantor organized
under the laws of the Canada.



          “Canadian Insolvency Laws” shall mean each of the Bankruptcy and Insolvency Act
(Canada), the Companies’ Creditors Arrangement Act (Canada), and the Winding-Up and Restructuring
Act (Canada), each as now and hereafter in effect, any successors to such statutes and any other
applicable insolvency or other similar law of any jurisdiction, including any law of any
jurisdiction permitting a debtor to obtain a stay or a compromise of the claims of its creditors
against it.



          “Canadian Loan Parties” means, individually and collectively, any Loan Party organized
under the laws of Canada or any province or territory thereof.



          “Canadian Pension Plans” means each pension plan required to be registered under
Canadian federal or provincial law that is maintained or contributed to by a Loan Party or any
Subsidiary of any Loan Party for its employees or former employees, but does not include the Canada
Pension Plan or the Quebec Pension Plan as maintained by the Government of Canada or the Province
of Quebec, respectively.



          “Canadian Security Agreement” means that certain Canadian Pledge and Security
Agreement, dated as of the date hereof, between the Loan Parties party thereto and the
Administrative Agent, for the benefit of the Administrative Agent and the Secured Parties to whom
Canadian Secured Obligations are owed, and any other pledge or security agreement entered into
after the date of this Agreement by any other Canadian Loan Party (as required by this Agreement or
any other Loan Document as the same may be amended, restated or otherwise modified from time to
time).



          “Canadian Secured Obligations” means all Secured Obligations of the Canadian Borrowers
and any other Canadian Loan Parties.



          “Canadian Subsidiary” means any Subsidiary of the Company that is organized under the
laws of Canada.



          “Capital Expenditures” means, for any period, the aggregate of all expenditures by the
Company and its consolidated Subsidiaries for the acquisition or leasing (pursuant to Capital Lease
Obligations) of fixed or capital assets or additions to equipment (including









 



10



replacements, capitalized repairs and improvements during such period) that should be
capitalized under GAAP on a consolidated balance sheet of the Company and its consolidated
Subsidiaries, but excluding any such expenditure which constitute (i) any portion of a Permitted
Acquisition, (ii) a reinvestment of Net Proceeds of an asset sale, casualty, condemnation or
similar event, (iii) expenditures relating to the construction or acquisition of any property which
has been transferred to a Person that is not a Borrower pursuant to a sale-leaseback transaction
permitted under Section 6.06, (iv) the purchase price of equipment purchased substantially
simultaneously with the trade-in or sale of used or surplus existing equipment to the extent that
the gross amount of such purchase price is reduced by the credit granted to the seller of such
equipment (or for the net proceeds of such sale) for equipment being traded in or sold at such
time, or (v) interest relating to the construction of any fixed assets to the extent such interest
is required to be capitalized on the balance sheet of the Company and its Subsidiaries pursuant to
GAAP.



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



          “Cash Dominion Period” means each period when a Specified Event of Default has
occurred and is continuing or the period (x) commencing at the conclusion of the third Business Day
out of any period of five Business Days on which Aggregate Gross Availability is less than the
greater of (i) 20% of the Aggregate Gross Borrowing Base (not to exceed 20% of the Total
Commitment) and (ii) (A) during September, October and November, $35,000,000 and (B) during any
other month, $40,000,000 and (y) ending on the date thereafter on which the Aggregate Gross
Availability shall have been in excess of the amounts specified in Clauses (i) and (ii) above for a
period of 45 consecutive days, provided further, however, that a Cash Dominion Period may
be discontinued no more than twice in any period of twelve (12) consecutive months.



          “CDOR Rate” means, for the relevant Interest Period, the Canadian deposit offered rate
which, in turn means on any day the sum of (a) the annual rate of interest determined with
reference to the arithmetic average of the discount rate quotations of all institutions listed in
respect of the relevant Interest Period for Canadian Dollar-denominated bankers’ acceptances
displayed and identified as such on the “Reuters Screen CDOR Page” as defined in the International
Swap Dealer Association, Inc. definitions, as modified and amended from time to time, as of 10:00
a.m. Toronto local time on such day and, if such day is not a Business Day, then on the immediately
preceding Business Day (as adjusted by the Administrative Agent after 10:00 a.m. Toronto local time
to reflect any error in the posted rate of interest or in the posted average annual rate of
interest) plus (b) 0.10% per annum; provided that if such rates are not available on the
Reuters Screen CDOR Page on any particular day, then the Canadian deposit offered rate component of
such rate on that day shall be calculated as the cost of funds quoted by the Administrative Agent
to raise Canadian dollars for the applicable Interest Period as of 10:00 a.m. Toronto local time on
such day for commercial loans or other extensions of credit to









 



11



businesses of comparable credit risk; or if such day is not a Business Day, then as quoted by
the Administrative Agent on the immediately preceding Business Day.



          “CDOR Rate Loan” means a Loan denominated in Canadian Dollars made by the Canadian
Facility Lenders to the Canadian Borrowers which bears interest at a rate based on the CDOR Rate.



          “Change in Control” means (a) the acquisition of ownership, directly or indirectly,
beneficially or of record, by any “person” (as that term is used in Section 13(d)(3) of the
Exchange Act and the rules of the SEC thereunder as in effect on the Effective Date), other than
the Principals and their Related Parties or a Permitted Group, of Equity Interests representing
more than 50% of the aggregate ordinary voting power represented by the issued and outstanding
Equity Interests in the Company, (b) the occupation of a majority of the seats (other than vacant
seats) on the board of directors of the Company by Persons who were neither (i) nominated by the
board of directors of the Company, (ii) appointed by directors so nominated nor (iii) otherwise
designated by one or more Principals, Related Parties or members of a Permitted Group, (c) a
Specified Change of Control or (d) the Company shall cease to own directly or indirectly, free and
clear of all Liens other than Permitted Liens, 100% of the outstanding voting Equity Interests of
each Canadian Subsidiary Borrower.



          “Change in Law” means the occurrence, after the date of this Agreement, of any of the
following: (a) the adoption or taking effect of any law, rule, regulation, treaty, protocol,
practice or concession, (b) any change in any law, rule, regulation, practice, concession or treaty
or in the administration, interpretation or application thereof by any Governmental Authority or
(c) the making or issuance of any request, guideline or directive (whether or not having the force
of law) of any Governmental Authority.



          “Charges” has the meaning assigned to such term in Section 9.18.



          “Chief Financial Officer” means, with respect to any Person, the chief financial
officer of such Person.



          “Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are Revolving Loans, Swingline Loans or Protective
Advances.



          “Code” means the Internal Revenue Code of 1986, as amended from time to time.



          “Collateral” means any and all property and rights owned, leased, subleased, licensed
or operated by a Person covered by the Collateral Documents and any and all other property of any
Loan Party, now existing or hereafter acquired, that may at any time be or become subject to a
security interest or Lien in favor of the Administrative Agent, on behalf of itself and the Secured
Parties, pursuant to the Collateral Documents in order to secure the Secured Obligations.



          “Collateral Access Agreement” means, individually and collectively, each “Collateral
Access Agreement” referred to in the applicable Security Agreement.









 



12


          “Collateral Agent” means, JPMCB or any of its offices and affiliates (including,
without limitation, JPMorgan Chase Bank, N.A., Toronto Branch), in its capacity as collateral agent
hereunder, and each of its successors and assigns in such capacity.



          “Collateral Documents” means, collectively, the Security Agreements, the Deposit
Account Control Agreements, the Quebec Security Documents and any other documents granting a Lien
upon the Collateral as security for payment of the Secured Obligations or perfecting any such Lien.



          “Collection Accounts” means the U.S. Collection Account and Canadian Collection
Account collectively.



          “Commitment” means, with respect to each Lender, the sum of such Lender’s U.S.
Facility Commitment, if any, and Canadian Facility Commitment, if any, it being understood that the
Canadian Facility Commitment is a sublimit within the Total Commitment and is not incremental
thereto. The initial amount of each Lender’s Commitment as of the Effective Date is set forth on
the Commitment Schedule. The Total Commitment as of the Effective Date is $250,000,000.



          “Commitment Schedule” means Schedule 1.01A. hereto identified as such.



          “Commitment Utilization Percentage” means, on any date, the percentage equivalent to a
fraction (a) the numerator of which is the Credit Exposure of all Lenders and (b) the denominator
of which is the Total Commitment.



          “Company” has the meaning assigned to such term in the preamble to this Agreement.



          “Consolidated Income Tax Expense” for any period means the provision for taxes of the
Company and its Subsidiaries, determined on a consolidated basis in accordance with GAAP.



          “Control” means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies, or the dismissal or appointment of the
management, of a Person, whether through the ability to exercise voting power, by contract or
otherwise. “Controlling” and “Controlled” have meanings correlative thereto.



          “Controlled Deposit Account” has the meaning assigned to such term in the applicable
Security Agreement.



          “Credit Exposure” means, with respect to any Lender at any time, the sum of the
outstanding principal amount of such Lender’s Revolving Loans, LC Exposure, and Swingline Exposure
at such time, plus an amount equal to its Applicable Percentage of the aggregate principal
amount of Protective Advances outstanding at such time.



          “Cure Expiration Date” has the meaning specified in Section 7.02(a).



          “Currency” means Dollars or Canadian Dollars.









 



13


          “Default” means any event or condition that constitutes an Event of Default or which
upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.



          “Defaulting Lender” means any Lender, as reasonably determined by the Administrative
Agent, that has (a) failed to fund its portion of any Borrowing, or any portion of its
participation in any Letter of Credit or Swingline Loan, within three Business Days of the date on
which it shall have been required to fund the same, unless the subject of a good faith dispute
based on a reasonable determination under the circumstances between the Borrower and such Lender,
(b) notified the Borrowers, the Administrative Agent, any Issuing Bank, the Swingline Lender or any
other Lender in writing that it does not intend to comply with any of its funding obligations under
this Agreement or has made a public statement to the effect that it does not intend to comply with
its funding obligations under this Agreement or under agreements in which it commits to extend
credit generally, (c) failed, within three Business Days after reasonable request by the
Administrative Agent, to confirm that it will comply with the terms of this Agreement relating to
its obligations to fund prospective Loans (unless the subject of a good faith dispute based on a
reasonable determination under the circumstances between the Borrower and such Lender) and
participations in then outstanding Letters of Credit, Swingline Loans and Protective Advances;
provided that any such Lender shall cease to be a Defaulting Lender under this clause (c)
upon receipt of such confirmation by the Administrative Agent, (d) otherwise failed to pay over to
the Administrative Agent or any other Lender any other amount required to be paid by it hereunder
within three Business Days of the date when due, unless the subject of a good faith dispute, or (e)
(i) been (or has a parent company that has been) adjudicated as, or determined by any Governmental
Authority having regulatory authority over such Person or its assets to be, insolvent or (ii)
become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator,
trustee, administrator, assignee for the benefit of creditors or similar Person charged with
reorganization or liquidation of its business or custodian, appointed for it, or has taken any
action in furtherance of, or indicating its consent to, approval of or acquiescence in any such
proceeding or appointment or has a parent company that has become the subject of a bankruptcy or
insolvency proceeding, or has had a receiver, conservator, trustee, administrator, assignee for the
benefit of creditors or similar Person charged with reorganization or liquidation of its business
or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent
to, approval of or acquiescence in any such proceeding or appointment, unless in the case of any
Lender referred to in this clause (e) the Borrowers, the Administrative Agent, the Swingline Lender
and each Issuing Bank shall be satisfied that such Lender intends, and has all approvals required
to enable it, to continue to perform its obligations as a Lender hereunder. For the avoidance of
doubt, a Lender shall not be deemed to be a Defaulting Lender solely by virtue of the ownership or
acquisition of any Equity Interest in such Lender or its parent by a Governmental Authority.



          “Departing Lender” has the meaning assigned to such term in Section 2.19(b).



          “Deposit Account Control Agreement” has the meaning assigned to such term in the
Security Agreements.









 



14


          “Designated Obligations” means all obligations of the Borrowers with respect to (a)
principal of and interest on the Loans, (b) LC Disbursements and interest thereon and (c) accrued
and unpaid fees under the Loan Documents.



          “Dilution Factors” means, without duplication, with respect to any period, the
aggregate amount of all deductions, credit memos, returns, adjustments, allowances, bad debt
write-offs and other non-cash credits (including all volume discounts, trade discounts and rebates)
that are recorded to reduce Accounts of the Loan Parties in a manner consistent with current and
historical accounting practices of the Loan Parties.



          “Dilution Ratio” means, at any time, the amount (expressed as a percentage),
calculated in connection with the delivery of any Borrowing Base Certificate for the fiscal month
most recently ended, equal to (a) the aggregate amount of the applicable Dilution Factors in
respect of the Accounts of the Loan Parties for the 12 most recently ended fiscal months divided by
(b) total gross sales of the Loan Parties for such 12 most recently ended fiscal months.



          “Dilution Reserve” means, at any date, the product of (a) the amount by which the
Dilution Ratio exceeds five percent (but in no event less than zero) multiplied by (b) the
aggregate amount of Eligible Accounts at such time.



          “Disclosed Matters” means the actions, suits and proceedings and the environmental
matters disclosed in Schedule 3.06.



          “Document” has the meaning assigned to such term in the applicable Security Agreement.



          “Dollar Equivalent” means, (a) with respect to any Borrowing or other extension of
credit expressed in Canadian Dollars, the amount of Dollars that would be required to purchase the
amount of such Canadian Dollars of such Borrowing or extension of credit on the date two Business
Days prior to the date of such Borrowing or extension of credit (or, in the case of any
determination made under Section 2.11(b) or redenomination under Section 2.18, or in the case of a
redenomination of any other amount into Dollars as provided herein, on the date of determination or
redenomination therein referred to), based upon the Spot Selling Rate, provided, that with
respect to the certification to be made by the Company pursuant to Section 5.01(g), such spot
selling rate shall be determined by reference to the spot selling rate set forth in the Wall Street
Journal on the Business Day immediately preceding the date on which such certification is to be
made and (b) with respect to any amount expressed in Dollars, such amount.



          “Dollar LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount
of all outstanding Dollar Letters of Credit at such time plus (b) the aggregate amount of
all LC Disbursements in respect of Dollar Letters of Credit that have not yet been reimbursed by or
on behalf of any Loan Party at such time. The Dollar LC Exposure of any Lender at any time shall
be its Applicable U.S. Facility Percentage of the Dollar LC Exposure of all Lenders at such time.



          “Dollar Letter of Credit” means a Letter of Credit that is denominated in U.S.
Dollars.









 



15


          “Dollars” or “$” refers to lawful money of the United States of America.



          “Domestic Subsidiary” means any Subsidiary of the Company that is organized under the
laws of the United States, any State thereof or the District of Columbia.



          “EBITDA” means, for any period, an amount equal to (a) the sum for such period of Net
Income and, to the extent subtracted in determining such Net Income, provisions for (i) income or
franchise tax expense, (ii) total interest expense and, to the extent not reflected in such total
interest expense, any losses on Swap Agreements or other derivative instruments entered into for
the purpose of hedging interest rate risk, net of interest income and gains on such Swap Agreements
or such derivative instruments, and bank and letter of credit fees and costs of surety bonds in
connection with financing activities, (iii) depreciation and amortization expense (including
amortization of intangibles and amortization of deferred financing costs (whether or not classified
as interest expense) but excluding amortization of prepaid cash expenses that were paid in a prior
period), (iv) any non-recurring fees, charges or expenses paid in connection with the Refinancing
within 180 days of the Effective Date, (v) restructuring charges (which, for the avoidance of
doubt, shall include costs related to severance, retention, relocation, contract termination and
consolidation of facilities) and other non-recurring expenses and charges, provided that
the aggregate amount of such fees, charges and other expenses may not exceed (a) $5,000,000 in any
twelve-month period and (b) $15,000,000 in the aggregate and provided further, that
the Company may carry over and utilize in subsequent twelve-month periods, in addition to the
amounts permitted for such twelve-month period, the amount of such fees, charges or other expenses
permitted to have been utilized in any preceding twelve-month period, (vi) any non-recurring fees,
charges and expenses incurred in connection with the issuance of Equity Interests or Indebtedness
(in either case whether or not successful), or the extinguishment of Indebtedness and any
non-recurring fees, charges and expenses related to Investments (including Permitted Acquisitions),
dispositions of assets or recapitalizations, (vii) any Management Fees paid or accrued to the
extent permitted under Section 6.08(a)(ix) and (viii) any other non-cash charges for such period
(but excluding any non-cash charge in respect of an item that was included in Net Income in a prior
period and any non-cash charge that relates to the write-down or write-off of inventory)
minus (b) without duplication and to the extent included in Net Income, (i) any cash
payments made during such period in respect of non-cash charges described in clause (a)(iv) taken
in a prior period and (ii) any non-cash items of income for such period (other than the accrual of
revenue or the reversal of reserves in the ordinary course), all calculated for the Company and its
Subsidiaries on a consolidated basis.



          The calculation of EBITDA shall also exclude non-cash income or charges resulting from
mark-to-market accounting under FAS No. 52 relating to Indebtedness denominated in foreign
currencies and any unrealized net gains and losses resulting from Swap Obligations (including,
without limitation, the application of SFAS No. 133 and International Accounting Standard No. 39).



          “Effective Date” means the date on which the conditions specified in Section 4.01 are
satisfied (or waived in accordance with Section 9.02).









 



16


          “Eligible Accounts” means, each Account of any Loan Party that is eligible for
inclusion in the calculation of any Borrowing Base. Without limiting the Collateral Agent’s
Permitted Discretion provided herein, Eligible Accounts shall not include any Account:



          (a) which is not subject to a first priority perfected security interest in favor of the
Collateral Agent (for the benefit of the Secured Parties);



          (b) which is subject to any Lien other than (i) a Lien in favor of the Collateral Agent (for
the benefit of the Secured Parties), (ii) a Permitted Lien which does not have priority over the
Lien in favor of the Collateral Agent (for the benefit of the Secured Parties) and (iii) Prior
Claims that are unregistered and that secure amounts that are not yet due and payable;



          (c) (A)(i) with respect to (i) invoices that have terms of Net 0 to Net 30 days, which is
unpaid more than 90 days after the original invoice date or more than 60 days after the due date,
(ii) with respect to invoices that have terms of Net 31 to Net 60, which is unpaid more than 120
days after the original invoice date or more than 60 days after the due date, (iii) with respect
to invoices that have terms of Net 61 to Net 120, which is unpaid more than 150 days after the
original invoice date or more than 60 days after the due date, (iv) with respect to invoices that
have terms of Net 121 to Net 180, which is unpaid more than 180 days after the original invoice
date or more than 30 days after the due date, and (v) with respect to invoices that have terms of
greater than Net 180, which is unpaid more than 180 days after the original invoice, therefor or
(B) which has been written off the books of the applicable Loan Party after being deemed
uncollectible; provided that (C) Accounts owing by Account Debtors of each of All-American
Sports Corporation and All-American Sports (Canada) Ltd. may be included in Eligible Accounts, so
long as such Account is not unpaid more than 180 days after the date of the original invoice date,
regardless of the payment terms attached to such invoice;



          (d) which is owing by an Account Debtor for which more than 50% of the Accounts owing from
such Account Debtor and its Affiliates are ineligible pursuant to clause (c) above;



          (e) (i) which is owing by an Account Debtor, other than an Investment Grade Account Debtor, to
the extent the aggregate amount of Accounts owing from such Account Debtor and its Affiliates to
all Loan Parties exceeds 20% of the aggregate amount of Eligible Accounts of all Loan Parties, but
only to the extent of such excess or (ii) which is owing by an Investment Grade Account Debtor, to
the extent the aggregate amount of Accounts owing from such Investment Grade Account Debtor and its
Affiliates to all Loan Parties exceeds 25% of the aggregate amount of Eligible Accounts of all Loan
Parties, but only to the extent of such excess;



          (f) which (i) does not arise from the sale of goods or performance of services in the
applicable Loan Party’s ordinary course of business, (ii) is not evidenced by an invoice or other
documentation which has been sent to the Account Debtor, (iii) represents a progress billing, (iv)
is contingent upon any Loan Party’s completion of any further performance, (v) represents a sale on
a bill-and-hold (except with respect to Accounts owing by Account Debtors of All-American Sports
Corporation or All-America Sports (Canada) Ltd.), guaranteed sale, sale-and-return, sale on
approval, consignment, cash-on-delivery or any other repurchase or return









 



17



basis, (vi) relates solely to payments of interest or (vii) relates to goods which have not
been shipped to the Account Debtor;



          (g) with respect to which any check or other instrument of payment has been returned
uncollected for any reason;



          (h) which is owed by an Account Debtor which has (i) applied for, suffered, or consented to
the appointment of any receiver, custodian, trustee, or liquidator or similar official for such
Account Debtor of its assets, (ii) has had possession of all or a material part of its property
taken by any receiver, custodian, trustee or liquidator, (iii) filed, or had filed against it, any
assignment, application, request or petition for liquidation, reorganization, compromise,
arrangement, adjustment of debts, stay of proceedings, adjudication as bankrupt, winding-up or
voluntary or involuntary case under any state or Federal bankruptcy laws or under any Canadian
Insolvency Laws (other than post-petition accounts payable of an Account Debtor that is a
debtor-in-possession under the Bankruptcy Code and reasonably acceptable to the Collateral Agent),
(iv) has admitted in writing its inability, or is generally unable to, pay its debts as they become
due; provided that to the extent such inability to pay applies to only a portion of the
Account, only such portion shall be excluded from this definition, or (vi) ceased operation of its
business;



          (i) (i) which with respect to the U.S. Loan Parties, is owed by an Account Debtor which (a)
does not maintain a significant executive office in the U.S. or (b) is not organized under the
applicable laws of the U.S. or any state of the U.S., unless such Account is backed by a letter of
credit acceptable to the Collateral Agent which is in the possession of, has been assigned to and
is directly drawable by the Collateral Agent; provided, however, that with respect to U.S. Loan
Parties and the calculation of the U.S. Borrowing Base, Accounts owed by Account Debtors (i) not
satisfying clauses (a) or (b) of this paragraph (i) and (ii) that are organized or headquartered in
Germany, the Netherlands, Norway, Switzerland, United Kingdom and Australia, in each case, shall be
deemed Eligible Accounts in an aggregate amount (together with amounts included as Eligible
Accounts pursuant to the proviso to clause (k) below) not to exceed $15,000,000.



               (ii) which with respect to the Canadian Loan Parties, is owed by an Account Debtor which (a)
does not maintain a significant executive office in Canada or (b) is not organized under the
applicable laws of Canada or any province thereof, unless such Account is backed by a letter of
credit acceptable to the Collateral Agent which is in the possession of, has been assigned to and
is directly drawable by the Collateral Agent;



          (j) which is owed in any currency (i) other than Dollars with respect to the U.S. Loan
Parties, subject to the proviso in clause (l) of this definition, or (ii) other than Dollars or
Canadian Dollars with respect to the Canadian Loan Parties;



          (k) which is owed by (i) the government (or any department, agency, public corporation, or
instrumentality thereof) of any country other than the U.S. (for U.S. Loan Parties) or Canada (for
Canadian Loan Parties) unless such Account is backed by a letter of credit acceptable to the
Collateral Agent which is in the possession of the Collateral Agent or (ii) the government of the
U.S. or Canada, or any department, agency, public corporation, or









 



18



instrumentality thereof unless the Federal Assignment of Claims Act of 1940, as amended (31
U.S.C. § 3727 et seq. and 41 U.S.C. § 15 et seq.) or the Financial Administration Act (Canada), as
amended, as applicable, and any other steps necessary to perfect the Lien of the Collateral Agent
in such Account have been complied with to the Collateral Agent’s satisfaction; provided,
however, that with respect to U.S. Loan Parties and the calculation of the U.S. Borrowing
Base, Accounts that otherwise satisfy the criteria in this definition and are owed by the
government of each of Germany, the Netherlands, Norway, Switzerland, United Kingdom and Australia,
in each case, shall be deemed Eligible Accounts in an aggregate amount (together with amounts
included as Eligible Accounts pursuant to the proviso to clause (i) above) not to exceed
$15,000,000;



          (l) which is owed by any Principal or its Affiliate, employee, officer, director, agent or
stockholder, but only to the extent the value of such Account exceeds $200,000 and only for such
excess;



          (m) which is owed by an Account Debtor or any Affiliate of such Account Debtor to which any
Loan Party is indebted, but only to the extent of such Indebtedness or is subject to any security,
deposit, progress payment, retainage or other similar advance made by or for the benefit of an
Account Debtor, in each case to the extent thereof;



          (n) which is subject to any counterclaim, deduction, defense, setoff or dispute but only to
the extent of any such counterclaim, deduction, defense, setoff or dispute, without duplication
with any other reserves;



          (o) which is evidenced by any promissory note, chattel paper or instrument;



          (p) which is owed by an Account Debtor located in any jurisdiction which requires filing of a
“Notice of Business Activities Report” or other similar report in order to permit such Loan Party
to seek judicial enforcement in such jurisdiction of payment of such Account, unless such Loan
Party has filed such report or qualified to do business in such jurisdiction;



          (q) with respect to which the applicable Loan Party has made any agreement with the Account
Debtor for any reduction thereof, other than discounts and adjustments given in the ordinary course
of business (but only to the extent of the reduction thereof), or any Account which was partially
paid and such Loan Party created a new receivable for the unpaid portion of such Account;



          (r) which does not comply in all material respects with the requirements of all applicable
laws and regulations, whether federal, territorial, provincial, state or local, including without
limitation the Federal Consumer Credit Protection Act, the Federal Truth in Lending Act and
Regulation Z of the Board; or



          (s) which is for goods that have been sold under a purchase order or pursuant to the terms of
a contract or other agreement or understanding (written or oral) that indicates or purports that
any Person other than a Loan Party has or has had an ownership interest in such goods, or which
indicates any party other than any of the Loan Parties as payee or remittance party.









 



19


          In the event that it becomes known to a Financial Officer of the Loan Parties that an Account
which was previously an Eligible Account ceases to be an Eligible Account hereunder, the Borrowers
shall notify the Collateral Agent thereof on and at the time of submission to the Collateral Agent
of the next Borrowing Base Certificate. In determining the amount of an Eligible Account, the face
amount of an Account may, in the Collateral Agent’s Permitted Discretion, be reduced by, without
duplication, to the extent not reflected in such face amount, (i) the amount of all accrued and
actual discounts, claims, credits or credits pending, promotional program allowances, price
adjustments, finance charges or other allowances (including any amount that such Loan Party may be
obligated to rebate to an Account Debtor pursuant to the terms of any written agreement or
understanding and (ii) the aggregate amount of all cash received in respect of such Account but not
yet applied by such Loan Party to reduce the amount of such Account. Standards of eligibility may
be made more or less restrictive from time to time by the Collateral Agent in the exercise of its
Permitted Discretion after consultation with the Borrowers, with any such changes to be effective
upon delivery of the next regularly scheduled Borrowing Base Certificate.



          Notwithstanding the foregoing, the establishment or adjustment of any Reserve or standards of
eligibility under this definition of “Eligible Accounts”shall be carried out in a manner consistent
with the provisions of the second paragraph in the definition of each of “Canadian Borrowing Base”
and “U.S. Borrowing Base”.



          “Eligible in Transit Inventory” means, at any time, Inventory in transit from vendors
and suppliers of a Loan Party, so long as (a) such Inventory has been paid for in full by such Loan
Party, (b) the Collateral Agent shall have received (i) a true and correct copy of the bill of
lading and other shipping documents for such Inventory, (ii) evidence of satisfactory casualty
insurance naming the Collateral Agent as loss payee and which is in form and substance and issued
by an insurance company acceptable to the Collateral Agent and which otherwise satisfies the
insurance requirements of this Agreement and the other Loan Documents, and (iii) if the bill of
lading is (A) non-negotiable and the Inventory is in transit within the U.S., lien releases and
waivers have been obtained from the applicable customs broker for such Inventory and such customs
broker has granted the Collateral Agent access to the Inventory or (B) negotiable, confirmation
that the bill is issued in the name of the applicable Loan Party and consigned to the order of the
Collateral Agent, and an acceptable agreement has been executed with such Loan Party’s customs
broker, in which the customs broker agrees that it holds the negotiable bill as agent for the
Collateral Agent and has granted the Collateral Agent access to the Inventory, (c) such Inventory
is in the possession of a common carrier that is not an Affiliate of the applicable vendor or
supplier, a master of a vessel chartered exclusively by a vendor of the Borrower as a time or
voyage charter, or a master of a vessel chartered exclusively by a Loan Party as a time or voyage
charter (other than a bare boat charter), (d) which Inventory does not constitute Eligible Letter
of Credit Inventory, and (e) such Inventory is otherwise not deemed ineligible pursuant to the
terms of any of the Eligible Inventory subsections other than subsections (d) and (i).



          “Eligible Inventory” means, all Inventory of any Loan Party that is eligible for
inclusion in the calculation of any Borrowing Base. Without limiting the Collateral Agent’s
Permitted Discretion provided herein, Eligible Inventory shall not include any Inventory:









 



20


          (a) which is not subject to a first priority perfected Lien in favor of the Collateral Agent
(for the benefit of the Secured Parties);



          (b) which is subject to any Lien other than (i) a Lien in favor of the Collateral Agent (for
the benefit of the Secured Parties), (ii) a Permitted Lien which does not have priority over the
Lien in favor of the Collateral Agent (for the benefit of the Secured Parties); provided that
Inventory shall not be deemed ineligible in respect of landlords’ liens to the extent that a Rent
or Collateral Access Reserve is maintained in respect thereof and (iii) Prior Claims that are
unregistered and secure amounts that are not yet due and payable;



          (c) which, in the Collateral Agent’s Permitted Discretion, is determined to be slow moving,
obsolete, unmerchantable, defective, used, unfit for sale, not salable at prices approximating at
least the cost of such Inventory in the ordinary course of business or unsalable due to age, type,
category and/or quantity; provided that any such determination under this paragraph (c)
shall be based on the Loan Parties’ methodology for classifying such Inventory as in effect on the
Effective Date;



          (d) to the extent any Person other than the applicable Loan Party shall (i) have any direct or
indirect ownership, interest or title to such Inventory or (ii) be indicated on any purchase order
or invoice with respect to such Inventory as having or purporting to have an interest therein;



          (e) which is not finished goods or which constitutes work-in-process, subassemblies, packaging
and shipping material, manufacturing supplies, samples, prototypes, displays or display items,
bill-and-hold goods, goods that are returned or marked for return, repossessed goods, defective or
damaged goods, goods held on consignment, or goods which are not of a type held for sale in the
ordinary course of business;



          (f) which is not located in the U.S. or its territories (with respect to Inventory owned by
any U.S. Loan Party) or Canada or its territories (with respect to Inventory owned by any Canadian
Loan Party) or is with a common carrier from vendors and suppliers of any Loan Party;



          (g) in excess of (x) $200,000 which is located in any location leased or subleased by/to a
Loan Party or (y) $2,500,000 in the aggregate for all leased and subleased locations, unless (i)
the lessor has delivered to the Collateral Agent a Collateral Access Agreement or (ii) a Rent or
Collateral Access Reserve for rent, charges, and other amounts due or to become due with respect to
such facility has been established by the Collateral Agent in its Permitted Discretion;



          (h) in excess of (x) $200,000 which is located in any third party warehouse or is in the
possession of a bailee (other than a third party processor) and is not evidenced by a Document or
(y) $2,500,000 in the aggregate for all such warehouses or third party locations, unless (i) such
warehouseman or bailee has delivered to the Collateral Agent a Collateral Access Agreement and such
other documentation as the Collateral Agent may require or (ii) an appropriate Reserve has been
established by the Collateral Agent in its Permitted Discretion;









 



21


          (i) in excess of (x) $200,000 which is being processed offsite at a third party location or
outside processor, or is in-transit to or from said third party location or outside processor or
(y) $2,500,000 in the aggregate for all such third party locations, unless (i) such third party has
delivered to the Collateral Agent a Collateral Access Agreement and such other documentation as the
Collateral Agent may require or (ii) an appropriate Reserve has been established by the Collateral
Agent in its Permitted Discretion;



          (j) which is the subject of a consignment by a Loan Party as consignor;



          (k) which is perishable;



          (l) which contains or bears any intellectual property rights licensed to any Loan Party unless
the Collateral Agent is reasonably satisfied that it may sell or otherwise dispose of such
Inventory without (i) infringing the rights of such licensor, (ii) violating any contract with such
licensor, or (iii) incurring any liability with respect to payment of royalties other than
royalties incurred pursuant to sale of such Inventory under the current licensing agreement;



          (m) which is not reflected in a current perpetual inventory report of any Loan Party; or



          (n) for which reclamation rights have been asserted by the seller.



          provided that, for purposes of determining “Eligible Inventory” in any calculation for
which the Net Orderly Liquidation Value percentage is then multiplied against Eligible Inventory,
paragraphs (c) and (e) shall not apply.



          Notwithstanding the foregoing requirements, Eligible in Transit Inventory shall be included
within Eligible Inventory for Borrowing Base purposes.



          In the event that it becomes known to a Financial Officer of the Loan Parties that Inventory
which was previously Eligible Inventory ceases to be Eligible Inventory hereunder, the Borrowers
shall notify the Collateral Agent thereof on and at the time of submission to the Collateral Agent
of the next Borrowing Base Certificate. Standards of eligibility may be made more or less
restrictive from time to time by the Collateral Agent in the exercise of its Permitted Discretion
after consultation with the Borrowers, with any such changes to be effective upon delivery of the
next regularly scheduled Borrowing Base Certificate. Notwithstanding the foregoing, the
establishment or adjustment of any Reserve or standards of eligibility under this definition of
“Eligible Inventory” shall be carried out in a manner consistent with the provisions of the second
paragraph in the definition of each of “Canadian Borrowing Base” and “U.S. Borrowing Base”.



          “Eligible Letter of Credit Inventory” means, at any time, Inventory (a) which has not
yet been delivered to any Loan Party, (b) the purchase of which is supported by a commercial Letter
of Credit issued under the Facility having an expiration date within 90 days of the initial
issuance of such Letter of Credit, which Letter of Credit provides that it may be drawn only after
the applicable Inventory is completed and delivered to a common carrier that is not an Affiliate of
any Loan Party, a master of a vessel chartered exclusively by a vendor of any Loan Party as a









 



22



time or voyage charter or a master of a vessel chartered exclusively by any Loan Party as a
time or voyage charter (other than a bare boat charter) in accordance with the underlying purchase
order or contract, and after documents of title have been issued for such Inventory reflecting the
applicable Loan Party or, if requested by the Collateral Agent, the Collateral Agent, as consignee
of such Inventory, (c) which is insured against risk of loss pursuant to an insurance policy in
form and substance and issued by an insurance company reasonably acceptable to the Collateral
Agent, with respect to which the Collateral Agent has been named loss payee and which otherwise
satisfies the insurance requirements of this Agreement and the other Loan Documents, (d) for which
no documents of title have been issued and (e) which is otherwise not excluded from the definition
of “Eligible Inventory”. Notwithstanding the foregoing, the establishment or adjustment of any
Reserve or standards of eligibility under this definition of “Eligible Letter of Credit Inventory”
shall be carried out in a manner consistent with the provisions of the second paragraph in the
definition of each of “Canadian Borrowing Base” and “U.S. Borrowing Base”.



          “Environmental Laws” means all treaties, statutes, laws (including common law), rules,
regulations, codes, ordinances, orders, decrees, writs, judgments, injunctions, or binding
agreements issued, promulgated or entered into by or with any Governmental Authority, relating to:
the protection of the environment; the preservation or reclamation of natural resources; the
generation, management, use, presence, release or threatened release of, or exposure to, any
Hazardous Materials; or health and safety matters.



          “Environmental Liability” means any liability or other obligation, contingent or
otherwise (including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of any Borrower or any Subsidiary resulting from or based upon any
actual or alleged (a) violation of any Environmental Law or permit, license or approval issued
thereunder, (b) generation, use, handling, transportation, storage, treatment, disposal or
arrangement for disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d)
release or threatened release of any Hazardous Materials or (e) contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the
foregoing.



          “Equity Interests” means shares of capital stock, partnership interests, membership
interests in a limited liability company, beneficial interests in a trust or other equity ownership
interests in a Person, and any warrants, options or other rights entitling the holder thereof to
purchase or acquire any such equity interest.



          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from
time to time.



          “ERISA Affiliate” means any trade or business (whether or not incorporated) that,
together with any Loan Party, is treated as a single employer under Section 414(b) or (c) of the
Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a
single employer under Section 414(m) of the Code.



          “ERISA Event” means (a) any Reportable Event; (b)  any failure by any Plan to satisfy
the minimum funding standards (within the meaning of Sections 412 or 430 of the Code or Section 302
of ERISA) applicable to such Plan, whether or not waived; (c) the filing pursuant









 



23



to Section 412 of the Code or Section 303 of ERISA of an application for a waiver of the
minimum funding standard with respect to any Plan, the failure to make by its due date a required
installment under Section 430(j) of the Code with respect to any Plan or the failure by any Loan
Party or any of its ERISA Affiliates to make any required contribution to a Multiemployer Plan;
(d) the incurrence by any Loan Party or any of its ERISA Affiliates of any liability under Title IV
of ERISA with respect to the termination of any Plan, including but not limited to the imposition
of any Lien in favor of the PBGC or any Plan; (e) the receipt by any Loan Party or any of its ERISA
Affiliates from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or to appoint a trustee to administer any Plan under Section 4042 of ERISA; (f)
the incurrence by any Loan Party or any of its ERISA Affiliates of any withdrawal liability with
respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by any Loan Party or any of its ERISA Affiliates of any notice, or the receipt by any
Multiemployer Plan from any Loan Party or any of its ERISA Affiliates of any notice, concerning the
imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected
to be, Insolvent, in Reorganization or in endangered or critical status, within the meaning of
Section 432 of the Code or Section 305 or Title IV of ERISA.



          “Eurocurrency”, when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by
reference to the Adjusted Eurocurrency Rate.



          “Eurocurrency Rate” means, with respect to any Eurocurrency Borrowing for any Interest
Period, the rate appearing on the applicable Reuters Screen (or on any successor or substitute page
of such service, or any successor to or substitute for such service, providing rate quotations
comparable to those currently provided on such page of such service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of interest rates
applicable to deposits in the applicable currency in the London interbank market) at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as
the rate for deposits in the relevant currency with a maturity comparable to such Interest Period.
In the event that such rate is not available at such time for any reason, then the
“Eurocurrency Rate” with respect to such Eurocurrency Borrowing for such Interest Period
shall be the rate at which deposits of $1,000,000, and for a maturity comparable to such Interest
Period are offered by the principal London office of the Administrative Agent in immediately
available funds in the London interbank market at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period.



          “Event of Default” has the meaning assigned to such term in Section 7.01.



          “Exchange Act” means the Securities Exchange Act of 1934, as amended.



          “Excluded Accounts” means the accounts listed in sub clauses (i) through (iii) of
Section 5.16(b), and any other accounts the aggregate balance of which does not exceed $5,000,000
on a daily average basis over a 30-day period.



          “Excluded Domestic Subsidiary” means any Subsidiary listed on Schedule 1.01B.









 



24


          “Excluded Taxes” means, with respect to the Administrative Agent, any Lender, any
Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of
any Loan Party hereunder or any other Loan Document, (a) any Other Connection Taxes, (b) any United
States federal withholding Tax (which, for the avoidance of doubt, shall include any back-up
withholding) that is imposed by a Requirement of Law in effect at the time such Lender becomes a
party to this Agreement other than an assignee pursuant to a request by the Borrowers under Section
2.19(b) (or designates a new lending office other than designating a new office pursuant to a
request by the Borrower under Section 2.19(a)), with respect to any payment made by or on account
of any obligation of the Borrowers to such Lender, except to the extent that such Lender was
entitled, at the time of designation of a new lending office to receive additional amounts with
respect to such withholding Tax pursuant to Section 2.17(a), (c) Taxes imposed on or measured by
such recipient’s net income or profits (however denominated) and franchise (and similar) Taxes
imposed on it in lieu of net income Taxes, (d) any branch profits Taxes imposed by the United
States or any similar Tax imposed by any other jurisdiction in which such recipient is located, or
(e) Taxes attributable to a Lender’s failure to comply with Section 2.17(f).



          “Existing Credit Agreement” means the Credit and Guaranty Agreement, dated as of March
16, 2006, among the Company, certain Canadian subsidiaries of the Company, RBG, the U.S.
guarantors, the Canadian guarantors, the various lenders from time to time party thereto, Wachovia
Bank, National Association, as administrative agent and collateral agent, and the other agents
party thereto.



          “Existing Letters of Credit” means any letters of credit which have been issued
pursuant to the Existing Credit Agreement and are listed on Schedule 2.01 hereto. The Company
shall be deemed to have requested the issuance of each Existing Letter of Credit for purposes
hereof.



          “Existing Senior Subordinated Notes” means the Company’s $140,000,000 8.375% Series
Subordinated Notes due 2012.



          “Facility” means the U.S. Facility or the Canadian Facility; collectively, the
“Facilities.”



          “Facility Commitment” shall refer, as applicable, to a U.S. Facility Commitment or a
Canadian Facility Commitment.



          “Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received
by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.









 



25


          “Financial Officer” means the chief financial officer, principal financial officer,
treasurer, financial vice president or controller of a Loan Party.



          “Fixed Charge Coverage Ratio” means, for any Test Period, the ratio, determined as of
the end of such Test Period, of (a) EBITDA for such Test Period minus the sum of (i)
Capital Expenditures paid in cash by the Company and its Subsidiaries during such Test Period
(other than those financed with Indebtedness (other than Loans) or Net Proceeds of issuances of
Equity Interests (or capital contributions in respect thereof)), (ii) cash contributions to any
qualified defined benefit pension Plan in excess of the amount of such contributions that was
expensed and (iii) the aggregate amount of income Taxes paid in cash by the Company and the
Subsidiaries during such Test Period to (b) Fixed Charges for such Test Period, all calculated for
the Company and its Subsidiaries on a consolidated basis.



          “Fixed Charge Coverage Ratio Commencement Date” has the meaning assigned to such term
in Section 6.12.



          “Fixed Charge Coverage Ratio Trigger Termination Event” has the meaning assigned to
such term in Section 6.12.



          “Fixed Charges” means, with reference to any Test Period, without duplication, (i)
cash Interest Expense (excluding arrangement and upfront fees and deal costs related to the
Refinancing and the incurrence of Indebtedness related thereto), plus (ii) scheduled
principal payments on Indebtedness for borrowed money made during such Test Period, plus
(iii) Restricted Payments paid in cash and ultimately received by one or more equity holders of the
ultimate Parent or paid to service interest expense on Indebtedness of a Parent plus (iv)
Capital Lease Obligation payments, all calculated for the Company and its Subsidiaries on a
consolidated basis.



          “Flood Insurance Laws” means, collectively, (i) the National Flood Insurance Act of
1968 as now or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster
Protection Act of 1973 as now or hereafter in effect or any successor statute thereto, (iii) the
National Flood Insurance Reform Act of 1994 as now or hereafter in effect or any successor statute
thereto and (iv) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any
successor statute thereto.



          “Foreign Lender” means any Lender or Issuing Bank, (a) with respect to any Borrower
other than the Company and any Tax, that is treated as foreign by the jurisdiction imposing such
Tax, or (b) with respect to the U.S. Borrowers, that (1) is not a “United States Person” as defined
by Section 7701(a)(30) of the Code (a “U.S. Person”), or (2) is a partnership or other entity
treated as a partnership for United States federal income tax purposes which is a U.S. Person, but
only to the extent the beneficial owners (including indirect partners if its direct partners are
partnerships or other entities treated as partnerships for United States federal income tax
purposes are U.S. Persons) are not U.S. Persons.



          “Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary;
provided, however, that the definition of “Foreign Subsidiary” shall not include
Canadian Subsidiaries.









 



26


          “Funding Accounts” has the meaning assigned to such term in Section 4.01(g).



          “GAAP” means generally accepted accounting principles in the United States of America.



          “Governmental Authority” means the government of the United States of America, Canada,
any other nation or any political subdivision thereof, whether provincial, territorial, state,
provisional, territorial or local, and any agency, authority, instrumentality, regulatory body,
court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government (including any supra-national
bodies such as the European Union or the European Central Bank) having jurisdiction over the
Company, any Subsidiary or any Lender as the context may require.



          “Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any obligation of the
guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such Indebtedness or other
obligation of the payment thereof, (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or obligation;
provided, that the term Guarantee shall not include endorsements for collection or deposit
in the ordinary course of business.



          “Guaranteed Obligations” has the meaning assigned to such term in Section 10.01.



          “Guarantor” means, at any time, collectively and individually, (a) with respect to the
U.S. Facility Loans, Dollar LC Exposure, U.S. Facility Swingline Loans and U.S. Facility Protective
Advances outstanding at such time, the Company and each material Wholly-Owned Domestic Subsidiary
that is not an Excluded Domestic Subsidiary that has executed this Agreement or has executed a
Joinder Agreement and has not been released from the Loan Guaranty and (b) with respect to the
Canadian Facility Loans, Canadian Dollar LC Exposure, Canadian Facility Swingline Loans and
Canadian Facility Protective Advances outstanding at such time, the Canadian Facility Borrowers,
each entity specified in paragraph (a) of this definition and each Wholly-Owned Subsidiary that is
a Canadian Subsidiary that has executed this Agreement or has executed a Joinder Agreement and has
not been released from the Loan Guaranty.



          “Hazardous Materials” means all explosive or radioactive substances or wastes; and all
hazardous or toxic substances, contaminants or wastes and all other pollutants, including any
petroleum products or byproducts and all other hydrocarbons, radon gas, molds, asbestos or
asbestos-containing materials, urea formaldehyde foam insulation, polychlorinated biphenyls,









 



27



chlorofluorocarbons and all other ozone-depleting substances, infectious or medical wastes,
odors or odor-causing substances; and all other substances or wastes that are prohibited, limited
or regulated pursuant to, or that could give rise to liability under, any Environmental Law.



          “Holdings” means EB Sports Corp., a Delaware corporation.



          “Holdings Credit Agreement” means the Credit Agreement, dated as of December 3, 2009,
among Holdings, RBG, the various lenders from time to time party thereto, Wachovia Investment
Holdings, LLC, as administrative agent, and the other agents party thereto, as such agreement may
be amended, supplemented or modified from time to time and any renewal, extension, refunding,
restructuring, replacement or refinancing thereof (whether with the original administrative agent
and lenders or another administrative agent or trustee or one or more other lenders and whether
provided under the original credit agreement or one or more other credit or other agreements or
indentures, in each case exclusively issued or entered into by one or more parent entities of the
Company).



          “Holdings Credit Facilities” means the Holdings Existing Credit Agreement and the
Holdings Credit Agreement.



          “Holdings Existing Credit Agreement” means the Credit Agreement, dated as of November
17, 2006 (as amended by Amendment No. 1, dated as of
November 15, 2009 and Amendment No. 2, dated as
of November 19, 2009), among Holdings, the various lenders from time to time party thereto,
Wachovia Investment Holdings, LLC, as administrative agent, and the other agents party thereto, as
such agreement may be amended, supplemented or modified from time to time and any renewal,
extension, refunding, restructuring, replacement or refinancing thereof (whether with the original
administrative agent and lenders or another administrative agent or trustee or one or more other
lenders and whether provided under the original credit agreement or one or more other credit or
other agreements or indentures, in each case exclusively issued or entered into by one or more
parent entities of the Company).



