Document:

Exhibit
10.43

 

REALD INC. 2010
MANAGEMENT INCENTIVE PLAN

 

This RealD Inc. 2010 Management Incentive Plan
was adopted by the Company’s Board of Directors on the Effective Date and this
Plan is effective as of the beginning of Fiscal Year 2011.

 

1.                                       Overview and Eligibility.  The purpose of this Plan is to motivate and
reward selected Eligible Officers for superior performance by making a portion
of their total compensation dependent on the achievement of specified
performance objectives for a Performance Period.  The Plan seeks to accomplish this objective
by awarding performance-based cash Bonuses. 
Only Eligible Officers who are affirmatively selected by the Committee
may become Participants in the Plan.

 

2.                                       Bonus, Payment and Taxes.

 

2.1                                 Committee Award of a Bonus Opportunity.
The Committee may from time to time, in its sole discretion, award a Bonus
opportunity to a Participant that is subject to satisfying specified
conditions.  The Committee, in its
discretion, shall: (i) select the Participants, if any, who will be
eligible to earn a Bonus, (ii) determine the Bonus amounts and targets, (iii) establish
any Performance Goal(s) with respect to a Bonus along with any associated
Performance Period(s), and (iv) prescribe all other terms and conditions
of a Participant’s Bonus opportunity. 
The terms and conditions may be different for different Participants.

 

2.2                                 Bonus Payment.  Subject to the Committee’s discretion and the
terms of this Plan and any applicable Employment Agreement, the payment of a
Bonus (or any portion thereof) will generally require that a Participant must
remain in service as a Company (or Parent, Subsidiary or Affiliate) employee
through the last date of the applicable Performance Period.  However, in the event of a Participant’s
Separation from Service by reason of a Qualifying Termination, death,
Disability, retirement, or leave of absence approved by the Company, or in the
event of hardship or other special circumstances of a Participant, or in the
event of a Change in Control, the Committee may in its sole discretion take any
action that it deems to be equitable under the circumstances or in the best
interests of the Company.  Bonus amounts
that have been earned will be paid in cash. 
Such earned Bonus amounts (if any) shall be paid to Participants
(i) on any date designated by the Committee and which occurs during the 2
1⁄2 month period immediately following the end of the Performance Period in which
the applicable Bonus amount was earned or (ii) upon an earlier Change in
Control if such earlier-in-time payment would not cause the imposition of taxes
under Code Section 409A.

 

2.3                                 Taxes and Withholding.  The Company (including without limitation
members of the Board or Committee) shall not be liable to any Participant or
other persons as to any unexpected or adverse tax consequence realized by a
Participant and each Participant shall be solely responsible for the timely
payment of all taxes arising from this Plan that are imposed on the
Participant.  All Bonus 

 

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payments
will be reduced by any legally required withholding and will also be subject to
reduction under Sections 4 and/or 6.  The
Company shall have the right to withhold from any payment to a Participant
under this Plan, in cash, all federal, state, city or other taxes as shall be
required pursuant to any statute or governmental regulations or ruling.  In connection with such withholding, the
Company may make any arrangement consistent with this Plan, as it may deem
appropriate.

 

3.                                       Code Section 162(m).  If the Company becomes a publicly held
corporation as a result of an IPO, the Plan is intended to be exempt from the
compensation deduction limitations imposed by Code Section 162(m) until
the Company’s first meeting of stockholders, in which Board members are
elected, after the close of the third calendar year that follows the year of
the IPO.  On and after the date, if any,
that compensation paid under the Plan is subject to the compensation deduction
limits imposed by Code Section 162(m), then the following subsections 3.1
through 3.6 shall apply with respect to any Bonuses (i) for Participants
who are or could be Covered Employees and (ii) which are intended to
constitute “qualified performance-based compensation” within the meaning of
Code Section 162(m):

 

3.1                                 Committee Composition.  The voting members of the Committee
administering the Participant’s Bonus shall consist solely of two or more
Outside Directors.

 

3.2                                 Establishment of Goals.
By no later than the latest time permitted by Code Section 162(m) (generally,
not later than after 25% of the Performance Period has elapsed and in any event
not later than 90 days after the commencement of the Performance Period) and
while the achievement of the Performance Goal(s) remains substantially
uncertain within the meaning of Code Section 162(m), the Committee shall
establish, in writing, the (i) specific Performance Goal(s) for a
Participant which must be achieved in order for such Participant to earn a
Bonus (or designated portion thereof) and (ii) formula for computing the
Participant’s Bonus (or designated portion thereof) if such Performance Goal(s) is
achieved.

 

3.3                                 No Positive Discretion.
After the establishment of a Participant’s Performance Goal(s), the Committee
will not have discretion to increase the amount of the Bonus that would
otherwise be payable to a Participant based on achievement of the Performance
Goal(s).  The amount of the Bonus
actually paid to a Participant may, in the sole discretion of the Committee, be
less than the amount otherwise payable to the Participant based on attainment
of the Performance Goal(s) for the Performance Period as determined in
accordance with Section 3.2.

 

3.4                                 Committee Certification.
No Bonus shall be paid to a Participant unless and until the Committee
certifies in writing the extent to which the Performance Goal(s) applicable
to a Participant have been achieved or exceeded.  Without limitation, the approved minutes of a
Committee meeting shall constitute such written certification.

 

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3.5                                 Performance Adjustment.
The Committee may adjust the evaluation of performance under a Performance Goal(s) (to
the extent permitted by this Plan and Code Section 162(m)) to remove the
effects of certain events including without limitation the following:  asset write-downs or discontinued operations;
litigation or claim judgments or settlements; material changes in or provisions
under tax law, accounting principles or other such laws or provisions affecting
reported results; reorganizations or restructuring programs or divestitures or
acquisitions; and/or extraordinary non-recurring items as described in
applicable accounting principles and/or items of gain, loss or expense
determined to be extraordinary or unusual in nature or infrequent in
occurrence.

 

3.6                                 Tax Deductibility.
Notwithstanding anything to the contrary in this Plan (including without
limitation subsections 3.1 through 3.5), the Committee shall not take any
action that would cause a Bonus payment to a Covered Employee to fail to be tax
deductible by the Company due to Code Section 162(m).

 

4.                                       Limitation on Payments.  No one Participant may receive Bonus payments
that in the aggregate exceed $5,000,000 in any Fiscal Year under this
Plan.  Except as may otherwise be
provided in a Participant’s Employment Agreement (and in such case such
Employment Agreement shall govern as to any conflicting provisions contained in
this Section 4), if any payment or benefit received or to be received by a
Participant (including any payment or benefit received pursuant to this Plan or
otherwise) would be (in whole or part) subject to the excise tax imposed by
Code Section 4999, or any successor provision thereto, or any similar tax
imposed by state or local law, or any interest or penalties with respect to
such excise tax (such tax or taxes, together with any such interest and
penalties, are hereafter collectively referred to as the “Excise Tax”), then,
the payments or benefits provided under this Plan or any other agreement pursuant
to which such Participant receives payments that give rise to the Excise Tax
will either be (a) paid in full or (b) reduced to the extent
necessary to make such payments and benefits not subject to such Excise
Tax.  Such Participant shall receive the
greater, on an after-tax basis, of (a) or (b).  However, if the imposition of such Excise Tax
could be avoided by approval of stockholders as described in Code Section 280G(b)(5)(B),
then the Participant may request the Company to solicit a vote of such
stockholders (described in Code Section 280G(b)(5)(B)) and in which case
Participant will cooperate and execute any such waivers of compensation as may
be necessary to enable the stockholder vote to comply with the requirements
specified under Code Section 280G and the regulations promulgated
thereunder.  In no event will the Company
be required to gross up any payment or benefit to a Participant to avoid the
effects of the Excise Tax or to pay any regular or excise taxes arising from
the application of the Excise Tax. 
Unless the Company and a Participant otherwise agree in writing, any
parachute payment calculation will be made in writing by independent public
accountants selected by the Company, whose calculations will be conclusive and
binding upon the Company and Participants for all purposes.  The Company and the Participant will furnish
to the accountants such information and documents as the accountants may
reasonably request in order to make a parachute payment determination.  The accountants also will provide its
calculations, together with detailed supporting documentation, both to the
Company and to the Participant.  To the
extent permitted by Q/A #32 of the Code Section 280G regulations, with
respect to performing any present value calculations that may be required in
connection with this Section 4, the Company and Participants affirmatively
elect to utilize the Applicable Federal Rates (“AFR”) that are in effect on the

 

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Effective Date (or
such other date if prescribed by a Participant’s Employment Agreement) and the
accountants shall therefore use such AFRs in their determinations and
calculations.

 

5.                                       Administration, Amendment and Termination.  The Plan will be administered
by the Committee.  The Committee has the
authority, without limitation, to select Participants and determine Performance
Goals, Bonus amounts and Performance Periods, to certify the calculation of the
amount of the Bonus payable to each Participant in respect of each Performance
Period, to correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Bonus in the manner and to the extent that the
Committee shall deem desirable to carry it into effect, to interpret the
provisions of the Plan, and to make rules and regulations necessary or
desirable to administer the Plan.  The
decisions of the Committee are final and binding on all Participants and other
persons in all matters pertaining to the Plan. 
All decisions and determinations by the Committee shall be afforded the
maximum deference permitted by applicable law. 
Further guidelines, procedures and mechanics of the Plan’s
administration may be promulgated by resolutions of the Committee.  The Plan may be amended or terminated by the
Board at any time provided that any such amendment or termination will not
adversely affect any outstanding Bonus opportunity without the Participant’s
written consent.  In the event any
provision of this Plan shall be held illegal or invalid for any reason, such
provisions will be reformed by the Committee if possible and to the extent
needed in order to be held legal and valid. 
If it is not possible to reform the illegal or invalid provisions then
the illegality or invalidity shall not affect the remaining parts of this Plan,
and this Plan shall be construed and enforced as if the illegal or invalid
provision had not been included.

 

6.                                       Clawback.  The Company may (i) cause the
cancellation of any Bonus, (ii) require reimbursement of any Bonus by a
Participant and (iii) effect any other right of recoupment of equity or
other compensation provided under this Plan or otherwise in accordance with
Company policies and/or applicable law (each, a “Clawback Policy”).  In addition, a Participant may be required to
repay to the Company certain previously paid compensation, whether provided
under this Plan or otherwise, in accordance with the Clawback Policy.

 

7.                                       Indemnification.  Each member of the Board or Committee (or
their agents) shall be indemnified and held harmless by the Company against and
from (i) any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him or her in connection with or resulting from any
claim, action, suit, or proceeding to which he or she may be a party or in
which he or she may be involved by reason of any action taken or failure to act
under the Plan and (ii) from any and all amounts paid by him or her in
settlement thereof, with the Company’s approval, or paid by him or her in
satisfaction of any judgment in any such claim, action, suit, or proceeding
against him or her, provided he or she shall give the Company an opportunity,
at its own expense, to handle and defend the same before he or she undertakes
to handle and defend it on his or her own behalf.  The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled under the Company’s Certificate of Incorporation or Bylaws, by
contract, as a matter of law, or otherwise, or under any power that the Company
may have to indemnify them or hold them harmless.

 

8.                                       Integration.  This Plan represents the entire plan as to
the matters described herein.  This Plan
shall supersede all prior or contemporaneous plans or arrangements or 

 

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understandings
between the Company and any Participant, whether written or oral, express or
implied, with respect to any subject covered by this Plan.

 

9.                                       No Other Rights.  Participation in the Plan does not guarantee
that any Bonus payments will ever be made under this Plan and a Participant has
no rights or entitlement to any Bonus except as provided herein or in an
applicable Employment Agreement. 
Participation in the Plan does not constitute a contract of or guarantee
of employment, nor guarantee participation in any other Company incentive plan
or arrangement nor provide any rights as an interest holder or holder of any
other equity interest in the Company. 
Participation in the Plan in one Performance Period does not guarantee
or entitle such Participant to become a Participant in any other Performance
Period and there is no obligation for uniformity of treatment of Participants
under the Plan.  This Plan does not in
any way alter or modify any Employment Agreement between the Company and a
Participant.  The adoption of this Plan
by the Board (i) does not create any limitation on the power of the
Committee or the Board to adopt other cash or equity-based compensation
programs outside of this Plan and (ii) shall not be construed as creating
any limitations on the power of the Board or the Committee to adopt such other
incentive arrangements as either may deem desirable, including, without
limitation, cash or equity-based compensation arrangements, either tied to
performance or otherwise, and any such other arrangements as may be either
generally applicable or applicable only in specific cases.  Except as specifically provided by the
Committee, the Company shall not be liable for the loss of existing or
potential profit from a Bonus opportunity in the event of the termination of
employment of any Participant.

 

10.                                 Unfunded and No Liability.  The Plan shall be unfunded.  Although bookkeeping accounts may be
established with respect to the Participants, any such accounts will be used
merely as a bookkeeping convenience.  The
Company shall not be required to segregate any assets which may at any time be
represented by Bonus amounts, nor shall this Plan be construed as providing for
such segregation, nor shall the Company or Board or Committee be deemed to be a
trustee of cash to be awarded under the Plan. 
The Company (or members of the Board or Committee) shall not be liable
to a Participant or other persons as to any unexpected or adverse tax consequence
realized by any Participant or other person due to the grant or receipt of any
Bonus amount.  A payment will not be made
under the Plan if such payment would violate applicable securities laws or
other laws.

 

11.                                 Code Section 409A.  The
payments under this Plan are intended to be exempt from the application of Code
Section 409A pursuant to the “short-term deferral” exception under Code Section 409A
to the fullest extent possible.  Each
individual payment provided under this Plan is intended to be a separate
payment and not a series of payments for purposes of Code Section 409A.  If a Participant is deemed at the time of
his/her Separation from Service to be a Specified Employee and solely to the
extent delaying commencement of payment of nonqualified deferred compensation
(that is payable on account of the Participant’s Separation from Service) is
required in order to avoid the imposition of taxes under Code Section 409A,
then all such payments will instead be paid to the Participant in a lump sum
without interest on the earlier of (a) the first business day of the
seventh month following the Participant’s Separation from Service or (b) five
business days after the date the Company receives written confirmation of the
Participant’s death.  It is intended that
payments under this Plan will be exempt from or comply with Code Section 409A,
but the Company makes no representation or 

 

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covenant to ensure
that the payments under this Plan are exempt from, or compliant with, Code Section 409A,
and will have no liability to any Participant or any other party if a payment
under this Plan that is intended to be exempt from, or compliant with, Code Section 409A
is not so exempt or compliant.

 

12.                                 Assignment.  The Company may assign this Plan and any Bonus
obligations (without the consent of any Participant) to any Successor Company
or other successor (whether by amalgamation, reorganization, merger,
consolidation, sale of assets, purchase or otherwise) to all or substantially
all of the equity, assets or business of the Company, and this Plan will be
binding upon and inure to the benefit of such successors and assigns, including
any successor entity.  No Participant may
assign any Bonus or any Participant obligations hereunder.

 

13.                                 Notice.  Any and all notices required or permitted to
be given to a Participant or the Company pursuant to the provisions of this
Plan will be in writing, and will be effective and deemed to provide such party
sufficient notice hereunder on the earliest of the following: (i) at the
time of personal delivery, if delivery is in person; (ii) one (1) business
day after deposit with an express overnight courier for United States
deliveries, or two (2) business days after such deposit for deliveries
outside of the United States; (iii) three (3) business days after
deposit in the United States mail by certified mail (return receipt requested)
for United States deliveries.  All
notices that the Company is required to or may desire to give a Participant
that are not delivered personally will be sent with postage and/or other
charges prepaid and properly addressed to Participant at his/her home address
of record with the Company, or at such other address as Participant may from
time to time designate by one of the indicated means of notice herein.  All notices that a Participant is required to
or may desire to give to the Company that are not delivered personally will be
sent with postage and/or other charges prepaid and properly addressed to the
Company’s General Counsel at its principal office, or at such other office as
the Company may from time to time designate by one of the indicated means of
notice herein.

 

14.                                 Governing Law.  The Plan shall be governed by, and construed
in accordance with, the laws of the State of California (except its
choice-of-law provisions).

 

15.                                 Successor Provisions.  Any reference to a statute, rule or
regulation, or to a section of a statute, rule or regulation, is a
reference to that statute, rule, regulation, or section as amended from time to
time, both before and after the Effective Date and including any successor
provisions.

 

16.                                 Definitions.  The following defined terms shall have the
below meanings in this Plan.

 

“Affiliate” means any entity other than a Subsidiary, if the
Company and/or one or more Subsidiaries own not less than 50% of such entity.

 

“Board” means
the Company’s board of directors.

 

“Bonus” means a conditional right to receive cash
performance-based bonus compensation that may be awarded under the Plan by the
Committee to a Participant and which may be subject to such terms, conditions,
restrictions, and/or limitations, if any, as the Committee may establish.  The Committee may require a Participant to
execute an 

 

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acknowledgement
regarding the Bonus (and its terms and conditions) as a condition of providing
the Participant with a Bonus opportunity.

 

“Cause” means,
with respect to a Participant, except as may otherwise be provided in a
Participant’s Employment Agreement (and
in such case such Employment Agreement shall govern as to the definition of
Cause and the procedures for determining Cause), any one or more of the
following:  (i) dishonesty or fraud,
(ii) serious willful misconduct, (iii) unauthorized use or disclosure
of confidential information or trade secrets, (iv) conviction or
confession of a felony, or (v) any other act or omission by a Participant
that could reasonably be expected to adversely affect the Company’s or a
Subsidiary’s or an Affiliate’s business, financial condition, prospects and/or
reputation.  In each of the foregoing
subclauses (i) through (v), whether or not a “Cause” event has occurred
will be determined by the Board whose determination shall be final, conclusive
and binding.  A Participant’s service
shall also be deemed to have terminated for Cause if, after the Participant’s
service has terminated, facts and circumstances are discovered that would have
justified a termination for Cause, including, without limitation, violation of
material Company policies or breach of noncompetition, confidentiality or other
restrictive covenants that may apply to the Participant.

 

“Change in Control”
means, with respect to a Participant, except as may otherwise be provided in a
Participant’s Employment Agreement (and in such case the Employment Agreement
shall govern as to the definition of Change in Control), any of the following:

 

(i)                                     A merger or consolidation of the Company with or into any other company
or other entity;

 

(ii)                                  A statutory share exchange pursuant to which the Company’s outstanding
shares are acquired or a sale in one transaction or a series of transactions
undertaken with a common purpose of at least 80% of the Company’s outstanding
voting securities;

 

(iii)                               A sale, lease, exchange or other transfer in one transaction or a
series of related transactions undertaken with a common purpose of all or
substantially all of the Company’s assets; or

 

(iv)                              Commencing as of the Effective Date, during any period of 24
consecutive months, individuals, who at the beginning of such period constitute
the Board, and any new director whose election by the Board, or whose
nomination for election by the Company’s stockholders, was approved by a vote
of at least one-half (1/2) of the directors then in office (other than in
connection with a contested election), cease for any reason to constitute at
least a majority of the Board.

 

A transaction shall not constitute a Change in
Control if it is a Related Party Transaction or if its sole purpose is to
change the state of the Company’s incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who
held the Company’s securities immediately before such transactions.  In addition, an IPO shall not constitute a
Change in Control.

 

“Code” means the
U.S. Internal Revenue Code of 1986, as amended.

 

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“Committee”
means a committee of Board members as selected by the Board.  If none is selected, then the Compensation
Committee of the Board shall constitute the Committee except as required under Section 3.

 

“Company” means
RealD Inc., a Delaware corporation.

 

“Covered Employees”
means those individuals whose compensation is subject to the deduction
limitations of Code Section 162(m).

 

“Disability” means, with respect to a Participant, except as
may otherwise be provided in a Participant’s Employment Agreement (and in such case such Employment Agreement shall govern as
to the definition of Disability), that the Participant is classified as disabled
under a long-term disability policy of the Company or, if no such policy
applies, the Participant is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than 12 months.

 

“Effective Date”
means June [DATE], 2010.

 

“Eligible Officer”
means any individual who is a Company “officer” within the meaning of Rule 16a-1(f) of
the Securities Exchange Act of 1934 as amended.

 

“Employment Agreement”
means, with respect to a Participant, an operative employment agreement that
was entered into by and between the Company and Participant.

 

“Fiscal Year”
means the Company’s fiscal year.

 

“Good Reason”
means, with respect to a Participant, except as may otherwise be provided in a
Participant’s Employment Agreement (and in such case such Employment Agreement
shall govern as to the definition of Good Reason), any one or more of the following: (1) a
material diminution in Participant’s base salary, (2) a material
diminution in Participant’s authority, duties, reporting or responsibilities, (3) a
material change in the geographic location at which Participant must perform
services to the Company, which shall be defined to be a relocation of
Participant’s principal workplace to a new location that is more than thirty
miles away from Participant’s workplace location as of the later of the
Effective Date or the commencement of Participant’s employment with the
Company, or (4) a material breach by the Company of this Plan.  A Participant must provide written notice to
the Company describing the existence of any Good Reason condition(s) within
ninety (90) days of the date of the initial existence of the condition(s) or
else such Participant will be deemed to have waived any Good Reason with
respect to such condition(s).  Upon the
Company’s receipt of such written notice, the Company shall then have thirty
(30) days during which it may cure or remedy the condition(s).  If the Company does cure or remedy the
condition(s) during such thirty (30) day period then Good Reason will be
deemed to have not occurred with respect to such condition(s).  If the Company does not cure or remedy the
condition(s) during such thirty (30) day period then Good Reason will be
deemed to exist for purposes of this Plan if Participant experiences a
Separation from Service (for any reason other than termination by the Company
for Cause) within sixty days after the end of the foregoing cure/remedy period.

 

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“IPO” means an initial public offering by the Company of its
common shares pursuant to an effective registration statement filed with the
Securities and Exchange Commission.

 

“Outside Director”
has the meaning provided to such term by Code Section 162(m) and its
regulations.

 

“Parent” means any corporation
(other than the Company) in an unbroken chain of corporations ending with the
Company, if each of the corporations other than the Company owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.  A corporation that attains the status of a
Parent on a date after the Effective Date shall be considered a Parent
commencing as of such date.

 

“Participant”
means an individual who (i) is a Eligible Officer and (ii) has been
affirmatively selected by the Committee to participate in the Plan.

 

“Performance Goals” means one or more objective performance
targets established for a Participant
which may be described in terms of Company-wide objectives and/or objectives
that are related to the performance of the individual Participant or a Parent,
Subsidiary, Affiliate, division, department or function within the Company or
entity in which the Participant is employed, and such targets may be applied
either individually, alternatively or in any combination, and measured either
annually or cumulatively over a period of years, on an absolute basis or
relative to a pre-established target, to previous years’ results or to a
designated comparison group, in each case as specified by the Committee.  Any Performance Goals that are included in a
Bonus in order to make such Bonus qualify as performance-based compensation
under Code Section 162(m) shall be limited to one or more of the
following target objectives: 
(i) operating income; (ii) earnings before interest, taxes,
depreciation and amortization, or EBITDA; (iii) earnings; (iv) cash
flow; (v) market share; (vi) sales or revenue; (vii) expenses; (viii) cost
of goods sold; (ix) profit/loss or profit margin; (x) working
capital; (xi) return on equity or assets; (xii) earnings per share; (xiii) economic
value added, or EVA; (xiv) stock price; (xv) price/earnings ratio; (xvi) debt
or debt-to-equity; (xvii) accounts receivable; (xviii) writeoffs; (xix) cash;
(xx) assets; (xxi) liquidity; (xxii) operations; (xxiii) research
or related milestones; (xxiv) business development; (xxv) intellectual
property (e.g., patents); (xxvi) product development; (xxvii) regulatory
activity; (xxviii) information technology; (xxix) financings; (xxx) product
quality control; (xxxi) management; (xxxii) human resources; (xxxiii) corporate
governance; (xxxiv) compliance program; (xxxv) legal matters; (xxxvi) internal
controls; (xxxvii) policies and procedures; (xxxviii) accounting and
reporting; (xxxix) strategic alliances, licensing and partnering; (xl)
site, plant or building development; (xli) mergers and acquisitions or
divestitures; and/or (xlii) Company advancement milestones (including revenue
from specified products, number of ordered or installed RealD Cinema Systems,
RealD-enabled screens, or other similar RealD products and/or market
penetration of new or key products measurable by pre-established objective
criteria).  The Performance Goals may
differ from Participant to Participant. 
With respect to Bonuses that are intended to constitute Code Section 162(m) qualified
performance-based compensation, the selection and adjustment of applicable
Performance Goals, and the establishment of targets, shall occur in compliance
with the rules of Code Section 162(m).  Awards
issued to Participants who are not Covered Employees (or which are not intended
to qualify as performance-based compensation under Code Section 162(m)) do

 

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not have to utilize the above Performance Goal
criteria and may take into account other (or no) factors.

 

“Performance Period” means any period of time as determined
by the Committee, in its sole discretion. 
The Committee may establish different Performance Periods for different
Participants and the Committee may establish concurrent or overlapping
Performance Periods.

 

“Plan” means
this RealD Inc. 2010 Management Incentive Plan, as it may be amended from time
to time by the Company.

 

“Related Party Transaction” means (i) a merger or
consolidation of the Company, or a statutory share exchange pursuant to which
the Company’s outstanding shares are acquired, in which the holders of the
outstanding voting securities of the Company immediately prior to the merger or
consolidation hold at least a majority of the outstanding voting securities of
the Successor Company immediately after the merger, consolidation or statutory
share exchange; (ii)  sale, lease, exchange or other transfer of all or
substantially all of the Company’s assets to a majority-owned subsidiary
company; or (iii) a transaction undertaken for the principal purpose of
restructuring the capital of the Company, including, but not limited to,
reincorporating the Company in a different jurisdiction, converting the Company
to a limited liability company or creating a holding company.

 

“Separation from Service”
has the meaning provided to such term by Code Section 409A and its
regulations.

 

“Specified Employee” means a Participant who is considered a “specified
employee” within the meaning of Code Section 409A and its regulations.

 

“Subsidiary” means any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.  A corporation that attains the status of a
Subsidiary on a date after the Effective Date shall be considered a Subsidiary
commencing as of such date.

 

“Successor Company” means the surviving company, the
successor company, the acquiring company or its parent, as applicable, in
connection with a Change in Control.

 

“Qualifying Termination” means a termination of a Participant’s
employment with the Company either by the Participant for Good Reason or by the
Company without Cause (excluding due to Participant’s death or Disability).

 

IN WITNESS WHEREOF, a duly authorized officer
of the Company has executed this Plan below.

 

	
   

  	
  REALD INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  

 

10

 

	
   

  	
  Title:

  	
   

  

 

11

 

REALD INC. 2010
MANAGEMENT INCENTIVE PLAN

 

ACKNOWLEDGEMENT OF PARTICIPATION

 

Pursuant to the RealD Inc. 2010 Management
Incentive Plan, the Company hereby informs the Participant named below that
he/she has been selected to be a Participant in the Plan for Fiscal Year 2011
and is eligible to earn a Bonus subject to Participant timely executing and
delivering to the Company this acknowledgement (the “Acknowledgement”).  The entire text of the Plan is incorporated
in this Acknowledgement by reference.  The governing terms and conditions of
Participant’s participation in the Plan are set forth herein and Participant
agrees to be bound by such terms and conditions.  Certain capitalized terms used in this
Acknowledgement are defined in the Plan. 
This Acknowledgement, the Plan and any applicable Employment Agreement
between the Company and the Participant constitute the entire understanding
between the Participant and the Company regarding the Bonus opportunity
described below.  This Bonus opportunity
satisfies the Company’s obligation under Section [NUMBER]
in the Employment Agreement to provide an annual bonus opportunity to
Participant for Fiscal Year 2011.  Any
prior agreements, commitments or negotiations concerning this Bonus opportunity
are superseded except as provided in the Plan.

 

Name of Participant:

 

Performance Period for Bonus:  Fiscal Year 2011

 

[                 ]

 

This Acknowledgement will be interpreted and
enforced under the laws of the State of California.

 

By signing below, the Participant
agrees to all of the terms and conditions described in this Acknowledgement and
in the Plan.

 

	
  Participant:

  	
   

  	
   

  
	
   

  	
  (Signature)

  	
   

  
	
   

  	
   

  	
   

  
	
  Company:

  	
   

  	
   

  
	
   

  	
  (Signature)

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

12Exhibit 10.19

 

EXECUTION COPY

 

 

THIRD AMENDED AND
RESTATED CREDIT AGREEMENT

 

Dated as of August 25, 2006

 

among

 

SEALY MATTRESS COMPANY,

as Borrower

 

SEALY CANADA LTD./LTEE,

as Canadian Borrower

 

CERTAIN SUBSIDIARIES OF BORROWER,

as Guarantors

 

SEALY MATTRESS CORPORATION,

as Holdings and a Guarantor

 

SEALY CORPORATION,

as Parent

 

The Several Lenders

from Time to Time Parties Hereto

 

JPMORGAN CHASE BANK, N.A.

as Administrative Agent

 

J.P. MORGAN SECURITIES INC.,

as Joint Lead Arranger and Joint Bookrunner

 

CITIGROUP GLOBAL MARKETS INC.,

as Joint Lead Arranger and Joint Bookrunner

 

CITIBANK, N.A.,

as Syndication Agent

 

 GENERAL ELECTRIC CAPITAL CORPORATION,

as Co-Documentation Agent

 

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Co-Documentation Agent

 

and

 

LASALLE BANK NATIONAL ASSOCIATION,

as Co-Documentation Agent

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   SECTION 1.

  	
   

  	
  Definitions

  	
   

  	
  2

  
	
  1.1.

  	
   

  	
  Defined Terms

  	
   

  	
  2

  
	
  1.2.

  	
   

  	
  Exchange Rates

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   SECTION 2.

  	
   

  	
  Amount and Terms of Credit

  	
   

  	
  43

  
	
  2.1.

  	
   

  	
  Commitments

  	
   

  	
  43

  
	
  2.2.

  	
   

  	
  Minimum Amount of Each
  Borrowing; Maximum Number of Borrowings

  	
   

  	
  46

  
	
  2.3.

  	
   

  	
  Notice of Borrowing

  	
   

  	
  46

  
	
  2.4.

  	
   

  	
  Disbursement of Funds

  	
   

  	
  48

  
	
  2.5.

  	
   

  	
  Repayment of Loans;
  Evidence of Debt

  	
   

  	
  49

  
	
  2.6.

  	
   

  	
  Conversions and
  Continuations

  	
   

  	
  52

  
	
  2.7.

  	
   

  	
  Pro Rata Borrowings

  	
   

  	
  53

  
	
  2.8.

  	
   

  	
  Interest

  	
   

  	
  53

  
	
  2.9.

  	
   

  	
  Interest Periods

  	
   

  	
  54

  
	
  2.10.

  	
   

  	
  Increased Costs,
  Illegality, etc.

  	
   

  	
  56

  
	
  2.11.

  	
   

  	
  Compensation

  	
   

  	
  59

  
	
  2.12.

  	
   

  	
  Change of Lending Office

  	
   

  	
  59

  
	
  2.13.

  	
   

  	
  Notice of Certain Costs

  	
   

  	
  59

  
	
  2.14.

  	
   

  	
  Bankers’ Acceptances

  	
   

  	
  60

  
	
  2.15.

  	
   

  	
  Incremental Facilities

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   SECTION 3.

  	
   

  	
  Letters of Credit

  	
   

  	
  64

  
	
  3.1.

  	
   

  	
  Letters of Credit

  	
   

  	
  64

  
	
  3.2.

  	
   

  	
  Letter of Credit Requests

  	
   

  	
  65

  
	
  3.3.

  	
   

  	
  Letter of Credit
  Participations

  	
   

  	
  65

  
	
  3.4.

  	
   

  	
  Agreement to Repay Letter
  of Credit Drawings

  	
   

  	
  68

  
	
  3.5.

  	
   

  	
  Increased Costs

  	
   

  	
  69

  
	
  3.6.

  	
   

  	
  Successor Letter of Credit
  Issuer

  	
   

  	
  70

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   SECTION 4.

  	
   

  	
  Fees; Commitments

  	
   

  	
  71

  
	
  4.1.

  	
   

  	
  Fees

  	
   

  	
  71

  
	
  4.2.

  	
   

  	
  Voluntary Reduction of
  Revolving Credit Commitments

  	
   

  	
  72

  
	
  4.3.

  	
   

  	
  Mandatory Termination of
  Commitments

  	
   

  	
  73

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   SECTION 5.

  	
   

  	
  Payments

  	
   

  	
  73

  
	
  5.1.

  	
   

  	
  Voluntary Prepayments

  	
   

  	
  73

  
	
  5.2.

  	
   

  	
  Mandatory Prepayments

  	
   

  	
  74

  
	
  5.3.

  	
   

  	
  Method and Place of
  Payment

  	
   

  	
  78

  
	
  5.4.

  	
   

  	
  Net Payments

  	
   

  	
  78

  
	
  5.5.

  	
   

  	
  Computations of Interest
  and Fees

  	
   

  	
  82

  
	
  5.6.

  	
   

  	
  Limit on Rate of Interest

  	
   

  	
  82

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   SECTION 6.

  	
   

  	
  Conditions Precedent to
  Initial Borrowing

  	
   

  	
  83

  
	
  6.1.

  	
   

  	
  Credit Documents

  	
   

  	
  83

  
	
  6.2.

  	
   

  	
  Collateral

  	
   

  	
  83

  

 

i

 

	
  6.3.

  	
   

  	
  Legal Opinions

  	
   

  	
  84

  
	
  6.4.

  	
   

  	
  No Default

  	
   

  	
  84

  
	
  6.5.

  	
   

  	
  Consent

  	
   

  	
  84

  
	
  6.6.

  	
   

  	
  [Reserved]

  	
   

  	
  84

  
	
  6.7.

  	
   

  	
  Effective Date
  Certificates

  	
   

  	
  84

  
	
  6.8.

  	
   

  	
  Corporate Proceedings of
  Each Credit Party

  	
   

  	
  84

  
	
  6.9.

  	
   

  	
  Corporate Documents

  	
   

  	
  84

  
	
  6.10.

  	
   

  	
  Fees

  	
   

  	
  84

  
	
  6.11.

  	
   

  	
  Representations and
  Warranties

  	
   

  	
  85

  
	
  6.12.

  	
   

  	
  Governmental
  Authorizations and Consents

  	
   

  	
  85

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   SECTION 7.

  	
   

  	
  Conditions Precedent to
  All Credit Events

  	
   

  	
  85

  
	
  7.1.

  	
   

  	
  No Default; Representations
  and Warranties

  	
   

  	
  85

  
	
  7.2.

  	
   

  	
  Notice of Borrowing;
  Letter of Credit Request

  	
   

  	
  85

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   SECTION 8.

  	
   

  	
  Representations,
  Warranties and Agreements

  	
   

  	
  86

  
	
  8.1.

  	
   

  	
  Corporate Status

  	
   

  	
  86

  
	
  8.2.

  	
   

  	
  Corporate Power and
  Authority

  	
   

  	
  86

  
	
  8.3.

  	
   

  	
  No Violation

  	
   

  	
  86

  
	
  8.4.

  	
   

  	
  Litigation

  	
   

  	
  86

  
	
  8.5.

  	
   

  	
  Margin Regulations

  	
   

  	
  87

  
	
  8.6.

  	
   

  	
  Governmental Approvals

  	
   

  	
  87

  
	
  8.7.

  	
   

  	
  Investment Company Act

  	
   

  	
  87

  
	
  8.8.

  	
   

  	
  True and Complete
  Disclosure

  	
   

  	
  87

  
	
  8.9.

  	
   

  	
  Financial Condition;
  Financial Statements

  	
   

  	
  87

  
	
  8.10.

  	
   

  	
  Tax Returns and Payments

  	
   

  	
  88

  
	
  8.11.

  	
   

  	
  Compliance with ERISA

  	
   

  	
  88

  
	
  8.12.

  	
   

  	
  Subsidiaries

  	
   

  	
  89

  
	
  8.13.

  	
   

  	
  Patents, etc.

  	
   

  	
  89

  
	
  8.14.

  	
   

  	
  Environmental Laws

  	
   

  	
  89

  
	
  8.15.

  	
   

  	
  Properties

  	
   

  	
  90

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   SECTION 9.

  	
   

  	
  Affirmative Covenants

  	
   

  	
  90

  
	
  9.1.

  	
   

  	
  Information Covenants

  	
   

  	
  90

  
	
  9.2.

  	
   

  	
  Books, Records and
  Inspections

  	
   

  	
  93

  
	
  9.3.

  	
   

  	
  Maintenance of Insurance

  	
   

  	
  93

  
	
  9.4.

  	
   

  	
  Payment of Taxes

  	
   

  	
  94

  
	
  9.5.

  	
   

  	
  Consolidated Corporate
  Franchises

  	
   

  	
  94

  
	
  9.6.

  	
   

  	
  Compliance with Statutes,
  Obligations, etc.

  	
   

  	
  94

  
	
  9.7.

  	
   

  	
  ERISA

  	
   

  	
  94

  
	
  9.8.

  	
   

  	
  Good Repair

  	
   

  	
  95

  
	
  9.9.

  	
   

  	
  Transactions with
  Affiliates

  	
   

  	
  95

  
	
  9.10.

  	
   

  	
  End of Fiscal Years; Fiscal
  Quarters

  	
   

  	
  95

  
	
  9.11.

  	
   

  	
  Additional Guarantors and
  Grantors

  	
   

  	
  95

  
	
  9.12.

  	
   

  	
  Pledges of Additional
  Stock and Evidence of Indebtedness

  	
   

  	
  96

  
	
  9.13.

  	
   

  	
  Use of Proceeds

  	
   

  	
  97

  
	
  9.14.

  	
   

  	
  Changes in Business

  	
   

  	
  97

  

 

ii

 

	
  9.15.

  	
   

  	
  Further Assurances

  	
   

  	
  97

  
	
  9.16.

  	
   

  	
  Canadian Borrower

  	
   

  	
  98

  
	
  9.17.

  	
   

  	
  Post-Closing Covenant

  	
   

  	
  98

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   SECTION 10.

  	
   

  	
  Negative Covenants

  	
   

  	
  99

  
	
  10.1.

  	
   

  	
  Limitation on Indebtedness

  	
   

  	
  99

  
	
  10.2.

  	
   

  	
  Limitation on Liens

  	
   

  	
  102

  
	
  10.3.

  	
   

  	
  Limitation on Fundamental
  Changes

  	
   

  	
  102

  
	
  10.4.

  	
   

  	
  Limitation on Sale of
  Assets

  	
   

  	
  105

  
	
  10.5.

  	
   

  	
  Limitation on Investments

  	
   

  	
  106

  
	
  10.6.

  	
   

  	
  Limitation on Dividends

  	
   

  	
  108

  
	
  10.7.

  	
   

  	
  Limitations on Debt
  Payments and Amendments

  	
   

  	
  109

  
	
  10.8.

  	
   

  	
  Limitations on Sale
  Leasebacks

  	
   

  	
  110

  
	
  10.9.

  	
   

  	
  Consolidated Total Debt to
  Consolidated EBITDA Ratio

  	
   

  	
  110

  
	
  10.10.

  	
   

  	
  Consolidated EBITDA to
  Consolidated Interest Expense Ratio

  	
   

  	
  110

  
	
  10.11.

  	
   

  	
  Capital Expenditures

  	
   

  	
  111

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   SECTION 11.

  	
   

  	
  Events of Default

  	
   

  	
  112

  
	
  11.1.

  	
   

  	
  Payments

  	
   

  	
  112

  
	
  11.2.

  	
   

  	
  Representations, etc.

  	
   

  	
  112

  
	
  11.3.

  	
   

  	
  Covenants

  	
   

  	
  112

  
	
  11.4.

  	
   

  	
  Default Under Other
  Agreements

  	
   

  	
  113

  
	
  11.5.

  	
   

  	
  Bankruptcy, etc.

  	
   

  	
  113

  
	
  11.6.

  	
   

  	
  ERISA

  	
   

  	
  114

  
	
  11.7.

  	
   

  	
  Guarantee

  	
   

  	
  114

  
	
  11.8.

  	
   

  	
  Pledge Agreement

  	
   

  	
  114

  
	
  11.9.

  	
   

  	
  Security Agreement

  	
   

  	
  114

  
	
  11.10.

  	
   

  	
  Mortgages

  	
   

  	
  114

  
	
  11.11.

  	
   

  	
  Foreign Guarantees

  	
   

  	
  114

  
	
  11.12.

  	
   

  	
  Canadian Security
  Documents

  	
   

  	
  115

  
	
  11.13.

  	
   

  	
  Subordination

  	
   

  	
  115

  
	
  11.14.

  	
   

  	
  Judgments

  	
   

  	
  115

  
	
  11.15.

  	
   

  	
  Change of Control

  	
   

  	
  115

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   SECTION 12.

  	
   

  	
  The Administrative Agent

  	
   

  	
  116

  
	
  12.1.

  	
   

  	
  Appointment

  	
   

  	
  116

  
	
  12.2.

  	
   

  	
  Delegation of Duties

  	
   

  	
  116

  
	
  12.3.

  	
   

  	
  Exculpatory Provisions

  	
   

  	
  116

  
	
  12.4.

  	
   

  	
  Reliance by Administrative
  Agent

  	
   

  	
  117

  
	
  12.5.

  	
   

  	
  Notice of Default

  	
   

  	
  117

  
	
  12.6.

  	
   

  	
  Non-Reliance on
  Administrative Agent and Other Lenders

  	
   

  	
  117

  
	
  12.7.

  	
   

  	
  Indemnification

  	
   

  	
  118

  
	
  12.8.

  	
   

  	
  Administrative Agent in
  its Individual Capacity

  	
   

  	
  118

  
	
  12.9.

  	
   

  	
  Successor Agent

  	
   

  	
  118

  
	
  12.10.

  	
   

  	
  Withholding Tax

  	
   

  	
  119

  
	
  12.11.

  	
   

  	
  Canadian Administrative
  Agent

  	
   

  	
  119

  
	
  12.12.

  	
   

  	
  Quebec

  	
   

  	
  119

  

 

iii

 

	
   SECTION 13.

  	
   

  	
  Collateral Allocation
  Mechanism

  	
   

  	
  120

  
	
  13.1.

  	
   

  	
  Implementation of CAM

  	
   

  	
  120

  
	
  13.2.

  	
   

  	
  Letters of Credit

  	
   

  	
  121

  
	
  13.3.

  	
   

  	
  Net Payments Upon
  Implementation of CAM Exchange

  	
   

  	
  122

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   SECTION 14.

  	
   

  	
  Miscellaneous

  	
   

  	
  123

  
	
  14.1.

  	
   

  	
  Amendments and Waivers

  	
   

  	
  123

  
	
  14.2.

  	
   

  	
  Notices

  	
   

  	
  125

  
	
  14.3.

  	
   

  	
  No Waiver; Cumulative
  Remedies

  	
   

  	
  126

  
	
  14.4.

  	
   

  	
  Survival of
  Representations and Warranties

  	
   

  	
  126

  
	
  14.5.

  	
   

  	
  Payment of Expenses and
  Taxes

  	
   

  	
  127

  
	
  14.6.

  	
   

  	
  Successors and Assigns;
  Participations and Assignments

  	
   

  	
  127

  
	
  14.7.

  	
   

  	
  Replacements of Lenders
  under Certain Circumstances

  	
   

  	
  132

  
	
  14.8.

  	
   

  	
  Adjustments; Set-off

  	
   

  	
  132

  
	
  14.9.

  	
   

  	
  Counterparts

  	
   

  	
  133

  
	
  14.10.

  	
   

  	
  Severability

  	
   

  	
  133

  
	
  14.11.

  	
   

  	
  Integration

  	
   

  	
  133

  
	
  14.12.

  	
   

  	
  GOVERNING LAW

  	
   

  	
  133

  
	
  14.13.

  	
   

  	
  Submission to
  Jurisdiction; Waivers

  	
   

  	
  133

  
	
  14.14.

  	
   

  	
  Acknowledgments

  	
   

  	
  134

  
	
  14.15.

  	
   

  	
  WAIVERS OF JURY TRIAL

  	
   

  	
  134

  
	
  14.16.

  	
   

  	
  Confidentiality

  	
   

  	
  134

  
	
  14.17.

  	
   

  	
  Judgment Currency

  	
   

  	
  135

  
	
  14.18.

  	
   

  	
  USA PATRIOT Act

  	
   

  	
  136

  
	
  14.19.

  	
   

  	
  Reaffirmation and Grant of
  Security Interest

  	
   

  	
  136

  
	
  14.20.