          “Incur” means create, incur, assume, Guarantee or otherwise become responsible for,
and “incurred” and “incurrence” shall have correlative meanings.



          “Indebtedness” of any Person means, without duplication, (a) all obligations of such
Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person upon which interest charges are
customarily paid, (d) all obligations of such Person under conditional sale or other title
retention agreements relating to property acquired by such Person, (e) all obligations of such
Person in respect of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business, obligations incurred under ERISA and
any earn-out obligation or purchase price adjustment until such obligation becomes a liability on
the balance sheet of such Person in accordance with GAAP), (f) all Indebtedness (excluding prepaid
interest thereon) of others secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired
by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all
Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such
Person, (i) all obligations, contingent or otherwise, of such Person as an









 



28



account party in respect of letters of credit, letters of guaranty or similar arrangements,
(j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances,
(k) obligations under any liquidated earn-out and (l) any other Off-Balance Sheet Liability. The
Indebtedness of any Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such Person is liable therefor
as a result of such Person’s ownership interest in or other relationship with such entity, except
to the extent the terms of such Indebtedness provide that such Person is not liable therefor.



          “Indemnified Taxes” means Taxes other than Excluded Taxes.



          “Indemnitee” has the meaning assigned to such term in Section 9.03(b).



          “Information Memorandum” means the Confidential Information Memorandum dated November
5, 2009 relating to the Loan Parties and the Transactions.



          “Infringe” has the meaning assigned to such term in Section 3.05(b).



          “Initial Period” has the meaning assigned to such term in Section 7.02(d).



          “Initial Period Minimum Availability” has the meaning assigned to such term in Section
7.02(d).



          “Insolvent” with respect to any Multiemployer Plan, means the condition that such Plan
is insolvent within the meaning of Section 4245 of ERISA.



          “Intellectual Property” has the meaning assigned to such term in Section 3.05(b).



          “Intercreditor Agreement” means the Intercreditor Agreement, substantially in the form
of Exhibit H, between the Administrative Agent on behalf of the Secured Parties and the
trustee under the Note Documents on behalf of the holders of the Senior Secured Notes, as in effect
on the date hereof, and as amended, modified, restated or supplemented from time to time.



          “Interest Election Request” means a request by a Borrower to convert or continue a
Revolving Borrowing in accordance with Section 2.08.



          “Interest Expense” means, with reference to any period, total interest expense
(including that attributable to Capital Lease Obligations), net of interest income, of the Company
and its Subsidiaries for such period with respect to all outstanding Indebtedness of the Company
and its Subsidiaries (including all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers’ acceptance financing and net costs under Swap Agreements
in respect of interest rates to the extent such net costs are allocable to such period in
accordance with GAAP), calculated on a consolidated basis for the Company and its Subsidiaries for
such period in accordance with GAAP. For purposes of calculating the foregoing, Interest Expense
shall be determined on the basis of net payments made or received or accruals in accordance with
GAAP by the Company and its Subsidiaries in respect of interest rate Swap Agreements.









 



29


          “Interest Payment Date” means (a) with respect to any ABR Loan (other than a Swingline
Loan), the first Business Day of each fiscal month of the Company, (b) with respect to any
Eurocurrency Loan or CDOR Rate Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurocurrency Borrowing or a CDOR Rate
Borrowing with an Interest Period of more than three months duration, each day prior to the last
day of such Interest Period that occurs at intervals of three months duration after the first day
of such Interest Period, (c) with respect to any Swingline Loan, the day that such Loan is required
to be repaid and (d) with respect to any Loan, the Maturity Date.



          “Interest Period” means (a) with respect to any Eurocurrency Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically corresponding day in the
calendar month that is one, two, three or six months (or nine or twelve months if each affected
Lender consents) thereafter, as the Company may elect and (b) with respect to any CDOR Rate
Borrowing, the period commencing on the date of such Borrowing and ending on the date which is 30,
60 or 90 days thereafter; provided, that (i) if any Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended to the next succeeding Business
Day unless, in the case of a Eurocurrency Borrowing only, such next succeeding Business Day would
fall in the next calendar month, in which case such Interest Period shall end on the next preceding
Business Day and (ii) any Interest Period that commences on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the last calendar month
of such Interest Period) shall end on the last Business Day of the last calendar month of such
Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which
such Borrowing is made and thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.



          “Inventory” has the meaning assigned to such term in the applicable Security
Agreement.



          “Investment” has the meaning set forth in Section 6.04.



          “Investment Grade Account Debtor” means an Account Debtor that, at the time of
determination, has a corporate credit rating and/or family rating, as applicable, of BBB- or higher
by S&P or Baa3 or higher by Moody’s



          “Issuing Bank” means JPMCB and each other Lender approved by the Administrative Agent
and the Company (such approval not to be unreasonably withheld or delayed) that has agreed in its
sole discretion to act as an “Issuing Bank” hereunder, in each case in its capacity as the issuer
of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.06(j),
in each case so long as such Person shall remain an Issuing Bank hereunder. Any Issuing Bank may,
in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of such
Issuing Bank, in which case the term “Issuing Banks” shall include any such Affiliate with respect
to Letters of Credit issued by such Affiliate.



          “ITA” means the Income Tax Act (Canada), as amended.



          “Joinder Agreement” has the meaning assigned to such term in Section 5.15.









 



30


          “Joint Lead Arrangers” means J.P. Morgan Securities Inc. and Wachovia Capital Finance
Corporation (New England).



          “Judgment Currency” has the meaning assigned to such term in Section 9.20(a).



          “Judgment Currency Conversion Date” has the meaning assigned to such term in Section
9.20(a).



          “JPMCB” means JPMorgan Chase Bank, N.A., a national banking association, in its
individual capacity, and its successors.



          “LC Collateral Account” has the meaning assigned to such term in Section 2.06(k).



          “LC Disbursement” means a payment made by any Issuing Bank pursuant to a Letter of
Credit.



          “LC Exposure” means, at any time, the sum of the Dollar LC Exposure and the Canadian
Dollar LC Exposure.



          “Lenders” means (a) on the Effective Date, the Persons listed on the Commitment
Schedule and (b) thereafter, any other Person that shall have become a party hereto pursuant to an
Assignment and Assumption or pursuant to Section 2.09, other than any such Person that ceases to be
a party hereto pursuant to an Assignment and Assumption. Unless the context otherwise requires, the
term “Lenders” includes the Swingline Lender.



          “Letter of Credit” means (i) any letter of credit issued pursuant to this Agreement
and (ii) the Existing Letters of Credit.



          “Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the
interest of a vendor or a lessor under any conditional sale agreement, capital lease or title
retention agreement (or any financing lease having substantially the same economic effect as any of
the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call
or similar right of a third party with respect to such securities; provided, that,
in no event shall Liens be deemed to include (x) an operating lease or (y) customary rights of
first refusal and tag, drag and similar rights in joint venture agreements.



          “Loan Documents” means, collectively, this Agreement, any promissory notes issued
pursuant to this Agreement, any Letter of Credit applications, the Collateral Documents, the Loan
Guaranty, the Intercreditor Agreement and all other agreements, instruments, documents and
certificates identified in Section 4.01 executed and delivered to, or in favor of, the
Administrative Agent or any Lenders and including all other pledges, powers of attorney, consents,
assignments, contracts, notices, letter of credit agreements and all other written matter whether
heretofore, now or hereafter executed by or on behalf of any Loan Party, or any employee of any
Loan Party, and delivered to the Administrative Agent or any Lender in connection with the
Agreement or the transactions contemplated thereby. Any reference in this Agreement or any other
Loan Document to a Loan Document shall include all appendices,









 



31



exhibits or schedules thereto, and all amendments, restatements, supplements or other
modifications thereto, and shall refer to this Agreement or such Loan Document as the same may be
in effect at any and all times such reference becomes operative.



          “Loan Guaranty” means Article X of this Agreement.



          “Loan Parties” means, individually and collectively, (i) the Borrowers, (ii) the
Company’s Domestic Subsidiaries and Canadian Subsidiaries, in each case, that are Guarantors, and
(iii) any other Person who becomes a party to this Agreement pursuant to a Joinder Agreement and
their respective successors and assigns.



          “Loans” means the loans and advances made by the Lenders to the Borrowers pursuant to
this Agreement, including Revolving Loans, Swingline Loans and Protective Advances.



          “Management Agreement” means, collectively, (i) that certain amended and restated
management advisory agreement, dated as of September 30, 2004, and as amended by Amendment No. 1
thereto, dated as of March 16, 2006, and Amendment No. 2 thereto, dated as of the date hereof, by
and among Easton-Bell Sports LLC, RBG, the other subsidiaries of RBG party thereto, and Fenway
Partners, LLC and (ii) that certain management advisory agreement, dated as of September 30, 2004,
and as amended by Amendment No. 1 thereto, dated as of March 16, 2006, and Amendment No. 2 thereto,
dated as of the date hereof, by and among Easton-Bell Sports LLC, RBG, the other subsidiaries of
RBG party thereto and Fenway Partners Resources, Inc., in each case, as in effect on the date
hereof.



          “Management Fees” means fees in respect of any Significant Transaction and
out-of-pocket expenses and indemnification obligations payable under the Management Agreement (as
in effect on the date hereof) to the Principals; provided, that the aggregate amount of any
fees (exclusive of any expense reimbursement or payments under indemnification obligations) paid in
connection with any Significant Transaction shall not exceed the greater of (i) $1,000,000.00 and
(ii) 1.5% of the gross transaction value of such Significant Transaction.



          “Material Adverse Effect” means a material adverse effect on (a) the business, assets,
operations or condition, financial or otherwise, of the Company and its Subsidiaries taken as a
whole, (b) the ability of the Loan Parties, taken as a whole, to perform their obligations under
the Loan Documents, (c) any Collateral in excess of $5,000,000, or the Administrative Agent’s Liens
(on behalf of itself and the Secured Parties) on Collateral in excess of $5,000,000 or the priority
of such Liens, or (d) the rights of or benefits available to the Administrative Agent, any Issuing
Bank or the Lenders thereunder.



          “Material Indebtedness” means Indebtedness (other than the Loans and Letters of
Credit), or obligations in respect of one or more Swap Agreements, of any one or more of the
Company and its Subsidiaries in an aggregate outstanding principal amount exceeding $10,000,000.
For purposes of determining Material Indebtedness, the “obligations” of the Company or any
Subsidiary in respect of any Swap Agreement at any time shall be the maximum aggregate amount
(giving effect to any netting agreements) that the Company or such Subsidiary would be required to
pay if such Swap Agreement were terminated at such time.









 



32


          “Maturity Date” means (a) December 3, 2013, or (b) any earlier date on which the
Commitments are reduced to zero or otherwise terminated pursuant to the terms hereof.



          “Maximum Liability” has the meaning assigned to such term in Section 10.09.



          “Maximum Rate” has the meaning assigned to such term in Section 9.18.



          “Moody’s” means Moody’s Investors Service, Inc.



          “Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of
ERISA.



          “Net Income” means, for any Test Period, the consolidated net income (or loss) of the
Company and its Subsidiaries, determined on a consolidated basis in accordance with GAAP;
provided that there shall be excluded from Net Income (a) the income (or deficit) of any
Person accrued prior to the date it becomes a Subsidiary or is merged into or consolidated with the
Company or any of its Subsidiaries, (b) the income (or deficit) of any Person (other than a
Subsidiary) in which the Company or any of its Subsidiaries has an ownership interest, except to
the extent that any such income is actually received by the Company or such Subsidiary in the form
of dividends or similar distributions, (c) the undistributed earnings of any Subsidiary to the
extent that the declaration or payment of dividends or similar distributions by such Subsidiary is
not at the time permitted by the terms of any contractual obligation (other than under any Loan
Document) or Requirement of Law applicable to such Subsidiary, (d) any gains or losses realized
upon the sale or disposition of assets that are not sold or otherwise disposed of in the ordinary
course of business, (e) any extraordinary gain or loss, (f) any impairment charge or asset
write-off pursuant to FAS 142 and FAS 144 and the amortization of intangibles arising pursuant to
FAS 141, (g) any increase in cost of sales as a result of the step-up in inventory valuation and
any increase in amortization or depreciation or other non-cash charges resulting from the
application of purchase accounting in relation to any acquisition that is consummated after the
Effective Date, and (h) so long as the specified Person and its Subsidiaries file a consolidated
tax return, or are part of a consolidated group for tax purposes with a parent entity, the excess
of (x) the Consolidated Income Tax Expense for such period over (y) all tax payments payable for
such period by such Person and its Subsidiaries, including without duplication any such tax
payments payable for such period by such Person and its Subsidiaries to such parent entity under a
tax sharing agreement or arrangement.



          “Net Orderly Liquidation Value” means, with respect to Inventory of any Person, the
orderly liquidation value thereof as determined in a manner reasonably acceptable to the Collateral
Agent by an appraiser reasonably acceptable to the Collateral Agent, net of all costs of
liquidation thereof.



          “Net Proceeds” means, with respect to any event, (a) the cash proceeds received by or
on behalf of any Loan Party in respect of such event including (i) any cash received in respect of
any non-cash proceeds (including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise,
but excluding any interest payments), but only as and when received, (ii) in the case of a
casualty, insurance proceeds and (iii) in the case of a condemnation or similar









 



33



event, condemnation awards and similar payments, net of (b) the sum of (i) all reasonable fees
and out-of-pocket expenses paid to third parties (other than Affiliates) in connection with such
event, (ii) in the case of a sale, transfer or other disposition of an asset (including pursuant to
a sale and leaseback transaction or a casualty or a condemnation or similar proceeding), the amount
of all payments required to be made as a result of such event to repay Indebtedness (other than
Loans) secured by such asset or otherwise subject to mandatory prepayment as a result of such event
and (iii) the amount of all taxes paid (or reasonably estimated to be payable) and the amount of
any reserves established to fund contingent liabilities reasonably estimated to be payable, in each
case during the year that such event occurred or the next succeeding year and that are directly
attributable to such event (as determined reasonably and in good faith by a Financial Officer of
the Company).



          “Non-Consenting Lender” has the meaning assigned to such term in Section 9.02(e).



          “Non-Paying Guarantor” has the meaning assigned to such term in Section 10.10.



          “Note Documents” means any agreement or instrument governing or evidencing the Senior
Secured Notes.



          “Note Obligations” has the meaning assigned to such term in the Intercreditor
Agreement.



          “Note Obligations Payment Date” has the meaning assigned to such term in the
Intercreditor Agreement.



          “Note Priority Collateral” has the meaning assigned to such term in the Intercreditor
Agreement.



          “Note Representative” has the meaning assigned to such term in the Intercreditor
Agreement.



          “Notice of Intent to Cure” has the meaning specified in Section 5.01(d).



          “Obligated Party” has the meaning assigned to such term in Section 10.02.



          “Obligation Currency” has the meaning assigned to such term in Section 9.20(a).



          “Obligations” means all unpaid principal of and accrued and unpaid interest on
(including interest accruing after the maturity of the Loans and reimbursement obligations and
interest accruing after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding relating to any Loan Party, whether or not a claim
for post-filing or post-petition interest is allowed in such proceeding) the Loans, all LC
Exposure, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other
obligations of the Loan Parties to the Lenders or to any Lender, the Administrative Agent, the
Issuing Bank or any indemnified party arising under the Loan Documents.









 



34


          “Off-Balance Sheet Liability” of a Person means (a) any repurchase obligation or
liability of such Person with respect to accounts or notes receivable sold by such Person, (b) any
indebtedness, liability or obligation under any so-called “synthetic lease” transaction entered
into by such Person or (c) any indebtedness, liability or obligation arising with respect to any
other transaction which is the functional equivalent of or takes the place of borrowing but which
does not constitute a liability on the balance sheets of such Person (other than operating leases).



          “Offering Memorandum” means the Offering Memorandum dated as of November 20, 2009,
with respect to the Senior Secured Notes.



          “Operating Agreement” means the Fifth Amended and Restated Limited Liability Company
Agreement of Easton-Bell Sports, LLC, dated as of December 3, 2009, by and among Easton-Bell
Sports, LLC and its Members (as defined therein), as in effect on the Effective Date.



          “Other Connection Taxes” means, with respect to the Administrative Agent, any Lender,
any Issuing Bank or any other recipient of any payment to be made by or on account of any
obligation of any Loan Party hereunder or under any other Loan Document, Taxes imposed as a result
of a present or former connection between such recipient and the jurisdiction imposing such Tax
(other than connections arising from such recipient having executed, delivered, or become a party
to, performed its obligations or received payments under, received or perfected a security interest
under, sold or assigned an interest in any Loan or Loan Document, engaged in any other transaction
pursuant to, or enforced, any Loan Documents).



          “Other Taxes” means any and all present or future recording, stamp, court or
documentary Taxes and any other excise, transfer, sales, property, intangible, filing or similar
Taxes, charges or similar levies arising from any payment made under, from the execution, delivery,
performance, enforcement or registration of, or from the receipt or perfection of a security
interest under, or otherwise with respect to, any Loan Document.



          “Parent” means any direct or indirect parent company of Company.



          “Participant” has the meaning assigned to such term in Section 9.04.



          “Participant Register” has the meaning assigned to such term in Section 9.04(c).



          “Paying Guarantor” has the meaning assigned to such term in Section 10.10.



          “PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA
and any successor entity performing similar functions.



          “Permitted Acquisition” means the purchase or other acquisition (whether by merger,
amalgamation or otherwise) by the Company or any other Subsidiary of substantially all of the
Equity Interests in, or all or substantially all the assets of (or all or substantially all the
assets constituting a business unit, division, product line or line of business of), any other
Person; provided that (i) such purchase or acquisition was not preceded by, or consummated
pursuant to, an unsolicited tender offer or proxy contest initiated by or on behalf of the Company
or any Subsidiary, (ii) all transactions related thereto are consummated in accordance with
applicable law, (iii) the business of such Person, or such assets, as the case may be, constitute a
business









 



35



permitted by Section 6.03(b), (iv) with respect to each such purchase or other acquisition,
all actions required to be taken with respect to such newly created or acquired Subsidiary or
assets in order to satisfy the requirements of Section 5.15 shall have been taken (or arrangements
for the taking of such actions satisfactory to the Administrative Agent shall have been made) and
(v) at the time of and immediately after giving effect to any such purchase or other acquisition on
a Pro Forma Basis, (A) no Default or Event of Default shall have occurred and be continuing, (B) a
Cash Dominion Period shall not be continuing, (C) either (I)(x) the Fixed Charge Coverage Ratio for
the Test Period then in effect shall be, pro forma for the Permitted Acquisition, not less than
1.25 to 1.00 and (y) Aggregate Gross Availability shall not have been less than 25% of the
Aggregate Gross Borrowing Base at any time during the prior 90-day period or (II) Aggregate Gross
Availability shall not have been less than 50% of the Aggregate Gross Borrowing Base at any time
during the prior 90-day period and (D) for each Permitted Acquisition in which the Company or any
Subsidiary is paying aggregate consideration exceeding $40,000,000, the Company shall have
delivered to the Administrative Agent substantially concurrently with such purchase or acquisition
(I) a certificate of its Chief Financial Officer, in form and substance reasonably satisfactory to
the Administrative Agent, certifying that all the requirements set forth in this definition have
been satisfied with respect to such purchase or other acquisition, together with reasonably
detailed calculations demonstrating satisfaction of the requirement set forth in clause (v)(C)
above and (II) revised projections incorporating the effects of the Permitted Acquisition through
the longer of either 12 months from the date of such purchase or acquisition or the period
extending from the date of such purchase or acquisition to the Maturity Date.



          “Permitted Discretion” means a determination made in good faith and in the exercise of
reasonable (from the perspective of a secured asset-based lender) business judgment;
provided that any standard of eligibility or reserve established or modified by the
Collateral Agent shall have a reasonable relationship to circumstances, conditions, events or
contingencies which are the basis for such standard of eligibility or reserve, as reasonably
determined, without duplication, by the Collateral Agent in good faith.



          “Permitted Encumbrances” means:




     (a) Liens imposed by law for Taxes, assessments or governmental charges that are not
yet due and payable, or are being contested in compliance with Section 5.04;




     (b) landlords’, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and
other like Liens imposed by law, arising in the ordinary course of business and securing
obligations that are not overdue by more than 30 days or are being contested in compliance
with Section 5.04, but excluding, for greater certainty, any landlord hypothecs registered
in the province of Quebec;




     (c) pledges and deposits made in the ordinary course of business in compliance with
workers’ compensation, unemployment insurance and other social security laws or regulations
or undetermined and inchoated liens (for amounts not due) in connection with such
regulations;




     (d) deposits to secure (A) the performance of bids, trade contracts, leases, statutory
obligations, surety and customs bonds, performance bonds and other obligations









 



36



of a like nature, in each case in the ordinary course of business and (B) stay and
appeal bonds;




     (e) judgment liens in respect of judgments that do not constitute an Event of Default
under clause (k) of Section 7.01;




     (f) easements, survey exceptions, zoning restrictions, rights-of-way, encroachments,
other minor defects or irregularities in title, and similar encumbrances on real property
imposed by law or arising in the ordinary course of business that do not materially detract
from the value of the affected property, secure any monetary obligations or materially
interfere with the ordinary conduct of business of any of the Loan Parties or any of their
Subsidiaries;




     (g) banker’s liens, rights of setoff or similar rights and remedies as to deposit
accounts or other funds maintained with depository institutions; provided that,
except with respect to any deposit account or funds subject to the Lien of a Loan Document,
such deposit accounts or funds are not established or deposited for the purpose of providing
collateral for any Indebtedness and are not subject to restrictions on access by Loan
Parties or any of their Subsidiaries in excess of those required by applicable banking
regulations; and




     (h) Liens arising by virtue of precautionary Uniform Commercial Code financing
statement filings (or PPSA or similar filings under applicable law) regarding operating
leases entered into by the Loan Parties and their Subsidiaries in the ordinary course of
business;




     (i) Liens in favor of customs and revenue authorities arising by operation of law to
secure payment of custom duties in connection with the importation of goods;




     (j) Leases, licenses, subleases or sublicenses entered into in accordance with the
terms of Section 6.05 to others which do not (i) interfere in any material respect with the
business of the Company and its Subsidiaries, taken as a whole, or (ii) secure any
Indebtedness;




     (k) Any interest or title of a lessor, sublessor, licensor or sublicensor or secured by
a lessor’s, sublessor’s, licensor’s or sublicensor’s interest under leases or licenses
entered into by the Company or any of its Subsidiaries in the ordinary course of business
which could not reasonably be expected, either individually or in the aggregate, to have a
Material Adverse Effect;




     (l) Liens arising out of conditional sale, title retention, consignment or similar
arrangements for sale of goods entered into by the Company or any of its Subsidiaries in the
ordinary course of business;




     (m) Liens solely on any cash earnest money deposits made by Company or any of its
Subsidiaries in connection with any letter of intent or purchase agreement permitted
hereunder;









 



37



     (n) Liens that are contractual rights of setoff (i) relating to the establishment of
depository relations with banks not given in connection with the issuance of Indebtedness or
(ii) pertaining to pooled deposit and/or sweep accounts of the Company and/or any Subsidiary
of the Company to permit satisfaction of overdraft or similar obligations incurred in the
ordinary course of business of the Company and the Subsidiaries of the Company;




     (o) Liens on documents of title and the property covered thereby securing Indebtedness
in respect of commercial letters of credit;




     (p) Liens upon specific items of inventory or other goods and proceeds of the Company
or any of its Subsidiaries securing such Person’s obligations in respect of bankers’
acceptances issued or created for the account of such Person to facilitate the purchase,
shipment or storage of such inventory or other goods;




     (q) reservations and exceptions contained in or implied by statute in the original
disposition from a Governmental Authority of a property and grants made by a Governmental
Authority of interests so reserved or excepted which are not in the aggregate materially
adverse to the use, operation or value of such property; and




     (r) all rights reserved to or vested in any Governmental Authority by the terms of any
lease, license, franchise, grant or permit, or by any statutory provisions to terminate any
such lease, license, franchise, grant or permit or to require annual or periodic payments as
a condition of the continuance thereof or to distrain against or to obtain a lien on any
property in the event of a failure to make such annual or periodic payments,


provided that the term “Permitted Encumbrances” shall not include any Lien securing
Indebtedness.




          “Permitted Group” means any group of investors that is deemed to be a “person” (as
that term is used in Section 13(d)(3) of the Exchange Act and the rules of the SEC thereunder as in
effect on the Effective Date), by virtue of the Operating Agreement; provided,
that, no single Person (other than the Principals and their Related Parties) beneficially
owns (together with its Affiliates) more of the Equity Interests representing ordinary voting power
represented by the issued and outstanding Equity Interests in the Company that is beneficially
owned by such group of investors than is then collectively beneficially owned by the Principals and
their Related Parties in the aggregate.



          “Permitted Investments” means:




     (a) direct obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (with respect to investments
made by the Company or any Domestic Subsidiary) or Canada (with respect to investments made
by any Canadian Subsidiary) (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of such government), in each case maturing within one
year from the date of acquisition thereof;









 



38



     (b) investments in commercial paper maturing within 270 days from the date of
acquisition thereof and having, at such date of acquisition, the highest credit rating
obtainable from S&P or from Moody’s;




     (c) investments in certificates of deposit, banker’s acceptances and time deposits
maturing within 180 days from the date of acquisition thereof issued or guaranteed by or
placed with, and money market deposit accounts issued or offered by, any domestic office of
any commercial bank organized under the laws of the United States of America (with respect
to investments made by the Company or any Domestic Subsidiary), Canada (with respect to
investments made by any Canadian Subsidiary) or any state or province thereof, as
applicable, in each case, which has a combined capital and surplus and undivided profits of
not less than $500,000,000;




     (d) fully collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (a) above and entered into with a financial institution
satisfying the criteria described in clause (c) above;




     (e) money market funds that (i) (x) either comply with the criteria set forth in
Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940 or (y)
are money market mutual funds (as defined in National Instrument 81-102 Mutual Funds) that
are reporting issuers (as defined in Ontario securities law) in the Province of Ontario,
(ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least
$5,000,000,000; and




     (f) in the case of any Foreign Subsidiary or Canadian Subsidiary, other short-term
investments that are liquid and are customarily used by companies in the jurisdiction of
such Foreign Subsidiary or Canadian Subsidiary for cash management purposes.



          “Permitted Liens” means Liens permitted by Section 6.02.



          “Permitted Payments to Parent” means, without duplication as to amounts:




     (a) payments to any Parent to permit any Parent to pay reasonable accounting, legal and
administrative expenses of any Parent when due, to the extent such expenses are attributable
to the ownership and operation of the Company and its Subsidiaries;




     (b) for any taxable period in which the Company is a member of a group filing a
consolidated, combined, unitary or similar tax return with any Parent, payments to any
Parent in respect of any income Taxes that are due and payable by such group;
provided that such payments shall not exceed the lesser of (i) the amount of the
relevant tax (including any penalties and interest) that the Company would owe if the
Company were filing a separate tax return (or a separate consolidated or combined return
with its Subsidiaries that are members of the consolidated or combined group), taking into
account any usable carryovers and carrybacks of tax attributes (such as net operating
losses) of the Company and such Subsidiaries from other taxable years and (ii) the net
amount of the relevant tax that any Parent actually owes to the appropriate taxing
authority; provided, further, that any Tax payments received from the
Company shall be









 



39



paid over to the appropriate taxing authority within 60 days of that Parent’s receipt of
such Tax Payments or shall be refunded to the Company; and




     (c) payments to any Parent to permit that Parent to pay the professional fees and
expenses of any unsuccessful equity or debt offerings by that Parent or to permit a Parent
to pay the professional fees and expenses associated with the restructuring of its equity
ownership or employee based equity incentive or equity compensation programs.



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



          “Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA,
and in respect of which any Loan Party or any ERISA Affiliate is (or, if such plan were terminated,
would under Section 4062 or Section 4069 of ERISA be deemed to be) an “employer” as defined in
Section 3(5) of ERISA.



          “PPSA” means the Personal Property Security Act (Ontario), including the regulations
thereto, provided that, if perfection or the effect of perfection or non-perfection or the priority
of any Lien created hereunder on the Collateral is governed by the personal property security
legislation or other applicable legislation with respect to personal property security in effect in
a jurisdiction other than Ontario, “PPSA” means the Personal Property Security Act or such other
applicable legislation in effect from time to time in such other jurisdiction for purposes of the
provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.



          “Prime Rate” means the rate of interest per annum publicly announced from time to time
by JPMCB as its prime rate at its principal offices in New York City; each change in the Prime Rate
shall be effective from and including the date such change is publicly announced as being
effective.



          “Principals” means Fenway Partners, LLC, Ontario Teacher’s Pension Plan Board and
their respective affiliated investment partnerships.



          “Prior Claims” shall mean all Liens created by applicable law (in contrast with Liens
voluntarily granted) which rank or are capable of ranking prior or pari passu with the Liens
created by the Collateral Documents (or interests similar thereto under applicable law) including
for amounts owing for employee source deductions, vacation pay, goods and services taxes, sales
taxes, harmonized sales taxes, municipal taxes, workers’ compensation, Quebec corporate taxes,
pension fund obligations and overdue rents.



          “Pro Forma Basis” means, with respect to the particular test, such test shall be
calculated in accordance with Section 1.06.



          “Prohibited Transaction” has the meaning assigned to such term in Section 406 of ERISA
and Section 4975(f)(3) of the Code.



          “Protective Advance” has the meaning assigned to such term in Section 2.04.









 



40


          “Quebec Security Documents” means a deed of hypothec executed by any Loan Party from
time to time, and any other related documents, bonds, debentures or pledge agreements required to
perfect a Lien in favour of the Administrative Agent in the Province of Quebec.



          “RBG” means RBG Holdings Corp., a Delaware corporation.



          “Reference Rate” means the rate of interest most recently publicly announced or
established by JPMCB as its reference rate in effect for determining interest rates on Canadian
Dollar denominated commercial loans made in Canada and commonly known as “prime rate”; each change
in the Reference Rate shall be effective from and including the date such change is publicly
announced as being effective.



          “Refinancing” means the issuance of the Senior Secured Notes, the Transactions, the
payment in full of all obligations of under the Existing Credit Agreement and Existing Senior
Subordinated Notes, the issuance by Holdings of additional Equity Interests and the use of the
proceeds of such issuance to repay Indebtedness of Holdings under the Holdings Existing Credit
Agreement, the exchange of certain Indebtedness of Holdings under the Holdings Existing Credit
Agreement for Indebtedness under the Holdings Credit Agreement, the consummation of any other
transactions in connection with the foregoing, and the payment of fees and expenses incurred in
connection with any of the foregoing, each as in effect on the Effective Date, and the application
of proceeds therefrom.



          “Reinstated Borrower” has the meaning assigned to such term in Section 9.02(f).



          “Register” has the meaning assigned to such term in Section 9.04.



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



          “Removed Borrower” has the meaning assigned to such term in Section 9.02(f).



          “Rent or Collateral Access Reserve” means with respect to any facility, warehouse,
distribution center, regional distribution center or depot where any Inventory with a book value in
excess of $200,000 subject to Liens arising by operation of law is located and with respect to
which no Collateral Access Agreement is in effect, a reserve equal to (a) in the case of any leased
or subleased locations, three months’ rent at such facility, warehouse, distribution center,
regional distribution center or depot, and (b) in the case of any other such location, an amount
determined by the Collateral Agent in its Permitted Discretion in respect of the liabilities owed
to the applicable bailee or warehouseman.



          “Reorganization” means, with respect to any Multiemployer Plan, the condition that
such plan is in reorganization within the meaning of Section 4241 of ERISA.



          “Report” means reports prepared by the Collateral Agent or another Person showing the
results of appraisals, field examinations or audits with respect to the assets of any Loan Party
from information furnished by or on behalf of any Loan Party, after the Collateral









 



41



Agent has exercised its rights of inspection pursuant to this Agreement, which Reports may be
distributed to the Lenders by the Administrative Agent.



          “Reporting Frequency Increase Period” means any period (x) commencing at the
conclusion of the third Business Day out of five Business Days on which Aggregate Gross
Availability is less than the greater of (i) 20% of the Aggregate Gross Borrowing Base (not to
exceed 20% of the Total Commitment) and (ii) (A) during September, October and November,
$35,000,000 and (B) during any other month, $40,000,000 and (y) ending on the date thereafter on
which the Aggregate Gross Availability has been in excess of the amounts specified in clauses (i)
and (ii) above for a period of 30 consecutive days; provided, however, that a
Reporting Frequency Increase Period may be discontinued no more than twice in any period of twelve
(12) consecutive months.



          “Reportable Event” means any “reportable event,” as defined in Section 4043 of ERISA
or the regulations issued thereunder, other than those events as to which the notice requirement
referred to in Section 4043 of ERISA has been waived, with respect to a Plan (other than a Plan
maintained by an ERISA Affiliate that is considered an ERISA Affiliate only pursuant to subsection
(m) or (o) of Section 414 of the Code).



          “Required Lenders” means, at any time, Lenders having Credit Exposures and unused
Commitments representing more than 50% of the Aggregate Credit Exposures and unused Commitments at
such time.



          “Requirement of Law” means, with respect to any Person, (a) the charter, articles or
certificate of organization or incorporation and bylaws or other organizational or governing
documents of such Person and (b) any statute, law (including common law), treaty, rule, regulation,
code, ordinance, order, decree, writ, judgment, injunction or determination of any arbitrator or
court or other Governmental Authority (including Environmental Laws), in each case applicable to or
binding upon such Person or any of its property or to which such Person or any of its property is
subject.



          “Reserves” means, without duplication, the Rent or Collateral Access Reserve and any
other reserves which the Collateral Agent deems necessary, in its Permitted Discretion, to maintain
(including, without limitation, reserves for accrued and unpaid interest on the Secured
Obligations, Banking Services Reserves, reserves for consignee’s, warehousemen’s mortgages and
bailee’s charges, reserves for unpaid and accrued sales taxes, reserves for banker’s liens, rights
of setoff or similar rights and remedies as to deposit accounts, reserves for Swap Obligations,
reserves for contingent liabilities of any Loan Party, reserves for uninsured losses of any Loan
Party, reserves for uninsured, underinsured, un-indemnified or under-indemnified liabilities or
potential liabilities with respect to any litigation and reserves for taxes, fees, assessments, and
other governmental charges and Prior Claims) with respect to the Collateral or any Loan Party.



          “Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in the Company or any
Subsidiary, or any payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement, acquisition,









 



42



cancellation or termination of any such Equity Interests in the Company or any Subsidiary or
any option, warrant or other right to acquire any such Equity Interests in the Company or any
Subsidiary, or any other payment that has a substantially similar effect to any of the foregoing.



          “Revolving Canadian Facility Credit Exposure” means, with respect to any Canadian
Facility Lender at any time, the sum of the outstanding principal amount of such Canadian Facility
Lender’s Canadian Facility Loans, its Canadian LC Exposure, its Applicable Canadian Facility
Percentage of the Canadian Facility Swingline Exposure and its Applicable Canadian Facility
Percentage of the Canadian Facility Protective Advances at such time.



          “Revolving Credit Exposure” means the Revolving U.S. Facility Credit Exposure and the
Revolving Canadian Facility Credit Exposure, collectively.



          “Revolving Loan” means a Loan made pursuant to Section 2.01(a) or 2.01(b).



          “Revolving U.S. Facility Credit Exposure” means, with respect to any U.S. Facility
Lender at any time, the sum of the outstanding principal amount of such U.S. Facility Lender’s U.S.
Facility Loans, its Dollar LC Exposure, its Applicable U.S. Facility Percentage of the U.S.
Facility Swingline Exposure and its Applicable U.S. Facility Percentage of the U.S. Facility
Protective Advances at such time.



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



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



          “Secured Indebtedness” means, with respect to any specified Person on any Test Date,
the sum of the aggregate outstanding amount of Indebtedness of such Person and its Subsidiaries
secured by a Lien, determined on a consolidated basis and in accordance with GAAP as of the last
day of the most recent fiscal quarter for which internal financial statements are available
immediately preceding the Test Date.



          “Secured Leverage Ratio” means, with respect to any specified Person on any Test Date,
the ratio, on a pro forma basis, of Secured Indebtedness to EBITDA of such Person and its
Subsidiaries for the most recently ended four fiscal quarters for which internal financial
statements are available immediately proceeding the Test Date.



          “Secured Obligations” means all Obligations, together with all (i) Banking Services
Obligations and (ii) Swap Obligations owing to one or more counterparties that are Lenders or
Affiliates of Lenders at the time that such Swap Obligations are incurred; provided that
(a) within 15 days of the later of the Effective Date and the time that any transaction relating to
such Swap Obligation is executed, the Lender party thereto (other than JPMCB) shall have delivered
written notice to the Administrative Agent that such a transaction has been entered into and that
it constitutes a Secured Obligation entitled to the benefits of the Collateral Documents and (b)
Banking Services Obligations and Swap Obligations (relating to interest rates or currencies) will
constitute Secured Obligations only to the extent such obligations, at the time of incurrence, are
not prohibited by the terms of the Intercreditor Agreement.









 



43


          “Secured Parties” has the meaning assigned to such term in the U.S. Security
Agreement.



          “Security Agreement” means, as the context may require, any U.S. Security Agreement,
any Canadian Security Agreement or any Quebec Security Documents, and “Security Agreements”
means all U.S. Security Agreements, Canadian Security Agreements and Quebec Security Documents.



          “Senior Secured Notes” means (a) the senior secured notes due 2016 issued by the
Company on the Effective Date in a public offering or in a Rule 144A or other private placement and
(b) any substantially identical senior notes that are registered under the Securities Act of 1933,
as amended, and issued in exchange for the senior notes described in clause (a) of this definition.



          “Settlement” has the meaning assigned to such term in Section 2.05(d).



          “Settlement Date” has the meaning assigned to such term in Section 2.05(d).



          “Significant Transaction” means any recapitalization, restructuring, refinancing,
financing, merger, acquisition, consolidation or disposition (including the sale of all or a
substantial portion of the assets or equity of any Person).



          “Specified Change of Control” means a “Change of Control” (or other defined term
having a similar purpose) as defined in the Note Documents.



          “Specified Event of Default” means (a) any Event of Default pursuant to clauses (a),
(b), (h), (i) or (j) of Section 7.01 or (b) an Event of Default triggered by non-compliance with
the requirements of Section 5.01(g) or Section 6.12.



          “Specified Reserves” means the Dilution Reserve and Rent or Collateral Access Reserve.



          “Specified Transactions” means (a) asset dispositions with an aggregate fair market
value equal to or in excess of $10,000,000, (b) an Investment (by merger or otherwise) in any
Subsidiary (or any Person which becomes a Subsidiary) or (c) an acquisition of Property which
constitutes all or substantially all of an operating unit of a business.



          “Spot Selling Rate” means, on any date, as determined by the Administrative Agent, the
spot selling rate posted by Reuters on its website for the sale of the applicable currency for
Dollars at approximately 11:00 a.m., London time, two Business Days prior to such date (the
“Applicable Quotation Date”); provided that if, for any reason, no such spot rate
is being quoted, the spot selling rate shall be determined by reference to such publicly available
service for displaying exchange rates as may be selected by the Administrative Agent, or, in the
event no such service is selected, such spot selling rate shall instead be the rate determined by
the Administrative Agent as the spot rate of exchange in the market where its foreign currency
exchange operations in respect of the applicable currency are then being conducted, at or about
11.00 a.m. London time, on the Applicable Quotation Date for the purchase of the relevant currency
for delivery two Business Days later.









 



44


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



          “Subordinated Indebtedness” of a Person means any Indebtedness of such Person the
payment of which is subordinated to payment of the Secured Obligations to the written satisfaction
of the Administrative Agent.



          “Subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity the accounts of
which would be consolidated with those of the parent in the parent’s consolidated financial
statements if such financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50% of the ordinary
voting power or, in the case of a partnership, more than 50% of the general partnership interests
are, as of such date, owned, controlled or held, or (b) the management of which is, as of such
date, otherwise controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent. Unless otherwise specified, “Subsidiary” means
any direct or indirect subsidiary of the Company.



          “Successor Collateral Agent” has the meaning assigned to such term in Section 8.02.



          “Supermajority Lenders” means, at any time, Lenders having Credit Exposures and unused
Commitments representing at least 66 2/3% of the Aggregate Credit Exposure and unused Commitments
at such time.



          “Swap Agreement” means any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk or value or any
similar transaction or any combination of these transactions; provided that no phantom
stock or similar plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Company or the Subsidiaries shall be a
Swap Agreement.



          “Swap Obligations” of a Person means any and all obligations of such Person, whether
absolute or contingent and howsoever and whensoever created, arising, evidenced or









 



45



acquired (including all renewals, extensions and modifications thereof and substitutions
therefor), under (a) any and all Swap Agreements, and (b) any and all cancellations, buy backs,
reversals, terminations or assignments of any Swap Agreement transaction.



          “Swingline Exposure” means, the U.S. Facility Swingline Exposure and Canadian Facility
Swingline Exposure, collectively.



          “Swingline Lender” means JPMorgan Chase Bank, N.A., in its capacity as lender of
Swingline Loans hereunder.



          “Swingline Loan” means a Loan made pursuant to Section 2.05.



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



          “Test Date” means the last day of the most recently ended Test Period.



          “Test Period” means, at any time, the most recent period of 12 consecutive fiscal
months of the Company ended on or prior to such time (taken as one accounting period) in respect of
which financial statements for each fiscal month, fiscal quarter or fiscal year in such period
have been (or were required to have been) delivered pursuant to Section 5.01(a), 5.01(b) or
5.01(c), as applicable.



          “Title Company” means a title insurer or title insurance agent which shall be
reasonably acceptable to the Administrative Agent and qualified to issue title insurance as
required by the Administrative Agent.



          “Total Canadian Facility Commitment” means, at any time, the aggregate amount of the
Canadian Facility Commitments as in effect at such time.



          “Total Commitment” means, at any time, the aggregate amount of the Commitments as in
effect at such time.



          “Total Indebtedness” means, with respect to any specific Person on any Test Date, the
sum of the aggregate outstanding amount of Indebtedness of such Person and its Subsidiaries,
determined on a consolidated basis in accordance with GAAP as of the last day of the most recent
fiscal quarter for which internal financial statements are available immediately preceding the Test
Date.



          “Total Leverage Ratio” means, with respect to any specified Person on any Test Date,
the ratio, on a pro forma basis, of Total Indebtedness to EBITDA of such Person and its
Subsidiaries for the most recently ended four fiscal quarter period for which internal financial
statements are available immediately preceding the Test Date.



          “Total U.S. Facility Commitment” means, at any time, the aggregate amount of the U.S.
Facility Commitments as in effect at such time.









 



46


          “Transactions” means the execution, delivery and performance by the Loan Parties of
this Agreement and the other Loan Documents to which they are party, the borrowing of Loans and
other credit extensions, the use of the proceeds thereof, the continuation or issuance of Letters
of Credit hereunder and the creation and perfection of the Liens created by the Collateral
Documents.



          “Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the
Adjusted Eurocurrency Rate, U.S. Alternate Base Rate, CDOR Rate or Canadian Alternate Base Rate.



          “UCC” means the Uniform Commercial Code as in effect from time to time in the State of
New York or any other state the laws of which are required to be applied in connection with the
issue of perfection of security interests.



          “Unliquidated Obligations” means, at any time, any Secured Obligations (or portion
thereof) that are contingent in nature or unliquidated at such time, including any Secured
Obligation that is: (i) an obligation to reimburse a bank for drawings not yet made under a letter
of credit issued by it; (ii) any other obligation (including any guarantee) that is contingent in
nature at such time; or (iii) an obligation to provide collateral to secure any of the foregoing
types of obligations.



          “U.S.” means the United States of America.



          “U.S. Alternate Base Rate” means, for any day, a rate per annum equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1% and (c) the Adjusted Eurocurrency Rate for a one month Interest Period on
such day (or if such day is not a Business Day, the immediately preceding Business Day)
plus 1%, provided that, for the avoidance of doubt, the Adjusted Eurocurrency Rate
for any day shall be based on the rate appearing on the Libor Reuters Screen LIBOR01 Page (or on
any successor or substitute page of such page) at approximately 11:00 a.m. London time on such day.
Any change in the U.S. Alternate Base Rate due to a change in the Prime Rate, the Federal Funds
Effective Rate or the Adjusted Eurocurrency Rate shall be effective from and including the
effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted
Eurocurrency Rate, respectively.



          “U.S. Borrowing Base” means, at any time, an amount equal to the sum of (a) the
product of (i) 85% multiplied by (ii) the U.S. Loan Parties’ Eligible Accounts at such time
minus the Accounts Reserves related to the U.S. Loan Parties, plus (b) the lesser
of (i) the product of (x) 70% multiplied by (y) the U.S. Loan Parties’ Eligible Inventory, valued
at the lower of cost or market value, determined on a first-in-first-out basis, at such time and
(ii) the product of 85% multiplied by the Net Orderly Liquidation Value percentage identified in
the most recent inventory appraisal ordered by the Collateral Agent multiplied by the U.S. Loan
Parties Eligible Inventory, valued at the lower of cost or market value, determined on a
first-in-first-out basis, at such time plus (c) the lesser of (i) the product of (x) 70%
multiplied by (y) the U.S. Loan Parties’ Eligible Letter of Credit Inventory, valued at the lower
of cost or market value, determined on a first-in-first-out basis, at such time and (ii) the
product of 85% multiplied by the Net Orderly









 



47



Liquidation Value percentage identified in the most recent inventory appraisal ordered by the
Collateral Agent multiplied by the U.S. Loan Parties Eligible Letter of Credit Inventory, valued at
the lower of cost or market value, determined on a first-in-first-out basis, at such time
minus without duplication of any Reserves of the U.S. Loan Parties accounted for in clause
(b) above, Reserves related to the Eligible Letter of Credit Inventory of the U.S. Loan Parties,
plus (d) U.S. Loan Parties’ cash and cash equivalents (provided that such cash and cash
equivalents shall be subject to special blocked account arrangements with such accounts to be held
at the Administrative Agent) minus (e) without duplication, Reserves related to the U.S.
Loan Parties established by the Collateral Agent in its Permitted Discretion.



          The Collateral Agent may, in its Permitted Discretion, adjust Reserves related to the U.S.
Loan Parties or reduce (or eliminate any restrictions it has imposed on) one or more of the other
elements used in determining standards of eligibility set forth in the respective definitions of
“Eligible Accounts”, “Eligible Inventory” and “Eligible Letter of Credit Inventory”, including
reserves with respect to sums that the respective U.S. Loan Parties are or will be required to pay
(such as sales, excise or similar taxes, assessments, insurance premiums, or, in the case of leased
or subleased assets, rents or other amounts payable under such leases or subleases as applicable)
and have not yet paid; provided, that, the Collateral Agent shall have provided the
Company five Business Days (or, during any Cash Dominion Period, three Business Days) prior written
notice thereof, setting forth in reasonable detail the basis therefor; and provided,
further, that (A) except in respect of taxes, the Collateral Agent may only establish or
increase a reserve or impose additional restrictions to standards of eligibility after the date
hereof based on an event, condition or other circumstance arising after the Effective Date, or
based on facts not known to the Collateral Agent as of the Effective Date; (B) any additional
restrictions to standards of eligibility and the amount of any new or increased reserves
established by the Collateral Agent shall have a reasonable relationship to the event, condition,
circumstance or fact that is the basis therefor; (C) to the extent the Collateral Agent may
establish additional, or revise existing, restrictions to standards of eligibility for Eligible
Accounts, Eligible Inventory or Eligible Letter of Credit Inventory so as to address any such
event, condition, circumstance or fact in a manner reasonably satisfactory to the Collateral Agent,
the Collateral Agent shall not establish or increase a reserve for the same purpose; (D) any such
establishment or increase in reserves or imposition of additional restrictions to standards of
eligibility shall become effective for purposes of the first U.S. Borrowing Base Certificate that
is delivered pursuant to Section 5.01(g) at least five Business Days after the date of receipt by
the Company of such written notice; and (E) any such establishment or increase in reserves or
imposition of additional restrictions to standards of eligibility shall be removed if the
Collateral Agent has determined in its Permitted Discretion that the event, condition or other
matter that is the basis for such establishment or increase in reserves or imposition of additional
restrictions to standards of eligibility no longer exists. The Collateral Agent may, in its
Permitted Discretion, adjust Reserves related to the U.S. Loan Parties or reduce one or more of the
other elements used in computing the U.S. Borrowing Base, with any such changes to be effective
five days (or, during any Cash Dominion Period, three days) after delivery of notice thereof to the
Company and the Lenders. The U.S. Borrowing Base shall be determined by reference to the U.S.
Borrowing Base Certificate most recently delivered to the Collateral Agent pursuant to Section
5.01(g), subject to adjustments and changes made by the Collateral Agent in its Permitted
Discretion as provided above. Upon the disposition of a U.S. Loan Party, or a sale of all or
substantially all of the assets of a U.S. Loan Party, the Company shall promptly give the









 



48



Collateral Agent written notice of such disposition together with such information as shall be
required for the Collateral Agent to adjust the U.S. Borrowing Base to reflect such disposition.



          “U.S. Borrowing Base Certificate” means a certificate, signed and certified as
accurate and complete by a Financial Officer of the Company, in substantially the form of
Exhibit C-2 or another form which is acceptable to the Collateral Agent in its reasonable
discretion.



          “U.S. Collection Account” has the meaning assigned to such term in the U.S. Security
Agreement.



          “U.S. Facility” means the U.S. Facility Commitment and the provisions herein related
to the extensions of credit made thereunder.



          “U.S. Facility Availability” means, at any time, the U.S. Facility Maximum
minus the Aggregate U.S. Facility Credit Exposure.



          “U.S. Facility Commitment” means, as to each U.S. Facility Lender, the obligation of
such U.S. Facility Lender to make Revolving Loans and to acquire participations in Dollar Letters
of Credit hereunder, expressed as an amount representing the maximum aggregate amount of such
Lender’s Revolving U.S. Facility Credit Exposure hereunder, as such commitment may be (a) reduced
from time to time pursuant to Section 2.09, (b) increased from time to time pursuant to Section
2.09 and (c) reduced or increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04. The initial amount of each Lender’s U.S. Facility Commitment is set forth
on the Commitment Schedule or in the Assignment and Assumption pursuant to which such Lender shall
have assumed its U.S. Facility Commitment. The initial aggregate amount of the Total U.S. Facility
is $250,000,000.



          “U.S. Facility Lender” means (a) on the Effective Date, the Lenders designated as
having U.S. Facility Commitments on the Commitment Schedule under the heading “U.S. Facility
Lenders” and (b) thereafter, the Lenders from time to time holding Loans made pursuant to U.S.
Facility Commitments or holding U.S. Facility Commitments, after giving effect to any assignments
thereof permitted by Section 9.04(b).



          “U.S. Facility Loan” means a Revolving Loan under the U.S. Facility.



          “U.S. Facility Maximum” means, at any time, the lesser of (a) the U.S. Facility
Commitment minus the Aggregate Canadian Facility Credit Exposure and (b) the U.S. Borrowing
Base.



          “U.S. Facility Protective Advance” has the meaning assigned to such term in Section
2.04.



          “U.S. Facility Swingline Exposure” means, at any time, the aggregate principal amount
of all U.S. Facility Swingline Loans outstanding at such time. The U.S. Facility Swingline
Exposure of any U.S. Facility Lender at any time shall be its Applicable U.S. Facility Percentage
of the U.S. Facility Swingline Exposure at such time.









 



49


          “U.S. Facility Swingline Loan” means a loan made under Section 2.05(a) that is
denominated in U.S. Dollars.



          “U.S. Gross Availability” means, at any time, the U.S. Gross Facility Maximum
minus the Aggregate U.S. Facility Credit Exposure.



          “U.S. Gross Borrowing Base” means the U.S. Borrowing Base without a reduction for
Specified Reserves related to the U.S. Loan Parties.



          “U.S. Gross Facility Maximum” means, at any time, the lesser of (a) the U.S. Facility
Commitment minus the Aggregate Canadian Facility Credit Exposure and (b) the U.S. Gross
Borrowing Base.



          “U.S. Guaranteed Obligations” has the meaning assigned to such term in Section 10.01.



          “U.S. Guarantor” means, individually and collectively, any Guarantor (including the
Company) organized under the laws of the United States.



          “U.S. Loan Party” means, individually and collectively, any Loan Party (including the
Company) organized under the laws of the United States.



          “U.S. Person” has the meaning assigned to such term by Section 7701(a)(30) of the
Code.



          “U.S. Security Agreement” means that certain U.S. Pledge and Security Agreement, dated
as of the date hereof, among the U.S. Loan Parties, the Company and the Administrative Agent, for
the benefit of the Administrative Agent and the Secured Parties, and any other pledge or security
agreement entered into, after the date of this Agreement by any other U.S. Loan Party (as required
by this Agreement or any other Loan Document), or any other Person, as the same may be amended,
restated or otherwise modified from time to time.



          “U.S. Tax Compliance Certificate” has the meaning assigned to such term in Section
2.17(f).



          “Wholly-Owned Subsidiary” means, when qualifying a Subsidiary, a Subsidiary of a
Person of which securities or other ownership interests representing 100% of the Equity Interests
(other than (i) directors’ or managers’ qualifying shares or (ii) shares issued to foreign
nationals to the extent required by applicable law) are, as of such date, owned, controlled or held
by such Person or one or more wholly-owned Subsidiaries of such Person or by such Person and one or
more wholly-owned Subsidiaries of such Person. Unless otherwise specified, “Wholly-Owned
Subsidiary” means a wholly-owned Subsidiary of the Company.



          “Withdrawal Liability” means withdrawal liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in
Part I of Subtitle E of Title IV of ERISA.









 



50


          SECTION 1.02 Classification of Loans and Borrowings. For purposes of this Agreement,
Loans may be classified and referred to by Class (e.g., a “Revolving Loan”), by Type (e.g., a
“Eurocurrency Loan”) or by Class and Type (e.g., a “Eurocurrency Revolving Loan”). Borrowings also
may be classified and referred to by Class (e.g., a “Revolving Borrowing” or “Borrowing of
Revolving Loans”), by Type (e.g., a “Eurocurrency Borrowing”) or by Class and Type (e.g., a
“Eurocurrency Revolving Borrowing” or a “Eurocurrency Borrowing of Revolving Loans”).



          SECTION 1.03 Terms Generally. The definitions of terms herein shall apply equally to
the singular and plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The
word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the
context requires otherwise (a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or other document as
from time to time amended, amended and restated, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person’s successors and assigns, (c) the
words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer
to this Agreement in its entirety and not to any particular provision hereof, (d) all references
herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and contract rights.



          SECTION 1.04 Accounting Terms; GAAP. Except as otherwise expressly provided herein,
all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in
effect from time to time, provided that, if the Borrowers notify the Administrative Agent
that the Borrowers request an amendment to any provision (including any definition) hereof to
eliminate the effect of any change occurring after the Effective Date in GAAP or in the application
thereof on the operation of such provision (or if the Administrative Agent notifies the Borrowers
that the Required Lenders request an amendment to any provision hereof for such purpose),
regardless of whether any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such notice shall have
been withdrawn or such provision amended in accordance herewith. In the event that the historical
accounting practices, systems or reserves relating to the components of the Aggregate Borrowing
Base or the Borrowing Base of any Borrower are modified in a manner that is adverse to the Lenders
in any material respect, the Borrowers will agree to maintain such additional reserves (for
purposes of computing the Aggregate Borrowing Base and the Borrowing Base of each Borrower) in
respect to the components of the Aggregate Borrowing Base and the Borrower Base of each Borrower
and make such other adjustments (which may include maintaining additional reserves, modifying the
advance rates or modifying the eligibility criteria for the components of the Aggregate Borrowing
Base and the Borrowing Base of each Borrower) as may be appropriate to eliminate the adverse
effects thereof. Notwithstanding any other provision contained herein, all terms of an accounting
or financial









 



51



nature used herein shall be construed, and all computations of amounts and ratios referred to
herein shall be made, without giving effect to any election under Statement of Financial Accounting
Standards 159 (or any other Financial Accounting Standard having a similar result or effect) to
value any Indebtedness or other liabilities of the Company or any Subsidiary at “fair value”, as
defined therein.



          SECTION 1.05 Currency Translations. (a) For purposes of this Agreement and the other
Loan Documents, where the permissibility of a transaction or determinations of required actions or
circumstances depend upon compliance with, or are determined by reference to, amounts stated in
Dollars, such amounts shall be deemed to refer to Dollars or Dollar Equivalents (but determined
according to the spot selling rates set forth in the Wall Street Journal on the Business Day
immediately preceding the date on which the transaction is consummated); provided that no
Default or Event of Default shall arise as a result of any limitation set forth in Dollars in
Section 6.01, 6.02 or 6.06 being exceeded solely as a result of changes in currency exchange rates
from those rates applicable at the time or times Indebtedness, Liens or sale and leaseback
transactions were initially consummated in reliance on the exceptions under such Sections. For
purposes of any determination under Section 6.04 or 6.05, the amount of each Investment,
disposition or other applicable transaction denominated in a currency other than Dollars shall be
translated into Dollars at the Spot Selling Rate on the date such Investment, disposition or other
transaction is consummated.



          (b) The Administrative Agent shall determine the Dollar Equivalent of (x) the Credit Exposure
(i) as of the end of each fiscal quarter of the Company, (ii) on or about the date of the related
notice requesting any extension of credit hereunder and (iii) on any other date, in its reasonable
discretion and (y) any other amount to be converted into Dollars in accordance with the provisions
hereof at the time of such conversion.



          SECTION 1.06 Pro Forma Calculations. (a) Notwithstanding anything to the contrary
herein, the Fixed Charge Coverage Ratio, Total Leverage Ratio and Secured Leverage Ratio for
purposes of any covenant herein shall be calculated in the manner prescribed by this Section 1.06
(regardless whether any such covenant references that such test shall be calculated on a “Pro Forma
Basis”).



          (b) In the event that since the beginning of the most recent 12-month period for which
internal financial statements of the Company are then available the Company or any Subsidiary since
the beginning of such period has incurred any Indebtedness that remains outstanding or repaid,
prepaid or redeemed any Indebtedness (other than ordinary working capital borrowings), or the
transaction giving rise to the need to calculate the Fixed Charge Coverage Ratio, Total Leverage
Ratio or Secured Leverage Ratio is an incurrence or repayment, prepayment or redemption of
Indebtedness, Interest Expense, Total Indebtedness, Secured Indebtedness and EBITDA for such period
shall be calculated after giving effect on a pro forma basis to such incurrence or repayment,
prepayment or redemption as if such Indebtedness was incurred or repaid on the first day of such
period, provided that, in the event of any such repayment of Indebtedness, EBITDA for such
period shall be calculated as if the Company or such Subsidiary had not earned any interest income
actually earned during such period in respect of the funds used to repay such Indebtedness.









 



52


          (c) In the event that since the beginning of the most recent 12-month period for which
internal financial statements of the Company are then available (1) a Specified Transaction has
occurred, (2) the transaction giving rise to the need to calculate the Fixed Charge Coverage Ratio,
Total Leverage Ratio or Secured Leverage Ratio is such a Specified Transaction, or (3) since the
beginning of such period any Person (that subsequently became a Subsidiary or was merged with or
into the Company or any Subsidiary since the beginning of such period) shall have made such a
Specified Transaction, EBITDA for such period shall be calculated after giving pro forma effect to
such Specified Transactions as if such Specified Transactions occurred on the first day of such
period.



          (d) If any Indebtedness bears a floating rate of interest and is being given pro forma effect,
the interest expense on such Indebtedness shall be calculated as if the interest rate in effect for
such floating rate of interest on the date of determination had been the applicable interest rate
for the entire period (taking into account any Swap Agreement applicable to such Indebtedness if
such Swap Agreement has a remaining term in excess of 12 months). In the event the Equity
Interests of any Subsidiary is sold during the period, the Company shall be deemed, for purposes of
clause (b) above, to have repaid during such period the Indebtedness of such Subsidiary to the
extent the Borrower and its continuing Subsidiaries are no longer liable for such Indebtedness
after such sale.



          (e) Whenever pro forma effect is to be given to a Specified Transaction, the pro forma
calculations shall be determined in good faith by the Chief Financial Officer of the Company and
may include operating expense reductions for such period attributable to the transaction to which
pro forma effect is being given (including, without limitation, operating expense reductions
attributable to execution or termination of any contract, reduction of costs related to
administrative functions, the termination of any employees or the closing (or the approval by the
Board of Directors of the closing) of any facility) that have been realized or for which all steps
necessary for the realization of which have been taken or are reasonably expected to be taken
following such transaction, provided, that such adjustments are set forth in an officers’
certificate which states (i) the amount of such adjustment or adjustments and (ii) that such
adjustment or adjustments are based on the reasonable good faith beliefs of the Chief Financial
Officer.



ARTICLE II




The Credits




          SECTION 2.01 Commitments. Subject to the terms and conditions set forth herein:



          (a) each U.S. Facility Lender agrees to make Revolving Loans to the Company in Dollars from
time to time during the Availability Period in an aggregate principal amount that will not result
in (i) such Lender’s Revolving U.S. Facility Credit Exposure exceeding such Lender’s U.S. Facility
Commitment or (ii) the Aggregate U.S. Facility Credit Exposure exceeding the lesser of (x) the
Total U.S. Facility Commitment and (y) the U.S. Borrowing Base, subject to the Administrative
Agent’s authority, in its sole discretion, to make Protective Advances pursuant to the terms of
Section 2.04; and









 



53


          (b) each Canadian Facility Lender agrees to make Revolving Loans to the Canadian Facility
Borrowers in Dollars or Canadian Dollars from time to time during the Availability Period in an
aggregate principal amount that will not result in (i) such Lender’s Revolving Canadian Facility
Credit Exposure exceeding such Lender’s Canadian Facility Commitment or (ii) the Aggregate Canadian
Facility Credit Exposure exceeding the lesser of (x) the Total Canadian Facility Commitment and (y)
the Canadian Borrowing Base plus U.S. Facility Availability, subject to the Administrative
Agent’s authority, in its sole discretion, to make Protective Advances pursuant to the terms of
Section 2.04.



          Within the foregoing limits and subject to the terms and conditions set forth herein, the
Borrowers may borrow, prepay and reborrow Revolving Loans.



          SECTION 2.02 Loans and Borrowings. (a) Each Loan (other than a Swingline Loan or
Protective Advance) shall be made as part of a Borrowing consisting of Revolving Loans of the same
Class, Currency and Type made by the applicable Lenders ratably in accordance with their respective
applicable Facility Commitments of the applicable Class. Any Protective Advance and any Swingline
Loan shall be made in accordance with the procedures set forth in Sections 2.04 and 2.05,
respectively. The failure of any Lender to make any Loan required to be made by it shall not
relieve any other Lender of its obligations hereunder; provided that the Commitments of the
Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans
as required.



          (b) Subject to Section 2.14, each Revolving Borrowing denominated in Dollars shall be
comprised entirely of ABR Loans or Eurocurrency Loans and each Revolving Borrowing denominated in
Canadian Dollars shall be comprised entirely of ABR Loans or CDOR Rate Loans as the Borrowers may
request in accordance herewith; provided that all Borrowings made on the Effective Date
must be made as ABR Borrowings but may be converted into Eurocurrency Borrowings or CDOR Rate
Borrowings, as applicable, in accordance with Section 2.08. Each Swingline Loan and each
Protective Advance shall be an ABR Loan. Each Lender at its option may make any Eurocurrency Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan;
provided that any exercise of such option shall not affect the obligation of the Borrowers
to repay such Loan in accordance with the terms of this Agreement.



          (c) At the commencement of each Interest Period for any Eurocurrency Revolving Borrowing or
CDOR Rate Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of
$100,000 or C$100,000, as applicable and not less than $1,000,000 or C$1,000,000, as applicable.
At the time that each ABR Revolving Borrowing is made, such Borrowing shall be in an aggregate
amount that is an integral multiple of $100,000 or C$100,000, as applicable and not less than
$500,000 or C$500,000, as applicable; provided that an ABR Borrowing may be in an aggregate
amount that is equal to the entire unused balance of the applicable Facility Commitment or that is
required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.06(f).
Each Swingline Loan shall be in an amount that is an integral multiple of $25,000 or C$25,000, as
applicable and not less than $100,000 or C$100,000, as applicable; provided that a
Swingline Loan may be in an aggregate amount that is equal to the entire unused amount of the
applicable Facility. Borrowings of more than one Type, Class and Currency may be outstanding at
the same time; provided that there shall not at any









 



54



time be more than a total of ten Eurocurrency Borrowings or CDOR Rate Borrowings outstanding.



          (d) Notwithstanding any other provision of this Agreement, the Borrowers shall not be entitled
to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with
respect thereto would end after the Maturity Date.



          SECTION 2.03 Requests for Revolving Borrowings. To request a Revolving Borrowing, the
applicable Borrower shall notify the Administrative Agent of such request either in writing
(delivered by hand or facsimile) in substantially the form of Exhibit F and signed by such
Borrower or by telephone (i) in the case of a CDOR Rate Borrowing denominated in Canadian Dollars,
not later than 1:00 p.m., New York City time, three Business Days before the date of the proposed
Borrowing, (ii) in the case of a Eurocurrency Borrowing denominated in Dollars, not later than 1:00
p.m., New York City time, three Business Days before the date of the proposed Borrowing or (iii) in
the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the day of the
proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be
confirmed promptly by hand delivery or facsimile to the Administrative Agent of a written Borrowing
Request substantially in the form of Exhibit F and signed by the applicable Borrower. Each
such telephonic and written Borrowing Request shall specify the following information in compliance
with Section 2.01:




     (i) the aggregate amount and Currency of the requested Borrowing and a breakdown of the
separate wires comprising such Borrowing;




     (ii) the date of such Borrowing, which shall be a Business Day;




     (iii) whether such Borrowing is to be denominated in Dollars or Canadian Dollars;




     (iv) whether such Borrowing is to be an ABR Borrowing, a Eurocurrency Borrowing or a
CDOR Rate Borrowing;




     (v) whether such Borrowing shall constitute a utilization of the U.S. Facility
Commitment or Canadian Facility Commitment;




     (vi) in the case of a Eurocurrency Borrowing or CDOR Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by the definition of
the term “Interest Period”;




     (vii) the location and number of the applicable Borrowers’ account to which funds are
to be disbursed, which shall comply with the requirements of Section 2.07; and




     (viii) that as of such date the conditions set forth in Sections 4.02(a), (b) and (c)
are satisfied.


If no election as to the Type of Revolving Borrowing is specified, then the requested Revolving
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any
requested Eurocurrency Revolving Borrowing or CDOR Rate Borrowing, then the Company








 



55


shall be deemed to have selected an Interest Period of one month’s duration (or 30 days for a CDOR
Rate Borrowing). Promptly following receipt of a Borrowing Request in accordance with this
Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount
of such Lender’s Loan to be made as part of the requested Borrowing.




          SECTION 2.04 Protective Advances. (a) Subject to the limitations set forth below,
the Administrative Agent is authorized by the Borrowers and the Lenders, from time to time in the
Administrative Agent’s sole discretion (but shall have absolutely no obligation to), to make (i)
Loans to the Company, on behalf of the U.S. Facility Lenders (each such Loan, a “U.S. Facility
Protective Advance”) and (ii) Loans to the Canadian Facility Borrowers, on behalf of the
Canadian Facility Lenders (each such Loan, a “Canadian Facility Protective Advance”),
which, in each case, the Administrative Agent, in its Permitted Discretion, deems necessary or
desirable (i) to preserve or protect the Collateral, or any portion thereof, (ii) to enhance the
likelihood of, or maximize the amount of, repayment of the Loans and other Obligations, or (iii) to
pay any other amount chargeable to or required to be paid by the Borrowers pursuant to the terms of
this Agreement, including payments of reimbursable expenses (including costs, fees, and expenses as
described in Section 9.03) and other sums payable under the Loan Documents (any of such Loans are
herein referred to collectively as “Protective Advances”); provided that, the
aggregate amount of Protective Advances outstanding at any time shall not at any time exceed 5% of
the Total Commitment (excluding the Commitment of any Defaulting Lender); provided,
further, that (A) the aggregate Revolving U.S. Facility Credit Exposure of all U.S.
Facility Lenders shall not exceed the Total U.S. Facility Commitment, (B) the aggregate Revolving
Canadian Facility Credit Exposure of all Canadian Facility Lenders shall not exceed the Total
Canadian Facility Commitment and (C) the Credit Exposure of any Lender shall not excede such
Lender’s Commitment. Protective Advances may be made even if the conditions precedent set forth in
Section 4.02 have not been satisfied. The Protective Advances shall be secured by the Liens in
favor of the Administrative Agent in and to the Collateral and shall constitute Obligations
hereunder. All Protective Advances shall be ABR Borrowings. For the avoidance of doubt, the
Administrative Agent may elect to make Protective Advances from either the U.S. Facility
Commitments or the Canadian Facility Commitments in its discretion and shall not be obligated to
make Protective Advances ratably as between the Facility Commitments. The Administrative Agent’s
authorization to make Protective Advances may be revoked at any time by the Required Lenders. Any
such revocation must be in writing and shall become effective prospectively upon the Administrative
Agent’s receipt thereof. At any time that there is sufficient Canadian Facility Availability or
U.S. Facility Availability, as applicable, and the conditions precedent set forth in Section 4.02
have been satisfied, the Administrative Agent may request the Lenders to make a Revolving Loan to
repay a Protective Advance. At any other time the Administrative Agent may require the Lenders to
fund their risk participations described in Section 2.04(b).



          (b) Upon the making of a Protective Advance by the Administrative Agent (whether before or
after the occurrence of a Default), each U.S. Facility Lender or Canadian Facility Lender, as
applicable, shall be deemed, without further action by any party hereto, to have unconditionally
and irrevocably purchased from the Administrative Agent without recourse or warranty, an undivided
interest and participation in such U.S. Facility Protective Advance or Canadian Facility Protective
Advance, as applicable, in proportion to its Applicable U.S. Facility Percentage or Applicable
Canadian Facility Percentage, as applicable. From and after the date, if









 



56



any, on which any Lender is required to fund its participation in any Protective Advance
purchased hereunder, the Administrative Agent shall promptly distribute to such Lender, such
Lender’s Applicable U.S. Facility Percentage or Applicable Canadian Facility Percentage, as
applicable, of all payments of principal and interest and all proceeds of Collateral received by
the Administrative Agent in respect of such Protective Advance.



          SECTION 2.05 Swingline Loans. (a) Subject to the terms and conditions set forth
herein, the Swingline Lender agrees to make Swingline Loans to the Borrowers, from time to time
during the Availability Period, in Dollars from the U.S. Facility Commitments and Canadian Dollars
from the Canadian Facility Commitments, in an aggregate principal amount at any time outstanding
that will not result in (i) the aggregate principal amount of all outstanding Swingline Loans
exceeding $25,000,000, (ii) the aggregate principal amount of outstanding Swingline Loans
denominated in Canadian Dollars exceeding the U.S. Dollar equivalent of $5,000,000, (iii) the sum
of the total Revolving U.S. Facility Credit Exposures of all U.S. Facility Lenders exceeding the
Total U.S. Facility Commitment, (iv) the sum of total Revolving Canadian Facility Credit Exposures
of all Canadian Facility Lenders exceeding the Total Canadian Facility Commitment, (v) the sum of
total Revolving Credit Exposure of all Lenders exceeding the Total Commitment, (vi) the sum of
Aggregate U.S. Facility Credit Exposure exceeding the lesser of (x) the Total U.S. Facility
Commitment and (y) the U.S. Borrowing Base, (vii) the sum of Aggregate Canadian Facility Credit
Exposure exceeding the lesser of (x) the Total Canadian Facility Commitment and (y) the Canadian
Borrowing Base plus U.S. Facility Availability, or (viii) the sum of Aggregate Credit
Exposure exceeding the lesser of (x) the Total Commitment and (y) the Aggregate Borrowing Base;
provided that the Swingline Lender shall not be required to make a Swingline Loan to
refinance an outstanding Swingline Loan. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrowers may borrow, prepay and reborrow Swingline Loans.



          (b) To request a Swingline Loan, the Borrowers shall notify the Administrative Agent of such
request by telephone (confirmed by facsimile), not later than 1:00 p.m., New York City time, on the
day of a proposed Swingline Loan. Each such notice shall be irrevocable and shall specify the
requested date (which shall be a Business Day) and amount and Currency of the requested Swingline
Loan. The Administrative Agent will promptly advise the Swingline Lender of any such notice
received from the Borrowers. The Swingline Lender shall make each Swingline Loan available to the
Borrowers by means of a credit to the general deposit account of the applicable Borrower with the
Swingline Lender (or, in the case of a Swingline Loan made to finance the reimbursement of an LC
Disbursement as provided in Section 2.06(e), by remittance to the relevant Issuing Bank, and in the
case of repayment of another Loan or fees or expenses as provided by Section 2.18(d), by remittance
to the Administrative Agent to be distributed to the Lenders) by 4:00 p.m., New York City time, on
the requested date of such Swingline Loan.



          (c) Upon the making of a Swingline Loan in Dollars (whether before or after the occurrence of
a Default and regardless of whether a Settlement has been requested with respect to such Swingline
Loan), each U.S. Facility Lender shall be deemed, without further action by any party hereto, to
have unconditionally and irrevocably purchased from the Swingline Lender without recourse or
warranty, an undivided interest and participation in such Swingline Loan in proportion to its
Applicable Percentage. Upon the making of a Swingline









 



57



Loan in Canadian Dollars (whether before or after the occurrence of a Default and regardless
of whether a Settlement has been requested with respect to such Swingline Loan), each Canadian
Facility Lender shall be deemed, without further action by any party hereto, to have
unconditionally and irrevocably purchased from the Swingline Lender without recourse or warranty,
an undivided interest and participation in such Swingline Loan in proportion to its Applicable
Percentage. The Swingline Lender may, at any time, require the Lenders to fund their
participations. From and after the date, if any, on which any Lender is required to fund its
participation in any Swingline Loan purchased hereunder, the Administrative Agent shall promptly
distribute to such Lender, such Lender’s Applicable Percentage of all payments of principal and
interest and all proceeds of Collateral received by the Administrative Agent in respect of such
Loan; provided that any such payment so remitted shall be repaid to the Swingline Lender if
and to the extent such payment is required to be refunded to the Borrowers for any reason.



          (d) The Administrative Agent, on behalf of the Swingline Lender, shall request settlement (a
“Settlement”) of all outstanding Swingline Loans with the applicable Lenders on at least a
weekly basis or on any earlier date that the Administrative Agent elects, by notifying such Lenders
of such requested Settlement by facsimile, telephone, or e-mail no later than 12:00 noon, New York
City time on the date of such requested Settlement (the “Settlement Date”). Each
applicable Lender (other than the Swingline Lender, in the case of the Swingline Loans) shall
transfer the amount of such Lender’s Applicable Percentage of the outstanding principal amount of
the applicable Swingline Loan or Swingline Loans with respect to which Settlement is requested to
the Administrative Agent, to such account of the Administrative Agent as the Administrative Agent
may designate, not later than 2:00 p.m., New York City time, on such Settlement Date. Settlements
may occur during the existence of a Default and whether or not the applicable conditions precedent
set forth in Section 4.02 have then been satisfied. Such amounts transferred to the Administrative
Agent shall be applied against the amounts of the Swingline Lender’s Swingline Loans and, together
with Swingline Lender’s Applicable Percentage of such Swingline Loan, shall constitute U.S Facility
Loans or Canadian Facility Loans, as applicable, of such Lenders, respectively. If any such amount
is not transferred to the Administrative Agent by any applicable Lender on such Settlement Date,
the Swingline Lender shall be entitled to recover such amount on demand from such Lender together
with interest thereon as specified in Section 2.07.



          SECTION 2.06 Letters of Credit. (a) General. Subject to the terms and
conditions set forth herein, the Borrowers may request the issuance of standby and documentary
letters of credit denominated in either Dollars or Canadian Dollars by an Issuing Bank for their
own account or for the account of any Subsidiary (provided, that Borrowers shall be a
co-applicant, and be jointly and severally liable, with respect to each such Letter of Credit
issued for the account of such Subsidiary) in a form reasonably acceptable to the Administrative
Agent and the Issuing Bank, at any time and from time to time during the Availability Period,
either under the U.S. Facility Commitments or under the Canadian Facility Commitments, it being
understood that all Canadian Dollar Letters of Credit shall be issued under the Canadian Facility
Commitments. For the avoidance of doubt, Letters of Credit issued hereunder, including the Dollar
Equivalent of Letters of Credit denominated in Canadian Dollars, shall constitute utilization under
the Commitments.









 



58


          (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. (i) To
request the issuance of a Letter of Credit (or the amendment, renewal or extension of an
outstanding Letter of Credit), the Borrowers shall deliver by hand or facsimile (or transmit by
electronic communication, if arrangements for doing so have been approved by the relevant Issuing
Bank of such Letter of Credit) to the relevant Issuing Bank and the Administrative Agent
(reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended,
renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which
shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply
with paragraph (d) of this Section), the Currency (which shall be Dollars or Canadian Dollars), the
amount of such Letter of Credit, the name of the account party (which shall be the one of the
Borrowers or a Subsidiary and a Borrower as co-applicants), the name and address of the beneficiary
thereof, whether such Letter of Credit is to be made under the U.S. Facility Commitments or the
Canadian Facility Commitments and such other information as shall be necessary to prepare, amend,
renew or extend such Letter of Credit. It is understood that the reinstatement of all or a portion
of a Letter of Credit in accordance with the terms thereof following a drawing thereunder shall not
constitute an amendment, renewal or extension of such Letter of Credit. If requested by such
Issuing Bank, the Borrowers also shall submit a letter of credit application on such Issuing Bank’s
standard form in connection with any request for a Letter of Credit. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms and conditions of
any form of letter of credit application or other agreement submitted by the Borrowers to, or
entered into by the Borrowers with, any Issuing Bank relating to any Letter of Credit, the terms
and conditions of this Agreement shall control.



          (ii) On the Effective Date, each Issuing Bank that has issued an Existing Letter of Credit
shall be deemed, without further action by any party hereto, to have granted to each Lender and
each Lender shall be deemed to have purchased from such Issuing Bank a participation in such
Existing Letter of Credit in accordance with paragraph (e) below. The applicable Issuing Banks and
the Lenders that were also party to the Existing Credit Agreement agree that concurrently with such
grant, the participations in the Existing Letters of Credit granted to such lenders under the
Existing Credit Agreement shall be automatically canceled without further action by any of the
parties thereto. On and after the Effective Date, each Existing Letter of Credit shall constitute
a Letter of Credit for all purposes hereof.



          (c) Limitations on Amounts. A Letter of Credit shall be issued, amended, renewed or
extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the
Borrowers shall be deemed to represent and warrant that), after giving effect to such issuance,
amendment, renewal or extension (i) the aggregate LC Exposure shall not exceed $25,000,000, (ii)
the Canadian Dollar LC Exposure shall not exceed the Dollar Equivalent of $5,000,000, (iii) the
aggregate amount of standby Letters of Credit shall not exceed $15,000,000, (iv) the total
Revolving U.S. Facility Credit Exposures shall not exceed the Total U.S. Facility Commitment, (v)
the total Revolving Canadian Facility Credit Exposures shall not exceed the Total Canadian Facility
Commitment, (vi) the Aggregate Credit Exposure shall not exceed the Total Commitment, (vii) the
Aggregate U.S. Facility Credit Exposure would not exceed the lesser of (x) the U.S. Borrowing Base
and (y) the Total U.S. Facility Commitment, (viii) the Aggregate Canadian Facility Credit Exposure
would not exceed the lesser of (x) the Canadian Borrowing Base plus U.S. Facility
Availability and (y) the Total Canadian Facility Commitment









 



59



and (ix) the Aggregate Credit Exposure would not exceed the lesser of (x) the Aggregate
Borrowing Base and (y) the Total Commitment.



          (d) Expiration Date. No Letter of Credit shall have a stated expiry date that is
later than the close of business on the earlier of (i) the date twelve months after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, twelve
months after the then-current expiration date of such Letter of Credit, so long as such renewal or
extension occurs within three months of such then-current expiration date) and (ii) the date that
is five Business Days prior to the Maturity Date; provided that any Letter of Credit with a
one-year tenor may provide for the renewal thereof for additional one year periods (which shall in
no event extend beyond the date referred to in clause (ii) above) under customary “evergreen”
provisions.



          (e) Participations. By the issuance of a Letter of Credit (or an amendment to a
Letter of Credit increasing the amount thereof), and without any further action on the part of any
Issuing Bank or the Lenders, (i) in the case of a Dollar Letter of Credit, the relevant Issuing
Bank hereby grants to each U.S. Facility Lender (other than the relevant Issuing Bank), and each
U.S. Facility Lender hereby acquires from such Issuing Bank, a participation in such Letter of
Credit equal to such Lender’s Applicable U.S. Facility Percentage, and (ii) in the case of a
Canadian Dollar Letter of Credit, the relevant Issuing Bank hereby grants to each Canadian Facility
Lender (other than the relevant Issuing Bank), and each Canadian Facility Lender hereby acquires
from such Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Applicable
Canadian Facility Percentage, of the aggregate amount available to be drawn under such Letter of
Credit. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and
unconditionally agrees to pay to the Administrative Agent, for the account of each relevant Issuing
Bank, such Lender’s Applicable U.S. Facility Percentage (in the case of a Dollar Letter of Credit)
and such Lender’s Applicable Canadian Facility Percentage (in the case of a Canadian Dollar Letter
of Credit) of each LC Disbursement made by such Issuing Bank and not reimbursed by the Borrowers on
the date due as provided in paragraph (f) of this Section 2.06, or of any reimbursement payment
required to be refunded to the Borrowers for any reason. Each U.S. Facility Lender and each
Canadian Facility Lender acknowledges and agrees that its obligation to acquire participations
pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall
not be affected by any circumstance whatsoever, including any amendment, renewal or extension of
any Letter of Credit or the occurrence and continuance of a Default or Event of Default or
reduction or termination of the U.S. Facility Commitment or Canadian Facility Commitment, and that
each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.



          (f) Reimbursement. If an Issuing Bank shall make any LC Disbursement in respect of a
Letter of Credit, the relevant Borrower shall reimburse such LC Disbursement by paying to the
Administrative Agent an amount equal to such LC Disbursement not later than 12:00 noon, New York
City time, on the date that such LC Disbursement is made, if the Borrowers shall have received
notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such
notice has not been received by the Borrowers prior to such time on such date, then not later than
12:00 noon, New York City time, on (i) the Business Day that the Borrowers receive such notice, if
such notice is received prior to 10:00 a.m., New York City time, on the day of receipt, or (ii) the
Business Day immediately following the day that the









 



60



Borrowers receive such notice, if such notice is not received prior to such time on the day of
receipt; provided, that the Borrowers may, subject to the conditions to borrowing set forth
herein, request in accordance with Section 2.03 or Section 2.05 that such payment be financed with
an ABR Revolving Borrowing or Swingline Loan of the Currency in which such Letter of Credit is
issued in an equivalent amount and, to the extent so financed, each Borrower’s obligation to make
such payment shall be discharged and replaced by the resulting ABR Revolving Borrowing or Swingline
Loan. If the Borrowers fail to make such payment when due, the Administrative Agent shall notify
each applicable Lender of the applicable LC Disbursement, the payment then due from the Borrowers
in respect thereof and such Lender’s Applicable Percentage thereof. Promptly following receipt of
such notice, each applicable Lender shall pay to the Administrative Agent its Applicable Percentage
of the payment then due from the Borrowers, in the same manner as provided in Section 2.07 with
respect to Loans made by such Lender (and Section 2.07 shall apply, mutatis mutandis, to the
payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the
relevant Issuing Bank, the amounts so received by it from the applicable Lenders. Promptly
following receipt by the Administrative Agent of any payment from the Borrowers pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the relevant Issuing Bank or,
to the extent that Lenders have made payments pursuant to this paragraph to reimburse such Issuing
Bank, then to such Lenders and such Issuing Bank, as their interests may appear. Any payment made
by a Lender pursuant to this paragraph to reimburse an Issuing Bank for any LC Disbursement (other
than the funding of an ABR Revolving Loan or a Swingline Loan as contemplated above) shall not
constitute a Loan and shall not relieve the Borrowers of their obligation to reimburse such LC
Disbursement.



          (g) Obligations Absolute. Each Borrower’s obligation to reimburse LC Disbursements as
provided in paragraph (f) of this Section shall be absolute, unconditional and irrevocable, and
shall be performed strictly in accordance with the terms of this Agreement under any and all
circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any
Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other
document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any
respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the
Issuing Banks under a Letter of Credit against presentation of a draft or other document that does
not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of
this Section, constitute a legal or equitable discharge of, or provide a right of setoff against,
such Borrower’s obligations hereunder. Neither the Administrative Agent, the Lenders nor the
Issuing Banks, nor any of their Related Parties, shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or
failure to make any payment thereunder (irrespective of any of the circumstances referred to in the
preceding sentence), or any error, omission, interruption, loss or delay in transmission or
delivery of any draft, notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the Issuing Banks;
provided that the foregoing shall not be construed to excuse the Issuing Banks from
liability to the Borrowers to the extent of any direct damages (as opposed to consequential or
special damages, claims in respect of which are hereby waived by the Borrowers to the extent
permitted by applicable law) suffered by the Borrowers that are caused by the Issuing Banks’
failure to exercise care when determining whether drafts and other documents presented under a
Letter of









 



61



Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence
of gross negligence or willful misconduct on the part of the Issuing Banks (as finally determined
by a court of competent jurisdiction), the Issuing Banks shall be deemed to have exercised the
requisite standard of care in each such determination. In furtherance of the foregoing and without
limiting the generality thereof, the parties agree that, with respect to documents presented which
appear on their face to be in substantial compliance with the terms of a Letter of Credit, the
Issuing Banks may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or information to the
contrary, or refuse to accept and make payment upon such documents if such documents are not in
strict compliance with the terms of such Letter of Credit.



          (h) Disbursement Procedures. The Issuing Bank shall, promptly following its receipt
thereof, examine all documents purporting to represent a demand for payment under a Letter of
Credit. The Issuing Bank shall promptly notify the Administrative Agent and the applicable
Borrower by telephone (confirmed by facsimile) of such demand for payment and whether the Issuing
Bank has made or will make an LC Disbursement thereunder; provided that any failure to give
or delay in giving such notice shall not relieve the Borrowers of their obligation to reimburse the
Issuing Bank and the Lenders with respect to any such LC Disbursement.



          (i) Interim Interest. If any Issuing Bank shall make any LC Disbursement, then,
unless the Borrowers shall reimburse such LC Disbursement in full on the date such LC Disbursement
is made, the unpaid amount thereof shall bear interest, for each day from and including the date
such LC Disbursement is made to, but excluding, the date that the Borrowers reimburse such LC
Disbursement, at the rate per annum then applicable to ABR Loans in the applicable currency;
provided that, if the Borrowers fail to reimburse such LC Disbursement when due pursuant to
paragraph (f) of this Section 2.06, then Section 2.13(d) shall apply. Interest accrued pursuant to
this paragraph shall be for the account of such Issuing Bank, except that interest accrued on and
after the date of payment by any Lender pursuant to paragraph (f) of this Section 2.06 to reimburse
such Issuing Bank shall be for the account of such Lender to the extent of such payment.



          (j) Replacement of the Issuing Bank. An Issuing Bank may be added, or an existing
Issuing Bank may be replaced or terminated, under this Agreement at any time by written agreement
among the Company, the Administrative Agent, the replaced or terminated Issuing Bank and the new or
successor Issuing Bank, as applicable. The Administrative Agent shall notify the Lenders of any
such addition, replacement or termination. At the time any such replacement or termination shall
become effective, the Company shall pay all unpaid fees accrued for the account of the Issuing Bank
being replaced or terminated. From and after the effective date of any such replacement or
addition, the new or successor Issuing Bank shall have all the rights and obligations of an Issuing
Bank under this Agreement with respect to Letters of Credit to be issued thereafter. References
herein to the term “Issuing Bank” shall be deemed to refer to each new Issuing Bank or to any
previous Issuing Bank, or to such new Issuing Bank and all previous Issuing Banks, as the context
shall require. After the replacement or termination of an Issuing Bank hereunder, the replaced or
terminated Issuing Bank shall remain a party hereto and shall continue to have all the rights and
obligations of an Issuing Bank under this Agreement with respect to any outstanding Letters of
Credit issued by it prior to such replacement or









 



62



termination, but shall not be required to issue any new Letters of Credit or to renew or
extend any such outstanding Letters of Credit.



          (k) Cash Collateralization. If either (i) an Event of Default shall have occurred and
be continuing and the Borrowers receive notice from the Administrative Agent or the Required
Lenders (or, if the maturity of the Loans has been accelerated, Lenders with LC Exposure
representing more than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, (ii) the aggregate amount of Revolving U.S. Facility Credit Exposure of
all U.S. Facility Lenders hereunder exceeds the Total U.S. Facility Commitment, (iii) the
aggregate amount of Revolving Canadian Facility Credit Exposure of all Canadian Facility Lenders
hereunder exceeds the Total Canadian Facility Commitment, or (iv) any of the other provisions of
this Agreement require cash collateralization, the Borrowers shall deposit within one Business Day
after notice from the Administrative Agent of the requirement thereof into an account established
and maintained on the books and records of the Administrative Agent, which account may be a
“securities account” (within the meaning of Section 8-501 of the UCC as in effect in the State of
New York), in the name of the Administrative Agent and for the benefit of the applicable Lenders
(the “LC Collateral Account”), an amount in immediately available funds in Dollars equal to
105% of the LC Exposure as of such date, converting the aggregate Canadian Dollar LC Exposure into
the Dollar Equivalent thereof as of such date, plus any accrued and unpaid interest
thereon; provided that the obligation to deposit such amount shall become effective
immediately, and such deposit shall become immediately due and payable, without demand or other
notice of any kind, upon the occurrence of any Event of Default described in paragraph (h) or (i)
of Section 7.01. Such deposits shall be held by the Administrative Agent as collateral for the LC
Exposure under this Agreement and for the payment and performance of the Secured Obligations, and
for this purpose the Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over the LC Collateral Account, the LC Collateral Account shall be
subject to a Deposit Account Control Agreement and the Borrowers hereby grant a security interest
to the Administrative Agent for the benefit of the Secured Parties in the LC Collateral Account and
in any financial assets (as defined in the UCC) or other property held therein. Other than any
interest earned on the investment of such deposits, which investments shall be made at the option
and sole discretion of the Administrative Agent and at the Borrowers’ risk and expense, such
deposits shall not bear interest. Interest or profits, if any, on such investments shall
accumulate in the LC Collateral Account. Moneys and financial assets in the LC Collateral Account
shall be applied by the Administrative Agent to reimburse the applicable Issuing Bank for LC
Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held
for the satisfaction of the reimbursement obligations of the Borrowers for the LC Exposure at such
time or, if the maturity of the Loans has been accelerated (but subject to the consent of Lenders
with LC Exposure representing more than 50% of the total LC Exposure), be applied to satisfy other
Secured Obligations. The Administrative Agent shall cause all such cash collateral (to the extent
not applied as aforesaid) to be returned to the Borrowers within three Business Days after (A) in
the case of clause (i) above, the applicable Event of Default shall have been cured or waived (so
long as no other Event of Default has occurred and is continuing at such time), (B) in the case of
clauses (ii) and (iii) above, the aggregate amount of Revolving U.S. Facility Credit Exposure of
all U.S. Facility Lenders or the aggregate amount of Revolving Canadian Facility Credit Exposure of
all Canadian Facility Lenders hereunder ceases to exceed the Total U.S. Facility Commitment or the
Total Canadian Facility Commitment, as applicable, for five consecutive









 



63



Business Days or (C) in the case of clause (iv) above, such cash collateral shall no longer be
required pursuant to the applicable provision hereof.



          (l) Reporting. Unless otherwise requested by the Administrative Agent, each Issuing
Bank shall (i) provide to the Administrative Agent copies of any notice received from the Borrowers
pursuant to Section 2.06(b) no later than the Business Day after receipt thereof and (ii) report in
writing to the Administrative Agent (A) on the first Business Day of each week, the activity for
each day during the immediately preceding week in respect of Letters of Credit issued by it,
including all issuances, extensions, amendments and renewals, all expirations and cancellations and
all disbursements and reimbursements, (B) on or prior to each Business Day on which such Issuing
Bank expects to issue, amend, renew or extend any Letter of Credit, the date of such issuance,
amendment, renewal or extension, whether such Letter of Credit is a trade, financial or performance
Letter of Credit, whether such Letter of Credit is a Dollar Letter of Credit or a Canadian Dollar
Letter of Credit and the aggregate face amount and Currency of the Letters of Credit to be issued,
amended, renewed or extended by it and outstanding after giving effect to such issuance, amendment,
renewal or extension (and whether the amount thereof changed), and no Issuing Bank shall be
permitted to issue, amend, renew or extend such Letter of Credit without first obtaining written
confirmation from the Administrative Agent that such issuance, amendment, renewal or extension is
then permitted by the terms of this Agreement, (C) on each Business Day on which such Issuing Bank
makes any LC Disbursement, the date of such LC Disbursement and the amount and Currency of such LC
Disbursement and (D) on any other Business Day, such other information as the Administrative Agent
shall reasonably request, including but not limited to prompt verification of such information as
may be requested by the Administrative Agent.



          SECTION 2.07 Funding of Borrowings. (a) Each Lender shall make each Loan to be made
by it hereunder on the proposed date thereof by wire transfer of immediately available funds by
3:00 p.m., New York City time, to the account of the Administrative Agent most recently designated
by it for such purpose by notice to the Lenders in an amount equal to such Lender’s Applicable U.S.
Facility Percentage or Applicable Canadian Facility Percentage, as the case may be;
provided that, Swingline Loans shall be made as provided in Section 2.05. The
Administrative Agent will make such Loans available to the applicable Borrower by promptly
crediting the amounts so received, in like funds, to the Funding Account(s) or such other account
as may be specified in a Borrowing Request; provided that ABR Revolving Loans made to
finance the reimbursement of (i) an LC Disbursement as provided in Section 2.06(f) shall be
remitted by the Administrative Agent to the Issuing Bank and (ii) a Protective Advance shall be
retained by the Administrative Agent.