  	
   

  	
  Amendment and Restatement

  	
   

  	
  136

  

 

 

	
  SCHEDULES

  	
   

  
	
   

  	
   

  
	
  Schedule
  1.1 (b)

  	
  Mortgaged
  Properties

  
	
  Schedule
  1.1(d)

  	
  EBITDA
  Add-Backs

  
	
  Schedule 1.1
  (c)

  	
  Commitments
  of Lenders

  
	
  Schedule
  1.1(e)

  	
  Excluded
  Subsidiaries

  
	
  Schedule
  8.11(ii)

  	
  Canadian
  Pension Plan Disclosures

  
	
  Schedule 8.12

  	
  Subsidiaries

  
	
  Schedule 10.1

  	
  Closing
  Date Indebtedness

  
	
  Schedule 10.2

  	
  Closing
  Date Liens

  
	
  Schedule 10.5

  	
  Closing
  Date Investments

  
	
  Schedule
  10.5(o)

  	
  Investments
  in newly formed Puerto Rican Subsidiary

  
	
   

  
	
   

  
	
  EXHIBITS

  
	
   

  
	
  Exhibit A-1

  	
  Form of
  Canadian Guarantee

  
	
  Exhibit A-2

  	
  Forms
  of Canadian Pledge Agreements

  
	
  Exhibit A-3

  	
  Form of
  Canadian Security Agreement

  
			

 

iv

 

	
  Exhibit C

  	
  Form of
  Guarantee

  
	
  Exhibit D

  	
  Form of
  Mortgage (Real Property)

  
	
  Exhibit E

  	
  Form of
  Perfection Certificate

  
	
  Exhibit F

  	
  Form of
  Pledge Agreement

  
	
  Exhibit G

  	
  Form of
  Security Agreement

  
	
  Exhibit H-1

  	
  Form of
  US Letter of Credit Request

  
	
  Exhibit H-2

  	
  Form of
  Canadian Letter of Credit Request

  
	
  Exhibit I-1

  	
  Form of
  Legal Opinion of Simpson Thacher & Bartlett LLP

  
	
  Exhibit I-2

  	
  Form of
  Legal Opinions of Osler, Hoskin & Harcourt LLP

  
	
  Exhibit I-3

  	
  Form of
  Legal Opinion of Calfee, Halter & Griswold LLP

  
	
  Exhibit I-4

  	
  Form of
  Legal Opinion of general counsel

  
	
  Exhibit J

  	
  Form of
  Effective Date Certificate

  
	
  Exhibit K

  	
  Form of
  Assignment and Acceptance

  
	
  Exhibit L-1

  	
  Form of
  Promissory Note (Term Loans)

  
	
  Exhibit L-2

  	
  Form of
  Promissory Note (Revolving Credit and Swingline Loans)

  
	
  Exhibit M

  	
  Form of
  Joinder Agreement

  
	
  Exhibit N

  	
  Form of
  Lender Addendum

  

 

v

 

THIRD AMENDED AND RESTATED CREDIT AGREEMENT dated as
of August 25, 2006, among SEALY MATTRESS COMPANY, an Ohio corporation (the
“Borrower”), SEALY CANADA LTD./LTEE, a company organized under the laws
of Canada (the “Canadian Borrower”), SEALY MATTRESS CORPORATION, a
Delaware Corporation (“Holdings”), SEALY CORPORATION, a Delaware
corporation (“Parent”), the lending institutions from time to time
parties hereto (each a “Lender” and, collectively, the “Lenders”),
J.P. MORGAN SECURITIES INC., as Joint Lead
Arranger and Joint Bookrunner,  CITIGROUP
GLOBAL MARKETS INC., as Joint Lead Arranger and Joint Bookrunner, CITIBANK,
N.A., as Syndication Agent,  JPMORGAN CHASE BANK, N.A. (as Administrative
Agent (such term and each other capitalized term used but not defined in this
introductory statement having the meaning provided in Section 1), JPMORGAN CHASE BANK, N.A.,
TORONTO BRANCH, as Canadian Administrative Agent, and GENERAL ELECTRIC
CAPITAL CORPORATION, WACHOVIA BANK, NATIONAL ASSOCIATION, and LASALLE BANK
NATIONAL ASSOCIATION, as Co-Documentation Agents.

 

WHEREAS, Borrower, Canadian Borrower, Holdings, Parent, the
Guarantors, certain financial institutions and other persons (the “Existing
Lenders”), J.P. Morgan Securities Inc., as joint lead arranger and joint
bookrunner, Goldman Sachs Credit Partners L.P., as joint lead arranger, joint
bookrunner and syndication agent, JPMorgan Chase Bank, as administrative agent,
JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian administrative agent,
and General Electric Capital Corporation and Royal Bank of Canada, as
co-documentation agents, are parties to that certain Second Amended and
Restated Credit Agreement dated as of April 14, 2005 (as heretofore
amended, supplemented or otherwise modified, the “Existing Credit Agreement”),
pursuant to which the Existing Lenders have extended certain credit facilities
to Company, the proceeds of which have been used to consummate the
Recapitalization and for working capital and general corporate purposes;

 

WHEREAS, Borrower desires that certain Existing Lenders and
other Lenders party hereto agree to amend and restate the Existing Credit
Agreement in its entirety to (i) refinance the existing term loans made
under the Existing Credit Agreement (the “Existing Term Loans”) with the
Tranche A Term Loans and Tranche E Term Loans made hereunder; (ii) permit
the reduction in certain mandatory prepayments; (iii) permit certain
prepayments of the Subordinated Debt; (iv) permit certain dividend
payments; and (v) make certain other changes as more fully set forth
herein, which amendment and restatement shall become effective upon
satisfaction of the conditions precedent set forth herein;

 

WHEREAS, (i) the
proceeds of the Tranche A Term Loans and the Tranche E Term Loans made on the
Effective Date shall be used by the Borrower to repay in full the outstanding
Existing Term Loans; (ii) the proceeds of the Revolving Credit Loans and
Swingline Loans made on and after the Effective Date will continue to be used
by the Borrower and the Canadian Borrower for general corporate purposes
(including Permitted Acquisitions); and (iii) Letters of Credit will
continue to be used by the Borrower and the Canadian Borrower for general
corporate purposes;

 

WHEREAS, Borrower has agreed to secure all of its
Obligations by reaffirming its grant to Administrative Agent, for the benefit
of Secured Parties, of a Lien on certain of its assets consistent with such
liens existing on the Effective Date, including a pledge of all of the

 

 

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

 

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

 

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

 

The parties hereto hereby agree as follows:

 

SECTION 1.           Definitions

 

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

 

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

 

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

 

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

 

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

 

“Adjusted Canadian Total Revolving Credit
Commitment” shall mean at any time the Canadian Total Revolving Credit
Commitment less the aggregate Canadian Revolving Credit Commitments of all
Defaulting Lenders.

 

2

 

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

 

“Adjusted Total Term Loan Commitment” shall
mean at any time the Total Term Loan Commitment less (i) the Tranche A
Term Loan Commitments of all Defaulting Lenders, (ii) the Tranche E Term
Loan Commitments of all Defaulting Lenders and (iii) the New Term Loan
Commitments, if any, of all Defaulting Lenders.

 

“Administrative Agent” shall mean JPMorgan
Chase Bank, together with its affiliates, as the arranger of the Commitments
and as the administrative agent for the Lenders under this Agreement and the
other Credit Documents.  With respect to
Borrowings by the Canadian Borrower, the Canadian Administrative Agent may be
an Affiliate of JPMorgan Chase Bank for purposes of administering such
Borrowings, and all references herein to the term “Administrative Agents” shall
be deemed to refer to both the Administrative Agent and the Canadian
Administrative Agent, as the context requires.

 

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

 

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

 

“Agents” shall mean each Joint Lead Arranger,
the Administrative Agent, the Canadian Administrative Agent, the Syndication
Agent and the Co-Documentation Agents.

 

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

 

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

 

“Agreement” shall mean this Third Amended and
Restated Credit Agreement, as the same may be amended, amended and restated,
supplemented or otherwise modified from time to time.

 

3

 

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

 

“Applicable ABR Margin” shall mean at any
date, (i) with respect to each ABR Loan, Cdn ABR Loan and Canadian Prime
Loan that is a Revolving Credit or Swingline Loan, the applicable percentage
per annum set forth below based upon the Status in effect on such date:

 

	
  Status

  	
   

  	
  Applicable
  ABR Margin for

  Revolving Credit and Swingline

  Loans (including ABR Loans,

  Cdn ABR Loans and Canadian

  Prime Loans)

  	
   

  
	
  Level I Status

  	
   

  	
  1.25

  	
  %

  
	
  Level II Status

  	
   

  	
  1.00

  	
  %

  
	
  Level III Status

  	
   

  	
  0.75

  	
  %

  
	
  Level IV Status

  	
   

  	
  0.50

  	
  %

  

 

(ii) with respect to
Tranche A Term Loans only, (a) initially, 0.25% per annum and (b) commencing
at the end of the first interest period so long as the Consolidated Total Debt
to Consolidated EBITDA Ratio is (x) greater than 4.50 to 1.00 as of such
date, 0.50%, or (y) less than 2.25 to 1.00 as of such date, 0.0% per
annum, and (iii) with respect to Tranche E Term Loans only, 0.50% per
annum.

 

“Applicable Eurodollar
Margin” shall mean at any date, (i) with respect to each
Eurodollar Loan that is a Revolving Credit or Swingline Loan, the applicable
percentage per annum set forth below based upon the Status in effect on such
date:

 

	
  Status

  	
   

  	
  Applicable
  Eurodollar

  Margin for Revolving

  Credit and Swingline Loans

  	
   

  
	
  Level I Status

  	
   

  	
  2.50

  	
  %

  
	
  Level II Status

  	
   

  	
  2.25

  	
  %

  
	
  Level III Status

  	
   

  	
  2.00

  	
  %

  
	
  Level IV Status

  	
   

  	
  1.75

  	
  %

  

 

(ii) with respect to
Tranche A Term Loans only, (a) initially, 1.25% per annum and (b) commencing
at the end of the first interest period so long as the Consolidated Total Debt
to Consolidated EBITDA Ratio is (x) greater than 4.50 to 1.00 as of such
date, 1.50%, or (y) less than 2.25 to 1.00 as of such date, 1.0% per
annum, and (iii) with respect to Tranche E Term Loans only, 1.50% per
annum.

 

“Applicable Stamping Fee” shall
mean, with respect to each accepted or advanced BA Loan by a Lender on any
date, the applicable percentage per annum set forth below based on the Status
in effect on such date:

 

4

 

	
  Status

  	
   

  	
  Applicable Stamping Fee

  	
   

  
	
  Level I Status

  	
   

  	
  2.50

  	
  %

  
	
  Level II Status

  	
   

  	
  2.25

  	
  %

  
	
  Level III Status

  	
   

  	
  2.00

  	
  %

  
	
  Level IV Status

  	
   

  	
  1.75

  	
  %

  

 

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

 

“Approved Fund” shall have the meaning
provided in Section 14.6.

 

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

 

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

 

“Authorized Officer” shall mean the Chairman
of the Board, the President, the Chief Financial Officer, the Treasurer or any
other senior officer of the Borrower designated as such in writing to the
Administrative Agent by the Borrower.

 

“Available Amount” shall mean, on any date
(the “Reference Date”), an amount equal at such time to (a) the sum
of, without duplication, (i) for the purposes of (x) Section 10.5(j),
Section 10.5(m) and Section 10.11(b), $125,000,000 in the
aggregate and (y) the first proviso to Section 10.7(a), to the extent
that (a) the Consolidated Senior Debt to Consolidated EBITDA Ratio at such
time and after giving effect to the prepayment, repurchase, redemption or
defeasance, as applicable, to be completed on the Reference Date is less than
3.50 to 1.00, $62,500,000 in the aggregate and (b) the Consolidated Total
Debt to Consolidated EBITDA Ratio at such time and after giving effect to the
prepayment, repurchase, redemption or defeasance, as applicable, to be
completed on the Reference Date is less than 2.25 to 1.00, an additional
$62,500,000 in the aggregate, (ii) an amount equal to (x) the
cumulative amount of Excess Cash Flow for all fiscal years completed after the
Closing Date and prior to the Reference Date minus (y) the portion
of such Excess Cash Flow that has been after the Closing Date and on or prior
to the Reference Date (or will be) applied to the prepayment of Loans in
accordance with Section 5.2(a)(ii), (iii) the amount of any capital
contributions (other than the Equity Proceeds) made in cash to the Borrower
from and including the Business Day immediately following the Closing Date
through and including the Reference Date, including contributions with the
proceeds from any issuance of equity securities by Holdings, (iv) the
aggregate amount of all cash dividends and other cash distributions received by
the Borrower or any Guarantor from any Minority Investments or Unrestricted
Subsidiaries after the Closing Date and on or prior to the

 

5

 

Reference Date (other than
the portion of any such dividends and other distributions that is used by the
Borrower or any Guarantor to pay taxes), (v) the aggregate amount of all
cash repayments of principal received by the Borrower or any Guarantor from any
Minority Investments or Unrestricted Subsidiaries after the Closing Date and on
or prior to the Reference Date in respect of loans made by the Borrower or any
Guarantor to such Minority Investments or Unrestricted Subsidiaries and (vi) the
aggregate amount of all net cash proceeds received by the Borrower or any
Guarantor in connection with the sale, transfer or other disposition of its
ownership interest in any Minority Investment or Unrestricted Subsidiary after
the Closing Date and on or prior to the Reference Date minus (b) in
the case of clauses (a)(i)(x), (a)(i)(y), (a)(ii), (iii), (iv), (v) and
(vi), the aggregate portion of such amounts used for (i) any investments
(including loans) made by the Borrower or any Restricted Subsidiary pursuant to
Section 10.5(j) or Section 10.5(m) after the Closing Date
and on or prior to the Reference Date, (ii) Capital Expenditures made by
the Borrower or any of the Restricted Subsidiaries after the Closing Date and
on or prior to the Reference Date pursuant to Section 10.11(b) and (iii) any
prepayment, repurchase or redemption of the Subordinated Notes pursuant to Section 10.7(a) or
10.7(b), respectively, after the Closing Date and on or prior to the Reference
Date, in each case without duplication in respect thereof from Excess Cash Flow
for any period included in such Available Amount.

 

“Available Canadian Commitment” shall mean an
amount equal to the excess, if any, of (a) the Dollar Equivalent of the
amount of the Canadian Total Revolving Credit Commitment over (b) the sum
of (i) the aggregate principal amount of all Canadian Revolving Credit
Loans (but not Swingline Loans) then outstanding and (ii) the aggregate
Canadian Letter of Credit Outstanding at such time.

 

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

 

“BA
Discount Proceeds” shall mean, with respect to any BA Loan, an
amount (rounded to the nearest full Canadian cent with one-half of one Canadian
cent being rounded up), calculated on the date of acceptance or advance of such
BA Loan which is equal to the face or principal amount of such BA Loan divided
by the sum of one plus the product of (i) the BA Discount Rate applicable
to such BA Loan multiplied by (ii) a fraction, the numerator of which is
the term of such BA Loan measured in days (commencing on the date of acceptance
and purchase or advance and ending on, but excluding, the maturity date
thereof) and the denominator of which is 365; with such product being rounded
up or down to the fifth decimal place and .000005 being rounded up.

 

“BA
Discount Rate” shall mean:

 

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

 

6

 

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

 

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

 

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

 

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

 

“BA Loans”
shall mean Bankers’ Acceptances and BA Equivalent Loans; provided that
reference to the amount or principal amount of a BA Loan shall mean the full
face amount of the applicable Bankers’ Acceptances or Discount Notes issued in
connection therewith.

 

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

 

“Bankruptcy Code” shall have the meaning
provided in Section 11.5.

 

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

 

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

 

“Borrowing” shall mean and include (a) the
incurrence of Swingline Loans from the Swingline Lender on a given date, (b) the
incurrence of one Type of Tranche A Term Loan on the Effective Date (or
resulting from conversions on a given date after the Effective Date) having, in
the case of Eurodollar Term Loans, the same Interest Period (provided
that ABR Loans incurred pursuant to Section 2.10(b) shall be
considered part of any related Borrowing of Eurodollar Term Loans), (c) the
incurrence of one Type of Tranche E Term Loan on the Effective Date (or
resulting from conversions on a given date after the Effective Date) having, in
the case of Eurodollar Term Loans, the same Interest Period (provided
that ABR Loans incurred pursuant to Section 2.10(b) shall be
considered part of any related Borrowing of Eurodollar Term Loans) and (d) the
incurrence of one Type of Revolving Credit Loan on a given date (or resulting
from conversions on a given date) having, in the case of Eurodollar Revolving
Credit Loans or BA Loans, the same Interest Period (provided that ABR
Loans, Cdn ABR Loans or Canadian Prime Loans incurred pursuant to Section 2.10(b) or
2.10(c)  shall be considered part of any related Borrowing of Eurodollar
Revolving Credit Loans or BA Loans, as the case may be).

 

7

 

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

 

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

 

“CAM” shall mean the mechanism for the
allocation and exchange of interests in the Credit Facilities and collections
thereunder established under Section 13.

 

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

 

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

 

“CAM Percentage” shall mean, as to each
Lender, a fraction, expressed as a decimal, of which (a) the numerator
shall be the aggregate Dollar Equivalent (determined on the basis of Exchange
Rates prevailing on the CAM Exchange Date) of the Specified Obligations owed to
such Lender and such Lender’s participation in the aggregate Letter of Credit
Outstanding immediately prior to the CAM Exchange Date and (b) the
denominator shall be the aggregate Dollar Equivalent (as so determined) of the
Specified Obligations owed to all the Lenders and the aggregate Letter of
Credit Outstanding immediately prior to such CAM Exchange Date.  For purposes of computing each Lender’s CAM
Percentage, all Specified Obligations which are denominated in Canadian Dollars
shall be translated into Dollars at the Exchange Rate in effect on the CAM
Exchange Date.

 

“Canadian Administrative Agent” shall mean
JPMorgan Chase Bank, an authorized foreign bank under the Bank Act  (Canada), acting through its
Toronto Branch, as the Canadian administrative agent for the Lenders under this
Agreement and the other Credit Documents, together with any of its permitted
successors appointed pursuant to Section 12.

 

“Canadian Benefit Plans” shall mean all
material employee benefit plans of any nature or kind whatsoever that are not
Canadian Pension Plans and are maintained or contributed to by any Credit Party
in relation to employees that it may have in Canada.

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Canadian Letter of Credit Issuer” shall mean
JPMorgan Chase Bank, N.A., Toronto Branch or any affiliate thereof, or any
other Canadian Lender with a Canadian Revolving Credit Commitment designated as
the Canadian Letter of Credit Issuer in a written notice from the Canadian
Administrative Agent and the Canadian 
Borrower to the Lenders with a Canadian Revolving Credit Commitment; provided
that to the extent that any Canadian Letter

 

9

 

of Credit shall be issued
for the account of the Borrower, the Canadian Issuing Lender shall, if it is
not a “US person” (as defined in Section 7701(a)(30) of the Code), make
such Letters of Credit available through its Related Affiliate in accordance
with Section 3.1(a), and such Related Affiliate shall be deemed to be the
Canadian Letter of Credit Issuer for such purpose.

 

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

 

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

 

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

 

“Canadian
Pension Plans” shall mean each plan which is a registered pension plan for
the purposes of the Tax Act established, maintained or contributed to by any
Credit Party in relation to any employees that it may have in Canada.

 

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

 

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

 

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

 

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

 

“Canadian Revolving Credit Commitment” shall
mean, (a) with respect to each Lender that is a Lender on the Closing
Date, the amount set forth opposite such Lender’s name on Schedule 1.1(c) as
such Lender’s “Canadian Revolving Credit Commitment” and (b) in the case
of any Lender that becomes a Lender after the Closing Date, the amount
specified as such Lender’s “Canadian Revolving Credit Commitment” in the
Assignment and Acceptance pursuant to which such Lender assumed a portion of
the Canadian Total Revolving Credit Commitment, in each case as the same may be
changed from time to time pursuant to the terms hereof.  The aggregate amount of the Canadian
Revolving Credit Commitments as of the Closing Date is US $25,000,000.

 

10

 

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

 

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

 

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

 

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

 

“Canadian Security Documents” shall mean,
collectively, (a) the Canadian Guarantee, (b) the Canadian Pledge
Agreements, (c) the Canadian Security Agreement, and the Canadian
Hypothecs, if any, with respect to collateral located in Quebec, (d) any
Mortgage or Canadian Hypothec, if applicable, over Mortgaged Property of a
Canadian Subsidiary and (e) any security document entered into by a
Canadian Subsidiary pursuant to Section 9.11 or 9.12.

 

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

 

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

 

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

 

“Capital Expenditures” shall mean, for any
period, the aggregate of all expenditures (whether paid in cash or accrued as
liabilities and including in all events all amounts expended or capitalized
under Capital Leases, but excluding any amount representing capitalized
interest) by the Borrower and the Restricted Subsidiaries during such period
that, in conformity with GAAP, are or are required to be included as additions
during such period to property, plant or equipment reflected in the
consolidated balance sheet of the Borrower and its Subsidiaries, provided
that the term “Capital Expenditures” shall not include (a) expenditures
made in connection with the replacement, substitution or restoration of assets (i) to
the extent financed from insurance proceeds paid on account of the loss of or
damage to the assets being replaced or restored or (ii) with awards of
compensation arising from the taking by eminent

 

11

 

domain or condemnation of
the assets being replaced, (b) the purchase price of equipment that is
purchased simultaneously with the trade-in of existing equipment to the extent
that the gross amount of such purchase price is reduced by the credit granted
by the seller of such equipment for the equipment being traded in at such time,
(c) the purchase of plant, property or equipment made within one year of
the sale of any asset to the extent purchased with the proceeds of such sale or
(d) expenditures that constitute any part of Consolidated Lease Expense.

 

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

 

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

 

“Cdn ABR” shall mean, for any day, a rate per
annum equal to the higher of (a) the rate of interest per annum publicly
announced from time to time by the Canadian Administrative Agent as its
reference rate of interest then in effect for determining interest rates on
commercial loans denominated in Dollars made by it in Canada and (b) the
Federal Funds Effective Rate in effect on such day plus 1⁄2 of 1% per annum.

 

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

 

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

 

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

 

“CDOR Rate” shall mean, as of any
day with respect to a BA Loan and the Interest Period selected by the
Canadian Borrower for such BA Loan, or otherwise as applicable, the
average interest rate equal to:

 

(a)                                  the average of the annual
rates for Canadian Dollar bankers acceptances for a term equal to such Interest
Period (or a term as closely possible comparable to such Interest Period) or
such other specified period quoted (at approximately 10:00 a.m. New York
time on such day) on the Reuters Monitor Money Rates Service, CDOR page “Canadian
Interbank Bid BA Rates”; and

 

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

 

12

 

“Change of Control” shall mean and be deemed
to have occurred if (a) (i) KKR, its Affiliates, Permitted Investors
and the Management Investors shall at any time not own, in the aggregate,
directly or indirectly, beneficially and of record, at least 35% of the
outstanding Voting Stock of Holdings (other than as the result of one or more
widely distributed offerings of Holdings or Parent common stock, in each case
whether by Holdings, Parent or by KKR, its Affiliates, Permitted Investors or
the Management Investors) and/or (ii) any person, entity or “group”
(within the meaning of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended) shall at any time have acquired direct or
indirect beneficial ownership of a percentage of the outstanding Voting Stock
of Holdings that exceeds the percentage of such Voting Stock then beneficially
owned, in the aggregate, by KKR, its Affiliates, Permitted Investors and the
Management Group, unless, in the case of either clause (i) or (ii) above,
KKR, its Affiliates, Permitted Investors and the Management Investors have, at
such time, the right or the ability by voting power, contract or otherwise to
elect or designate for election a majority of the Board of Directors of
Holdings; provided, however, for purposes of this definition,
Permitted Investors shall be deemed to own no more than the aggregate amount of
Voting Stock of Holdings that such Permitted Investors owned as of the
Effective Date; and/or (b) at any time Continuing Directors shall not
constitute a majority of the Board of Directors of Holdings; and/or (c) any
Person, other than Holdings acquires ownership, directly or indirectly,
beneficially or of record, of any equity interest (other than any management or
employee equity interests) of any nature in the Borrower; (d) any Person,
other than Parent acquires ownership, directly or indirectly, beneficially or
of record, of any equity interest of any nature in Holdings and/or (e) a
Change of Control (as defined in the Subordinated Note Indenture) shall have
occurred.

 

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

 

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

 

“Co-Documentation Agents” shall mean General
Electric Capital Corporation, together with its affiliates, Wachovia Bank,
National Association, together with its affiliates, and LaSalle Bank National
Association, together with its affiliates, as the co-documentation agents for
the Lenders under this Agreement and the other Credit Documents.

 

“Code” shall mean the Internal Revenue Code
of 1986, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.  Section references
to the Code are to the Code, as in effect at the date of this Agreement, and
any subsequent provisions of the Code, amendatory thereof, supplemental thereto
or substituted therefor.

 

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

 

13

 

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

 

	
  Status

  	
   

  	
  Commitment

     Fee Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Level I Status

  	
   

  	
  0.500

  	
  %

  
	
  Level II Status

  	
   

  	
  0.500

  	
  %

  
	
  Level III Status

  	
   

  	
  0.500

  	
  %

  
	
  Level IV Status

  	
   

  	
  0.375

  	
  %

  

 

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

 

“Commitments” shall mean, with respect to
each Lender, such Lender’s Tranche A Term Loan Commitment, Tranche E Term Loan
Commitment, Revolving Credit Commitment, New Revolving Loan Commitment or New
Term Loan Commitment.

 

“Confidential Information” shall have the
meaning provided in Section 14.16.

 

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

 

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

 

“Consolidated EBITDA” shall mean, for any
period, the sum, without duplication, of the amounts for such period of (a) Consolidated
Earnings and to the extent already deducted in arriving at Consolidated
Earnings: (b) Consolidated Interest Expense, (c) depreciation
expense, (d) amortization expense, including amortization of deferred
financing fees, (e) extraordinary losses and unusual or non-recurring
charges (including severance, relocation costs and one-time compensation
charges), (f) non-cash charges (provided that if any such non-cash charges
represent an accrual or reserve for potential cash items in any future period,
the cash payment in respect thereof in such future period shall be subtracted
from Consolidated EBITDA to such extent, and excluding amortization of a
prepaid cash item that was paid in a prior period), (g) losses on asset
sales, (h) restructuring charges or reserves (including costs related to
closure of facilities), (i) in the case of any period that includes a
period ending during the fiscal year ending November 28, 2004, Transaction
Expenses, to the extent deducted in determining Consolidated Earnings, (j) any
expenses or charges incurred in connection with any issuance of debt, equity
securities or any refinancing transaction, (k) any fees and expenses
related to Permitted Acquisitions, (l) any deduction for minority interest
expense, (m) the amount of

 

14

 

management, monitoring,
consulting and advisory fees and related expenses paid to KKR and (n) those
items described on Schedule 1.1(d) annexed hereto, less the sum of
the amounts for such period of (o) extraordinary gains and non-recurring
gains, (p) non-cash gains (excluding any such non-cash gain to the extent
it represents the reversal of an accrual or reserve for potential cash item in
any prior period) and (q) gains on asset sales, all as determined on a
consolidated basis for Holdings, the Borrower and the Restricted Subsidiaries
in accordance with GAAP, provided that (i) except as provided in
clause (iv) below, there shall be excluded from Consolidated Earnings
for any period the income from continuing operations before income taxes and
extraordinary items of all Unrestricted Subsidiaries for such period to the
extent otherwise included in Consolidated Earnings, except to the extent
actually received in cash by Holdings, the Borrower or its Restricted
Subsidiaries during such period through dividends or other distributions, (ii) there
shall be excluded from Consolidated Earnings for any period the income from
continuing operations before income taxes and extraordinary items of each
Foreign Joint Venture for such period corresponding to the percentage of
capital stock or other equity interests in such Foreign Joint Venture not owned
by the Borrower or its Restricted Subsidiaries (other than Foreign Joint
Ventures), (iii) there shall be excluded in determining Consolidated
EBITDA non-operating currency transaction
gains and losses and (iv) (x) there shall be included in
determining Consolidated EBITDA for any period (A) the Acquired EBITDA of
any Person, property, business or asset (other than an Unrestricted Subsidiary)
acquired to the extent not subsequently sold, transferred or otherwise disposed
of (but not including the Acquired EBITDA of any related Person, property,
business or assets to the extent not so acquired) by the Borrower or any
Restricted Subsidiary during such period (each such Person, property, business
or asset acquired and not subsequently so disposed of, an “Acquired Entity
or Business”), and the Acquired EBITDA of any Unrestricted Subsidiary that
is converted into a Restricted Subsidiary during such period (each, a “Converted
Restricted Subsidiary”), in each case based on the actual Acquired EBITDA
of such Acquired Entity or Business or Converted Restricted Subsidiary for such
period (including the portion thereof occurring prior to such acquisition or
conversion) and (B) for the purposes of the definition of the term “Permitted
Acquisition” and Sections 10.3, 10.9 and 10.10, an adjustment in respect
of each Acquired Entity or Business equal to the amount of the Pro Forma
Adjustment with respect to such Acquired Entity or Business for such period
(including the portion thereof occurring prior to such acquisition or
conversion) as specified in the Pro Forma Adjustment Certificate delivered to
the Lenders and the Administrative Agent and (y) for purposes of
determining the Consolidated Total Debt to Consolidated EBITDA Ratio only,
there shall be excluded in determining Consolidated EBITDA for any period the
Acquired EBITDA of any Person, property, business or asset (other than an
Unrestricted Subsidiary) sold, transferred or otherwise disposed of, closed or
classified as discontinued operations by the Borrower or any Restricted
Subsidiary during such period (each such Person, property, business or asset so
sold or disposed of, a “Sold Entity or Business”), and the Acquired
EBITDA of any Restricted Subsidiary that is converted into an Unrestricted
Subsidiary during such period (each, a “Converted Unrestricted Subsidiary”),
in each case based on the actual Acquired EBITDA of such Sold Entity or
Business or Converted Unrestricted Subsidiary for such period (including the
portion thereof occurring prior to such sale, transfer, disposition or
conversion).

 

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

 

15

 

“Consolidated Interest Expense” shall mean,
for any period, the cash interest expense (including that attributable to
Capital Leases in accordance with GAAP), net of cash interest income, of
Holdings, the Borrower and the Restricted Subsidiaries on a consolidated basis
with respect to all outstanding Indebtedness of Holdings, the Borrower and the
Restricted 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 Hedge Agreements (other than currency swap
agreements, currency future or option contracts and other similar agreements),
but excluding, however, amortization of deferred financing costs and any other
amounts of non-cash interest, all as calculated on a consolidated basis in
accordance with GAAP, provided that (a) except as provided in
clause (b) below, there shall be excluded from Consolidated Interest
Expense for any period the cash interest expense (or income) of all
Unrestricted Subsidiaries for such period to the extent otherwise included in
Consolidated Interest Expense and (b) for purposes of the definition of
the term “Permitted Acquisition” and Sections 10.3, 10.9 and 10.10, there
shall be included in determining Consolidated Interest Expense for any period
the cash interest expense (or income) of any Acquired Entity or Business
acquired during such period and of any Converted Restricted Subsidiary
converted during such period, in each case based on the cash interest expense
(or income) of such Acquired Entity or Business or Converted Restricted
Subsidiary for such period (including the portion thereof occurring prior to
such acquisition or conversion) assuming any Indebtedness incurred or repaid in
connection with any such acquisition or conversion had been incurred or prepaid
on the first day of such period.

 

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

 

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

 

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

 

“Consolidated Senior Debt” shall mean, as of
any date of determination, (x) the sum of all Indebtedness of Holdings,
the Borrower and the Restricted Subsidiaries for borrowed money outstanding on
such date minus (y) the sum of (i) the Subordinated Notes and (ii) other
subordinated Indebtedness issued or incurred by Holdings, the Borrower and the
Restricted

 

16

 

Subsidiaries subordinated in
right of payment to the payment in full of the Obligations outstanding on such
date.

 

“Consolidated Senior Debt to Consolidated EBITDA
Ratio” shall mean, as of any date of determination, the ratio of (a) Consolidated
Senior Debt as of the last day of the relevant Test Period to (b) Consolidated
EBITDA for such Test Period.

 

“Consolidated Total Debt” shall mean, as of
any date of determination, (a) the sum of (i) all Indebtedness of
Holdings, the Borrower and the Restricted Subsidiaries for borrowed money
outstanding on such date and (ii) all Capitalized Lease Obligations of
Holdings, the Borrower and the Restricted Subsidiaries outstanding on such
date, all calculated on a consolidated basis in accordance with GAAP minus
(b) the aggregate amount of cash included in the cash accounts listed on
the consolidated balance sheet of Holdings, the Borrower and the Restricted
Subsidiaries as at such date up to a maximum amount of $45,000,000 to the
extent the use thereof for application to payment of Indebtedness is not
prohibited by law or any contract to which the Borrower or any of the
Restricted Subsidiaries is a party.

 

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

 

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

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Dividends” shall have the meaning provided
in Section 10.6.

 

“Dollar Borrowing” shall mean a Borrowing
denominated in Dollars.

 

“Dollar Equivalent” shall mean, on any date
of determination, (a) with respect to any amount denominated in Dollars,
such amount, and (b) with respect to any amount denominated in any
Canadian Dollars, the equivalent in Dollars of such amount, determined by the
Administrative Agent pursuant to Section 1.2(b) using the applicable
Exchange Rate with respect to such Canadian Dollars at the time in effect under
the provisions of such Section 1.2.

 

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

 

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

 

18

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“ERISA Affiliate” shall mean each person (as
defined in Section 3(9) of ERISA) that together with the Borrower or
a Subsidiary would be deemed to be a “single employer” within the meaning of 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 of the
Code.

 

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

 

“Eurodollar Rate” shall mean, in the case of
any Eurodollar Term Loan or Eurodollar Revolving Credit Loan, with respect to
each day during each Interest Period pertaining to such Eurodollar Loan, (a) the
rate of interest determined on the basis of the rate for

 

19

 

deposits in Dollars for a
period equal to such Interest Period commencing on the first day of such
Interest Period appearing on Page 3750 of the Telerate screen as of 11:00 a.m.
(London time) two Business Days prior to the beginning of such Interest Period
multiplied by (b) the Statutory Reserve Rate.  In the event that any such rate does not
appear on the applicable Page of the Telerate Service (or otherwise on
such service), the “Eurodollar Rate” for the purposes of this paragraph
shall be determined by reference to such other publicly available service for
displaying Eurodollar rates as may be agreed upon by the Administrative Agent
and the Borrower or, in the absence of such agreement, the “Eurodollar Rate”
for the purposes of this paragraph shall instead be the rate per annum notified
to the Administrative Agent by the Reference Lender as the rate at which the
Reference Lender is offered Dollar deposits at or about 11:00 a.m. (London
time) two Business Days prior to the beginning of such Interest Period in the
interbank Eurodollar market where the Eurodollar and foreign currency and
exchange operations in respect of its Eurodollar Loans are then being conducted
for delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of its Eurodollar
Term Loan or Eurodollar Revolving Credit Loan, as the case may be, to be outstanding
during such Interest Period.

 

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

 

“Eurodollar Term Loan” shall mean any Tranche
A Term Loan or Tranche E Term Loan bearing interest at a rate determined by
reference to the Eurodollar Rate.

 

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

 

“Excess Cash Flow” shall mean, for any
period, an amount equal to the excess of (a) the sum, without duplication,
of (i) Consolidated Net Income for such period, (ii) an amount equal
to the amount of all non-cash charges to the extent deducted in arriving at
such Consolidated Net Income, (iii) decreases in Consolidated Working
Capital for such period and (iv) an amount equal to the aggregate net
non-cash loss on the sale, lease, transfer or other disposition of assets by
the Borrower and the Restricted Subsidiaries during such period (other than
sales in the ordinary course of business) to the extent deducted in arriving at
such Consolidated Net Income over (b) the sum, without duplication,
of (i) an amount equal to the amount of all non-cash credits included in
arriving at such Consolidated Net Income, (ii) the aggregate amount
actually paid by the Borrower and the Restricted Subsidiaries in cash during
such period on account of Capital Expenditures (excluding the principal amount
of Indebtedness incurred in connection with such Capital Expenditures, whether
incurred in such period or in a subsequent period), (iii) the aggregate
amount of all prepayments of Revolving Credit Loans and Swingline Loans made
during such period to the extent accompanying reductions of the US Total
Revolving Credit Commitments except to the extent not financed with the
proceeds of other Indebtedness of Holdings or its Restricted Subsidiaries, (iv) the
aggregate amount of all principal payments of Indebtedness of the Borrower or
the Restricted Subsidiaries (including any Term Loans and the principal
component of payments in respect of Capitalized Lease Obligations but excluding
Revolving Credit Loans, Swingline Loans and voluntary prepayments of Term Loans
pursuant to Section 5.1) made during such period (other than in respect of
any revolving credit facility to the extent there is not an equivalent
permanent reduction in commitments thereunder) except to the extent not
financed with the proceeds of other

 

20

 

Indebtedness of Holdings or
its Restricted Subsidiaries, (v) an amount equal to the aggregate net
non-cash gain on the sale, lease, transfer or other disposition of assets by
the Borrower and the Restricted Subsidiaries during such period (other than
sales in the ordinary course of business) to the extent included in arriving at
such Consolidated Net Income, (vi) increases in Consolidated Working
Capital for such period, (vii) payments by the Borrower and the Restricted
Subsidiaries during such period in respect of long-term liabilities of the
Borrower and the Restricted Subsidiaries other than Indebtedness, (viii) the
amount of investments made during such period pursuant to Section 10.5 to
the extent that such investments were financed with internally generated cash
flow of the Borrower and the Restricted Subsidiaries, (ix) the amount of
dividends paid during such period pursuant to clause (b), (c), (d) or
(e) of the proviso to Section 10.6 to the extent such dividends were
paid with the proceeds of any amount referred to in paragraph (a) of
this definition, (x) the aggregate amount of expenditures actually made by
the Borrower and the Restricted Subsidiaries in cash during such period
(including expenditures for the payment of financing fees) to the extent that
such expenditures are not expensed during such period and (xi) the aggregate
amount of any premium, make-whole or penalty payments actually paid in cash by
the Borrower and the Restricted Subsidiaries during such period that are
required to be made in connection with any prepayment of Indebtedness and that
are accounted for as extraordinary items.

 

“Exchange Rate” shall mean on any day (i) with
respect to any Foreign Currency, the rate at which such Foreign Currency may be
exchanged into Dollars, as set forth at approximately 11:00 a.m. (London
time) on such day on the Reuters World Currency Page for such Foreign
Currency; in the event that such rate does not appear on any Reuters World
Currency Page, the Exchange Rate shall be determined by reference to such other
publicly available service for displaying exchange rates as may be agreed upon
by the Administrative Agent and the Borrower, or, in the absence of such
agreement, such Exchange Rate shall instead be the arithmetic average of the
spot rates of exchange of the Administrative Agent in the market where its
foreign currency exchange operations in respect of such Foreign Currency are
then being conducted, at or about 10:00 a.m. (New York time) on such date
for the purchase of Dollars for delivery two Business Days later and (ii) with
respect to calculations in connection with Canadian Borrowings, the rate at
which Canadian Dollars may be exchanged into Dollars, computed by the Canadian
Administrative Agent at the Bank of Canada noon spot rate, after 12:00 noon
(New York time) on such day, provided that if at the time of any such
determination, for any reason, no such spot rate is being quoted, the Canadian
Administrative Agent, after consultation with the Borrower, may use any
reasonable method it deems appropriate to determine such rate, and such
determination shall be conclusive absent manifest error.

 

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

 

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

 

“Existing Lenders” as defined in the recitals
hereto.

 

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

 

21

 

“Federal Funds Effective Rate” shall mean,
for any day, the weighted average of the per annum 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 of the quotations for the day of
such transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it.

 

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

 

“Final Date” shall mean the date on which the
Revolving Credit Commitments shall have terminated, no Revolving Credit Loans
shall be outstanding and the Letter of Credit Outstandings shall have been
reduced to zero.

 

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

 

“Foreign Currencies” shall mean Canadian
Dollars, Euro and Sterling.

 

“Foreign Joint Venture” shall mean any
Restricted Foreign Subsidiary in which the Borrower and its Restricted
Subsidiaries own, collectively, less than 100% of the equity interests and
designated as such in a written notice to the Administrative Agent by the
Borrower, provided that in the event a Restricted Subsidiary not
previously designated by the Borrower as a Foreign Joint Venture is
subsequently re-designated as a Foreign Joint Venture, (x) such
re-designation shall be deemed to be an investment on the date of such
re-designation in a Foreign Joint Venture in an amount equal to the product of (i) the
net worth of such re-designated Restricted Subsidiary immediately prior to such
re-designation (such net worth to be calculated without regard to any guarantee
provided by such re-designated Restricted Subsidiary) and (ii) the
percentage of capital stock or other equity interests in such Foreign Joint
Venture owned by the Borrower or its Restricted Subsidiaries (other than
Foreign Joint Ventures) and (y) no Default or Event of Default would
result from such re-designation.

 

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

 

“Foreign Subsidiary Guarantors” shall mean
any Foreign Subsidiary that becomes a Foreign Subsidiary Guarantor pursuant to Section 9.11.

 

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

 

“Funded Debt” shall mean all indebtedness of
the Borrower and the Restricted Subsidiaries for borrowed money that matures
more than one year from the date of its creation or matures within one year
from such date that is renewable or extendable, at the option of the Borrower
or one of the Restricted Subsidiaries, to a date more than one year from such
date or arises under a revolving credit or similar agreement that obligates the
lender or lenders to extend credit during a period of more than one year from
such date, including all amounts of Funded Debt required to be paid or prepaid
within one year from the date of its creation and, in the case of the Borrower,
Indebtedness in respect of the Loans.

 

22

 

“GAAP” shall mean generally accepted
accounting principles in the United States of America or Canada, as applicable,
as in effect from time to time; provided, however, that if there
occurs after the date hereof any change in GAAP that affects in any respect the
calculation of any covenant contained in Section 10, the Lenders and the
Borrower shall negotiate in good faith amendments to the provisions of this
Agreement that relate to the calculation of such covenant with the intent of
having the respective positions of the Lenders and the Borrower after such
change in GAAP conform as nearly as possible to their respective positions as
of the date of this Agreement and, until any such amendments have been agreed
upon, the covenants in Section 10 shall be calculated as if no such change
in GAAP has occurred.

 

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

 

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

 

“Guarantee and Collateral Exception Amount”
shall mean, at any time: (a) $100,000,000 minus (b) the sum of
(i) the aggregate amount of Indebtedness incurred or assumed prior to such
time pursuant to Section 10.1(j) or (k) that is outstanding at
such time and that was used to acquire, or was assumed in connection with the
acquisition of, capital stock and/or assets in respect of which guarantees,
pledges and security have not been given pursuant to Sections 9.11 and
9.12, (ii) the lesser of (x) the aggregate Increased Commitment
Amount at such time and (y) $50,000,000 and (iii) any Indebtedness
incurred by any Foreign Joint Venture, provided that if such amount is a
negative number, the Guarantee and Collateral Exception Amount shall be zero.

 

“Guarantee Obligations” shall mean, as to any
Person, any obligation of such Person guaranteeing or intended to guarantee any
Indebtedness of any other Person (the “primary obligor”) in any manner,
whether directly or indirectly, including any obligation of such Person,
whether or not contingent, (a) to purchase any such Indebtedness or any
property constituting direct or indirect security therefor (b) to advance
or supply funds (i) for the purchase or payment of any such Indebtedness
or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary
obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such Indebtedness of the ability of
the primary obligor to make payment of such Indebtedness or (d) otherwise
to assure or hold harmless the owner of such Indebtedness against loss in
respect thereof; provided, however, that the term “Guarantee Obligations”
shall not include endorsements of instruments for deposit or collection in the
ordinary course of business.  The amount
of any Guarantee Obligation shall be deemed to be an amount equal to the stated
or determinable amount of the Indebtedness in respect of which such Guarantee
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder) as determined by such Person in good faith.

 

23

 

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

 

“Hazardous Materials” shall mean (a) any
petroleum or petroleum products, radioactive materials, friable asbestos, urea
formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing regulated levels of polychlorinated biphenyls, and
radon gas; (b) any chemicals, materials or substances defined as or
included in the definition of “hazardous substances”, “hazardous waste”, “hazardous
materials”, “extremely hazardous waste”, “restricted hazardous waste”, “toxic
substances”, “toxic pollutants”, “contaminants”, or “pollutants”, or words of
similar import, under any applicable Environmental Law; and (c) any other
chemical, material or substance, which is prohibited, limited or regulated by
any Environmental Law.

 

“Hedge Agreements” shall mean interest rate
swap, cap or collar agreements, interest rate future or option contracts,
currency swap agreements, currency future or option contracts, commodity price
protection agreements or other commodity price hedging agreements, and other
similar agreements entered into by the Borrower or the Canadian Borrower in the
ordinary course of business (and not for speculative purposes) in order to
protect the Borrower, the Canadian Borrower or any of the Restricted
Subsidiaries against fluctuations in interest rates, currency exchange rates or
commodity prices.