          (b) Unless the Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the Administrative Agent
such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has
made such share available on such date in accordance with paragraph (a) of this Section and may, in
reliance upon such assumption and in its sole discretion, make available to the Borrowers a
corresponding amount. In such event, if a Lender has not in fact made its share of the applicable
Borrowing available to the Administrative Agent, then the applicable Lender and the applicable
Borrower agree (severally and not jointly) to pay to the Administrative Agent forthwith on demand
such corresponding amount with interest









 



64



thereon, for each day from and including the date such amount is made available to such
Borrower, to but excluding the date of payment to the Administrative Agent, at (i) in the case of
such Lender, the greater of either the Federal Funds Effective Rate (in the case of
Dollar-denominated amounts) or the Administrative Agent’s cost of funds (in the case of Canadian
Dollar-denominated amounts) and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation or (ii) in the case of the Borrowers, the interest
rate applicable to ABR Loans in the applicable currency. If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender’s Loan included in such
Borrowing.



          SECTION 2.08 Interest Elections. (a) Each Revolving Borrowing initially shall be of
the Type specified in the applicable Borrowing Request and, in the case of a Eurocurrency Revolving
Borrowing or CDOR Rate Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request or as otherwise provided in Section 2.03. Thereafter, the Borrowers may elect to
convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a
Eurocurrency Borrowing or a CDOR Rate Borrowing, may elect Interest Periods therefor, all as
provided in this Section; provided, however, that a Borrowing denominated in one
Currency may not be converted to a Borrowing in a different Currency. Subject to the foregoing,
the Borrowers may elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the
Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing. This Section shall not apply to Swingline Borrowings or Protective Advances,
which may not be converted or continued.



          (b) To make an election pursuant to this Section, the Borrowers shall notify the
Administrative Agent of such election by telephone by the time that a Borrowing Request would be
required under Section 2.03 if such Borrower was requesting a Revolving Borrowing of the Type
resulting from such election to be made on the effective date of such election. Each such
telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or facsimile to the Administrative Agent of a written Interest Election Request
substantially in the form of Exhibit G signed by the applicable Borrower.



          (c) Each telephonic and written Interest Election Request shall specify the following
information in compliance with Section 2.02:




     (i) the Borrower and the Borrowing to which such Interest Election Request applies and,
if different options are being elected with respect to different portions thereof, the
portions thereof to be allocated to each resulting Borrowing (in which case the information
to be specified pursuant to clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);




     (ii) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;




     (iii) whether the resulting Borrowing is to be an ABR Borrowing, a Eurocurrency
Borrowing or a CDOR Rate Borrowing; and









 



65



     (iv) if the resulting Borrowing is a Eurocurrency Borrowing or a CDOR Rate Borrowing,
the Interest Period to be applicable thereto after giving effect to such election, which
shall be a period contemplated by the definition of the term “Interest Period” and permitted
under Section 2.02(d).


If any such Interest Election Request requests a Eurocurrency Borrowing or a CDOR Rate Borrowing
but does not specify an Interest Period, then the applicable Borrower shall be deemed to have
selected an Interest Period of one month’s duration for a Eurocurrency Borrowing or 30 days for a
CDOR Rate Borrowing.




          (d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall
advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.



          (e) If the applicable Borrower fails to deliver a timely Interest Election Request with
respect to a Eurocurrency Revolving Borrowing prior to the end of the Interest Period applicable
thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest
Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary
provision hereof, if an Event of Default has occurred and is continuing and the Administrative
Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event
of Default is continuing (i) no outstanding Revolving Borrowing may be converted to or continued as
a Eurocurrency Borrowing and (ii) unless repaid, each Eurocurrency Revolving Borrowing shall be
converted to an ABR Borrowing at the end of the Interest Period applicable thereto.



          (f) If the Borrower fails to deliver a timely Interest Election Request with respect to a CDOR
Rate Borrowing prior to the end of the Interest Period applicable thereto, then, unless such
Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing and the Administrative Agent, at the request of the Required
Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no
outstanding Borrowing may be converted to or continued as a CDOR Rate Borrowing and (ii) unless
repaid, each CDOR Rate Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.



          SECTION 2.09 Termination and Reduction of Commitments; Increase in Commitments . (a)
Unless previously terminated, all Commitments shall terminate on the Maturity Date.



          (b) The Borrowers may at any time terminate the Commitments upon (i) the payment in full of
all outstanding Loans, together with accrued and unpaid interest thereon and on any Letters of
Credit, (ii) the cancellation and return of all outstanding Letters of Credit (or alternatively,
with respect to each such Letter of Credit, the furnishing to the Administrative Agent of a cash
deposit (or at the discretion of the Administrative Agent a back up standby letter of credit
reasonably satisfactory to the Administrative Agent) equal to 105% of the LC Exposure as of such
date), (iii) the payment in full of the accrued and unpaid fees, and (iv) the payment in









 



66



full of all reimbursable expenses and other Obligations (other than Unliquidated Obligations)
together with accrued and unpaid interest thereon.



          (c) The Borrowers may from time to time reduce the Commitments (and each Facility Commitment);
provided, that (i) each reduction of the Commitments (and of either Facility Commitment)
shall be in an amount that is an integral multiple of $1,000,000 and not less than $10,000,000,
(ii) each reduction of the Commitments shall be pro rata as between the Facilities and (iii) the
Borrowers shall not reduce the Commitments (or either Facility Commitment) if, after giving effect
to any concurrent prepayment of the Loans in accordance with Section 2.10 or Section 2.11, (A) the
Aggregate Credit Exposure would exceed the lesser of the Total Commitment and the Aggregate
Borrowing Base, (B) the sum of the Revolving U.S. Facility Credit Exposure would exceed the Total
U.S. Facility Commitment or (C) the sum of the Revolving Canadian Facility Credit Exposures would
exceed the Total Canadian Facility Commitment.



          (d) The Borrowers shall notify the Administrative Agent of (i) any election to terminate or
reduce the Commitments under paragraph (b) or (c) of this Section 2.09, and (ii) in the case of a
reduction, the amount of such reduction (if any) to be allocated to the U.S. Facility Commitment
and/or Canadian Facility Commitment hereunder, in each case, at least three Business Days prior to
the effective date of such termination or reduction, specifying such election, the aggregate amount
of a reduction and any allocation as aforesaid, and the effective date thereof. Promptly following
receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof.
Each notice delivered by the Borrowers pursuant to this Section 2.09(d) shall be irrevocable;
provided, that a notice of termination of the Commitments delivered by the Borrowers may
state that such notice is conditioned upon the effectiveness of other credit facilities, in which
case such notice may be revoked by such Borrower (by notice to the Administrative Agent on or prior
to the specified effective date) if such condition is not satisfied. Any termination or reduction
of the Commitments (and of Facility Commitments) shall be permanent. Each reduction of the
Commitments and Facility Commitments shall be made ratably among the Lenders in accordance with
their respective Commitments and Facility Commitments, as the case may be.



          (e) The Company shall have the right to increase the U.S. Facility Commitment by obtaining
additional U.S. Facility Commitments, either from one or more of the Lenders or another lending
institution, in an aggregate amount not to exceed $50,000,000; provided that (i) any such
request for an increase shall be in a minimum amount of $10,000,000, (ii) the Company may make a
maximum of five such requests, (iii) the Administrative Agent has approved the identity of any such
new Lender, such approval not to be unreasonably withheld, (iv) any such new Lender assumes all of
the rights and obligations of a “Lender” hereunder, and (v) the procedures described in Section
2.09(f) have been satisfied.



          (f) Any amendment hereto for such an increase of U.S. Facility Commitments shall be in form
and substance reasonably satisfactory to the Administrative Agent and shall only require the
written signatures of the Administrative Agent, the Company and the Lender(s) being added or
increasing their U.S. Facility Commitment. As a condition precedent to such an increase, (i) the
Company shall deliver to the Administrative Agent a certificate of each U.S. Loan Party (in
sufficient copies for each Lender) signed by an authorized officer of such Loan









 



67



Party certifying and attaching the resolutions adopted by such Loan Party approving or
consenting to such increase, (ii) before and after giving effect to such increase, (x) the
representations and warranties contained in Article III and the other Loan Documents shall be true
and correct in all material respects (except that any representation and warranty that is qualified
as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects), except
to the extent that such representations and warranties specifically refer to an earlier date, in
which case they are true and correct as of such earlier date and (y) no Default or Event of Default
shall have occurred and be continuing and (iii) if requested by the Administrative Agent, the
Company shall deliver to the Administrative Agent customary legal opinions, in form and substance,
and from counsel, reasonably satisfactory to the Administrative Agent.



          (g) Within a reasonable time after the effective date of any increase, the Administrative
Agent shall, and is hereby authorized and directed to, revise the Commitment Schedule to reflect
such increase and shall distribute such revised Commitment Schedule to each of the Lenders and the
Company, whereupon such revised Commitment Schedule shall replace the old Commitment Schedule and
become part of this Agreement. On the Business Day following any such increase, all outstanding
ABR Loans shall be reallocated among the U.S. Facility Lenders (including any newly added Lenders)
in accordance with the U.S. Facility Lenders’ respective revised Applicable U.S. Facility
Percentages. Eurocurrency Advances shall not be reallocated among the U.S. Facility Lenders prior
to the expiration of the applicable Interest Period in effect at the time of any such increase.



          SECTION 2.10 Repayment of Loans; Evidence of Debt. (a) Each Borrower hereby
unconditionally promises to pay (i) to the Administrative Agent for the account of each Lender the
then unpaid principal amount of each Revolving Loan of such Lender extended to such Borrower on the
Maturity Date, (ii) to the Administrative Agent the then unpaid amount of each Protective Advance
extended to such Borrower on the earliest of the Maturity Date and demand by the Administrative
Agent and (iii) to the Swingline Lender the then unpaid principal amount of each Swingline Loan
extended to such Borrower on the earlier of the Maturity Date and the date that is the seventh day
(or if such day is not a Business Day, the next succeeding Business Day) after such Swingline Loan
is made, provided that on each date that a Revolving Borrowing is made by the Company, the
Company shall repay all Swingline Loans then outstanding.



          (b) During any Cash Dominion Period, on each Business Day, the Administrative Agent shall (i)
apply all funds credited to the U.S. Collection Account as of 4:00 p.m., New York City time, on
such Business Day (whether or not immediately available) first to prepay any U.S. Facility
Protective Advances that may be outstanding, pro rata, second to prepay U.S. Facility
Swingline Loans, third to prepay the U.S. Facility Revolving Loans and fourth, to
cash collateralize outstanding Dollar LC Exposure and (ii) apply all funds credited to the Canadian
Collection Account as of 4:00 p.m., Toronto time, on such Business Day (whether or not immediately
available) first to prepay any Canadian Facility Protective Advances that may be
outstanding, pro rata, second to prepay Canadian Facility Swingline Loans, third to
prepay the Canadian Facility Revolving Loans and fourth, to cash collateralize outstanding
Canadian Dollar LC Exposure; provided that if the proceeds from the Canadian Collections
Account are inadequate to repay the Loans under the Canadian Facility, the Administrative Agent
shall apply









 



68



any excess balance in the U.S. Collections Account, after the application of proceeds in
accordance with clause (i) above, to the repayment of Loans under the Canadian Facility in
accordance with this clause (ii). If the Company is required to provide (and has provided the
required amount of) cash collateral pursuant to this Section 2.10(b), at the end of any Cash
Dominion Period, the amount of such cash collateral shall be returned to the Company within two
Business Days.



          (c) Each Lender shall maintain in accordance with its usual practice records evidencing the
indebtedness of the Borrowers to such Lender resulting from each Loan made by such Lender,
including the amounts and Currency of principal and interest payable and paid to such Lender from
time to time hereunder.



          (d) The Administrative Agent shall maintain records in which it shall record (i) the amount
and Currency of each Loan made hereunder, the Facility Commitment, Class and Type thereof and the
Interest Period applicable thereto, (ii) the amount and Currency of any principal or interest due
and payable or to become due and payable from the Borrowers to each Lender hereunder and (iii) the
amount and Currency of any sum received by the Administrative Agent hereunder for the account of
the Lenders and each Lender’s share thereof.



          (e) The entries made in the records maintained pursuant to paragraph (c) or (d) of this
Section shall be prima facie evidence of the existence and amounts of the
obligations recorded therein; provided that the failure of any Lender or the Administrative
Agent to maintain such records or any error therein shall not in any manner affect the obligation
of the Borrowers to repay the Loans and pay interest thereon in accordance with the terms of this
Agreement.



          (f) Any Lender may request that Loans made by it be evidenced by a promissory note. In such
event, the applicable Borrower shall prepare, execute and deliver to such Lender a promissory note
payable to the order of such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in a form approved by the Administrative Agent and the Company.
Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such promissory note is
a registered note, to such payee and its registered assigns).



          SECTION 2.11 Prepayment of Loans. (a) Optional Prepayments. The Borrowers
shall have the right at any time and from time to time to prepay any Borrowing in whole or in part,
without premium or penalty, subject to Section 2.16, and prior notice in accordance with paragraph
(c) of this Section.



          (b) Mandatory Prepayments. In the event and on such occasion that:




     (i) the Credit Exposure of any Lender exceeds such Lender’s Commitment;




     (ii) the Aggregate Credit Exposures (including the Dollar Equivalent of any Revolving
Canadian Facility Credit Exposure denominated in Canadian Dollars) exceeds the lesser of (x)
the Total Commitment or (y) the Aggregate Borrowing Base, including as a result of any
currency exchange fluctuation;









 



69



     (iii) the Aggregate U.S. Facility Credit Exposure exceeds the lesser of (x) the U.S.
Facility Commitment or (y) the U.S. Borrowing Base;




     (iv) the Aggregate Canadian Facility Credit Exposure exceeds the lesser of (x) the
Canadian Facility Commitment or (y) the Canadian Borrowing Base plus U.S. Facility
Availability; or




     (v) the Dollar Equivalent of the aggregate Revolving Canadian Facility Credit Exposure
of all Canadian Facility Lenders exceeds (x) 105% of the Total Canadian Facility Commitment
as then in effect at any point in time or (y) 100% but less than 105% of the Total Canadian
Facility Commitment as then in effect for a period of ten (10) consecutive Business Days;


the Borrowers shall promptly prepay the Revolving Loans and/or Swingline Loans (and/or provide cash
collateral for LC Exposure as specified in Section 2.06(k)) in an aggregate amount equal to (1) in
the case of clauses (b)(i), (b)(ii), (b)(iii) and (b)(iv) of this Section, such excess and (2) in
the case of clause (b)(v) of this Section, the amount by which the Dollar Equivalent of the
aggregate Revolving Canadian Facility Credit Exposure of all Canadian Facility Lenders exceeds the
Total Canadian Facility Commitment as then in effect. If the Company is required to provide (and
has provided the required amount of) cash collateral pursuant to this Section 2.11(b) and such
excess is subsequently reduced, cash collateral in an amount equal to the lesser of (x) any such
reduction and (y) the amount of such cash collateral (to the extent not applied as set forth in
Section 2.06(k)) shall be returned to the Company within five Business Days after any such
reduction.




          (c) The Company or Canadian Facility Borrowers, as applicable, shall notify the Administrative
Agent (and, in the case of prepayment of a Swingline Loan, the Swingline Lender) by telephone
(confirmed by facsimile or by other electronic transmission) of any prepayment hereunder (i) in the
case of prepayment of a Eurocurrency Borrowing or a CDOR Rate Borrowing, not later than 1:00 p.m.,
New York City time, three Business Days before the date of prepayment, (ii) in the case of
prepayment of an ABR Borrowing, not later than 1:00 p.m., New York City time, one Business Day
before the date of prepayment or (iii) in the case of prepayment of a Swingline Loan, not later
than 1:00 p.m., New York City time, on the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or
portion thereof to be prepaid (specifying the Currency thereof) and, in the case of a mandatory
prepayment, set forth a reasonably detailed calculation of the amount of such prepayment, provided
that a notice of optional prepayment may state that such notice is conditioned upon the
effectiveness of other credit facilities or the receipt of the proceeds from the issuance of other
Indebtedness or any other event, in which case such notice of prepayment may be revoked by the
Company (by notice to the Administrative Agent on or prior to the specified date) if such condition
is not satisfied. Promptly following receipt of any such notice (other than a notice relating
solely to Swingline Loans) the Administrative Agent shall advise the Lenders of the contents
thereof. Each partial optional prepayment of any Revolving Borrowing shall be in an amount that
would be permitted in the case of an advance of a Revolving Borrowing of the same Type and Currency
as provided in Section 2.02. Each prepayment of a Revolving Borrowing shall be applied ratably to
the Revolving Loans included









 



70



in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent
required by Section 2.13.



          SECTION 2.12 Fees. (a) The Company agrees to pay to the Administrative Agent for the
account of each Lender a commitment fee, which shall accrue at the Applicable Commitment Fee Rate
on the average daily amount of the Available Commitment of such Lender during the period from and
including the Effective Date to but excluding the Maturity Date. Accrued commitment fees shall be
payable in arrears on the first Business Day of each fiscal month of the Company and on the
Maturity Date, commencing on the first such date to occur after the Effective Date. All commitment
fees shall be computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed.



          (b) The Company agrees to pay to the Administrative Agent for the account of each U.S.
Facility Lender and Canadian Facility Lender a participation fee with respect to its participations
in Dollar Letters of Credit and Canadian Dollar Letters of Credit, respectively, which shall accrue
at the same Applicable Rate used to determine the interest rate applicable to Eurocurrency
Revolving Loans (in the case of Dollar Letters of Credit) or CDOR Rate Loans (in the case of
Canadian Dollar Letters of Credit) on the average daily amount of such Lender’s LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period
from and including the Effective Date to but excluding the later of the Maturity Date and the date
on which such Lender ceases to have any LC Exposure.



          (c) The Company agrees to pay to each Issuing Bank (i) a fronting fee, which shall accrue at
the rate or rates per annum separately agreed upon between the Company and the applicable Issuing
Bank on the average daily amount of the LC Exposure attributable to Letters of Credit issued by it
(excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period
from and including the Effective Date to but excluding the later of the Maturity Date and the date
on which there ceases to be any LC Exposure under such Letters of Credit and (ii) such Issuing
Bank’s standard fees with respect to the issuance, amendment, renewal or extension of any Letter of
Credit issued by it or processing of drawings thereunder.



          (d) Participation fees and fronting fees accrued through and including the last day of each
fiscal month shall be payable on the first Business Day of each fiscal month; provided that
all such fees shall be payable on the Maturity Date and any such fees accruing after the Maturity
Date shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this
paragraph shall be payable within 10 days after demand. All participation fees and fronting fees
shall be computed on the basis of a year of 360 days and shall be payable for the actual number of
days elapsed.



          (e) The Company agrees to pay to the Administrative Agent, for its own account, fees payable
in the amounts and at the times separately agreed upon between the Company and the Administrative
Agent.



          (f) All fees payable hereunder shall be paid on the dates due, in immediately available funds,
to the Administrative Agent (or to any Issuing Bank, in the case of fees payable









 



71



to it) for distribution, in the case of commitment fees and participation fees, to the
Lenders. Fees paid shall not be refundable under any circumstances.



          SECTION 2.13 Interest.



          (a) The Loans comprising each ABR Borrowing (including each Swingline Loan) shall bear
interest at the U.S. Alternate Base Rate (for ABR Borrowings and Swingline Loans denominated in
Dollars) or the Canadian Alternate Base Rate (for ABR Borrowings and Swingline Loans denominated in
Canadian Dollars) plus, in each case, the Applicable Rate.



          (b) The Loans comprising each Eurocurrency Borrowing shall bear interest at the Adjusted
Eurocurrency Rate for the Interest Period in effect for such Borrowing plus the Applicable
Rate.



          (c) Each Protective Advance shall bear interest at the U.S. Alternate Base Rate (for
Protective Advances denominated in Dollars) or the Canadian Alternate Base Rate (for Protective
Advances denominated in Canadian Dollars) plus, in each case, the Applicable Rate for
Revolving Loans plus 2%.



          (d) Notwithstanding the foregoing, if any principal of or interest on any Loan (other than a
Protective Advance) or any fee or other amount payable by the Borrowers hereunder is not paid when
due, whether at stated maturity, by mandatory prepayment, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to
(i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to
such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other
amount, 2% plus the rate applicable to ABR Revolving Loans as provided in paragraph (a) of
this Section.



          (e) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date
for such Loan and upon termination of the Commitments; provided that (i) interest accrued
pursuant to paragraph (c) or (d) of this Section shall be payable on demand, (ii) in the event of
any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior to
the Maturity Date), accrued interest on the principal amount repaid or prepaid shall be payable on
the date of such repayment or prepayment and (iii) in the event of any conversion of any
Eurocurrency Loan or any CDOR Rate Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such conversion.



          (f) All interest hereunder shall be computed on the basis of a year of 360 days, except that
interest computed by reference to the Canadian Alternate Base Rate or CDOR Rate and interest
computed by reference to the U.S. Alternate Base Rate at times when the U.S. Alternate Base Rate is
based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and in each case shall be payable for the actual number of days elapsed (including the first
day but excluding the last day). The applicable U.S. Alternate Base Rate, Canadian Alternate Base
Rate, CDOR Rate, Adjusted Eurocurrency Rate or Eurocurrency Rate shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest error.









 



72


          (g) Interest Act (Canada). For purposes of disclosure pursuant to the Interest Act
(Canada), the annual rates of interest or fees to which the rates of interest or fees provided in
this Agreement and the other Loan Documents (and stated herein or therein, as applicable, to be
computed on the basis of 360 days or any other period of time less than a calendar year) are
equivalent are the rates so determined multiplied by the actual number of days in the applicable
calendar year and divided by 360 or such other period of time, respectively.



          (h) Limitation on Interest. If any provision of this Agreement or of any of the other
Loan Documents would obligate any Loan Party to make any payment of interest or other amount
payable to the Lenders in an amount or calculated at a rate which would be prohibited by law or
would result in a receipt by the Lenders of interest at a criminal rate (as such terms are
construed under the Criminal Code (Canada)) then, notwithstanding such provisions, such amount or
rate shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of
interest, as the case may be, as would not be so prohibited by law or so result in a receipt by the
Lenders of interest at a criminal rate, such adjustment to be effected, to the extent necessary, as
follows: (1) firstly, by reducing the amount or rate of interest required to be paid to the
Lenders under this Section 2.13, and (2) thereafter, by reducing any fees, commissions, premiums
and other amounts required to be paid to the Lenders which would constitute “interest” for purposes
of Section 347 of the Criminal Code (Canada). Notwithstanding the foregoing, and after giving
effect to all adjustments contemplated thereby, if the Lenders shall have received an amount in
excess of the maximum permitted by that section of the Criminal Code (Canada), the Loan Parties
shall be entitled, by notice in writing to the Administrative Agent, to obtain reimbursement from
the Lenders in an amount equal to such excess and, pending such reimbursement, such amount shall be
deemed to be an amount payable by the Lenders to the Borrower. Any amount or rate of interest
referred to in this Section 2.13(h) shall be determined in accordance with generally accepted
actuarial practices and principles as an effective annual rate of interest over the term that the
applicable Loan remains outstanding on the assumption that any charges, fees or expenses that fall
within the meaning of “interest” (as defined in the Criminal Code (Canada)) shall, if they relate
to a specific period of time, be pro-rated over that period of time and otherwise be pro-rated over
the period from the Effective Date to the Maturity Date and, in the event of a dispute, a
certificate of a Fellow of the Canadian Institute of Actuaries appointed by the Administrative
Agent shall be conclusive for the purposes of such determination.



          SECTION 2.14 Alternate Rate of Interest. (a) If prior to the commencement of any
Interest Period for a Eurocurrency Borrowing:




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




     (ii) the Administrative Agent is advised by the Required Lenders that the Adjusted
Eurocurrency Rate or the Eurocurrency Rate, as applicable, for such Interest Period will not
adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining
their Loans (or its Loan) included in such Borrowing for such Interest Period;









 



73

then the Administrative Agent shall give notice thereof to the Borrowers and the Lenders by
telephone or facsimile or by other electronic transmission as promptly as practicable thereafter
and, until the Administrative Agent notifies the Borrowers and the Lenders that the circumstances
giving rise to such notice no longer exist, (i) any Interest Election Request that requests the
conversion of any Borrowing to, or continuation of any such Borrowing as, a Eurocurrency Borrowing
shall be ineffective and such Borrowing (unless prepaid) shall be converted to, or continued as, an
ABR Borrowing and (ii) if any Borrowing Request requests a Eurocurrency Revolving Borrowing, such
Borrowing shall be made as an ABR Borrowing.




     (b) If prior to the commencement of any Interest Period for a CDOR Rate Borrowing:




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




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


then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by
telephone or facsimile as promptly as practicable thereafter and, until the Administrative Agent
notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer
exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a CDOR Rate Borrowing shall be ineffective and such Borrowing
(unless prepaid) shall be converted to, or continued as an ABR Borrowing, and (ii) if any Borrowing
Request requests a CDOR Rate Borrowing, such Borrowing shall be made as an ABR Borrowing.




          SECTION 2.15 Increased Costs. (a) If any Change in Law shall:




     (i) impose, modify or deem applicable any reserve, special deposit, compulsory loan or
similar requirement against assets of, deposits with or for the account of, or credit
extended by, any Lender (except any such reserve requirement reflected in the Adjusted
Eurocurrency Rate) or any Issuing Bank;




     (ii) subject any Lender or any Issuing Bank to any (or any increase in any) Other
Connection Taxes with respect to this Agreement or any other Loan Document, any Letter of
Credit, or any participation in a Letter of Credit or any Loan made or Letter of Credit
issued by it, except any such Taxes imposed on or measured by its net income or profits
(however denominated) or franchise (or similar) Taxes imposed in lieu of net income or
profits Taxes; or




     (iii) impose on any Lender or any Issuing Bank or the London interbank market any other
condition, cost, or expense affecting this Agreement or Eurocurrency Loans or CDOR Rate
Loans made by such Lender or any Letter of Credit or participation therein;









 



74

and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurocurrency Loan or CDOR Rate Loan, (or in the case of clause (ii), any Loan, any
Letter of Credit, or any participation in a Letter of Credit or any Loan made or a Letter of Credit
issued by it) or to increase the cost to such Lender or such Issuing Bank of participating in,
issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or
receivable by such Lender or such Issuing Bank hereunder (whether of principal, interest or
otherwise), then the Borrowers, subject to Section 2.19, will pay to such Lender or such Issuing
Bank, as the case may be, such additional amount or amounts as will compensate such Lender or such
Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered.




          (b) If any Lender or any Issuing Bank determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on such Lender’s or such
Issuing Bank’s capital or on the capital of such Lender’s or such Issuing Bank’s holding company,
if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of
Credit held by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a level below
that which such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company
could have achieved but for such Change in Law (taking into consideration such Lender’s or such
Issuing Bank’s policies and the policies of such Lender’s or such Issuing Bank’s holding company
with respect to capital adequacy), then from time to time the Borrowers will pay to such Lender or
such Issuing Bank, as the case may be, such additional amount or amounts as will compensate such
Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company for any such
reduction suffered.



          (c) A certificate of a Lender or an Issuing Bank setting forth the amount or amounts necessary
to compensate such Lender or such Issuing Bank or its holding company, as the case may be, as
specified in paragraph (a) or (b) of this Section shall be delivered to the Borrowers and shall be
conclusive absent manifest error. The Borrowers shall pay such Lender or such Issuing Bank, as the
case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.



          (d) Failure or delay on the part of any Lender or any Issuing Bank to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender’s or such Issuing Bank’s
right to demand such compensation, provided that the Borrowers shall not be required to compensate
a Lender or an Issuing Bank pursuant to this Section for any increased costs or reductions incurred
more than 270 days prior to the date that such Lender or such Issuing Bank, as the case may be,
notifies the Borrowers of the Change in Law giving rise to such increased costs or reductions and
of such Lender’s or such Issuing Bank’s intention to claim compensation therefor; provided further
that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then
the 270-day period referred to above shall be extended to include the period of retroactive effect
thereof.



          (e) Notwithstanding any other provision of this Agreement, if, after the date hereof, (x) any
Change in Law shall make it unlawful for any Canadian Facility Lender to make or maintain any CDOR
Rate Loan denominated in Canadian Dollars or to give effect to its obligations as contemplated
hereby with respect to any CDOR Rate Loan denominated in Canadian Dollars, or (y) there shall have
occurred any change in national or international financial, political or economic conditions
(including the imposition of or any change in









 



75



exchange controls, but excluding conditions otherwise covered by this Section 2.15) or
currency exchange rates which would make it impracticable for the Canadian Facility Lenders to make
or maintain any CDOR Rate Loan denominated in Canadian Dollars to, or for the account of, the
Canadian Facility Borrowers, then, by written notice to the Company and to the Administrative Agent
and subject to Section 2.19:




     (i) such Canadian Facility Lender or Canadian Facility Lenders may declare that such
CDOR Rate Loan will not thereafter (for the duration of such unlawfulness) be made by such
Canadian Facility Lender or Canadian Facility Lenders hereunder (or be continued for
additional Interest Periods), whereupon any request for a CDOR Rate Loan or to continue a
CDOR Rate Loan, as the case may be, for an additional Interest Period shall, as to such
Canadian Facility Lender or Canadian Facility Lenders only, be of no force and effect,
unless such declaration shall be subsequently withdrawn; and




     (ii) such Canadian Facility Lender may require that any outstanding CDOR Rate Loan,
made by it be converted to a Eurocurrency Loan or ABR Loan denominated in Dollars, as the
case may be (unless repaid by the Canadian Facility Borrowers as described below), in which
event any such CDOR Rate Loan, shall be converted to a Eurocurrency Loan or ABR Loan
denominated in Dollars, as the case may be, as of the effective date of such notice as
provided in Section 2.15(f) and at the Spot Selling Rate on the date of such conversion or,
at the option of the Canadian Facility Borrowers, repaid on the last day of the then current
Interest Period with respect thereto or, if earlier, the date on which the applicable notice
becomes effective.



          If any Canadian Facility Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to repay such
converted CDOR Rate Loan shall instead be applied to repay the Eurocurrency Loans or ABR Loans
denominated in Dollars, as the case may be, made by such Lender resulting from such conversion.



          (f) For purposes of Section 2.15(e), a notice to the Canadian Facility Borrowers by any
Canadian Facility Lender shall be effective as to each CDOR Rate Loan made by such Canadian
Facility Lender, if lawful, on the last day of the Interest Period, if any, currently applicable to
such Revolving Loan; in all other cases such notice shall be effective on the date of receipt
thereof by the Canadian Facility Borrowers.



          SECTION 2.16 Break Funding Payments. In the event of (a) the payment of any principal
of any Eurocurrency Loan or CDOR Rate Loan prior to the last day of an Interest Period applicable
thereto (including as a result of an Event of Default), (b) the conversion of any Eurocurrency Loan
or CDOR Rate Loan prior to the last day of the Interest Period applicable thereto, (c) the failure
to borrow, convert, continue or prepay any Eurocurrency Loan (or to convert any ABR Loan into a
Eurocurrency Loan or a CDOR Rate Loan, as applicable) on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section 2.09(d) and is
revoked in accordance therewith) or (d) the assignment of any Eurocurrency Loan or CDOR Rate Loan
other than on the last day of the Interest Period applicable thereto as a result of a request by
the Borrowers to replace a Lender pursuant to Section 2.19(b), then, in any such event, the
Borrowers shall compensate each









 



76



Lender for the loss, cost and expense attributable to such event. In the case of a
Eurocurrency Loan or a CDOR Rate Loan, such loss, cost or expense to any Lender shall be deemed to
include an amount determined by such Lender to be equal to the excess, if any, of (i) the amount of
interest that would have accrued on the principal amount of such Loan had such event not occurred,
at the Adjusted Eurocurrency Rate or the CDOR Rate that would have been applicable to such Loan,
for the period from the date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue, for the period that would
have been the Interest Period for such Loan), over (ii) the amount of interest that would accrue on
such principal amount for such period at the interest rate that such Lender would bid were it to
bid, at the commencement of such period, for Dollar deposits of a comparable amount and period to
such Eurocurrency Loan from other banks in the eurocurrency market, or for Canadian Dollar deposits
of a comparable amount and period to such CDOR Rate Loan from other banks in the Canadian bankers’
acceptance market. A certificate of any Lender setting forth any amount or amounts that such
Lender is entitled to receive pursuant to this Section shall be delivered to the Borrowers and
shall be conclusive absent manifest error. The Borrowers shall pay such Lender the amount shown as
due on any such certificate within 10 days after receipt thereof.



          SECTION 2.17 Taxes.



          (a) Except as provided in this Section 2.17, any and all payments made by or on account of any
obligation of any Loan Party hereunder or under any other Loan Document shall be made free and
clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes; provided
that if any applicable law (as determined in the good faith discretion of an applicable Loan Party
or the Administrative Agent) requires the deduction or withholding of any Indemnified Tax or Other
Tax from any such payment (including, for the avoidance of doubt, any such deduction or withholding
required to be made by the applicable Loan Party or the Administrative Agent), such Loan Party or
the Administrative Agent shall make such deductions and timely pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law and, if such Tax is an
Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary
so that after making all required deductions (including deductions applicable to additional sums
payable under this Section) the Administrative Agent, Lender, any Issuing Bank or its beneficial
owner, as the case may be, receives an amount equal to the sum it would have received had no such
deductions been made.



          (b) Without limiting the provisions of paragraph (a) above but without duplicating any payment
obligation by the Loan Parties in either paragraph (a) above or paragraph (c) below, the Loan
Parties shall timely pay, or at the option of the Administrative Agent timely reimburse it for the
payment of any Other Taxes to the relevant Governmental Authority in accordance with applicable
law.



          (c) The Loan Parties shall jointly and severally indemnify the Administrative Agent, each
Lender and each Issuing Bank, within 30 days after receipt of the certificate described below, for
the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section) payable by the
Administrative Agent, such Lender (for its beneficial owner) or each Issuing Bank, as the case may
be, and any reasonable expenses arising therefrom or with









 



77



respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority, provided that such Agent or
Lender, as the case may be, provides the Loan Party with a certificate, setting forth in reasonable
detail calculations of the amount of such payment or liability delivered to the Borrowers by a
Lender or an Issuing Bank (with a copy to the Administrative Agent), or by the Administrative Agent
on its own behalf or on behalf of a Lender or the Issuing Bank.



          (d) Each Lender shall indemnify the Administrative Agent within 10 days after demand therefor,
for the full amount of any Excluded Taxes attributable to such Lender that are payable or paid by
the Administrative Agent, and reasonable expenses arising therefrom or with respect thereto,
whether or not such Excluded Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or liability delivered to
any Lender by the Administrative Agent shall be conclusive absent manifest error.



          (e) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Loan
Parties to a Governmental Authority, the Borrowers shall deliver to the Administrative Agent the
original or a certified copy of a receipt issued by such Governmental Authority evidencing such
payment, a copy of the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.



          (f) All Lenders, to the extent they are legally entitled to do so, shall deliver to the
Company (with a copy to the Administrative Agent), on or prior to the Closing Date and at the time
or times reasonably requested by the Borrowers or the Administrative Agent, such properly completed
and duly executed documentation prescribed by applicable law as will permit payments hereunder or
under any other Loan Document to be made without withholding or at a reduced rate of withholding.
Each such Lender shall, whenever a lapse in time or change in circumstances renders such
documentation obsolete or inaccurate in any material respect, deliver promptly to the Borrower such
updated or other documentation as is reasonably requested by the Loan Parties or Administrative
Agent or promptly notify the Loan Parties or Administrative Agent of its legal inability to do so.
In addition, any Lender, if requested by the Loan Parties or the Administrative Agent, shall
deliver such other documentation prescribed by applicable law or reasonably requested by the Loan
Parties or the Administrative Agent as will enable the Loan Parties or the Administrative Agent to
determine whether or not such Lender is subject to backup withholding or information reporting
requirements. Notwithstanding anything to the contrary in the preceding two sentences, in the case
of any withholding tax other than the U.S. federal withholding tax, the completion,
execution and submission of such forms shall not be required if in the Foreign Lender’s judgment
such completion, execution or submission would subject such Foreign Lender to any material
unreimbursed cost or expense or would materially prejudice the legal or commercial position of such
Foreign Lender. Without limiting the foregoing:




     (i) Any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to
the Borrowers and the Administrative Agent (in such number of copies as shall be requested
by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender
under this Agreement (and from time to time thereafter upon the request of the Borrowers or
the Administrative Agent), whichever of the following is applicable:









 



78



          (A) properly completed and duly executed copies of Internal Revenue Service Form W-8BEN
claiming eligibility for benefits of an income tax treaty to which the United States of
America is a party,




          (B) properly completed and duly executed copies of Internal Revenue Service Form
W-8ECI,




          (C) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under section 881(c) of the Code, (x) a certificate substantially in the
Form of Exhibit I to the effect that such Foreign Lender is not (A) a “bank” within
the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the
Borrower within the meaning of section 881(c)(3)(B) of the Code, (C) a “controlled foreign
corporation” described in section 881(c)(3)(C) of the Code and (D) the interest payments in
question are not effectively connected with the United States trade or business conducted by
such Lender (a “U.S. Tax Compliance Certificate”) and (y) duly completed copies of
Internal Revenue Service Form W-8BEN,




          (D) to the extent a Foreign Lender is not the beneficial owner (for example, where the
Foreign Lender is a partnership or participating Lender granting a typical participation),
an Internal Revenue Service Form W-8IMY, accompanied by a Form W-8ECI, W-8BEN, U.S. Tax
Compliance Certificate, Form W-9, and/or other certification documents from each beneficial
owner, as applicable; provided that, if the Foreign Lender is a partnership (and not
a participating Lender) and one or more beneficial owners of such Foreign Lender are
claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax
Compliance Certificate on behalf of each such beneficial owner, or




          (E) any other form, including Form W-8EXP, prescribed by applicable law as a basis for
claiming exemption from United States federal withholding tax duly completed together with
such supplementary documentation as may be prescribed by applicable law to permit the
Borrowers to determine the withholding or deduction required to be made.




     (ii) Any Lender that is a United States person (as defined in Section 7701(a)(30) of
the Code) shall deliver to the Loan Parties and Administrative Agent on or before the date
on which it becomes a party to this Agreement two properly completed and duly signed
original copies of Internal Revenue Service Form W-9 certifying that such Lender is exempt
from federal backup withholding.



          (g) If the Administrative Agent, a Lender or an Issuing Bank determines, in its sole
discretion, that it has received a refund of any Indemnified Taxes or Other Taxes as to which it
has been indemnified pursuant to this Section (including additional amounts paid by any Loan Party
pursuant to this Section), it shall pay to the indemnifying party an amount equal to such refund
(but only to the extent of indemnity payments made under this Section with respect to the
Indemnified Taxes or Other Taxes giving rise to such refund), net of all reasonable out-of-pocket
expenses (including any Taxes) of the Administrative Agent, such Lender or such Issuing Bank, as
the case may be, and without interest (other than any interest paid by the relevant









 



79



Governmental Authority with respect to such refund), provided that such indemnifying
party, upon the request of the Administrative Agent, such Lender or such Issuing Bank, agrees to
repay the amount paid over pursuant to this Section 2.17(g) (plus any penalties, interest or other
charges imposed by the relevant Governmental Authority) to the Administrative Agent, such Lender or
such Issuing Bank in the event the Administrative Agent, such Lender or such Issuing Bank is
required to repay such refund to such Governmental Authority. Notwithstanding anything to the
contrary in this paragraph (g), in no event will any Issuing Bank or Lender be required to pay any
amount to any Loan Party the payment of which would place such Issuing Bank or such Lender in a
less favorable net after-Tax position than such Issuing Bank or such Lender would have been in if
the indemnification payments or additional amounts giving rise to such refund had never been paid.
This paragraph shall not be construed to require the Administrative Agent, any Issuing Bank or any
Lender to make available its Tax returns (or any other information relating to its Taxes that it
deems confidential) to the Borrowers or any other Person.



          (h) Each party’s obligations under this Section 2.17 shall survive termination of the Loan
Documents and payment of any obligations thereunder.



          SECTION 2.18 Payments Generally; Allocation of Proceeds; Sharing of Set-offs. (a)
The Borrowers shall make each payment required to be made by them hereunder (whether of principal,
interest, fees or reimbursements of LC Disbursements, or of amounts payable under Section 2.15,
2.16, 2.17 or 9.03, or otherwise) at or prior to the time expressly required hereunder or under any
other Loan Document for such payment (or, if no such time is expressly required, prior to 12:00
noon, New York City time), on the date when due, in immediately available funds, without set off or
counterclaim. Any amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding Business Day for
purposes of calculating interest thereon. All such payments shall be made to the Administrative
Agent or at such other address that the Administrative Agent shall advise the Borrowers in writing,
except payments to be made directly to an Issuing Bank or the Swingline Lender as expressly
provided herein and except that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be
made directly to the Persons entitled thereto and payments pursuant to other Loan Documents shall
be made to the Persons specified therein. The Administrative Agent shall distribute any such
payments received by it for the account of any other Person to the appropriate recipient promptly
following receipt thereof. If any payment under any Loan Document shall be due on a day that is
not a Business Day, the date for payment shall be extended to the next succeeding Business Day and,
in the case of any payment accruing interest, interest thereon shall be payable for the period of
such extension. All payments under any Loan Document shall be made in Dollars, except that unless
otherwise specified herein or in any other Loan Document, all payments in respect of Loans (and
interest thereon) and LC Exposures shall be made in the same Currency in which such Loan was made
or such Letter of Credit was issued. At all times during a Cash Dominion Period, solely for
purposes of determining the amount of Loans available for borrowing purposes, checks (in addition
to immediately available funds applied pursuant to Section 2.10(b)) from collections of items of
payment and proceeds of any Collateral shall be applied in whole or in part against the Obligations
on the Business Day after receipt, subject to actual collection.









 



80


          (b) Any proceeds of Collateral from the U.S. Loan Parties or any other amounts received by the
Administrative Agent (i) not constituting either (A) a specific payment of principal, interest,
fees or other sum payable under the Loan Documents (which shall be applied as specified by the
Borrowers), (B) a mandatory prepayment (which shall be applied in accordance with Section 2.11),
(C) amounts to be used to cash collateralize LC Exposures or (D) amounts to be applied from the
Collection Accounts during any Cash Dominion Period (which shall be applied in accordance with
Section 2.10(b)) or (ii) after an Event of Default has occurred and is continuing and the
Administrative Agent so elects or the Required Lenders so direct, such funds shall be applied,
subject to the Intercreditor Agreement, ratably first, to pay any fees, indemnities, or
expense reimbursements including amounts then due to the Administrative Agent, any Issuing Bank or
the Swingline Lender under any Loan Document (other than in connection with Banking Services or
Swap Obligations), second, to pay any fees or expense reimbursements then due to the U.S.
Facility Lenders from the U.S. Loan Parties (other than in connection with Banking Services or Swap
Obligations), third, to pay interest due in respect of the U.S. Facility Protective
Advances, fourth, to pay the principal of the U.S. Facility Protective Advances,
fifth, to pay interest then due and payable on the U.S. Facility Loans (other than the U.S.
Facility Protective Advances) and unreimbursed Dollar LC Disbursements along with any amounts due
under Section 2.16 in connection with the foregoing ratably, sixth, to prepay principal on
the U.S. Facility Loans (other than the U.S. Facility Protective Advances) and unreimbursed Dollar
LC Disbursements ratably, seventh, to pay an amount to the Administrative Agent equal to
one hundred five percent (105%) of the aggregate undrawn face amount of all outstanding Dollar
Letters of Credit and the aggregate amount of any unpaid Dollar LC Disbursements, to be held as
cash collateral for such Obligations, eighth, to payment of any amounts owing with respect
to Banking Services and Swap Obligations (in each case, to the extent constituting Secured
Obligations), and ninth, to the payment of any other Secured Obligation due to the
Administrative Agent or any Lender by the U.S. Loan Parties; provided that any remaining
funds shall be applied in the manner detailed in the immediately following sentence. Any proceeds
of Collateral from the Canadian Loan Parties or any other amounts received by the Administrative
Agent (i) not constituting either (A) a specific payment of principal, interest, fees or other sum
payable under the Loan Documents (which shall be applied as specified by the Borrowers), (B) a
mandatory prepayment (which shall be applied in accordance with Section 2.11), (C) amounts to be
used to cash collateralize LC Exposures or (D) amounts to be applied from the Collection Accounts
during any Cash Dominion Period (which shall be applied in accordance with Section 2.10(b)) or (ii)
after an Event of Default has occurred and is continuing and the Administrative Agent so elects or
the Required Lenders so direct, such funds shall be applied, subject to the Intercreditor
Agreement, ratably first, to pay any fees, indemnities, or expense reimbursements including
amounts then due to the Administrative Agent, any Issuing Bank or the Swingline Lender under any
Loan Document (other than in connection with Banking Services or Swap Obligations), second,
to pay any fees or expense reimbursements then due to the Lenders from the Loan Parties (other than
in connection with Banking Services or Swap Obligations), third, to pay interest due in
respect of the Canadian Facility Protective Advances, fourth, to pay the principal of the
Canadian Facility Protective Advances, fifth, to pay interest then due and payable on the
Canadian Facility Loans (other than the Canadian Facility Protective Advances) and unreimbursed
Canadian Dollar LC Disbursements along with any amounts due under Section 2.16 in connection with
the foregoing ratably, sixth, to prepay principal on the Canadian Facility Loans (other
than the Canadian









 



81



Facility Protective Advances) and unreimbursed Canadian Dollar LC Disbursements ratably,
seventh, to pay an amount to the Administrative Agent equal to one hundred five percent
(105%) of the aggregate undrawn face amount of all outstanding Canadian Dollar Letters of Credit
and the aggregate amount of any unpaid Canadian Dollar LC Disbursements, to be held as cash
collateral for such Obligations, eighth, to payment of any amounts owing with respect to
Banking Services and Swap Obligations (in each case, to the extent constituting Secured Obligations
owed by the Canadian Loan Parties), and ninth, to the payment of any other Secured
Obligation owed by the Canadian Loan Parties due to the Administrative Agent or any Lender by the
Canadian Loan Parties. Notwithstanding anything to the contrary contained in this Agreement,
unless so directed by the Borrowers, or unless a Default has occurred and is continuing, neither
the Administrative Agent nor any Lender shall apply any payment which it receives to any
Eurocurrency Loan or any CDOR Rate Loan of a Class, except (a) on the expiration date of the
Interest Period applicable to any such Eurocurrency Loan or such CDOR Rate Loan or (b) in the
event, and only to the extent, that there are no outstanding ABR Loans of the same Class and, in
any such event, the Borrowers shall pay the break funding payment required in accordance with
Section 2.16. The Administrative Agent and the Lenders shall have the continuing and exclusive
right to apply and reverse and reapply any and all such proceeds and payments to any portion of the
Secured Obligations.



          (c) Except to the extent otherwise provided herein: (i) each Borrowing of U.S. Facility Loans
or Canadian Facility Loans in a particular Currency from the Lenders under Section 2.01 hereof
shall be made from the relevant Lenders, each payment of Commitment Fees or of participation fees
under Section 2.12 hereof in respect of the U.S. Facility Commitment or the Canadian Facility
Commitment shall be made for account of the relevant Lenders, and each termination or reduction of
the amount of the Commitment, U.S. Facility Commitment or Canadian Facility Commitment under
Section 2.09 hereof shall be applied to the respective Commitments and Facility Commitments of the
relevant Lenders, pro rata according to the amounts of their respective Commitments or Facility
Commitments, as applicable; (ii) the making, conversion and continuation of Loans of a particular
Type and Currency (other than conversions provided for by Section 2.14 hereof) shall be made pro
rata among the relevant Lenders according to the amounts of their respective Facility Commitments
(in the case of the making of Loans) or their respective Loans (in the case of conversions and
continuations of Loans) and the then current Interest Period for each Eurocurrency Loan, as
applicable, shall be coterminous; and (iii) each payment or prepayment of principal of U.S.
Facility Loans or of Canadian Facility Loans, or interest thereon, by the Borrowers shall be made
for the account of the U.S. Facility Lenders or the Canadian Facility Lenders, as applicable, pro
rata in accordance with their respective Applicable U.S. Facility Percentages or Applicable
Canadian Facility Percentages, as the case may be.