 

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

 

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

 

“Increased Amount Date” as defined in Section 2.15.

 

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

 

“Indebtedness” of any Person shall mean (a) all
indebtedness of such Person for borrowed money, (b) the deferred purchase
price of assets or services that in accordance with GAAP would be included as
liabilities in the balance sheet of such Person, (c) the face amount of
all letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder, (d) all Indebtedness of a second
Person secured by any Lien on any property owned by such first Person, whether
or not such Indebtedness has been assumed, (e) all Capitalized Lease
Obligations of such Person, (f) all obligations of such Person under
interest rate swap, cap or collar agreements, interest rate future or option
contracts, currency swap agreements, currency future or option contracts,
commodity price protection agreements or other commodity price hedging
agreements and other similar agreements and (g) without duplication, all
Guarantee Obligations of such Person, provided that Indebtedness shall
not include trade payables and accrued expenses, in each case payable directly
or through a bank clearing arrangement and arising in the ordinary course of
business.

 

24

 

“Initial Credit Agreement” shall mean the
Credit Agreement, dated as of April 6, 2004, among Borrower, Holdings, the
lenders from time to time party thereto, the Administrative Agent, the Joint
Lead Arrangers and the other parties thereto.

 

“Initial Financial Statement Delivery Date”
shall mean the date on which Section 9.1 Financials are delivered to the
Lenders under Section 9.1 for the first full fiscal quarter commencing
after the Closing Date.

 

“Interest Period” shall mean, with respect to
any Tranche A Term Loan, Tranche E Term Loan or Revolving Credit Loan, the
interest period applicable thereto, as determined pursuant to Section 2.9.

 

“JPMCB” shall mean JPMorgan Chase Bank, N.A.
and any successor thereto by merger, consolidation or otherwise.

 

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

 

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

 

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

 

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

 

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

 

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

 

“L/C Participants”: means collectively the Cdn
L/C Participants and the US L/C Participants and each is an “L/C Participant”

 

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

 

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

 

“Lender Addendum” shall mean a lender
addendum substantially in the form of Exhibit N.

 

“Lender Default” shall mean (a) the
failure (which has not been cured) of a Lender to make available its portion of
any Borrowing or to fund its portion of any unreimbursed payment under Section 3.3
or (b) a Lender having notified the Administrative Agent and/or the
Borrower that it does not intend to comply with the obligations under Section 2.1(b),
2.1(d) or 3.3, in the case of either clause (a) or clause (b) above,
as a result of the appointment of a

 

25

 

receiver or conservator with
respect to such Lender at the direction or request of any regulatory agency or
authority.

 

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

 

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

 

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

 

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

 

“Level I Status” shall mean, on any
date, the Consolidated Total Debt to Consolidated EBITDA Ratio is greater than
or equal to 5.25 to 1.00 as of such date.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Material Adverse Change” shall mean any
change in the business, assets, operations, properties or financial condition
of Holdings, the Borrower and its Subsidiaries, taken as a whole, that would
materially adversely affect the ability of Holdings, the Borrower

 

26

 

and the other Credit
Parties, taken as a whole, to perform their obligations under this Agreement or
any of the other Credit Documents.

 

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

 

“Material Subsidiary” shall mean, at any date
of determination, each Restricted Subsidiary of the Borrower (a) whose
total assets at the last day of the Test Period ending on the last day of the
most recent fiscal period for which Section 9.1 Financials have been
delivered were equal to or greater than 5% of the consolidated total assets of
the Borrower and the Restricted Subsidiaries at such date or (b) whose
gross revenues for such Test Period were equal to or greater than 5% of the
consolidated gross revenues of the Borrower and the Restricted Subsidiaries for
such period, in each case determined in accordance with GAAP.

 

“Maturity Date” shall mean the Tranche A Term
Loan Maturity Date, Tranche E Term Loan Maturity Date or the Revolving Credit
Maturity Date.

 

“Merger” shall have the meaning provided in
the Initial Credit Agreement.

 

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

 

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

 

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

 

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

 

“Mortgage” shall mean a Mortgage, Assignment
of Leases and Rents, Security Agreement and Financing Statement or other
security document entered into by the owner of a Mortgaged Property and the
Administrative Agent for the benefit of the Lenders in respect of that
Mortgaged Property, substantially in the form of Exhibit D or, in the case
of Mortgaged Properties located outside the United States of America, in such
form as agreed between the Borrower and the Administrative Agent or the
Canadian Administrative Agent, as applicable, as the same may be amended,
supplemented or otherwise modified from time to time.

 

27

 

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

 

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

 

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

 

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

 

(iii)          in the case of any Prepayment Event,
the amount of any Indebtedness secured by a Lien on the assets that are the
subject of such Prepayment Event to the extent that the instrument creating or
evidencing such Indebtedness requires that such Indebtedness be repaid upon
consummation of such Prepayment Event,

 

(iv)          in the case of any Asset Sale
Prepayment Event (other than a transaction permitted by Section 10.4(e)),
the amount of any proceeds of such Asset Sale Prepayment Event that the
Borrower has reinvested (or intends to reinvest within one year of the date of
such Asset Sale Prepayment Event) in the business of the Borrower or any of the
Restricted Subsidiaries (subject to Section 9.14), provided that any portion of such proceeds that has not been so
reinvested within such one-year period shall (x) be deemed to be Net Cash
Proceeds of an Asset Sale Prepayment Event occurring on the last day of such
one-year period and (y) be applied to the repayment of Term Loans in
accordance with Section 5.2(a)(i); provided further that, for purposes of the preceding proviso, such one-year
period shall be extended by up to twelve months (or, if less, extended by up to
the shortest period of time in excess of one year that such a reinvestment
period exists pursuant to, or may be extended under the terms of, any
instrument governing any publicly offered or privately placed Indebtedness of
Holdings or the Borrower) from the last day of such one-year period so long as (A) such
proceeds are to be reinvested within such additional twelve-month period under
the Borrower’s business plan as most recently adopted in good faith by its
Board of Directors and (B) the Borrower believes in good faith that such
proceeds will be so reinvested within such additional twelve-month period, and

 

28

 

(v)           in the case of any Prepayment Event
or the issuance by the Borrower of any capital stock, reasonable and customary
fees, commissions, expenses, issuance costs, discounts and other costs paid by
Holdings, the Borrower or any of the Restricted Subsidiaries, as applicable, in
connection with such Prepayment Event or issuance, as the case may be (other
than those payable to Holdings, the Borrower or any Subsidiary of the
Borrower), in each case only to the extent not already deducted in arriving at
the amount referred to in clause (a) above.

 

“New Revolving Loan Commitments” as defined in Section 2.15.

 

“New Revolving Loan Lender” as defined in Section 2.15.

 

“New Revolving Loans” as defined in Section 2.15.

 

“New Term Loan Commitments” as defined in Section 2.15.

 

“New Term Loan Lender” as defined in Section 2.15.

 

“New Term Loan Maturity Date” means the date
that New Term Loans of  a Series shall
become due and payable in full hereunder, as specified in the applicable
Joinder Agreement, including by acceleration or otherwise.

 

“New Term Loans” as defined in Section 2.15.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

29

 

“Permitted Acquisition” shall mean the
acquisition, by merger or otherwise, by the Borrower or any of the Restricted
Subsidiaries of assets or capital stock or other equity interests, so long as (a) such
acquisition and all transactions related thereto shall be consummated in
accordance with applicable law; (b) such acquisition shall result in the
issuer of such capital stock or other equity interests becoming (i) a
Restricted Subsidiary and (ii) (x) in the case of a Restricted
Domestic Subsidiary, a Subsidiary Guarantor or (y) in the case of a
Restricted Foreign Subsidiary, a Foreign Subsidiary Guarantor, in each case to
the extent required by Section 9.11; (c) such acquisition shall
result in the Administrative Agent or the Canadian Administrative Agent, as
applicable, for the benefit of the applicable Lenders, being granted a security
interest in any capital stock or any assets so acquired to the extent required
by Sections 9.11, 9.12 and/or 9.15; (d) after giving effect to such
acquisition, no Default or Event of Default shall have occurred and be
continuing; and (e) the Borrower shall be in compliance, on a pro forma
basis after giving effect to such acquisition (including any Indebtedness
assumed or permitted to exist or incurred pursuant to Sections 10.1(j) and
10.1(k), respectively, and any related Pro Forma Adjustment), with the covenants
set forth in Sections 10.9 and 10.10, as such covenants are recomputed as
at the last day of the most recently ended Test Period under such Sections as
if such acquisition had occurred on the first day of such Test Period.

 

“Permitted Additional Subordinated Notes”
shall mean Subordinated Notes other than Subordinated Notes issued as Permitted
Subordinated Debt, provided that the aggregate principal amount of
Permitted Additional Subordinated Notes outstanding at any time shall not
exceed $100,000,000, plus accrued interest thereon as provided in the
Subordinated Note Indenture.

 

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

 

“Permitted Investments” shall mean (a) securities
issued or unconditionally guaranteed by the United States government or any
agency or instrumentality thereof, in each case having maturities of not more
than 24 months from the date of acquisition thereof; (b) securities issued
by any state of the United States of America or any political subdivision of
any such state or any public instrumentality thereof or any political
subdivision of any such state or any public instrumentality thereof having
maturities of not more than 24 months from the date of acquisition thereof and,
at the time of acquisition, having an investment grade rating generally
obtainable from either S&P or Moody’s (or, if at any time neither S&P
nor Moody’s shall be rating such obligations, then from another nationally
recognized rating service); (c) commercial paper issued by any Lender or
any bank holding company owning any Lender; (d) commercial paper maturing
no more than 12 months after the date of creation thereof and, at the time
of acquisition, having a rating of at least A-2 or P-2 from either S&P or
Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such
obligations, an equivalent rating from another nationally recognized rating
service); (e) domestic and Eurodollar certificates of deposit or bankers’
acceptances maturing no more than two years after the date of acquisition
thereof issued by any Lender or any other bank having combined capital and
surplus of not less than $250,000,000 in the case of domestic banks and
$100,000,000 (or the dollar equivalent thereof) in the case of foreign banks; (f) repurchase
agreements with a term of not more than 30 days for underlying securities
of the type described in clauses (a), (b) and (e) above entered into
with any bank meeting the qualifications specified in clause (e) above or
securities dealers of recognized

 

30

 

national standing; (g) marketable
short-term money market and similar securities, having a rating of at least A-2
or P-2 from either S&P or Moody’s (or, if at any time neither S&P nor
Moody’s shall be rating such obligations, an equivalent rating from another
nationally recognized rating service); (h) shares of investment companies
that are registered under the Investment Company Act of 1940 and invest solely
in one or more of the types of securities described in clauses (a) through
(g) above; and (i) in the case of investments by any Restricted
Foreign Subsidiary or investments made in a country outside the United States
of America, other customarily utilized high-quality investments in the country
where such Restricted Foreign Subsidiary is located or in which such investment
is made.

 

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

 

“Permitted Liens” shall mean (a) Liens
for taxes, assessments or governmental charges or claims not yet due or which
are being contested in good faith and by appropriate proceedings for which
appropriate reserves have been established in accordance with GAAP; (b) Liens
in respect of property or assets of the Borrower or any of the Subsidiaries
imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens and
other similar Liens arising in the ordinary course of business, in each case so
long as such Liens arise in the ordinary course of business and do not
individually or in the aggregate have a Material Adverse Effect; (c) Liens
arising from judgments or decrees in circumstances not constituting an Event of
Default under Section 11.14; (d) Liens incurred or deposits made in
connection with workers’ compensation, unemployment insurance and other types
of social security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations incurred in
the ordinary course of business; (e) ground leases in respect of real
property on which facilities owned or leased by the Borrower or any of its
Subsidiaries are located; (f) easements, rights-of-way, restrictions,
minor defects or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the business of
Holdings, the Borrower and its Subsidiaries, taken as a whole or the Canadian
Borrower and its Subsidiaries, taken as a whole; (g) any interest or title
of a lessor or secured by a lessor’s interest under any lease permitted by this
Agreement; (h) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in connection with the
importation of goods; (i) Liens on goods the purchase price of which is
financed by a documentary letter of credit issued for the account of the
Borrower or any of its Subsidiaries, provided that such Lien secures
only the obligations of the Borrower or such Subsidiaries in respect of such
letter of credit to the extent permitted under Section 10.1; (j) leases
or subleases granted to others not interfering in any material respect with the
business of Holdings, the Borrower and its Subsidiaries, taken as a whole; and (k) Liens
created in the ordinary course of business in favor of banks and other
financial institutions over credit balances of any bank accounts of any of
Holdings, the Borrower and the Restricted Subsidiaries held at such banks or
financial institutions, as the case may be, to facilitate the operation of cash
pooling and/or interest set-off arrangements in respect of such bank accounts
in the ordinary course of business.

 

“Permitted Sale Leaseback” shall mean any
Sale Leaseback consummated by the Borrower or any of the Restricted
Subsidiaries after the Closing Date, provided that such Sale Leaseback
is consummated for fair value as determined at the time of consummation in good

 

31

 

faith by the Borrower and,
in the case of any Sale Leaseback (or series of related Sales Leasebacks) the
aggregate proceeds of which exceed $20,000,000, the Board of Directors of the
Borrower (which such determination may take into account any retained interest
or other investment of the Borrower or such Restricted Subsidiary in connection
with, and any other material economic terms of, such Sale Leaseback).

 

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

 

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

 

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

 

“Pledge Agreement” shall mean the Pledge
Agreement, entered into by any of Holdings, the Borrower, the other pledgors
party thereto and the Administrative Agent for the benefit of the Lenders,
substantially in the form of Exhibit F, as the same may be amended,
supplemented or otherwise modified from time to time.

 

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

 

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

 

“Pro Forma Adjustment” shall mean, for any
test period that includes any of the six fiscal quarters first ending following
any Permitted Acquisition, with respect to the Acquired EBITDA of the
applicable Acquired Entity or Business or the Consolidated EBITDA of the
Borrower affected by such acquisition, the pro forma increase or decrease in
such Acquired EBITDA or such Consolidated EBITDA, as the case may be, projected
by the Borrower in good faith as a result of reasonably identifiable and
factually supportable net cost savings or additional net costs, as the case may
be, realizable during such period by combining the operations of such Acquired
Entity or Business with the operations of the Borrower and its Subsidiaries, provided
that so long as such net cost savings or additional net costs will be
realizable at any time during such six-quarter period, it may be assumed, for
purposes of projecting such pro forma increase or decrease to such
Acquired EBITDA or such Consolidated EBITDA, as the case may be, that such net
cost savings or additional net costs will be realizable during the entire such
period; provided further that any such pro forma
increase or decrease to such Acquired EBITDA or such Consolidated EBITDA, as
the case may be, shall be without duplication for net cost savings or

 

32

 

additional net costs
actually realized during such period and already included in such Acquired
EBITDA or such Consolidated EBITDA, as the case may be.

 

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

 

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

 

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

 

“Recalculation Date” shall have the meaning
provided in Section 1.2.

 

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

 

“Reference Lender” shall mean JPMCB.

 

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

 

“Regulation D” shall mean
Regulation D of the Board as from time to time in effect and any successor
to all or a portion thereof establishing reserve requirements.

 

“Regulation T” shall mean
Regulation T of the Board as from time to time in effect and any successor
to all or a portion thereof establishing margin requirements.

 

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

 

“Regulation X” shall mean
Regulation X of the Board as from time to time in effect and any successor
to all or a portion thereof establishing margin requirements.

 

“Related Affiliate” shall mean with respect
to any Lender with a Canadian Revolving Credit Commitment, an Affiliate or
lending office of such Lender designated by it to

 

33

 

make its Canadian Revolving
Credit Commitment, Canadian Letters of Credit and Canadian Revolving Credit
Loans available to the Borrower under this Agreement.

 

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

 

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

 

“Required Canadian Revolving Credit Lenders”
shall mean, at any date, (a) Non-Defaulting Lenders having or holding a
majority of the Dollar Equivalent of the Adjusted Canadian Total Revolving
Credit Commitment that relates to Canadian Revolving Credit Loans at such date
or (b) if the Canadian Total Revolving Credit Commitment has been
terminated, the holders (excluding Defaulting Lenders) of a majority of the
outstanding principal amount of the Dollar Equivalent of the Canadian Revolving
Credit Loans in the aggregate at such date.

 

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

 

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

 

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

 

34

 

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

 

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

 

“Requirement of Law” shall mean, as to any
Person, the Certificate of Incorporation and By-Laws or other organizational or
governing documents of such Person, and any law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or assets or to which such Person or any of its property or assets is
subject.

 

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

 

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

 

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

 

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

 

“Revolving Credit Maturity Date” shall mean
the date that is six years after the Closing Date, or, if such date is not a
Business Day, the next preceding Business Day.

 

“SAC” shall have the meaning provided in the
Initial Credit Agreement.

 

“Sale Leaseback” shall mean any transaction
or series of related transactions pursuant to which the Borrower or any of the
Restricted Subsidiaries (a) sells, transfers or otherwise disposes of any
property, real or personal, whether now owned or hereafter acquired, and (b) as
part of such transaction, thereafter rents or leases such property or other
property that it intends to use for substantially the same purpose or purposes
as the property being sold, transferred or disposed.

 

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

 

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

 

35

 

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

 

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

 

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

 

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

 

“Security Documents” shall mean,
collectively, (a) the Guarantee, (b) the Pledge Agreement, (c) the
Security Agreement, (d) the Mortgages, (e) the Canadian Security
Documents and (f) each other security agreement or other instrument or
document executed and delivered pursuant to Section 9.11 or 9.12 or
pursuant to any of the Security Documents to secure any of the Obligations.

 

“Series” as defined in Section 2.15.

 

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

 

“Solvent” means, with respect to the
Borrower, that as of the Closing Date, both (i) (a) the sum of the
Borrower’s debt (including contingent liabilities) does not exceed the present
fair saleable value of the Borrower’s present assets; (b) the Borrower’s
capital is not unreasonably small in relation to its business as contemplated
on the Closing Date; and (c) the Borrower has not incurred and does not
intend to incur, or believe that it will incur, debts including current
obligations beyond its ability to pay such debts as they become due (whether at
maturity or otherwise); and (ii) such Person is “solvent” within the
meaning given that term and similar terms under applicable laws relating to
fraudulent transfers and conveyances. 
For purposes of this definition, the amount of any contingent liability
at any time shall be computed as the amount that, in light of all of the facts
and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability (irrespective
of whether such contingent liabilities meet the criteria for accrual under
Statement of Financial Accounting Standard No.5).

 

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

 

“Specified Subsidiary” shall mean, at any
date of determination, (a) any Material Subsidiary or (b) any
Unrestricted Subsidiary (i) whose total assets at the last day of the Test
Period ending on the last day of the most recent fiscal period for which Section 9.1
Financials have been delivered were equal to or greater than 15% of the
consolidated total assets of the Borrower and the Subsidiaries at such date or (ii) whose
gross revenues for such Test Period

 

36

 

were equal to or greater
than 15% of the consolidated gross revenues of the Borrower and the
Subsidiaries for such period, in each case determined in accordance with GAAP.

 

“Stated Amount” of any Letter of Credit shall
mean the maximum amount from time to time available to be drawn thereunder,
determined without regard to whether any conditions to drawing could then be
met.

 

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

 

“Statutory Reserve Rate” shall mean for any
day as applied to any Eurodollar Loan, 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 that are in effect
on that day (including any marginal, special, emergency or supplemental
reserves), expressed as a decimal, as prescribed by the Board and to which the
Administrative Agent is subject, 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. 
Eurodollar 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 Note Indenture” shall mean the
Indenture dated as of the Closing Date, among the Borrower, the guarantors
party thereto and The Bank of New York, as trustee, pursuant to which the
Subordinated Notes are issued, as the same may be amended, supplemented or
otherwise modified from time to time to the extent permitted by Section 10.7(b).

 

“Subordinated Notes” shall mean (a) the
Subordinated Notes defined in the Initial Credit Agreement and (b) any
replacement or refinancing thereof having terms no more adverse to the
interests of the Lenders than the terms thereof, provided that any such
amendment,

 

37

 

replacement or refinancing
shall bear a rate of interest determined by the Board of Directors of the
Borrower to be a market rate of interest at the date of such amendment,
replacement or refinancing and have other terms customary for similar issuances
under similar market conditions or otherwise be on terms reasonably acceptable
to the Administrative Agent.

 

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

 

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

 

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

 

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

 

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

 

“Syndication Agent” shall mean Citibank,
N.A., together with its affiliates, as the syndication agent for the Lenders
under this Agreement and the other Credit Documents.

 

“Tax Act” means the Income Tax Act (Canada), as amended from
time to time, and regulations promulgated thereunder.

 

“Term Loans” shall mean, collectively, the
Tranche A Term Loans and the Tranche E Term Loans.

 

“Test Period” shall mean, for any
determination under this Agreement, the four consecutive fiscal quarters of the
Borrower then last ended.

 

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

 

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

 

38

 

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

 

“Tranche A Repayment Amount” shall have the
meaning provided in Section 2.5(b)(i).

 

“Tranche A Repayment Date” shall have the
meaning provided in Section 2.5(b)(i).

 

“Tranche A Term Loan” shall have the meaning
provided in Section 2.1(a)(i).

 

“Tranche A Term Loan Commitment” shall mean, (a) in
the case of each Lender that is a Lender on the date hereof, the amount set
forth opposite such Lender’s name on Schedule 1.1(c) as such Lender’s
“Tranche A Term Loan Commitment” and (b) in the case of any Lender that
becomes a Lender after the date hereof, the amount specified as such Lender’s “Tranche
A Term Loan Commitment” in the Assignment and Acceptance pursuant to which such
Lender assumed a portion of the Total Term Loan Commitment, in each case as the
same may be changed from time to time pursuant to the terms hereof.  The aggregate amount of the Tranche A Term
Loan Commitments as of the Effective Date is $300,000,000.

 

“Tranche A Term Loan Maturity Date” shall
mean the date that is five years after the Effective Date, or, if such date is
not a Business Day, the next preceding Business Day.

 

“Tranche E Repayment Amount” shall have the
meaning provided in Section 2.5(b)(ii).

 

“Tranche E Repayment Date” shall have the
meaning provided in Section 2.5(b)(ii).

 

“Tranche E Term Loan”
shall have the meaning provided in Section 2.1(a)(ii).

 

“Tranche E Term Loan Commitment” shall mean, (a) in
the case of each Lender that is a Lender on the date hereof, the amount set
forth opposite such Lender’s name on Schedule 1.1(c) as such Lender’s
“Tranche E Term Loan Commitment” and (b) in the case of any Lender that
becomes a Lender after the date hereof, the amount specified as such Lender’s “Tranche
E Term Loan Commitment” in the Assignment and Acceptance pursuant to which such
Lender assumed a portion of the Total Term Loan Commitment, in each case as the
same may be changed from time to time pursuant to the terms hereof.  The aggregate amount of the Tranche E Term
Loan Commitments as of the Effective Date is $140,000,000.

 

“Tranche E Term Loan Maturity Date” shall
mean the date that is six years after the Effective Date, or, if such date is
not a Business Day, the next preceding Business Day.

 

39

 

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

 

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

 

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

 

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

 

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

 

“Unrestricted Subsidiary”
shall mean (a) any Subsidiary of the Borrower that is formed or acquired
after the Closing Date (other than a Subsidiary that becomes or is required to
become a Credit Party hereunder), provided that at such time (or
promptly thereafter) the Borrower designates such Subsidiary an Unrestricted
Subsidiary in a written notice to the Administrative Agent, (b) any
Restricted Subsidiary (other than a Restricted Subsidiary that is or becomes a
Credit Party) subsequently re-designated as an Unrestricted Subsidiary by the
Borrower in a written notice to the Administrative Agent, provided that (x) such
re-designation shall be deemed to be an investment on the date of such
re-designation in an Unrestricted Subsidiary in an amount equal to the sum of (i) the
net worth of such re-designated Restricted Subsidiary immediately prior to such
re-designation (such net worth to be calculated without regard to any guarantee
provided by such re-designated Restricted Subsidiary) and (ii) the
aggregate principal amount of any Indebtedness owed by such re-designated
Restricted Subsidiary to the Borrower or any other Restricted Subsidiary
immediately prior to such re-designation, all calculated, except as set forth
in the parenthetical to clause (i), on a consolidated basis in accordance with
GAAP and (y) no Default or Event of Default would result from such
re-designation and (c) each Subsidiary of an Unrestricted Subsidiary; provided,
however, that at the time of any written re-designation by the Borrower
to the Administrative Agent that any Unrestricted Subsidiary shall no longer
constitute an Unrestricted Subsidiary, such Unrestricted Subsidiary shall cease
to be an Unrestricted Subsidiary to the extent no Default or Event of

 

40

 

Default would result from
such re-designation.  On or promptly
after the date of its formation, acquisition or re-designation, as applicable,
each Unrestricted Subsidiary (other than an Unrestricted Subsidiary that is a
Foreign Subsidiary) shall have entered into a tax sharing agreement containing
terms that, in the reasonable judgment of the Administrative Agent, provide for
an appropriate allocation of tax liabilities and benefits.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“US Revolving Credit Commitment Percentage”
shall mean at any time, for each Lender, the percentage obtained by dividing (a) such
Lender’s US Revolving Credit Commitment by (b) the aggregate amount of the
US Revolving Credit Commitments, provided

 

41

 

that at any time when the US
Total Revolving Credit Commitment shall have been terminated, each Lender’s US
Revolving Credit Commitment Percentage shall be its US Revolving Credit
Commitment Percentage as in effect immediately prior to such termination.

 

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

 

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

 

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

 

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

 

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

 

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

 

1.2.          Exchange Rates. (a)     Not
later than 1:00 p.m. (New York time) on each Calculation Date, the
Administrative Agent shall (i) determine the Exchange Rate as of such
Calculation Date with respect to Canadian Dollars to be used for calculating
the Dollar Equivalent and (ii) give notice thereof to the Lenders and the
Borrower.  The Exchange Rates so
determined shall become effective on the first Business Day immediately
following the relevant Calculation Date (a “Recalculation Date”), shall
remain effective until the next succeeding Recalculation Date, and shall for
all purposes of this Agreement (other than any provision expressly requiring
the use of a current Exchange Rate) be the Exchange Rates employed in
converting any amounts between Dollars and Canadian Dollars.

 

(b)           Not later
than 5:00 p.m. (New York time) on each Recalculation Date and each
date on which Canadian Revolving Loans are made, the Administrative Agent shall
(i) determine the aggregate amount of the Dollar Equivalents of the
principal amounts of the Canadian Revolving Loans then outstanding (after
giving effect to any Canadian Revolving Loans made or repaid on such date), and
(ii) notify the Lenders and the Borrower of the results of such
determination.

 

(c)           For
purposes of determining compliance under Sections 10.4, 10.5, 10.6, 10.9,
10.10 and 10.11 with respect to any amount in a Foreign Currency, such amount
shall be deemed to equal the Dollar Equivalent thereof based on the average
Exchange Rate for a Foreign

 

42

 

Currency for the most recent twelve-month period immediately
prior to the date of determination determined in a manner consistent with that
used in calculating Consolidated EBITDA for the related period.  For purposes of determining compliance with
Sections 10.1 and 10.2, with respect to any amount of Indebtedness in a Foreign
Currency, compliance will be determined at the time of incurrence thereof using
the Dollar Equivalent thereof at the Exchange Rate in effect at the time of
such incurrence.

 

SECTION 2.           Amount and Terms of Credit

 

2.1.          Commitments. (a)     (i) 
Subject to and upon the terms and conditions herein set forth, each Lender
having a Tranche A Term Loan Commitment severally agrees to make a loan or
loans (each a “Tranche A Term Loan”) to the Borrower in
Dollars, which Tranche A Term Loans shall not exceed for any such Lender the
Tranche A Term Loan Commitment of such Lender; and

 

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

 

(ii)  Subject to and upon the terms and
conditions herein set forth, each Lender having a Tranche E Term Loan
Commitment severally agrees to make a loan or loans (each a “Tranche E Term Loan”) to the Borrower in
Dollars, which Tranche E Term Loans shall not exceed for any such Lender the
Tranche E Term Loan Commitment of such Lender; and

 

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

 

(b)           (i) 
Subject to and upon the terms and conditions herein set forth, each Lender
having a US Revolving Credit Commitment severally agrees to make a loan or
loans denominated in Dollars (each a “US Revolving Credit Loan” and,
collectively, the “US Revolving Credit Loans” and, together with the
Canadian Revolving Credit Loans, the “Revolving Credit Loans”) to the
Borrower which US Revolving Credit Loans (A) shall be made at any time and
from time to time on and after the Closing Date and prior to the Revolving
Credit Maturity Date, (B) may, at the option of the Borrower be incurred
and maintained as, and/or

 

43

 

converted into, ABR Loans or Eurodollar Revolving Credit
Loans, provided that all US Revolving Credit Loans made by each of the
Lenders pursuant to the same Borrowing shall, unless otherwise specifically
provided herein, consist entirely of US Revolving Credit Loans of the same
Type, (C) may be repaid and reborrowed in accordance with the provisions
hereof, (D) shall not, for any such Lender at any time, after giving
effect thereto and to the application of the proceeds thereof, result in such
Lender’s US Revolving Credit Exposure at such time exceeding such Lender’s US
Revolving Credit Commitment at such time and (E) shall not, after giving
effect thereto and to the application of the proceeds thereof, result at any
time in the aggregate amount of the Lenders’ US Revolving Credit Exposures at
such time exceeding the US Total Revolving Credit Commitment then in effect.

 

(ii)           Subject
to and upon the terms and conditions herein set forth, each Canadian Lender
having a Canadian Revolving Credit Commitment severally agrees to make a loan
or loans denominated in Canadian Dollars or Dollars to the Canadian Borrower or
a loan or loans denominated in Dollars to the Borrower (each a “Canadian
Revolving Credit Loan” and, collectively, the “Canadian Revolving Credit
Loans”) which Canadian Revolving Credit Loans (A) shall be made at any
time and from time to time on and after the Closing Date and prior to the
Revolving Credit Maturity Date, (B) shall be incurred and maintained (x) as
Canadian Prime Loans or BA Loans if denominated in C$ or (y) as Cdn ABR
Loans or Eurodollar Loans if denominated in US$ and made to the Canadian
Borrower, or (z) as ABR Loans or Eurodollar Loans if denominated in US$
and made to the Borrower; provided that all Canadian Revolving Credit
Loans made by each of the Canadian Lenders pursuant to the same Borrowing
shall, unless otherwise specifically provided herein, consist entirely of
Canadian Revolving Credit Loans of the same Type made to the same Borrower, (C) may
be repaid and reborrowed in accordance with the provisions hereof, (D) shall
not, for any such Canadian Lender at any time, after giving effect thereto and
to the application of the proceeds thereof, result in such Canadian Lender’s
Canadian Revolving Credit Exposure allocated to the Canadian Borrower at such
time exceeding such Canadian Lender’s Canadian Revolving Credit Commitment
allocated to the Canadian Borrower at such time, (E) shall not, for any
such Canadian Lender at any time, after giving effect thereto and to the
application of the proceeds thereof, result in such Lender’s Canadian Revolving
Credit Exposure allocated to the Borrower at such time exceeding such Canadian
Lender’s Canadian Revolving Credit Commitment allocated to the Borrower at such
time, (F) shall not, after giving effect thereto and to the application of
the proceeds thereof, result at any time in the aggregate amount of the
Canadian Lenders’ Canadian Revolving Credit Exposures at such time exceeding the
Canadian Total Revolving Credit Commitment then in effect, and (G) if made
to the Canadian Borrower shall be made by a Canadian Lender that is a Canadian
Resident or a permitted assignee of such Canadian Lender pursuant to Section 14.6(b)(ii).  The allocation of the Canadian Total
Revolving Credit Commitment as between the Borrower (the “Borrower
Allocation”) on the one hand and the Canadian Borrower (the “Canadian
Borrower Allocation”) on the other hand shall be fixed by the Borrower at
the beginning of each calendar month by providing written notice to the
Administrative Agent and the Canadian Administrative Agent (which notice must
be received by each such agent prior to 10:00 a.m. (New York time), three (3) Business
Days before the date on which such allocations shall be revised) specifying the
revised allocation of the Canadian Total Revolving Credit Commitment as between
the Borrower and the Canadian Borrower, respectively.  As of the Closing Date, $0 of the Canadian
Revolving Credit Commitment is allocated to the Borrower and $25,000,000 of the
Canadian Revolving Credit Commitment is allocated to the Canadian

 

44

 

Borrower.  The portion of each Canadian Lender’s
Canadian Revolving Credit Commitment allocated to the Borrower and the Canadian
Borrower, respectively, shall be its Canadian Revolving Credit Percentage of
the Borrower Allocation and the Canadian Borrower Allocation,
respectively.  Each Canadian Lender, if
it is not a “United States person” (as such term is defined in Section 7701(a)(30)
of the Code), shall designate by notice in writing to the Administrative Agent
and the Canadian Administrative Agent on the Closing Date, and otherwise from
time to time, a Related Affiliate of such Lender which is either a “United
States person” (as such term is defined in Section 7701(a)(30) of the
Code) or is a Non-US Lender that has fulfilled the requirements in Section 5.4(b),
for the purposes of making Canadian Revolving Credit Loans available to the
Borrower.

 

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

 

(c)           Subject to and upon the terms and
conditions herein set forth, the Swingline Lender in its individual capacity
agrees, at any time and from time to time on and after the Closing Date and
prior to the Swingline Maturity Date, to make a loan or loans (each a “Swingline
Loan” and, collectively, the “Swingline Loans”) to the Borrower in
Dollars, which Swingline Loans (i) shall be ABR Loans, (ii) shall
have the benefit of the provisions of Section 2.1(d), (iii) shall not
exceed at any time outstanding the Swingline Commitment, (iv) shall not,
after giving effect thereto and to the application of the proceeds thereof,
result at any time in the aggregate amount of the Lenders’ US Revolving Credit
Exposures at such time exceeding the US Total Revolving Credit Commitment then
in effect and (v) may be repaid and reborrowed in accordance with the
provisions hereof.  On the Swingline
Maturity Date, each outstanding Swingline Loan shall be repaid in full.  The Swingline Lender shall not make any Swingline
Loan after receiving a written notice from the Borrower, the Canadian Borrower
or any Lender stating that a Default or Event of Default exists and is
continuing until such time as the Swingline Lender shall have received written
notice of (i) rescission of all such notices from the party or parties
originally delivering such notice or (ii) the waiver of such Default or
Event of Default in accordance with the provisions of Section 14.1.

 

(d)           On any Business Day, the Swingline
Lender may, in its sole discretion, give notice to the Lenders that all
then-outstanding Swingline Loans shall be funded with a Borrowing of US
Revolving Credit Loans, in which case US Revolving Credit Loans constituting
ABR Loans (each such Borrowing, a “Mandatory Borrowing”) shall be made
on the 

 

45

 

immediately succeeding
Business Day by all Lenders with US Revolving Credit Commitments pro rata
based on each Lender’s US Revolving Credit Commitment Percentage, and the
proceeds thereof shall be applied directly to the Swingline Lender to repay the
Swingline Lender for such outstanding Swingline Loans.  Each Lender with US Revolving Credit
Commitments hereby irrevocably agrees to make such US Revolving Credit Loans
upon one Business Day’s notice pursuant to each Mandatory Borrowing in the
amount and in the manner specified in the preceding sentence and on the date
specified to it in writing by the Swingline Lender notwithstanding (i) that
the amount of the Mandatory Borrowing may not comply with the minimum amount
for each Borrowing specified in Section 2.2, (ii) whether any
conditions specified in Section 7 are then satisfied, (iii) whether a
Default or an Event of Default has occurred and is continuing, (iv) the
date of such Mandatory Borrowing or (v) any reduction in the Total
Commitment after any such Swingline Loans were made.  In the event that, in the sole judgment of
the Swingline Lender, any Mandatory Borrowing cannot for any reason be made on
the date otherwise required above (including as a result of the commencement of
a proceeding under the Bankruptcy Code in respect of the Borrower), each Lender
with US Revolving Credit Commitments hereby agrees that it shall forthwith
purchase from the Swingline Lender (without recourse or warranty) such
participation of the outstanding Swingline Loans as shall be necessary to cause
such Lenders to share in such Swingline Loans ratably based upon their
respective US Revolving Credit Commitment Percentages, provided that all
principal and interest payable on such Swingline Loans shall be for the account
of the Swingline Lender until the date the respective participation is
purchased and, to the extent attributable to the purchased participation, shall
be payable to the Lender with US Revolving Credit Commitments purchasing same
from and after such date of purchase.

 

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

 

2.3.          Notice of Borrowing.  (a)  
The Borrower shall give the Administrative Agent at the Administrative
Agent’s Office (i) prior to 12:00 Noon (New York time) at least three
Business Days’ prior written notice (or telephonic notice promptly confirmed in
writing) of the Borrowing of Tranche A Term Loans or Tranche E Term Loans if
all or any of such Tranche A Term Loans or Tranche E Term Loans are to be
initially Eurodollar Loans, and (ii) prior written notice (or telephonic
notice promptly confirmed in writing) prior to 10:00 a.m. (New York time)
on the date of the Borrowing of Tranche A Term Loans or Tranche E Term Loans if
all such Tranche A Term Loans or Tranche E Term Loans are to be ABR Loans.  Such notice (together with each notice of a
Borrowing of Revolving Credit Loans pursuant to Section 2.3(b) and
each notice of a Borrowing of Swingline Loans pursuant to Section 2.3(d),
a “Notice of Borrowing”) shall be irrevocable and shall specify (i) the
aggregate principal amount of such Tranche A Term Loans or Tranche E Term Loans
to be made, (ii) the date of the borrowing (which shall be the Effective
Date) and (iii) whether such Tranche A Term Loans or Tranche E Term Loans
shall consist of ABR Loans and/or Eurodollar Term Loans and, if such Tranche A 

 

46

 

Term Loans or Tranche E Term
Loans are to include Eurodollar Term Loans, the Interest Period to be initially
applicable thereto.  The Administrative
Agent shall promptly give each Lender written notice (or telephonic notice
promptly confirmed in writing) of the proposed Borrowing of Tranche A Term
Loans or Tranche E Term Loans, of such Lender’s proportionate share thereof and
of the other matters covered by the related Notice of Borrowing.

 

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

 

(c)           Whenever the Canadian Borrower
desires to incur Canadian Revolving Credit Loans in Dollars or Canadian Dollars
(subject to its allocated portion of the Canadian Revolving Credit Commitment)
hereunder (other than Mandatory Borrowings or borrowings to repay Unpaid
Drawings), it shall give the Canadian Administrative Agent at the Canadian
Administrative Agent’s Office, (i) prior to 12:00 Noon (New York time) at
least three Business Days’ prior written notice (or telephonic notice promptly
confirmed in writing) of each Canadian Borrowing of BA Loans or Eurodollar
Loans, and (ii) prior to 12:00 Noon (New York time) at least one
Business Day’s prior written notice (or telephonic notice promptly confirmed in
writing) of each Canadian Borrowing of Cdn ABR or Canadian Prime Loans.  Each such Notice of Borrowing, except as
otherwise expressly provided in Section 2.10, shall be irrevocable and
shall specify (i) the aggregate principal amount of the Revolving Credit
Loans to be made pursuant to such Borrowing, (ii) the date of Borrowing
(which shall be a Business Day) and (iii) whether the respective Borrowing
shall consist of BA Loans, Eurodollar Loans, Canadian Prime Loans or Cdn ABR
Loans and, if BA Loans or Eurodollar Loans, the Interest Period to be initially
applicable thereto.  The Canadian
Administrative Agent shall promptly give each Lender written notice (or
telephonic notice promptly confirmed in writing) of each proposed Borrowing of
Revolving Credit Loans, of such Lender’s proportionate share thereof and of the
other matters covered by the related Notice of Borrowing.

 

(d)           Whenever the Borrower desires to
incur Swingline Loans hereunder, it shall give the Administrative Agent written
notice (or telephonic notice promptly confirmed in writing) of each Borrowing
of Swingline Loans prior to 2:30 p.m. (New York time) on the date 

 

47

 

of such Borrowing.  Each such notice shall be irrevocable and
shall specify (i) the aggregate principal amount of the Swingline Loans to
be made pursuant to such Borrowing and (ii) the date of Borrowing (which
shall be a Business Day).  The
Administrative Agent shall promptly give the Swingline Lender written notice
(or telephonic notice promptly confirmed in writing) of each proposed Borrowing
of Swingline Loans and of the other matters covered by the related Notice of
Borrowing.

 

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

 

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

 

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

 

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

 

(b)           Each Lender shall make available all
amounts it is to fund to the Borrower under any Borrowing in the applicable
currency for its applicable Commitments, and in immediately available funds to
the Administrative Agent at the Administrative Agent’s Office and the Administrative
Agent will (except in the case of Mandatory Borrowings and Borrowings to repay
Unpaid Drawings) make available to the Borrower, by depositing to the
Borrower’s account at the Administrative Agent’s Office the aggregate of the
amounts so made available in Dollars. 
Each Canadian Lender shall make available all amounts it is to fund to
the Canadian Borrower under any Canadian Borrowing in the applicable currency
for its applicable Commitments, and in immediately available funds to the
Canadian Administrative Agent at the Canadian Administrative Agent’s Office and
the Canadian Administrative Agent will (except in the case of Mandatory
Borrowings and Borrowings to repay Unpaid Drawings) make available to the
Canadian Borrower, by depositing to the Canadian Borrower’s account (as
designated by it in a written notice to the Canadian Administrative Agent from
time to time) the aggregate of the amounts so made available in Canadian
Dollars or Dollars as applicable.  Unless
the Administrative Agent and the Canadian Administrative Agent (in the case of
Canadian Borrowings) shall have been notified by any Lender prior to the date
of any such Borrowing that 

 

48

 

such Lender does not intend
to make available to the Administrative Agent or the Canadian Administrative
Agent (in the case of Canadian Borrowings) its portion of the Borrowing or
Borrowings to be made on such date, the Administrative Agent or the Canadian
Administrative Agent (in the case of Canadian Borrowings) may assume that such
Lender has made such amount available to the Administrative Agent or the
Canadian Administrative Agent (in the case of Canadian Borrowings) on such date
of Borrowing, and the Administrative Agent and the Canadian Administrative
Agent (in the case of Canadian Borrowings), in reliance upon such assumption,
may (in its sole discretion and without any obligation to do so) make available
to the Borrower or the Canadian Borrower, as the case may be, a corresponding
amount.  If such corresponding amount is
not in fact made available to the Administrative Agent or the Canadian
Administrative Agent (in the case of Canadian Borrowings) by such Lender and
the Administrative Agent or the Canadian Administrative Agent (in the case of
Canadian Borrowings) has made available same to the Borrower or the Canadian
Borrower, as the case may be, the Administrative Agent or the Canadian
Administrative Agent (in the case of Canadian Borrowings) shall be entitled to
recover such corresponding amount from such Lender.  If such Lender does not pay such
corresponding amount forthwith upon the Administrative Agent’s or the Canadian
Administrative Agent (in the case of Canadian Borrowings) demand therefor the
Administrative Agent or the Canadian Administrative Agent (in the case of
Canadian Borrowings) shall promptly notify the Borrower or the Canadian
Borrower, as the case may be, and the Borrower or the Canadian Borrower, as the
case may be, shall immediately pay such corresponding amount to the
Administrative Agent or the Canadian Administrative Agent (in the case of
Canadian Borrowings).  The Administrative
Agent or the Canadian Administrative Agent (in the case of Canadian Borrowings)
shall also be entitled to recover from such Lender or the Borrower or the Canadian
Borrower, as the case may be, interest on such corresponding amount in respect
of each day from the date such corresponding amount was made available by the
Administrative Agent or the Canadian Administrative Agent (in the case of
Canadian Borrowings) to the Borrower or the Canadian Borrower, as the case may
be, to the date such corresponding amount is recovered by the Administrative
Agent or the Canadian Administrative Agent (in the case of Canadian
Borrowings), at a rate per annum equal to (i) if paid by such Lender, the
Federal Funds Effective Rate (or, in the case of an amount owing in respect of
a Canadian Borrowing, the rate reasonably determined by the Canadian
Administrative Agent to be the cost to it of funding such amount) or (ii) if
paid by the Borrower or the Canadian Borrower, as the case may be, the
then-applicable rate of interest or fees, calculated in accordance with Section 2.8,
for the respective Loans.

 

(c)           Nothing in this Section 2.4
shall be deemed to relieve any Lender from its obligation to fulfill its
commitments hereunder or to prejudice any rights that the Borrower or the
Canadian Borrower, as the case may be, may have against any Lender as a result
of any default by such Lender hereunder (it being understood, however, that no Lender
shall be responsible for the failure of any other Lender to fulfill its
commitments hereunder).