          (d) At the election of the Administrative Agent, all payments of principal, interest, LC
Disbursements, fees, premiums, reimbursable expenses (including, without limitation, all
reimbursement for fees and expenses pursuant to Section 9.03), and other sums payable under the
Loan Documents that are not paid when due (after any applicable grace period) in accordance with
the Loan Documents, subject to five Business Days prior written notice to the Borrower, may be paid
from the proceeds of Borrowings made hereunder whether made following a request by the Borrowers
pursuant to Section 2.03 or a deemed request as provided in this Section or may be deducted from
any deposit account of the any Borrower









 



82



maintained with the Administrative Agent. Each Borrower hereby irrevocably authorizes, solely
to the extent a payment is not paid by a Loan Party by the required time set forth in the Loan
Documents (after any applicable grace period) (i) the Administrative Agent to make a Borrowing in
the name of such Borrower for the purpose of paying each payment of principal, interest and fees
payable by such Borrower due hereunder or any other amount due under the Loan Documents and agrees
that all such amounts charged shall constitute Loans (including Swingline Loans and Protective
Advances, but such a Borrowing may only constitute a Protective Advance if it is to reimburse
costs, fees and expenses as described in Section 9.03) and that all such Borrowings shall be deemed
to have been requested pursuant to Sections 2.03, 2.04 or 2.05, as applicable and (ii) the
Administrative Agent to charge any deposit account of the any Borrower maintained with the
Administrative Agent for each payment of principal, interest and fees due hereunder or any other
amount due under the Loan Documents.



          (e) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise,
obtain payment in respect of any principal of or interest on any of its Revolving Loans or
participations in LC Disbursements, Swingline Loans or Protective Advances resulting in such Lender
receiving payment of a greater proportion of the aggregate amount of its Revolving Loans,
participations in LC Disbursements, Swingline Loans and Protective Advances and accrued interest
thereon then due than the proportion received by any other Lender, then the Lender receiving such
greater proportion shall purchase (for cash at face value) participations in the Revolving Loans
and participations in LC Disbursements, Swingline Loans and Protective Advances of other Lenders to
the extent necessary so that the benefit of all such payments shall be shared by the Lenders
ratably in accordance with the aggregate amount of principal of and accrued interest on their
respective Revolving Loans and participations in LC Disbursements, Swingline Loans and Protective
Advances, provided that (i) if any such participations are purchased and all or any portion
of the payment giving rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and (ii) the provisions
of this paragraph shall not be construed to apply to any payment made by the Borrowers pursuant to
and in accordance with the express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its Loans, Commitments or
participations in any LC Disbursements to any assignee or participant, other than to the Borrowers
or any Subsidiary or other Affiliate thereof (as to which the provisions of this paragraph shall
apply). Each Borrower consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the foregoing
arrangements may exercise against such Borrower rights of set-off and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of such Borrower in the amount
of such participation.



          (f) Unless the Administrative Agent shall have received notice from the Borrowers, prior to
the date on which any payment is due to the Administrative Agent for the account of a Lender or an
Issuing Bank hereunder, that the Borrowers will not make such payment, the Administrative Agent may
assume that the Borrowers have made such payment on such date in accordance herewith and may, in
reliance upon such assumption, distribute to such Lender or such Issuing Bank, as the case may be,
the amount due. In such event, if the Borrowers has not in fact made such payment, then each of
the Lenders and the Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such Lender or such Issuing
Bank with interest thereon, for each day









 



83



from and including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules on interbank
compensation.



          (g) If any Lender shall fail to make any payment required to be made by it hereunder, then the
Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply
any amounts thereafter received by the Administrative Agent for the account of such Lender to
satisfy such Lender’s obligations hereunder until all such unsatisfied obligations are fully paid.



          SECTION 2.19 Mitigation Obligations; Replacement of Lenders.



          (a) Designation of a Different Lending Office. If any Lender or any Issuing Bank
requests compensation under Section 2.15, or if the Borrowers are required to pay any additional
amount to any Lender, Issuing Bank or any Governmental Authority for the account of any Lender or
any Issuing Bank pursuant to Section 2.17, then such Lender or such Issuing Bank shall use
reasonable efforts to designate a different lending office for funding or booking its Loans, LC
Disbursements or participations in LC Disbursements hereunder (as applicable) or to assign its
rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the
judgment of such Lender or such Issuing Bank, such designation or assignment (i) would eliminate or
reduce amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the future and (ii)
would not subject such Lender or such Issuing Bank to any unreimbursed cost or expense and would
not otherwise be disadvantageous to such Lender or such Issuing Bank; provided that, upon
any such change in any lending office or assignment, such Lender or such Issuing Bank shall provide
or cause to be delivered to the Administrative Agent and the Borrowers the appropriate forms
specified in and to the extent required by Section 2.17. The Borrowers hereby agree to pay all
reasonable costs and expenses incurred by any Lender or any Issuing Bank in connection with any
such designation or assignment.



          (b) Replacement of Lenders or Issuing Banks. If any Lender or any Issuing Bank
requests compensation under Section 2.15, or if the Borrowers are required to pay any additional
amount to any Lender, any Issuing Bank or any Governmental Authority for the account of any Lender
or any Issuing Bank pursuant to Section 2.17, then the Company may, at its sole expense and effort,
require such Lender or such Issuing Bank or any Lender that becomes a Defaulting Lender (each a
“Departing Lender”), upon notice to such Departing Lender and the Administrative Agent, to
assign and delegate, without recourse (in accordance with and subject to the restrictions contained
in, and consents required by Section 9.04), all its interests, rights and obligations under this
Agreement to an assignee that shall assume such obligations (which assignee may be another Lender
or another Issuing Bank, if a Lender or Issuing Bank accepts such assignment); provided
that (i) the Borrowers shall have received the prior written consent of the Administrative Agent,
each Issuing Bank and the Swingline Lender (which consent in each case shall not unreasonably be
withheld), (ii) the Departing Lender shall have received payment of an amount equal to the
outstanding principal of its Loans, LC Disbursements and participations in LC Disbursements and
Swingline Loans (as applicable and to the extent funded), accrued interest thereon, accrued fees
and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or









 



84



the Borrowers (in the case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.15 or payments required to be made pursuant
to Section 2.17, such assignment will result in a reduction in such compensation or payments. A
Departing Lender shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or such Issuing Bank or otherwise, the
circumstances entitling the Borrowers to require such assignment and delegation cease to apply.



          SECTION 2.20 Returned Payments. If after receipt of any payment which is applied to
the payment of all or any part of the Obligations, the Administrative Agent or any Lender is for
any reason compelled to surrender such payment or proceeds to any Person because such payment or
application of proceeds is invalidated, declared fraudulent, set aside, determined to be void or
voidable as a preference, impermissible setoff, or a diversion of trust funds, or for any other
reason, then the Obligations or part thereof intended to be satisfied shall be revived and
continued and this Agreement shall continue in full force as if such payment or proceeds had not
been received by the Administrative Agent or such Lender. The provisions of this Section 2.20
shall be and remain effective notwithstanding any contrary action which may have been taken by the
Administrative Agent or any Lender in reliance upon such payment or application of proceeds. The
provisions of this Section 2.20 shall survive the termination of this Agreement.



          SECTION 2.21 Defaulting Lenders. Notwithstanding any provision of this Agreement to
the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply
for so long as such Lender is a Defaulting Lender:



          (a) fees set forth in Section 2.12(a) shall cease to accrue on the unfunded portion of the
Commitment of such Defaulting Lender;



          (b) to the extent permitted by applicable law, (i) any voluntary prepayment of Revolving Loans
shall, if the Company so directs at the time of making such voluntary prepayment, be applied to the
Revolving Loans of other Lenders as if such Defaulting Lender had no Revolving Loans outstanding
and the Revolving Credit Exposure of such Defaulting Lender were zero, and (ii) any mandatory
prepayment of the Revolving Loans shall, if the Company so directs at the time of making such
mandatory prepayment, be applied to the Revolving Loans of other Lenders, but not to the Revolving
Loans of such Defaulting Lender, it being understood and agreed that the Company shall be entitled
to retain any portion of any mandatory prepayment of the Revolving Loans that is not paid to such
Defaulting Lender solely as a result of the operation of the provisions of this clause (b);



          (c) the Commitment and Credit Exposure of such Defaulting Lender shall not be included in
determining whether all Lenders or the Required Lenders have taken or may take any action hereunder
(including any consent to any amendment or waiver pursuant to Section 9.02), provided that any
waiver, amendment or modification requiring the consent of all Lenders or each affected Lender
which affects such Defaulting Lender differently than other affected Lenders shall require the
consent of such Defaulting Lender;



          (d) if any Swingline Exposure or LC Exposure exists at the time a Lender becomes a Defaulting
Lender then:









 



85



     (i) (A) all or any part of such U.S Facility Swingline Exposure and Dollar LC Exposure
shall be reallocated among the U.S. Facility Lenders that are not Defaulting Lenders in
accordance with their respective Applicable U.S. Facility Percentages and (B) all or any
part of such Canadian Facility Swingline Exposure and Canadian Dollar LC Exposure shall be
reallocated among the Canadian Facility Lenders that are not Defaulting Lenders in
accordance with their respective Applicable Canadian Facility Percentages but, in any case,
only to the extent (x) the sum of the Revolving U.S. Facility Credit Exposures of all U.S.
Facility Lenders that are not Defaulting Lenders plus such Defaulting Lender’s U.S.
Facility Swingline Exposure and Dollar LC Exposure does not exceed the total of the U.S.
Facility Commitments of all U.S. Facility Lenders that are not Defaulting Lenders, (y) the
sum of the Revolving Canadian Facility Credit Exposures of all Canadian Facility Lenders
that are not Defaulting Lenders plus such Defaulting Lender’s Canadian Facility
Swingline Exposure and Canadian Dollar LC Exposure does not exceed the total of the Canadian
Facility Commitments of all Canadian Facility Lenders that are not Defaulting Lenders and
(z) the conditions set forth in Section 4.02 are satisfied at such time; and




     (ii) if the reallocation described in clause (i) above cannot, or can only partially,
be effected, the Borrowers shall within one Business Day following notice by the
Administrative Agent (A) prepay such Swingline Exposure and (B) cash collateralize such
Defaulting Lender’s LC Exposure (after giving effect to any partial reallocation pursuant to
clause (i) above) in accordance with the procedures set forth in Section 2.06(k) for so long
as such LC Exposure is outstanding;




     (iii) if the Borrowers cash collateralize any portion of such Defaulting Lender’s LC
Exposure pursuant to this paragraph (d), the Borrowers shall not be required to pay any fees
to such Defaulting Lender pursuant to Section 2.12(b) with respect to such Defaulting
Lender’s LC Exposure during the period such Defaulting Lender’s LC Exposure is cash
collateralized;




     (iv) if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to this
paragraph (d), then the fees payable to the Lenders pursuant to Section 2.12(a) and Section
2.12(b) shall be adjusted in accordance with such non-Defaulting Lenders’ Applicable
Percentages; or




     (v) if any Defaulting Lender’s LC Exposure is neither cash collateralized nor
reallocated pursuant to this paragraph (d), then, without prejudice to any rights or
remedies of the Issuing Banks or any Lender hereunder, all commitment fees that otherwise
would have been payable to such Defaulting Lender (solely with respect to the portion of
such Defaulting Lender’s Commitment that was utilized by such LC Exposure) and letter of
credit fees payable under Section 2.12(b) with respect to such Defaulting Lender’s LC
Exposure shall be payable to the applicable Issuing Banks until such LC Exposure is cash
collateralized and/or reallocated; and



          (e) so long as any Lender is a Defaulting Lender, the Swingline Lender shall not be required
to fund any Swingline Loan and no Issuing Bank shall be required to issue, amend or increase any
Letter of Credit, unless it is satisfied that the related exposure will be









 



86

100% covered by the Commitments of the non-Defaulting Lenders and/or cash collateral will be
provided by the Borrowers in accordance with paragraph (d) of this Section, and participating
interests in any such newly issued or increased Letter of Credit or newly made Swingline Loan shall
be allocated among non-Defaulting Lenders in a manner consistent with paragraph (d)(i) of this
Section (and Defaulting Lenders shall not participate therein).




          (f) In the event that each of the Administrative Agent, the Borrowers, the Issuing Banks and
the Swingline Lender agree that a Defaulting Lender has adequately remedied all matters that caused
such Lender to be a Defaulting Lender, then the Swingline Exposure and LC Exposure of the Lenders
shall be readjusted to reflect the inclusion of such Lender’s Commitment and on such date such
Lender shall purchase at par such of the Loans of the other Lenders (other than Swingline Loans) as
the Administrative Agent shall determine may be necessary in order for such Lender to hold such
Loans in accordance with its Applicable U.S. Facility Percentage and Applicable Canadian Facility
Percentage, as applicable.



ARTICLE III




Representations and Warranties




          Each Loan Party represents and warrants to the Lenders that:



          SECTION 3.01 Organization; Powers. Each of the Loan Parties and each of its
Subsidiaries (a) is duly organized or incorporated, validly existing and in good standing under the
laws of the jurisdiction of its organization, (b) has all requisite power and authority to carry on
its business as now conducted and, (c) is qualified to do business and in good standing in every
jurisdiction where its assets are located and wherever necessary to carry out its business and
operations, except in jurisdictions where the failure to be so qualified or in good standing has
not had, and could not be reasonably expected to have, a Material Adverse Effect.



          SECTION 3.02 Authorization; Enforceability. The Transactions are within each Loan
Party’s organizational powers and have been duly authorized by all necessary organizational actions
and, if required, actions by equity holders. The Loan Documents to which each Loan Party is a
party have been duly executed and delivered by such Loan Party and constitute a legal, valid and
binding obligation of such Loan Party, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’
rights generally and subject to general principles of equity, regardless of whether considered in a
proceeding in equity or at law.



          SECTION 3.03 Governmental Approvals; No Conflicts. The Transactions (a) do not
require any consent or approval of, registration or filing with, or any other action by, any
Governmental Authority, except such as have been obtained or made and are in full force and effect
and except for filings necessary to perfect Liens created pursuant to the Loan Documents, (b) do
not violate any Requirement of Law applicable to any Loan Party or any of its Subsidiaries, (c) do
not violate or result in a default under any indenture, agreement or other instrument binding upon
any Loan Party or any of its Subsidiaries, or give rise to a right thereunder to require any
payment to be made by any Loan Party or any of its Subsidiaries, and (d) do not result in the
creation or imposition of any Lien on any asset of any Loan Party or any









 



87



of its Subsidiaries, except Liens created pursuant to the Loan Documents and, in each case,
except as could not be reasonably expected to have a Material Adverse Effect.



          SECTION 3.04 Financial Condition; No Material Adverse Change. (a) The Company has
heretofore furnished to the Lenders its consolidated balance sheet and statements of income,
stockholders equity and cash flows (i) as of and for the fiscal year ended January 3, 2009,
reported on by Ernst & Young, LLP, independent public accountants and (ii) as of and for the fiscal
quarter and the portion of the fiscal year ended October 3, 2009, certified by its Chief Financial
Officer. Such financial statements present fairly, in all material respects, the financial
position and results of operations and cash flows of the Company and its consolidated Subsidiaries
as of such dates and for such periods in accordance with GAAP, subject to year-end audit
adjustments and the absence of footnotes in the case of the statements referred to in clause (ii)
above.



          (b) No Material Adverse Change. No event, change or condition has occurred that has
had, or could reasonably be expected to have, a Material Adverse Effect, since January 3, 2009.



          (c) No Material Undisclosed Liabilities. On the date of this Agreement, no Loan Party
has any contingent liabilities, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments in each case that are material, except as
referred to or reflected in the balance sheets as at October 3, 2009.



          SECTION 3.05 Properties. (a) Title to Properties. As of the date of this
Agreement, Schedules 3.05(a) and (b) set forth the address of (i) each parcel of real property that
is owned by each Loan Party and (ii) each parcel of real property that is leased or subleased by/to
each Loan Party, respectively, in each case located in the United States or Canada. To the
knowledge of the Loan Parties, each of such leases and subleases is valid and enforceable in
accordance with its terms and is in full force and effect, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors’ rights generally and subject to general principles of equity and except certain of the
leases and subleases for which the term has expired are continuing on a month to month basis, and,
to the knowledge of the Loan Parties, no default by any Loan Party or default by any other party to
any such lease or sublease exists. Each of the Loan Parties and its Subsidiaries has good and
indefeasible title to, or valid leasehold interests in, all its real property, fixtures and
personal property free of all Liens other than Permitted Liens.



          (b) Intellectual Property. Except, in each case, as could not reasonably be expected,
either individually, or in the aggregate, to have a Material Adverse Effect, (i) each Loan Party
and its Subsidiaries owns, or is licensed to use, all issued patents, patent applications,
trademarks, service marks, trade names, trade dress, internet domain names, copyright, trade
secrets, and know how (collectively, “Intellectual Property”) necessary to its business as
currently conducted, (ii) the conduct of each of the Loan Parties and its Subsidiaries’ business
does not infringe, dilute, misappropriate, or otherwise violate (“Infringe”) upon the
rights of any other Person, and (iii) to the knowledge of the Loan Parties, there are no claims
asserted by the Loan Parties in writing (including cease and desist letters) against third parties
asserting that the Loan Parties’ Intellectual Property rights are being Infringed. A correct and
complete list of all









 



88



U.S. and material foreign registered trademarks, trade names, copyrights, patents, and pending
applications thereof, and domain names owned by each Loan Party as of the date of the Agreement is
set forth on Schedule 3.05(c).



          SECTION 3.06 Litigation and Environmental Matters. (a) There are no actions, suits
or proceedings by or before any arbitrator or Governmental Authority pending against or, to the
knowledge of any Loan Party, threatened against or affecting the Loan Parties or any of their
Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination that
could reasonably be expected, individually or in the aggregate, to result in a Material Adverse
Effect (other than the Disclosed Matters), or (ii) that involve this Agreement, the other Loan
Documents or the Transactions.



          (b) Except for the Disclosed Matters (i) no Loan Party nor any of its Subsidiaries has
received notice of any claim with respect to any Environmental Liability or knows of any basis for
any Environmental Liability and (ii) except with respect to any other matters that, individually or
in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, no Loan
Party nor any of its Subsidiaries (1) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any permit, license or other approval required under any Environmental Law
or (2) has become subject to any Environmental Liability.



          (c) Since the date of this Agreement, there has been no change in the status of the Disclosed
Matters that, individually or in the aggregate, has resulted in a Material Adverse Effect.



          SECTION 3.07 Compliance with Laws and Agreements. Each Loan Party and its
Subsidiaries is in compliance with all Requirements of Law applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be expected to result in a
Material Adverse Effect.



          SECTION 3.08 Investment Company Status. No Loan Party nor any of its Subsidiaries is
an “investment company” as defined in, or subject to regulation under, the Investment Company Act
of 1940.



          SECTION 3.09 Taxes. Except as set forth in Schedule 3.09, each Loan Party and its
Subsidiaries has timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes exceeding $7,500,000 in the aggregate
required to have been paid by it, except those Taxes that are being contested in good faith by
appropriate proceedings and for which such Loan Party or such Subsidiary, as applicable, has set
aside on its books adequate reserves in accordance with GAAP. No tax liens have been filed and no
claims are being asserted with respect to any such taxes other than those liens or claims that are
not yet delinquent or that are being contested in good faith by appropriate proceedings and for
which a Loan Party or Subsidiary, as applicable, has set aside on its books adequate reserves in
accordance with GAAP.
















 





89 




          SECTION 3.10 ERISA. No ERISA Event has occurred or is reasonably expected to occur
that, when taken together with all other such ERISA Events from which liability is reasonably
expected to occur, could reasonably be expected to result in a Material Adverse Effect. The
present value of all accumulated benefit obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the
most recent financial statements reflecting such amounts, exceed the fair market value of the
assets of such Plan and the present value of all accumulated benefit obligations of all underfunded
Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements reflecting such amounts,
exceed the fair market value of the assets of all such underfunded Plans, such that it is
reasonably expected, that such underfunding will result in a Material Adverse Effect.




          SECTION 3.11 Disclosure. Neither the Information Memorandum nor any of the other
reports, financial statements, certificates or other information furnished by or on behalf of any
Loan Party to the Administrative Agent or any Lender in connection with the negotiation of this
Agreement or any other Loan Document (as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any material fact necessary
to make the statements therein, in the light of the circumstances under which they were made, not
misleading; provided, that, with respect to projected financial information, the Loan Parties
represent only that such information was prepared in good faith based upon assumptions believed to
be reasonable at the time delivered, it being understood that such projections may vary from actual
results and that such variances may be material.




          SECTION 3.12 Margin Regulations. No Loan Party or any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending credit for the
purpose, whether immediate, incidental or ultimate, of “buying” or “carrying” “margin stock” within
the meaning of each of the quoted terms under Regulation U as now and from time to time hereafter
in effect, and no part of the proceeds of any extension of credit hereunder will be used to “buy”
or “carry” any “margin stock”.




          SECTION 3.13 Indebtedness, Liens. (a) Indebtedness. Part A of Schedule 3.13
hereto is a complete and correct list, as of the Effective Date after giving effect to the
Refinancing, of each credit agreement, loan agreement, indenture, note purchase agreement,
guarantee, letter of credit or other arrangement providing for or otherwise relating to any
Indebtedness or any extension of credit (or commitment for any extension of credit) to, or
guarantee by, any Loan Party or any of its Subsidiaries (including the Note Documents) the
aggregate principal or face amount of which equals or exceeds (or may equal or exceed) $10,000,000
and the aggregate principal or face amount outstanding or that may become outstanding under each
such arrangement as in effect on the Effective Date is correctly described in Part A of said
Schedule.




          (b) Liens. Part B of Schedule 3.13 hereto is a complete and correct list, as of the
Effective Date after giving effect to the Refinancing, of each Lien securing Indebtedness described
in Part A of Schedule 3.13 of any Person covering any property of any Loan Party or any of its
Subsidiaries, and the aggregate Indebtedness secured (or which may be secured) by










 



90

each such Lien and the property covered by each such Lien is correctly described in Part B of
said Schedule 3.13.




          SECTION 3.14 No Default. No Loan Party nor any of its Subsidiaries is in default in
the performance, observance or fulfillment of any of the obligations, covenants or conditions
contained in any agreement, instrument or other undertaking to which such Person is a party or by
which it or any of its property is bound in any respect that could reasonably be expected to have a
Material Adverse Effect. No Default or Event of Default has occurred and is continuing.




          SECTION 3.15 Solvency. (a) Immediately after the consummation of the Transactions to
occur on the Effective Date, (i) the fair value of the assets of the Loan Parties, on a
consolidated basis, at a fair valuation, will exceed their debts and liabilities, subordinated,
contingent (to the extent constituting identified contingent liabilities) or otherwise; (ii) the
present fair saleable value of the property of the Loan Parties will be greater than the amount
that will be required to pay the probable liability of its debts and other liabilities,
subordinated, contingent (to the extent constituting identified contingent liabilities) or
otherwise, as such debts and other liabilities become absolute and matured; (iii) the Loan Parties,
on a consolidated basis, will be able to pay their debts and liabilities, subordinated, contingent
or otherwise, as such debts and liabilities become absolute and matured; and (iv) the Loan Parties
will, on a consolidated basis, not have unreasonably small capital with which to conduct the
business in which it is engaged as such business is now conducted and is proposed to be conducted
after the Effective Date.




          (b) The Loan Parties, on a consolidated basis, do not intend to or believe that they will,
incur debts beyond their ability to pay such debts as they mature, taking into account the timing
of and amounts of cash to be received by them and the timing of the amounts of cash to be payable
on or in respect of their Indebtedness.




          (c) With respect to the Canadian Loan Parties, immediately after the consummation of the
Transactions to occur on the Effective Date, (i) the property of the Canadian Loan Parties, on a
consolidated basis, at a fair valuation, is greater than the total amount of their debts and
liabilities, subordinated, contingent or otherwise; (ii) the Canadian Loan Parties’ property, on a
consolidated basis, is sufficient, if disposed of at a fairly conducted sale under legal process,
to enable payment of all their obligations, due and accruing due; (iii) the Canadian Loan Parties,
on a consolidated basis, will be able to pay their debts and liabilities, subordinated, contingent
or otherwise, as such debts and liabilities generally become due; and (iv) the Canadian Loan
Parties, on a consolidated basis, have not ceased paying their current obligations in the ordinary
course of business as they generally become due.




          SECTION 3.16 Insurance. Schedule 3.16 sets forth a description of all insurance
maintained by or on behalf of the Loan Parties and its Subsidiaries as of the Effective Date. As
of the Effective Date, all premiums in respect of such insurance have been paid. The Company
believes that the insurance maintained by or on behalf of the Company and its Subsidiaries is
adequate.










 



91




          SECTION 3.17 Capitalization and Subsidiaries. (a) Subsidiaries. As of the
Effective Date, Schedule 3.17 sets forth (a) a correct and complete list of the name and
relationship to the Company of each and all of the Company’s Subsidiaries, (b) a true and complete
listing of each class of each of the Borrowers’ authorized Equity Interests, of which all of such
issued shares are validly issued, outstanding, fully paid and non-assessable, and, in the case of
each Loan Party other than the Company, owned beneficially and of record by the Persons identified
on Schedule 3.17, and (c) the type of entity of the Company and each of its Subsidiaries. All of
the issued and outstanding Equity Interests owned by any Loan Party in any Subsidiary (other than
any Subsidiary that is a shell entity that does not own any material assets) has been (to the
extent such concepts are relevant with respect to such ownership interests) duly authorized and
issued and is fully paid and non-assessable.




          (b) Investments. Set forth in Part B of Schedule 3.17 hereto is a complete and correct
list, as of the Effective Date after giving effect to the Refinancing, of all Investments (other
than Investments disclosed in Part A of said Schedule 3.17 hereto and Investments permitted
pursuant to clauses (a), (g), (h), (i), (l) and (m) of Section 6.04) held by any Loan Party in a
Person and, for each such Investment, (x) the identity of the Person or Persons holding such
Investment and (y) the nature of such Investment. Except as disclosed in Part B of Schedule 3.17
hereto, each Loan Party owns, free and clear of all Liens (other than non-consensual Liens arising
by operation of law and Permitted Liens), all such Investments.




          SECTION 3.18 Security Interest in Collateral. The provisions of this Agreement and
the other Loan Documents create legal and valid Liens on all the Collateral in favor of the
Administrative Agent, for the benefit of the Administrative Agent and the Secured Parties, and,
upon filing of UCC financing statements and the taking of any other actions or making of filings
required for perfection under the laws of the relevant Collateral Documents and specified herein or
in such Collateral Documents, as, and when necessary and required (including but not limited to the
filing of financing statements under the PPSA, in the case of collateral located in Quebec, Canada,
upon filings of the required forms of registrations in the Register of Personal Property and
movable real rights and with respect to cash and Permitted Investments, as and when required
pursuant to Section 5.16 and the Collateral Documents), and, if applicable, the taking of actions
or making of filings with respect to Intellectual Property registrations or applications issued or
pending as specified, such Liens constitute perfected and continuing Liens on the Collateral,
securing the Secured Obligations, enforceable against the applicable Loan Party and all third
parties (subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors’ rights generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law), and having priority over all other Liens
on the Collateral except in the case of (a) Permitted Liens, to the extent any such Permitted Liens
would have priority over the Liens in favor of the Administrative Agent pursuant to any applicable
law, (b) Liens perfected only by possession (including possession of any certificate of title or
bond) to the extent the Administrative Agent has not obtained or does not maintain possession of
such Collateral, or (c) Liens or minor defects in title that are not reasonably expected to present
a continuing, material encumbrance on the Collateral.




          SECTION 3.19 Employment Matters. As of the Effective Date, except as in the aggregate
could not reasonably be expected to have a Material Adverse Effect, (a) there









 



92


are no strikes, lockouts or slowdowns against any Loan Party or any Subsidiary pending or, to
the knowledge of the Borrowers, threatened; (b) the terms and conditions of employment, the hours
worked by and payments made to employees of the Loan Parties and the Subsidiaries have not been in
violation of the Fair Labor Standards Act, the Employee Standards Act (Ontario) or any other
applicable federal, state, provincial, territorial, local or foreign law dealing with such matters;
(c) all payments due from any Loan Party or any Subsidiary, or for which any claim may be made
against any Loan Party or any Subsidiary, on account of wages, vacation pay and employee health and
welfare insurance and other benefits including without limitation, on account of the Canada and
Quebec pension plans, have been paid or accrued as a liability on the books of the Loan Party or
such Subsidiary; and (d) the consummation of the Transactions will not give rise to any right of
termination or right of renegotiation on the part of any union under any collective bargaining
agreement to which any Loan Party or any of its Subsidiaries are bound.




          SECTION 3.20 Affiliate Transactions. Except as set forth on Schedule 3.20, as of the
date of this Agreement, there are no existing or proposed agreements, arrangements, understandings,
or transactions between any Loan Party and any of the officers, members, managers, directors,
stockholders, parents, other interest holders, employees, or Affiliates (other than Subsidiaries)
of any Loan Party or any members of their respective immediate families, and none of the foregoing
Persons are directly or indirectly indebted to or have any direct or indirect ownership,
partnership, or voting interest in any Affiliate of any Loan Party or any Person with which any
Loan Party has a business relationship or which competes with any Loan Party.




          SECTION 3.21 Common Enterprise. Each Loan Party expects to derive benefit (and its
board of directors or other governing body has determined that it may reasonably be expected to
derive benefit), directly and indirectly, from (i) successful operations of each of the other Loan
Parties and (ii) the credit extended by the Lenders to the Borrowers hereunder, both in their
separate capacities and as members of the group of companies. Each Loan Party has determined that
execution, delivery, and performance of this Agreement and any other Loan Documents to be executed
by such Loan Party is within its purpose, will be of direct and indirect benefit to such Loan
Party, and is in its best interest.




          SECTION 3.22 Canadian Pension Plan and Benefit Plans. Schedule 3.22 lists all Canadian
Benefit Plans and Canadian Pension Plans currently maintained or contributed to by the Loan Parties
and their Subsidiaries. The Canadian Pension Plans are duly registered under the ITA and all other
applicable laws which require registration. Each Loan Party and each of their Subsidiaries has
complied with and performed all of its obligations under and in respect of the Canadian Pension
Plans and Canadian Benefit Plans under the terms thereof, any funding agreements and all applicable
laws (including any fiduciary, funding, investment and administration obligations). All employer
and employee payments, contributions or premiums to be remitted, paid to or in respect of each
Canadian Pension Plan or Canadian Benefit Plan have been paid in a timely fashion in accordance
with the terms thereof, any funding agreement and all applicable laws. There have been no improper
withdrawals or applications of the assets of the Canadian Pension Plans or the Canadian Benefit
Plans. No promises of benefit improvements under the Canadian Pension Plans or the Canadian
Benefit Plans have been made except where such improvement could not be reasonably expected to have
a Material Adverse Effect and, in









 



93


any event, no such improvements will result in a solvency deficiency or going concern unfunded
liability in the affected Canadian Pension Plans. The pension fund under each Canadian Pension
Plan is exempt from the payment of any income tax and there are no taxes, penalties or interest
owing in respect of any such pension fund. All material reports and disclosures relating to the
Canadian Pension Plans required by such plans and any Requirement of Law to be filed or distributed
have been filed or distributed. There has been no partial termination of any Canadian Pension Plan
and no facts or circumstances have occurred or existed that could result, or be reasonably
anticipated to result, in the declaration of a partial termination of any Canadian Pension Plan
under Requirements of Law. Except as set forth on Schedule 3.22, there are no outstanding disputes
concerning the assets of the Canadian Pension Plans or the Canadian Benefit Plans. Except as set
forth on Schedule 3.22, each of the Canadian Pension Plans is fully funded on both a going concern
and on a solvency basis (using actuarial methods and assumptions which are consistent with the
valuations last filed with the applicable Governmental Authorities and which are consistent with
generally accepted actuarial principles).




ARTICLE IV




Conditions




          SECTION 4.01 Effective Date. The obligations of the Lenders to make Loans and of the
Issuing Banks to issue Letters of Credit hereunder shall not become effective until the date on
which each of the following conditions is satisfied (or waived in accordance with Section 9.02):





     (a) Credit Agreement and Loan Documents. The Administrative Agent (or its
counsel) shall have received (i) from each party hereto either (A) a counterpart of this
Agreement signed on behalf of such party or (B) written evidence satisfactory to the
Administrative Agent (which may include facsimile transmission or by other electronic
transmission of a signed signature page of this Agreement) that such party has signed a
counterpart of this Agreement, (ii) duly executed copies of the other Loan Documents (or
written evidence reasonably satisfactory to the Administrative Agent (which may include
facsimile or by other electronic transmission of a signed signature page) that such party
has signed a counterpart of such Loan Documents) and such other certificates, documents,
instruments and agreements as the Administrative Agent shall reasonably request in
connection with the transactions contemplated by this Agreement and the other Loan
Documents, including any promissory notes requested by a Lender pursuant to Section 2.10
payable to the order of each such requesting Lender, and (iii) a written opinion of the Loan
Parties’ counsel, addressed to the Administrative Agent, the Issuing Banks and the Lenders
in substantially the form of Exhibit B.




     (b) Financial Statements. The Lenders shall have received (i) audited
consolidated financial statements of the Company for the fiscal year which ended on January
3, 2009 and (ii) unaudited interim consolidated financial statements of the Company for each
fiscal month ended after the date of the latest applicable financial statements delivered
pursuant to clause (i) of this paragraph to the extent such financial statements are
available.









 



94



     (c) Closing Certificates; Certified Certificate of Incorporation; Good Standing
Certificates. The Administrative Agent and the Collateral Agent shall have received (i)
a certificate of each Loan Party, dated the Effective Date and executed by its Secretary or
Assistant Secretary, which shall (A) certify the resolutions of its Board of Directors,
members or other body authorizing the execution, delivery and performance of the Loan
Documents to which it is a party, (B) identify by name and title and bear the signatures of
the Financial Officers and any other officers of such Loan Party authorized to sign the Loan
Documents to which it is a party, and (C) contain appropriate attachments, including the
certificate or articles of incorporation or organization of each Loan Party certified by the
relevant authority of the jurisdiction of organization of such Loan Party and a true and
correct copy of its by-laws or operating, management or partnership agreement, and (ii) a
certificate of good standing/compliance/status (as applicable) for each Loan Party from its
jurisdiction of organization and each jurisdiction in which it carries on business.




     (d) No Default Certificate. The Administrative Agent and the Collateral Agent
shall have received a certificate, signed by the Chief Financial Officer of each of the
Borrowers, on the initial Borrowing date (i) stating that no Default has occurred and is
continuing and (ii) stating that the representations and warranties contained in Article III
are true and correct in all respects (for representations and warranties qualified by
materiality, true and correct in all respects) as of such date.




     (e) Fees. The Lenders, the Joint Lead Arrangers, the Administrative Agent and
the Collateral Agent shall have received all fees required to be paid, and all out-of-pocket
expenses for which invoices have been presented (including the reasonable fees and
out-of-pocket expenses of legal counsel), on or before the Effective Date.




     (f) Lien Searches. The Administrative Agent and the Collateral Agent shall
have received the results of a recent lien search in each of the jurisdictions where assets
constituting Collateral of the Loan Parties are located, and such search shall reveal no
liens on any of the assets constituting Collateral of the Loan Parties except for Permitted
Liens or discharged on or prior to the Effective Date pursuant to a pay-off letter or other
documentation reasonably satisfactory to the Administrative Agent.




     (g) Funding Accounts. The Administrative Agent shall have received a notice
setting forth the deposit account(s) of the Borrowers (the “Funding Accounts”) to
which the Lender is authorized by the Borrowers to transfer the proceeds of any Borrowings
requested or authorized pursuant to this Agreement.




     (h) [Reserved].




     (i) Solvency. The Administrative Agent and the Collateral Agent shall have
received a solvency certificate from a Financial Officer of the Company.




     (j) Borrowing Base Certificate. The Administrative Agent and the Collateral
Agent shall have received (i) an Aggregate Borrowing Base Certificate, a U.S. Borrowing Base
Certificate and a Canadian Borrowing Base Certificate, each of which calculates









 



95



such Borrowing Base as of October 28, 2009 and (ii) all Borrowing Base Supplemental
Documentation with respect thereto. The Aggregate Borrowing Base Certificate delivered on
the Effective Date shall show Availability of not less than $75,000,000 after giving effect
to all Borrowings to be made as of the Effective Date as if made on October 28, 2009 and the
issuance of any Letters of Credit on the Effective Date and payment of all fees and expenses
due hereunder.




     (k) Senior Secured Notes. The Company shall have received proceeds of at least
$350,000,000 in consideration of the issuance of the Senior Secured Notes, upon terms and
conditions reasonably satisfactory to the Administrative Agent.




     (l) Pledged Stock; Stock Powers; Pledged Notes. The Administrative Agent shall
have received, subject to the Intercreditor Agreement (i) the certificates, if any,
representing the shares of Equity Interests pledged pursuant to the Security Agreements,
together with an undated stock power for each such certificate executed in blank by a duly
authorized officer of the pledgor thereof, except as set forth on Schedule 4.01(l) and (ii)
each promissory note (if any) pledged to the Administrative Agent pursuant to the Security
Agreements endorsed (without recourse) in blank (or accompanied by an executed transfer form
in blank) by the pledgor thereof.




     (m) Filings, Registrations and Recordings. Each document (including any
Uniform Commercial Code and PPSA financing statement) required by the Collateral Documents
or under law or reasonably requested by the Collateral Agent to be filed, registered or
recorded in order to create in favor of the Administrative Agent, for the benefit of the
Secured Parties, a perfected Lien on the Collateral described therein, prior and superior in
right to any other Person (other than with respect to Permitted Liens expressly permitted by
Section 6.02), shall be in proper form for filing, registration or recordation.




     (n) Appraisals and Field Exams. The Collateral Agent shall have received and
be reasonably satisfied with (i) appraisals of Inventory of the Loan Parties and (ii) field
exams of the Accounts, Inventory, related working capital matters, financial information,
equipment and related data processing and other systems of the Loan Parties, in each case
from appraisers and/or examiners reasonably satisfactory to the Collateral Agent.




     (o) Evidence of Insurance. The Administrative Agent and the Collateral Agent
shall have received evidence of insurance coverage in form, scope, and substance reasonably
satisfactory to the Administrative Agent and otherwise in compliance with the terms of
Section 5.09 hereof and Section 4.12 of the U.S. Security Agreement (or any similar
provision of any other Security Agreement).




     (p) Filings, Registrations and Recordings. All governmental and third party
approvals necessary in connection with the Transactions, the continuing operations of the
Loan Parties shall have been obtained and be in full force and effect.




     (q) [Reserved].









 



96



     (r) “Know Your Customer” Requirements. The Lenders shall have received all
documentation and other information requested by the Administrative Agent required under
applicable “know your customer” and anti-money laundering rules and regulations, including
all information required to be delivered pursuant to Section 9.14.




     (s) Letter of Credit Application. The Administrative Agent shall have received
a properly completed letter of credit application if the issuance of a Letter of Credit will
be required on the Effective Date.




     (t) Projections. The Administrative Agent shall have received and shall be
reasonably satisfied with (i) the Company’s most recent projected income statement, balance
sheet and cash flows for (A) each fiscal quarter through fiscal year-end 2010 and (B) fiscal
years 2011 and 2012 and (ii) the Company’s quarterly liquidity analysis for each of the four
fiscal quarters following the Effective Date (commencing with the first full fiscal quarter
after the Effective Date).




     (u) Existing Senior Subordinated Notes Payoff. The Administrative Agent shall
have received evidence reasonably satisfactory to it that the Company has given notice for
the redemption in full of the Existing Senior Subordinated Notes pursuant to the indenture
governing the Existing Senior Subordinated Notes.




     (v) Existing Credit Agreement Payoff. The Administrative Agent shall have
received evidence reasonably satisfactory to it that (i) all principal, interest and fees
owing under the Existing Credit Agreement have been paid, or simultaneously with the closing
of the Transactions will be prepaid and (ii) all Liens granted in favor of the lenders under
the Existing Credit Agreement shall have been released, or simultaneously with the closing
of the Transactions will be released or such other arrangements with the Administrative
Agent shall have been agreed.




     (w) Other Documents. The Administrative Agent shall have received such other
documents as the Administrative Agent, the Collateral Agent, any Issuing Bank or their
respective counsel may reasonably request.


The Administrative Agent shall notify the Borrowers and the Lenders of the Effective Date, and such
notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of the
Lenders to make Loans and of any Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 9.02)
at or prior to 3:00 p.m., New York City time, on December 31, 2009 (and, in the event such
conditions are not so satisfied or waived, the Commitments shall terminate at such time).




          SECTION 4.02 Each Credit Event. The obligation of each Lender to make a Loan on the
occasion of any Borrowing and of any Issuing Bank to issue, amend, renew or extend any Letter of
Credit is subject to the satisfaction of the following conditions:





     (a) The representations and warranties of the Loan Parties set forth in the Loan
Documents shall be true and correct in all material respects (or, in the case of any
representation and warranty qualified by materiality, in all respects) on and as of the date









 



97



of such Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, except to the extent such representations and warranties
expressly relate to an earlier date (in which case such representations and warranties shall
be true and correct in all material respects as of such earlier date, or, in the case of any
representation and warranty qualified by materiality, in all respects as of such earlier
date).




     (b) At the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no
Default or Event of Default shall have occurred and be continuing.




     (c) At the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as applicable, (i) the
Aggregate U.S. Facility Credit Exposure shall not exceed the lesser of (x) the U.S. Facility
Commitment or (y) the U.S. Borrowing Base then in effect, (ii) the Aggregate Canadian
Facility Credit Exposure shall not exceed the lesser of (x) the Canadian Facility Commitment
or (y) the Canadian Borrowing Base plus U.S. Availability then in effect and (iii)
the Aggregate Credit Exposure shall not exceed the lesser of (x) the Total Commitment or (y)
the Aggregate Borrowing Base then in effect.


Each Borrowing (provided that a conversion or continuation of a Borrowing shall not constitute a
“Borrowing” for purposes of this Section 4.02) and each issuance, amendment, renewal or extension
of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrowers
on the date thereof as to the matters specified in paragraphs (a), (b) and (c) of this Section.




ARTICLE V




Affirmative Covenants




          Until the Commitments have expired or been terminated and the principal of and interest on
each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit
shall have expired or terminated or been cash collateralized and all LC Disbursements shall have
been reimbursed, each Loan Party executing this Agreement covenants and agrees, jointly and
severally with all of the Loan Parties, with the Lenders that:




          SECTION 5.01 Financial Statements; Borrowing Base and Other Information. The
Borrowers will furnish to the Administrative Agent and each Lender:





     (a) within 90 days after the end of each fiscal year of the Company (or such later date
if the Company has obtained an extension for filing its audited financials, but in no event
later than 105 days after the end of each fiscal year of the Company), its audited
consolidated balance sheet and related statements of operations, stockholders’ equity and
cash flows as of the end of and for such year, setting forth in each case in comparative
form the figures for the previous fiscal year, all reported on by independent public
accountants of recognized national standing (without a “going concern” or like qualification
or exception and without any qualification or exception as to the scope of









 



98



such audit) to the effect that such consolidated financial statements present fairly in
all material respects the financial condition and results of operations of the Company and
its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, accompanied by any management letter prepared by said accountants;




     (b) within 45 days after the end of each of the first three fiscal quarters of the
Company, its consolidated balance sheet and related statements of operations, stockholders’
equity and cash flows as of the end of and for such fiscal quarter and the then elapsed
portion of the fiscal year, setting forth in each case in comparative form the figures for
the corresponding period or periods of (or, in the case of the balance sheet, as of the end
of) the previous fiscal year, all certified by the Chief Financial Officer of the Company as
presenting fairly in all material respects the financial condition and results of operations
of the Company and its consolidated Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied, subject to normal year-end audit adjustments and the absence of
footnotes;




     (c) within 30 days after the end of each fiscal month (other than the last month of any
fiscal quarter of the Company or the last month of any fiscal year of the Company), the
Company’s consolidated balance sheet and related statements of operations, stockholders’
equity and cash flows as of the end of and for such fiscal month and the then elapsed
portion of the fiscal year, setting forth in each case in comparative form the figures for
the corresponding period or periods of (or, in the case of the balance sheet, as of the end
of) the previous fiscal year, all certified by the Chief Financial Officer of the Company as
presenting fairly in all material respects the financial condition and results of operations
of the Company and its consolidated Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied, subject to normal year-end audit adjustments and the absence of
footnotes;




     (d) concurrently with any delivery of financial statements under paragraphs (a), (b) or
(c) above, a certificate of the Chief Financial Officer of the Company substantially in the
form of Exhibit D certifying (i) in the case of the financial statements delivered
pursuant to paragraphs (b) or (c) above as presenting fairly in all material respects the
financial condition and results of operations of the Company and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject
to normal year-end audit adjustments and the absence of footnotes, (ii) as to whether a
Default has occurred and, if a Default has occurred, specifying the details thereof and any
action taken or proposed to be taken with respect thereto, (iii) setting forth reasonably
detailed calculation of the Fixed Charge Coverage Ratio and demonstrating compliance (to the
extent required) with the covenant contained in Section 6.12 and, if such certificate
demonstrates an Event of Default under Section 6.12, the Company may deliver, prior to or
together with such certificate, notice of the intent to cure (a “Notice of Intent to
Cure”) such Event of Default pursuant to Section 7.02 (provided that, except as
otherwise expressly set forth herein, the delivery of a Notice of Intent to Cure shall in no
way affect or alter the occurrence, existence or continuation of any such Event of Default
or the rights, benefits, powers and remedies of the Administrative Agent and the Lenders
under any Loan Document) and (iv) stating whether any change in GAAP or in the application
thereof that applies to the Company or









 



99



any of its consolidated Subsidiaries has occurred since the later of the date of the
audited financial statements referred to in Section 3.04 and the date of the prior
certificate delivered pursuant to this paragraph (d) indicating such a change and, if any
such change has occurred, specifying the effect of such change on the financial statements
accompanying such certificate;




     (e) concurrently with any delivery of financial statements under paragraph (a) of this
Section, a certificate of the accounting firm that reported on such financial statements
stating whether they obtained knowledge during the course of their examination of such
financial statements of any Default (which certificate may be limited to the extent required
by accounting rules or guidelines);




     (f) as soon as available, but in any event not more than 30 days after the end of each
fiscal year of the Company, detailed consolidated financial projections for such fiscal year
(including projected monthly consolidated balance sheets, income statements and cash flow
statements and the corresponding liquidity analyses in a form reasonably acceptable to the
Administrative Agent and setting forth the assumptions used for purposes of preparing such
budget);




     (g) as soon as available (but in any event within 30 days of the end of each of the
first three full fiscal months commencing on the Effective Date and within 15 Business Days
of the end of each fiscal month thereafter (or, during any Reporting Frequency Increase
Period, within three Business Days of the end of each week), (i) an Aggregate Borrowing Base
Certificate, a U.S. Borrowing Base Certificate and a Canadian Borrowing Base Certificate and
supporting information in connection therewith, together with any additional reports with
respect to the Borrowing Bases as the Collateral Agent may reasonably request and (ii) all
Borrowing Base Supplemental Documentation;




     (h) promptly after the filing thereof, copies of all reports on Form 10-K, Form 10-Q
and Form 8-K and all proxy statements filed by any Loan Party with the SEC, or any
Governmental Authority succeeding to any or all of the functions of the SEC, or with any
national securities exchange, as the case may be;




     (i) promptly following receipt thereof, copies of any documents described in Sections
101(k) or 101(l) of ERISA that any Loan Party or any ERISA Affiliate may request with
respect to any Multiemployer Plan, provided that if the Loan Parties or any of the ERISA
Affiliates have not requested such documents or notices from the administrator or sponsor of
the applicable Multiemployer Plan, then, upon reasonable request of the Administrative
Agent, the Loan Parties and/or the ERISA Affiliates shall promptly make a request for such
documents or notices from such administrator or sponsor and the Borrowers shall provide
copies of such documents and notices promptly to the Administrative Agent after receipt
thereof;




     (j) concurrently with the delivery of each Borrowing Base Certificate (or at such other
times as the Administrative Agent may reasonably request), a certificate from a Financial
Officer of the applicable Borrower setting forth the Aggregate Availability,









 



100



U.S. Facility Availability and Canadian Facility Availability, as applicable, as of the
period then ended, together with supporting information in connection therewith;




     (k) promptly upon obtaining knowledge of any such event, circumstance or change, a
written notice of any event, circumstance or change that has occurred since the delivery of
the most recent Borrowing Base Certificate in accordance with the terms of this Agreement
that would materially reduce the aggregate amount of the Eligible Accounts or result in a
material portion of the Eligible Accounts ceasing to be Eligible Accounts, in each case,
other than a result of payments thereof; and




     (l) promptly following any request therefor, such other information regarding the
operations, business affairs and financial condition of any Loan Party or any of its
Subsidiaries, or compliance with the terms of this Agreement and the other Loan Documents,
as the Administrative Agent or the Required Lenders (through the Administrative Agent) may
reasonably request.


Information required to be delivered pursuant to Sections 5.01(a), (b), and (h) shall be deemed to
have been delivered on the date on which the Company provides notice
to the Administrative Agent that such information has been posted on the SEC website on the Internet at www.sec.gov, or at
another website identified in such notice and accessible by the Lenders without charge, provided
that such notice may be included in a certificate delivered pursuant to Section 5.01(d).




          SECTION 5.02 Notices of Material Events. The Borrowers will furnish to the
Administrative Agent and each Lender prompt written notice of the
following.




     (a) the occurrence of any Default or Event of Default;




     (b) receipt of any notice of any governmental investigation or any litigation or
proceeding commenced or threatened against any Loan Party that (i) seeks damages in excess
of $20,000,000, (ii) seeks injunctive relief, (iii) is asserted or instituted against any
Plan, any Canadian Benefit Plan, any Canadian Pension Plan its fiduciaries or its assets,
(iv) alleges criminal misconduct by any Loan Party, (v) alleges the violation of any law
regarding, or seeks remedies in connection with, any Environmental Laws, (vi) contests any
Tax, fee, assessment, or other governmental charge in excess of $20,000,000, or (vii)
involves any material product recall; provided, that with respect to any product
liability case, the Company shall be required to furnish such notices only (x)
contemporaneously with the delivery of the financial statements under Section 5.01(b) and
(y) to the extent not covered by insurance;




     (c) any Lien (other than Permitted Liens) or claim made or asserted against any portion
of the Collateral with a fair market value in the amount of $10,000,000 or more;




     (d) any loss, damage, or destruction to any portion of the Collateral with a fair
market value in the amount of $10,000,000 or more, to the extent not covered by insurance;









 



101



     (e) any and all default notices received under or with respect to any leased or
subleased location or public warehouse where any portion of the Collateral with a fair
market value in the amount of $10,000,000 or more is located (which shall be delivered
within two Business Days after receipt thereof);




     (f) all material amendments to the Note Documents, together with a copy of each such
amendment;




     (g) the fact that a Loan Party has entered into a Swap Agreement or an amendment to a
Swap Agreement, together with copies of all agreements evidencing such Swap Agreement or
amendments thereto that extend the term thereof or materially increase the Loan Parties’
exposure thereunder (which shall be delivered within two Business Days);




     (h) the occurrence of any ERISA Event that, alone or together with any other ERISA
Events that have occurred, could reasonably be expected to result in a Material Adverse
Effect;




     (i) any event, notice or circumstance or any correspondence with any Governmental
Authority (including with respect to any release into the indoor or outdoor environment of
any Hazardous Material that is required by any applicable Environmental Law to be reported
to a Governmental Authority) which could reasonably be expected to result in a Material
Adverse Effect; and




     (j) any other development including that results in, or could reasonably be expected to
result in, a Material Adverse Effect.


Each notice delivered under this Section shall be accompanied by a written statement of a Financial
Officer or other executive officer of the applicable Borrower setting forth the details of the
event or development requiring such notice and any action taken or proposed to be taken with
respect thereto.




          SECTION 5.03 Existence. Each Loan Party will, and will cause each Subsidiary to, (a)
do or cause to be done all things necessary to preserve, renew and keep in full force and effect
its legal existence and the rights, qualifications, licenses, permits, franchises, governmental
authorizations, intellectual property rights, licenses and permits material to the conduct of its
business and maintain all requisite authority to conduct its business in each jurisdiction in which
its business is conducted; except where the failure to do so could not be reasonably expected to
have a Material Adverse Effect; provided, however, that the Loan Party shall not be
required to preserve any such right, franchise, licenses and permits if the preservation thereof is
no longer desirable in the conduct of the business of such Person and the loss thereof is not
adverse in any material respect to such Person or the Lenders; provided, further,
that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution
permitted under Section 6.03.




          SECTION 5.04 Payment of Taxes. Each Loan Party will, and will cause each Subsidiary
to, pay or discharge all Taxes, before the same shall become delinquent or in default, except where
(a) the validity or amount thereof is being contested in good faith by









 



102


appropriate proceedings, (b) such Loan Party or such Subsidiary has set aside on its books
adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material Adverse Effect.




          SECTION 5.05 Maintenance of Properties Except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect, each Loan Party will, and will cause each
Subsidiary to, keep and maintain all property material to the conduct of its business in good
working order and condition, ordinary wear and tear and casualty excepted; provided,
however, that the Loan Party shall not be required to maintain any property if the
preservation thereof is no longer desirable in the conduct of the business of such Person and the
loss thereof is not adverse in any material respect to such Person or the Lenders.




          SECTION 5.06 Books and Records; Inspection Rights. Each Loan Party will, and will
cause each Subsidiary to, (i) keep proper books of record and account in which full, true and
correct entries in all material respects are made of all dealings and transactions in relation to
its business and activities and (ii) permit any representatives designated by the Administrative
Agent (including employees of the Administrative Agent, or any consultants, accountants, lawyers
and appraisers retained by the Administrative Agent), upon reasonable prior notice, to visit and
inspect its properties, to examine and make extracts from its books and records (including
environmental assessment reports and Phase I or Phase II studies (with respect to such
environmental reports and studies, subject to any limitations of any lease, sublease or other
agreement with, or other obligations to, any third party by which any Loan Party is bound with
respect to the property at issue; and, with respect to any Phase II study, subject to execution of
a customary access agreement reasonably acceptable to the Administrative Agent and the relevant
Loan Party) and to discuss its affairs, finances and condition with its officers and independent
accountants, (provided that the Company shall be provided the opportunity to participate in any
such discussions with its independent accountants), all at such reasonable times and as often as
reasonably requested. The Loan Parties acknowledge that the Administrative Agent, after exercising
its rights of inspection, may prepare and distribute to the Lenders certain Reports pertaining to
the Loan Parties’ assets for internal use by the Administrative Agent and the Lenders.




          SECTION 5.07 Compliance with Laws. (a) Each Loan Party will, and will cause each
Subsidiary to, comply with all Requirements of Law applicable to it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be expected to result
in a Material Adverse Effect.





     (b) Canadian Pension Plans and Benefit Plans.




     (i) For each existing, or hereafter adopted, Canadian Pension Plan and Canadian Benefit
Plan, each Loan Party will, and will cause each Subsidiary to, in a timely fashion comply
with and perform in all material respects all of its obligations under and in respect of
such Canadian Pension Plan or Canadian Benefit Plan, including under any funding agreements
and all applicable laws (including any fiduciary, funding, investment and administration
obligations).









 



103



     (ii) All employer or employee payments, contributions or premiums required to be
remitted, paid to or in respect of each Canadian Pension Plan or Canadian Benefit Plan shall
be paid or remitted by each Loan Party and each Subsidiary of each Loan Party in a timely
fashion in accordance with the terms thereof, any funding agreements and all applicable
laws.




     (iii) The Loan Parties shall deliver to Lender (i) if requested by Lender, copies of
each annual and other return, report or valuation with respect to each Canadian Pension Plan
as filed with any applicable Governmental Authority; (ii) promptly after receipt thereof, a
copy of any direction, order, notice, ruling or opinion that any Loan Party or any
Subsidiary of any Loan Party may receive from any applicable Governmental Authority with
respect to any Canadian Pension Plan; (iii) notification within 30 days of any increases
having a cost to one or more of the Loan Parties and their Subsidiaries in excess of
$10,000,000 per annum in the aggregate, in the benefits of any existing Canadian Pension
Plan or Canadian Benefit Plan, or the establishment of any new Canadian Pension Plan or
Canadian Benefit Plan, or the commencement of contributions to any such plan to which any
Loan Party was not previously contributing; and (iv) notification within 30 days of any
voluntary or involuntary termination of, or participation in, a Canadian Pension Plan or a
Canadian Benefit Plan.



          (c) Except as could not reasonably be expected to have a Material Adverse Effect, the Loan
Parties and each of their respective Subsidiaries: (i) shall be at all times in compliance with all
applicable Environmental Laws, and take commercially reasonable efforts to ensure compliance by all
tenants and subtenants and invitees with all applicable Environmental Laws, and (ii) shall
generate, use, treat, store, release, transport, dispose of, and otherwise manage all Hazardous
Materials in a manner that would not reasonably be expected to result in a liability to any Loan
Party or any of its Subsidiaries or to adversely affect any real property owned or operated by any
of them, and take reasonable efforts to prevent any other Person from generating, using, treating,
storing, releasing, transporting, disposing of, or otherwise managing Hazardous Materials in a
manner that could reasonably be expected to result in a liability to, or adversely affect any real
property owned or operated by, any Loan Party or any of its Subsidiaries; it being understood that
this clause (c) shall be deemed not breached by a noncompliance with (i) or (ii) above provided
that, upon learning of such noncompliance or any condition that results from such noncompliance,
which, in either case, could reasonably be considered material, any affected Loan Parties and
Subsidiaries promptly develop and diligently implement a response to such noncompliance and any
such condition that is consistent with principles of prudent environmental management and all
applicable Environmental Laws, and provided that such response and condition, in the aggregate with
any other such responses and conditions, could not reasonably be expected to have a Material
Adverse Effect.




          SECTION 5.08 Use of Proceeds. The proceeds of the Loans will be used, and Letters of
Credit will be issued, to refinance certain existing Indebtedness of the Company and for other
general corporate purposes (including Permitted Acquisitions) of the Company and the Subsidiaries.
No part of the proceeds of any Loan and no Letter of Credit will be used, whether directly or
indirectly, for any purpose that entails a violation of any of the Regulations of the Board,
including Regulations T, U and X as in effect from time to time.










 



104




          SECTION 5.09 Insurance. (a) Each Loan Party will maintain or cause to be maintained,
with financially sound and reputable insurers, such public liability insurance, third party
property damage insurance, business interruption insurance and casualty insurance with respect to
liabilities, losses or damage in respect of the assets, properties and businesses of the Loans
Parties as may customarily be carried or maintained under similar circumstances by Persons of
established reputation engaged in similar businesses, in each case in such amounts (giving effect
to self insurance), with such deductibles, covering such risks and otherwise on such terms and
conditions as shall be customary for such Persons. The Borrowers will furnish to the Administrative
Agent, upon the request of the Administrative Agent, information in reasonable detail as to the
insurance so maintained.




          (b) All insurance policies required under paragraph (a) of this Section 5.09, to the extent
such insurance policies by their terms insure any portion of the Collateral, shall name the
Administrative Agent (for the benefit of the Secured Parties) as an additional insured or as a loss
payee, as applicable, and shall contain loss payable clauses or mortgagee clauses, through
endorsements in form and substance reasonably satisfactory to the Administrative Agent, that
provide that (i) all proceeds thereunder with respect to any Collateral shall be payable to the
Administrative Agent, the Note Representative or the Borrowers and (ii) such policy and loss
payable clauses may be canceled or terminated only upon at least 30 days’ prior written notice
given to the Administrative Agent. For the avoidance of doubt the application of any insurance
proceeds will be subject to the terms of the Intercreditor Agreement.




          (c) All premiums on any such insurance shall be paid when due by the Borrowers and their
Subsidiaries, and summaries of the policies shall be delivered annually upon renewal of such
insurance policy. If the Borrowers or any of their Subsidiaries shall fail to obtain any insurance
as required by this Section 5.09, the Administrative Agent may obtain such insurance at the
Borrowers’ expense. By purchasing such insurance, the Administrative Agent shall not be deemed to
have waived any Default arising from the applicable Borrower’s or such Subsidiary’s failure to
maintain such insurance or pay any premiums therefor.




          SECTION 5.10 Casualty and Condemnation. The Borrowers (a) will furnish to the
Administrative Agent and the Lenders prompt written notice of any casualty or other insured damage
to any portion of the Collateral with a fair market value in the amount of $10,000,000 or more or
the commencement of any action or proceeding for the taking of any material portion of the
Collateral with a fair market value in the amount of $10,000,000 or more or interest therein under
power of eminent domain or by condemnation or similar proceeding and (b) will ensure that the Net
Proceeds of any such event (whether in the form of insurance proceeds, condemnation awards or
otherwise) are collected and applied in accordance with the applicable provisions of this
Agreement, the Collateral Documents and the Intercreditor Agreement.




          SECTION 5.11 Governmental Authorizations. Each Loan Party will, and will cause each
Subsidiary to, promptly from time to time obtain or make and maintain in full force and effect all
material licenses, consents, authorizations and approvals of, and filings and registrations with,
any Governmental Authority from time to time necessary under the laws of the jurisdiction in which
each Loan Party is located for the making and performance in all material respects by each such
Loan Parties of the Loan Documents.










 



105




          SECTION 5.12 Depository Banks. The Borrowers and their Subsidiaries will maintain one
or more of the Lenders as its principal depository bank, including for the maintenance of
operating, administrative, cash management, collection activity, and other deposit accounts for the
conduct of its business.




          SECTION 5.13 Appraisals. Twice in each twelve month period, at the request of the
Collateral Agent, the Loan Parties will cooperate with an appraiser selected and engaged by the
Collateral Agent to provide Inventory appraisals or updates thereof, prepared on a basis reasonably
satisfactory to the Collateral Agent, such appraisals and updates to include, without limitation,
information required by applicable law and regulations; provided, however that (a)
if an Event of Default has occurred and is continuing, there shall be no limitation on the number
or frequency of such appraisals and (b) if Aggregate Gross Availability is less than the greater of
(i) 20% of the Aggregate Gross Borrowing Base (not to exceed 20% of the Total Commitment) and
(ii)(A) during September, October and November, $35,000,000 and (B) during any other month,
$40,000,000, for any period of five consecutive Business Days in any calendar year, then three
times during the twelve month period commencing with any month during which clause (b) is
triggered, at the request of the Collateral Agent, the Loan Parties will cooperate with the
Collateral Agent to provide such appraisals. For purposes of this Section 5.13, it is understood
and agreed that a single appraisal may consist of appraisals conducted at multiple relevant sites
and involve one or more relevant Loan Parties and their assets. All such appraisals shall be at
the sole expense of the Loan Parties.




          SECTION 5.14 Field Examinations. Twice in each twelve month period, at the request of
the Collateral Agent, the Loan Parties will permit, upon reasonable notice, the Collateral Agent to
conduct a field examination to ensure the adequacy of Collateral included in any Borrowing Base and
related reporting and control systems; provided, however that (a) if an Event of
Default has occurred and is continuing, there shall be no limitation on the number or frequency of
field examinations and (b) if Aggregate Gross Availability is less than the greater of (i) 20% of
the Aggregate Gross Borrowing Base (not to exceed 20% of the Total Commitment) and (ii) (A) during
September, October and November, $35,000,000 and (B) during any other month, $40,000,000, for any
period of five consecutive Business Days in any calendar year, then three times during the twelve
month period commencing with any month during which clause (b) is triggered, at the request of the
Collateral Agent, the Loan Parties will permit the Collateral Agent to conduct such examinations.
For purposes of this Section 5.14, it is understood and agreed that a single field examination may
be conducted at multiple relevant sites and involve one or more relevant Loan Parties and their
assets. All such field examinations shall be at the sole expense of the Loan Parties.




          SECTION 5.15 Additional Collateral; Further Assurances. (a) Subject to applicable
law, the Borrowers and each of their Subsidiaries that are Loan Parties shall promptly cause any
Wholly-Owned Domestic Subsidiary or Wholly-Owned Canadian Subsidiary created or acquired after the
Effective Date to (A) become a Loan Party by executing the Joinder Agreement set forth as
Exhibit E hereto (the “Joinder Agreement”) and (B) to execute and deliver such
amendments, supplements or documents of accession to any Collateral Documents as the Administrative
Agent reasonably deems necessary for such Subsidiary to grant to the Administrative Agent (for the
benefit of the Secured Parties) a perfected security interest (with the priority required by the
Intercreditor Agreement) in the Collateral described in such









 



106


Collateral Document with respect to such Subsidiary, subject only to Permitted Liens. Upon
execution and delivery of such documents and agreements, each such Person (i) shall automatically
become a Guarantor hereunder and thereupon shall have all of the rights, benefits, duties, and
obligations in such capacity under the Loan Documents and (ii) will grant Liens to the
Administrative Agent, for the benefit of the Secured Parties), in any property of such Loan Party
which constitutes Collateral, other than any real property owned or leased.




          (b) Each U.S. Loan Party will, to the extent required under the applicable Collateral
Documents, cause (i) 100% of the issued and outstanding Equity Interests of each of its
Wholly-Owned Domestic Subsidiaries and (ii) 65% of the issued and outstanding Equity Interests in
each Wholly-Owned Foreign Subsidiary and Wholly-Owned Canadian Subsidiary directly owned by such
Loan Party to be subject at all times to a perfected Lien (with the priority required by the
Intercreditor Agreement and subject to Permitted Liens) in respect of the Secured Obligations
(other than the Canadian Secured Obligations) in favor of the Administrative Agent pursuant to the
terms and conditions of the Loan Documents or other security documents as the Administrative Agent
shall reasonably request. Each Canadian Loan Party will, to the extent required under the
applicable Collateral Agreement cause 100% of the issued and outstanding Equity Interests of each
of its Wholly-Owned Subsidiaries directly owned by such Loan Party to be subject at all times to a
perfected Lien (with the priority required by the Intercreditor Agreement and subject to Permitted
Liens) in respect of the Canadian Secured Obligations.




          (c) Each Loan Party will, to the extent required under the applicable Collateral Documents,
cause 100% of the issued and outstanding Equity Interests of each of its Wholly-Owned Subsidiaries
directly owned by such Loan Party to be subject at all times to a perfected Lien (with the priority
required by the Intercreditor Agreement and subject to Permitted Liens) in respect of the Canadian
Secured Obligations in favor of the Administrative Agent pursuant to the terms and conditions of
the Loan Documents or other security documents as the Administrative Agent shall reasonably
request.




          (d) Without limiting the foregoing, each Loan Party will execute and deliver, or cause to be
executed and delivered, to the Administrative Agent such documents, agreements and instruments, and
will take or cause to be taken such further actions (including the filing and recording of
financing statements, fixture filings, mortgages, deeds of trust and other documents and such other
actions or deliveries of the type required by Section 4.01, as applicable), which may be required
by law or which the Administrative Agent may, from time to time, reasonably request to carry out
the terms and conditions of this Agreement and the other Loan Documents and to ensure perfection
and priority of the Liens created or intended to be created by the Collateral Documents, all at the
expense of the Loan Parties. In addition, each Loan Party will execute and deliver, or cause to be
executed and delivered, to the Administrative Agent filings with any governmental recording or
registration office in any jurisdiction required by the Administrative Agent, in the exercise of
its Permitted Discretion, in order to perfect or protect the Liens of the Administrative Agent
granted under any Collateral Document in any Intellectual Property, all at the expense of the Loan
Parties.




          (e) If any material assets (other than any real property) are acquired by the Company or any
other Loan Party after the Effective Date (other than assets constituting Collateral under any of
the Security Agreements that become subject to the Lien in favor of the









 



107


Administrative Agent pursuant to the applicable Security Agreement upon acquisition thereof),
the Company will notify the Administrative Agent and, if requested by the Administrative Agent or
the Required Lenders, the Company will cause such assets to be subjected to a Lien securing the
Secured Obligations and will take, and cause the Loan Parties to take, such actions as shall be
necessary or reasonably requested by the Administrative Agent to grant and perfect such Liens,
including actions described in paragraph (d) of this Section, all at the expense of the Loan
Parties.




          Notwithstanding the foregoing, neither the Company nor any Subsidiary shall be required to
grant a security interest in any property to the extent that such grant of a security interest is
prohibited by any requirement of law of a governmental authority, requires a consent not obtained
of any governmental authority pursuant to such requirement of law or is prohibited by, or
constitutes a breach or default under or results in the termination of or gives rise to a right on
the part of the parties thereto other than the Company and its Subsidiaries to terminate (or
materially modify) or requires any consent not obtained under, any contract, license, agreement,
instrument or other document evidencing or giving rise to such property or, in the case of any
investment property, pledged stock or pledged note, any applicable shareholder or similar
agreement, except to the extent that such requirement of law or the term in such contract, license,
agreement, instrument or other document or shareholder or similar agreement providing for such
prohibition, breach, default or right of termination or modification or requiring such consent is
ineffective under applicable law.




          Additionally, the parties hereto agree that, notwithstanding anything to the contrary
contained herein or in the Loan Documents, neither the Company nor any subsidiary shall be required
to provide any guarantee, pledge or asset support arrangement that, in the reasonable judgment of
the Company, would subject the Company to any adverse tax consequence due to the application of
Section 956 of the Code.




          In addition, and notwithstanding anything else to the contrary contained in this Section or
elsewhere in the Agreement, perfection of Collateral (including the pledge of any Equity Interests)
shall not be required where either the burden or costs of perfecting a security interest, lien or
mortgage is reasonably determined (in consultation with the Borrowers) by the Administrative Agent
to be excessive in relation to the benefit afforded to the Lenders thereby. For the avoidance of
doubt, it is understood and agreed that limitations under applicable law regarding the pledge of
Equity Interests in any Subsidiary shall be considered a basis for the exclusion of such pledge
from the requirements of perfection pursuant to this Section.




          SECTION 5.16 Control Agreements. (a) The Borrowers will, and the Borrowers will
cause each applicable Loan Party to, (i) enter into the Deposit Account Control Agreements required
to be provided pursuant to the Security Agreements and (ii) open the Collection Accounts with the
Administrative Agent, in each case within 60 days of the Effective Date (or such later date as the
Administrative Agent shall agree in its Permitted Discretion). In connection with the foregoing,
the Borrowers shall, if requested by the Administrative Agent, promptly deliver to the
Administrative Agent a written opinion (addressed to the Administrative Agent and the Lenders) of
counsel for the Borrowers and the other Loan Parties, in form and substance reasonably satisfactory
to the Administrative Agent and covering customary matters relating to such Deposit Account Control
Agreements.










 



108




          (b) The Borrowers shall determine the aggregate balance of cash and Permitted Investments of
all Loan Parties in accounts located in the United States or Canada (other than (i) each deposit
account, the funds in which are used, in the ordinary course of business, solely for the payment of
salaries and wages, workers’ compensation, pension benefits and similar expenses or taxes related
thereto, (ii) each deposit account used, in the ordinary course of business, solely for daily
accounts payable and that has an ending daily balance of zero and (iii) each account, all the cash
and Permitted Investments contained in which consist of (A) proceeds from the issuance of
Indebtedness; (B) proceeds from the sale or other disposition of assets (other than ABL First
Priority Collateral), or (C) proceeds of insurance and condemnation awards (and payments in lieu
thereof) relating to any assets (other than ABL First Priority Collateral), in each case, to the
extent such cash or Permitted Investments is required to be deposited in such account pursuant to
the documentation governing any Indebtedness having a first-priority lien on any assets (other than
ABL First Priority Collateral)) not subject to Deposit Account Control Agreements or other
appropriate control agreements in favor of the Administrative Agent in form and substance
reasonably satisfactory to the Administrative Agent at each time when the Borrowers deliver any
Borrowing Base reports pursuant to Section 5.01(g), and, if during any Cash Dominion Period the
aggregate balance on a daily average basis over a 30-day period of cash and Permitted Investments
not subject to a perfected first-priority lien as described above is equal to or greater than
$5,000,000, the Borrowers shall promptly eliminate such excess from such accounts or shall within
30 days enter, or cause the applicable Loan Parties to enter, into one or more Deposit Account
Control Agreements or other appropriate control agreements in favor of the Administrative Agent in
form and substance reasonably satisfactory to the Administrative Agent so that there shall not
thereafter be any such excess.




          SECTION 5.17 Post-Closing Actions. Subject to the terms of the Security Agreement,
the Loan Parties shall use commercially reasonable efforts to deliver to the Administrative Agent,
within 90 days of the Effective Date (or such later date as the Administrative Agent may agree in
its reasonable discretion), Collateral Access Agreements required to be provided pursuant to
Section 4.13 of the Security Agreement; provided that the Loan Parties shall not be
required to make payments to obtain such Collateral Access Agreements, except for any payments
already required pursuant to the underlying lease agreements (together with any renewals,
extensions, amendments, modifications, substitutions or replacements thereof) and minimum
processing fees not to exceed $500.




ARTICLE VI




Negative Covenants




          Until the Commitments have expired or terminated and the principal of and interest on each
Loan and all fees, expenses and other amounts payable under any Loan Document have been paid in
full and all Letters of Credit have expired or been terminated and all LC Disbursements shall have
been reimbursed, each of the Loan Parties covenants and agrees, jointly and severally, with the
Lenders that:










 



109




          SECTION 6.01 Indebtedness. No Loan Party will, nor will it permit any of its
Subsidiaries to, directly or indirectly create, incur, assume or suffer to exist any Indebtedness,
except:





     (a) the Secured Obligations;




     (b) the Senior Secured Notes and Guarantees thereof by the Guarantors in an initial
aggregate principal amount not to exceed $350,000,000;




     (c) Indebtedness existing on the Effective Date and set forth on Schedule 6.01 and any
extensions, renewals and replacements of any such Indebtedness in accordance with clause (g)
hereof;




     (d) Indebtedness of any Borrower to any Subsidiary or any other Borrower and of any
Subsidiary to any Borrower or any other Subsidiary; provided that (i) Indebtedness
of any Subsidiary that is not a Loan Party to the Company or any Subsidiary that is a Loan
Party shall be subject to Section 6.04 and (ii) Indebtedness of the Company to any
Subsidiary and Indebtedness of any Subsidiary that is a Loan Party to any Subsidiary that is
not a Loan Party shall be subordinated to the Secured Obligations on terms reasonably
satisfactory to the Administrative Agent;




     (e) Guarantees by any Borrower of Indebtedness of any Subsidiary and by any Subsidiary
of Indebtedness of any Borrower or any other Subsidiary; provided that (i) the
Indebtedness so Guaranteed is permitted by this Section 6.01, (ii) Guarantees by any
Borrower or any Subsidiary that is a Loan Party of Indebtedness of any Subsidiary that is
not a Loan Party shall be subject to Section 6.04 and (iii) Guarantees permitted under this
clause (e) shall be subordinated to the Secured Obligations of the applicable Subsidiary on
the same terms as the Indebtedness so Guaranteed is subordinated to the Secured Obligations;




     (f) Indebtedness of any Borrower or any Subsidiary incurred to finance the acquisition,
construction or improvement of any fixed or capital assets (whether or not constituting
purchase money Indebtedness), including Capital Lease Obligations and any Indebtedness
assumed in connection with the acquisition of any such assets or secured by a Lien on any
such assets prior to the acquisition thereof, and extensions, renewals and replacements of
any such Indebtedness in accordance with clause (g) hereof; provided that (i) such
Indebtedness is incurred prior to or within 120 days after such acquisition or the
completion of such construction or improvement and (ii) the aggregate principal amount of
Indebtedness permitted by this clause (f) shall not exceed $5,000,000 at any time
outstanding;




     (g) Indebtedness which represents an extension, refinancing, replacement or renewal
(collectively, “Refinancing”) of any of the Indebtedness described in clauses (b),
(c), (f), (g), (j), (k), (l), (m) and (n) hereof; provided that, (i) the principal
amount (or accreted value, if applicable) of such Indebtedness is not increased, except by
an amount equal to unpaid accrued interest and premium thereon plus other reasonable
amounts paid, and fees and expenses reasonably incurred, in connection with such
Refinancing,









 



110



(ii) any Liens securing such Indebtedness are not extended to any additional property
of any Loan Party, (iii) no Loan Party that is not originally obligated with respect to
repayment of such Indebtedness is required to become obligated with respect thereto, (iv)
such Refinancing does not result in a shortening of the average weighted maturity of the
Indebtedness so extended, refinanced or renewed, (v) the terms of any such Refinancing are,
taken as a whole, not materially less favorable to the obligor thereunder than the original
terms of such Indebtedness and (iv) if the Indebtedness that is Refinanced was subordinated
in right of payment to the Secured Obligations, then the terms and conditions of the
Refinancing Indebtedness must include subordination terms and conditions that are at least
as favorable to the Administrative Agent and the Lenders as those that were applicable to
the Indebtedness subject to the Refinancing;




     (h) Indebtedness owed to any Person providing workers’ compensation, health, disability
or other employee benefits or property, casualty or liability insurance, pursuant to
reimbursement or indemnification obligations to such Person, in each case incurred in the
ordinary course of business;




     (i) Indebtedness of the Company or any Subsidiary in respect of performance bonds, bid
bonds, appeal bonds, surety bonds and similar obligations, in each case provided in the
ordinary course of business;




     (j) Indebtedness of Foreign Subsidiaries and Canadian Subsidiaries; provided,
that, the aggregate principal amount of Indebtedness permitted by this paragraph (j)
shall not exceed $20,000,000 at any time outstanding;




     (k) Indebtedness of any Person that becomes a Subsidiary after the date hereof;
provided that (i) such Indebtedness exists at the time such Person becomes a
Subsidiary and is not created in contemplation of or in connection with such Person becoming
a Subsidiary and (ii) the aggregate principal amount of Indebtedness permitted by this
clause (k) shall not exceed $10,000,000 at any time outstanding; and




     (l) other Indebtedness in an aggregate principal amount not exceeding $20,000,000 at
any time outstanding;




     (m) (x) the incurrence or assumption by the Company or a Subsidiary of Indebtedness to
finance or assumed in connection with a Permitted Acquisition or (y) the incurrence or
assumption by the Company or a Subsidiary of Indebtedness of Persons that are acquired by
the Company or any Subsidiary or merged into the Company or a Subsidiary; provided
that in the case of (x) and (y) after giving effect to such acquisition or merger on a pro
forma basis (A) (1) the Fixed Charge Coverage Ratio is (i) greater than 1.25 to 1.00 and
(ii) greater than the Fixed Charge Coverage Ratio immediately prior to such acquisition or
merger or (2) the Fixed Charge Coverage Ratio is greater than 1.25 to 1.00 and such
Indebtedness is incurred or assumed on an unsecured subordinated basis, in each case, the
Fixed Charge Coverage Ratio shall be calculated in a manner set forth in the first sentence
of this covenant and (B) the Aggregate Gross Availability is not less than 25% of the
Aggregate Gross Borrowing Base;









 



111



     (n) the incurrence by the Company or any of its Subsidiaries of Indebtedness, the net
proceeds of which are used to fund scheduled cash interest payments on, or repay, prepay,
repurchase, redeem, defease or retire, any Indebtedness under the Holdings Credit Facilities
or to pay to unrelated third parties any fees, expenses or premiums, if any, related
thereto; provided, however, that (A) after giving pro forma effect thereto
(i) the Total Leverage Ratio would be no greater than 5.00 to 1.00 as of the end of the
Company’s most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding such incurrence and (ii) the Aggregate Gross
Availability would be not less than 25% of the Aggregate Gross Borrowing Base and, (B) any
Indebtedness the proceeds of which are used to repay, prepay, repurchase, redeem, defease or
retire Indebtedness under the Holdco Credit Facilities is incurred on an unsecured senior or
unsecured subordinated basis; provided that the principal amount of such Indebtedness
matures no earlier than 91 days after the Maturity Date and (C) the amount of Indebtedness
incurred pursuant to this Section 6.01(n) does not exceed the sum of (x) Indebtedness under
the Holdings Credit Facilities outstanding on the Effective Date plus any accrued
and capitalized interest thereon, (y) the aggregate amount of accrued but unpaid interest
thereon and (z) fees, expenses and premiums, if any, relating to such transaction;




     (o) Indebtedness in respect of Swap Agreements permitted under Section 6.07;




     (p) Indebtedness of the Company or any Subsidiary supported by a Letter of Credit, in a
principal amount not to exceed the face amount of such Letter of Credit;




     (q) Indebtedness which may be deemed to exist pursuant to any guaranties, performance,
surety, statutory, appeal or similar obligations incurred in the ordinary course of
business;




     (r) Indebtedness in respect of netting services, overdraft protections and otherwise in
connection with deposit accounts;




     (s) Indebtedness representing deferred compensation to employees of the Company or any
of its Subsidiaries incurred in the ordinary course of business;




     (t) Indebtedness consisting of obligations of the Company or any Subsidiary under
deferred compensation or similar arrangements incurred by such Person in connection with
Permitted Acquisitions or any other Investment expressly permitted hereunder;




     (u) Indebtedness consisting of (a) financing of insurance premiums or (b) take-or-pay
obligations contained in supply arrangements, in each case, in the ordinary course of
business;




     (v) Indebtedness incurred by the Company or any of its Subsidiaries in respect of
letters of credit, bank guarantees, bankers’ acceptances, or similar instruments issued or
created in the ordinary course of business, including in respect of workers compensation
claims, health, disability or other employee benefits or property, casualty,









 



112



or liability insurance or self-insurance or other Indebtedness with respect to
reimbursement-type obligations regarding workers compensation claims; and




     (w) Promissory notes issued in connection with the repurchase, redemption or other
acquisition or retirement of Equity Interests held by any current or former officer,
director or employee of any Parent, the Company or any of its Subsidiaries;
provided, that, such repurchase, redemption, or other acquisition or
retirement is permitted by Section 6.08(a)(iii).



          SECTION 6.02 Liens. No Loan Party will, nor will it permit any of its Subsidiaries
to, create, incur, assume or permit to exist any Lien on any property or asset now owned or
hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable)
or rights in respect of any thereof, except:





     (a) Liens securing the Secured Obligations;




     (b) Permitted Encumbrances;




     (c) Liens on the Collateral securing Indebtedness incurred pursuant to Section 6.01(b),
and any extensions, renewals and replacements of any such Indebtedness in respect thereof in
accordance with Section 6.01(g), in each case, to the extent subject to the Intercreditor
Agreement;




     (d) any Lien on any property or asset of any Borrower or any Subsidiary existing on the
Effective Date and set forth on Schedule 6.02; provided that (i) such Lien shall not
apply to any other property or asset of any Borrower or any Subsidiary and (ii) such Lien
shall secure only (A) those obligations that it secures on the Effective Date, or (B)
obligations that shall have been extended, renewed, replaced or refinanced in accordance
with Section 6.01(g);




     (e) Liens on fixed or capital assets acquired, constructed or improved by any Borrower
or any Subsidiary; provided that (i) such security interests secure Indebtedness
permitted by Section 6.01 (or any Refinancing of such Indebtedness permitted under clause
(g) of Section 6.01) and (ii) such security interests shall not apply to any other property
or assets of such Borrower or Subsidiary or any other Borrower or Subsidiary;




     (f) any Lien existing on any property or asset (other than Accounts and Inventory of
any Loan Party) prior to the acquisition thereof by any Borrower or any Subsidiary or
existing on any property or asset (other than Accounts and Inventory of any Loan Party) of
any Person that becomes a Subsidiary or is merged or consolidated with any Borrower or any
Subsidiary after the date hereof prior to the time such Person becomes a Subsidiary or is so
merged or consolidated securing Indebtedness permitted under Section 6.01(k);
provided that (A) such Lien is not created in contemplation of or in connection with
such acquisition, merger or consolidation or such Person becoming a Subsidiary, as the case
may be, (B) such Lien shall not apply to any other property or asset of such Borrower or
Subsidiary or any other Borrower or Subsidiary and (C) such Lien shall secure only those
obligations that it secures on the date of such acquisition, merger or consolidation or the
date such Person becomes a Subsidiary, as the case may









 



113



be, or, with respect to any such obligations that shall have been subject to a
Refinancing in accordance with Section 6.01, such Refinancing in respect thereof;




     (g) Liens (i) of a collecting bank arising in the ordinary course of business under
Section 4-210 of the Uniform Commercial Code in effect in the relevant jurisdiction covering
only the items being collected upon, (ii) attaching to a commodity trading account or other
commodities brokerage account incurred in the ordinary course of business and (iii) in favor
of banking or other financial institutions arising as a matter of law or under customary
contractual provisions encumbering deposits or other funds maintained with such banking or
other financial institutions (including the right of set off and grants of security
interests in deposits and/or securities held by such banking or other financial institution)
and that are within the general parameters customary in the banking industry;




     (h) Liens arising out of sale and leaseback transactions permitted by Section 6.06;




     (i) Liens granted by a Subsidiary that is not a Loan Party in favor of the a Borrower
or another Loan Party in respect of Indebtedness owed by such Subsidiary;




     (j) Liens securing Indebtedness permitted by Section 6.01(j), provided that such Lien
shall only cover the property of Foreign Subsidiaries and Canadian Subsidiaries; and




     (k) Liens securing Indebtedness of the Company or any of its Subsidiaries the proceeds
of which are used to finance a Permitted Acquisition, so long as after giving pro forma
effect to such acquisition, (i) the Secured Leverage Ratio of the Company would be no
greater than 3.50 to 1.00 as of the end of the Company’s most recently ended four full
fiscal quarters for which internal financial statements are available immediately preceding
such incurrence and (ii) the Aggregate Gross Availability would be equal to or greater than
25% of the Aggregate Gross Borrowing Base;




     (l) other Liens so long as the aggregate outstanding principal amount of the
obligations secured thereby does not exceed $50,000,000;


Notwithstanding the foregoing, none of the Liens permitted pursuant to this Section 6.02 may at any
time attach to any Loan Party’s (1) Accounts, other than those permitted under clause (a) of the
definition of Permitted Encumbrance and clauses (a) and (c) above and, in the case of Liens junior
in priority to the Liens securing the Secured Obligations and subject to an intercreditor agreement
reasonably acceptable to the Collateral Agent, clauses (k) and (l) above and (2) Inventory, other
than those permitted under clauses (a), (b) and (i) of the definition of Permitted Encumbrance and
clauses (a) and (c) above and, in the case of Liens junior in priority to the Liens securing the
Secured Obligations and subject to an intercreditor agreement reasonably acceptable to the
Collateral Agent, clauses (k) and (l) above. Notwithstanding anything to the contrary contained in
this Agreement or any Collateral Document (including any provision for, reference to, or
acknowledgement of, any Lien or Permitted Lien), nothing herein and no approval by the
Administrative Agent or Lenders of any Lien or Permitted Lien (whether such








 



114


approval is oral or in writing) shall be construed as or deemed to constitute a subordination by
the Administrative Agent or the Lenders of any security interest or other right, interest or Lien
in or to the Collateral or any part thereof in favour of any Lien or Permitted Lien or any holder
of any Lien or Permitted Lien.



Furthermore, it is understood and agreed that except for Liens permitted by Section 6.02(c) and
Section 6.02(f) above, no Loan Party will, nor will it permit any of its Subsidiaries to, create,
incur, assume or permit to exist any Lien (other than Permitted Encumbrances) on any real property
now owned or hereafter acquired that is pledged as collateral security for the Senior Secured Notes
unless a mortgage is delivered in connection with such real property to the Administrative Agent
for the benefit of the Secured Parties.




          SECTION 6.03 Fundamental Changes; Business Activities. (a) Mergers, Sales of
Assets, Etc. No Loan Party will, nor will it permit any of its Subsidiaries to, amalgamate
with, merge into or consolidate with any other Person, or permit any other Person to amalgamate
with, merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one
transaction or in a series of transactions) all or substantially all of its assets, or all or
substantially all of the stock of any of its Subsidiaries (in each case, whether now owned or
hereafter acquired), or liquidate or dissolve, except that, if at the time thereof and immediately
after giving effect thereto no Default or Event of Default shall have occurred and be continuing
(i) any Subsidiary of any Borrower may merge into a Borrower in a transaction in which the Borrower
is the surviving corporation, (ii) any U.S. Loan Party (other than the Company) may merge into any
U.S. Loan Party in a transaction in which the surviving entity is a U.S. Loan Party, (iii) any
Canadian Loan Party may merge into any other Canadian Loan Party in a transaction in which the
surviving entity is a Canadian Loan Party, (iv) any Subsidiary may liquidate or dissolve if (x) the
Borrower which owns such Subsidiary determines in good faith that such liquidation or dissolution
is in the best interests of such Borrower and is not materially disadvantageous to the Lenders and
(y) in connection with any such dissolution or a Loan Party, all the assets of such Loan Party are
transferred to another Loan Party; and (v) any non-Loan Party may merge into, amalgamate with, or
consolidate with another non-Loan Party; provided that any such merger involving a Person
that is not a wholly owned Subsidiary immediately prior to such merger shall not be permitted
unless also permitted by Section 6.04.




          (b) Line of Business. No Loan Party will, nor will it permit any of its Subsidiaries
to, engage in any business other than businesses of the type conducted by the Company and the
Subsidiaries on the date of execution of this Agreement and businesses reasonably related or
similar thereto or reasonable extensions thereof.




          SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions. No Loan Party
will, nor will it permit any of its Subsidiaries to, purchase, hold or acquire (including pursuant
to any merger with any Person that was not a Loan Party and a Wholly-Owned Subsidiary prior to such
merger) any capital stock, evidences of indebtedness or other securities (including any option,
warrant or other right to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, Guarantee any obligations of, or make or permit to exist any investment or any other
interest in, any other Person, or purchase or otherwise acquire (in one transaction or a series of
transactions) all or substantially all of the assets of any









 



115


Person or any assets of any other Person constituting a business unit (whether through
purchase of assets, merger or otherwise) (each such transaction, an “Investment”), except:





     (a) Permitted Investments, subject to, in the case of Loan Parties, control agreements
in favor of the Administrative Agent for the benefit of the Lenders to the extent required
under Section 5.16, or otherwise subject to a perfected security interest in favor of the
Administrative Agent for the benefit of the Lenders (other than (i) Permitted Investments
maintained in Excluded Accounts and (ii) Permitted Investments held by any Foreign
Subsidiary or other non-Loan Party;




     (b) Investments (i) in existence on the date of this Agreement and (with respect to any
Investment held by any Loan Party) described in Schedule 6.04(b);




     (c) Investments by the Loan Parties and their Subsidiaries in Equity Interests in their
respective Subsidiaries, provided that (A) any such Equity Interests held by a Loan
Party shall be pledged pursuant to the applicable Security Agreement (subject to the
limitations applicable to common stock of a Foreign Subsidiary or Canadian Subsidiary, as
applicable referred to in Section 5.15(b)) and (B) the aggregate amount of investments by
Loan Parties in Subsidiaries that are not Loan Parties (together with outstanding
intercompany loans permitted under clause (B) to the proviso to Section 6.04(d) and
outstanding Guarantees permitted under the proviso to Section 6.04(e)) shall not exceed
$20,000,000 at any time outstanding (in each case determined without regard to any
write-downs or write-offs);




     (d) loans or advances made by any Borrower to any Subsidiary and made by any Subsidiary
to any other Borrower or any other Subsidiary, provided that the amount of such
loans and advances made by Loan Parties to Subsidiaries that are not Loan Parties (together
with outstanding investments permitted under clause (B) to the proviso to Section 6.04(c)
and outstanding Guarantees permitted under the proviso to Section 6.04(e)) shall not exceed
$20,000,000 at any time outstanding (in each case determined without regard to any
write-downs or write-offs);




     (e) Guarantees constituting Indebtedness permitted by Section 6.01, provided
that the aggregate principal amount of Indebtedness of Subsidiaries that are not Loan
Parties that is Guaranteed by any Loan Party shall (together with outstanding investments
permitted under clause (B) to the proviso to Section 6.04(c) and outstanding intercompany
loans permitted under clause (B) to the proviso to Section 6.04(d)) shall not exceed
$20,000,000 at any time outstanding (in each case determined without regard to any
write-downs or write-offs);




     (f) Permitted Acquisitions;




     (g) loans or advances made to directors, officers and employees of a Parent, the
Company or any Subsidiary (x) on an arms length basis in the ordinary course of business
consistent with past practices for travel and entertainment expenses, relocation costs and
similar purposes and (y) to finance the purchase by such person of Equity









 



116



Interests of the Parent, Company or any Subsidiary or otherwise in an aggregate
principal amount not to exceed $250,000 at any one time outstanding;




     (h) subject to Sections 4.2(a) and 4.4 of the U.S. Security Agreement (or any similar
provision of any other Security Agreement), notes payable, or stock or other securities
issued by Account Debtors to a Loan Party pursuant to negotiated agreements with respect to
settlement of such Account Debtor’s Accounts in the ordinary course of business, consistent
with past practices;




     (i) Investments in the form of Swap Agreements permitted by Section 6.07;




     (j) Investments of any Person existing at the time such Person becomes a Subsidiary of
a Borrower or consolidates or merges with a Borrower or any of the Subsidiaries (including
in connection with a Permitted Acquisition) so long as such Investments were not made in
contemplation of such Person becoming a Subsidiary or of such merger;




     (k) Investments received in connection with the dispositions of assets permitted by
Section 6.05;




     (l) Investments constituting deposits described in clauses (c) and (d) of the
definition of the term “Permitted Encumbrances.”




     (m) Guarantees by a Borrower or any of its Subsidiaries of leases (other than Capital
Leases) or of other obligations of a Borrower or any of its Subsidiaries that do not
constitute Indebtedness, in each case, entered into in the ordinary course of business;




     (n) Investments consisting of stock, obligations, securities or other property received
in settlement of accounts receivable (created in the ordinary course of business) from
bankrupt obligors of any Loan Party or Subsidiary;




     (o) other Investments in an aggregate amount not to exceed $10,000,000 at any time
outstanding plus, so long as both immediately before and immediately after giving
effect thereto on a Pro Forma Basis (i) no Default or Event of Default shall have occurred
and be continuing and (ii) Aggregate Gross Availability shall not have been less than 25% of
the Aggregate Gross Borrowing Base at any time during the prior 90-day period, any other
Investments.