 

2.5.          Repayment of Loans; Evidence of
Debt.  (a)     The Borrower shall repay to the
Administrative Agent, for the benefit of the Lenders, (i) on the Tranche A
Term Loan Maturity Date, the then-unpaid Tranche A Term Loans, in Dollars and (ii) on
the Tranche E Term Loan Maturity Date, the then-unpaid Tranche E Term Loans, in
Dollars.  The Borrower shall repay to the
Administrative Agent in Dollars, for the benefit of the applicable Lenders, on
the Revolving Credit Maturity Date, the then-unpaid US Revolving Credit Loans
and Canadian

 

49

 

Revolving Credit Loans made
to the Borrower.  The Canadian Borrower
shall repay to the Canadian Administrative Agent in Dollars or C$, as the case
may be, for the benefit of the applicable Lenders, on the Revolving Credit
Maturity Date, the then-unpaid Canadian Revolving Credit Loans made to the
Canadian Borrower.  The Borrower shall
repay to the Administrative Agent in Dollars, for the account of the Swingline
Lender, on the Swingline Maturity Date, the then-unpaid Swingline Loans.

 

(b)           (i) The Borrower shall repay to
the Administrative Agent, in Dollars, for the benefit of the Lenders of Tranche
A Term Loans, on each date set forth below (each a “Tranche A Repayment Date”),
the principal amount of the Tranche A Term Loans equal to (x) the
outstanding principal amount of Tranche A Term Loans immediately after closing
on the Effective Date multiplied by (y) the percentage set forth below
opposite such Repayment Date (each a “Tranche A Repayment Amount”):

 

	
  Number of Months

  From Effective Date

  	
   

  	
  Tranche A Term Loan

  Repayment Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  0.0

  	
  %

  
	
  6

  	
   

  	
  0.0

  	
  %

  
	
  9

  	
   

  	
  0.0

  	
  %

  
	
  12

  	
   

  	
  0.0

  	
  %

  
	
  15

  	
   

  	
  1.25

  	
  %

  
	
  18

  	
   

  	
  1.25

  	
  %

  
	
  21

  	
   

  	
  1.25

  	
  %

  
	
  24

  	
   

  	
  1.25

  	
  %

  
	
  27

  	
   

  	
  1.25

  	
  %

  
	
  30

  	
   

  	
  1.25

  	
  %

  
	
  33

  	
   

  	
  1.25

  	
  %

  
	
  36

  	
   

  	
  1.25

  	
  %

  
	
  39

  	
   

  	
  1.25

  	
  %

  
	
  42

  	
   

  	
  1.25

  	
  %

  
	
  45

  	
   

  	
  1.25

  	
  %

  
	
  48

  	
   

  	
  1.25

  	
  %

  
	
  51

  	
   

  	
  21.25

  	
  %

  
	
  54

  	
   

  	
  21.25

  	
  %

  
	
  57

  	
   

  	
  21.25

  	
  %

  
	
  Tranche A Term Loan Maturity Date

  	
   

  	
  21.25

  	
  %

  

 

(ii) The
Borrower shall repay to the Administrative Agent, in Dollars, for the benefit
of the Lenders of Tranche E Term Loans, on each date set forth below (each a “Tranche
E Repayment Date”), the principal amount of the Tranche E Term Loans equal
to (x) the outstanding principal amount of Tranche E Term Loans
immediately after closing on the Effective Date multiplied by (y) the
percentage set forth below opposite such Repayment Date (each a “Tranche E
Repayment Amount”):

 

50

 

	
  Number of Months

  From Effective Date

  	
   

  	
  Tranche E Term Loan

  Repayment Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  0.25

  	
  %

  
	
  6

  	
   

  	
  0.25

  	
  %

  
	
  9

  	
   

  	
  0.25

  	
  %

  
	
  12

  	
   

  	
  0.25

  	
  %

  
	
  15

  	
   

  	
  0.25

  	
  %

  
	
  18

  	
   

  	
  0.25

  	
  %

  
	
  21

  	
   

  	
  0.25

  	
  %

  
	
  24

  	
   

  	
  0.25

  	
  %

  
	
  27

  	
   

  	
  0.25

  	
  %

  
	
  30

  	
   

  	
  0.25

  	
  %

  
	
  33

  	
   

  	
  0.25

  	
  %

  
	
  36

  	
   

  	
  0.25

  	
  %

  
	
  39

  	
   

  	
  0.25

  	
  %

  
	
  42

  	
   

  	
  0.25

  	
  %

  
	
  45

  	
   

  	
  0.25

  	
  %

  
	
  48

  	
   

  	
  0.25

  	
  %

  
	
  51

  	
   

  	
  0.25

  	
  %

  
	
  54

  	
   

  	
  0.25

  	
  %

  
	
  57

  	
   

  	
  0.25

  	
  %

  
	
  60

  	
   

  	
  0.25

  	
  %

  
	
  63

  	
   

  	
  0.25

  	
  %

  
	
  66

  	
   

  	
  0.25

  	
  %

  
	
  69

  	
   

  	
  0.25

  	
  %

  
	
  Tranche E Term Loan Maturity Date

  	
   

  	
  94.25

  	
  %

  

 

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

 

(c)           Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower and the Canadian Borrower, as the case may be, to
the appropriate lending office of such Lender resulting from each Loan made by
such lending office of such Lender from time to time, including the amounts of
principal and interest payable and paid to such lending office of such Lender
from time to time under this Agreement.

 

(d)           The Administrative Agent shall
maintain the Register pursuant to Section 14.6(b), and a subaccount for
each Lender, in which Register and subaccounts (taken together) shall be
recorded (i) the amount and currency of each Loan made hereunder, whether
such Loan is a Tranche A Term Loan, a Tranche E Term Loan, a US Revolving
Credit Loan, a Canadian Revolving Credit Loan or a Swingline Loan, the Type of
each Loan made and the 

 

51

 

Interest Period applicable
thereto, (ii) the amount of any principal or interest due and payable or
to become due and payable from the Borrower and the Canadian Borrower, as the
case may be, to each Lender or the Swingline Lender hereunder and (iii) the
amount of any sum received by the Administrative Agent and the Canadian
Administrative Agent hereunder from the Borrower and the Canadian Borrower, as
the case may be, and each Lender’s share thereof.

 

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

 

2.6.          Conversions and Continuations.  (a)    
Each of the Borrower and the Canadian Borrower shall have the option on
any Business Day to convert all or a portion equal to at least the Minimum
Borrowing Amount of the outstanding principal amount of Tranche A Term Loans,
Tranche E Term Loans or Revolving Credit Loans made to such Borrower (as
applicable) of one Type into a Borrowing or Borrowings of another Type in the
same currency and the Borrower or the Canadian Borrower, as the case may be,
shall have the option on any Business Day to continue the outstanding principal
amount of any Eurodollar Term Loans or Eurodollar Revolving Credit Loans as
Eurodollar Term Loans or Eurodollar Revolving Credit Loans, as the case may be,
for an additional Interest Period, provided that (i) no partial conversion
of BA Loans or  Eurodollar Term
Loans or Eurodollar Revolving Credit Loans shall reduce the outstanding
principal amount of BA Loans or Eurodollar Term Loans or Eurodollar Revolving
Credit Loans made pursuant to a single Borrowing to less than the Minimum
Borrowing Amount, (ii) Cdn ABR Loans and ABR Loans may not be converted
into Eurodollar Term Loans or Eurodollar Revolving Credit Loans and Canadian
Prime Loans may not be converted into BA Loans if a Default or Event of Default
is in existence on the date of the conversion and the Administrative Agent has
or the Required Lenders have determined in its or their sole discretion not to
permit such conversion, (iii) BA Loans and Eurodollar Loans may not be
continued as BA Loans or Eurodollar Loans , respectively, for an additional
Interest Period if a Default or Event of Default is in existence on the date of
the proposed continuation and the Administrative Agent has or the Required
Lenders have determined in its or their sole discretion not to permit such
continuation, (iv) no conversion or continuation of BA Loans may be made
on a day other than the last day of the Interest Period applicable thereto and (v) Borrowings
resulting from conversions pursuant to this Section 2.6 shall be limited
in number as provided in Section 2.2. 
Each such conversion or continuation shall be effected by the Borrower
or the Canadian Borrower, as the case may be, by giving the Administrative
Agent or the Canadian Administrative Agent at the applicable Administrative
Agent’s Office prior to 12:00 Noon (New York time) at least three Business
Days’ (or one Business Day’s notice in the case of a conversion into Cdn ABR
Loans and ABR Loans or Canadian Prime Loans) prior written notice (or
telephonic notice promptly confirmed in writing) (each a “Notice of
Conversion or Continuation”) specifying the Tranche A Term Loans, Tranche E
Term Loans or Revolving Credit Loans to be so converted or continued, the Type
of Tranche A Term Loans, Tranche E Term Loans or Revolving Credit Loans to be
converted or continued into and, if such Tranche A 

 

52

 

Term Loans, Tranche E Term
Loans or Revolving Credit Loans are to be converted into or continued as BA
Loans or Eurodollar Loans, the Interest Period to be initially applicable
thereto.  The Administrative Agent (or
the Canadian Administrative Agent, in the case of Canadian Borrowings) shall
give each Lender notice as promptly as practicable of any such proposed
conversion or continuation affecting any of its Tranche A Term Loans, Tranche E
Term Loans or Revolving Credit Loans.

 

(b)           If any Default or Event of Default is
in existence at the time of any proposed continuation of any BA Loans or
Eurodollar Loans, as the case may be, and the Administrative Agent has or the
Required Lenders have determined in its or their sole discretion not to permit
such continuation, such BA Loans or Eurodollar Loans shall be automatically
converted on the last day of the current Interest Period (i) in respect of
Eurodollar Loans, into ABR Loans or Cdn ABR Loans (in the case of the Canadian
Borrower) and (ii) in respect of BA Loans, into Canadian Prime Loans.  If upon the expiration of any Interest Period
in respect of BA Loans or Eurodollar Loans, the Borrower or the Canadian
Borrower, as the case may be, has failed to elect a new Interest Period to be
applicable thereto as provided in paragraph (a) above, the Borrower or the
Canadian Borrower, as the case may be, shall be deemed to have elected to
continue such Borrowing of BA Loans or Eurodollar Loans, as the case may be,
into a Borrowing of Canadian Prime Loans or ABR Loans or Cdn ABR Loans (in the
case of the Canadian Borrower), as the case may be, effective as of the
expiration date of such current Interest Period.

 

2.7.          Pro Rata Borrowings.  Each Borrowing of Tranche A Term Loans and
Tranche E Term Loans under this Agreement shall be granted by the Lenders pro
rata on the basis of their then-applicable Tranche A Term Loan Commitments and
Tranche E Term Loan Commitments.  Each
Borrowing of US Revolving Credit Loans under this Agreement shall be granted by
the Lenders pro rata on the basis of their then-applicable US Revolving Credit
Commitments. Each Borrowing of Canadian Revolving Credit Loans under this Agreement
shall be granted by the Canadian Lenders (or their Related Affiliates if
applicable) pro rata on the basis of their then-applicable Canadian Revolving
Credit Commitments allocated to the Canadian Borrower or the Borrower, as
applicable.  Each Borrowing of New Term
Loans under this Agreement shall be granted by the Lenders pro rata on the
basis of their then-applicable New Term Loan Commitments.  It is understood that no Lender shall be
responsible for any default by any other Lender in its obligation to make Loans
hereunder and that each Lender shall be obligated to make the Loans provided to
be made by it hereunder, regardless of the failure of any other Lender to
fulfill its commitments hereunder.

 

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

 

53

 

(b)           (i) The unpaid principal amount
of each Eurodollar Loan shall bear interest from the date of the Borrowing
thereof until maturity thereof (whether by acceleration or otherwise) at a rate
per annum that shall at all times be the Applicable Eurodollar Margin in effect
from time to time plus the relevant Eurodollar Rate and (ii) the Canadian
Borrower shall pay to each Lender that accepts or advances a BA Loan, as a
condition of and at the time of such acceptance or advance, a fee at the rate
of the then Applicable Stamping Fee calculated on the basis of a year of
365 days on the face amount at maturity (or the principal amount in the
case of a BA Equivalent Loan) of such Bankers’ Acceptance for the period from
and including the date of acceptance (or advance in the case of a BA Equivalent
Loan) of such Bankers’ Acceptance for the period from and including the date of
acceptance to but excluding the maturity date of such Bankers’ Acceptance.

 

(c)           If all or a portion of (i) the
principal amount of any Loan or (ii) any interest payable thereon shall
not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per annum that is
(x) in the case of overdue principal, the rate that would otherwise be
applicable thereto plus 2% or (y) in the case of any overdue
interest, to the extent permitted by applicable law, the rate described in Section 2.8(a) plus
2% from and including the date of such non-payment to but excluding the date on
which such amount is paid in full (after as well as before judgment).

 

(d)           Interest on each Loan shall accrue
from and including the date of any Borrowing to but excluding the date of any
repayment thereof and shall be payable (i) in respect of each Canadian
Prime Loan, Cdn ABR Loan and ABR Loan, quarterly in arrears on the last day of
each March, June, September and December, (ii) in respect of each
Eurodollar Loan, on the last day of each Interest Period applicable thereto
and, in the case of an Interest Period in excess of three months, on each date
occurring at three-month intervals after the first day of such Interest Period,
(iii) in respect of each Loan (except, other than in the case of
prepayments, any Canadian Prime Loan, Cdn ABR Loan  or ABR Loan), on any prepayment (on the
amount prepaid), at maturity (whether by acceleration or otherwise) and, after
such maturity, on demand.

 

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

 

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

 

2.9.          Interest Periods.

 

(a)           At the time the Borrower or the Canadian
Borrower, as applicable, gives a Notice of Borrowing or Notice of Conversion or
Continuation in respect of the making of, or conversion into or continuation
as, a Borrowing of Eurodollar Loans (in the case of the initial Interest Period
applicable thereto) or prior to 10:00 a.m. (New York time) on the third
Business Day prior to the expiration of an Interest Period applicable to a
Borrowing of Eurodollar Loans, the Borrower or the Canadian Borrower, as
applicable, shall have the right to elect by giving the Administrative Agent or
the Canadian Administrative Agent (in the case of the Canadian 

 

54

 

Borrower) written notice (or
telephonic notice promptly confirmed in writing) the Interest Period applicable
to such Borrowing, which Interest Period shall, at the option of the Borrower
or the Canadian Borrower, as applicable, be a one, two, three, six or (in the
case of Revolving Credit Loans, if available to all the Lenders making such
loans as determined by such Lenders in good faith based on prevailing market
conditions) a nine or twelve month period, provided that the initial Interest
Period may be for a period less than one month if agreed upon by the Borrower
(on its own behalf and on behalf of the Canadian Borrower) and the Agents.  Notwithstanding anything to the contrary
contained above:

 

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

 

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

 

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

 

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

 

(b)           At the time the Canadian Borrower
gives a Notice of Borrowing or Notice of Continuation in respect of the making
of, or continuation into or continuation as, a Borrowing of BA Loans prior to
12:00 noon. (New York time) on the third Business Day prior to the applicable
date of making or continuation of such BA Loans, the Canadian Borrower shall
have the right to elect by giving the Canadian Administrative Agent written
notice (or telephonic notice promptly confirmed in writing) of the Interest
Period applicable to such Borrowing, which Interest Period shall, at the option
of the Canadian Borrower, be one, two, three or six months (or in the case of
Canadian Revolving Credit Loans, if available to all the Lenders making such
loans as determined by such Lenders in good faith based on prevailing market
conditions), a nine or twelve month period as well; provided that, in each
case, the initial Interest Period for BA Loans advanced on the Closing Date may
be for a period less than one month if agreed upon by the Canadian Borrower and
the Canadian Administrative Agent. 
Notwithstanding anything to the contrary contained above:

 

55

 

(i)                                           the initial
Interest Period for any Borrowing of BA Loans shall commence on the date of
such Borrowing (including the date of any continuation from a Borrowing of
Canadian Prime Loans) and each Interest Period occurring thereafter in respect
of such Borrowing shall commence on the day on which the next preceding
Interest Period expires;

 

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

 

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

 

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

 

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

 

(i)            on any date for
determining the Eurodollar Rate for any Interest Period that (x) deposits
in the principal amounts of the Loans comprising such Eurodollar Borrowing are
not generally available in the relevant market or (y) by reason of any
changes arising on or after the Closing Date affecting the interbank Eurodollar
market, adequate and fair means do not exist for ascertaining the applicable
interest rate on the basis provided for in the definition of Eurodollar Rate;
or

 

(ii)           at any time, that
such Lender shall incur increased costs or reductions in the amounts received
or receivable hereunder with respect to any Eurodollar Loans (other than any such
increase or reduction attributable to taxes) because of (x) any change
since the date hereof in any applicable law, governmental rule, regulation,
guideline or order (or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule, regulation,
guideline or order), such as, for example, without limitation, a change in
official reserve requirements, and/or (y) other circumstances affecting
the interbank Eurodollar market or the position of such Lender in such market;
or

 

(iii)          at any time, that
the making or continuance of any Eurodollar Loan has become unlawful by
compliance by such Lender in good faith with any law, governmental rule,
regulation, guideline or order (or would conflict with any such governmental
rule, regulation, guideline or order not having the force of law even though
the failure to comply therewith would not be unlawful), or has become
impracticable as a 

 

56

 

result
of a contingency occurring after the date hereof that materially and adversely
affects the interbank Eurodollar market;

 

then, and in any such event,
such Lender (or the Administrative Agent, in the case of clause (i) above)
shall within a reasonable time thereafter give notice (if by telephone,
confirmed in writing) to the Borrower (on its own behalf and on behalf of the
Canadian Borrower) and to the Administrative Agent of such determination (which
notice the Administrative Agent shall promptly transmit to each of the other
Lenders).  Thereafter (x) in the
case of clause (i) above, Eurodollar Term Loans and Eurodollar
Revolving Credit Loans shall no longer be available until such time as the
Administrative Agent notifies the Borrower (on its own behalf and on behalf of
the Canadian Borrower) and the Lenders that the circumstances giving rise to
such notice by the Administrative Agent no longer exist (which notice the
Administrative Agent agrees to give at such time when such circumstances no
longer exist), and any Notice of Borrowing or Notice of Conversion given by the
Borrower or the Canadian Borrower with respect to Eurodollar Term Loans or
Eurodollar Revolving Credit Loans that have not yet been incurred shall be
deemed rescinded by the Borrower or the Canadian Borrower (y) in the case
of clause (ii) above, the Borrower or the Canadian Borrower, as the
case may be, shall pay to such Lender, promptly after receipt of written demand
therefor such additional amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
reasonable discretion shall determine) as shall be required to compensate such
Lender for such increased costs or reductions in amounts receivable hereunder
(it being agreed that a written notice as to the additional amounts owed to
such Lender, showing in reasonable detail the basis for the calculation
thereof, submitted to the Borrower or the Canadian Borrower, as the case may
be, by such Lender shall, absent clearly demonstrable error, be final and
conclusive and binding upon all parties hereto) and (z) in the case of
clause (iii) above, the Borrower or the Canadian Borrower, as the
case may be, shall take one of the actions specified in Section 2.10(b) as
promptly as possible and, in any event, within the time period required by law.

 

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

 

(c)           In the event that the Canadian
Administrative Agent shall have reasonably determined (which determination
shall, absent clearly demonstrable error, be final and conclusive and binding
upon all parties hereto) that there does not exist a normal market in Canada
for the purchase and sale of bankers’ acceptances, then, and in any such event,
the Administrative Agent shall within a reasonable time thereafter give notice
(if by telephone confirmed in writing) to the Borrower, the Canadian Borrower
and each of the other Lenders of 

 

57

 

such determination.  Thereafter BA Loans shall no longer be
available until such time as the Administrative Agent notifies the Borrower,
the Canadian Borrower and the Lenders that the circumstances giving rise to
such notice by the Administrative Agent no longer exist (which notice the
Administrative Agent agrees to give at such time when such circumstances no
longer exist), and any Notice of Borrowing or Notice of Continuation given by
the Borrower with respect to BA Loans that have not yet been incurred shall be
deemed rescinded by the Borrower.  Any
maturing BA Loans shall thereafter, and until contrary notice is provided by
the Administrative Agent, be continued as a Canadian Prime Loan.

 

(d)           If, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, the National Association
of Insurance Commissioners, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by a Lender or its
parent with any request or directive made or adopted after the date hereof
regarding capital adequacy (whether or not having the force of law) of any such
authority, association, central bank or comparable agency, has or would have
the effect of reducing the rate of return on such Lender’s or its parent’s or
its Related Affiliate’s capital or assets as a consequence of such Lender’s
commitments or obligations hereunder to a level below that which such Lender or
its parent or its Related Affiliate could have achieved but for such adoption,
effectiveness, change or compliance (taking into consideration such Lender’s or
its parent’s policies with respect to capital adequacy), then from time to
time, promptly after demand by such Lender (with a copy to the Administrative
Agent), the Borrower or the Canadian Borrower, as the case may be, shall pay to
such Lender such additional amount or amounts as will compensate such Lender or
its parent for such reduction, it being understood and agreed, however, that a
Lender shall not be entitled to such compensation as a result of such Lender’s
compliance with, or pursuant to any request or directive to comply with, any
such law, rule or regulation as in effect on the date hereof.  Each Lender, upon determining in good faith
that any additional amounts will be payable pursuant to this Section 2.10(d),
will give prompt written notice thereof to the Borrower (on its own behalf and
on behalf of the Canadian Borrower) which notice shall set forth in reasonable
detail the basis of the calculation of such additional amounts, although the
failure to give any such notice shall not, subject to Section 2.13,
release or diminish any of the Borrower’s or the Canadian Borrower’s, as the
case may be, obligations to pay additional amounts pursuant to this Section 2.10(d) upon
receipt of such notice.

 

(e)           Notwithstanding the foregoing, in the
case of Canadian Revolving Credit Loans affected by the circumstances described
in Section 2.10(a)(i), as promptly as practicable but in no event later
than three Business Days after the giving of the required notice by the
Canadian Administrative Agent with respect to such circumstances, the
Administrative Agent (in consultation with the Lenders) shall negotiate with
the Borrower in good faith in order to ascertain whether a substitute interest
rate (a “Substitute Rate”) may be agreed upon for the maintaining of
existing Canadian Revolving Credit Loans. If a Substitute Rate is agreed upon
by the Borrower and all the Lenders, such Substitute Rate shall apply.  If a Substitute Rate is not so agreed upon by
the Borrower and all the Lenders within such time, each Lender’s Canadian
Revolving Credit Loans shall thereafter bear interest at a rate equal to the
sum of (i) the rate certified by such Lender to be its costs of funds (from
such sources as it may reasonably select 

 

58

 

out of those sources then
available to it) for such Canadian Revolving Credit Loans, plus (ii) the
Applicable Eurodollar Margin.

 

2.11.        Compensation.  If (a) any payment of principal of any
BA Loan or Eurodollar Loan is made by the Borrower or the Canadian Borrower, as
the case may be, to or for the account of a Lender other than on the last day
of the Interest Period for such BA Loan or Eurodollar Loan as a result of a
payment or conversion pursuant to Section 2.5, 2.6, 2.10, 5.1, 5.2 or
14.7, as a result of acceleration of the maturity of the Loans pursuant to Section 11
or for any other reason, (b) any Borrowing of BA Loan or Eurodollar Loans
is not made as a result of a withdrawn Notice of Borrowing, (c) any ABR
Loan is not converted into a Eurodollar Loan as a result of a withdrawn Notice
of Conversion or Continuation, (d) any Canadian Prime Loan is not
continued into a BA Loan as a result of a withdrawn Notice of Continuation, (e) any
BA Loan or Eurodollar Loan is not continued as a BA Loan or Eurodollar Loan, as
the case may be, as a result of a withdrawn Notice of Conversion or
Continuation or (f) any prepayment of principal of any BA Loan or
Eurodollar Loan is not made as a result of a withdrawn notice of prepayment
pursuant to Section 5.1 or 5.2, the Borrower or the Canadian Borrower, as
the case may be, shall, after receipt of a written request by such Lender
(which request shall set forth in reasonable detail the basis for requesting
such amount), pay to the Administrative Agent for the account of such Lender
any amounts required to compensate such Lender for any additional losses, costs
or expenses that such Lender may reasonably incur as a result of such payment,
failure to convert, failure to continue or failure to prepay, including any
loss, cost or expense (excluding loss of anticipated profits) actually incurred
by reason of the liquidation or reemployment of deposits or other funds
acquired by any Lender to fund or maintain such BA Loan or Eurodollar Loan.

 

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

 

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

 

59

 

2.14.        Bankers’ Acceptances

 

(a)           The Canadian Administrative Agent,
promptly following receipt of a Notice of Borrowing or Notice of Continuation,
requesting BA Loans, shall advise each applicable Canadian Lender of the face
or principal amount and term of each BA Loan to be accepted (and purchased) or
advanced by it.  The aggregate face or
principal amount of BA Loans to be accepted or advanced by a Canadian Lender
shall be determined by the Canadian Administrative Agent by reference to that
Canadian Lender’s applicable pro rata portion of the issue or advance of BA
Loans, except that the aggregate face amount of Bankers’ Acceptances to be
accepted by the applicable Canadian Lenders shall be increased or reduced by
the Canadian Administrative Agent in its sole discretion as may be necessary to
ensure that the face amount of the Bankers’ Acceptance to be accepted by each
applicable Canadian Lender would be C$100,000 or a whole multiple thereof.  For greater certainty, the foregoing
C$100,000 minimum face amount of Bankers’ Acceptances for each Lender shall not
apply to BA Equivalent Loans.

 

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

 

(c)           The Canadian Borrower shall sell and
each Canadian Lender shall purchase the Bankers’ Acceptance accepted by it at
the applicable BA Discount Rate.  Subject
to clause (d) below, each Canadian Lender shall provide the Canadian
Administrative Agent, for the account of the Canadian Borrower, the BA Discount
Proceeds less the Applicable Stamping Fee payable by the Canadian Borrower with
respect to the Bankers’ Acceptance.

 

(d)           In the event the Canadian Borrower
requests a continuation of BA Loans for a further Interest Period, or requests
conversion from Canadian Prime Loans into BA Loans in accordance with Section 2.6,
the Canadian Administrative Agent shall make arrangements satisfactory to it to
ensure the BA Discount Proceeds from the replacement BA Loans are applied to
repay the face amount of the maturing BA Loans or the principal amount of such
loans to be converted (the “Maturing Amount”) and the Canadian Borrower
should concurrently pay to the Canadian Administrative Agent any positive
difference between the Maturing Amount and such BA Discount Proceeds.

 

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

 

(f)            In order to facilitate the issuance
of Bankers’ Acceptances pursuant to this Agreement, the Canadian Borrower
hereby authorizes each of the Canadian Lenders, and appoints each of the
Canadian Lenders as the Canadian Borrower’s attorney, to complete, sign and
endorse drafts or depository bills (as defined in the Depository Bills and Notes Act (Canada)
(each such executed draft or bill being herein referred to as a “Draft”)
on its behalf in handwritten form or by facsimile or mechanical signature or
otherwise in accordance with the applicable Notice of Borrowing or Notice of
Continuation and, once so completed, signed and endorsed to accept them as
Bankers’ Acceptances under this Agreement and then if applicable, purchase,
discount or negotiate such Bankers’ Acceptances in accordance with the
provisions of this Agreement.  Drafts so
completed, signed, endorsed and negotiated on behalf of the Canadian 

 

60

 

Borrower by a Canadian
Lender shall bind the Canadian Borrower as fully and effectively as if so
performed by an Authorized Officer of the Canadian Borrower.  Each draft of a Bankers’ Acceptance
completed, signed or endorsed by a Canadian Lender shall mature on the last day
of the term thereof.  All Bankers’
Acceptances to be accepted by a particular Canadian Lender shall, at the option
of such Canadian Lender, be issued in the form of depository bills made payable
originally to and deposited with The Depository for Securities Limited pursuant
to the Depository Bills and Notes Act
(Canada).

 

(g)           Any Drafts to be used for Bankers’
Acceptances which are held by a Canadian Lender shall be held in safekeeping
with the same degree of care as if they were such Canadian Lender’s own
property being kept at the place at which they are to be held.  The Canadian Borrower may, by written notice
to the Canadian Administrative Agent, designate persons other than Authorized
Officers authorized to give the Canadian Administrative Agent instructions
regarding the manner in which Drafts are to be completed and the times at which
they are to be issued; provided however that receipt by the Canadian
Administrative Agent of a Notice of Borrowing or Notice of Continuation
requesting an advance or continuation into, Bankers’ Acceptances shall be
deemed to be sufficient authority from Authorized Officers or such designated
persons for each of the Canadian Lenders to complete, and issue drafts in
accordance with such notice.  None of the
Canadian Administrative Agent or the Canadian Lenders nor any of their
respective directors, officers, employees or representatives shall be liable
for any action taken or omitted to be taken by any of them under this Section 2.14(g) except
for their own respective gross negligence or willful misconduct as determined
by a final judgment of a court of competent jurisdiction.

 

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

 

(i)            Whenever the Canadian Borrower
requests a Loan under this Agreement by way of Bankers’ Acceptances, each
Non-Acceptance Lender shall, in lieu of accepting a Bankers’ Acceptance, make a
BA Equivalent Loan by way of Discount Note in an amount equal to the
Non-Acceptance Lender’s pro rata
portion of the BA Loan.  All terms of
this Agreement applicable to Bankers’ Acceptances shall apply equally to
Discount Notes evidencing BA Equivalent Loans with such changes as may in the
context be necessary.  For greater
certainty:

 

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

 

61

 

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

 

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

 

2.15.        Incremental
Facilities

 

Borrower may by written
notice to Syndication Agent elect to request (A) prior to the Revolving
Credit Commitment Maturity Date, an increase to the existing US Revolving
Credit Commitments (any such increase, the “New Revolving Loan Commitments”)
and/or (B) the establishment of one or more new term loan commitments (the
“New Term Loan Commitments”), by an amount not in excess of $100,000,000
in the aggregate and not less than $25,000,000 individually (or such lesser
amount which shall be approved by Administrative Agent and Syndication Agent or
such lesser amount that shall constitute the difference between $100,000,000
and all such New Revolving Loan Commitments and New Term Loan Commitments
obtained prior to such date), and integral multiples of $5,000,000 in excess of
that amount.  Each such notice shall
specify (A) the date (each, an “Increased Amount Date”) on which
Borrower proposes that the New Revolving Loan Commitments or New Term Loan
Commitments, as applicable, shall be effective, which shall be a date not less
than 10 Business Days after the date on which such notice is delivered to
Syndication Agent and (B) the identity of each Lender or other Person that
is an eligible assignee pursuant to Section 14.6(b)  (each, a “New
Revolving Loan Lender” or “New Term Loan Lender”, as applicable) to
whom Borrower proposes any portion of such New Revolving Loan Commitments or
New Term Loan Commitments, as applicable, be allocated and the amounts of such
allocations; provided that Borrower shall first approach the Lenders to
provide all of the New Revolving Loan Commitments or New Term Loan Commitments
prior to approaching any other Person that is an eligible assignee pursuant to Section 14.6(b);
provided further that any Lender approached to provide all
or a portion of the New Revolving Loan Commitments or New Term Loan Commitments
may elect or decline, in its sole discretion, to provide a New Revolving Loan
Commitment or a New Term Loan Commitment. 
Such New Revolving Loan Commitments or New Term Loan Commitments shall
become effective, as of such Increased Amount Date; provided that (1) no
Default or Event of Default shall exist on such Increased Amount Date before or
after giving effect to such New Revolving Loan Commitments or New Term Loan
Commitments, as applicable; (2) both before and after giving effect to the
making of any Series of New Term Loans, each of the conditions set forth
in Section 7 shall be satisfied; (3) Borrower and its Subsidiaries
shall be in pro forma compliance with each of the covenants set forth in
Sections 10.9 and 10.10 as of the last day of the most recently ended fiscal
quarter after giving effect to such New Revolving Loan Commitments or New Term
Loan Commitments, as applicable; (4) the New Revolving Loan Commitments or
New Term Loan Commitments, as applicable, shall be effected pursuant to one or
more Joinder Agreements executed and delivered by Borrower, Syndication Agent
and Administrative Agent, and each of which shall be recorded in the Register
and shall be subject to the requirements set forth in Section 5.4(b); (5) Borrower
shall make any payments required pursuant to Section 2.11 in connection
with the New Revolving Loan Commitments or New Term Loan Commitments, as
applicable; and (6) Borrower shall deliver or cause to be delivered any
legal opinions or other documents reasonably 

 

62

 

requested by Administrative
Agent in connection with any such transaction. Any New Term Loans made on an
Increased Amount Date shall be designated, a separate series (a “Series”)
of New Term Loans for all purposes of this Agreement.

 

On any Increased Amount Date
on which New Revolving Loan Commitments are effected, subject to the
satisfaction of the foregoing terms and conditions, (a) each of the
Lenders with US Revolving Credit Commitments shall assign to each of the New
Revolving Loan Lenders, and each of the New Revolving Loan Lenders shall
purchase from each of the Lenders with US Revolving Credit Commitments, at the
principal amount thereof (together with accrued interest), such interests in
the US Revolving Credit Loans outstanding on such Increased Amount Date as
shall be necessary in order that, after giving effect to all such assignments
and purchases, such US Revolving Credit Loans will be held by existing Lenders
with US Revolving Credit Loans and New Revolving Loan Lenders ratably in accordance
with their US Revolving Credit Commitments after giving effect to the addition
of such New Revolving Loan Commitments to the US Revolving Credit Commitments, (b) each
New Revolving Loan Commitment shall be deemed for all purposes a US Revolving
Credit Commitment and each Loan made thereunder (a “New Revolving Loan”)
shall be deemed, for all purposes, a US Revolving Credit Loan and (c) each
New Revolving Loan Lender shall become a Lender with respect to the New
Revolving Loan Commitment and all matters relating thereto.

 

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

 

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

 

The terms and provisions of
the New Term Loans and New Term Loan Commitments of any Series shall be,
except as otherwise set forth herein or in the Joinder Agreement, identical to
the Term Loans to the extent they are secured by the Collateral on a pari passu basis with the Term Loans.  The terms and provisions of the New Revolving
Loans shall be identical to the US Revolving Credit Loans.  In any event (i) the weighted average
life to maturity of all New Term Loans of any Series shall be no shorter
than the weighted average life to maturity of the Revolving Credit Loans and
the Terms Loans, (ii) the applicable New Term Loan Maturity Date of each Series shall
be no shorter than the final maturity of the Revolving Credit Loans and the
Term Loans, (iii) the rate of interest applicable to the New Term Loans of
each Series shall be determined by Borrower and the applicable new Lenders
and shall be set forth in each applicable Joinder Agreement; provided however
that the interest rate margin applicable to the New Term Loans shall not be
greater than the highest interest rate that may, 

 

63

 

under any circumstances
(including, without limitation, any issuance at a discount or as a result of
the payment of any fees), be payable with respect to the Term Loans plus
0.25% per annum unless the interest rate margin with respect to the Term Loans
is increased so as to be equal to, or be 0.25% per annum lower than, the interest
rate margin applicable to the New Term Loans, provided that such
limitation shall not apply to the extent such New Term Loans are junior in
collateral rights to the Term Loans, in which case customary terms shall apply
consistent with the other provisions of this Agreement and the then prevailing
market conditions.  Each Joinder
Agreement may, without the consent of any other Lenders, effect such amendments
to this Agreement and the other Credit Documents as may be necessary or
appropriate, in the opinion of the Syndication Agent and Administrative Agent,
to effect the provision of this Section 2.15.

 

SECTION 3.                                Letters of Credit

 

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

 

(b)           Notwithstanding the foregoing, (i) no
US Letter of Credit shall be issued the Stated Amount of which, when added to
the US Letter of Credit Outstanding at such time, would exceed the US Letter of
Credit Commitment then in effect; (ii) no US Letter of Credit shall be
issued the Stated Amount of which would cause the aggregate amount of the
Lender’s US Revolving Credit Exposures at such time to exceed the US Revolving
Credit Commitment then in effect; (iii) no Canadian Letter of Credit shall
be issued the Stated Amount of which when added to Canadian Letter of Credit
Outstanding would exceed the Canadian Letter of Credit Commitment then in
effect, (iv) no Canadian Letter of Credit shall be issued the Stated
Amount of which would cause the aggregate amount of the Canadian Lender’s Revolving
Credit Exposure at such time to exceed the Canadian Revolving Credit
Commitment, (v) each Letter of Credit shall have an expiration date
occurring no later than one year after the date of issuance thereof, unless
otherwise agreed upon by the Administrative Agent or the Canadian
Administrative Agent, as applicable, and the Letter of Credit Issuer, provided
that in no event shall such expiration date occur later than the
L/C Maturity Date; (vi) each US Letter of Credit shall be denominated
in Dollars; (vii) each Canadian Letter of Credit shall be denominated in
US Dollars or Canadian Dollars, (viii) no Letter of Credit shall be issued
if it would be illegal under any applicable law for the beneficiary of the
Letter of Credit to have a Letter of Credit issued in its favor; (ix) no
Letter of Credit shall be issued by a Letter of Credit Issuer after it has
received a written notice from the Borrower or the Canadian Borrower or any
Lender stating that a Default or Event of Default has occurred and is continuing
until such time as the Letter of Credit Issuer shall have received a written
notice of (x) rescission of such notice from the party or parties
originally delivering such notice or (y) the waiver of such Default or
Event of Default in accordance with the provisions of Section 14.1; and (x) any
Letter of Credit issued for the

 

64

 

account of the Canadian
Borrower shall be made by a Canadian Lender described in clause (a) of
that definition or a permitted assigned of such Canadian Lender that is a
Canadian Resident.  Notwithstanding
anything herein to the contrary, the issuance of US Letters of Credit for the
account of the Borrower shall be deemed a utilization of the US Revolving
Credit Commitments allocated to the Borrower, and the issuance of the Canadian
Letters of Credit for the account of the Canadian Borrower shall be deemed a
utilization of the Canadian Revolving Credit Commitments.

 

(c)           Upon at least one Business Day’s
prior written notice (or telephonic notice promptly confirmed in writing) to
the Administrative Agent and the US Letter of Credit Issuer (which notice the
Administrative Agent shall promptly transmit to each of the applicable
Lenders), the Borrower shall have the right, on any day, permanently to
terminate or reduce the US Letter of Credit Commitment in whole or in part, provided
that, after giving effect to such termination or reduction, the US Letter of
Credit Outstanding shall not exceed the US Letter of Credit Commitment.

 

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

 

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

 

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

 

3.3.          Letter of Credit Participations.  (a)    
Immediately upon the issuance by the US Letter of Credit Issuer of any
US Letter of Credit, the US Letter of Credit Issuer shall be deemed to have
sold and transferred to each other Lender that has a US Revolving Credit
Commitment (each such other Lender, in its capacity under this Section 3.3,
an “US L/C Participant”), and each such US L/C Participant shall be
deemed irrevocably and unconditionally to have purchased and received from the
US Letter of Credit Issuer, without recourse or warranty, an undivided interest
and participation (each an “US L/C Participation”), to the extent of
such US L/C Participant’s US Revolving Credit Commitment Percentage in such
Letter of Credit, each substitute letter of credit, each drawing made
thereunder and the obligations of the 

 

65

 

Borrower under this
Agreement with respect thereto, and any security therefor or guaranty
pertaining thereto (although Letter of Credit Fees will be paid directly to the
Administrative Agent for the ratable account of the US L/C Participants as
provided in Section 4.1(b) and the US L/C Participants shall have no
right to receive any portion of any Fronting Fees).

 

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

 

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

 

(d)           In determining whether to pay under
any Letter of Credit, the relevant Letter of Credit Issuer shall have no
obligation relative to the L/C Participants other than to confirm that any
documents required to be delivered under such Letter of Credit have been
delivered and that they appear to comply on their face with the requirements of
such Letter of Credit.  Any action taken
or omitted to be taken by the relevant Letter of Credit Issuer under or in
connection with any Letter of Credit issued by it, if taken or omitted in the
absence of gross negligence or willful misconduct, shall not create for the
Letter of Credit Issuer any resulting liability.

 

(e)           In the event that the Letter of
Credit Issuer makes any payment under any Letter of Credit issued by it and the
Borrower or the Canadian Borrower, as applicable, shall not have repaid such
amount in full to the respective Letter of Credit Issuer pursuant to Section 3.4(a),
the Letter of Credit Issuer shall promptly notify the Administrative Agent or
the Canadian Administrative Agent, as applicable, and each applicable L/C
Participant of such failure, and each such L/C Participant shall promptly and
unconditionally pay to the Administrative Agent or the Canadian Administrative
Agent, as applicable,, for the account of the Letter of Credit Issuer, the
amount of such L/C Participant’s Revolving Credit Commitment Percentage of such
unreimbursed payment in Dollars and in immediately available funds; provided, however,
that no L/C Participant shall be obligated to pay to the Administrative Agent
or the Canadian Administrative Agent, as applicable, for the account of the
respective Letter of Credit Issuer its Revolving Credit Commitment Percentage
of such unreimbursed amount arising from any wrongful payment made by the
Letter of Credit Issuer under a Letter of Credit as a result of acts or
omissions constituting willful misconduct or gross negligence on the part of
the Letter of 

 

66

 

Credit Issuer.  If the Letter of Credit Issuer so notifies,
prior to 11:00 a.m. (New York time) on any Business Day, any L/C
Participant required to fund a payment under a Letter of Credit, such L/C
Participant shall make available to the Administrative Agent or the Canadian
Administrative Agent, as applicable, for the account of the Letter of Credit
Issuer such L/C Participant’s Revolving Credit Commitment Percentage of the
amount of such payment on such Business Day in immediately available
funds.  If and to the extent such L/C
Participant shall not have so made its Revolving Credit Commitment Percentage
of the amount of such payment available to the Administrative Agent or the
Canadian Administrative Agent, as applicable, for the account of the Letter of
Credit Issuer, such L/C Participant agrees to pay to the Administrative Agent
or the Canadian Administrative Agent, as applicable, for the account of the
Letter of Credit Issuer, forthwith on demand, such amount, together with
interest thereon for each day from such date until the date such amount is paid
to the Administrative Agent or the Canadian Administrative Agent, as
applicable, for the account of the Letter of Credit Issuer at the Federal Funds
Effective Rate.  The failure of any L/C
Participant to make available to the Administrative Agent or the Canadian
Administrative Agent, as applicable, for the account of the Letter of Credit
Issuer its Revolving Credit Commitment Percentage of any payment under any
Letter of Credit shall not relieve any other L/C Participant of its obligation
hereunder to make available to the Administrative Agent or the Canadian
Administrative Agent, as applicable, for the account of the Letter of Credit
Issuer its Revolving Credit Commitment Percentage of any payment under such
Letter of Credit on the date required, as specified above, but no L/C
Participant shall be responsible for the failure of any other L/C Participant
to make available to the Administrative Agent or the Canadian Administrative
Agent, as applicable, such other L/C Participant’s Revolving Credit Commitment
Percentage of any such payment.

 

(f)            Whenever the Letter of Credit Issuer
receives a payment in respect of an unpaid reimbursement obligation as to which
the Administrative Agent has received for the account of the Letter of Credit
Issuer any payments from the L/C Participants pursuant to paragraph (c) above,
the Letter of Credit Issuer shall pay to the Administrative Agent and the
Administrative Agent shall promptly pay to each L/C Participant that has paid
its Revolving Credit Commitment Percentage of such reimbursement obligation, in
Dollars and in immediately available funds, an amount equal to such L/C
Participant’s share (based upon the proportionate aggregate amount originally
funded by such L/C Participant to the aggregate amount funded by all L/C
Participants) of the principal amount of such reimbursement obligation and
interest thereon accruing after the purchase of the respective L/C Participations.

 

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

 

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

 

(ii)           the existence of
any claim, set-off, defense or other right that the Borrower may have at any
time against a beneficiary named in a Letter of Credit, any 

 

67

 

transferee
of any Letter of Credit (or any Person for whom any such transferee may be
acting), the Administrative Agent, the Canadian Administrative Agent the Letter
of Credit Issuer, any Lender or other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated herein or any
unrelated transactions (including any underlying transaction between the
Borrower and the beneficiary named in any such Letter of Credit);

 

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

 

(iv)          the surrender or impairment
of any security for the performance or observance of any of the terms of any of
the Credit Documents; or

 

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

 

provided, however,
that no L/C Participant shall be obligated to pay to the Administrative Agent
or the Canadian Administrative Agent for the account of the Letter of Credit
Issuer its US Revolving Credit Commitment Percentage or Canadian Revolving
Credit Commitment Percentage of any unreimbursed amount arising from any
wrongful payment made by the Letter of Credit Issuer under a Letter of Credit
as a result of acts or omissions constituting willful misconduct or gross
negligence on the part of the Letter of Credit Issuer.