          SECTION 6.05 Asset Sales. No Loan Party will, nor will it permit any of its
Subsidiaries to, sell, transfer, license, assign, lease or otherwise dispose of any asset,
including any Equity Interest owned by it, nor will any Borrower permit any Subsidiary to issue any
additional Equity Interest in such Subsidiary (other than to another Borrower or another Subsidiary
in compliance with Section 6.04), except:





     (a) dispositions of cash and Permitted Investments;




     (b) leases, subleases, licenses and sublicenses, in each case which do not materially
interfere with the business of the Company and its Subsidiaries;









 



117



     (c) sales, transfers and dispositions of (i) inventory in the ordinary course of
business and (ii) used, obsolete, worn out or surplus equipment or property (including
intellectual property) in the ordinary course of business;




     (d) sales, transfers, leases, licenses and dispositions to any Borrower or any
Subsidiary, provided that any such sales, transfers or dispositions involving a
Subsidiary that is not a Loan Party shall be made in compliance with Sections 6.04 and 6.09;




     (e) sales, transfers, dispositions and discounts of accounts receivable in connection
with the compromise, settlement or collection thereof in the ordinary course of business;




     (f) sales, transfers and dispositions of Permitted Investments in the ordinary course
of business;




     (g) sale and leaseback transactions permitted by Section 6.06;




     (h) Restricted Payments permitted by Section 6.08, Investments permitted by Section
6.04, Liens permitted by Section 6.02;




     (i) dispositions resulting from any casualty or other damage to, or any taking under
power of eminent domain or by condemnation or similar proceeding of, any property or asset
of any Borrower or any Subsidiary;




     (j) sales, transfers and other dispositions of assets (other than Equity Interests in a
Subsidiary unless all Equity Interests in such Subsidiary are sold) that are not permitted
by any other paragraph of this Section; provided that the aggregate fair market
value of all assets sold, transferred or otherwise disposed of in reliance upon this
paragraph (j) shall not exceed $20,000,000 during any fiscal year of the Company and
$50,000,000 in the aggregate since the Effective Date;




     (k) dispositions of property listed on Schedule 6.05(k); and




     (l) any merger, amalgamation, consolidation, liquidation, wind-up or dissolution, the
purpose of which is to effect a disposition otherwise permitted in this Section 6.05;


provided that all sales, transfers, leases, licenses and other dispositions permitted
hereby (i) (other than those permitted by paragraphs (d), (h) and (i) above) shall be made for fair
value and (ii) in the case of paragraphs (j) and (k), shall be for at least 75% cash consideration,
provided, further, that the following shall be deemed to be cash: (x) the repayment or assumption
of Indebtedness secured by Liens with a priority to the Liens in favor of the Secured Parties and
(y) any securities, notes or other obligations received by the Company or any such Subsidiary from
such transferee that are, within 180 days of the disposition of Collateral, converted by the
Company or such Subsidiary into cash or Permitted Investments.




          SECTION 6.06 Sale and Leaseback Transactions. No Loan Party will, nor will it permit
any of its Subsidiaries to, enter into any arrangement, directly or indirectly,









 



118


whereby it shall sell or transfer any property, real or personal, used or useful in its
business, whether now owned or hereafter acquired, and thereafter rent or lease or license such
property or other property that it intends to use for substantially the same purpose or purposes as
the property sold or transferred, except for any such sale of any fixed or capital assets by any
Borrower or any Subsidiary that is made for cash consideration in an amount not less than the fair
value of such fixed or capital asset and is consummated within 120 days after such Borrower or
Subsidiary acquires or completes the construction of such fixed or capital asset, provided
that the aggregate amount of sale and leaseback transactions consummated in reliance on this
Section 6.06 shall not exceed $10,000,000.




          SECTION 6.07 Swap Agreements. No Loan Party will, nor will it permit any of its
Subsidiaries to, enter into any Swap Agreement, except (a) Swap Agreements entered into to hedge or
mitigate risks to which any Borrower or any Subsidiary has actual exposure (other than those in
respect of Equity Interests of any Subsidiary of the Company), and (b) Swap Agreements entered into
in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from
one floating rate to another floating rate or otherwise) or foreign exchange contract, currency
swap agreement, currency option or other similar agreement or arrangement for the purpose of
fixing, hedging or swapping currency exchange rates with respect to any interest-bearing liability
or investment of any Borrower or any Subsidiary.




          SECTION 6.08 Restricted Payments; Certain Payments of Indebtedness. (a)
Restricted Payments. No Loan Party will, nor will it permit any of its Subsidiaries to,
declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, or incur
any obligation (contingent or otherwise) to do so, except





     (i) each Loan Party and its Subsidiaries may declare and pay dividends with respect to
its common stock payable solely in additional shares of its common stock, and, with respect
to its preferred stock, payable solely in additional shares of such
preferred stock or in shares of its common stock,




     (ii) Subsidiaries may declare and pay dividends ratably with respect to their Equity
Interests,




     (iii) the Borrowers may make Restricted Payments, not exceeding (x) $2,000,000 during
any 12-month period (plus the Net Proceeds from the issuance of Equity Interests to
officers, directors or employees) or (y) $10,000,000 (plus the Net Proceeds from the
issuance of Equity Interests to officers, directors or employees) in the aggregate since the
Effective Date, pursuant to and in accordance with stock option plans or other benefit plans
for management or employees of a Parent, the Company and the Subsidiaries; provided,
that, the Company may carry over and make in subsequent 12-month periods, in addition to the
amounts permitted for such 12-month period, the amount of such Restricted Payments permitted
to have been made but not made in any preceding 12-month period;




     (iv) Restricted Payments in an amount not to exceed $5,000,000 plus, so long as
both immediately before and immediately after giving effect thereto on a Pro Forma Basis
(i) no Default or Event of Default shall have occurred and be continuing, (ii) no









 



119



Cash Dominion Period shall be continuing, (iii) the Fixed Charge Coverage Ratio for the
Test Period then in effect is at least 1.25 to 1.00 and (iv) Aggregate Gross Availability
shall not have been less than 25% of the Aggregate Gross Borrowing Base at any time during
the prior 90-day period, any other Restricted Payment;




     (v) from and after May 1, 2012 the Company may make Restricted Payments to RBG to
enable RBG to make Restricted Payments to Holdings to make scheduled payments of interest or
principal or mandatory “AHYDO catch-up” or similar payment in cash under the Holdings Credit
Agreement so long as immediately before and immediately after giving effect thereto on a Pro
Forma Basis, (y) Aggregate Gross Availability is greater than or equal to the greater of (i)
25% of the Aggregate Gross Borrowing Base (not to exceed 25% of the Total Commitments) and
(ii)(A) during September, October and November, $45,000,000 and (B) during any other month,
$50,000,000, and (z) the Fixed Charge Coverage Ratio is greater than or equal to 1.00 to
1.00;




     (vi) pay dividends or make distributions or advances to Parent to repay, prepay,
repurchase, redeem, defease or retire Indebtedness under the Holdings Credit Facilities, and
to pay to unrelated third parties related fees and expenses; provided,
however, that after giving pro forma effect thereto (x) no Default or Event of
Default shall have occurred and be continuing and (y) the Total Leverage Ratio would be no
greater than 5.00 to 1.00 as of the end of the Company’s most recently ended four full
fiscal quarters for which internal financial statements are available immediately preceding
such payment and (z) other than in connection with Restricted Payments made with the
proceeds of Indebtedness incurred pursuant to Section 6.01(n), (i) Aggregate Gross
Availability would be equal to or greater than 25% of the Aggregate Gross Borrowing Base,
(ii) the Fixed Charge Coverage Ratio would be equal to or greater than 1.00 to 1.00 (without
giving effect to such dividends, distributions or advances in calculating the Fixed Charge
Coverage Ratio) and (iii) any Indebtedness the proceeds of which are used to repay, prepay,
repurchase, redeem, defease or retire Indebtedness under the Holding Credit Facilities is
incurred on an unsecured senior or unsecured subordinated basis; provided further that the
principal amount of such Indebtedness matures no earlier than 91 days after the Maturity
Date;




     (vii) Restricted Payments made on the Effective Date in connection with the Refinancing
or made in connection with expenses arising out of the Refinancing paid within 180 days
after the Effective Date;




     (viii) Permitted Payments to Parent;




     (ix) Restricted Payments related to the payment of Management Fees pursuant to the
Management Agreement in effect on the Effective Date, provided, both immediately
before and immediately after giving effect to the payment of such Management Fee (except for
the reimbursement of costs and out-of-pocket expenses and indemnification obligations) on a
Pro Forma Basis (i) no Default or Event of Default shall have occurred and be continuing
(ii) Aggregate Gross Availability shall not be less









 



120



than 25% of the Aggregate Gross Borrowing Base and (iii) the Fixed Charge Coverage
Ratio shall not be less than 1.25 to 1.00; and




     (x) The repurchase of Equity Interests deemed to occur upon the exercise of stock
options to the extent such Equity Interests represent a portion of the exercise price of
those stock options.




     (xi) payments made or expected to be made by the Company or any Subsidiary in respect
of withholding or similar Taxes payable by any future, present or former employee, director,
officer, manager or consultant and any repurchases of Equity Interests in consideration of
such payments including deemed repurchases in connection with the exercise of stock options;
and




     (xii) the proceeds of which shall be used to pay customary salary, bonus and other
benefits payable to officers and employees of a Parent to the extent such salaries, bonuses
and other benefits are attributable to the ownership or operation of the Company and its
Subsidiaries.



          (b) Payments of Indebtedness. No Loan Party will, nor will it permit any of its
Subsidiaries to, make or agree to pay or make, directly or indirectly, any payment or other
distribution (whether in cash, securities or other property) of or in respect of principal of or
interest on any Indebtedness, or any payment or other distribution (whether in cash, securities or
other property), including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any Indebtedness, except:




          (i) payment of Indebtedness created under the Loan Documents;




          (ii) payment of (A) regularly scheduled interest and principal payments as and when due
(including at maturity) in respect of any Indebtedness, other than payments in respect of
Subordinated Indebtedness prohibited by the subordination provisions thereof, and (B)
Indebtedness owing to the Company or any Subsidiary that is otherwise permitted hereunder;




          (iii) refinancings of Indebtedness to the extent permitted by Section 6.01;




          (iv) payment of secured Indebtedness that becomes due as a result of the voluntary sale
or transfer of the property or assets securing such Indebtedness;




          (v) Payment of Indebtedness owed to the Company or any Subsidiary of the Company in
accordance with the terms of any subordination provisions thereof;




          (vi) Payment of Indebtedness owed by non-Loan Parties to the Company or its
Subsidiaries;




          (vii) other payments of Indebtedness in an amount not to exceed $5,000,000 plus, other
payments of Indebtedness so long as both immediately before and immediately after giving effect
thereto on a Pro Forma Basis (i) no Default or Event of Default shall have occurred and be
continuing, (ii) no Cash Dominion Period shall be continuing, (iii) the Fixed Charge









 



121


Coverage Ratio for the Test Period then in effect is at least 1.25 to 1.00 and (iv) Aggregate Gross
Availability shall not have been less than 25% of the Aggregate Gross Borrowing Base at any time
during the prior 90-day period;




          (viii) the conversion (or exchange) of any Indebtedness to (or with) Equity Interests of a
Parent or Indebtedness of a Parent; and




          (ix) the prepayment of Indebtedness of the Company or any Subsidiary with the proceeds of any
issuance of Equity Interests by a Parent.




          SECTION 6.09 Transactions with Affiliates. No Loan Party will, nor will it permit any
of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase,
lease or otherwise acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (a) transactions that (i) are in the ordinary
course of business and (ii) are at prices and on terms and conditions not less favorable to such
Borrower or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third
parties, (b) transactions between or among any Borrower and one or more Subsidiaries not involving
any other Affiliate, (c) any Investment permitted by Sections 6.04, (d) any Indebtedness permitted
under Section 6.01(d), (e) any Restricted Payment permitted by Section 6.08, (f) any disposition of
assets permitted under Section 6.05, (g) the payment of reasonable fees to directors of the Company
or any Subsidiary who are not employees of the Company or any Subsidiary, and compensation and
employee benefit arrangements paid to, and indemnities provided for the benefit of, directors,
officers or employees of the Company or the Subsidiaries in the ordinary course of business and (h)
any issuances of securities or other payments, awards or grants in cash, securities or otherwise
pursuant to, or the funding of, employment agreements, stock options and stock ownership plans
approved by the Company’s board of directors, (i) so long as no payment Default has occurred and is
continuing, the payment of the Management Fees permitted under Section 6.08, (j) any contribution
to the capital of Parent by the Equity Investors or any purchase of Equity Interests of Parent by
the Equity Investors and (k) any transaction listed on Schedule 3.20.




          SECTION 6.10 Restrictive Agreements. No Loan Party will, nor will it permit any of its
Subsidiaries to, directly or indirectly, enter into, incur or permit to exist any agreement or
other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of such
Loan Party or any of its Subsidiaries to create, incur or permit to exist any Lien upon any of its
property or assets, (b) the ability of any Subsidiary to pay dividends or other distributions with
respect to any shares of its capital stock or to make or repay loans or advances to the Company or
any other Subsidiary or (c) the ability of any Domestic Subsidiary or Canadian Subsidiary to
Guarantee Indebtedness of the Borrowers or any other Subsidiary; provided that (i) the
foregoing shall not apply to restrictions and conditions imposed by law or by any Loan Document,
(ii) the foregoing shall not apply to restrictions and conditions existing on the date hereof
identified on Schedule 6.10 (but shall apply to any extension or renewal of, or any amendment or
modification expanding the scope of, any such restriction or condition), (iii) the foregoing shall
not apply to (A) customary restrictions and conditions contained in agreements relating to the sale
of a Subsidiary, or a business unit, division, product line or line of business of a Subsidiary,
pending such sale, provided such restrictions and conditions apply only to the Subsidiary, or the
business unit, division, product line or line of business of such









 



122

	Subsidiary, that is to be sold and such sale is permitted hereunder, and (B) restrictions and
conditions imposed by (1) the Note Documents, (2) any agreement or document governing or evidencing
refinancing Indebtedness in respect of the Senior Secured Notes permitted under Section 6.01(g), or
(3) any additional Indebtedness permitted to be incurred under Section 6.01(m) or (n),
provided that the restrictions and conditions contained in any such agreement or document
in clause (2) or (3) above are not less favorable to the Lenders in any material respect, taken as
a whole, than the restrictions and conditions imposed by the Note Documents, (iv) clause (a) of the
foregoing shall not apply to restrictions or conditions imposed by any agreement relating to
secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to
the property or assets securing such Indebtedness and such property or assets do not constitute
Collateral, (v) clause (a) of the foregoing shall not apply to customary provisions in leases and
other contracts restricting the assignment thereof, (vi) the foregoing shall not apply to
agreements entered into by any Subsidiary that is not a Guarantor (including Foreign Subsidiaries)
that are otherwise permitted by this Agreement (so long as such agreements do not prohibit the Loan
Parties from complying with the other provisions of this Agreement).






          SECTION 6.11 Amendment of Material Documents. No Loan Party will, nor will it permit
any of its Subsidiaries to, amend, modify or waive any of its rights under (a) any agreement or
instrument governing or evidencing the Senior Secured Notes or any Subordinated Indebtedness or (b)
its certificate/articles of incorporation, by-laws, operating, management or partnership agreement
or other organizational documents, in each case to the extent such amendment, modification or
waiver is adverse in any material respect to the Lenders, unless consented to by the Administrative
Agent (such consent not to be unreasonably withheld or delayed).




          SECTION 6.12 Fixed Charge Coverage Ratio. During any period commencing on the
Business Day after the third Business Day during any period of five Business Days (each a
“Fixed Charge Ratio Commencement Date”) on which Aggregate Gross Availability is less than
the greater of (i) 15% of the Aggregate Gross Borrowing Base (not to exceed 15% of the Total
Commitment) and (ii) $30,000,000, and continuing until any later date on which Aggregate Gross
Availability shall have exceeded such threshold for at least 30 consecutive days (a “Fixed
Charge Coverage Ratio Trigger Termination Event”), the Loan Parties will not permit the Fixed
Charge Coverage Ratio, determined for any Test Period ending on the last day of each fiscal month,
to be less than 1.10 to 1.00.




          SECTION 6.13 Changes in Fiscal Periods. No Loan Party will change its fiscal year or
change its method of determining fiscal quarters in any way other than switching to a calendar
system.




ARTICLE VII




Events of Default and Remedies




          SECTION 7.01 Events of Default. If any of the following events (any such event, an
“Event of Default”) shall occur:










 



123





     (a) the Borrowers shall fail to pay any principal of any Loan or any reimbursement
obligation in respect of any LC Disbursement when and as the same shall become due and
payable, whether at the due date thereof or at a date fixed for prepayment thereof or
otherwise;




     (b) the Borrowers shall fail to pay any interest on any Loan or any fee or any other
amount (other than an amount referred to in clause (a) of this Article) payable under any
Loan Document, when and as the same shall become due and payable, and such failure shall
continue unremedied for a period of five Business Days or more;




     (c) any representation, warranty or statement made or deemed made by or on behalf of
any Loan Party or any Subsidiary in or in connection with this Agreement or any other Loan
Document or any amendment or modification hereof or thereof or waiver hereunder or
thereunder, or in any report, certificate, financial statement or other document furnished
pursuant to or in connection with this Agreement or any other Loan Document or any amendment
or modification hereof or thereof or waiver hereunder or thereunder, shall prove to have
been incorrect in any material respect (or, in the case of any representation, warranty or
statement qualified by materiality, in any respect) when made or deemed made;




     (d) any Loan Party shall fail to observe or perform any covenant, condition or
agreement contained in Section 5.02(a), 5.03 (with respect to a Loan Party’s existence) or
5.08 or in Article VI of this Agreement or any Loan Party shall fail to observe or perform
any covenant, condition or agreement contained in Section 4.11 of the U.S. Security
Agreement (or any similar provision of any other Security Agreement); provided,
that, with respect to any failure to perform or observe any term, covenant or
agreement contained in Section 6.12, such failure shall only result in an Event of Default
if such failure is continuing after the earlier of (A) the Cure Expiration Date and (B) the
date upon which the Company has delivered financial statements with respect to the
applicable fiscal period without having delivered a Notice of Intent to Cure;




     (e) any Loan Party shall fail to observe or perform any covenant, condition or
agreement contained in this Agreement (other than those which constitute a default under
another clause of this Article) or any other Loan Document, and such failure shall continue
unremedied for a period of (i) five Business Days after the earlier of any Loan Party’s
knowledge of such breach or notice thereof from the Administrative Agent (which notice will
be given at the request of any Lender) if such breach relates to terms or provisions of
Section 5.01, 5.02 (other than Section 5.02(a)), 5.03 through 5.07, 5.09, 5.10 or 5.12 of
this Agreement or (ii) 15 Business Days after the earlier of any Loan Party’s knowledge of
such breach or notice thereof from the Administrative Agent (which notice will be given at
the request of any Lender) if such breach relates to terms or provisions of any other
Section of this Agreement or any other Loan Document;




     (f) any Loan Party or any Subsidiary shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material Indebtedness,
when and as the same shall become due and payable subject to applicable grace periods;









 



124



     (g) any event or condition occurs that results in any Material Indebtedness becoming
due prior to its scheduled maturity or that enables or permits (with or without the giving
of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or
a trustee or agent on its or their behalf to cause such Indebtedness to become due or to
require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity, provided that this paragraph (g) shall not apply to secured Indebtedness
that becomes due as a result of the voluntary sale or transfer of the property or assets
securing such Indebtedness;




     (h) an involuntary case or proceeding (including the filing of any notice of intention
in respect thereof) shall be commenced or an involuntary petition shall be filed seeking (i)
bankruptcy, liquidation, winding up, dissolution, reorganization, examination, suspension of
general operations or other relief in respect of a Loan Party or any Subsidiary of any Loan
Party or its debts, or of a substantial part of its assets, under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law including any Canadian
Insolvency Laws now or hereafter in effect or (ii) the appointment of a receiver, interim
receiver, receiver and manager, liquidator, administrator, trustee, custodian, sequestrator,
conservator or similar official for any Loan Party or any Subsidiary of any Loan Party or
for a substantial part of its assets, (iii) the composition, rescheduling, reorganization,
arrangement or readjustment of, or other relief from, or stay of proceedings to enforce,
some or all of its debts or obligations, (iv) possession, foreclosure, seizure or retention,
sale or other disposition of, or other proceedings to enforce security over, all or any
substantial part of the assets, of such Loan Party or any Subsidiary of any Loan Party, and,
in any such case, such proceeding or petition shall continue undismissed for 60 days or more
or an order or decree approving or ordering any of the foregoing shall be entered;




     (i) any Loan Party or any Subsidiary of any Loan Party shall (i) voluntarily commence
any proceeding or file any petition, pass any resolution or make an application seeking
liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law including any Canadian Insolvency Laws now or
hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in paragraph (h) of this Article,
(iii) apply for or consent to the appointment of a receiver, interim receiver, receiver and
manager, liquidator, assignee, trustee, custodian, sequestrator, administrator, examiner,
conservator or similar official for such Loan Party or any Subsidiary of a Loan Party or for
a substantial part of its assets, (iv) file an answer admitting the material allegations of
a petition filed against it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of effecting any of the
foregoing;




     (j) any Loan Party or any Subsidiary of any Loan Party shall become unable, admit in
writing its inability or fail generally to pay its debts as they become due;




     (k) one or more judgments for the payment of money in an aggregate amount in excess of
$10,000,000 shall be rendered against any Loan Party, any Subsidiary of any Loan Party or
any combination thereof and the same shall remain undischarged for a









 



125



period of 30 consecutive days during which execution shall not be effectively stayed,
or any action shall be legally taken by a judgment creditor to attach or levy upon any
assets of any Loan Party or any Subsidiary of any Loan Party to enforce any such judgment,
or any Loan Party or any Subsidiary of any Loan Party shall fail within 30 days to discharge
one or more non-monetary judgments or orders which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, which judgments or orders, in any
such case, are not stayed on appeal or otherwise being appropriately contested in good faith
by proper proceedings diligently pursued;




     (l) (i) any Loan Party or any of its Subsidiaries shall, directly or indirectly,
terminate or cause to terminate, in whole or in part, or initiate the termination of, in
whole or in part, any Canadian Pension Plan so as to result in any liability which could
have a Material Adverse Effect; (ii) any event or condition exists in respect of any
Canadian Pension Plan which presents the risk of liability of such Loan Party or any of its
Subsidiaries which could have a Material Adverse Effect;




     (m) an ERISA Event shall have occurred that when taken together with all other ERISA
Events that have occurred, could reasonably be expected to result in a Material Adverse
Effect;




     (n) a Change in Control shall occur;




     (o) the Loan Guaranty shall fail to remain in full force or effect or any action shall
be taken to discontinue or to assert the invalidity or unenforceability of the Loan
Guaranty, or any Guarantor shall fail to comply with any of the terms or provisions of the
Loan Guaranty to which it is a party, or any Guarantor shall deny that it has any further
liability under the Loan Guaranty to which it is a party, or shall give notice to such
effect;




     (p) any Collateral Document shall for any reason fail to create a valid and perfected
security interest (with the priority required by the Intercreditor Agreement) in any
Collateral with an aggregate fair market value in excess of $10,000,000 purported to be
covered thereby, except as permitted by the terms of any Collateral Document, or any
Collateral Document shall fail to remain in full force or effect or any action shall be
taken to discontinue or to assert the invalidity or unenforceability of any Collateral
Document, or any Loan Party shall fail to comply with any of the terms or provisions of any
Collateral Document; or




     (q) any material provision of any Loan Document for any reason ceases to be valid,
binding and enforceable in accordance with its terms (or any Loan Party shall challenge the
enforceability of any Loan Document or shall assert in writing, or engage in any action or
inaction based on any such assertion, that any provision of any of the Loan Documents has
ceased to be or otherwise is not valid, binding and enforceable in accordance with its
terms).


then, and in every such event (other than an event with respect to the Borrowers described in
paragraph (h) or (i) of this Article), and at any time thereafter during the continuance of such
event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice








 



126


to the Borrowers, take either or both of the following actions, at the same or different times:
(i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to be due and payable),
and thereupon the principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Loan Parties accrued hereunder and under
the other Loan Documents, shall become due and payable immediately, without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the Loan Parties; and in
case of any event with respect to the Borrowers described in paragraph (h) or (i) of this Article,
the Commitments shall automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the Loan Parties
accrued hereunder, shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Loan Parties. Upon the
occurrence and continuance of any Event of Default, the Administrative Agent may, and at the
request of the Required Lenders shall, exercise any rights and remedies provided to the
Administrative Agent under the Loan Documents or at law or equity, including all remedies provided
under the UCC.




          SECTION 7.02 Company’s Right to Cure. 




          (a) Notwithstanding anything to the contrary contained in Section 7.01, in the event of any
Event of Default under Section 6.12 and until the expiration of the tenth Business Day after the
date on which financial statements are required to be delivered with respect to the applicable
fiscal period hereunder (such date, the “Cure Expiration Date”), the Company (or any
Parent) may on one or more occasions sell or issue Equity Interests and the Company may designate
any portion of the Net Proceeds thereof as an increase to EBITDA with respect to such applicable
month; provided that all such Net Proceeds to be so designated (i) are actually received by
the Company (including through capital contribution of such Net Proceeds to the Company) no later
than ten days after the date on which financial statements are required to be delivered with
respect to such fiscal period hereunder and (ii) the aggregate amount of Net Proceeds that are so
designated shall not exceed 100% of the aggregate amount necessary to cure such Event of Default
under Section 6.12 for any applicable period.




          (b) Upon receipt by the Company of any such designated Net Proceeds (the “Cure
Amount”), EBITDA for any period of calculation which includes the last fiscal month of the Test
Period ending immediately prior to the date on which such Cure Amount was paid shall be increased,
solely for the purpose of calculating the Fixed Charge Coverage Ratio set forth in Section 6.12, by
an amount equal to the Cure Amount. The resulting increase to EBITDA from designation of a Cure
Amount shall not result in any adjustment to EBITDA or any other financial definition for any
purpose under this Agreement other than for purposes of calculating the Fixed Charge Coverage Ratio
under Section 6.12.




          (c) If, after giving effect to the foregoing recalculations, the Company shall then be in
compliance with the requirements of Section 6.12, the Company shall be deemed to have satisfied the
requirements of Section 6.12 as of the relevant date of determination with the same effect as
though there had been no failure to comply therewith at such date, and the









 



127


applicable breach or default of Section 6.12 that had occurred shall be deemed cured for this
purpose of the Agreement.




          (d) (i) In each period of six months, there shall be no more than one exercise of a cure
pursuant to Section 7.02(a) and (ii) in each period of twelve months, there shall be no more than
two exercises of a cure pursuant to Section 7.02(a); provided that after any such exercise the
Company shall for the following 12-month period (the “Initial Period”) maintain Aggregate
Availability not less than the greater of (1) 10% of the Aggregate Borrowing Base (not to exceed
10% of the Total Commitment) and (2)(A) during September, October and November, $15,000,000 and (B)
during any other month, $20,000,000 (“Initial Period Minimum Availability”). If at any time the
Company shall fail to comply with the requirements contained the clause (y) of the proviso in the
immediately preceding sentence, the Company shall be deemed to have been in breach of Section 6.12
as of the end of the Test Period ending immediately prior to the Initial Period.




          (e) Any increase to EBITDA with respect to any fiscal month pursuant to Section 7.02(a) above
will apply to any 12-month period containing such fiscal month.




          (f) For the avoidance of doubt, any failure to comply with the Fixed Charge Coverage Ratio
after a Fixed Charge Coverage Ratio Commencement Date shall be deemed to be cured upon a Fixed
Charge Coverage Ratio Trigger Termination Event.




ARTICLE VIII




The Administrative Agent; Collateral Agent; Other Agents




          SECTION 8.01 The Administrative Agent. Each of the Lenders and the Issuing Banks
hereby irrevocably appoints the Administrative Agent as its agent and authorizes the Administrative
Agent to take such actions on its behalf, including execution of the other Loan Documents, and to
exercise such powers as are delegated to the Administrative Agent by the terms of the Loan
Documents, together with such actions and powers as are reasonably incidental thereto. Except as
expressly provided below with respect to the replacement of the Administrative Agent or the
Collateral Agent, the provisions of this Article are solely for the benefit of the Administrative
Agent and the Lenders, and the Borrowers shall not have rights as a third party beneficiary of any
of such provisions.




          The bank serving as the Administrative Agent hereunder shall have the same rights and powers
in its capacity as a Lender as any other Lender and may exercise the same as though it were not the
Administrative Agent, and such Lender and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of business with the Loan Parties or any Subsidiary of a Loan
Party or other Affiliate thereof as if it were not the Administrative Agent hereunder.




          For the purposes of holding any security granted by the Borrower or any other Loan Party
pursuant to the laws of the Province of Quebec to secure payment of any bond issued by Borrower or
any Loan Party, each Lender hereby irrevocably appoints and authorizes the Administrative Agent to
act as the person holding the power of attorney (i.e. “fondé de pouvoir”)










 



128



(in such capacity, the “Attorney”) of the Lenders as contemplated under Article 2692
of the Civil Code of Québec, and to enter into, to take and to hold on its behalf, and for its
benefit, any hypothec, and to exercise such powers and duties that are conferred upon the Attorney
under any hypothec. Moreover, without prejudice to such appointment and authorization to act as
the person holding the power of attorney as aforesaid, each Lender hereby irrevocably appoints and
authorizes the Administrative Agent (in such capacity, the “Custodian”) to act as agent and
custodian for and on behalf of the Lenders to hold and be the sole registered holder of any bond
which may be issued under any hypothec, the whole notwithstanding Section 32 of An Act respecting
the special powers of legal persons (Quebec) or any other applicable law, and to execute all
related documents. Each of the Attorney and the Custodian shall: (a) have the sole and exclusive
right and authority to exercise, except as may be otherwise specifically restricted by the terms
hereof, all rights and remedies given to the Attorney and the Custodian (as applicable) pursuant to
any hypothec, bond, pledge, applicable laws or otherwise, (b) benefit from and be subject to all
provisions hereof with respect to the Administrative Agent mutatis mutandis, including, without
limitation, all such provisions with respect to the liability or responsibility to and
indemnification by the Lenders, and (c) be entitled to delegate from time to time any of its powers
or duties under any hypothec, bond, or pledge on such terms and conditions as it may determine from
time to time. Any person who becomes a Lender shall, by its execution of an Assignment and
Assumption, be deemed to have consented to and confirmed: (i) the Attorney as the person holding
the power of attorney as aforesaid and to have ratified, as of the date it becomes a Lender, all
actions taken by the Attorney in such capacity, and (ii) the Custodian as the agent and custodian
as aforesaid and to have ratified, as of the date it becomes a Lender, all actions taken by the
Custodian in such capacity. The Substitution of the Administrative Agent pursuant to the
provisions of this Article 8 shall also constitute the substitution of the Attorney and the
Custodian.




          The Administrative Agent shall not have any duties or obligations except those expressly set
forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the
Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any
duty to take any discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated by the Loan Documents that the Administrative Agent is
required to exercise in writing as directed by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary or believed by the Administrative Agent in good
faith to be necessary under the circumstances as provided in Section 9.02), and (c) except as
expressly set forth in the Loan Documents, the Administrative Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information relating to any Loan
Party or any of its Subsidiaries that is communicated to or obtained by the bank serving as
Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not
be liable for any action taken or not taken by it with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02 or believed by the Administrative Agent in good faith to
be necessary) or in the absence of its own willful misconduct. The Administrative Agent shall be
deemed not to have knowledge of any Default unless and until written notice thereof is given to the
Administrative Agent by the Borrowers or a Lender, and the Administrative Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with any









 



129


Loan Document, (ii) the contents of any certificate, report or other document delivered
hereunder or in connection with any Loan Document, (iii) the performance or observance of any of
the covenants, agreements or other terms or conditions set forth in any Loan Document or the
occurrence of any Default, (iv) the validity, enforceability, effectiveness, genuineness or
accuracy of any Loan Document or any other agreement, instrument or document, (v) the creation,
perfection or priority of Liens on the Collateral or the existence of the Collateral, or (vi) the
satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than
to confirm receipt of items expressly required to be delivered to the Administrative Agent.




          The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any representation, notice, request, certificate, consent, statement, instrument,
document or other writing (including any electronic message, Internet or intranet website posting
or other distribution) believed by it to be genuine and to have been signed or sent or otherwise
authenticated by the proper Person. The Administrative Agent also may rely upon any statement made
to it orally or by telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. The Administrative Agent may consult with legal counsel
(who may be counsel for the Loan Parties), independent accountants and other experts selected by
it, and shall not be liable for any action taken or not taken by it in accordance with the advice
of any such counsel, accountants or experts.




          The Administrative Agent may perform any and all its duties and exercise its rights and powers
by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative
Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of this Article shall apply
to any such sub-agent and to the Related Parties of the Administrative Agent and any such
sub-agent, and shall apply to their respective activities in connection with the syndication of the
credit facilities provided for herein as well as activities as Administrative Agent.




          In determining compliance with any condition hereunder to the making of a Loan, that by its
terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that
such condition is satisfactory to such Lender unless the Administrative Agent shall have received
notice to the contrary from such Lender prior to the making of such Loan.




          Subject to the appointment and acceptance of a successor Administrative Agent as provided in
this paragraph, the Administrative Agent may resign at any time by notifying the Lenders, the
Issuing Banks and the Borrowers. Upon any such resignation, the Required Lenders shall have the
right, with the consent of the Borrowers (not to be unreasonably withheld), to appoint a successor;
provided that no such consent of the Borrowers shall be required at any time during the
existence of an Event of Default. If no successor shall have been so appointed by the Required
Lenders and shall have accepted such appointment within 30 days after the retiring Administrative
Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the
Lenders and the Issuing Banks, appoint a successor Administrative Agent which shall be a commercial
bank or finance company or an Affiliate of any such commercial bank or finance company which in
each case has at least $500,000,000 in capital and is organized or doing business under the laws of
the U.S. or any state thereof. Upon









 



130


the acceptance of its appointment as Administrative Agent hereunder by a successor, such
successor shall succeed to and become vested with all the rights, powers, obligations, privileges
and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from all its duties and obligations under the Loan Documents. The fees payable by the
Borrowers to a successor Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrowers and such successor. After the Administrative Agent’s
resignation hereunder, the provisions of this Article, Section 2.17(c), Section 2.17(d) and Section
9.03 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents
and their respective Related Parties in respect of any actions taken or omitted to be taken by any
of them while it was acting as Administrative Agent.




          Each Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and based on such
documents and information as it has deemed appropriate, made its own credit analysis and decision
to enter into this Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon the Administrative Agent or any other Lender or any of their Related Parties
and based on such documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based upon this
Agreement, any other Loan Document or related agreement or any document furnished hereunder or
thereunder.




          SECTION 8.02 The Collateral Agent. Each of the Lenders and Issuing Banks hereby
irrevocably appoints the Collateral Agent as its agent hereunder and under the other Loan Documents
and authorizes the Collateral Agent to take such actions on its behalf and to exercise such powers
as are delegated to the Collateral Agent by the terms of the Loan Documents, together with such
actions and powers as are reasonably incidental thereto.




          The bank serving as the Collateral Agent hereunder shall have the same rights and powers in
its capacity as a Lender as any other Lender and may exercise the same as though it were not the
Collateral Agent, and such Lender and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Loan Parties or any Subsidiary of a Loan Party or
other Affiliate thereof as if it were not the Collateral Agent hereunder.




          The Collateral Agent shall not have any duties or obligations except those expressly set forth
in the Loan Documents. Without limiting the generality of the foregoing, (a) the Collateral Agent
shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) the Collateral Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers except as expressly set forth in this
Agreement and (c) except as expressly set forth in the Loan Documents, the Collateral Agent shall
not have any duty to disclose, nor shall be liable for the failure to disclose, any information
relating to any Loan Party or any of the Subsidiaries that is communicated to or obtained by any
bank serving as Collateral Agent or any of its Affiliates in any capacity. The Collateral Agent
shall not be liable for any action taken nor not taken by it in the absence of its own willful
misconduct. The Collateral Agent shall not be responsible for or have any duty to ascertain or
inquire into (i) any statement, warranty or representation made in or in connection with any Loan
Document, (ii) the contents of any certificate, report or other document delivered hereunder or in
connection with any Loan Document, (iii) the performance or observance of any









 



131


of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv)
the adequacy, accuracy or completeness of any information (whether oral or written) set forth or in
connection with any Loan Document, (v) the legality, the validity, enforceability, effectiveness,
adequacy or genuineness of any Loan Document or any other agreement, instrument or document, (vi)
the creation, perfection or priority of Liens on the Collateral or the existence of the Collateral,
or (vii) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan
Document, other than to confirm receipt of items expressly required to be delivered to the
Collateral Agent.




          The Collateral Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any representation, notice, request, certificate, consent, statement, instrument,
document or other writing or communication believed by it to be genuine, correct and to have been
authorized, signed or sent by the proper Person. The Collateral Agent may consult with legal
counsel (who may be counsel for the Borrowers), independent accountants and other experts selected
by them, in their Permitted Discretion, and shall not be liable for any action taken or not taken
by it in accordance with the advice of any such counsel, accountants or experts.




          The Collateral Agent may perform any and all its duties and exercise its rights and powers by
or through any one or more sub-agents appointed by the Collateral Agent. The Collateral Agent and
any such sub-agent may perform any and all their duties and exercise their rights and powers
through their respective Related Parties. The exculpatory provisions of the preceding paragraphs
shall apply to any such sub-agent and to the Related Parties of the Collateral Agent and any such
sub-agent, and shall apply to their respective activities in connection with the syndication of the
credit facilities provided for herein as well as activities as the Collateral Agent.




          The Collateral Agent may resign at any time by notifying the Administrative Agent, the Issuing
Banks and the Borrowers and the Required Lenders shall have the right, with the consent of the
Borrowers (not to be unreasonably withheld), to appoint a successor collateral agent, who shall be
the successor collateral agent hereunder (the “Successor Collateral Agent”). If a
Successor Collateral Agent has not been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the Collateral Agent has given notice of such
resignation, then the retiring Collateral Agent may, on behalf of the Lender Parties, appoint a
Successor Collateral Agent which shall be a commercial bank or finance company or an Affiliate of
any such commercial bank or finance company which in each case has at least $500,000,000 in capital
and is organized or doing business under the laws of the U.S. or any state thereof. Upon the
acceptance of its appointment as Successor Collateral Agent, such Person shall succeed to and
become vested with all the rights, powers, privileges, obligations and duties of the retiring (or
retired) Collateral Agent, and the retiring Collateral Agent shall be discharged from the duties
and obligations hereunder.




          The fees payable by the Borrowers to the Successor Collateral Agent shall be the same as those
payable to the Collateral Agent unless otherwise agreed between the Borrowers and the Successor
Collateral Agent, as the case may be. After the Collateral Agent’s resignation hereunder, the
provisions of this Article, Section 2.17(c), Section 2.17(d) and Section 9.03 shall continue in
effect for the benefit of such retiring Collateral Agent, its sub-agents and their









 



132


respective Related Parties in respect of any actions taken or omitted to be taken by any of
them while it was acting as Collateral Agent.




          Each Lender and Issuing Bank hereby agrees that (a) it has requested a copy of each Report
prepared by or on behalf of the Collateral Agent; (b) the Collateral Agent (i) does not make any
representation or warranty, express or implied, as to the completeness or accuracy of any Report or
any of the information contained therein or any inaccuracy or omission contained in or relating to
a Report or (ii) shall be liable for any information contained in any Report; (c) the Reports are
not comprehensive audits or examinations, and that any Person performing any field examination will
inspect only specific information regarding the Loan Parties and will rely significantly upon the
Loan Parties’ books and records, as well as on representations of the Loan Parties’ personnel and
that the Collateral Agent undertakes no obligation to update, correct or supplement the Reports;
(d) it will keep all Reports confidential and strictly for its internal use, and it will not share
the Report with any Loan Party or any other Person except as otherwise permitted pursuant to this
Agreement; and (e) without limiting the generality of any other indemnification provision contained
in this Agreement, it will pay and protect, and indemnify, defend, and hold the Collateral Agent
and any such other Person preparing a Report harmless from and against, the claims, actions,
proceedings, damages, costs, expenses, and other amounts (including reasonable attorney fees)
incurred by as the direct or indirect result of any third parties who might obtain all or part of
any Report through the indemnifying Lender.




          SECTION 8.03 Appointment of Fondé de Pouvoir. The Borrowers and the Lenders
acknowledge that they have entered into an Appointment of fondé de pouvoir Agreement dated as of
December 2, 2009 providing for the appointment of the Attorney in anticipation of the execution of
this Agreement. The appointment of the Attorney hereunder is a confirmation and ratification of
the appointment of the Attorney under the Appointment of fondé de pouvoir Agreement.




          SECTION 8.04 Other Agents. The Joint Lead Arrangers shall not have any right, power,
obligation, liability, responsibility or duty under this Agreement other than those applicable to
all Lenders as such.




ARTICLE IX




Miscellaneous




          SECTION 9.01 Notices. (a) Except in the case of notices and other communications
expressly permitted to be given by telephone (and subject to paragraph (b) below), all notices and
other communications provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by facsimile or by other
electronic transmission, as follows:





	 	(i)	 	if to any Loan Party (including each Borrower), to the Company at:


	 
	 	 	 	Easton-Bell Sports, Inc.

7855 Haskell Avenue, Suite 200










 



133


	 	 	 	Van Nuys, CA 91406-1999

Attention: Mark Tripp

Facsimile No: (818) 782-9733


	 
	 	 	 	Easton-Bell Sports, LLC

c/o Fenway Partners

152 W. 57th Street

New York, NY 10019

Attention: Aron Schwartz

Facsimile No.: (212) 581-1205


	 
	 	 	 	With a copy to:


	 
	 	 	 	Ropes & Gray LLP

1211 Avenue of the Americas

New York, NY 10036

Attention: Sunil Savkar

Facsimile No: (646) 728-1533


	 
	 	(ii)	 	if to the Administrative Agent or the Swingline Lender, to:


	 
	 	 	 	JPMorgan Chase Bank, N.A.

2200 Ross Avenue

TX1-2921

Dallas, Texas 75201
	 	 	 	Attention: Christy West

Facsimile No: (214) 965-2594



With a copy to:


	 
	 	 	 	Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, NY 10017

Attention: Patrick Ryan

Facsimile No: (212) 455-2502



(iii) if to JPMCB as an Issuing Bank, to:


	 
	 	 	 	JPMorgan Chase Bank, N.A.

2200 Ross Avenue

TX1-2921

Dallas, Texas 75201
	 	 	 	Attention: Christy West

Facsimile No: (214) 965-2594



With a copy to:










 



134


	 	 	 	Simpson Thacher & Bartlett LLP

425 Lexington Avenue
	 	 	 	New York, NY 10017

Attention: Patrick Ryan

Facsimile No: (212) 455-2502







     (iv) if to any other Lender, to it at its address or facsimile number set forth in its
Administrative Questionnaire.


All such notices and other communications (i) sent by hand or overnight courier service, or mailed
by certified or registered mail, shall be deemed to have been given when received or (ii) sent by
facsimile or by other electronic transmission shall be deemed to have been given when sent,
provided that if not given during normal business hours for the recipient, shall be deemed
to have been given at the opening of business on the next Business Day for the recipient.




          (b) Notices and other communications to the Lenders hereunder may be delivered or furnished by
electronic communications (including e-mail and internet or intranet websites) pursuant to
procedures approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Article II unless otherwise agreed by the Administrative Agent and the
applicable Lender. The Administrative Agent or the Company (on behalf of the Loan Parties) may, in
its discretion, agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it; provided that approval of such
procedures may be limited to particular notices or communications. All such notices and other
communications (i) sent to an e-mail address shall be deemed received upon the sender’s receipt of
an acknowledgement from the intended recipient (such as by the “return receipt requested” function,
as available, return e-mail or other written acknowledgement), provided that if not given
during the normal business hours of the recipient, such notice or communication shall be deemed to
have been given at the opening of business on the next Business Day for the recipient, and (ii)
posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the
intended recipient at its e-mail address as described in the foregoing clause (b)(i) of
notification that such notice or communication is available and identifying the website address
therefor.




          (c) Any party hereto may change its address or facsimile number for notices and other
communications hereunder by notice to the other parties hereto (or, in the case of any such change
by a Lender, by notice to the Borrowers and the Administrative Agent).




          SECTION 9.02 Waivers; Amendments. (a) No failure or delay by the Administrative
Agent, the Collateral Agent, any Issuing Bank or any Lender in exercising any right or power
hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or the exercise of
any other right or power. The rights and remedies of the Administrative Agent, the Issuing Banks
and the Lenders hereunder and under any other Loan Document are cumulative and are not exclusive of
any rights or remedies that they would otherwise have. No waiver of any provision of any Loan
Document or consent to any departure by any Loan Party therefrom shall in any event be effective
unless the same shall be permitted by









 



135


paragraph (b) of this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan or the issuance of a Letter of Credit shall not be construed as a
waiver of any Default, regardless of whether the Administrative Agent, the Collateral Agent, any
Issuing Bank or any Lender may have had notice or knowledge of such Default at the time. No notice
to or demand on the Borrowers or any Loan Party in any case shall entitle the Borrowers or any Loan
Party to any other or further notice or demand in similar or other circumstances.




          (b) Except as provided in the first sentence of Section 2.09(f) (with respect to any
commitment increase), neither this Agreement nor any other Loan Document nor any provision hereof
or thereof may be waived, amended or modified except in the case of this Agreement, pursuant to an
agreement or agreements in writing entered into by the Loan Parties and the Required Lenders or, in
the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into
by the Administrative Agent and the Loan Party or Loan Parties that are parties thereto, in each
case with the consent of the Required Lenders; provided that, without limiting the
provisions of Section 2.09(f), no such agreement shall:





     (i) increase the Commitment of any Lender (or reinstate any Commitment terminated
pursuant to Section 7.01) without the written consent of such Lender,




     (ii) reduce or forgive the principal amount of any Loan or LC Disbursement or reduce
the rate of interest thereon, or reduce or forgive any interest or fees payable hereunder,
without the written consent of each Lender directly affected thereby,




     (iii) postpone any scheduled date of payment of the principal amount of any Loan or LC
Disbursement, or any date for the payment of any interest, fees or other Obligations payable
hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the
scheduled date of expiration of any Commitment, without the written consent of each Lender
directly affected thereby,




     (iv) change Section 2.18(b), (c) or (e) in a manner that would alter the manner in
which payments are shared, without the written consent of each Lender directly affected
thereby,




     (v) add new categories of eligible assets or make changes affecting any Borrowing Base
eligibility criteria that have the effect of increasing Aggregate Availability, U.S.
Facility Availability or Canadian Availability, without the written consent of the
Collateral Agent and the Supermajority Lenders,




     (vi) change any of the provisions of this Section or the percentage set forth in the
definition of “Required Lenders” or “Supermajority Lenders” or any other provision of any
Loan Document specifying the number or percentage of Lenders required to waive, amend or
modify any rights hereunder or thereunder or make any determination or grant any consent
hereunder or thereunder, without the written consent of each Lender,




     (vii) permit the Borrowers to assign their rights or obligations hereunder, release any
Guarantor from its obligation under its Loan Guaranty (except as otherwise permitted herein
or in the other Loan Documents), or increase the advance rates set forth









 



136



     in the definitions of Aggregate Borrowing Base, U.S. Borrowing Base or Canadian
Borrowing Base, without the written consent of each Lender, or




     (viii) except as provided in clauses (d) of this Section or in any Collateral Document,
release all or substantially all of the Collateral, without the written consent of each
Lender; provided further that no such agreement shall amend, modify or otherwise
affect the rights or duties of the Administrative Agent, the Collateral Agent, any Issuing
Bank or the Swingline Lender hereunder without the prior written consent of the
Administrative Agent, the Collateral Agent, such Issuing Bank or the Swingline Lender, as
the case may be.