 

3.4.          Agreement to Repay Letter of Credit
Drawings.  (a)     The Borrower and the Canadian Borrower
hereby agree to reimburse the relevant Letter of Credit Issuer, by making
payment in the currency in which the relevant Letter of Credit was denominated
to the Administrative Agent (in the case of reimbursement made by the Borrower)
or the Canadian Administrative Agent (in the case of reimbursement made by the
Canadian Borrower) in immediately available funds for any payment or
disbursement made by the Letter of Credit Issuer under any Letter of Credit
(each such amount so paid until reimbursed, an “Unpaid Drawing”)
immediately after, and in any event on the date of, such payment, with interest
on the amount so paid or disbursed by the Letter of Credit Issuer, to the
extent not reimbursed prior to 5:00 p.m. (New York time) on the date of
such payment or disbursement, from and including the date paid or disbursed to
but excluding the date the Letter of Credit Issuer is reimbursed therefor at a
rate per annum that shall at all times be the Applicable ABR Margin plus the
ABR (or the Cdn ABR or Canadian Prime Rate, as applicable, in the case of the
Canadian Letter of Credit Issuer) as in effect from time to time, provided
that, notwithstanding anything contained in this Agreement to the contrary, (i) unless
the Borrower (or the Canadian Borrower) shall have notified the Administrative
Agent (or the Canadian Administrative Agent) and the relevant Letter of Credit
Issuer prior to 10:00 a.m. (New York time) on the date of such drawing
that the Borrower or the Canadian Borrower, as the case may be, intends to
reimburse the relevant Letter of Credit Issuer for the amount of such drawing
with funds other than the proceeds of Loans, the Borrower or the Canadian
Borrower, as the case may, be shall be deemed to have given a Notice of
Borrowing requesting that (A) with respect to US Letters of Credit, that
the Lenders with US Revolving Credit Commitments make US Revolving Credit Loans
(which shall be ABR Loans) and (B) with respect to Canadian Letters of
Credit, the Lenders with Canadian Revolving Credit Commitment make Canadian
Revolving Credit Loans (in the currency in which the Canadian 

 

68

 

Letter of Credit is
denominated which shall initially be Cdn ABR Loans or Canadian Prime Rate
Loans, as applicable) on the date on which such drawing is honored in an amount
equal to the amount of such drawing and (ii) the Administrative Agent or
the Canadian Administrative Agent shall promptly notify each relevant L/C
Participant of such drawing and the amount of its Revolving Credit Loan to be
made in respect thereof, and each L/C Participant shall be irrevocably
obligated to make a Revolving Credit Loan to the Borrower or the Canadian
Borrower, as applicable, in the manner deemed to have been requested in the
amount of its Revolving Credit Commitment Percentage of the applicable Unpaid
Drawing by 12:00 noon (New York time) on such Business Day by making the amount
of such Revolving Credit Loan available to the Administrative Agent (or the
Canadian Administrative Agent, as applicable). 
Such Revolving Credit Loans shall be made without regard to the Minimum
Borrowing Amount.  The Administrative
Agent (or the Canadian Administrative Agent, as applicable) shall use the
proceeds of such Revolving Credit Loans solely for purpose of reimbursing the
Letter of Credit Issuer for the related Unpaid Drawing.

 

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

 

3.5.          Increased Costs.  If after the date hereof, the adoption of any
applicable law, rule or regulation, or any change therein, or any change
in the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or actual compliance by the Letter of Credit Issuer or
any L/C Participant with any request or directive made or adopted after the
date hereof (whether or not having the force of law), by any such authority, central
bank or comparable agency shall either (a) impose, modify or make
applicable any reserve, deposit, capital adequacy or similar requirement
against letters of credit issued by the Letter of Credit Issuer, or any L/C
Participant’s L/C Participation therein, or (b) impose on the Letter of
Credit Issuer or any L/C Participant any other conditions affecting its
obligations under this Agreement in respect of Letters of Credit or L/C
Participations therein or any Letter of Credit or such L/C Participant’s L/C
Participation therein, and the result of any of the foregoing is to increase
the cost to the Letter of Credit Issuer or such L/C Participant of issuing,
maintaining or participating in any Letter of Credit, or to reduce the amount
of any sum received or receivable by the Letter of Credit Issuer or such L/C
Participant hereunder (other than any such increase or reduction attributable
to taxes) in respect of Letters of Credit or L/C Participations therein, then,
promptly after receipt of written demand to the Borrower by the Letter of
Credit Issuer or such L/C Participant, as the case may be, (a copy of which
notice shall be sent by the Letter of Credit 

 

69

 

Issuer or such L/C
Participant to the Administrative Agent (with respect to Letter of Credit
issued on account of the Borrower) and to the Canadian Administrative Agent
with respect to Letters of Credit issued on account of the Canadian Borrower)),
the Borrower or the Canadian Borrower, as applicable, shall pay to the Letter
of Credit Issuer or such L/C Participant such additional amount or amounts as
will compensate the Letter of Credit Issuer or such L/C Participant for such
increased cost or reduction, it being understood and agreed, however, that the
Letter of Credit Issuer or a L/C Participant shall not be entitled to such
compensation as a result of such Person’s compliance with, or pursuant to any
request or directive to comply with, any such law, rule or regulation as
in effect on the date hereof.  A
certificate submitted to the Borrower or the Canadian Borrower, as applicable,
by the relevant Letter of Credit Issuer or a L/C Participant, as the case
may be, (a copy of which certificate shall be sent by the Letter of Credit
Issuer or such L/C Participant to the Administrative Agent (with respect
to Letters of Credit issued on account of the Borrower) and to the Canadian
Administrative Agent with respect to Letters of Credit issued on account of the
Canadian Borrower)) setting forth in reasonable detail the basis for the
determination of such additional amount or amounts necessary to compensate the
Letter of Credit Issuer or such L/C Participant as aforesaid shall be
conclusive and binding on the Borrower or the Canadian Borrower, as applicable,
absent clearly demonstrable error.

 

3.6.          Successor Letter of Credit Issuer.  A Letter of Credit Issuer may resign as
Letter of Credit Issuer upon 60 days’ prior written notice to the
Administrative Agent, the Canadian Administrative Agent, the Lenders and the
Borrower.  If the US Letter of Credit
Issuer shall resign as US Letter of Credit Issuer under this Agreement, then
the Borrower shall appoint from among the Lenders with US Revolving Credit
Commitments a successor issuer of US Letters of Credit, whereupon such
successor issuer shall succeed to the rights, powers and duties of the US
Letter of Credit Issuer, and the term “US Letter of Credit Issuer” shall mean
such successor issuer effective upon such appointment.  At the time such resignation shall become
effective, the Borrower shall pay to the resigning US Letter of Credit Issuer
all accrued and unpaid fees pursuant to Sections 4.1(c) and (e).  The acceptance of any appointment as the US
Letter of Credit Issuer hereunder by a successor Lender shall be evidenced by
an agreement entered into by such successor, in a form satisfactory to the
Borrower and the Administrative Agent and, from and after the effective date of
such agreement, such successor Lender shall have all the rights and obligations
of the previous Letter of Credit Issuer under this Agreement and the other
Credit Documents.  If the Canadian Letter
of Credit Issuer shall resign as Canadian Letter of Credit Issuer under this
Agreement, then the Canadian Borrower shall appoint from among the Lenders with
Canadian Revolving Credit Commitments a successor issuer of Canadian Letters of
Credit, whereupon such successor issuer shall succeed to the rights, powers and
duties of the Canadian Letter of Credit Issuer, and the term “Canadian Letter
of Credit Issuer” shall mean such successor issuer effective upon such
appointment.  At the time such
resignation shall become effective, the Canadian Borrower and the Borrower, as
applicable shall pay to the resigning Letter of Credit Issuer all accrued and
unpaid fees pursuant to Sections 4.1(d ) and (e).  After the resignation of the Letter of Credit
Issuer hereunder, the resigning Letter of Credit Issuer shall remain a party
hereto and shall continue to have all the rights and obligations of a Letter of
Credit Issuer under this Agreement and the other Loan Documents with respect to
Letters of Credit issued by it prior to such resignation, but shall not be
required to issue additional Letters of Credit. 
After any retiring Letter of Credit Issuer’s resignation as Letter of
Credit Issuer, the provisions of this Agreement relating to the Letter of
Credit Issuer shall inure to its benefit as to 

 

70

 

any actions taken or omitted
to be taken by it (a) while it was Letter of Credit Issuer under this
Agreement or (b) at any time with respect to Letters of Credit issued by
such Letter of Credit Issuer.

 

SECTION 4.                                Fees; Commitments

 

4.1.          Fees.  (a)

 

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

 

(ii)           The Canadian
Borrower agrees to pay to the Canadian Administrative Agent for the account of
each Canadian Lender with a Canadian Revolving Credit Commitment allocated to
the Canadian Borrower (in each case pro rata according to the respective
Canadian Revolving Credit Commitments of all such Lenders), a commitment fee
for each day from and including the Closing Date to but excluding the Final
Date. Such commitment fee shall be payable in arrears (i) on the last day
of each March, June, September and December (for the three-month
period (or portion thereof) ended on such day for which no payment has been
received) and (ii) on the Final Date (for the period ended on such date
for which no payment has been received pursuant to clause (i) above),
and shall be computed for each day during such period at a rate per annum equal
to the Commitment Fee Rate in effect on such day on the portion of the
Available Canadian Commitments allocated to the Canadian Borrower on such day.

 

(iii)          The Borrower agrees
to pay to the Administrative Agent for the account of each Canadian Lender with
a Canadian Revolving Credit Commitment allocated to the Borrower (in each case
pro rata according to the respective Canadian Revolving Credit Commitments of
all such Lenders), a commitment fee for each day from and including the Closing
Date to but excluding the Final Date. Such commitment fee shall be payable in
arrears (i) on the last day of each March, June, September and December (for
the three-month period (or portion thereof) ended on such day for which no
payment has been received) and (ii) on the Final Date (for the period
ended on such date for which no payment has been received pursuant to
clause (i) above), and shall be computed for each day during such
period at a rate per annum equal to the Commitment Fee Rate in effect on such
day on the portion of the Available Canadian Commitments allocated to the
Borrower on such day.

 

71

 

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

 

(b)           The Borrower agrees to pay to the
Administrative Agent in Dollars for the account of the Lenders pro rata
on the basis of their respective Letter of Credit Exposure, a fee in respect of
each Letter of Credit (the “Letter of Credit Fee”), for the period from
and including the date of issuance of such Letter of Credit to but excluding
the termination date of such Letter of Credit computed at the per annum rate
for each day equal to the Applicable Eurodollar Margin for Revolving Credit
Loans minus 0.125% per annum on the average daily Stated Amount of such Letter
of Credit.  Such Letter of Credit Fees shall
be due and payable quarterly in arrears on the last day of each March, June, September and
December and on the date upon which the US Total Revolving Credit
Commitment terminates and the Letter of Credit Outstanding shall have been
reduced to zero.

 

(c)           The Borrower agrees to pay to the
Administrative Agent in Dollars for the account of the US Letter of Credit
Issuer a fee in respect of each US Letter of Credit issued by it (the “Fronting
Fee”), for the period from and including the date of issuance of such US
Letter of Credit to but excluding the termination date of such US Letter of
Credit, computed at the rate for each day equal to 0.125% per annum on the
average daily Stated Amount of such US Letter of Credit.  Such Fronting Fees shall be due and payable
quarterly in arrears on the last day of each March, June, September and December and
on the date upon which the US Total Revolving Credit Commitment terminates and
the US Letter of Credit Outstandings shall have been reduced to zero.

 

(d)           The Canadian Borrower agrees to pay
to the Canadian Administrative Agent in for the account of the Lenders with a
Canadian Revolving Credit Commitment pro rata on the basis
of their respective Canadian Letter of Credit Exposure, a fee in respect of
each Canadian Letter of Credit (the “Canadian Letter of Credit Fee”),
for the period from and including the date of issuance of such Canadian Letter
of Credit to but excluding the termination date of such Canadian Letter of
Credit computed at the per annum rate for each day equal to the Applicable
Eurodollar Margin for Revolving Credit Loans minus 0.125% per annum on the
average daily Stated Amount of such Letter of Credit.  Such Letter of Credit Fees shall be due and
payable quarterly in arrears on the last day of each March, June, September and
December and on the date upon which the Canadian Total Revolving Credit
Commitment terminates and the Canadian Letter of Credit Outstandings shall have
been reduced to zero.

 

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

 

4.2.          Voluntary Reduction of Revolving
Credit Commitments.  Upon at least
one Business Day’s prior written notice (or telephonic notice promptly
confirmed in writing) to the Administrative Agent at the Administrative Agent’s
Office (which notice the Administrative Agent shall promptly transmit to each
of the Lenders), the Borrower (on behalf of itself and the Canadian Borrower)
shall have the right, without premium or penalty, on any day, permanently 

 

72

 

to terminate or reduce the
Revolving Credit Commitments in whole or in part, provided that (a) any
such reduction shall apply proportionately and permanently to reduce the US
Revolving Credit Commitment or the Canadian Revolving Credit Commitment, as the
case may be, of each of the Lenders, (b) any partial reduction pursuant to
this Section 4.2 shall be in the amount of at least the Dollar Equivalent
of $1,000,000 and (c) after giving effect to such termination or reduction
and to any prepayments of the Loans made on the date thereof in accordance with
this Agreement, (i) the aggregate amount of the Lenders’ US Revolving
Credit Exposures shall not exceed the US Total Revolving Credit Commitment (ii) the
aggregate amount of the Canadian Lenders’ Canadian Revolving Credit Exposure to
the Canadian Borrower shall not exceed the portion of the Canadian Total
Revolving Credit Commitment allocated to the Canadian Borrower and (iii) the
aggregate amount of the Canadian Lenders’ Canadian Revolving Credit Exposures
to the Borrower shall not exceed the portion of the Canadian Total Revolving
Credit Commitment allocated to the Borrower.

 

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

 

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

 

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

 

SECTION 5.                                Payments

 

5.1.          Voluntary Prepayments.  The Borrower shall have the right to prepay Tranche
A Term Loans, Tranche E Term Loans, US Revolving Credit Loans and Swingline
Loans, and the Canadian Borrower shall have the right to prepay Canadian
Revolving Credit Loans in whole or in part from time to time on the following
terms and conditions: (a) the Borrower (on its own behalf and on behalf of
the Canadian Borrower) shall give the Administrative Agent and the Canadian
Administrative Agent at the applicable Administrative Agent’s Office written
notice (or telephonic notice promptly confirmed in writing) of its or the
Canadian Borrower’s intent to make such prepayment, the amount of such
prepayment and (in the case of BA Loans and Eurodollar Loans) the specific
Borrowing(s) pursuant to which made, which notice shall be given by the
Borrower no later than (i) in the case of Tranche A Term Loans, Tranche E
Term Loans or Revolving Credit Loans, 10:00 a.m. (New York time) one
Business Day prior to, or (ii) in the case of Swingline Loans, 10:00 a.m.
(New York time) on, the date of such prepayment and shall promptly be
transmitted by the Administrative Agent or the Canadian Administrative Agent,
as applicable, to each of the Lenders or the Swingline Lender, as the case may
be; (b) each partial prepayment of any Borrowing of Tranche A Term Loans,
Tranche E Term Loans or Revolving Credit Loans shall be in a multiple of the
Dollar Equivalent of $100,000 or C$100,000 and in an aggregate principal amount
of the Dollar Equivalent of at least $1,000,000 or C$1,000,000 and each partial
prepayment of Swingline Loans shall be in a multiple of the Dollar Equivalent
of $100,000 and in an aggregate principal amount of at least the Dollar
Equivalent of $100,000, provided that no partial prepayment of Eurodollar Term 

 

73

 

Loans or Eurodollar
Revolving Credit Loans made pursuant to a single Borrowing shall reduce the
outstanding Eurodollar Term Loans or Eurodollar Revolving Credit Loans made
pursuant to such Borrowing to an amount less than the Minimum Borrowing Amount
for Eurodollar Term Loans or Eurodollar Revolving Credit Loans; (c) any
prepayment of Eurodollar Term Loans or Eurodollar Revolving Credit Loans
pursuant to this Section 5.1 on any day other than the last day of an
Interest Period applicable thereto shall be subject to compliance by the
Borrower or the Canadian Borrower, as the case may be, with the applicable
provisions of Section 2.11 and (d) BA Loans may not be repaid on any
day other than the last day of an Interest Period applicable thereto except as
may be otherwise provided in this Agreement. 
Each prepayment in respect of any Term Loans pursuant to this Section 5.1
shall be (a) applied to Tranche A Term Loans and Tranche E Term Loans in
such manner as the Borrower may determine and (b) applied to reduce Tranche
A Repayment Amounts and Tranche E Repayment Amounts in such order as the
Borrower may determine; provided, that (i) each Tranche E Term Loan
Lender will have the right to refuse any such voluntary prepayment by giving
notice of such refusal to the Administrative Agent (and the Borrower shall not
prepay any such Tranche E Term Loans), (ii) any prepayment so refused
shall be applied to the Tranche A Term Loans in such manner as the Borrower may
determine and (iii) after the prepayment or repayment in full of the
Tranche A Term Loans, each Tranche E Term Loan Lender may not refuse any such
voluntary prepayments pursuant to this Section 5.1.  At the Borrower’s election (on its own behalf
and on behalf of the Canadian Borrower) in connection with any prepayment
pursuant to this Section 5.1, such prepayment shall not be applied to any
Tranche A Term Loan, Tranche E Term Loan or Revolving Credit Loan of a
Defaulting Lender.

 

5.2.          Mandatory Prepayments.  (a)    
Term Loan Prepayments.  (i)  On each occasion that
a Prepayment Event occurs, the Borrower shall, within one Business Day after
the occurrence of a Debt Incurrence Prepayment Event and within five Business
Days after the occurrence of any other Prepayment Event, prepay, in accordance
with paragraph (c) below, the principal amount of Term Loans in an
amount equal to 100% of the Net Cash Proceeds from such Prepayment Event,
provided that, at the option of the Borrower, the Net Cash Proceeds from any
transaction permitted by Section 10.4(e) (including pursuant to any
securitization) may be applied to repay Revolving Credit Loans, which repayment
shall automatically result in the reduction of the Revolving Credit Commitment
of each Lender by an amount equal to the amount of the Revolving Credit Loans
prepaid to such Lender.

 

(ii)           Not later than the
date that is ninety days after the last day of any fiscal year (commencing with
the fiscal year ending December 31, 2004), 
the Borrower shall  prepay, in
accordance with paragraph (c) below, the principal of Term Loans in
an amount equal to (x) 50% of Excess Cash Flow for such fiscal year (provided
such percentage shall be reduced to (i) 25% if the Consolidated Total Debt
to Consolidated EBITDA Ratio as of the end of such fiscal year is less than
4.00 to 1.00 and (ii) 0% if the Consolidated Total Debt to Consolidated
EBITDA Ratio as of the end of such fiscal year is less than 3.25 to 1.00), minus
(y) the amount of any such Excess Cash Flow that the Borrower has, after
the end of such fiscal year and prior to such date, reinvested in the business
of the Borrower or any of its Subsidiaries (subject to Section 9.14) and minus
(z) the principal amount of Term Loans voluntarily prepaid pursuant to Section 5.1
during such fiscal year.

 

74

 

(b)                                 Repayment of Revolving Credit
Loans.

 

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

 

(ii)                                  Aggregate Canadian Revolving
Credit Outstandings.  If on any date the
aggregate amount of the Canadian Lenders’ Canadian Revolving Credit Exposures
(all the foregoing, collectively, the “Aggregate Canadian Revolving Credit
Outstandings”) exceeds 103% of the Canadian Total Revolving Credit
Commitment as then in effect, each of the Borrower and the Canadian Borrower,
as the case may be, shall forthwith repay on such date Canadian Revolving Credit
Loans owing by each of them, respectively, in an aggregate amount equal to such
excess.  If, after giving effect to the
prepayment of all outstanding Canadian Revolving Credit Loans (other than BA
Loans), the Aggregate Canadian Revolving Credit Outstandings exceed the
Canadian Total Revolving Credit Commitment then in effect, the Borrower and/or
the Canadian Borrower as the case may be, shall pay to the Canadian
Administrative Agent an amount in cash equal to such excess and the Canadian
Administrative Agent shall hold such payment for the benefit of the applicable
Lenders as security for the obligations of the Borrower and the Canadian
Borrower hereunder (including obligations in respect of Canadian Letter of
Credit Outstandings and BA Loans) pursuant to a cash collateral agreement to be
entered into in form and substance satisfactory to the Canadian Administrative
Agent (which shall permit certain investments in Permitted Investments
satisfactory to the Canadian Administrative Agent, until the proceeds are
applied to the secured obligations).

 

(c)                                  Application to Repayment Amounts. 
Each prepayment of Term Loans required by Section 5.2(a) shall
be applied to reduce Tranche A Repayment Amounts and Tranche E Repayment
Amounts in such order as the Borrower may determine up to an amount equal to
the aggregate amount of the applicable Tranche A Repayment Amounts and Tranche
E Repayment Amounts required to be made by the Borrower pursuant to Section 2.5(b) during
the two year period immediately following the date of the prepayment (such
amount being, the “Amortization Amount”); provided that to the
extent that the amount of the prepayment exceeds the Amortization Amount, such
excess shall be applied ratably to reduce the then remaining

 

75

 

Tranche A Repayment Amounts and Tranche E Repayment
Amounts.  With respect to each such
prepayment, (i) the Borrower will, not later than the date specified in Section 5.2(a) for
offering to make such prepayment, give the Administrative Agent telephonic
notice (promptly confirmed in writing) requesting that the Administrative Agent
provide notice of such prepayment to each Term Loan Lender, (ii) each
Tranche E Term Loan Lender will have the right to refuse any such prepayment by
giving written notice of such refusal to the Borrower within fifteen Business
Days after such Lender’s receipt of notice from the Administrative Agent of
such prepayment (and the Borrower shall not prepay any such Tranche E Term
Loans until the date that is specified in the immediately following clause), (iii) the
Borrower will make all such prepayments not so refused upon the earlier of (x) such
fifteenth Business Day and (y) such time as the Borrower has received
notice from each Lender that it consents to or refuses such prepayment and (iv) any
prepayment so refused may be retained by the Borrower, provided that any
prepayment so refused that relates to Net Cash Proceeds from a Debt Incurrence
Prepayment Event in respect of the issuance of Permitted Additional
Subordinated Notes shall be allocated to the then outstanding Term Loans on a
pro rata basis and shall be applied as set forth above in this
paragraph (c).

 

(d)                                 Application to Term Loans.  With respect to each
prepayment of Term Loans required by Section 5.2(a), the Borrower may
designate the Types of Loans that are to be prepaid and the specific Borrowing(s) pursuant
to which made, provided that (i) Eurodollar Term Loans may be
designated for prepayment pursuant to this Section 5.2 only on the last
day of an Interest Period applicable thereto unless all Eurodollar Term Loans
with Interest Periods ending on such date of required prepayment and all ABR
Loans have been paid in full; and (ii) Eurodollar Term Loans made pursuant
to a single Borrowing shall reduce the outstanding Term Loans made pursuant to
such Borrowing to an amount less than the Minimum Borrowing Amount for
Eurodollar Loans such Borrowing shall immediately be converted into ABR
Loans.  In the absence of a designation
by the Borrower as described in the preceding sentence, the Administrative
Agent shall, subject to the above, make such designation in its reasonable
discretion with a view, but no obligation, to minimize breakage costs owing
under Section 2.11.

 

(e)                                  Application to Revolving Credit
Loans.  With respect to each prepayment of Revolving
Credit Loans elected by the Borrower pursuant to Section 5.2(a) or
required by Section 5.2(b), the Borrower (on its own behalf and on behalf
of the Canadian Borrower) may designate (i) the Types of Loans that are to
be prepaid and the specific Borrowing(s) pursuant to which made and (ii) the
US Revolving Credit Loans or Canadian Revolving Credit Loans to be prepaid, provided
that (w) Eurodollar Revolving Credit Loans may be designated for prepayment
pursuant to this Section 5.2 only on the last day of an Interest Period
applicable thereto unless all Eurodollar Loans with Interest Periods ending on
such date of required prepayment and all ABR Loans have been paid in full; (x) if
any prepayment by the Borrower or the Canadian Borrower of Eurodollar Revolving
Credit Loans made pursuant to a single Borrowing shall reduce the outstanding
Dollar Equivalent of the Revolving Credit Loans made pursuant to such Borrowing
to an amount less than the Minimum Borrowing Amount for Eurodollar Revolving
Credit Loans, as the case may be, such Borrowing shall immediately be converted
into Cdn ABR Loans or ABR Loans, as applicable; (y) each prepayment of any
Loans made pursuant to a Borrowing shall be applied pro rata
among such Loans; and (z) notwithstanding the provisions of the preceding
clause (y), no prepayment made pursuant to Section 5.2(a) or Section 5.2(b) of
Revolving Credit Loans shall be applied to the Revolving Credit Loans of any
Defaulting

 

76

 

Lender.  In
the absence of a designation by the Borrower as described in the preceding
sentence, the Administrative Agent shall, subject to the above, make such
designation in its reasonable discretion with a view, but no obligation, to
minimize breakage costs owing under Section 2.11.

 

(f)                                    BA and Eurodollar Interest
Periods.  In lieu of making any payment pursuant to
this Section 5.2 in respect of any BA Loan or Eurodollar Loan other than
on the last day of the Interest Period therefor so long as no Default or Event
of Default shall have occurred and be continuing, the Borrower or the Canadian
Borrower, as the case may be, at its option may deposit with the Administrative
Agent an amount equal to the amount of the BA Loan or Eurodollar Loan to be
prepaid and such BA Loan or Eurodollar Loan, as the case may be, shall be
repaid on the last day of the Interest Period therefor in the required
amount.  Such deposit shall be held by
the Administrative Agent in a corporate time deposit account established on
terms reasonably satisfactory to the Administrative Agent, earning interest at
the then-customary rate for accounts of such type.  Such deposit shall constitute cash collateral
for the Obligations, provided that the Borrower or the Canadian
Borrower, as the case may be, may at any time direct that such deposit be
applied to make the applicable payment required pursuant to this Section 5.2.

 

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

 

(h)                                 Foreign Asset Sales. 
Notwithstanding any other provisions of this Section 5.2, (i) to
the extent that any of or all the Net Cash Proceeds of any asset sale by a
Restricted Foreign Subsidiary giving rise to an Asset Sale Prepayment Event (a “Foreign
Asset Sale”) or Excess Cash Flow are prohibited or delayed by applicable
local law from being repatriated to the United States, the portion of such Net Cash Proceeds or Excess Cash Flow so
affected will not be required to be applied to repay Term Loans at the times
provided in this Section 5.2 but may be retained by the applicable
Restricted Foreign Subsidiary so long, but only so long, as the applicable
local law will not permit repatriation to the United States (the Borrower
and the Canadian Borrower hereby agreeing to cause the applicable Restricted
Foreign Subsidiary to promptly take all actions required by the applicable
local law to permit such repatriation), and once such repatriation of any of
such affected Net Cash Proceeds or Excess Cash Flow is permitted under the
applicable local law, such repatriation will be immediately effected and such
repatriated Net Cash Proceeds or Excess Cash Flow will be promptly (and in any event
not later than two Business Days after such repatriation) applied (net of
additional taxes payable or reserved against as a result thereof) to the
repayment of the Term Loans pursuant to this Section 5.2 and (ii) to
the extent that the Borrower (on its own behalf and on behalf of the Canadian
Borrower) has determined in good faith that repatriation of any of or all the
Net Cash Proceeds of any Foreign Asset Sale or Excess Cash Flow would have a
material adverse tax cost consequence with respect to such Net Cash Proceeds or
Excess Cash Flow, the Net Cash Proceeds or Excess Cash Flow so affected may be
retained by the applicable Restricted Foreign Subsidiary, provided that,
in the case of this clause (ii), on or before the date on which any Net
Cash Proceeds so retained would otherwise have been required to be applied to
reinvestments or prepayments pursuant to Section 5.2(a) (or such
Excess Cash Flow would have

 

77

 

been so required if it were Net Cash Proceeds), (x) the
Borrower or the Canadian Borrower, as the case may be, applies an amount equal
to such Net Cash Proceeds or Excess Cash Flow to such reinvestments or
prepayments as if such Net Cash Proceeds or Excess Cash Flow had been received
by the Borrower or the Canadian Borrower, as the case may be, rather than such
Restricted Foreign Subsidiary, less the amount of additional taxes that would
have been payable or reserved against if such Net Cash Proceeds or Excess Cash
Flow had been repatriated (or, if less, the Net Cash Proceeds or Excess Cash
Flow that would be calculated if received by such Foreign Subsidiary) or (y) such
Net Cash Proceeds or Excess Cash Flow are applied to the repayment of
Indebtedness of a Restricted Foreign Subsidiary.

 

5.3.                              Method and Place of Payment. 
(a)     Except as otherwise
specifically provided herein, all payments under this Agreement shall be made
by the Borrower or the Canadian Borrower, without set-off, counterclaim or
deduction of any kind, to the Administrative Agent for the ratable account of
the Lenders entitled thereto, the Letter of Credit Issuer, the Canadian Letter
of Credit Issuer or the Swingline Lender, as the case may be, not later than
12:00 Noon (New York time) on the date when due and shall be made (i) in
the case of amounts payable in Dollars, in immediately available funds at the
Administrative Agent’s Office and (ii) in the case of amounts payable in a
Canadian Dollars, in immediately available funds at the Administrative Agent’s
Office or at such other office as the Administrative Agent shall specify for
such purpose by notice to the Borrower, it being understood that written or
facsimile notice by the Borrower or the Canadian Borrower, as the case may be,
to the Administrative Agent to make a payment from the funds in the Borrower’s
or the Canadian Borrower’s, as the case may be, account at the Administrative
Agent’s Office shall constitute the making of such payment to the extent of
such funds held in such account.  All
payments under each Credit Document (whether of principal, interest or
otherwise) shall be made (i) in the case of the principal of and interest
on each Loan, in the currency in which such Loan is denominated, (ii) in
the case of reimbursement obligations in respect of Letters of Credit, in the
currency in which such Letter of Credit is denominated or (iii) in the
case of any indemnification or expense reimbursement payment, in Dollars,
except as otherwise expressly provided herein. 
The Administrative Agent will thereafter cause to be distributed on the
same day (if payment was actually received by the Administrative Agent prior to
2:00 p.m. (New York time) on such day) like funds relating to the payment
of principal or interest or Fees ratably to the Lenders entitled thereto.

 

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

 

5.4.                              Net Payments. 
(a)     Subject to the
following sentence, all payments made by or on behalf of the Borrower and the
Canadian Borrower under this Agreement or any other Credit Document shall be
made free and clear of, and without deduction or withholding for or on account
of, any current or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority,
excluding (i) net income taxes and franchise taxes

 

78

 

(imposed in lieu of net income taxes) and capital
taxes imposed on the Administrative Agent, the Canadian Administrative Agent or
any Lender and (ii) any taxes imposed on the Administrative Agent, the
Canadian Administrative Agent or any Lender as a result of a current or former
connection between the Administrative Agent, the Canadian Administrative Agent
or such Lender and the jurisdiction of the Governmental Authority imposing such
tax or any political subdivision or taxing authority thereof or therein (other
than any such connection arising solely from the Administrative Agent, the
Canadian Administrative Agent or such Lender having executed, delivered or
performed its obligations or received a payment under, or enforced, this
Agreement).  If any such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions or withholdings (“Non-Excluded
Taxes”) are required to be withheld from any amounts payable under this
Agreement, the Borrower or the Canadian Borrower, as applicable, shall increase
the amounts payable to the Administrative Agent, the Canadian Administrative
Agent or such Lender to the extent necessary to yield to the Administrative
Agent, the Canadian Administrative Agent or such Lender (after payment of all
Non-Excluded Taxes) interest or any such other amounts payable hereunder at the
rates or in the amounts specified in this Agreement; provided, however, that
the Borrower shall not be required to increase any such amounts payable to any
Lender that is not organized under the laws of the United States of America or
a state thereof (a “Non-U.S. Lender”) if such Lender fails to comply
with the requirements of paragraph (b) of this Section 5.4.  Whenever any Non-Excluded Taxes are payable
by the Borrower or the Canadian Borrower, as the case may be, as promptly as
possible thereafter such Borrower or Canadian Borrower shall send to the
Administrative Agent or the Canadian Administrative Agent for its own account
or for the account of such Lender, as the case may be, a certified copy of an
original official receipt (or other evidence acceptable to such Lender, acting
reasonably) received by such Borrower or Canadian Borrower showing payment
thereof.  If the Borrower or the Canadian
Borrower, as the case may be, fails to pay any Non-Excluded Taxes when due to
the appropriate taxing authority or fails to remit to the Administrative Agent
or the Canadian Administrative Agent the required receipts or other required
documentary evidence, such Borrower or Canadian Borrower shall indemnify the
Administrative Agent, the Canadian Administrative Agent and the Lenders for any
incremental taxes, interest, costs or penalties that may become payable by the
Administrative Agent, the Canadian Administrative Agent or any Lender as a
result of any such failure.  The
agreements in this Section 5.4(a) shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.

 

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

 

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

 

79

 

exemption
from, or reduced rate of, U.S. Federal withholding tax on payments by the
Borrower under this Agreement;

 

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

 

(iii)                               obtain such extensions of time
for filing and complete such forms or certifications as may reasonably be
requested by the Borrower or the Administrative Agent;

 

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

 

(c)                                  The Borrower shall not be
required to indemnify any Non-U.S. Lender, or to pay any additional amounts to
any Non-U.S. Lender, in respect of U.S. Federal withholding tax pursuant to
paragraph (a) above to the extent that (i) the obligation to
withhold amounts with respect to U.S. Federal withholding tax existed on the
date such Non-U.S. Lender became a party to this Agreement (or, in the case of
a Participant that is not organized under the laws of the United States of
America or a state thereof (a “Non-U.S. Participant”), on the date such
Non-U.S. Participant became a Participant hereunder); provided, however,
that this clause (i) shall not apply to the extent that (x) the
indemnity payments or additional amounts any Lender (or Participant) would be
entitled to receive (without regard to this clause (i)) do not exceed the
indemnity payment or additional amounts that the person making the assignment,
participation or transfer to such Lender (or Participant) would have been
entitled to receive in the absence of such assignment, participation or
transfer, or (y) such assignment, participation or transfer had been
requested by the Borrower or the Canadian Borrower, (ii) the obligation to
pay such additional amounts would not have arisen but for a failure by such
Non-U.S. Lender or Non-U.S. Participant to comply with the provisions of
paragraph (b) above or (iii) any of the representations or
certifications made by a Non-U.S. Lender or Non-U.S. Participant pursuant to
paragraph (b) above are incorrect at the time a payment hereunder is made,
other than by reason of any change in treaty, law or regulation having effect
after the date such representations or certifications were made. The Canadian
Borrower shall not be required to indemnify or pay additional amounts to a
Lender or Administrative Agent in respect of Canadian withholding tax pursuant
to paragraph (a) above to the extent that such Non-Excluded Taxes result from
a failure by the Lender or Administrative Agent to comply with any
certification, identification, information, documentation or other reporting
requirement (collectively referred to in this Section 5.4(c) as a “Reporting
Requirement”) if (i) compliance is required by law, regulation,

 

80

 

administrative practice or any applicable tax
treaty as a precondition to exemption from or a reduction in the rate of
deduction or withholding of Non-Excluded Taxes, and (ii) the Canadian
Borrower has first made written request to the Lender or the Canadian
Administrative Agent, as applicable, that the Lender or Administrative Agent
comply with the particular Reporting Requirement (identified specifically in
such request) and the Lender or Administrative Agent, as applicable, has not
complied with such Reporting Requirement within 30 Business Days of such
written request; provided, however that the Canadian Borrower
shall not be relieved of its obligation to indemnify or pay additional amounts
to a Lender or Administrative Agent (x) in respect of certain payments
where the obligation to indemnify or pay additional amounts in respect of those
payments arose prior to Canadian Borrower’s written request to the Lender or
Canadian Administrative Agent, as applicable, respecting such Reporting
Requirement, (y) if, by reason of any change in any law, regulation,
administrative practice or applicable tax treaty occurring after the date
hereof, the Lender or Administrative Agent, as applicable, is unable to duly
comply with such Reporting Requirement, or (z) to the extent that the
additional payment or indemnity compensates the Lender or Administrative Agent
for an amount to which the Lender or Administrative Agent would have been entitled
to receive under paragraph (a) had the Lender or Administrative Agent, as
applicable complied with the Reporting Requirement.

 

(d)                                 If the Borrower or the Canadian
Borrower determines in good faith that a reasonable basis exists for contesting
any taxes for which indemnification has been demanded hereunder, the relevant
Lender, the Canadian Administrative Agent or the Administrative Agent, as
applicable, shall cooperate with such Borrower or Canadian Borrower in
challenging such taxes at Borrower’s or Canadian Borrower’s expense if so
requested by Borrower or Canadian Borrower. 
If any Lender, the Canadian Administrative Agent or the Administrative
Agent, as applicable, receives a refund of a tax for which a payment has been
made by the Borrower or the Canadian Borrower pursuant to this Agreement, which
refund in the good faith judgment of such Lender, the Canadian Administrative
Agent or Administrative Agent, as the case may be, is attributable to such
payment made by such Borrower or Canadian Borrower, then the Lender, the
Canadian Administrative Agent or the Administrative Agent, as the case may be,
shall reimburse Borrower or Canadian Borrower for such amount (together with
any interest received thereon) as the Lender, the Canadian Administrative Agent
or Administrative Agent, as the case may be, determines to be the proportion of
the refund as will leave it, after such reimbursement, in no better or worse
position than it would have been in if the payment had not been required.  A Lender, the Canadian Administrative Agent
or Administrative Agent shall claim any refund that it determines is available
to it, unless it concludes in its reasonable discretion that it would be
adversely affected by making such a claim. 
Neither the Lender, the Canadian Administrative Agent nor the
Administrative Agent shall be obliged to disclose any information regarding its
tax affairs or computations to the Borrower or the Canadian Borrower in
connection with this paragraph (d) or any other provision of this Section 5.4.

 

(e)                                  Each Lender represents and agrees
that, on the date hereof and at all times during the term of this Agreement, it
is not and will not be a conduit entity participating in a conduit financing
arrangement (as defined in Section 7701(1) of the Code and the
regulations thereunder) with respect to the Borrowings hereunder unless the
Borrower has consented to such arrangement prior thereto.

 

81

 

(f)                                    Notwithstanding Section 5.4(a),
the Canadian Borrower shall not be required to indemnify or pay any additional
amounts in respect of Canadian withholding tax imposed under Part XIII of
the Tax Act applicable to any amount payable with respect to Canadian Revolving
Credit Loans or Canadian Letters of Credit pursuant to Section 5.4(a) above
to any Lender that is not a Canadian Resident for the purposes of the Tax Act,
except if any such Loans were assigned, participated or transferred to such
Lender at the request of the Borrower or the Canadian Borrower or were assigned,
participated or transferred to such Lender following the occurrence of and
during the continuance of an Event of Default pursuant to Section 11.1 or
11.5.

 

5.5.                              Computations of Interest and Fees. 
(a)     Interest on
Eurodollar Loans and, except as provided in the next succeeding sentence, ABR
Loans shall be calculated on the basis of a 360-day year for the actual days
elapsed.  Interest on (i) Canadian
Prime Loans and (ii) ABR Loans in respect of which the rate of interest is
calculated on the basis of the Prime Rate and interest on overdue interest
shall be calculated on the basis of a 365- (or 366-, as the case may be) day
year for the actual days elapsed.

 

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

 

5.6.                              Limit on Rate of Interest.

 

(a)                                  No Payment shall exceed Lawful
Rate.  Notwithstanding any other term of this
Agreement, neither the Borrower nor the Canadian Borrower shall be obliged to
pay any interest or other amounts under or in connection with this Agreement in
excess of the amount or rate permitted under or consistent with any applicable
law, rule or regulation.  In
particular, the Canadian Borrower shall not be obliged to pay any interest or
other amounts which would result in the receipt by any Lender of interest on
credit advanced at a rate in excess of the rate permitted under the Criminal Code (Canada).  For purposes of this Section 5.6, “interest”
and “credit advanced” have the meanings ascribed in the Criminal Code (Canada) and the “effective
annual rate of interest” shall be calculated in accordance with generally
accepted actuarial principles and practices.

 

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

 

(c)                                  Adjustment if any Payment exceeds
Lawful Rate.                             If any provision of this
Agreement or any of the other Credit Documents would obligate the Borrower or
the Canadian Borrower to make any payment of interest or other amount payable
to any Lender in an amount or calculated at a rate which would be prohibited by
any applicable law, rule or regulation, or in the case of the Canadian
Borrower, would result in a receipt by that Lender of interest at a criminal
rate (as such terms are construed under the Criminal
Code (Canada)), then notwithstanding such provision, 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

 

82

 

so prohibited by law (in the case of the Borrower
or the Canadian Borrower) or so result in a receipt by that Lender of interest
at a criminal rate (in the case of the Canadian Borrower), such adjustment to be
effected, to the extent necessary, as follows:

 

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

 

(ii)                                  thereafter, by reducing any fees,
commissions, premiums and other amounts required to be paid by the Borrower or
the Canadian Borrower to the affected Lender where, in the case of the Canadian
Borrower, such amounts 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 any Lender shall have
received from the Borrower or the Canadian Borrower an amount in excess of the
maximum permitted by any applicable law, rule or regulation or in the case
of the Canadian Borrower, an amount in excess of the maximum permitted under
the Criminal Code (Canada), then
the Borrower or the Canadian Borrower, as applicable, shall be entitled, by
notice in writing to the Administrative Agent or the Canadian Administrative
Agent, as applicable, to obtain reimbursement from that Lender in an amount
equal to such excess, and pending such reimbursement, such amount shall be
deemed to be an amount payable by that Lender to the Borrower or the Canadian
Borrower, as applicable.  Any amount or
rate of interest referred to in this Section 5.6(c) shall be
determined in accordance with generally accepted actuarial practices and
principles as an effective annual rate of interest over the term that any Loan
remains outstanding on the assumption, with respect to Canadian Borrowings,
that any charges, fees or expenses that fall within the meaning of “interest”
(as defined in the Criminal Code
(Canada)) shall, if the 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 Closing Date to the Maturity Date.

 

SECTION 6.                                Conditions Precedent to Initial
Borrowing

 

The
initial Borrowing of Term Loans under this Agreement is subject to the satisfaction
of the following conditions precedent:

 

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

 

6.2.                              Collateral. 
All documents and instruments, including Uniform Commercial Code or
other applicable personal property security financing statements, required by
law or reasonably requested by the Administrative Agent to be filed, registered
or recorded to create the Liens intended to be created by the Security
Agreement and perfect such Liens to the extent required by, and with the
priority required by, the Security Agreement shall have been filed, registered
or recorded or delivered to the Administrative Agent for filing, registration
or recording.

 

83

 

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

 

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

 

6.5.                              Consent. 
Borrower, Holdings, Required Lenders (as such term is defined under the
Existing Credit Agreement and whom may provide written consent via a consent
supplement to this Agreement) and the Term Loan Lenders shall have indicated
their consent by the execution and delivery of the signature pages hereof
to the Administrative Agent.

 

6.6.                              [Reserved].

 

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

 

6.8.                              Corporate Proceedings of Each
Credit Party.  The Administrative Agent shall
have received a copy of the resolutions, in form and substance satisfactory to
the Administrative Agent, of the Board of Directors of each Credit Party (or a
duly authorized committee thereof) authorizing (a) the execution, delivery
and performance of the Credit Documents (and any agreements relating thereto)
to which it is a party and (b) in the case of the Borrower and the
Canadian Borrower, the extensions of credit contemplated hereunder; provided
that in lieu of delivery of each of the resolutions set forth in this Section 6.8,
the Borrower may deliver a certificate executed by the President or any Vice
President of such Credit Party certifying that there have been no material
amendments to those resolutions previously delivered to the Administrative
Agent on the Closing Date pursuant to Section 6.8 of the Existing Credit Agreement.

 

6.9.                              Corporate Documents. 
The Administrative Agent shall have received true and complete
copies of the certificate of incorporation and by-laws (or equivalent
organizational documents) of each Credit Party; provided that in lieu of
delivery of each of the documents set forth in this Section 6.9, the
Borrower may deliver a certificate executed by the President or any Vice
President of such Credit Party certifying that there have been no material
amendments to those documents previously delivered to the Administrative Agent
on the Closing Date pursuant to Section 6.9 of the Existing Credit
Agreement.

 

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

 

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

 

6.12.                        Governmental Authorizations and
Consents.  Each Credit Party shall have
obtained all approval and authorizations of Governmental Authorities and
all consents of other Persons, in each case that are necessary in connection
with the transactions contemplated by the Credit Documents and each of the
foregoing shall be in full force and effect. 
All applicable waiting periods shall have expired without any action
being taken or threatened by any competent authority which would restrain,
prevent or otherwise impose adverse conditions on the transactions contemplated
by the Credit Documents and no action, request for stay, petition for review or
rehearing, reconsideration, or appeal with respect to any of the foregoing
shall be pending, and the time for any applicable agency to take action to set
aside its consent on its own motion shall have expired.

 

SECTION 7.                                Conditions Precedent to All
Credit Events

 

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

 

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

 

7.2.                              Notice of Borrowing; Letter of
Credit Request.  (a)     Prior to the making of each Tranche A Term
Loan, each Tranche E Term Loan, each Revolving Credit Loan (other than any
Revolving Credit Loan made pursuant to Section 3.4(a)) and each Swingline
Loan, the Administrative Agent shall have received a Notice of Borrowing
(whether in writing or by telephone) meeting the requirements of Section 2.3.

 

(b)                                 Prior to the issuance of each
Letter of Credit, the Administrative Agent and the Letter of Credit Issuer
shall have received a Letter of Credit Request meeting the requirements of Section 3.2(a).

 

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

 

85

 

SECTION 8.                                Representations, Warranties and
Agreements

 

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

 

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

 

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

 

8.3.                              No Violation. 
Neither the execution, delivery or performance by any Credit Party of
the Credit Documents to which it is a party nor compliance with the terms and
provisions thereof nor the consummation of the Recapitalization and the other
transactions contemplated hereby or thereby will (a) contravene any
applicable provision of any material law, statute, rule, regulation, order,
writ, injunction or decree of any court or governmental instrumentality, (b) result
in any breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the property or assets of
any of Holdings, the Borrower, the Canadian Borrower or any of the Restricted
Subsidiaries (other than Liens created under the Credit Documents) pursuant to,
the terms of any material indenture (including the Subordinated Note
Indenture), loan agreement, lease agreement, mortgage, deed of trust, agreement
or other material instrument to which Holdings, the Borrower, the Canadian
Borrower or any of the Restricted Subsidiaries is a party or by which it or any
of its property or assets is bound or (c) violate any provision of the
certificate of incorporation, By-Laws or other constitutional documents of
Holdings, the Borrower, the Canadian Borrower or any of the Restricted
Subsidiaries.

 

8.4.                              Litigation. 
There are no actions, suits, investigations or proceedings (including
Environmental Claims) pending or, to the knowledge of Holdings, the Borrower or
the Canadian Borrower, threatened with respect to Holdings, the Borrower, the
Canadian

 

86

 

Borrower or any of its Subsidiaries that could
reasonably be expected to result in a Material Adverse Effect.

 

8.5.                              Margin Regulations. 
Neither the making of any Loan hereunder nor the use of the proceeds
thereof will violate the provisions of Regulation T, U or X of the Board.

 

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

 

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

 

8.8.                              True and Complete Disclosure. 
(a)     None of the factual
information and data (taken as a whole) heretofore or contemporaneously
furnished by any of Holdings, the Borrower, the Canadian Borrower, any of the
Subsidiaries or any of their respective authorized representatives in writing
to the Administrative Agent and/or any Lender on or before the Closing Date
(including (i) the Confidential Information Memorandum and (ii) all
information contained in the Credit Documents) for purposes of or in connection
with this Agreement or any transaction contemplated herein contained any untrue
statement or omitted to state any material fact necessary to make such
information and data (taken as a whole) not misleading at such time in light of
the circumstances under which such information or data was furnished, it being
understood and agreed that for purposes of this Section 8.8(a), such
factual information and data shall not include projections and pro forma
financial information.

 

(b)                                 The projections and pro forma
financial information contained in the information and data referred to in
paragraph (a) above were based on good faith estimates and assumptions
believed by such Persons to be reasonable at the time made, it being recognized
by the Lenders that such projections as to future events are not to be viewed
as facts and that actual results during the period or periods covered by any
such projections may differ from the projected results.

 

8.9.                              Financial Condition; Financial
Statements.  The (a) unaudited
historical consolidated financial information of the Parent as set forth in the
Confidential Information Memorandum, and (b) the Historical Financial
Statements, in each case present or will, when provided, present fairly in all
material respects the combined financial position of the Borrower at the
respective dates of said information, statements and results of operations for
the respective periods covered thereby. 
The financial statements referred to in clause (b) of this Section 8.9
have been prepared in accordance with GAAP consistently applied except to the
extent provided in the notes to said financial statements.  There has been no Material Adverse Change
since November 30, 2003, other than solely as a result of changes in
general economic conditions.

 

87

 

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

 

8.11.                        Compliance with ERISA. 
(i) Each Plan is in compliance with ERISA, the Code and any
applicable Requirement of Law; no Reportable Event has occurred (or is
reasonably likely to occur) with respect to any Plan; no Plan is insolvent or
in reorganization (or is reasonably likely to be insolvent or in
reorganization), and no written notice of any such insolvency or reorganization
has been given to any of Holdings, the Borrower, any Subsidiary or any ERISA
Affiliate; no Plan (other than a multiemployer plan) has an accumulated or
waived funding deficiency (or is reasonably likely to have such a deficiency);
none of Holdings, the Borrower, any Subsidiary or any ERISA Affiliate has
incurred (or is reasonably likely expected to incur) any liability to or on
account of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062,
4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the
Code or has been notified in writing that it will incur any liability under any
of the foregoing Sections with respect to any Plan; no proceedings have been
instituted (or are reasonably likely to be instituted) to terminate or to
reorganize any Plan or to appoint a trustee to administer any Plan, and no
written notice of any such proceedings has been given to any of Holdings, the
Borrower, any Subsidiary or any ERISA Affiliate; and no lien imposed under the
Code or ERISA on the assets of any of Holdings, the Borrower or any Subsidiary
or any ERISA Affiliate exists (or is reasonably likely to exist) nor has
Holdings, the Borrower, any Subsidiary or any ERISA Affiliate been notified in
writing that such a lien will be imposed on the assets of any of Holdings, the
Borrower, any Subsidiary or any ERISA Affiliate on account of any Plan, except
to the extent that a breach of any of the representations, warranties or
agreements in this Section 8.11(i) would not result, individually or
in the aggregate, in an amount of liability that would be reasonably likely to
have a Material Adverse Effect or relates to any matter disclosed in the
financial statements of the Borrower contained in the Confidential Information
Memorandum.  No Plan (other than a
multiemployer plan) has an Unfunded Current Liability that would, individually
or when taken together with any other liabilities referenced in this Section 8.11(i),
be reasonably likely to have a Material Adverse Effect.  With respect to Plans that are multiemployer
plans (as defined in Section 3(37) of ERISA), the representations and
warranties in this Section 8.11(i), other than any made with respect to (a) liability
under Section 4201 or 4204 of ERISA or (b) liability for termination
or reorganization of such Plans under ERISA, are made to the best knowledge of
the Borrower.

 

(ii)                                  the Canadian Pension Plans are
duly registered under all applicable provincial pension benefits legislation;
all material obligations of each Credit Party and its Subsidiaries (including
fiduciary, funding, investment and administration obligations) required to be
performed in connection with the Canadian Pension Plans, the Canadian Benefit
Plans and the funding agreements therefore have been performed in accordance
with applicable laws and regulations; there are no outstanding disputes
concerning the assets held pursuant to any such

 

88

 

funding agreement; all contributions or premiums
required to be made by any Credit Party and any of its Subsidiaries to the
Canadian Pension Plans and the Canadian Benefit Plans have been made within the
time limits required by, and in accordance with, the terms of such plans and
applicable laws and regulations; all employee contributions to the Canadian
Pension Plans and the Canadian Benefit Plans required to be made by way of
authorized payroll deduction have been properly withheld and fully paid into
such plans within the time limits required by, and in accordance with, the
terms of such plans and applicable laws and regulations; all reports and disclosures
relating to the Canadian Pension Plans and Canadian Benefit Plans required by
any applicable laws or regulations have been filed or distributed in accordance
with applicable laws and regulations; no Credit Party has made any  improper withdrawals, or applications of,
the assets of any of the Canadian Pension Plans; other than as disclosed in
Schedule 8.11(ii), there have been no partial terminations of any Canadian
Pension Plan with a defined benefit provision; no amount is owing by any of the
Canadian Pension Plans under the Tax Act; no Credit Party has any knowledge,
nor any grounds for believing, that any of the Canadian Pension Plans is the
subject of an investigation, any other proceeding, an action or a claim other
than a routine claim for benefits; except to the extent that a breach of any of
the foregoing representations, warranties or agreements in this Section 8.11(ii) would
not result, individually or in the aggregate, in an amount of liability that
would be reasonably likely to have a Material Adverse Effect, or relates to any
matter disclosed in the financial statements of the Borrower contained in the
Confidential Information Memorandum; No Canadian Pension Plan has an Unfunded
Current Liability that would, individually or when taken together with any
other liabilities referenced in this Section 8.11(ii) be reasonably
likely to have a Material Adverse Effect;

 

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

 

8.13.                        Patents, etc. 
Holdings, the Borrower, the Canadian Borrower and each of the Restricted
Subsidiaries have obtained all patents, trademarks, servicemarks, trade names,
copyrights, licenses and other rights, free from burdensome restrictions, that
are necessary for the operation of their respective businesses as currently
conducted and as proposed to be conducted, except where the failure to obtain
any such rights could not reasonably be expected to have a Material Adverse
Effect.

 

8.14.                        Environmental Laws. 
(a)     Except as could not
reasonably be expected to have a Material Adverse Effect: (i) each of
Holdings, the Borrower, the Canadian Borrower and each of the Subsidiaries are
in compliance with all Environmental Laws in all jurisdictions in which
Holdings, the Borrower and each of the Subsidiaries are currently doing
business (including having obtained all material permits required under
Environmental Laws); (ii) each of Holdings, the Borrower and the Canadian
Borrower will comply and cause each of the Subsidiaries to comply with all such
Environmental Laws (including all permits required under Environmental Laws);
and (iii) none of Holdings, the Borrower, the Canadian Borrower and each
of the Subsidiaries has become subject to any Environmental Claim or any other
liability under any Environmental Law.

 

89

 

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

 

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

 

SECTION 9.                                Affirmative Covenants

 

Each of Holdings, the Borrower and the Canadian
Borrower hereby covenants and agrees that on the Effective Date and thereafter,
until the Commitments, the Swingline Commitment and each Letter of Credit have
terminated and the Loans and Unpaid Drawings, together with interest, Fees and
all other Obligations incurred hereunder, are paid in full:

 

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

 

(a)                                  Annual Financial Statements. 
As soon as available and in any event on or before the date on which
such financial statements are required to be filed with the SEC (or, if such
financial statements are not required to be filed with the SEC, on or before
the date that is 90 days after the end of each such fiscal year), the
consolidated balance sheet of (i) Holdings, the Borrower and the
Restricted Subsidiaries and (ii) Holdings and its Subsidiaries, in each
case as at the end of such fiscal year, and the related consolidated statement
of operations and cash flows for such fiscal year, setting forth comparative
consolidated figures for the preceding fiscal year, and certified by
independent certified public accountants of recognized national standing whose
opinion shall not be qualified as to the scope of audit or as to the status of
Holdings, the Borrower, the Canadian Borrower or any of the Material
Subsidiaries as a going concern, together in any event with a certificate of
such accounting firm stating that in the course of its regular audit of the
business of Holdings, the Borrower, the Canadian Borrower and the Material
Subsidiaries, which audit was conducted in accordance with generally accepted
auditing standards, such accounting firm has obtained no knowledge of any
Default or Event of Default relating to Section 10.9 or 10.10 that has
occurred and is continuing or, if in the opinion of such accounting firm such a
Default or Event of Default has occurred and is continuing, a statement as to
the nature thereof.  The requirements of
this Section 9.1(a) shall be satisfied by delivery of financial
statements of Parent and its Subsidiaries which otherwise meet the requirements
hereof and are accompanied by reconciliations for any difference between what
is delivered hereunder and what would have been delivered by Holdings and its
Subsidiaries pursuit to this Section 9.1(a).

 

(b)                                 Quarterly Financial Statements. 
As soon as available and in any event on or before the date on which
such financial statements are required to be filed with the SEC with respect to
each of the first three quarterly accounting periods in each fiscal year of
Holdings (or,

 

90

 

 if such
financial statements are not required to be filed with the SEC, on or before
the date that is 45 days after the end of each such quarterly accounting
period), the consolidated balance sheet of (i) Holdings, the Borrower and
the Restricted Subsidiaries and (ii) Holdings and its Subsidiaries, in
each case as at the end of such quarterly period and the related consolidated
statement of operations for such quarterly accounting period and for the
elapsed portion of the fiscal year ended with the last day of such quarterly
period, and the related consolidated statement of cash flows for the elapsed
portion of the fiscal year ended with the last day of such quarterly period,
and setting forth comparative consolidated figures for the related periods in
the prior fiscal year or, in the case of such consolidated balance sheet, for
the last day of the prior fiscal year, all of which shall be certified by an
Authorized Officer of the Borrower, subject to changes resulting from audit and
normal year-end audit adjustments. The requirements of this Section 9.1(b) shall
be satisfied by delivery of financial statements of Parent and its Subsidiaries
which otherwise meet the requirements hereof and are accompanied by
reconciliations for any difference between what is delivered hereunder and what
would have been delivered by Holdings and its Subsidiaries pursuit to this Section 9.1(b).

 

(c)                                  Budgets. 
Within 60 days after the commencement of each fiscal year of
Holdings and the Borrower, budgets of Holdings, the Borrower and the Canadian
Borrower in reasonable detail for the fiscal year as customarily prepared by
management of Holdings, the Borrower and the Canadian Borrower for their
internal use consistent in scope with the financial statements provided
pursuant to Section 9.1(a), setting forth the principal assumptions upon
which such budgets are based.

 

(d)                                 Officer’s Certificates. 
At the time of the delivery of the financial statements provided for in
Sections 9.1(a) and (b), a certificate of an Authorized Officer of the
Borrower to the effect that no Default or Event of Default exists or, if any
Default or Event of Default does exist, specifying the nature and extent
thereof, which certificate shall set forth (i) the calculations required
to establish whether Holdings, the Borrower and the Subsidiaries were in
compliance with the provisions of Sections 10.9 and 10.10 as at the end of
such fiscal year or period, as the case may be, (ii) a specification of
any change in the identity of the Restricted Subsidiaries, Unrestricted
Subsidiaries and Foreign Subsidiaries as at the end of such fiscal year or
period, as the case may be, from the Restricted Subsidiaries, Unrestricted
Subsidiaries and Foreign Subsidiaries, respectively, provided to the Lenders on
the Closing Date or the most recent fiscal year or period, as the case may be, (iii) the
then applicable Status and (iv) the amount of any Pro Forma Adjustment not
previously set forth in a Pro Forma Adjustment Certificate or any change in the
amount of a Pro Forma Adjustment set forth in any Pro Forma Adjustment
Certificate previously provided and, in either case, in reasonable detail, the
calculations and basis therefor.  At the
time of the delivery of the financial statements provided for in Section 9.1(a),
(i) a certificate of an Authorized Officer of the Borrower setting forth
in reasonable detail the Available Amount as at the end of the fiscal year to
which such financial statements relate and (ii) a certificate of an
Authorized Officer and the chief legal officer of the Borrower (x) setting
forth the information required pursuant to Section 2 of the Perfection
Certificate or confirming that there has been no change in such information
since the Closing Date or the date of the most recent certificate delivered
pursuant to this subsection (d)(ii), as the case may be, and (ii) certifying
that all Uniform Commercial Code and Personal Property Security Act financing
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations, including all refilings, rerecordings and
reregistrations,

 

91

 

containing a description of the Collateral have
been filed of record in each governmental, municipal or other appropriate
office in each jurisdiction identified pursuant to clause (x) above
to the extent necessary to protect and perfect the security interests under the
Security Documents.

 

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

 

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

 

(i)                                     Any pending or threatened
Environmental Claim against any of Holdings, the Borrower, the Canadian
Borrower or any of the Subsidiaries or any Real Estate;

 

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

 

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

 

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

 

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

 

(g)                                 Other Information. 
Promptly upon filing thereof, copies of any filings (including on Form 10-K,
10-Q or 8-K) or registration statements with, and reports to, the SEC or any
analogous Government Authority in any relevant jurisdiction by any of Holdings,
the Borrower, the Canadian Borrower or any of the Subsidiaries (other than
amendments to any registration statement (to the extent such registration
statement, in the form it becomes effective,

 

92

 

is delivered to the Lenders), exhibits to any
registration statement and, if applicable, any registration statements on Form S-8)
and copies of all financial statements, proxy statements, notices and reports
that Holdings, the Borrower, the Canadian Borrower or any of the Subsidiaries
shall send to the holders of any publicly issued debt of Holdings, the
Borrower, the Canadian Borrower and/or any of the Subsidiaries (including any
Subordinated Notes (whether publicly issued or not)) in their capacity as such
holders (in each case to the extent not theretofore delivered to the Lenders
pursuant to this Agreement) and, with reasonable promptness, such other
information (financial or otherwise) as the Administrative Agent on its own
behalf or on behalf of any Lender may reasonably request in writing from time
to time.

 

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

 

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

 

9.2.                              Books, Records and Inspections. 
Each of Holdings, the Borrower and the Canadian Borrower will, and will
cause each of the Subsidiaries to, permit officers and designated
representatives of the Administrative Agent or the Required Lenders to visit
and inspect any of the properties or assets Holdings, the Borrower, the
Canadian Borrower and any such Subsidiary in whomsoever’s possession to the
extent that it is within such party’s control to permit such inspection, and to
examine the books of account Holdings, the Borrower, the Canadian Borrower and
any such Subsidiary and discuss the affairs, finances and accounts Holdings,
the Borrower, the Canadian Borrower and of any such Subsidiary with, and be
advised as to the same by, its and their officers and independent accountants,
all at such reasonable times and intervals and to such reasonable extent as the
Administrative Agent or the Required Lenders may desire.

 

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

 

93

 

9.4.                              Payment of Taxes. 
Each of Holdings, the Borrower and the Canadian Borrower will pay and
discharge, and will cause each of the Subsidiaries to pay and discharge, all
material taxes, assessments and governmental charges or levies imposed upon it
or upon its income or profits, or upon any properties belonging to it, prior to
the date on which material penalties attach thereto, and all lawful material
claims that, if unpaid, could reasonably be expected to become a material Lien
upon any properties of the Borrower, the Canadian Borrower or any of the
Restricted Subsidiaries, provided that neither Holdings, the Borrower, the
Canadian Borrower nor any of the Subsidiaries shall be required to pay any such
tax, assessment, charge, levy or claim that is being contested in good faith
and by proper proceedings if it has maintained adequate reserves (in the good
faith judgment of the management of the Borrower) with respect thereto in
accordance with GAAP.

 

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

 

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

 

9.7.                              ERISA. 
Promptly after Holdings, the Borrower or any Subsidiary or any ERISA
Affiliate knows or has reason to know of the occurrence of any of the following
events that, individually or in the aggregate (including in the aggregate such
events previously disclosed or exempt from disclosure hereunder, to the extent
the liability therefor remains outstanding), would be reasonably likely to have
a Material Adverse Effect, the Parent Companies, Holdings or the Borrower will
deliver to each of the Lenders a certificate of an Authorized Officer or any
other senior officer of the Borrower setting forth details as to such
occurrence and the action, if any, that Holdings, the Borrower, such Subsidiary
or such ERISA Affiliate is required or proposes to take, together with any
notices (required, proposed or otherwise) given to or filed with or by
Holdings, the Borrower, such Subsidiary, such ERISA Affiliate, the PBGC, a Plan
participant (other than notices relating to an individual participant’s
benefits) or the Plan administrator with respect thereto: that a Reportable
Event has occurred; that an accumulated funding deficiency has been incurred or
an application is to be made to the Secretary of the Treasury for a waiver or
modification of the minimum funding standard (including any required
installment payments) or an extension of any amortization period under Section 412
of the Code with respect to a Plan; that a Plan having an Unfunded Current
Liability has been or is to be terminated, reorganized, partitioned or declared
insolvent under Title IV of ERISA (including the giving of written notice
thereof); that a Plan has an Unfunded Current Liability that has or will result
in a lien under ERISA or the Code; that proceedings will be or have been
instituted to terminate a Plan having an Unfunded Current Liability (including
the giving of written notice thereof); that a proceeding has been instituted
against the Borrower, a Subsidiary or an ERISA Affiliate pursuant to Section 515
of ERISA to collect a delinquent contribution to a Plan; that the PBGC has
notified Holdings, the Borrower, any Subsidiary or any ERISA Affiliate of its

 

94

 

intention to appoint a trustee to administer any
Plan; that Holdings, the Borrower, any Subsidiary or any ERISA Affiliate has
failed to make a required installment or other payment pursuant to Section 412
of the Code with respect to a Plan; or that Holdings, the Borrower, any
Subsidiary or any ERISA Affiliate has incurred or will incur (or has been
notified in writing that it will incur) any liability (including any contingent
or secondary liability) to or on account of a Plan pursuant to Section 409,
502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971
or 4975 of the Code.

 

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

 

9.9.          Transactions with Affiliates. 
Each of Holdings, the Borrower and the Canadian Borrower will conduct,
and cause each of the Restricted Subsidiaries to conduct, all transactions with
any of its Affiliates on terms that are substantially as favorable to Holdings,
the Borrower, the Canadian Borrower or such Restricted Subsidiary as it would
obtain in a comparable arm’s-length transaction with a Person that is not an
Affiliate, provided that the foregoing restrictions shall not apply to (a) the
payment of customary annual fees to KKR and/or its Affiliates for management,
consulting and financial services rendered to Holdings, the Borrower, the
Canadian Borrower and the Subsidiaries and customary investment banking fees
paid to KKR and its Affiliates for services rendered to Holdings, the Borrower,
the Canadian Borrower and the Subsidiaries in connection with divestitures,
acquisitions, financings and other transactions, (b) customary fees paid
to members of the Board of Directors Holdings, the Borrower, the Canadian
Borrower and the Subsidiaries and (c) transactions permitted by Section 10.6.

 

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

 

9.11.        Additional Guarantors and
Grantors.  (a)     Except as provided in Section 10.1(j) or
(k), each of Holdings, the Borrower and the Canadian Borrower will cause (i) any
direct or indirect Domestic Subsidiary (other than any Unrestricted Subsidiary)
formed or

 

95

 

otherwise purchased or acquired after the date
hereof (including pursuant to a Permitted Acquisition), (ii) any
Subsidiary (other than any Unrestricted Subsidiary) that is not a Domestic
Subsidiary on the date hereof but subsequently becomes a Domestic Subsidiary
(other than any Unrestricted Subsidiary) and (iii) any inactive Subsidiary
listed on Schedule 1.1(e) (unless such Subsidiary is designated an
Unrestricted Subsidiary in accordance with terms of this Agreement) which
acquires any material assets or is otherwise no longer deemed inactive, in each
case to execute a supplement to each of the Guarantee and the Security
Agreement, substantially in the form of Annex B or Annex 1, as applicable, to
the respective agreement in order to become a Guarantor under the Guarantee and
a grantor under the Security Agreement.

 

(b)           Except as provided in Section 10.1(j) or
(k), each of Holdings, the Borrower and the Canadian Borrower will cause each
Foreign Subsidiary that is a Restricted Foreign Subsidiary, or that is required
to become a Restricted Foreign Subsidiary for an investment to constitute a
Permitted Acquisition, in each case that makes an investment constituting a
Permitted Acquisition pursuant to Section 10.5(j) to enter into
guarantee and security arrangements in relation to the Obligations of the
Borrower and/or the Canadian Obligations of the Canadian Borrower, as the case
may be, in respect of the capital stock and/or assets acquired pursuant to such
Permitted Acquisition, in a form and to an extent agreed between the Borrower
and the Administrative Agent, but to be substantially consistent (taking into
account the scope of customary collateral arrangements in the applicable
jurisdiction) with the scope of the guarantee and collateral arrangements
entered into pursuant to the Guarantees and the Security Documents, and to
comply with Section 9.15 in respect of such arrangements, provided
that no such Restricted Foreign Subsidiary shall be required to enter into such
arrangements to the extent that such arrangements would (i) be prohibited
by the law of the jurisdiction of incorporation or formation of such Restricted
Subsidiary or of the entity whose capital stock is acquired or (ii) have
material adverse tax consequences for any of Holdings, the Borrower or any of
the Restricted Subsidiaries.

 

9.12.        Pledges of Additional Stock and
Evidence of Indebtedness.  (a)     Except as provided in Section 10.1(j) or
(k), the Borrower will pledge, and, if applicable, will cause each Domestic
Subsidiary to pledge, to the Administrative Agent, for the benefit of the
Secured Parties, (i) all the capital stock of each Domestic Subsidiary
(other than any Unrestricted Subsidiary) and each Foreign Subsidiary (other
than an Unrestricted Subsidiary or any capital stock representing in excess of
65% of the issued and outstanding capital stock in any Foreign Subsidiary) held
by the Borrower or a Domestic Subsidiary, in each case, formed or otherwise
purchased or acquired after the date hereof, in each case pursuant to a
supplement to the Pledge Agreement in form and substance reasonably
satisfactory to the Administrative Agent, (ii) all evidences of
Indebtedness in excess of $5,000,000 received by the Borrower or any of the
Domestic Subsidiaries (other than any Unrestricted Subsidiary) in connection with
any disposition of assets pursuant to Section 10.4(b), in each case
pursuant to a supplement to the Pledge Agreement, substantially in the form of
Annex A thereto and (iii) any global promissory notes executed after the
date hereof evidencing Indebtedness of any of Holdings, the Borrower and each
Subsidiary that is owing to any of the Borrower or any Domestic Subsidiary
(other than any Unrestricted Subsidiary), in each case pursuant to a supplement
to the Pledge Agreement, substantially in the form of Annex A thereto.

 

96

 

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

 

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

 

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

 

9.13.        Use of Proceeds. 
The Borrower and the Canadian Borrower will use the Letters of Credit
and the proceeds of all Loans for the purposes set forth in the recitals to
this Agreement.

 

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

 

9.15.        Further Assurances. 
(a)     Each of Holdings, the
Borrower and the Canadian Borrower will, and will cause each other Credit Party
to, execute any and all further documents, financing statements, agreements and
instruments, and take all such further actions

 

97

 

(including the filing and recording of financing
statements, fixture filings, mortgages, deeds of trust and other documents),
which may be required under any applicable law, or which the Administrative
Agent or the Required Lenders may reasonably request, in order to grant,
preserve, protect and perfect the validity and priority of the security
interests created or intended to be created by the Security Agreement, the
Pledge Agreement or any Mortgage, all at the expense of Holdings, the Borrower
and the Restricted Subsidiaries.

 

(b)           If any assets (including any real
estate or improvements thereto or any interest therein) with a book value or
fair market value in excess of $1,000,000 are acquired by the Borrower, the
Canadian Borrower or any other Credit Party after the Closing Date (other than
assets constituting Collateral under the Security Agreement that become subject
to the Lien of the Security Agreement upon acquisition thereof) that are of the
nature secured by the Security Agreement or any Mortgage, as the case may be,
the Borrower will notify the Administrative Agent and the Lenders thereof, and,
if requested by the Administrative Agent or the Required Lenders, the Borrower
will cause such assets to be subjected to a Lien securing the applicable
Obligations and will take, and cause the other Credit Parties to take, such
actions as shall be necessary or reasonably requested by the Administrative
Agent to grant and perfect such Liens consistent with the applicable
requirements of the Security Documents, including actions described in
paragraph (a) of this Section, all at the expense of the Credit
Parties.  Any Mortgage delivered to the Administrative
Agent in accordance with the preceding sentence shall be accompanied by (x) a
policy or policies of title insurance issued by a nationally recognized title
insurance company insuring the Lien of each Mortgage as a valid first Lien on
the Mortgaged Property described therein, free of any other Liens except as
expressly permitted by Section 10.2, together with such endorsements,
coinsurance and reinsurance as the Administrative Agent may reasonably request
and (y) an opinion of local counsel to the Borrower (or in the event a
Subsidiary of the Borrower is the Mortgagor, to such Subsidiary) substantially
in the form of Exhibit I-3.

 

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

 

9.17.        Post-Closing Covenant. 
Borrower shall deliver, furnish and/or cause to be furnished all of the
obligations set forth below within the time periods specified therewith: within
thirty (30) days after the Effective Date, (i) execute and deliver a
second modification of Mortgage, in favor of the Administrative Agent, for the
benefit of the Lenders, with respect to each Mortgaged Property, (ii) furnish
to the Administrative Agent in respect of each Mortgaged Property an
endorsement to the existing mortgagee’s title insurance policy to insure that (a) the
Mortgage insured thereby creates a valid first lien in such Mortgaged Property,
free and clear of all defects and encumbrances, except as disclosed therein, (b) names
the Administrative Agent for the benefit of the Lenders as the insured
thereunder and (c) to be issued by title companies reasonably satisfactory
to the Administrative Agent and the Borrower (including any such title
companies acting as co-insurers or reinsurers, at the option of the Administrative
Agent), and (iii) deliver flood certificates with respect to all Mortgaged
Properties in Schedule 1.1(b) and evidence of flood insurance with respect
to each Mortgaged Property that is located in a special

 

98

 

flood hazard and is located in a community that
participates in the National Flood Insurance Program, in each case in
compliance with any applicable regulations of the Board, in form and substance
reasonably satisfactory to Collateral Agent; provided, such thirty (30)
day period may be extended an additional thirty (30) days with the consent of
Administrative Agent.

 

SECTION 10.                          Negative Covenants

 

Each of Holdings, the Borrower and the Canadian
Borrower hereby covenant and agree that on the Effective Date and thereafter,
until the Commitments, the Swingline Commitment and each Letter of Credit have
terminated and the Loans and Unpaid Drawings, together with interest, Fees and
all other Obligations incurred hereunder, are paid in full:

 

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

 

(a)           Indebtedness arising under the
Credit Documents;

 

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

 

(c)           Indebtedness in respect of any
bankers’ acceptance, letter of credit, warehouse receipt or similar facilities
entered into in the ordinary course of business;

 

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

 

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

 

(f)            (i) Indebtedness (including
Indebtedness arising under Capital Leases) incurred within 270 days of the
acquisition, construction or improvement of fixed or capital assets to finance
the acquisition, construction or improvement of such fixed or capital assets or
otherwise incurred in respect of Capital Expenditures permitted by Section 10.11,
(ii) Indebtedness arising under Capital Leases entered into in connection
with Permitted Sale Leasebacks and (iii) Indebtedness arising under
Capital Leases, other than Capital Leases in effect on the date hereof and
Capital Leases entered into pursuant to subclauses (i) and (ii) above,
provided that the aggregate amount of Indebtedness incurred pursuant to
this subclause (iii) shall not exceed $75,000,000 at any time
outstanding, and (iv) any refinancing, refunding, renewal or extension of
any Indebtedness specified in subclause (i), (ii) or (iii) above,

 

99

 

provided that the principal amount thereof is not increased
above the principal amount thereof outstanding immediately prior to such
refinancing, refunding, renewal or extension;

 

(g)           Indebtedness outstanding on the
date hereof and listed on Schedule 10.1 and any refinancing, refunding,
renewal or extension thereof, provided that (i) the principal
amount thereof is not increased above the principal amount thereof outstanding
immediately prior to such refinancing, refunding, renewal or extension, except
to the extent otherwise permitted hereunder and (ii) the direct and
contingent obligors with respect to such Indebtedness are not changed;

 

(h)           Indebtedness in respect of Hedge
Agreements;

 

(i)            Indebtedness in respect of
Permitted Subordinated Debt;

 

(j)            (i) Indebtedness of a Person
or Indebtedness attaching to assets of a Person that, in either case, becomes a
Restricted Subsidiary or Indebtedness attaching to assets that are acquired by
the Borrower or any Restricted Subsidiary, in each case after the Closing Date
as the result of a Permitted Acquisition, provided that (w) such
Indebtedness existed at the time such Person became a Restricted Subsidiary or
at the time such assets were acquired and, in each case, was not created in
anticipation thereof, (x) such Indebtedness is not guaranteed in any
respect by the Borrower or any Restricted Subsidiary (other than any such
person that so becomes a Restricted Subsidiary), (y)(A) the capital stock
of such Person is pledged to the Administrative Agent to the extent required
under Section 9.12 and (B) such Person executes a supplement to each
of the Guarantee, the Security Agreement and the Pledge Agreement (or alternative
guarantee and security arrangements in relation to the Obligations) to the
extent required under Sections 9.11 or 9.12, as applicable, provided
that the requirements of this subclause (y) shall not apply to an
aggregate amount at any time outstanding of up to (and including) the Guarantee
and Collateral Exception Amount at such time of the aggregate of (1) such
Indebtedness and (2) all Indebtedness as to which the proviso to
clause (k)(i)(y) below then applies, and (z) the aggregate
amount of such Indebtedness and all Indebtedness incurred under clause (k) below,
when taken together, does not exceed $150,000,000 in the aggregate at any time
outstanding, and (ii) any refinancing, refunding, renewal or extension of
any Indebtedness specified in subclause (i) above, provided
that, except to the extent otherwise permitted hereunder, (x) the
principal amount of any such Indebtedness is not increased above the principal
amount thereof outstanding immediately prior to such refinancing, refunding,
renewal or extension and (y) the direct and contingent obligors with
respect to such Indebtedness are not changed;

 

(k)           (i) Indebtedness of the
Borrower or any Restricted Subsidiary incurred to finance a Permitted
Acquisition, provided that (x) such Indebtedness is not guaranteed
in any respect by any Restricted Subsidiary (other than any Person acquired
(the “acquired Person”) as a result of such Permitted Acquisition or the
Restricted Subsidiary so incurring such Indebtedness) or, in the case of
Indebtedness of any Restricted Subsidiary, by the Borrower, (y)(A) the
Borrower pledges the capital stock of such acquired Person to the
Administrative Agent to the extent required under Section 9.12 and (B) such
acquired Person executes a supplement to the Guarantee, the Security Agreement
and the Pledge Agreement (or alternative guarantee and security arrangements in
relation to the Obligations) to the extent required under Sections 9.11 or
9.12, as applicable, provided that the requirements of this
subclause (y) shall not

 

100

 

apply to an aggregate amount at any time
outstanding of up to (and including) the amount of the Guarantee and Collateral
Exception Amount at such time of the aggregate of (1) such Indebtedness
and (2) all Indebtedness as to which the proviso to clause (j)(i)(y) above
then applies, and (z) the aggregate amount of such Indebtedness and all
Indebtedness assumed or permitted to exist under clause (j) above,
when taken together, does not exceed $150,000,000 in the aggregate at any time
outstanding, and (ii) any refinancing, refunding, renewal or extension of
any Indebtedness specified in subclause (i) above, provided
that (x) the principal amount of any such Indebtedness is not increased
above the principal amount thereof outstanding immediately prior to such
refinancing, refunding, renewal or extension and (y) the direct and
contingent obligors with respect to such Indebtedness are not changed, except
to the extent otherwise permitted hereunder;

 

(l)            Indebtedness of Restricted
Foreign Subsidiaries in an aggregate amount at any time outstanding not to
exceed the Dollar Equivalents of $125,000,000 (which amount shall include the
aggregate outstanding amount at any time of any Indebtedness of Restricted
Foreign Subsidiaries existing at the Closing Date);

 

(m)          (i) Indebtedness incurred in
connection with any Permitted Sale Leaseback and (ii) any refinancing,
refunding, renewal or extension of any Indebtedness specified in
subclause (i) above, provided that, except to the extent
otherwise permitted hereunder, (x) the principal amount of any such
Indebtedness is not increased above the principal amount thereof outstanding
immediately prior to such refinancing, refunding, renewal or extension and (y) the
direct and contingent obligors with respect to such Indebtedness are not
changed;

 

(n)           (i) additional Indebtedness,
provided that the aggregate amount of Indebtedness incurred and
remaining outstanding pursuant to this clause (n) shall not at any
time exceed $100,000,000; and (ii) any refinancing, refunding, renewal or
extension of any Indebtedness specified in subclause (i) above; and

 

(o)           Indebtedness in respect of
Permitted Additional Subordinated Notes to the extent that the Net Cash
Proceeds therefrom are, immediately after the receipt thereof, applied to the
prepayment of Term Loans in accordance with Section 5.2

 

(B)         Neither Parent nor Holdings will
create, incur, assume or suffer to exist any Indebtedness except (1) with
respect to Parent, Qualified PIK Securities and (2) the guarantee
obligations of Parent and Holdings of the Subordinated Notes under the
Subordinated Note Indenture (provided that Holdings shall not guarantee
the Subordinated Notes unless (i) Holdings also has guaranteed the
Obligations pursuant to the Guarantee, (ii) such guarantee of the
Subordinated Notes is unsecured and subordinated to such guarantee of the
Obligations on terms no less favorable to the Lenders than the subordination
provisions of the Subordinated Notes and (iii) such guarantee of the
Subordinated Notes provides for the release and termination thereof, without
action by any party, upon any release and termination of such guarantee of the
Obligations).

 

(C)           Neither of Parent, Holdings nor
the Borrower will, nor will they permit any Subsidiary to, issue any preferred
stock or other preferred equity interests, other than, in the case of Parent,
Qualified PIK Securities.

 

101

 

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

 

(a)           Liens arising under the Credit
Documents;

 

(b)           Permitted Liens;

 

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

 

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

 

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

 

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

 

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

 

(h)           additional Liens so long as the
aggregate principal amount of the obligations so secured does not exceed
$50,000,000 at any time outstanding.

 

(B)           Neither Parent nor Holdings will
create, incur, assume or suffer 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 thereof, except (a) liens
of the nature set forth in clauses (a), (c) and (h) of the
definition of the term “Permitted Liens” and (b) Liens created under the
Pledge Agreement.

 

10.3.        Limitation on Fundamental Changes. 
(A) Except as expressly permitted by Section 10.4 or 10.5,
each of Holdings, the Borrower and the Canadian Borrower will not, and will not
permit any of the Restricted Subsidiaries to, enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution),

 

102

 

or convey, sell, lease, assign, transfer or
otherwise dispose of, all or substantially all its business units, assets or
other properties, except that:

 

(a)           any Subsidiary of the Borrower or
any other Person may be merged or consolidated with or into the Borrower, provided
that (i) the Borrower shall be the continuing or surviving corporation or
the Person formed by or surviving any such merger or consolidation (if other
than the Borrower) shall be an entity organized or existing under the laws of
the United States, any state thereof, the District of Columbia or any territory
thereof (the Borrower or such Person, as the case may be, being herein referred
to as the “Successor Borrower”), (ii) the Successor Borrower (if
other than the Borrower) shall expressly assume all the obligations of the Borrower
under this Agreement and the other Credit Documents pursuant to a supplement
hereto or thereto in form reasonably satisfactory to the Administrative Agent, (iii) no
Default or Event of Default would result from the consummation of such merger
or consolidation, (iv) the Successor Borrower shall be in compliance, on a
pro forma basis after giving effect to such merger or consolidation, with the
covenants set forth in Sections 10.9 and 10.10, as such covenants are
recomputed as at the last day of the most recently ended Test Period under such
Section as if such merger or consolidation had occurred on the first day
of such Test Period, (v) each Guarantor, unless it is the other party to
such merger or consolidation, shall have by a supplement to the Guarantee
confirmed that its Guarantee shall apply to the Successor Borrower’s
obligations under this Agreement, (vi) each Subsidiary grantor and each
Subsidiary pledgor, unless it is the other party to such merger or
consolidation, shall have by a supplement to the Security Agreement or the
Pledge Agreement, as applicable, confirmed that its obligations thereunder
shall apply to the Successor Borrower’s obligations under this Agreement, (vii) each
mortgagor of a Mortgaged Property, unless it is the other party to such merger
or consolidation, shall have by an amendment to or restatement of the
applicable Mortgage confirmed that its obligations thereunder shall apply to
the Successor Borrower’s obligations under this Agreement, and (viii) the
Borrower shall have delivered to the Administrative Agent an officer’s
certificate and an opinion of counsel, each stating that such merger or
consolidation and such supplement to this Agreement or any Security Document
comply with this Agreement; provided  further that if the foregoing
are satisfied, the Successor Borrower (if other than the Borrower) will succeed
to, and be substituted for, the Borrower under this Agreement;

 

(b)           any Subsidiary of the Canadian
Borrower or any other Person may be merged, amalgamated or consolidated with or
into the Canadian Borrower, provided that (i) the Canadian Borrower
shall be the continuing or surviving corporation or the Person formed by or
surviving any such merger, amalgamation or consolidation (if other than the
Canadian Borrower) shall be a corporation organized or existing under the laws
of Canada (the Canadian Borrower or such Person, as the case may be, being
herein referred to as the “Successor Canadian Borrower”), (ii) the
Successor Canadian Borrower (if other than the Canadian Borrower) shall
expressly assume all the obligations of the Canadian Borrower under this
Agreement and the other Credit Documents pursuant to a supplement hereto or
thereto in form reasonably satisfactory to the Administrative Agent, (iii) no
Default or Event of Default would result from the consummation of such merger,
amalgamation or consolidation, (iv) the Borrower shall be in compliance,
on a pro forma basis after giving effect to such merger, amalgamation or
consolidation, with the covenants set forth in Sections 10.9 and 10.10, as
such covenants are recomputed as at the last day of the most recently ended
Test Period under such Section as if such merger, amalgamation or
consolidation had occurred on the first day of such Test Period,

 

103

 

(v) the Borrower, each Guarantor and each
Foreign Subsidiary Guarantor, unless it is the other party to such merger,
amalgamation or consolidation, shall have by a supplement to the Guarantee or
Canadian Subsidiary Guarantee, as the case may be, confirmed that its Guarantee
or Canadian Subsidiary Guarantee, as the case may be, shall apply to the
Successor Canadian Borrower’s obligations under this Agreement, (vi) each
grantor and each pledgor, unless it is the other party to such merger,
amalgamation or consolidation, shall have by a supplement to the applicable
Security Document confirmed that its obligations thereunder shall apply to the
Successor Canadian Borrower’s obligations under this Agreement, (vii) each
mortgagor of a Mortgaged Property, unless it is the other party to such merger,
amalgamation or consolidation, shall have by an amendment to or restatement of
the applicable Mortgage confirmed that its obligations thereunder shall apply
to the Successor Canadian Borrower’s obligations under this Agreement, and (viii) the
Canadian Borrower shall have delivered to the Administrative Agent an officer’s
certificate and an opinion of counsel, each stating that such merger,
amalgamation or consolidation, such supplement to this Agreement or any
Security Document and such amendment or restatement to any applicable Mortgage,
as the case may be, comply with this Agreement; provided further
that if the foregoing are satisfied, the Successor Canadian Borrower (if other
than the Canadian Borrower) will succeed to, and be substituted for, the
Canadian Borrower under this Agreement;

 

(c)           any Subsidiary of the Borrower
(other than the Canadian Borrower) or any other Person may be merged,
amalgamated or consolidated with or into any one or more Subsidiaries of the
Borrower (other than the Canadian Borrower), provided that (i) in
the case of any merger, amalgamation or consolidation involving one or more
Restricted Subsidiaries, (A) a Restricted Subsidiary shall be the
continuing or surviving corporation or (B) the Borrower shall take all
steps necessary to cause the Person formed by or surviving any such merger,
amalgamation or consolidation (if other than a Restricted Subsidiary) to become
a Restricted Subsidiary, (ii) in the case of any merger, amalgamation or
consolidation involving one or more Guarantors and/or Canadian Subsidiary
Guarantors, as the case may be, a Guarantor or Canadian Subsidiary Guarantor,
as the case may be, shall be the continuing or surviving corporation or the Person
formed by or surviving any such merger, amalgamation or consolidation (if other
than a Guarantor or Canadian Subsidiary Guarantor, as the case may be) shall
execute a supplement to the Guarantee Agreement, the Pledge Agreement and the
Security Agreement and any applicable Mortgage or the analogous Canadian
Security Documents, as the case may be, in form and substance reasonably
satisfactory to the Administrative Agent in order to become a Guarantor or
Canadian Subsidiary Guarantor, as the case may be, and pledgor, mortgagor and
grantor of Collateral for the benefit of the Secured Parties, (iii) no
Default or Event of Default would result from the consummation of such merger,
amalgamation or consolidation, (iv) the Borrower shall be in compliance,
on a pro forma basis after giving effect to such merger, amalgamation or
consolidation, with the covenants set forth in Sections 10.9 and 10.10, as
such covenants are recomputed as at the last day of the most recently ended
Test Period under such Section as if such merger or consolidation had
occurred on the first day of such Test Period, and (v) the Borrower shall
have delivered to the Administrative Agent an Officers’ Certificate stating
that such merger, amalgamation or consolidation and such supplements to any
Security Document comply with this Agreement;

 

(d)           any Restricted Subsidiary that is not a Guarantor or a Foreign
Subsidiary Guarantor may sell, lease, transfer or otherwise dispose of any or
all of its assets (upon voluntary

 

104

 

liquidation or otherwise) to the Borrower, the
Canadian Borrower, a Guarantor, a Foreign Subsidiary Guarantor or any other
Restricted Subsidiary of the Borrower;

 

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

 

(f)            any Restricted Subsidiary (other
than the Canadian Borrower) may liquidate or dissolve if (x) the Borrower
determines in good faith that such liquidation or dissolution is in the best
interests of the Borrower and is not materially disadvantageous to the Lenders
and (y) to the extent such Restricted Subsidiary is a Credit Party, any
assets or business not otherwise disposed of or transferred in accordance with Section 10.4
or 10.5, or, in the case of any such business, discontinued, shall be
transferred to, or otherwise owned or conducted by, another Credit Party after
giving effect to such liquidation or dissolution.