          (c) Notwithstanding anything to the contrary in this Section, if the Administrative Agent and
the Borrowers shall have jointly identified an obvious error or any error or omission of a
technical or immaterial nature, in each case, in any provision of the Loan Documents, then the
Administrative Agent and the Borrowers shall be permitted to amend such provision and such
amendment shall become effective without any further action or consent of any other party to any
Loan Document if the same is not objected to in writing by the Required Lenders within five
Business Days following receipt of notice thereof. The Administrative Agent may also amend the
Commitment Schedule to reflect assignments entered into pursuant to Section 9.04.




          (d) The Lenders hereby irrevocably authorize the Administrative Agent, at its option and in
its sole discretion, to release any Liens granted to the Administrative Agent by the Loan Parties
on any Collateral (A) upon the termination of the all Commitments, payment and satisfaction in full
in cash of all Secured Obligations (other than Unliquidated Obligations), and the cash
collateralization of all Unliquidated Obligations in a manner satisfactory to each affected Lender,
(B) constituting property being sold or disposed of if the Loan Party disposing of such property
certifies to the Administrative Agent that the sale or disposition is made in compliance with the
terms of this Agreement (and the Administrative Agent may rely conclusively on any such
certificate, without further inquiry) (C) constituting property leased or subleased by/to a Loan
Party under a lease or sublease, respectively, which has expired or been terminated in a
transaction permitted under this Agreement, or (D) as required to effect any sale or other
disposition of such Collateral in connection with any exercise of remedies of the Administrative
Agent and the Lenders pursuant to Article VII. Except as provided in the preceding sentence, the
Administrative Agent will not release any Liens on Collateral without the prior written
authorization of the Required Lenders; provided that, the Administrative Agent may in its
discretion, release its Liens on Collateral valued in the aggregate not in excess of $10,000,000
during any calendar year without the prior written authorization of the Required Lenders. Any such
release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other
than those expressly being released) upon (or obligations of the Loan Parties in respect of) all
interests retained by the Loan Parties, including the proceeds of any sale, all of which shall
continue to constitute part of the Collateral.




          (e) If, in connection with any proposed amendment, waiver, modification or consent, the
consent of the Lenders holding greater than 50% of the Aggregate Credit Exposure is obtained, but
the consent of other necessary Lenders is not obtained (any such Lender whose consent is necessary
but not obtained being referred to herein as a “Non-Consenting Lender”),









 



137


then the Borrowers may elect to replace a Non-Consenting Lender as a Lender party to this
Agreement, provided that, concurrently with such replacement, (i) another bank or other
entity which is reasonably satisfactory to the Borrowers and the Administrative Agent shall agree,
as of such date, to purchase for cash at par the Loans and other Obligations due to the
Non-Consenting Lender pursuant to an Assignment and Assumption in accordance with Section 9.04(b)
and to become a Lender for all purposes under this Agreement and to assume all obligations of the
Non-Consenting Lender to be terminated as of such date and to comply with the requirements of
clause (b) of Section 9.04, and (ii) the Borrowers shall pay to such Non-Consenting Lender in same
day funds on the day of such replacement (1) all interest, fees and other amounts then accrued but
unpaid to such Non-Consenting Lender by the Borrowers hereunder to and including the date of
termination, including without limitation payments due to such Non-Consenting Lender under Sections
2.15 and 2.17, and (2) an amount, if any, equal to the payment which would have been due to such
Lender on the day of such replacement under Section 2.16 had the Loans of such Non-Consenting
Lender been prepaid on such date rather than sold to the replacement Lender.




          (f) This Agreement will be amended to remove any Canadian Loan Party as a Canadian Borrower (a
“Removed Borrower”) upon execution and delivery by the Company to the Administrative Agent
of a written notification to such effect and repayment in full of all Loans made to such Removed
Borrower, cash collateralization of all L/C Obligations in respect of Letters of Credit issued for
the account of such Removed Borrower and repayment in full of all other amounts owing by such
Removed Borrower under this Agreement and the other Loan Documents (it being agreed that any such
repayment shall be in accordance with the other terms of this Agreement); provided that any
such Removed Borrower may be reinstated as a Canadian Borrower (a “Reinstated Borrower”)
upon (x) execution and delivery by such Reinstated Borrower of a joinder agreement in form and
substance reasonably satisfactory to the Administrative Agent to each of this Agreement and the
applicable Collateral Documents, providing for such Reinstated Borrower to become a party thereto,
(y) agreement and acknowledgment by the Loan Parties and such Reinstated Borrower that the Loan
Guaranty covers the obligations of such Reinstated Borrower and (z) delivery to the Administrative
Agent of (1) corporate or other applicable resolutions, other corporate or other applicable
documents, certificates and legal opinions in respect of such Reinstated Borrower substantially
equivalent to comparable documents delivered on the Effective Date and (2) such other documents or
information with respect thereto as the Administrative Agent shall reasonably request.




          SECTION 9.03 Expenses; Indemnity; Damage Waiver. (a) The Company shall pay (i) all
reasonable out-of-pocket expenses incurred by the Administrative Agent, the Collateral Agent and
the Lead Arrangers and each of their Affiliates, including the reasonable fees, charges and
disbursements of counsel for the Administrative Agent, in connection with the syndication and
distribution (including, without limitation, via the internet or through a service such as
Intralinks) of the credit facilities provided for herein, the preparation and administration of the
Loan Documents or any amendments, modifications or waivers of the provisions of the Loan Documents,
(ii) all reasonable out-of-pocket expenses incurred by any Issuing Bank in connection with the
issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment
thereunder, (iii) all reasonable out-of-pocket expenses incurred by the Collateral Agent in
connection with the performance of its duties pursuant to the provisions of the Loan Documents and
(iv) all reasonable out-of-pocket expenses incurred by the









 



138


Administrative Agent, any Issuing Bank or any Lender, including the reasonable fees, charges
and disbursements of any counsel for the Administrative Agent, any Issuing Bank or any Lender, in
connection with the enforcement, collection or protection of its rights in connection with the Loan
Documents, including its rights under this Section, or in connection with the Loans made or Letters
of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit. Expenses being
reimbursed by the Borrowers under this Section include, without limiting the generality of the
foregoing, reasonable out-of-pocket costs and expenses incurred in connection with:





     (i) appraisals and insurance reviews;




     (ii) field examinations and the preparation of Reports based on the fees charged by a
third party retained by the Collateral Agent or the internally allocated fees for each
Person employed by the Collateral Agent with respect to each field examination, together
with the reasonable fees and expenses associated with collateral monitoring services
performed by the Specialized Due Diligence Group of the Administrative Agent and the
Borrowers agree to modify or adjust the computation of the Borrowing Bases which may include
maintaining additional Reserves, modifying the advance rates or modifying the eligibility
criteria for the components of the Borrowing Bases to the extent required by the Collateral
Agent as a result of any such evaluation, appraisal or monitoring;




     (iii) Taxes, fees and other charges for (A) lien and title searches and title insurance
and (B) recording the filing financing statements and continuations, and other actions to
perfect, protect, and continue the Administrative Agent’s Liens;




     (iv) sums paid or incurred to take any action required of any Loan Party under the Loan
Documents that such Loan Party fails to pay or take; and




     (v) forwarding loan proceeds, collecting checks and other items of payment, and
establishing and maintaining the accounts and lock boxes, and costs and expenses of
preserving and protecting the Collateral.


All of the foregoing reasonable out-of-pocket costs and expenses may be charged to the Borrowers as
Revolving Loans or to another deposit account, to the extent permitted under Section 2.18(d).




          (b) The Borrowers shall, jointly and severally, indemnify the Administrative Agent, the
Collateral Agent, the Lead Arrangers, the Issuing Banks and each Lender, and the affiliates and the
respective Related Parties of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, penalties, incremental taxes, liabilities and related expenses, including the fees,
charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee by the Borrowers or any Loan Party or any other Person arising out of, in connection
with, or as a result of (i) the execution or delivery of the Loan Documents or any other agreement
or instrument contemplated thereby, the performance by the parties to the Loan









 



139


Documents of their respective obligations thereunder or the consummation of the Transactions
or any other transactions contemplated thereby, (ii) any Loan or Letter of Credit or the use of the
proceeds therefrom (including any refusal by an Issuing Bank to honor a demand for payment under a
Letter of Credit if the documents presented in connection with such demand do not strictly comply
with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of
Hazardous Materials on, at, to or from any property currently or formerly owned or operated by any
Borrower or any of their Subsidiaries, or any Environmental Liability related in any way to any
Borrower or any of their Subsidiaries, (iv) the failure of the Borrowers to deliver to the
Administrative Agent the required receipts or other required documentary evidence with respect to a
payment made by any Loan Parties for Taxes pursuant to Section 2.17, or (v) any actual or
prospective claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be available
to the extent that such losses, claims, damages, tax, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable judgment to have
resulted from the bad faith, gross negligence or willful misconduct of such Indemnitee.




          (c) To the extent that the Borrowers fail to pay any amount required to be paid by it to the
Administrative Agent, any Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this
Section and without limiting each Borrower’s obligation to do so, each Lender severally agrees to
pay to the Administrative Agent, such Issuing Bank or the Swingline Lender, as the case may be,
such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed
expense or indemnity payment is sought) of such unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case
may be, was incurred by or asserted against the Administrative Agent, such Issuing Bank or the
Swingline Lender in its capacity as such.




          (d) To the fullest extent permitted by applicable law, no party shall assert, and each hereby
waives, any claim against any other party or Indemnitee (i) on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any agreement or
instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of the
proceeds thereof, and (ii) for contribution or any other rights of recovery under or related to
Environmental Laws that it now or hereafter may have by statute or otherwise against any
Indemnitee.




          (e) All amounts due under this Section shall be payable promptly, and in no event, later than
five Business Days after receipt of written demand therefor.




          SECTION 9.04 Successors and Assigns. (a) The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby (including any Affiliate of the Issuing Banks that issues any Letter of
Credit), except that (i) the Borrowers may not assign or otherwise transfer any of their rights or
obligations hereunder without the prior written consent of the Administrative Agent and each Lender
(and any attempted assignment or transfer by the Borrowers without such consent shall be null and
void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder
except in accordance with this Section.










 



140




          Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns permitted hereby (including
any Affiliate of an Issuing Bank that issues any Letter of Credit), Participants (to the extent
provided in paragraph (c) of this Section) and, to the extent expressly contemplated hereby, the
Related Parties of each of the Administrative Agent, any Issuing Bank and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.




          (b) (i) Subject to the conditions set forth in clause (b)(ii) below, any Lender may assign to
one or more assignees (other than the Borrowers or any Affiliate thereof) all or a portion of its
rights and obligations under this Agreement (including all or a portion of its Commitment and the
Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably
withheld) of: (A) the Company, provided that no consent of the Company shall be required
for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of
Default has occurred and is continuing, any other assignee; provided, further, that
the Borrowers shall be deemed to have consented to any such assignment unless the Company shall
object thereto by written notice to the Administrative Agent within five Business Days after having
received notice thereof; (B) the Administrative Agent (such consent not to be unreasonably
withheld), provided that no consent of the Administrative Agent shall be required for an assignment
to a Lender, an Affiliate of a Lender or an Approved Fund; and (C) each Issuing Bank and the
Swingline Lender (such consent not to be unreasonably withheld).





     (ii) Assignments shall be subject to the following additional conditions:




     (A) except in the case of an assignment to a Lender or an Affiliate of a Lender or an
assignment of the entire remaining amount of the assigning Lender’s Facility Commitment or
Loans of any Class, the amount of the Commitment or Loans of the assigning Lender subject to
each such assignment (determined as of the date the Assignment and Assumption with respect
to such assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000 unless the Company and the Administrative Agent otherwise consent,
provided that no such consent of the Borrowers shall be required if a Specified
Event of Default has occurred and is continuing;




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




     (C) the parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption, together with a processing and recordation fee of
$3,500, provided that assignments made pursuant to Section 2.19(b) or Section
9.02(e) shall not require the signature of the assigning Lender to become effective;




     (D) the assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent any Tax forms required by Section 2.17(f) and an Administrative Questionnaire in which
the assigned designates one or more Credit Contacts to whom all









 



141



syndicate-level information (which may contain material non-public information about
the Company, the Loan Parties and their Related Parties or their respective securities) will
be made available and who may receive such information in accordance with the assignee’s
compliance procedures and applicable laws, including Federal and state securities laws; and




     (E) no assignment of all or a portion of a Lender’s Canadian Facility Commitment shall
be permitted without an equivalent assignment (to the same assignor) of the assignee’s U.S.
Commitment



          For the purposes of this Section 9.04(b), the term “Approved Fund” has the following
meaning:




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





     (iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this
Section, from and after the effective date specified in each Assignment and Assumption the
assignee thereunder shall be a party hereto and, to the extent of the interest assigned by
such Assignment and Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned
by such Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a party hereto
but shall continue to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.03).
Any assignment or transfer by a Lender of rights or obligations under this Agreement that
does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a
sale by such Lender of a participation in such rights and obligations in accordance with
paragraph (c) of this Section.




     (iv) The Administrative Agent, acting solely for this purpose as an agent of the
Borrowers, shall maintain at one of its offices a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses of the
Lenders, and the Commitment of, and principal amount of and interest on the Loans and LC
Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be conclusive, and the Borrowers,
the Administrative Agent, the Issuing Banks and the Lenders may treat each Person whose name
is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrowers, any Issuing Bank and any Lender, at any
reasonable time and from time to time upon reasonable prior notice.




     (v) Upon its receipt of a duly completed Assignment and Assumption executed by an
assigning Lender and an assignee, the assignee’s completed









 



142



     Administrative Questionnaire and any Tax forms required by Section 2.17 (unless the
assignee shall already be a Lender hereunder), the processing and recordation fee referred
to in paragraph (b) of this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and
Assumption and record the information contained therein in the Register; provided
that if either the assigning Lender or the assignee shall have failed to make any payment
required to be made by it pursuant to Section 2.04, 2.05, 2.06(e) or (f), 2.07(b), 2.18(e)
or 9.03(c), the Administrative Agent shall have no obligation to accept such Assignment and
Assumption and record the information therein in the Register unless and until such payment
shall have been made in full, together with all accrued interest thereon. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this paragraph.



          (c) (i) Any Lender may, without the consent of the Borrowers, the Administrative Agent, the
Issuing Banks or the Swingline Lender, sell participations to one or more banks or other entities
(a “Participant”) in all or a portion of such Lender’s rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans owing to it);
provided that (A) such Lender’s obligations under this Agreement shall remain unchanged,
(B) such Lender shall remain solely responsible to the other parties hereto for the performance of
such obligations and (C) the Borrowers, the Administrative Agent, the Issuing Banks and the other
Lenders shall continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement. For the avoidance of doubt, each Lender
shall be responsible for the indemnity under Section 2.19(b) with respect to any payments made by
such Lender to its participant(s). Any agreement or instrument pursuant to which a Lender sells
such a participation shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision of this Agreement;
provided that such agreement or instrument may provide that such Lender will not, without
the consent of the Participant, agree to any amendment, modification or waiver described in the
first proviso to Section 9.02(b) (other than clause (v) thereof) that affects such Participant.
Subject to paragraph (c)(ii) of this Section, the Borrowers agree that each Participant shall be
entitled to the benefits of and limitations of Sections 2.15, 2.16 and 2.17 to the same extent as
if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this
Section. To the extent permitted by law, each Participant also shall be entitled to the benefits
of Section 9.08 as though it were a Lender, provided such Participant agrees to be subject to
Section 2.18(e) as though it were a Lender. Each Lender that sells a participation shall, acting
solely for this purpose as an agent of the Loan Parties, maintain a register on which it enters the
name and address of each Participant and the principal amounts (and stated interest) of each
participant’s interest in the Loans or other obligations under this Agreement (the “Participant
Register”). The entries in the Participant Register shall be conclusive absent manifest error,
and such Lender shall treat each person whose name is recorded in the Participant Register as the
owner of such participation for all purposes of this Agreement notwithstanding any notice to the
contrary.





     (ii) A Participant shall not be entitled to receive any greater payment under Section
2.15 or 2.17 than the applicable Lender would have been entitled to receive with respect to
the participation sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrowers’ prior written consent. A Participant shall









 



143



not be entitled to the benefits of Section 2.17 unless the Borrowers and the
Administrative Agent are notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrowers and any withholding Agent, to comply
with Section 2.17(f) as though it were a Lender.



          (d) Any Lender may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Lender, including without limitation
any pledge or assignment to secure obligations to any central bank or a Federal Reserve Bank and
this Section shall not apply to any such pledge or assignment of a security interest;
provided that no such pledge or assignment of a security interest shall release a Lender
from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as
a party hereto.




          SECTION 9.05 Survival. All covenants, agreements, representations and warranties made
by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered
in connection with or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the other parties hereto and shall survive the execution and delivery of
the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of
any investigation made by any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Collateral Agent, any Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect as long as the principal of or any accrued
interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and
unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or
terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive
and remain in full force and effect regardless of the consummation of the transactions contemplated
hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.




          SECTION 9.06 Counterparts; Integration; Effectiveness. This Agreement may be executed
in counterparts (and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a single contract.
This Agreement, the other Loan Documents and any separate letter agreements with respect to fees
payable to the Administrative Agent or the syndication of the Loans and Commitments constitute the
entire contract among the parties relating to the subject matter hereof and supersede any and all
previous agreements and understandings, oral or written, relating to the subject matter hereof.
Except as provided in Section 4.01, this Agreement shall become effective when it shall have been
executed by the Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of the other parties
hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by facsimile or by other electronic transmission shall be effective as delivery
of a manually executed counterpart of this Agreement.




          SECTION 9.07 Severability. Any provision of any Loan Document held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective









 



144


to the extent of such invalidity, illegality or unenforceability without affecting the
validity, legality and enforceability of the remaining provisions thereof; and the invalidity of a
particular provision in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.




          SECTION 9.08 Right of Setoff. If a Specified Event of Default shall have occurred and
be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and other obligations
at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrowers
or such Guarantor against any of and all the Secured Obligations held by such Lender, irrespective
of whether or not such Lender shall have made any demand under the Loan Documents and although such
obligations may be unmatured; provided that, no such Lender shall exercise any right of set
off prior to the date on which the Loans are declared to be immediately due and payable, without
the prior consent of the Administrative Agent. The applicable Lender shall notify the Borrowers
and the Administrative Agent of such set-off or application, provided that any failure to give or
any delay in giving such notice shall not affect the validity of any such set-off or application
under this Section. The rights of each Lender under this Section are in addition to other rights
and remedies (including other rights of setoff) which such Lender may have.




          SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process. (a) The
Loan Documents (other than those containing a contrary express choice of law provision) shall be
construed in accordance with and governed by the law of the State of New York, but giving effect to
federal laws applicable to national banks.




          (b) Each party hereto hereby irrevocably and unconditionally submits, for itself and its
property, to the non-exclusive jurisdiction of the Supreme Court of the State of New York, the
courts of the United States for the Southern District of New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to any Loan Document, or for
recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such Federal court. Each
of the parties hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any
right that any party may otherwise have to bring any action or proceeding relating to this
Agreement or any other Loan Document against any other party or its properties in the courts of any
jurisdiction.




          (c) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it
may legally and effectively do so, any objection which it may now or hereafter have to the laying
of venue of any suit, action or proceeding arising out of or relating to this Agreement or any
other Loan Document in any court referred to in paragraph (b) of this Section. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such court.










 



145




          (d) Each party to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 9.01. Nothing in this Agreement or any other Loan Document will
affect the right of any party to this Agreement to serve process in any other manner permitted by
law.




          SECTION 9.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY
OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT
OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.




          SECTION 9.11 Headings. Article and Section headings and the Table of Contents used
herein are for convenience of reference only, are not part of this Agreement and shall not affect
the construction of, or be taken into consideration in interpreting, this Agreement.




          SECTION 9.12 Confidentiality. Each of the Administrative Agent, the Collateral Agent,
the Issuing Banks and the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its Affiliates’ respective
directors, officers, employees and agents, including accountants, legal counsel and other advisors
(it being understood that the Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such Information confidential),
(b) to the extent requested by any regulatory authority, provided, unless specifically
prohibited by applicable law or court order, each Lender shall make reasonable efforts to notify
the Company of any request by any regulatory authority or representative thereof for disclosure of
any such confidential information prior to disclosure of such confidential information, (c) to the
extent required by any Requirement of Law or by any subpoena or similar legal process, (d) to any
other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any
suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement
of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially
the same as those of this Section, to (i) any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this Agreement, (ii) any
central bank, Federal Reserve Bank or any other governmental entity to which a Lender has pledged a
security interest in all or any portion of its rights hereunder pursuant to Section 9.04(d) or
(iii) any actual or prospective counterparty (or its advisors) to any swap or derivative
transaction relating to the Loan Parties and their obligations, (g) with the consent of the
Borrowers or (h) to the extent such Information (i) becomes publicly available other than as a
result of a breach of this Section by such Person or (ii) becomes available to the Administrative
Agent, the Collateral Agent, any Issuing Bank or









 



146


any Lender on a non-confidential basis from a source other than a Loan Party that is not to
the knowledge of the receiving party in violation of any confidentiality restrictions. For the
purposes of this Section, “Information” means all information received from a Loan Party or
its representatives relating to the Loan Parties, the Subsidiaries or their respective businesses,
other than any such information that is available to the Administrative Agent, the Collateral
Agent, any Issuing Bank or any Lender on a non-confidential basis prior to disclosure by a Loan
Party or its representative. Any Person required to maintain the confidentiality of Information as
provided in this Section shall be considered to have complied with its obligation to do so if such
Person has exercised the same degree of care to maintain the confidentiality of such Information as
such Person would accord to its own confidential information.




          EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN THIS SECTION 9.12 FURNISHED TO IT
PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE COMPANY AND
ITS AFFILIATES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS
DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT
WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE
LAW, INCLUDING FEDERAL, PROVINCIAL, TERRITORIAL AND STATE SECURITIES LAWS AND THE TERMS HEREOF.




          ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE BORROWERS OR
THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE
SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE COMPANY,
THE LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH
LENDER REPRESENTS TO THE BORROWERS AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS
ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL
NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW, INCLUDING
FEDERAL, PROVINCIAL, TERRITORIAL AND STATE SECURITIES LAWS AND THE TERMS HEREOF.




          SECTION 9.13 Several Obligations; Nonreliance; Violation of Law. The respective
obligations of the Lenders hereunder are several and not joint and the failure of any Lender to
make any Loan or perform any of its obligations hereunder shall not relieve any other Lender from
any of its obligations hereunder. Each Lender hereby represents that it is not relying on or
looking to any margin stock for the repayment of the Borrowings provided for herein. Anything
contained in this Agreement to the contrary notwithstanding, no Issuing Banks nor any Lender shall
be obligated to extend credit to the Borrowers in violation of any Requirement of Law.




          SECTION 9.14 USA PATRIOT Act. Each Lender that is subject to the requirements of the
USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,










 



147




2001)) (the “Act”) hereby notifies the Borrowers that pursuant to the requirements of
the Act, it is required to obtain, verify and record information that identifies the Borrowers,
which information includes the names and addresses of the Borrowers and other information that will
allow such Lender to identify the Borrowers in accordance with the Act.




          SECTION 9.15 Disclosure. Each Loan Party and each Lender hereby acknowledges and
agrees that the Administrative Agent and/or its Affiliates from time to time may hold investments
in, make other loans to or have other relationships with any of the Loan Parties and their
respective Affiliates.




          SECTION 9.16 No Fiduciary Relationship. The Loan Parties agree that in connection
with all aspects of the transactions contemplated hereby and any communications in connection
therewith, the Loan Parties, the Subsidiaries and their Affiliates, on the one hand, and the
Administrative Agent, the Collateral Agent, the Issuing Banks, the Lenders and their Affiliates, on
the other hand, will have a business relationship that does not create, by implication or
otherwise, any fiduciary duty on the part of the Administrative Agent, the Collateral Agent, the
Lenders, the Issuing Banks or their Affiliates, and no such duty will be deemed to have arisen in
connection with any such transactions or communications.




          SECTION 9.17 Appointment for Perfection. Each Lender hereby appoints each other
Lender as its agent for the purpose of perfecting Liens, for the benefit of the Administrative
Agent and the Lenders, in assets which, in accordance with Article 9 of the UCC or any other
applicable law can be perfected only by possession. Should any Lender (other than the
Administrative Agent) obtain possession of any such Collateral, such Lender shall notify the
Administrative Agent thereof, and, promptly upon the Administrative Agent’s request therefor shall
deliver such Collateral to the Administrative Agent or otherwise deal with such Collateral in
accordance with the Administrative Agent’s instructions.




          SECTION 9.18 Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges
and other amounts which are treated as interest on such Loan under applicable law (collectively the
“Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be
contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance
with applicable law, the rate of interest payable in respect of such Loan hereunder, together with
all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent
lawful, the interest and Charges that would have been payable in respect of such Loan but were not
payable as a result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be increased (but not
above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the
Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.




          SECTION 9.19 Intercreditor Arrangements. Notwithstanding anything herein to the
contrary, the lien and security interest granted to the Administrative Agent pursuant to this
Agreement or any other Loan Document and the exercise of any right or remedy by the Administrative
Agent hereunder or under any other Loan Document are subject to the provisions of the Intercreditor
Agreement. In the event of any conflict between the terms of the Intercreditor









 



148


Agreement, this Agreement and any other Loan Document, the terms of the Intercreditor
Agreement shall govern and control with respect to any right or remedy. Without limiting the
generality of the foregoing, and notwithstanding anything herein to the contrary, all rights and
remedies of the Administrative Agent (and the Lenders) with respect to the Note Priority Collateral
shall be subject to the terms of the Intercreditor Agreement, and until the Note Payment Date, any
obligation of any Borrower and any Guarantor hereunder or under any other Loan Document with
respect to the delivery or control of any Note Priority Collateral, the novation of any lien on any
certificate of title, bill of lading or other document, the giving of any notice to any bailee or
other Person, the provision of voting rights or the obtaining of any consent of any Person, in each
case in connection with any Note Priority Collateral, shall be deemed to be satisfied if such
Borrower or such Guarantor, as applicable, complies with the requirements of the similar provision
of the applicable Note Document. Until the Note Obligations Payment Date, the delivery of any Note
Priority Collateral to the Note Representative pursuant to the Note Documents shall satisfy any
delivery requirement hereunder or under any other Loan Document.




          SECTION 9.20 Judgment Currency Conversion.




          (a) The obligations of the Loan Parties hereunder and under the other Loan Documents to make
payments in Dollars or in Canadian Dollars, as the case may be (the “Obligation Currency”),
shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed
in or converted into any currency other than the Obligation Currency, except to the extent that
such tender or recovery results in the effective receipt by the Administrative Agent or a Lender of
the full amount of the Obligation Currency expressed to be payable to the Administrative Agent or
Lender under this Agreement or the other Loan Documents. If, for the purpose of obtaining or
enforcing judgment against any Loan Party in any court or in any jurisdiction, it becomes necessary
to convert into or from any currency other than the Obligation Currency (such other currency being
hereinafter referred to as the “Judgment Currency”) an amount due in the Obligation
Currency, the conversion shall be made, at the Administrative Agent’s quoted rate of exchange
prevailing, in each case, as of the date immediately preceding the day on which the judgment is
given (such Business Day being hereinafter referred to as the “Judgment Currency Conversion
Date”).




          (b) If there is a change in the rate of exchange prevailing between the Judgment Currency
Conversion Date and the date of actual payment of the amount due, the Loan Parties each 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 ensure that the amount paid in the Judgment Currency, when
converted at the rate of exchange prevailing on the date of payment, will produce the amount of the
Obligation Currency which could have been purchased with the amount of Judgment Currency stipulated
in the judgment or judicial award at the rate of exchange prevailing on the Judgment Currency
Conversion Date. Any amount due from a Loan Party under this Section 9.20(b) shall be due as a
separate debt and shall not be affected by judgment being obtained for any other amounts due under
or in respect of any of the Loan Documents.




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










 



149




ARTICLE X




Loan Guaranty




          SECTION 10.01 Guaranty. Each U.S. Guarantor hereby agrees that it is jointly and
severally liable for, and, as primary obligor and not merely as surety, absolutely and
unconditionally guarantees to the Lenders the prompt payment when due, whether at stated maturity,
upon acceleration or otherwise, and at all times thereafter, of the Secured Obligations and all
out-of-pocket costs and expenses including, without limitation, all court costs and attorneys’ and
paralegals’ fees and expenses paid or incurred by the Administrative Agent, the Collateral Agent,
the Issuing Banks and the Lenders in endeavoring to collect all or any part of the Secured
Obligations from, or in prosecuting any action against, any Borrower or any Guarantor of all or any
part of the Secured Obligations (such costs and expenses, together with the Secured Obligations,
collectively the “ U.S. Guaranteed Obligations”). Each Guarantor hereby agrees that it is
jointly and severally liable for, and, as primary obligor and not merely as surety, absolutely and
unconditionally guarantees to the Lenders the prompt payment when due, whether at stated maturity,
upon acceleration or otherwise, and at all times thereafter, of the Canadian Secured Obligations
and, and all out-of-pocket costs and expenses including, without limitation, all court costs and
attorneys’ and paralegals’ fees and expenses paid or incurred by the Administrative Agent, the
Collateral Agent, the Issuing Banks and the Lenders in endeavoring to collect all or any part of
the Canadian Secured Obligations from, or in prosecuting any action against, any Borrower or any
Guarantor of all or any part of the Canadian Secured Obligations (such costs and expenses, together
with the Canadian Secured Obligations, collectively the “Canadian Guaranteed Obligations”,
together with the U.S. Guaranteed Obligations, the “Guaranteed Obligations”). Each
Guarantor further agrees that the Guaranteed Obligations may be extended or renewed in whole or in
part without notice to or further assent from it, and that it remains bound upon its guarantee
notwithstanding any such extension or renewal. All terms of this Loan Guaranty apply to and may be
enforced by or on behalf of any domestic or foreign branch or Affiliate of any Lender that extended
any portion of the Guaranteed Obligations.




          SECTION 10.02 Guaranty of Payment. This Loan Guaranty is a guaranty of payment and
not of collection. Each Guarantor waives any right to require the Administrative Agent, the
Collateral Agent, any Issuing Bank or any Lender to sue any Borrower, any Guarantor, any other
guarantor, or any other person obligated for all or any part of the Guaranteed Obligations (each,
an “Obligated Party”), or otherwise to enforce its payment against any collateral securing
all or any part of the Guaranteed Obligations.




          SECTION 10.03 No Discharge or Diminishment of Loan Guaranty (a) Except as otherwise
provided for herein, the obligations of each Guarantor hereunder are unconditional and absolute and
not subject to any reduction, limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Guaranteed Obligations), including: (i) any claim of
waiver, release, extension, renewal, settlement, surrender, alteration, or compromise of any of the
Guaranteed Obligations, by operation of law or otherwise; (ii) any change in the corporate
existence, structure or ownership of any Borrower or any other guarantor of or other person liable
for any of the Guaranteed Obligations; (iii) any insolvency, bankruptcy, reorganization or other
similar proceeding affecting any Obligated Party, or their assets or any resulting release or
discharge of any obligation of any Obligated









 



150


Party; or (iv) the existence of any claim, setoff or other rights which any Guarantor may have
at any time against any Obligated Party, the Administrative Agent, the Collateral Agent, any
Issuing Bank, any Lender, or any other person, whether in connection herewith or in any unrelated
transactions.




          (b) The obligations of each Guarantor hereunder are not subject to any defense or setoff,
counterclaim, recoupment, or termination whatsoever by reason of the invalidity, illegality, or
unenforceability of any of the Guaranteed Obligations or otherwise, or any provision of applicable
law or regulation purporting to prohibit payment by any Obligated Party, of the Guaranteed
Obligations or any part thereof.




          (c) Further, the obligations of any Guarantor hereunder are not discharged or impaired or
otherwise affected by: (i) the failure of the Administrative Agent, the Collateral Agent, any
Issuing Bank or any Lender to assert any claim or demand or to enforce any remedy with respect to
all or any part of the Guaranteed Obligations; (ii) any waiver or modification of or supplement to
any provision of any agreement relating to the Guaranteed Obligations; (iii) any release,
non-perfection, or invalidity of any indirect or direct security for the obligations of any
Borrower for all or any part of the Guaranteed Obligations or any obligations of any other
guarantor of or other person liable for any of the Guaranteed Obligations; (iv) any action or
failure to act by the Administrative Agent, the Collateral Agent, any Issuing Bank or any Lender
with respect to any collateral securing any part of the Guaranteed Obligations; or (v) any default,
failure or delay, willful or otherwise, in the payment or performance of any of the Guaranteed
Obligations, or any other circumstance, act, omission or delay that might in any manner or to any
extent vary the risk of such Guarantor or that would otherwise operate as a discharge of any
Guarantor as a matter of law or equity (other than the indefeasible payment in full in cash of the
Guaranteed Obligations).




          SECTION 10.04 Defenses Waived. To the fullest extent permitted by applicable law,
each Guarantor hereby waives any defense based on or arising out of any defense of any Borrower or
any Guarantor or the unenforceability of all or any part of the Guaranteed Obligations from any
cause, or the cessation from any cause of the liability of any Borrower or any Guarantor, other
than the indefeasible payment in full in cash of the Guaranteed Obligations. Without limiting the
generality of the foregoing, each Guarantor irrevocably waives acceptance hereof, presentment,
demand, protest and, to the fullest extent permitted by law, any notice not provided for herein, as
well as any requirement that at any time any action be taken by any person against any Obligated
Party, or any other person. The Administrative Agent may, at its election, foreclose on any
Collateral held by it by one or more judicial or nonjudicial sales, accept an assignment of any
such Collateral in lieu of foreclosure or otherwise act or fail to act with respect to any
collateral securing all or a part of the Guaranteed Obligations, compromise or adjust any part of
the Guaranteed Obligations, make any other accommodation with any Obligated Party or exercise any
other right or remedy available to it against any Obligated Party, without affecting or impairing
in any way the liability of such Guarantor under this Loan Guaranty except to the extent the
Guaranteed Obligations have been fully and indefeasibly paid in cash. To the fullest extent
permitted by applicable law, each Guarantor waives any defense arising out of any such election
even though that election may operate, pursuant to applicable law, to impair or extinguish any
right of reimbursement or subrogation or other right or remedy of any Guarantor against any
Obligated Party or any security.










 



151




          SECTION 10.05 Rights of Subrogation. Any right, claim or cause of action, including,
without limitation, a claim of subrogation, contribution or indemnification of any Guarantor
against any Obligated Party, or any collateral, shall be subordinated in right of payment to the
Obligations until the Loan Parties and the Guarantors have fully performed all their obligations to
the Administrative Agent, the Collateral Agent, the Issuing Banks and the Lenders.




          SECTION 10.06 Reinstatement; Stay of Acceleration. If at any time any payment of any
portion of the Guaranteed Obligations is rescinded or must otherwise be restored or returned upon
the insolvency, bankruptcy, or reorganization of any Borrower or otherwise, each Guarantor’s
obligations under this Loan Guaranty with respect to that payment shall be reinstated at such time
as though the payment had not been made and whether or not the Administrative Agent, the Collateral
Agent, the Issuing Banks and the Lenders are in possession of this Loan Guaranty. If acceleration
of the time for payment of any of the Guaranteed Obligations is stayed upon the insolvency,
bankruptcy or reorganization of any Borrower, all such amounts otherwise subject to acceleration
under the terms of any agreement relating to the Guaranteed Obligations shall nonetheless be
payable by the Guarantors forthwith on demand by the Lender.




          SECTION 10.07 Information. Each Guarantor assumes all responsibility for being and
keeping itself informed of the Borrowers’ financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature,
scope and extent of the risks that each Guarantor assumes and incurs under this Loan Guaranty, and
agrees that neither the Administrative Agent, the Collateral Agent, any Issuing Bank nor any Lender
shall have any duty to advise any Guarantor of information known to it regarding those
circumstances or risks.




          SECTION 10.08 Taxes. All payments of the Guaranteed Obligations will be made by each
Guarantor free and clear of and without deduction or withholding for any Indemnified Taxes or Other
Taxes; provided that if any Guarantor shall be required to deduct or withhold any Indemnified Taxes
or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to additional sums payable
under this Section) the Administrative Agent, Lender or Issuing Bank (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been made, (ii) such
Guarantor shall make such deductions and (iii) such Guarantor shall pay the full amount deducted to
the relevant Governmental Authority in accordance with applicable law.




          SECTION 10.09 Maximum Liability. The provisions of this Loan Guaranty are severable,
and in any action or proceeding involving any corporate law, or any provincial, state, federal or
foreign bankruptcy, insolvency, reorganization or other law affecting the rights of creditors
generally, if the obligations of any Guarantor under this Loan Guaranty would otherwise be held or
determined to be void, voidable, avoidable, invalid or unenforceable on account of the amount of
such Guarantor’s liability under this Loan Guaranty, then, notwithstanding any other provision of
this Loan Guaranty to the contrary, the amount of such liability shall, without any further action
by the Guarantors or the Lenders, be automatically limited and reduced to the highest amount that
is valid and enforceable as determined in such









 



152


action or proceeding (such highest amount determined hereunder being the relevant Guarantor’s
“Maximum Liability”). This Section with respect to the Maximum Liability of each Guarantor
is intended solely to preserve the rights of the Lenders to the maximum extent not subject to
avoidance under applicable law, and no Guarantor nor any other person or entity shall have any
right or claim under this Section with respect to such Maximum Liability, except to the extent
necessary so that the obligations of any Guarantor hereunder shall not be rendered voidable under
applicable law. Each Guarantor agrees that the Guaranteed Obligations may at any time and from
time to time exceed the Maximum Liability of each Guarantor without impairing this Loan Guaranty or
affecting the rights and remedies of the Lenders hereunder, provided that, nothing in this sentence
shall be construed to increase any Guarantor’s obligations hereunder beyond its Maximum Liability.




          SECTION 10.10 Contribution. In the event any Guarantor (a “Paying Guarantor”)
shall make any payment or payments under this Loan Guaranty or shall suffer any loss as a result of
any realization upon any collateral granted by it to secure its obligations under this Loan
Guaranty, each other Guarantor (each a “Non-Paying Guarantor”) shall contribute to such
Paying Guarantor an amount equal to such Non-Paying Guarantor’s “Applicable Percentage” of
such payment or payments made, or losses suffered, by such Paying Guarantor. For purposes of this
Article X, each Non-Paying Guarantor’s “Applicable Percentage” with respect to any such
payment or loss by a Paying Guarantor shall be determined as of the date on which such payment or
loss was made by reference to the ratio of (i) such Non-Paying Guarantor’s Maximum Liability as of
such date (without giving effect to any right to receive, or obligation to make, any contribution
hereunder) or, if such Non-Paying Guarantor’s Maximum Liability has not been determined, the
aggregate amount of all monies received by such Non-Paying Guarantor from the Borrowers after the
date hereof (whether by loan, capital infusion or by other means) to (ii) the aggregate Maximum
Liability of all Guarantors hereunder (including such Paying Guarantor) as of such date (without
giving effect to any right to receive, or obligation to make, any contribution hereunder), or to
the extent that a Maximum Liability has not been determined for any Guarantor, the aggregate amount
of all monies received by such Guarantors from the Borrowers after the date hereof (whether by
loan, capital infusion or by other means). Nothing in this provision shall affect any Guarantor’s
several liability for the entire amount of the Guaranteed Obligations (up to such Guarantor’s
Maximum Liability). Each of the Guarantors covenants and agrees that its right to receive any
contribution under this Loan Guaranty from a Non-Paying Guarantor shall be subordinate and junior
in right of payment to the payment in full in cash of the Guaranteed Obligations. This provision
is for the benefit of both the Administrative Agent, the Collateral Agent, the Issuing Banks, the
Lenders and the Guarantors and may be enforced by any one, or more, or all of them in accordance
with the terms hereof.




          SECTION 10.11 Liability Cumulative. The liability of each Loan Party as a Guarantor
under this Article X is in addition to and shall be cumulative with all liabilities of each Loan
Party to the Administrative Agent, the Collateral Agent, the Issuing Banks and the Lenders under
this Agreement and the other Loan Documents to which such Loan Party is a party or in respect of
any obligations or liabilities of the other Loan Parties, without any limitation as to amount,
unless the instrument or agreement evidencing or creating such other liability specifically
provides to the contrary.










 



153


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



	 	 	 	 	 
	 	EASTON-BELL SPORTS, INC.

 	 
	 	By  	/s/ Mark A. Tripp
 	 
	 	 	Name:  	Mark A. Tripp 	 
	 	 	Title:  	Chief Financial Officer 	 
	 



	 	 	 	 	 
	 	4078624 CANADA INC. 

ALL-AMERICAN SPORTS (CANADA) LTD. 

BELL SPORTS CANADA INC. 

EASTON SPORTS CANADA, INC.

 	 
	 	By  	/s/ Mark A. Tripp
 	 
	 	 	Name:  	Mark A. Tripp 	 
	 	 	Title:  	Chief Financial Officer 	 
	 



	 	 	 	 	 
	 	ALL AMERICAN SPORTS CORPORATION 

BELL CHINA INVESTMENTS, INC. 

BELL RACING COMPANY 

BELL SPORTS CORP. 

BELL SPORTS. INC. 

CDT NEVADA INC. 

EASTON SPORTS ASIA, INC. 

EASTON SPORTS, INC. 

EQUILINK LICENSING, LLC 

MACMARK CORPORATION 

RIDDELL, INC.  

RIDDELL SPORTS GROUP, INC. 

RIDMARK CORPORATION

 	 
	 	By  	/s/ Mark A. Tripp
 	 
	 	 	Name:  	Mark A. Tripp 	 
	 	 	Title:  	Chief Financial Officer 	 
	 












 



154

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A.,

as Administrative Agent and Collateral Agent

 	 
	 	By  	/s/ Christy West
 	 
	 	 	Name:  	Christy West 	 
	 	 	Title:  	V. P. 	 
	 













 



155

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A.

 	 
	 	By:  	/s/ Christy West
 	 
	 	 	Name:  	Christy West 	 
	 	 	Title:  	V. P. 	 
	 













 



156

	 	 	 	 	 
	 	BANK OF AMERICA, N.A.

 	 
	 	By:  	/s/ Bobby P.S. Bans
 	 
	 	 	Name:  	Bobby P.S. Bans 	 
	 	 	Title:  	Vice President 	 
	 













 



157

	 	 	 	 	 
	 	Bank of America, N.A. (Canada branch)

 	 
	 	By:  	/s/ Medina Sales de Andrade
 	 
	 	 	Name:  	Medina Sales de Andrade	 
	 	 	Title:   	Vice President 	 
	 







 











 




158

	 	 	 	 	 
	 	CAPITAL ONE LEVERAGE FINANCE CORPORATION

 	 
	 	By:  	/s/ Paul Dellova
 	 
	 	 	Name:  	Paul Dellova 	 
	 	 	Title:  	SVP 	 
	 
















 





159
	 	 	 	 	 
	 	GENERAL ELECTRIC CAPITAL 

CORPORATION

 	 
	 	By:  	/s/ Rebecca L. Milligan
 	 
	 	 	Name:  	Rebecca L. Milligan 	 
	 	 	Title:  	Duly Authorized Signatory 	 
	 







 









 




160

	 	 	 	 	 
	 	ISRAEL DISCOUNT BANK OF NEW YORK

 	 
	 	By:  	/s/ Richard Tripaldi
 	 
	 	 	Name:  	Richard Tripaldi 	 
	 	 	Title:  	Vice President 	 
	 
	 	 	 
	 	By:  	/s/ David Acosta
 	 
	 	 	Name:  	David Acosta 	 
	 	 	Title:  	Senior Vice President 	 
	 







 









 




161

	 	 	 	 	 
	 	PNC BANK NATIONAL ASSOCIATION, as a 

Lender

 	 
	 	By:  	/s/ Robin L. Arriola
 	 
	 	 	Name:  	Robin L. Arriola 	 
	 	 	Title:  	Vice President 	 
	 







 









 




162

	 	 	 	 	 
	 	PNC BANK CANADA BRANCH as a Canadian 

Lender

 	 
	 	By:  	/s/ Mike Danby
 	 
	 	 	Name:  	Mike Danby 	 
	 	 	Title:  	Assistant Vice President 	 
	 
	 	 	 
	 	By:  	/s/ Bill Hines
 	 
	 	 	Name:  	Bill Hines 	 
	 	 	Title:  	Senior Vice President & 

Principal Officer 	 
	 






 









 





163
	 	 	 	 	 
	 	SIEMENS FINANCIAL SERVICES, INC.

 	 
	 	By:  	/s/ Doug Maher
 	 
	 	 	Name:  	Doug Maher 	 
	 	 	Title:  	Managing Director 	 
	 
	 	 	 
	 	By:  	/s/ Jennifer Humphrey
 	 
	 	 	Name:  	Jennifer Humphrey 	 
	 	 	Title:  	Vice President 	 
	 







 









 




164

	 	 	 	 	 
	 	UNION BANK, N.A. formerly known as 

UNION BANK OF CALIFORNIA, N.A., 

as a Lender

 	 
	 	By:  	/s/ Peter Ehlinger
 	 
	 	 	Name:  	Peter Ehlinger 	 
	 	 	Title:  	Vice President 	 
	 







 












 




165
	 	 	 	 	 
	 	U.S. Bank National Association,

As a U.S. Facility Lender

 	 
	 	By:  	/s/ Lynn Gosselin
 	 
	 	 	Name:  	Lynn Gosselin  	 
	 	 	Title:  	Vice President 	 
	 







 









 




166

	 	 	 	 	 
	 	U.S. Bank National Association, Canada Branch 

As a Canadian Facility Lender

 	 
	 	By:  	/s/ Paul Rodgers
 	 
	 	 	Name:  	PAUL RODGERS 	 
	 	 	Title:  	PRINCIPAL OFFICER 	 
	 







 









 




167

	 	 	 	 	 
	 	WACHOVIA CAPITAL FINANCE

CORPORATION (NEW ENGLAND)

 	 
	 	By  	/s/ Sanat Amladi
 	 
	 	 	Name:  	Sanat Amladi 	 
	 	 	Title:  	Vice President 	 
	 



	 	 	 	 	 
	 	WACHOVIA CAPITAL FINANCE

CORPORATION (CANADA)

 	 
	 	By  	/s/ Sanat Amladi
 	 
	 	 	Name:  	Sanat Amladi  	 
	 	 	Title:  	Vice President