 

(B)           Holdings will not engage in any
business or activity other than (a) the ownership of all the outstanding
shares of capital stock of the Borrower, (b) maintaining its corporate
existence, (c) participating in tax, accounting and other administrative
matters as a member of the consolidated group of Holdings and Borrower, (d) the
performance of the Credit Documents to which it is a party, (e) making any
Dividend permitted by Section 10.6 or holding any cash received in
connection with Dividends made by the Borrower in accordance with Section 10.6
pending application thereof by Holdings in the manner contemplated by Section 10.6
and (f) activities incidental to the businesses or activities described in
clauses (a) to (e) of this Section 10.3(B).  Holdings will not own or acquire any assets
(other than shares of capital stock of the Borrower, cash and Permitted
Investments) or incur any liabilities (other than liabilities under the Credit
Documents, liabilities under its guarantee of the Subordinated Notes and
liabilities imposed by law, including tax liabilities, and other liabilities
incidental to its existence and business and activities permitted by this
Agreement).

 

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

 

10.4.        Limitation on Sale of Assets. 
Each of Holdings, the Borrower and the Canadian Borrower will not, and
will not permit any of the Restricted Subsidiaries to, (i) convey, sell,
lease, assign, transfer or otherwise dispose of any of its property, business
or assets

 

105

 

(including receivables and leasehold interests),
whether now owned or hereafter acquired (other than any such sale, transfer,
assignment or other disposition resulting from any casualty or condemnation, of
any assets of the Borrower or the Restricted Subsidiaries) or (ii) sell to
any Person (other than the Borrower, a Guarantor or a Restricted Foreign Subsidiary)
any shares owned by it of any Restricted Subsidiary’s capital stock, except
that:

 

(a)           the Borrower and the Restricted
Subsidiaries may sell, transfer or otherwise dispose of used or surplus
equipment, vehicles, inventory and other assets in the ordinary course of
business;

 

(b)           the Borrower and the Restricted
Subsidiaries may sell, transfer or otherwise dispose of other assets (other
than accounts receivable) for fair value, provided that (i) the
aggregate amount of such sales, transfers and disposals by the Borrower and the
Restricted Subsidiaries, taken as a whole, pursuant to this clause (b) shall
not exceed in the aggregate $200,000,000, (ii) any consideration in excess
of $5,000,000 received by the Borrower or any Guarantor in connection with such
sales, transfers and other dispositions of assets pursuant to this clause (b) that
is in the form of Indebtedness shall be pledged to the Administrative Agent
pursuant to Section 9.12, (iii) with respect to any such sale,
transfer or disposition (or series of related sales, transfers or dispositions)
in an aggregate amount in excess of $10,000,000 the Borrower shall be in
compliance, on a pro forma basis after giving effect to such sale, transfer or
disposition, with the covenants set forth in Sections 10.9 and 10.10, as
such covenants are recomputed as at the last day of the most recently ended
Test Period under such Sections as if such sale, transfer or disposition had
occurred on the first day of such Test Period and (iv) after giving effect
to any such sale, transfer or disposition, no Default or Event of Default shall
have occurred and be continuing;

 

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

 

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

 

(e)           in addition to selling or
transferring accounts receivable pursuant to the other provisions hereof, the
Borrower and the Restricted Subsidiaries may (i) sell or discount without
recourse accounts receivable arising in the ordinary course of business in
connection with the compromise or collection thereof and (ii) sell or
transfer accounts receivable and related rights pursuant to customary
receivables financing facilities so long as, in the case of clauses (i) and
(ii), the Net Cash Proceeds thereof to the Borrower and its Restricted
Subsidiaries (except in the case of transactions permitted by Section 10.4(e)(i) to
the extent the Net Cash Proceeds of any such transaction do not exceed $10,000)
are promptly applied to the prepayment and/or commitment reductions as provided
for in Section 5.2.

 

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

 

106

 

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

 

(b)           Permitted Investments;

 

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

 

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

 

(e)           investments in Hedge Agreements
permitted by Section 10.1(h);

 

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

 

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

 

(h)           investments constituting non-cash
proceeds of sales, transfers and other dispositions of assets to the extent
permitted by Section 10.4;

 

(i)            investments in any Guarantor
(other than Holdings), the Borrower, the Canadian Borrower or any Foreign
Subsidiary Guarantor;

 

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

 

(k)           investments in the equity
interests of one or more newly formed persons that are received in
consideration of the contribution by the Borrower or its applicable Restricted
Subsidiaries of assets (including capital stock) to such person or persons, provided
that (i) the fair market value of such assets, determined on arms-length
basis, so contributed pursuant to this paragraph (k) shall not in the
aggregate exceed $50,000,000, (ii) with respect to investments in

 

107

 

Foreign Joint Ventures, the sum of all investments
in Foreign Joint Ventures made pursuant to this Section 10.5 (k) prior
to the date thereof and all investment in Foreign Joint Ventures made pursuant
to Section 10.5(m) below prior to the date thereof, when taken
together, as valued at the fair market value of such investment at the time
each such investment is made, does not exceed $50,000,000 plus an amount equal
to any repayments, interest, returns, profits, distributions, income and
similar amounts actually received in cash in respect of any such investment
(which amount shall not exceed the amount of such investment valued at the fair
market value of such investment at the time such investment was made) in the aggregate
and (iii) in respect of each such contribution, an Authorized Officer of
the Borrower shall certify, in a form to be agreed upon by the Borrower and the
Administrative Agent (x) after giving effect to such contribution, no
Default or Event of Default shall have occurred and be continuing, (y) the
fair market value of the assets so contributed and (z) that the
requirements of paragraph (i) of this proviso remain satisfied;

 

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

 

(m)          additional investments (including
investments in Minority Investments and Unrestricted Subsidiaries), as valued
at the fair market value of such investment at the time each such investment is
made, in an aggregate amount at the time of such investment not in excess of
the Available Amount at such time plus an amount equal to any repayments,
interest, returns, profits, distributions, income and similar amounts actually
received in cash in respect of any such investment (which amount shall not
exceed the amount of such investment valued at the fair market value of such
investment at the time such investment was made), provided, that with
respect to investments in Foreign Joint Ventures, the sum of all investments in
Foreign Joint Ventures made pursuant to Section 10.5 (k) above prior
to the date thereof and all investment in Foreign Joint Ventures made pursuant
to this Section 10.5(m) prior to the date thereof, when taken
together, as valued at the fair market value of such investment at the time
each such investment is made, does not exceed $50,000,000 plus an amount equal
to any repayments, interest, returns, profits, distributions, income and
similar amounts actually received in cash in respect of any such investment
(which amount shall not exceed the amount of such investment valued at the fair
market value of such investment at the time such investment was made) in the
aggregate;

 

(n)           investments permitted under Section 10.6;
and

 

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

 

10.6.        Limitation on Dividends. 
None of Holdings, the Borrower or the Canadian Borrower will declare or
pay any dividends (other than, (a) in respect of  Holdings, dividends payable solely in its
capital stock or rights, warrants or options to purchase its capital stock and (b) in
respect of the Borrower, dividends payable solely in its capital stock) or
return any capital to its stockholders or make any other distribution, payment
or delivery of property or cash to its stockholders as such, or redeem, retire,
purchase or otherwise acquire, directly or indirectly, for consideration, any
shares of any class of its capital stock or the capital stock of any

 

108

 

direct or indirect parent now or hereafter
outstanding (or any options or warrants or stock appreciation rights issued
with respect to any of its capital stock), or set aside any funds for any of
the foregoing purposes, or permit any of the Restricted Subsidiaries to
purchase or otherwise acquire for consideration (other than in connection with
an investment permitted by Section 10.5) any shares of any class of the
capital stock of Holdings or the Borrower, now or hereafter outstanding (or any
options or warrants or stock appreciation rights issued with respect to any of
its capital stock) (all of the foregoing “Dividends”), provided
that, so long as no Default or Event of Default exists or would exist after
giving effect thereto, (a) Holdings or the Borrower may redeem in whole or
in part any of its capital stock for another class of capital stock or rights
to acquire its capital stock or with proceeds from substantially concurrent
equity contributions or issuances of new shares of its capital stock (or pay
dividends with such proceeds), provided that such other class of capital stock
contains terms and provisions at least as advantageous to the Lenders in all
respects material to their interests as those contained in the capital stock
redeemed thereby, (b) Holdings or the Borrower may or may pay Dividends to
Parent to repurchase shares of its or Parent’s capital stock (or any options or
warrants or stock appreciation rights issued with respect to any of its or
Parent’s capital stock) held by officers, directors and employees of Parent,
Holdings and its Subsidiaries, with the proceeds of dividends from, seriatim,
the Borrower and Holdings, as applicable, which shall also be permitted, so
long as such repurchase is pursuant to, and in accordance with the terms of,
management and/or employee stock plans, stock subscription agreements or
shareholder agreements, (c) the Borrower and the Restricted Subsidiaries
may make investments permitted by Section 10.5, (d) Holdings may
declare and pay Dividends on its capital stock, with the proceeds of dividends
from, the Borrower, which shall also be permitted to declare and pay dividends
on its capital stock, provided that (i) subject to clause (ii) below,
the aggregate amount of such Dividends paid by Holdings pursuant to this
clause (d) shall not at any time exceed the sum of (x) $30,000,000
in the aggregate per annum and (y) 50% of Cumulative Consolidated Net
Income Available to Stockholders at such time less the amount of Dividends
previously paid pursuant to clause (i)(x) or (i)(y) of this proviso
following the last day of the most recent fiscal quarter for which Section 9.1
Financials have been delivered to the Lenders under Section 9.1, (ii) with
respect to each of clauses (x) and (y), at the time of the payment of any
such Dividends and after giving effect thereto, both (a) the Consolidated
Total Debt to Consolidated EBITDA Ratio on the date of such payment of such
dividends shall be less than 5.00:1.00 and (b) the Consolidated Senior
Debt to Consolidated EBITDA Ratio on the date of such payment of such dividends
shall be less than 3.50:1.00 and (e) the Borrower and Holdings may declare
and pay dividends and/or make distributions on its capital stock, as
applicable, the proceeds of which will be used by Parent or Holdings solely to
pay taxes of Parent, Holdings, the Borrower and the Subsidiaries as part of a
consolidated tax filing group for U.S. federal, state or local tax purposes,
along with franchise taxes, administrative and similar expenses related to its
existence and ownership of the Borrower, as applicable, provided that the
amount of such dividends does not exceed in any fiscal year the amount of such
taxes and expenses payable for such fiscal year (it being understood that such
expenses shall in no event exceed $1,000,000 in the aggregate per fiscal year).

 

10.7.        Limitations on Debt Payments and
Amendments.  (a)     The Borrower will not prepay, repurchase or
redeem or otherwise defease any Subordinated Notes (it being understood that
any payment of principal prior to April 6, 2014 shall be deemed a
prepayment for purposes of this Section 10.7); provided, however,
that so long as (i) no Default or Event of

 

109

 

Default has occurred and is continuing and (ii) on
the date of such determination the Consolidated Senior Debt to Consolidated
EBITDA Ratio is less than 3.50 to 1.00, the Borrower may prepay, repurchase or
redeem any Subordinated Notes; provided, that to the extent such
prepayment, repurchase or redemption is made with the proceeds of
subordinated Indebtedness that is permitted by Section 10.1 (other than
Permitted Additional Subordinated Notes), such subordinated Indebtedness shall
have terms material to the interests of the Lenders not materially less
advantageous to the Lenders than those of the Subordinated Notes.

 

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

 

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

 

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

 

	
  Period

  	
   

  	
  Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  May 29,
  2006 to August 27, 2006

  	
   

  	
  5.00 to 1.00

  	
   

  
	
  August 28
  2006 to November 26, 2006

  	
   

  	
  5.00 to 1.00

  	
   

  
	
  November 27,
  2006 to February 25, 2007

  	
   

  	
  5.00 to 1.00

  	
   

  
	
  February 26,
  2007 to May 27, 2007

  	
   

  	
  4.75 to 1.00

  	
   

  
	
  May 28,
  2007 to August 26, 2007

  	
   

  	
  4.75 to 1.00

  	
   

  
	
  August 27,
  2007 December 2, 2007

  	
   

  	
  4.50 to 1.00

  	
   

  
	
  December 3,
  2007 to March 2, 2008

  	
   

  	
  4.50 to 1.00

  	
   

  
	
  March 3,
  2008 to June 1, 2008

  	
   

  	
  4.25 to 1.00

  	
   

  
	
  June 2,
  2008 to August 31, 2008

  	
   

  	
  4.25 to 1.00

  	
   

  
	
  September 1,
  2008 to November 30, 2008

  	
   

  	
  4.00 to 1.00

  	
   

  
	
  December 1,
  2008 and thereafter

  	
   

  	
  4.00 to 1.00

  	
   

  

 

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

 

110

 

	
  Period

  	
   

  	
  Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  May 29,
  2006 to August 27, 2006

  	
   

  	
  2.10 to 1.00

  	
   

  
	
  August 28
  2006 to November 26, 2006

  	
   

  	
  2.10 to 1.00

  	
   

  
	
  November 27,
  2006 to February 25, 2007

  	
   

  	
  2.10 to 1.00

  	
   

  
	
  February 26,
  2007 to May 27, 2007

  	
   

  	
  2.10 to 1.00

  	
   

  
	
  May 28,
  2007 to August 26, 2007

  	
   

  	
  2.20 to 1.00

  	
   

  
	
  August 27,
  2007 December 2, 2007

  	
   

  	
  2.20 to 1.00

  	
   

  
	
  December 3,
  2007 to March 2, 2008

  	
   

  	
  2.30 to 1.00

  	
   

  
	
  March 3,
  2008 to June 1, 2008

  	
   

  	
  2.30 to 1.00

  	
   

  
	
  June 2,
  2008 to August 31, 2008

  	
   

  	
  2.30 to 1.00

  	
   

  
	
  September 1,
  2008 to November 30, 2008

  	
   

  	
  2.30 to 1.00

  	
   

  
	
  December 1,
  2008 to March 1, 2009

  	
   

  	
  2.40 to 1.00

  	
   

  
	
  March 2,
  2009 to May 31, 2009

  	
   

  	
  2.40 to 1.00

  	
   

  
	
  June 1,
  2009 to August 30, 2009

  	
   

  	
  2.50 to 1.00

  	
   

  
	
  August 31,
  2009 to November 29, 2009

  	
   

  	
  2.50 to 1.00

  	
   

  
	
  November 30,
  2009 to February 28, 2010

  	
   

  	
  2.50 to 1.00

  	
   

  
	
  March 1,
  2010 to May 30, 2010

  	
   

  	
  2.50 to 1.00

  	
   

  
	
  June 1,
  2010 to August 29, 2010

  	
   

  	
  2.75 to 1.00

  	
   

  
	
  August 30,
  2010 to November 28, 2010

  	
   

  	
  2.75 to 1.00

  	
   

  
	
  November 29,
  2010 and thereafter

  	
   

  	
  2.75 to 1.00

  	
   

  

 

10.11.      Capital Expenditures. 
Holdings, the Borrower and the Canadian Borrower will not, and will not
permit any of the Restricted Subsidiaries to, make any Capital Expenditures
(other than Permitted Acquisitions that constitute Capital Expenditures), that
would cause the aggregate amount of such Capital Expenditures made by the
Borrower and the Restricted Subsidiaries in any fiscal year of the Borrower set
forth below to exceed (i) the sum of (a) the greater of (x) the
amount set forth in the table below opposite such fiscal year and (y) an
amount equal to 6.00% multiplied by Consolidated Net Sales for such fiscal year
(such greater amount, the “Permitted Capital Expenditure Amount”) and (b) the
Available Amount as of the last day of such fiscal year (provided that no
portion of the Available Amount may be used for Capital Expenditures until the
entire amount of the sum of (x) the Permitted Capital Expenditure Amount
for such year and (y) the carry-forward amount (as defined below in this Section 10.11)
for such year shall have been used to make Capital Expenditures) less (ii) to
the extent deducted in arriving at Consolidated Earnings in the prior fiscal
year, the amount of expenses related to the implementation of enterprise
resource planning systems of such prior fiscal year.

 

	
  Period

  	
   

  	
  Amount

  	
   

  
	
  March 1,
  2004 to November 28, 2004

  	
   

  	
  $

  	
  35,000,000

  	
   

  
	
  November 29,
  2004 to November 27, 2005

  	
   

  	
  $

  	
  45,000,000

  	
   

  
	
  November 28,
  2005 to November 26, 2006

  	
   

  	
  $

  	
  50,000,000

  	
   

  
	
  November 27,
  2006 to December 2, 2007

  	
   

  	
  $

  	
  40,000,000

  	
   

  

 

111

 

	
  Period

  	
   

  	
  Amount

  	
   

  
	
  December 3,
  2007 to November 30, 2008

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
  December 1,
  2008 to November 29, 2009

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
  November 30,
  2009 to November 28, 2010

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
  November 29,
  2010 to the Maturity Date

  	
   

  	
  $

  	
  40,000,000

  	
   

  

 

To the extent that Capital Expenditures (other than
Permitted Acquisitions that constitute Capital Expenditures) made by the
Borrower and the Restricted Subsidiaries during any fiscal year are less than
the Permitted Capital Expenditure Amount for such fiscal year, 100% of such
unused amount (each such amount, a “carry-forward amount”) may be
carried forward to the immediately succeeding fiscal year and utilized to make
such Capital Expenditures in such succeeding fiscal year in the event the
amount set forth above for such succeeding fiscal year has been used (it being
understood and agreed that (a) no carry-forward amount may be carried
forward beyond the first two fiscal years immediately succeeding the fiscal
year in which it arose, (b) no portion of the carry-forward amount
available for any fiscal year may be used until the entire amount of the
Permitted Capital Expenditure Amount for such fiscal year (without giving
effect to such carry-forward amount) shall have been used to make Capital
Expenditures and (c) if the carry-forward amount available for any fiscal
year is the sum of amounts carried forward from each of the two immediately
preceding fiscal years, no portion of such carry-forward amount from the
earlier of the two immediately preceding fiscal years may be used until the
entire portion of such carry-forward amount from the more recent immediately
preceding fiscal year shall have been used for such Capital Expenditures made
in such fiscal year).

 

SECTION 11.                          Events of Default

 

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

 

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

 

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

 

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

 

112

 

11.4.        Default Under Other Agreements. 
(a) Any of Holdings, the Borrower, the Canadian Borrower or any of
the Restricted Subsidiaries shall (i) default in any payment with respect
to any Indebtedness (other than the Obligations) in excess of $20,000,000 in
the aggregate, for Holdings, the Borrower, the Canadian Borrower and such
Subsidiaries, beyond the period of grace, if any, provided in the instrument or
agreement under which such Indebtedness was created or (ii) default in the
observance or performance of any agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing, securing
or relating thereto, or any other event shall occur or condition exist (other
than, with respect to Indebtedness consisting of any Hedge Agreements,
termination events or equivalent events pursuant to the terms of such Hedge
Agreements), the effect of which default or other event or condition is to
cause, or to permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause, any such Indebtedness to
become due prior to its stated maturity; or (b) without limiting the
provisions of clause (a) above, any such Indebtedness shall be
declared to be due and payable, or required to be prepaid other than by a
regularly scheduled required prepayment or as a mandatory prepayment (and, with
respect to Indebtedness consisting of any Hedge Agreements, other than due to a
termination event or equivalent event pursuant to the terms of such Hedge
Agreements), prior to the stated maturity thereof; or

 

11.5.        Bankruptcy, etc. 
Holdings, the Borrower, the Canadian Borrower or any Specified
Subsidiary shall commence a voluntary case, proceeding or action concerning
itself under (a) Title 11 of the United States Code entitled “Bankruptcy,”
or (b) in the case of the Canadian Borrower and any Foreign Subsidiary
that is a Specified Subsidiary, any domestic or foreign law relating to
bankruptcy, insolvency reorganization or relief of debtors legislation of its
jurisdiction of incorporation, in each case as now or hereafter in effect, or
any successor thereto (collectively, the “Bankruptcy Code”); or an
involuntary case, proceeding or action is commenced against any of Holdings,
the Borrower, the Canadian Borrower or any Specified Subsidiary and the
petition is not controverted within 10 days after commencement of the case,
proceeding or action; or an involuntary case, proceeding or action is commenced
against any of Holdings, the Borrower, the Canadian Borrower or any Specified
Subsidiary and the petition is not dismissed within 60 days after commencement
of the case, proceeding or action; or a custodian (as defined in the Bankruptcy
Code) receiver, receiver manager, trustee or similar person is appointed for,
or takes charge of, all or substantially all of the property of any of
Holdings, the Borrower, the Canadian Borrower or any Specified Subsidiary; or
any of Holdings, the Borrower, the Canadian Borrower or any Specified
Subsidiary commences any other proceeding or action under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to any of Holdings, the Borrower, the Canadian Borrower or any
Specified Subsidiary; or there is commenced against any of Holdings, the
Borrower, the Canadian Borrower or any Specified Subsidiary any such proceeding
or action that remains undismissed for a period of 60 days; or any of Holdings,
the Borrower, the Canadian Borrower or any Specified Subsidiary is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding or action is entered; or any of Holdings, the Borrower, the
Canadian Borrower or any Specified Subsidiary suffers any appointment of any
custodian receiver, receiver manager, trustee or the like for it or any
substantial part of its property to continue undischarged or unstayed for a
period of 60 days; or any of Holdings, the Borrower, the Canadian Borrower or
any Specified Subsidiary makes a general assignment for

 

113

 

the benefit of creditors; or any corporate action
is taken by any of Holdings, the Borrower, the Canadian Borrower or any
Specified Subsidiary for the purpose of effecting any of the foregoing; or

 

11.6.        ERISA.  (a) Any Plan shall fail to satisfy the
minimum funding standard required for any plan year or part thereof or a waiver
of such standard or extension of any amortization period is sought or granted
under Section 412 of the Code; any Plan is or shall have been terminated
or is the subject of termination proceedings under ERISA (including the giving
of written notice thereof); an event shall have occurred or a condition shall
exist in either case entitling the PBGC to terminate any Plan or to appoint a
trustee to administer any Plan (including the giving of written notice
thereof); any Plan shall have an accumulated funding deficiency (whether or not
waived); any of Holdings, the Borrower or any Subsidiary or any ERISA Affiliate
has incurred or is likely to incur a liability to or on account of a Plan under
Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of
ERISA or Section 4971 or 4975 of the Code (including the giving of written
notice thereof); (b) there could result from any event or events set forth
in clause (a) of this Section 11.6 the imposition of a lien, the
granting of a security interest, or a liability, or the reasonable likelihood
of incurring a lien, security interest or liability; and (c) such lien,
security interest or liability will or would be reasonably likely to have a
Material Adverse Effect; or

 

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

 

11.8.        Pledge Agreement. 
The Pledge Agreements or any material provision thereof shall cease to
be in full force or effect (other than pursuant to the terms hereof or thereof
or as a result of acts or omissions of the Administrative Agent or any Lender)
or any pledgor thereunder or any Credit Party shall deny or disaffirm in
writing any pledgor’s obligations under the Pledge Agreement; or

 

11.9.        Security Agreement. 
The Security Agreements or any material provision thereof shall cease to
be in full force or effect (other than pursuant to the terms hereof or thereof
or as a result of acts or omissions of the Administrative Agent or any Lender)
or any grantor thereunder or any Credit Party shall deny or disaffirm in
writing any grantor’s obligations under the Security Agreement; or

 

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

 

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

 

114

 

11.12.           Canadian Security Documents. 
Any Canadian Security Document or any material provision of any Canadian
Security Document shall cease to be in full force or effect (other than
pursuant to the terms hereof or thereof or as a result of acts or omissions of
the Administrative Agent or any Lender) or any grantor thereunder or any Credit
Party shall deny or disaffirm in writing any grantors obligations under any
Canadian Security Document; or

 

11.13.           Subordination. 
The Obligations of the Borrower and the Canadian Borrower, or the
obligations of Holdings or any Subsidiaries pursuant to the Guarantee or the
Canadian Guarantee, shall cease to constitute senior indebtedness under the
subordination provisions of any document or instrument evidencing the Subordinated
Notes or any other permitted subordinated Indebtedness or such subordination
provisions shall be invalidated or otherwise cease to be legal, valid and
binding obligations of the parties thereto, enforceable in accordance with
their terms; or

 

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

 

11.15.           Change of Control. 
A Change of Control shall occur; then, and in any such event, and at any
time thereafter, if any Event of Default shall then be continuing, the
Administrative Agent shall, upon the written request of the Required Lenders,
by written notice to the Borrower, take any or all of the following actions,
without prejudice to the rights of the Administrative Agent, the Canadian
Administrative Agent or any Lender to enforce its claims against the Borrower
and the Canadian Borrower, except as otherwise specifically provided for in
this Agreement (provided that, if an Event of Default specified in Section 11.5
shall occur with respect to the Borrower, the Canadian Borrower or any
Specified Subsidiary, the result that would occur upon the giving of written
notice by the Administrative Agent as specified in clauses (i), (ii) and (iv) below
shall occur automatically without the giving of any such notice):  (i) declare the US Total Revolving
Credit Commitment terminated and the Canadian Total Revolving Credit Commitment
terminated, whereupon the Commitments and Swingline Commitment, if any, of each
Lender or the Swingline Lender, as the case may be, shall forthwith terminate
immediately and any Fees theretofore accrued shall forthwith become due and
payable without any other notice of any kind; (ii) declare the principal
of and any accrued interest and fees in respect of all Loans and all
Obligations owing hereunder and thereunder to be, whereupon the same shall
become, forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower and the
Canadian Borrower; (iii) terminate any Letter of Credit that may be
terminated in accordance with its terms; and/or (iv) direct the Borrower
and the Canadian Borrower to pay (and the Borrower and the Canadian Borrower
agree that upon receipt of such notice, or upon the occurrence of an Event of
Default specified in Section 11.5 with respect to the Borrower, the
Canadian Borrower or any Specified Subsidiary, it will pay) to the
Administrative Agent or the Canadian Administrative Agent, as applicable, at
its Administrative Agent’s Office such additional amounts of cash, to be held
as security for the Borrower’s and the Canadian

 

115

 

Borrower’s respective reimbursement obligations for
(x) Drawings that may subsequently occur thereunder, equal to the
aggregate Stated Amount of all Letters of Credit issued and then outstanding
and (y) the full face amount of Bankers’ Acceptances outstanding prior to
their maturity dates.

 

SECTION 12.                                          The Administrative Agent

 

12.1.        Appointment. 
Each Lender hereby irrevocably designates and appoints the
Administrative Agent as the agent of such Lender under this Agreement and the
other Credit Documents, and each such Lender irrevocably authorizes the
Administrative Agent, in such capacity, to take such action on its behalf under
the provisions of this Agreement and the other Credit Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Credit
Documents, together with such other powers as are reasonably incidental thereto.  Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Administrative Agent shall not have any duties
or responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Credit Document or otherwise exist against the
Administrative Agent.  Neither the
Syndication Agent nor the Co-Documentation Agents, in their respective
capacities as such, shall have any obligations, duties or responsibilities
under this Agreement but shall be entitled to all benefits of this Section 12.

 

12.2.        Delegation of Duties. 
The Administrative Agent may execute any of its duties under this
Agreement and the other Credit Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties.  The
Administrative Agent shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by it with reasonable care.

 

12.3.        Exculpatory Provisions. 
Neither the Administrative Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates shall be (a) liable for
any action lawfully taken or omitted to be taken by it or such Person under or
in connection with this Agreement or any other Credit Document (except for its
or such Person’s own gross negligence or willful misconduct) or (b) responsible
in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrower, the Canadian Borrower, any
Guarantor, any Canadian Subsidiary Guarantor, any other Credit Party or any
officer thereof contained in this Agreement or any other Credit Document or in
any certificate, report, statement or other document referred to or provided
for in, or received by the Administrative Agent under or in connection with,
this Agreement or any other Credit Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Credit Document or for any failure of the Borrower, the Canadian
Borrower, any Guarantor, any Canadian Subsidiary Guarantor or any other Credit
Party to perform its obligations hereunder or thereunder.  The Administrative Agent shall not be under
any obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Credit Document, or to inspect the properties, books or
records of the Borrower or the Canadian Borrower.

 

116

 

12.4.        Reliance by Administrative Agent. 
The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telecopy, telex or teletype message, statement,
order or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel (including counsel to the
Borrower and/or the Canadian Borrower), independent accountants and other
experts selected by the Administrative Agent. 
The Administrative Agent may deem and treat the Lender specified in the
Register with respect to any amount owing hereunder as the owner thereof for
all purposes unless a written notice of assignment, negotiation or transfer
thereof shall have been filed with the Administrative Agent.  The Administrative Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Credit Document unless it shall first receive such advice or concurrence
of the Required Lenders as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability
and expense that may be incurred by it by reason of taking or continuing to
take any such action.  The Administrative
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the other Credit Documents in accordance with
a request of the Required Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Loans.

 

12.5.        Notice of Default. 
The Administrative Agent shall not be deemed to have knowledge or notice
of the occurrence of any Default or Event of Default hereunder unless the
Administrative Agent has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a “notice of default”.  In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give notice thereof to
the Lenders.  The Administrative Agent
shall take such action with respect to such Default or Event of Default as
shall be reasonably directed by the Required Lenders, provided that unless and
until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders (except
to the extent that this Agreement requires that such action be taken only with
the approval of the Required Lenders or each of the Lenders, as applicable).

 

12.6.        Non-Reliance on Administrative
Agent and Other Lenders.  Each
Lender expressly acknowledges that neither the Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates has
made any representations or warranties to it and that no act by the
Administrative Agent hereinafter taken, including any review of the affairs of
the Borrower, the Canadian Borrower, any Guarantor, any Canadian Subsidiary
Guarantor or any other Credit Party, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender.  Each Lender represents to the Administrative
Agent that it has, independently and without reliance upon the Administrative
Agent or any other Lender, and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Borrower, the Canadian Borrower, any Guarantor, any
Canadian Subsidiary Guarantor and any other Credit Party and made its own decision
to make its Loans hereunder and enter into this Agreement.  Each Lender also represents that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such 

 

117

 

documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Credit Documents, and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Borrower, the Canadian Borrower, any
Guarantor, any Canadian Subsidiary Guarantor and any other Credit Party.  Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any
duty or responsibility to provide any Lender with any credit or other information
concerning the business, assets, operations, properties, financial condition,
prospects or creditworthiness of the Borrower, the Canadian Borrower, any
Guarantor, any Canadian Subsidiary Guarantor or any other Credit Party that may
come into the possession of the Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.

 

12.7.        Indemnification. 
The Lenders agree to indemnify the Administrative Agent in its capacity
as such (to the extent not reimbursed by the Borrower or the Canadian Borrower
and without limiting the obligation of the Borrower and the Canadian Borrower
to do so), ratably according to their respective portions of the Total Credit
Exposure in effect on the date on which indemnification is sought (or, if
indemnification is sought after the date upon which the Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance
with their respective portions of the Total Credit Exposure in effect
immediately prior to such date), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever that may at any time
(including at any time following the payment of the Loans) be imposed on,
incurred by or asserted against the Administrative Agent in any way relating to
or arising out of, the Commitments, this Agreement, any of the other Credit
Documents or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by the Administrative Agent under or in connection with any of the foregoing,
provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Administrative Agent’s
gross negligence or willful misconduct. 
The agreements in this Section 12.7 shall survive the payment of
the Loans and all other amounts payable hereunder.

 

12.8.        Administrative Agent in its
Individual Capacity.  The Administrative Agent and
its Affiliates may make loans to, accept deposits from and generally engage in
any kind of business with the Borrower, the Canadian Borrower, any Guarantor,
any Canadian Subsidiary Guarantor and any other Credit Party as though the
Administrative Agent were not the Administrative Agent hereunder and under the
other Credit Documents.  With respect to
the Loans made by it, the Administrative Agent shall have the same rights and
powers under this Agreement and the other Credit Documents as any Lender and
may exercise the same as though it were not the Administrative Agent, and the
terms “Lender” and “Lenders” shall include the Administrative Agent in its
individual capacity.

 

12.9.        Successor Agent. 
The Administrative Agent may resign as Administrative Agent upon 20 days’
prior written notice to the Lenders and the Borrower.  If the Administrative Agent shall resign as
Administrative Agent under this Agreement and the other Credit

 

118

 

Documents, then the Required Lenders shall appoint
from among the Lenders a successor agent for the Lenders, which successor agent
shall be approved by the Borrower (which approval shall not be unreasonably
withheld), whereupon such successor agent shall succeed to the rights, powers
and duties of the Administrative Agent, and the term “Administrative Agent”
shall mean such successor agent effective upon such appointment and approval,
and the former Administrative Agent’s rights, powers and duties as
Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties to
this Agreement or any holders of the Loans. 
After any retiring Administrative Agent’s resignation as Administrative
Agent, the provisions of this Section 12 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Administrative
Agent under this Agreement and the other Credit Documents.

 

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

 

12.11.      Canadian Administrative Agent.(a)  Each of the Lenders hereby agrees
and confirms that the provisions of this Section 12 shall apply to
JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative Agent
with respect to the Canadian Revolving Credit Loans upon the same terms and
subject to the same conditions as provided in this Section 12 mutatis
mutandis; provided, that any successor Canadian Administrative Agent
shall be a Canadian Resident with an office in Toronto, Canada or Montreal,
Canada having a combined capital and surplus of at least $500,000,000 or an
Affiliate of any such bank which is also a bank.

 

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

 

The said constitution of the fondé de pouvoir  (within the meaning of Article 2692
of the Civil Code of Quebec) as the holder of such irrevocable power of
attorney and of the Canadian Administrative Agent as bondholder and mandatary
with respect to any bond that may be issued

 

119

 

and pledged from time to time for the benefit of
the Lenders shall be deemed to have been ratified and confirmed by any assignee
by the execution of an Assignment and Acceptance.

 

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

 

The Canadian Administrative Agent herein appointed
as fondé de pouvoir shall have the same rights, powers and immunities as
the Agents as stipulated in this Article XII, which shall apply mutatis
mutandis.  Without limitation, the
provisions of Section 12.9 of this Agreement shall apply mutatis
mutandis to the resignation and appointment of a successor to the Canadian
Administrative Agent acting as fondé de pouvoir.

 

SECTION 13.                                          Collateral Allocation Mechanism

 

13.1.        Implementation of CAM.  (a)     On the CAM Exchange Date, (i) the
Commitments shall automatically and without further act be terminated as
provided in Section 11, (ii) the Lenders shall automatically and
without further act (and without regard to the provisions of Section 14.6)
be deemed to have exchanged interests in the Credit Facilities such that in
lieu of the interest of each Lender in each Credit Facility in which it shall
participate as of such date (including such Lender’s interest in the Specified
Obligations of each Credit Party in respect of each such Credit Facility), such
Lender shall hold an interest in every one of the Credit Facilities (including
the Specified Obligations of each Credit Party in respect of each such Credit
Facility and each L/C Reserve Account established pursuant to Section 13.2
below), whether or not such Lender shall previously have participated therein,
equal to such Lender’s CAM Percentage thereof and (iii) simultaneously
with the deemed exchange of interests pursuant to clause (ii) above, in the
case of (A) any Canadian Lender that has prior to the date thereof
notified the Canadian Administrative Agent and the Borrower in writing that it
has elected to have this clause (iii) apply to it, and (B) any other
Lender that has notified the Administrative Agent in writing that it desires to
have its deemed participation following the CAM Exchange Date converted to
Dollars, the interests in the Canadian Obligations to be received by such
Lender in such deemed exchange shall, automatically and with no further action
required, be converted into the Dollar Equivalent, determined using the
Exchange Rate calculated as of such date, of such amount and on and after such
date all amounts accruing and owed to such Lender in respect of such
Obligations shall accrue and be payable in Dollars at the rate otherwise
applicable hereunder, provided that such CAM Exchange will not affect the
aggregate amount of the Obligations of the Borrower and the Canadian Borrower
to the Lenders under the Credit Documents. 
Each Lender and each Credit Party hereby consents and agrees to the CAM
Exchange, and each Lender agrees that the CAM Exchange shall be binding upon
its successors and assigns and any person that acquires a participation in its
interests in any Credit Facility.  Each
Credit Party agrees from time to time to execute and deliver to the
Administrative Agent all promissory notes and other instruments and documents
as the Administrative Agent shall reasonably request to evidence and confirm
the respective interests of the Lenders after giving effect to the CAM
Exchange, and each Lender agrees to surrender any promissory notes originally
received by it in connection with its Loans hereunder to the Administrative
Agent

 

120

 

against delivery of new promissory notes evidencing
its interests in the Credit Facilities; provided, however, that the failure of
any Credit Party to execute or deliver or of any Lender to accept any such
promissory note, instrument or document shall not affect the validity or
effectiveness of the CAM Exchange.

 

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

 

13.2.        Letters of Credit.  (a)     In the event that on the CAM Exchange Date
any Letter of Credit shall be outstanding and undrawn in whole or in part, or
any amount drawn under a Letter of Credit shall constitute an Unpaid Drawing,
each Lender with a U.S. Revolving Credit Commitment or Canadian Revolving
Credit Commitment, as applicable, in respect of Unpaid Drawings on Letters of
Credit shall, before giving effect to the CAM Exchange, promptly pay over to
the Administrative Agent, in immediately available funds and in the currency
that such Letters of Credit are denominated (or at the request of a Lender,
such amount in the Dollar Equivalent thereof at such time), an amount equal to
such Lender’s Revolving Credit Commitment Percentage (as notified to such
Lender by the Administrative Agent), of such Letter of Credit’s undrawn face
amount or (to the extent it has not already done so) such Letter of Credit’s
Unpaid Drawing, as the case may be, together with interest thereon from the CAM
Exchange Date to the date on which such amount shall be paid to the
Administrative Agent at the rate that would be applicable at the time to a
Revolving Credit Loan that is an ABR Loan in a principal amount equal to such
amount, as the case may be.  The
Administrative Agent shall establish a separate account or accounts for each
Lender (each, an “L/C Reserve Account”) for the amounts received with
respect to each such Letter of Credit pursuant to the preceding sentence.  The Administrative Agent shall deposit in
each Lender’s L/C Reserve Account such Lender’s CAM Percentage of the amounts
received from the Lenders as provided above. 
The Administrative Agent shall have sole dominion and control over each
L/C Reserve Account, and the amounts deposited in each L/C Reserve Account
shall be held in such L/C Reserve Account until withdrawn as provided in
paragraph (b), (c), (d) or (e) below.  The Administrative Agent shall maintain
records enabling it to determine the amounts paid over to it and deposited in
the L/C Reserve Accounts in respect of each Letter of Credit and the amounts on
deposit in respect of each Letter of Credit attributable to each Lender’s CAM
Percentage.  The amounts held in each
Lender’s L/C Reserve Account shall be held as a reserve against the Letter of
Credit Exposure, shall be the property of such Lender, shall not constitute
Loans to or give rise to any claim of or against any Credit Party and shall not
give rise to any obligation on the part of the Borrower or the Canadian
Borrower to pay interest to such Lender, it being agreed that the reimbursement
obligations in respect of Letters of Credit shall arise only at such times as
drawings are made thereunder, as provided in Section 3.

 

(b)           In the event that after the CAM
Exchange Date any drawing shall be made in respect of a Letter of Credit, the
Administrative Agent shall, at the request of the Letter of

 

121

 

Credit Issuer withdraw from the L/C Reserve Account
of each Lender any amounts, up to the amount of such Lender’s CAM Percentage of
such drawing, deposited in respect of such Letter of Credit and remaining on
deposit and deliver such amounts to the Letter of Credit Issuer in satisfaction
of the reimbursement obligations of the Lenders under Section 3 (but not
of the Borrower and the Canadian Borrower under Section 3,
respectively).  In the event any Lender
shall default on its obligation to pay over any amount to the Administrative
Agent in respect of any Letter of Credit as provided in this Section 13.2,
the Letter of Credit Issuer shall, in the event of a drawing thereunder, have a
claim against such Lender to the same extent as if such Lender had defaulted on
its obligations under Section 2.5(e), but shall have no claim against any
other Lender in respect of such defaulted amount, notwithstanding the exchange
of interests in the reimbursement obligations pursuant to Section 13.1.  Each other Lender shall have a claim against
such defaulting Lender for any damages sustained by it as a result of such
default, including, in the event such Letter of Credit shall expire undrawn,
its CAM Percentage of the defaulted amount.

 

(c)           In the event that after the CAM
Exchange Date any Letter of Credit shall expire undrawn, the Administrative
Agent shall withdraw from the L/C Reserve Account of each Lender the amount
remaining on deposit therein in respect of such Letter of Credit and distribute
such amount to such Lender.

 

(d)           With the prior written approval
of the Administrative Agent and the Letter of Credit Issuer, any Lender may
withdraw the amount held in its L/C Reserve Account in respect of the undrawn
amount of any Letter of Credit.  Any
Lender making such a withdrawal shall be unconditionally obligated, in the
event there shall subsequently be a drawing under such Letter of Credit, to pay
over to the  Administrative Agent, for
the account of the Letter of Credit Issuer on demand, its CAM Percentage of
such drawing.

 

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

 

13.3.        Net Payments Upon Implementation
of CAM Exchange.  Notwithstanding any other
provision of this Agreement, if, as a direct result of the implementation of
the CAM Exchange, the Borrower or the Canadian Borrower is required to withhold
Non-Excluded Taxes from amounts payable to the Administrative Agent, any Lender
or any Participant hereunder, the amounts so payable to the Administrative
Agent, such Lender or such Participant shall be increased to the extent
necessary to yield to the Administrative Agent, such Lender or such Participant
(after payment of all Non-Excluded Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Agreement; provided,
however, that the Borrower and the Canadian Borrower shall not be
required to increase any such amounts payable to such Lender or Participant
under this Section 13.3 (but, rather, shall be required to increase any
such amounts payable to such Lender or Participant to the extent required by

 

122

 

Section 5.4) if such Lender or Participant was
prior to or on the CAM Exchange Date already a Lender or Participant with
respect to such Borrower or Canadian Borrower. 
If a Non-U.S. Lender (or Non-U.S. Participant), in its good faith
judgment, is eligible for an exemption from, or reduced rate of, U.S. Federal
withholding tax on payments by the Borrower under this Agreement, the Borrower
shall not be required to increase any such amounts payable to such Non-U.S.
Lender (or Non-U.S. Participant) if such Non-U.S. Lender (or Non-U.S.
Participant) fails to comply with the requirements of paragraph (b) of Section 5.4.  The Canadian Borrower shall not be required
to indemnify or pay any additional amounts to any Lender in respect of Canadian
withholding tax pursuant to this Section 13.3 to the extent that such
taxes result from a failure by the Lender to comply with any Reporting
Requirement described in Section 5.4(c) of this Agreement if (i) compliance
is required by law, regulation, administrative practice or any applicable tax
treaty as a precondition to exemption from or a reduction in the rate of
deduction or withholding of tax, and (ii) the Canadian borrower has first
made written request to the Lender that such Lender comply with the particular
Reporting Requirement (identified specifically in such request) and the Lender
has not complied with such Reporting Requirement within 30 Business Days of
such written request; provided, however that the Canadian
Borrower shall not be relieved of its obligation to indemnify or pay additional
amounts to a Lender (x) where such obligation arose prior to the Canadian
Borrower’s written request to the Lender respecting such Reporting Requirement,
(y) if, by reason of any change in any law, regulation, administrative
practice or applicable tax treaty occurring after the date hereof, the Lender,
as applicable, is unable to duly comply with such Reporting Requirement, or (z) to
the extent that the additional payment or indemnity compensates the Lender for
an amount to which the Lender would have been entitled to received under this Section 13.3
had the Lender complied with the Reporting Requirement.  Upon a CAM Exchange, a Lender (or
Participant) will use commercially reasonable efforts, and complete any
procedural formalities necessary, to become an Eligible Lender with respect to
the Canadian Borrower and, if such Lender (or Participant) fails to do so, the
Canadian Borrower shall not be required to increase any such amounts payable to
such Lender (or Participant) (unless such Lender is prohibited from becoming a
Canadian Lender by its governing documents). 
If the Borrower or the Canadian Borrower, as the case may be, fails to
pay any such Non-Excluded Taxes when due to the appropriate taxing authority or
fails to remit to the Administrative Agent the required receipts or other
required documentary evidence, such Borrower or Canadian Borrower shall
indemnify the Administrative Agent, the Lenders and the Participants for any
incremental taxes, interest, costs or penalties that may become payable by the
Administrative Agent, such Lenders or such Participants as a result of any such
failure.

 

SECTION 14.                                          Miscellaneous

 

14.1.        Amendments and Waivers.  Neither this Agreement nor any other Credit
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 14.1.  The Required Lenders may, or, with the
written consent of the Required Lenders, the Administrative Agent may, from
time to time, (a) enter into with the relevant Credit Party or Credit
Parties written amendments, supplements or modifications hereto and to the
other Credit Documents for the purpose of adding any provisions to this
Agreement or the other Credit Documents or changing in any manner the rights of
the Lenders or of the Credit Parties hereunder or thereunder or (b) waive,
on such terms and conditions as the Required Lenders or the Administrative Agent,
as the case may be, may specify in such instrument, any of the requirements of
this Agreement or the other Credit Documents or

 

123

 

any Default or
Event of Default and its consequences; provided, however, that no
such waiver and no such amendment, supplement or modification shall directly (i) forgive
any portion of any Loan or extend the final scheduled maturity date of any Loan
or reduce the stated rate, or forgive any portion, or extend the date for the
payment, of any interest or fee payable hereunder (other than as a result of
waiving the applicability of any post-default increase in interest rates), or
extend the final expiration date of any Lender’s Commitment or extend the final
expiration date of any Letter of Credit beyond the L/C Maturity Date, or
increase the aggregate amount of the Commitments of any Lender, or amend or
modify any provisions of Section 14.8(a), in each case without the written
consent of each Lender directly and adversely affected thereby, or (ii) amend,
modify or waive any provision of this Section 14.1 or reduce the
percentages specified in the definitions of the terms “Required Canadian
Revolving Credit Lenders”, “Required US Revolving Credit Lenders”,  “Required
Lenders” “Required Tranche A Term Lenders”, “Required Tranche E Term Lenders”
and  “Required Term Lenders” or consent to the assignment or transfer by the
Borrower or the Canadian Borrower of its rights and obligations under any
Credit Document to which it is a party (except as permitted pursuant to Section 10.3),
in each case without the written consent of each Lender directly and adversely
affected thereby, or (iii) amend, modify or waive any provision of Section 12
without the written consent of the then-current Administrative Agent, or (iv) amend,
modify or waive any provision of Section 3 without the written consent of
the Letter of Credit Issuer, or (v) amend, modify or waive any provisions
hereof relating to Swingline Loans without the written consent of the Swingline
Lender, or (vi) (a) change any Revolving Credit Commitment to a
Tranche A Term Loan Commitment or Tranche E Term Loan Commitment, (b) change
any Tranche A Term Loan Commitment or Tranche E Term Loan Commitment to a
Revolving Credit Commitment, (c) change any Tranche A Term Loan Commitment
to a Tranche E Term Loan Commitment or (d) change any Tranche E Term Loan
Commitment to a Tranche A Term Loan Commitment, in each case without the prior
written consent of each Lender directly and adversely affected thereby, or (vii) release
all or substantially all of the Guarantors under the Guarantee (except as
expressly permitted by the Guarantee), release all or substantially all of the
Canadian Subsidiary Guarantors under any Canadian Subsidiary Guarantee (except as
permitted by any Canadian Subsidiary Guarantee) or release all or substantially
all of the Collateral under the Pledge Agreement, the Security Agreement, the
Canadian Security Documents and the Mortgages, in each case without the prior
written consent of each Lender, or (viii) amend Section 2.9(a) so
as to permit Interest Period intervals greater than six months without regard
to availability to Lenders, without the written consent of each Lender directly
and adversely affected thereby, or (ix) decrease any Tranche A Repayment
Amount or Tranche E Repayment Amount, extend any scheduled Tranche A Repayment
Date or Tranche E Repayment Date or decrease the amount or allocation of any
mandatory prepayment to be received by any Lender holding any Tranche A Term
Loans or Tranche E Term Loans, in each case without the written consent of the
Required Tranche A Term Lenders and Tranche E Term Loans, as applicable, and; provided, further,
that at any time that no Default or Event of Default has occurred and is continuing,
the Revolving Credit Commitment of any Lender may be increased to finance a
Permitted Acquisition, with the consent of such Lender, the Borrower and the
Administrative Agent (which consent, in the case of the Administrative Agent,
shall not be unreasonably withheld) and without the consent of the Required
Lenders, so long as (i) the Increased Commitment Amount at such time, when
added to the amount of Indebtedness incurred pursuant to Section 10.1(k) and
outstanding at such time, does not exceed the limits set forth therein, (ii) the
Borrower or its applicable Restricted

 

124

 

Subsidiary shall pledge the capital stock of any
person acquired pursuant thereto to the Administrative Agent for the benefit of
the Lenders to the extent required under Section 9.12 and (iii) to
the extent determined by the Administrative Agent to be necessary to ensure pro
rata borrowings commencing with the initial borrowing after giving effect to
such increase, the Borrower shall prepay any BA Loans or Eurodollar Loans
outstanding immediately prior to such initial borrowing; as used herein, the “Increased
Commitment Amount” means, at any time, aggregate amount of all increases
pursuant to this proviso made at or prior to such time less the aggregate
amount of all voluntary reductions of the Revolving Credit Commitments made
prior to such time.  Any such waiver and
any such amendment, supplement or modification shall apply equally to each of
the affected Lenders and shall be binding upon the Borrower, the Canadian
Borrower, such Lenders, the Administrative Agent and all future holders of the
affected Loans.  In the case of any
waiver, the Borrower, the Lenders and the Administrative Agent shall be
restored to their former positions and rights hereunder and under the other
Credit Documents, and any Default or Event of Default waived shall be deemed to
be cured and not continuing, it being understood that no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
right consequent thereon.

 

14.2.                        Notices.  All notices,
requests and demands to or upon the respective parties hereto to be effective
shall be in writing (including by facsimile transmission), and, unless
otherwise expressly provided herein, shall be deemed to have been duly given or
made when delivered, or three days after being deposited in the mail, postage prepaid,
or, in the case of telecopy notice, when received, addressed as follows in the
case of the Borrower, the Canadian Borrower and the Administrative Agent, and
in the case of the other parties hereto to such other address as may be
hereafter notified by the respective parties hereto:

 

	
  The Borrower and the
  Canadian Borrower:

  	
   

  	
  Sealy Mattress
  Company

  One Office
  Parkway

  Trinity, NC  27370

  Attention:
  Kenneth L. Walker

  Fax:  +-336-861-3786

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

   

  Kohlberg Kravis Roberts & Co., L.P.

  9 West 57th Street

  Suite 4200

  New York, NY 
  10019

  Attention: Brian
  Carroll

  Fax:  212-750-0003

  

 

125

 

	
  The Administrative
  Agent:

  	
   

  	
  JPMorgan Chase Bank

  Agent Bank Services Group

  1111 Fannin, 10th Floor

  Houston,
  Texas  77002

  Attention: Vaughan Nguyen

  Fax: (713) 750-2932

   

  with a copy to:

   

  JPMorgan Chase Bank

  270 Park Avenue,
  4th Floor

  New York, New
  York 10017

  Attention:
  Kathryn Duncan

  Fax:
  212-270-6637

  
	
   

  	
   

  	
   

  
	
  The Canadian
  Administrative Agent:

  	
   

  	
  JPMorgan Chase Bank, N.A., Toronto Branch

  200 Bay Street, Suite 1800

  Royal Bank Plaza, South Tower

  Toronto, Ontario M5J 2J2

  Attention: Corporate Banker

  Fax: 416-981-9138

   

  with a copy to:

   

  JPMorgan Chase Bank, N.A., Toronto Branch

  200 Bay Street, Suite 1800

  Royal Bank Plaza, South Tower

  Toronto, Ontario M5J 2J2

  Attention: Corporate Banking Officer

  Fax: 416-981-9128

  

 

provided that any notice, request or demand to or upon the
Administrative Agent or the Lenders pursuant to Sections 2.3, 2.6, 2.9,
4.2 and 5.1 shall not be effective until received.

 

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

 

14.4.                        Survival of Representations and
Warranties.  All representations and warranties made
hereunder, in the other Credit Documents and in any document, certificate or
statement delivered pursuant hereto or in connection herewith shall survive the
execution and delivery of this Agreement and the making of the Loans hereunder.

 

126

 

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

 

14.6.                        Successors and Assigns; Participations
and Assignments.  (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 Letter of Credit Issuer that
issues any Letter of Credit), except that (i) the Borrower and the
Canadian Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by the Borrower or the Canadian Borrower
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.  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 the Letter of Credit Issuer that
issues any Letter of Credit), Participants (to the extent provided in paragraph
(c) of this Section) and, to 

 

127

 

the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent, the Letter of Credit Issuer 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 paragraph (b)(ii) below, any Lender may assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitments and the Loans at the time owing
to it) with the prior written consent (such consent not be unreasonably
withheld; it being understood that, without limitation, the Borrower shall have
the right to withhold its consent to any assignment if, in order for such
assignment to comply with applicable law, the Borrower would be required to
obtain the consent of, or make any filing or registration with, any
Governmental Authority) of:

 

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

 

(B)                                the Administrative Agent, and, in the
case of Revolving Credit Commitments or Revolving Credit Loans or Canadian
Letters of Credit only, the Swingline Lender and the applicable Letter of
Credit Issuer, provided that no consent of the Administrative Agent, the
Swingline Lender or the Letter of Credit Issuer shall be required for an
assignment of (1) any Commitment to an assignee that is a Lender with a
Commitment of the same Class immediately prior to giving effect to such
assignment or (2) any Term Loan to a Lender, an Affiliate of a Lender or an
Approved Fund.

 

(ii)                                  Assignments shall be subject to the
following additional conditions:

 

(A)                              except in the case of an assignment to a
Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the
entire remaining amount of the assigning Lender’s 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 Acceptance
with respect to such assignment is delivered to the Administrative Agent) shall
not be less than the Dollar Equivalent of $2,500,000 or, in the case of a
Tranche A Term Loan Commitment, Tranche E Term Loan Commitment, Tranche A Term
Loan or Tranche E Term Loan, the Dollar Equivalent of $1,000,000 unless each of
the Borrower and the Administrative Agent otherwise consents, provided
that no such consent of the Borrower shall be required if an Event of Default
under Section 11.1 or Section 11.5 has occurred and is continuing; provided further
that contemporaneous assignments to a single assignee made by Affiliate Lenders
shall be aggregated for purposes of meeting the minimum assignment amount
requirements stated above;

 

128

 

(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 Acceptance,
together with a processing and recordation fee of $3,500, provided that
only one such fee shall be payable in the event of simultaneous assignments to
or from two or more Approved Funds;

 

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

 

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

 

For the purpose of this
Section 14.6(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, advised or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers, advises or manages a
Lender.

 

(iii)                               Subject to acceptance and recording
thereof pursuant to paragraph (b)(v) of this Section, from and after
the effective date specified in each Assignment and Acceptance, the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, 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 Acceptance, be released from
its obligations under this Agreement (and, in the case of an Assignment and
Acceptance 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 2.10, 2.11, 3.5, 5.4 and 14.5).  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
Section 14.6 shall be treated for purposes of this Agreement as a sale by
such Lender of a 

 

129

 

participation in such rights
and obligations in accordance with paragraph (c) of this Section.

 

(iv)                              The Administrative Agent, acting for this
purpose as an agent of the Borrower and the Canadian Borrower, shall maintain
at the Administrative Agent’s Office a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Commitments of, and principal amount of the Loans and
any payment made by the Letter of Credit Issuer under any Letter of Credit owing
to, each Lender pursuant to the terms hereof from time to time (the “Register”).  In the case of a Lender in respect of a
Canadian Revolving Credit Commitment or a Canadian Letter of Credit Commitment,
the Register shall also record the address of the lending office of the Lender
through which such Lender acts under this Agreement and whether or not the
Lender is a Canadian Resident.  Further,
the Register shall contain the name and address of the Administrative Agent and
the Canadian Administrative Agent and the lending office through which each
such Person acts under this Agreement. 
The entries in the Register shall be conclusive, and the Borrower, the
Canadian Borrower, the Administrative Agent, the Letter of Credit Issuer 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 Borrower, the Canadian Borrower, the Letter of Credit Issuer 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 Acceptance executed by an assigning Lender and an assignee, the
assignee’s completed Administrative Questionnaire (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 Acceptance and record the information
contained therein in the Register.  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 Borrower, the Canadian Borrower, the Administrative Agent, the
Letter of Credit Issuer or the Swingline Lender, sell participations to one or
more banks or other entities (each, a “Participant”) in all or a portion
of such Lender’s rights and obligations under this Agreement (including all or
a portion of its Commitments 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 Borrower, the
Canadian Borrower, the Administrative Agent, the Letter of Credit Issuer 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.  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 or any
other Credit Document, provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant,
agree to any 

 

130

 

amendment, modification or waiver described in the
first proviso to Section 14.1 that affects such Participant.  Subject to paragraph (c)(ii) of
this Section, the Borrower and the Canadian Borrower agree that each
Participant shall be entitled to the benefits of Sections 2.10, 2.11 and 5.4 to
the same extent as if it were a Lender and had acquired 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 14.8(b) as
though it were a Lender, provided such Participant agrees to be subject
to Section 14.8(a) as though it were a Lender.

 

(ii)                                  A Participant shall not be entitled to
receive any greater payment under Section 2.10 or 5.4 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 Borrower’s prior written consent.  A Participant that would be a Non-U.S. Lender
if it were a Lender shall not be entitled to the benefits of Section 5.4
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower and the Canadian
Borrower, to comply with Section 5.4(b) as though it were a Lender.

 

(d)                                 Any Lender may, without the consent of
the Borrower or the Administrative Agent, 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 any pledge or assignment to secure
obligations to 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.  In order
to facilitate such pledge or assignment, the Borrower and the Canadian Borrower
hereby agree that, upon request of any Lender at any time and from time to time
after the Borrower has made its initial borrowing hereunder, the Borrower or
the Canadian Borrower, as the case may be, shall provide to such Lender, at the
Borrower’s or the Canadian Borrower’s own expense, a promissory note,
substantially in the form of Exhibit L-1 or L-2, as the case may be,
evidencing the Tranche A Term Loans, Tranche E Term Loans and Revolving Credit
Loans and Swingline Loans, respectively, owing to such Lender.

 

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

 

(f)                                    Each Person that is or becomes a Lender
or Administrative Agent in respect of the Canadian Revolving Credit Commitment
or Canadian Letter of Credit Commitment shall (i) promptly direct the
Administrative Agent to record in the Register the information described in
Section 14.6(b)(iv) of this Agreement, (ii) upon written request
made by Canadian Borrower, deliver to the Canadian Borrower and the
Administrative Agent such certificates, forms, documents, or other evidence as
may be applicable and determined by the 

 

131

 

Canadian Borrower, acting reasonably, to be reasonably
satisfactory to determine whether such Person is a Canadian Resident, and
(iii) promptly direct the Administrative Agent to amend the Register to
reflect any change in the information contained therein with respect to such
Person.

 

14.7.                        Replacements of Lenders under Certain
Circumstances.  The Borrower (on its own behalf and on behalf
of the Canadian Borrower) shall be permitted to replace any Lender that
(a) requests reimbursement for amounts owing pursuant to
Section 2.10, 2.12, 3.5 or 5.4, (b) is affected in the manner
described in Section 2.10(a)(iii) and as a result thereof any of the
actions described in such Section is required to be taken or
(c) becomes a Defaulting Lender, with a replacement bank or other
financial institution, provided that (i) such replacement does not
conflict with any Requirement of Law, (ii) no Event of Default shall have
occurred and be continuing at the time of such replacement, (iii) the
Borrower and/or the Canadian Borrower, as applicable shall repay (or the
replacement bank or institution shall purchase, at par) all Loans and other
amounts (other than any disputed amounts), pursuant to Section 2.10, 2.11,
2.12, 3.5, 5.4 or 14.5, as the case may be, owing to such replaced Lender prior
to the date of replacement, (iv) the replacement bank or institution, if
not already a Lender, and the terms and conditions of such replacement, shall
be reasonably satisfactory to the Administrative Agent, (v) the replaced
Lender shall be obligated to make such replacement in accordance with the
provisions of Section 14.6 (provided that the Borrower shall be obligated
to pay the registration and processing fee referred to therein) and (vi) any
such replacement shall not be deemed to be a waiver of any rights that the
Borrower, the Canadian Borrower, the Administrative Agent or any other Lender
shall have against the replaced Lender.

 

14.8.                        Adjustments; Set-off. 
(a)     If any Lender (a “benefited
Lender”) shall at any time receive any payment of all or part of its Loans,
or interest thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Section 11.5, or otherwise), in a greater
proportion than any such payment to or collateral received by any other Lender,
if any, in respect of such other Lender’s Loans, or interest thereon, such
benefited Lender shall purchase for cash from the other Lenders a participating
interest in such portion of each such other Lender’s Loan, or shall provide
such other Lenders with the benefits of any such collateral, or the proceeds
thereof, as shall be necessary to cause such benefited Lender to share the
excess payment or benefits of such collateral or proceeds ratably with each of
the Lenders; provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such benefited Lender, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest.

 

(b)                                 After the occurrence and during the
continuance of an Event of Default, in addition to any rights and remedies of
the Lenders provided by law, each Lender shall have the right, without prior
notice to the Borrower or the Canadian Borrower, any such notice being
expressly waived by the Borrower and the Canadian Borrower to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrower or the Canadian Borrower hereunder (whether at the stated maturity, by
acceleration or otherwise) to set-off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Lender or any branch or
agency thereof to or for 

 

132

 

the credit or the account of the Borrower or the
Canadian Borrower, as the case may be. 
Each Lender agrees promptly to notify the Borrower or the Canadian
Borrower, as the case may be, and the Administrative Agent after any such
set-off and application made by such Lender, provided that the failure
to give such notice shall not affect the validity of such set-off and
application.

 

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

 

14.10.                  Severability.  Any provision
of this Agreement that is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

 

14.11.                  Integration.  This
Agreement and the other Credit Documents represent the agreement of the
Borrower, the Canadian Borrower, the Administrative Agent and the Lenders with
respect to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Administrative Agent or any Lender
relative to subject matter hereof not expressly set forth or referred to herein
or in the other Credit Documents.

 

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

 

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

 

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

 

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

 

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

 

133

 

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

 

(e)                                  waives, to the maximum extent not
prohibited by law, any right it may have to claim or recover in any legal
action or proceeding referred to in this Section 14.13 any special,
exemplary, punitive or consequential damages.

 

14.14.                  Acknowledgments.  The Borrower
and the Canadian Borrower each hereby acknowledge that:

 

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

 

(b)                                 neither the Administrative Agent nor any
Lender has any fiduciary relationship with or duty to the Borrower or the
Canadian Borrower arising out of or in connection with this Agreement or any of
the other Credit Documents, and the relationship between Administrative Agent
and Lenders, on one hand, and the Borrower or the Canadian Borrower, on the
other hand, in connection herewith or therewith is solely that of debtor and
creditor; and

 

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

 

14.15.              WAIVERS OF JURY TRIAL.  THE BORROWER, THE CANADIAN BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

14.16.                  Confidentiality.  The
Administrative Agent and each Lender shall hold all non-public information
furnished by or on behalf of the Borrower or the Canadian Borrower in
connection with such Lender’s evaluation of whether to become a Lender
hereunder or obtained by such Lender or the Administrative Agent pursuant to the
requirements of this Agreement (“Confidential Information”),
confidential in accordance with its customary procedure for handling
confidential information of this nature and (in the case of a Lender that is a
bank) in accordance with safe and sound banking practices and in any event may
make disclosure as required or requested by any governmental agency or
representative thereof or pursuant to legal process or to such Lender’s or the
Administrative Agent’s attorneys, or to any direct or indirect contractual
counterparty in swap agreements or such contractual counterparty’s professional
advisor (so long as such contractual counterparty or professional advisor to
such contractual party agrees to be bound by the provisions of this
Section 14.16.) or independent auditors or Affiliates, provided
that unless specifically prohibited by applicable law or court order, each
Lender and the Administrative Agent shall notify the Borrower of any request by
any governmental agency or representative thereof (other than any such request
in connection with an examination of the financial condition of such Lender by
such governmental agency) for disclosure of any such non-public information
prior to disclosure of such information, and

 

134

 

provided further that in no event shall any Lender
or the Administrative Agent be obligated or required to return any materials
furnished by the Borrower or any Subsidiary of the Borrower.  Each Lender and the Administrative Agent agrees
that it will not provide to prospective Transferees or to prospective direct or
indirect contractual counterparties in swap agreements to be entered into in
connection with Loans made hereunder any of the Confidential Information unless
such Person is advises of and agrees to be bound by the provisions of this
Section 14.16.

 

Notwithstanding anything express or implied to the
contrary herein or by the documents referred to or incorporated by reference
herein, or any other prior or future oral or written statements by any parties
hereto with respect to the transactions contemplated herein or by the other
Credit Documents, and whether or not any of them are legally binding, the
obligations of confidentiality contained herein and therein, as they relate to
the transactions contemplated by this Agreement, shall not apply to the tax
structure or tax treatment of such transactions, and each recipient (and its
employees, representatives, or other agents) may immediately disclose to any
and all persons, without limitation of any kind, the U.S. Federal income tax
structure and such recipient’s U.S. Federal income tax treatment of such
transactions and any opinions or other tax analyses that have been provided by
the parties hereto (or any agent thereof) to the recipient regarding such tax
structure or tax treatment.  However, no
such recipient shall disclose any information relating to such tax structure or
tax treatment to the extent that non-disclosure is reasonably necessary to
comply with applicable securities law. 
This paragraph is intended to cause the transactions contemplated by
this Agreement not to be treated as having been offered under conditions of
confidentiality for purposes of Section 1.6011-4(b)(3) (or any
successor provision) of the Treasury Regulations promulgated under
Section 6011 of the Internal Revenue Code of 1986, as amended, and shall
be construed in a manner consistent with such purpose.

 

14.17.                  Judgment Currency. 
(a)     The obligations of
the Borrower and the Canadian Borrower 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, the Canadian Administrative Agent or a Lender of the full amount of the
Obligation Currency expressed to be payable to the Administrative Agent, the
Canadian Administrative Agent or Lender under this Agreement or the other
Credit Documents.  If, for the purpose of
obtaining or enforcing judgment against the Borrower, the Canadian Borrower or
any other Credit 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 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 Borrower and the Canadian Borrower
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 

 

135

 

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.

 

(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.

 

14.18.                            USA PATRIOT Act. 
Each Lender hereby notifies the Borrower that pursuant to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the “Patriot
Act”), it is required to obtain, verify and record information that
identifies the Borrower, which information includes the name and address of the
Borrower and other information that will allow such Lender to identify the
Borrower in accordance with the Patriot Act.

 

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

 

(b)                                 Each Credit Party acknowledges and agrees
that any of the Credit Documents to which it is a party or otherwise bound
shall continue in full force and effect and that all of its obligations
thereunder shall be valid and enforceable and shall not be impaired or limited
by the execution or effectiveness of the amendment and restatement of the
Existing Credit Agreement.  Each Credit
Party represents and warrants that all representations and warranties contained
in the Credit Documents to which it is a party or otherwise bound are true,
correct and complete in all material respects on and as of the Effective Date
to the same extent as though made on and as of that date, except to the extent
such representations and warranties specifically relate to an earlier date, in
which case they were true, correct and complete in all material respects on and
as of such earlier date.

 

14.20.                                  Amendment and Restatement. 
It is the intention of each of the parties hereto that the Existing
Credit Agreement be amended and restated so as to preserve the perfection and
priority of all security interests securing indebtedness and obligations under
the Existing Credit Agreement and that all Indebtedness and Obligations and
Guarantee Obligations 

 

136

 

of Borrower and its Subsidiaries hereunder and
thereunder shall be secured by the Security Documents and that this Agreement
does not constitute a novation of the obligations and liabilities existing
under the Existing Credit Agreements. 
The parties hereto further acknowledge and agree that this Agreement
constitutes an amendment of the Existing Credit Agreement made under and in accordance
with the terms of subsection 14.1 of the Existing Credit Agreement.  In addition, unless specifically amended
hereby, each of the Credit Documents, the Exhibits and Schedules to the
Existing Credit Agreement shall continue in full force and effect and that,
from and after the Effective Date, all references to the “Credit Agreement”
contained therein shall be deemed to refer to this Agreement.

 

[Signature
Pages Follow]

 

137

 

IN WITNESS WHEREOF, each
of the parties hereto has caused a counterpart of this Agreement to be duly
executed and delivered as of the date first above written.

 

	
   

  	
  SEALY MATTRESS COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SEALY MATTRESS CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SEALY CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SEALY CANADA LTD./LTEE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

SUBSIDIARY GUARANTORS:

SEALY MATTRESS COMPANY OF PUERTO RICO

OHIO-SEALY MATTRESS MANUFACTURING CO., INC.

OHIO-SEALY MATTRESS MANUFACTURING CO.

SEALY MATTRESS COMPANY OF KANSAS CITY, INC.

SEALY MATTRESS COMPANY OF MEMPHIS

SEALY MATTRESS COMPANY OF ILLINOIS

SEALY MATTRESS COMPANY OF ALBANY, INC.

SEALY OF MARYLAND AND VIRGINIA, INC.

SEALY OF MINNESOTA, INC.

NORTH AMERICAN BEDDING COMPANY

SEALY, INC.

MATTRESS HOLDINGS INTERNATIONAL LLC

THE OHIO MATTRESS COMPANY LICENSING AND COMPONENTS
GROUP

SEALY MATTRESS MANUFACTURING COMPANY, INC.

SEALY TECHNOLOGY LLC

SEALY KOREA, INC.

SEALY REAL ESTATE, INC.

SEALY TEXAS MANAGEMENT, INC.

SEALY TEXAS HOLDINGS LLC

SEALY TEXAS L.P.

WESTERN MATTRESS COMPANY

GESTION CENTURION INC.

 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  JPMORGAN CHASE BANK, N.A.,

  as Administrative Agent and as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A.,

  
	
   

  	
  TORONTO BRANCH,

  
	
   

  	
  as Canadian Administrative Agent and as a Canadian
  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  J.P. MORGAN SECURITIES INC.,

  as Joint Lead Arranger and Joint Bookrunner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  CITIGROUP GLOBAL MARKETS INC.,

  as Joint Lead Arranger and Joint Bookrunner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  CITIBANK, N.A.,

  as Syndication Agent and a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  GENERAL ELECTRIC CAPITAL CORPORATION,

  as Co-Documentation Agent and as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  WACHOVIA BANK, NATIONAL ASSOCIATION,

  as Co-Documentation Agent and as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  LASALLE BANK NATIONAL ASSOCIATION,

  as Co-Documentation Agent and as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  Institution Name:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
                                                                                          ,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

SCHEDULE 1.1(c)

 

Schedule of Facility Amounts at Closing (FINAL)

 

	
   

  	
   

  	
  Amount

  	
   

  
	
  U.S. Revolving Credit
  Facility

  	
   

  	
   

  	
   

  
	
  JPMorgan Chase Bank, N.A.

  	
   

  	
  $

  	
  25,000,000.00

  	
   

  
	
  Grayson and Co

  	
   

  	
  $

  	
  5,000,000.00

  	
   

  
	
  Franklin Floating Rate
  Daily Access Fund

  	
   

  	
  $

  	
  1,750,000.00

  	
   

  
	
  Franklin Floating Rate
  Master Series

  	
   

  	
  $

  	
  750,000.00

  	
   

  
	
  General Electric Capital
  Corporation

  	
   

  	
  $

  	
  12,500,000.00

  	
   

  
	
  Goldman Sachs Credit
  Partners L.P.

  	
   

  	
  $

  	
  15,000,000.00

  	
   

  
	
  ING Capital LLC

  	
   

  	
  $

  	
  15,000,000.00

  	
   

  
	
  Merrill Lynch Capital, a
  div of ML Bus Fin Serv

  	
   

  	
  $

  	
  10,000,000.00

  	
   

  
	
  Royal Bank of Canada

  	
   

  	
  $

  	
  7,500,000.00

  	
   

  
	
  Loan Funding I LLC

  	
   

  	
  $

  	
  2,500,000.00

  	
   

  
	
  Van Kampen Senior Income
  Trust

  	
   

  	
  $

  	
  2,500,000.00

  	
   

  
	
  Van Kampen Senior Loan
  Fund (fka PRIncTr)

  	
   

  	
  $

  	
  2,500,000.00

  	
   

  
	
  Total

  	
   

  	
  $

  	
  100,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Canadian Revolving Credit
  Facility

  	
   

  	
   

  	
   

  
	
  Royal Bank of Canada

  	
   

  	
  $

  	
  12,500,000.00

  	
   

  
	
  GE Canada Finance Holding
  Company

  	
   

  	
  $

  	
  12,500,000.00

  	
   

  
	
  Total

  	
   

  	
  $

  	
  25,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Term Loan A

  	
   

  	
   

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  $

  	
  25,000,000.00

  	
   

  
	
  Carolina First Bank

  	
   

  	
  $

  	
  7,500,000.00

  	
   

  
	
  Citibank, N.A.

  	
   

  	
  $

  	
  50,000,000.00

  	
   

  
	
  General Electric Capital
  Corporation

  	
   

  	
  $

  	
  20,000,000.00

  	
   

  
	
  Goldman Sachs Credit
  Partners, L.P.

  	
   

  	
  $

  	
  27,500,000.00

  	
   

  
	
  JPMorgan Chase Bank, N.A.

  	
   

  	
  $

  	
  105,000,000.00

  	
   

  
	
  Mizuho Corporate
  Bank, Ltd.

  	
   

  	
  $

  	
  10,000,000.00

  	
   

  
	
  State Bank of India

  	
   

  	
  $

  	
  5,000,000.00

  	
   

  
	
  Wachovia Bank, National
  Association

  	
   

  	
  $

  	
  50,000,000.00

  	
   

  
	
  Total

  	
   

  	
  $

  	
  300,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Term Loan E

  	
   

  	
   

  	
   

  
	
  Babson CLO Ltd. 2005-I

  	
   

  	
  $

  	
  1,106,046.31

  	
   

  
	
  Franklin CLO I, Limited

  	
   

  	
  $

  	
  390,142.90

  	
   

  
	
  Franklin CLO II, Limited

  	
   

  	
  $

  	
  547,902.02

  	
   

  
	
  Franklin CLO IV, Limited

  	
   

  	
  $

  	
  365,268.01

  	
   

  
	
  Franklin CLO V, Ltd.

  	
   

  	
  $

  	
  511,375.22

  	
   

  
	
  GE CFS Loan Holdings
  2006-2 LLC

  	
   

  	
  $

  	
  11,244,727.49

  	
   

  
	
  JPMorgan Chase Bank, N.A.

  	
   

  	
  $

  	
  107,836,636.91

  	
   

  
	
  MapleWood (Cayman) Limited

  	
   

  	
  $

  	
  3,536,768.89

  	
   

  
	
  Massachusetts Mutual Life
  Insurance Company

  	
   

  	
  $

  	
  236,833.18

  	
   

  
	
  Merrill Lynch Capital, a div
  of ML Bus Fin Serv

  	
   

  	
  $

  	
  6,000,000.00

  	
   

  
	
  Merritt CLO Holding LLC

  	
   

  	
  $

  	
  8,224,299.07

  	
   

  
	
  Total

  	
   

  	
  $

  	
  140,000,000.00

  	
   

  

 

 

SCHEDULE
1.1(d)

 

EBITDA
ADD-BACKS

 

1.                                       Expenses related to the implementation of
enterprise resource planning systems in an aggregate amount not greater than
$45,000,000 less the amount of expenditures related thereto that are
capitalized.

 

 

EXHIBIT J

TO THE CREDIT AGREEMENT

 

FORM OF EFFECTIVE DATE CERTIFICATE

 

Reference is made to the Third Amended and Restated
Credit Agreement dated as of August 25, 2006 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the “Third
Amended and Restated Credit Agreement”), among SEALY MATTRESS COMPANY, an
Ohio corporation (the “Borrower”), SEALY CANADA LTD./LTEE, a company
organized under the laws of Canada (the “Canadian Borrower”), certain
subsidiaries of the Borrower (each a “Subsidiary” and, collectively, the
“Subsidiaries”), SEALY CORPORATION, a Delaware corporation (“Parent”),
SEALY MATTRESS CORPORATION, a Delaware corporation (“Holdings”), the
lending institutions from time to time parties thereto (each a “Lender”
and, collectively, the “Lenders”), J.P. MORGAN SECURITIES INC., as Joint Lead Arranger and Joint Bookrunner, CITIGROUP GLOBAL MARKETS INC., as Joint
Lead Arranger, Joint Bookrunner, CITIBANK, N.A., as Syndication Agent,
JPMORGAN CHASE BANK, N.A., as Administrative Agent, JPMORGAN CHASE BANK, N.A.,
TORONTO BRANCH, as Canadian Administrative Agent, and GENERAL ELECTRIC CAPITAL
CORPORATION, WACHOVIA BANK, NATIONAL ASSOCIATION, and LASALLE BANK NATIONAL
ASSOCIATION, as Co-Documentation Agents. 
Terms used but not defined herein shall have the meanings given to such
terms in the Third Amended and Restated Credit Agreement.

 

1.                                       The undersigned Vice President of
[                    ]
(the “Certifying Credit Party”) hereby certifies as follows:

 

(a) (i) The representations and warranties
made by the Certifying Credit Party in each of the Credit Documents, in each
case as they relate to the Credit Parties on the date hereof, are true and
correct in all material respects on and as of the date hereof (except where such
representations and warranties expressly relate to an earlier date, in which
case such representations and warranties are true and correct in all material
respects as of such earlier date),  and (ii) no Default or Event of Default has occurred and is continuing
as of the date hereof; and

 

(b) Kenneth L. Walker is the duly elected and
qualified Secretary of the Certifying Credit Party and the signature set forth
on the signature line for such officer below is such officer’s true and genuine
signature, and such officer is duly authorized to execute and deliver on behalf
of the Certifying Credit Party each Credit Document to which it is a party and
any certificate or other document to be delivered by the Certifying Credit
Party pursuant to such Credit Documents; and

 

2.                                       The undersigned Secretary of the Certifying Credit Party hereby
certifies as follows:

 

(a) There are no liquidation or dissolution
proceedings pending or to my knowledge threatened against the Certifying Credit
Party, nor to my knowledge has any other event occurred affecting or
threatening the corporate existence of the Certifying Credit Party;

 

(b) The Certifying Credit Party is a
[corporation] duly organized, validly existing and in good standing under the
laws of the State of
[                ];

 

 

(c) There have been no material amendments to the
resolutions duly adopted by the Board of Directors (or a duly authorized
committee thereof) of the Certifying Credit Party previously delivered to the
Administrative Agent on the Closing Date pursuant to Section 6.8 of the
Existing Credit Agreement;

 

(d) There have been no material amendments to the
certificate of incorporation of the Certifying Credit Party previously
delivered to the Administrative Agent on the Closing Date pursuant to Section 6.9
of the Existing Credit Agreement;

 

(e) There have been no material amendments to the
by-laws of the Certifying Credit Party previously delivered to the
Administrative Agent on the Closing Date pursuant to Section 6.9 of the
Existing Credit Agreement; and

 

(f) The following persons are now duly elected
and qualified officers of the Certifying Credit Party holding the offices
indicated next to their respective names below, and the signatures appearing
opposite their respective names below are the true and genuine signatures of
such officers, and each of such officers is duly authorized to execute and
deliver on behalf of the Certifying Credit Party each Credit Document to which
it is a party and any certificate or other document to be delivered by the
Certifying Credit Party pursuant to such Credit Documents:

 

	
  Name

  	
   

  	
  Office

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mark D. Boehmer

  	
   

  	
  Vice President & Treasurer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Kenneth L. Walker

  	
   

  	
  Corporate Vice President, General Counsel &
  Secretary

  	
   

  	
   

  
	
   

  	
   

  

 

 

IN WITNESS WHEREOF, the undersigned have hereto set
our names as of August 25, 2006.

 

 

	
   

  	
   

  	
   

  
	
  Name: Mark D. Boehmer

  	
   

  	
  Name: Kenneth L. Walker

  
	
  Title: Vice President

  	
   

  	
  Title: Secretary

  

 

2

 

 

EXHIBIT K

TO THE CREDIT AGREEMENT

 

ASSIGNMENT AND ACCEPTANCE

 

This
Assignment and Acceptance (the “Assignment and Acceptance”) is dated as
of the Effective Date (as defined below) and is entered into by and between the
Assignor (as defined below) and the Assignee (as defined below).  Capitalized terms used in this Assignment and
Acceptance and not otherwise defined herein shall have the meanings specified
in the Third Amended and Restated Credit Agreement dated as of August 25, 2006
(as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among SEALY MATTRESS COMPANY, an Ohio corporation (the “Borrower”),
SEALY CANADA LTD./LTEE, a company organized under the laws of Canada (the “Canadian
Borrower”), SEALY CORPORATION, a Delaware corporation (“Parent”),
SEALY MATTRESS CORPORATION, a Delaware corporation (“Holdings”), certain
subsidiaries of the Borrower (each a “Subsidiary” and,
collectively,  the “Subsidiaries”),
the lending institutions from time to time parties thereto (each a “Lender”
and, collectively, the “Lenders”), J.P. MORGAN SECURITIES INC., as joint lead arranger and joint
bookrunner (in such capacities, the “Joint Lead Arranger” and “Joint
Bookrunner”), CITIGROUP GLOBAL
MARKETS INC., as joint lead arranger and joint bookrunner (in such
capacities, the “Joint Lead Arranger” and “Joint Bookrunner”),
CITIBANK, N.A., as syndication agent (in such capacity, the “Syndication
Agent”), JPMORGAN CHASE BANK, N.A., as administrative agent (in such
capacity, the “Administrative Agent”), JPMORGAN CHASE BANK, N.A.,
TORONTO BRANCH, as Canadian administrative agent (in such capacity, the “Canadian
Administrative Agent”), and GENERAL ELECTRIC CAPITAL CORPORATION, WACHOVIA
BANK, NATIONAL ASSOCIATION, and LASALLE BANK NATIONAL ASSOCIATION, as
co-documentation agents (in such capacities, the “Co-Documentation Agents”).  The Standard Terms and Conditions set forth
in Annex 1 attached hereto are hereby agreed to and incorporated herein by
reference and made a part of this Assignment and Acceptance as if set forth
herein in full.

 

For
an agreed consideration, the Assignor hereby irrevocably sells and assigns to
the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all the Assignor’s rights and
obligations in its capacity as a Lender under the Credit Agreement and any
other documents or instruments delivered pursuant thereto to the extent related
to the amount and percentage interest identified below of the Credit Facility
identified below and (ii) to the extent permitted to be assigned under
applicable law, all claims, suits, causes of action and any other right of the
Assignor (in its capacity as a Lender) against any Person, whether known or
unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including contract claims, tort claims, malpractice claims, statutory claims
and all other claims at law or in equity related to the rights and obligations
sold and assigned pursuant to clause (i) above (the rights and obligations sold
and assigned pursuant to clauses (i) and (ii) above being referred to herein
collectively as the “Assigned Interest”).  Such sale and assignment is without recourse
to the Assignor and, except

 

 

as
expressly provided in this Assignment and Acceptance, without representation or
warranty by the Assignor.

 

If the Assignee was an Existing Lender with respect to the Existing Term
Loans, the Assignee agrees that the Existing Term Loans made by it as an
Existing Lender shall remain outstanding on and after the Effective Date of the
Credit Agreement as “Tranche E Term Loans” made pursuant to the Credit
Agreement in the same amount of such Existing Lender’s amount of the Existing
Term Loans outstanding as of the Effective Date of the Credit Agreement (the “Rollover
Amount”) and such Existing Term Loans shall on and after the Effective Date
of the Credit Agreement have all of the rights and benefits of Tranche E Term
Loans as set forth in the Credit Agreement and the other Credit Documents.  To the extent the Rollover Amount is
different than the Assigned Interest, such amount shall be listed below as the “Net
Amount.”

 

1.                                       Assignor (the “Assignor”):JPMorgan Chase Bank, N.A.

 

2.                                       Assignee (the “Assignee”):

(a)  Assignee is
an Affiliate of:

(b)  Assignee is
an Approved Fund:

 

3.                                       Assigned Interest:

 

	
  Credit
  Facility

  	
   

  	
  Total Commitment of

  all Lenders

  	
   

  	
  Amount of

  Credit Facility

  Assigned

  	
   

  	
  Percentage Assigned

  of Total Commitment

  of all Lenders (Set

  forth, to at least 9

  decimals, as a

  percentage of the

  Total Commitment of

  all Lenders)

  	
   

  	
  Net Amount

  	
   

  
	
  Tranche A Term Loan Commitment

  	
   

  	
  $

  	
  300,000,000.00

  	
   

  	
  $

  	
  [  ]

  	
   

  	
  [  ]

  	
  %

  	
  $

  	
  [  ]

  	
   

  
	
  Tranche E Term Loan Commitment

  	
   

  	
  $

  	
  150,000,000.00

  	
   

  	
  $

  	
  [  ]

  	
   

  	
  [  ]

  	
  %

  	
  $

  	
  [  ]

  	
   

  

 

4.                                       Effective Date of Assignment (the “Effective Date”): August 25,
2006

 

 

(signature
pages follow)

 

2

 

	
  [    ],
  as Assignee

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

(signatures continue on next page)

 

[Assignment Agreement - Sealy Mattress Company]

 

 

The
terms set forth in this Assignment and Acceptance are hereby agreed to:

 

 

	
  JPMORGAN
  CHASE BANK, N.A., as Assignor

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
   

  	
  Name: 

  	
   

  
	
   

  	
   

  	
  Title:  

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Consented to and Accepted:

  
	
   

  
	
  JPMORGAN
  CHASE BANK, N.A.

  
	
  as
  Administrative Agent

  
	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name: 

  	
   

  
	
  Title:  

  	
   

  

 

 

(signatures continue on next page)

 

[Assignment Agreement - Sealy Mattress Company]

 

 

	
  Consented
  to:

  
	
   

  
	
  SEALY
  MATTRESS COMPANY

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
   

  	
  Name: 

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

[Assignment Agreement - Sealy Mattress Company]

 

 

ANNEX 1

 

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ACCEPTANCE

 

1.  Representations and Warranties and
Agreements.

 

1.1  Assignor.  The Assignor (a) represents and warrants
that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the
Assigned Interest is free and clear of any lien, encumbrance or other adverse
claim and (iii) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Acceptance and to
consummate the transactions contemplated hereby and (b) assumes no
responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the Credit Agreement or any other
Credit Document, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Documents or any collateral
thereunder, (iii) the financial condition of the Borrower, Canadian
Borrower, Holdings, any of their respective Subsidiaries or Affiliates or any
other Person obligated in respect of any Credit Document or (iv) the
performance or observance by any of the Borrower, Canadian Borrower, Holdings,
any of their respective Subsidiaries or Affiliates or any other Person
obligated in respect of any Credit Document of any of their respective
obligations under any Credit Document.

 

1.2.  Assignee.  The Assignee (a) represents and warrants
that (i) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Acceptance and to
consummate the transactions contemplated hereby and to become a Lender under
the Credit Agreement, (ii) it satisfies the requirements, if any,
specified in the Credit Agreement that are required to be satisfied by it in
order to acquire the Assigned Interest and become a Lender thereunder, (iii) from
and after the Effective Date, it shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender under the Credit Agreement, and (iv) it has received
a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 9.1 of the Credit
Agreement, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance and to purchase the Assigned Interest on the basis of
which it has made such analysis and decision independently and without reliance
on the Administrative Agent or any other Lender and (b) agrees that (i) it
will, independently and without reliance on the Administrative Agent, the
Assignor or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under the Credit Documents, and (ii) it
will perform in accordance with their terms all of the obligations which by the
terms of the Credit Documents are required to be performed by it as a Lender, including, if it is a Non-U.S. Lender, its obligations pursuant to Section 5.4 of the Credit Agreement.

 

2.  Payments.  From and after the Effective Date, the
Administrative Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to
the Assignor for amounts which have accrued to but excluding the Effective Date
and to the Assignee for amounts which have accrued from and after the Effective
Date.

 

1

 

3.  General Provisions.

 

3.1  In accordance with Section 14.6 of the
Credit Agreement, upon execution, delivery, acceptance and recording of this
Assignment and Acceptance, from and after the Effective Date, (a) the
Assignee shall be a party to the Credit Agreement and, to the extent provided
in this Assignment and Acceptance, have the rights and obligations of a Lender
under the Credit Agreement with a Credit Commitment as set forth herein and (b) the
Assignor shall, to the extent of the Assigned Interest assigned pursuant to
this Assignment and Acceptance, be released from its obligations under the
Credit Agreement (and, in the case of this Assignment and Acceptance covers all
of the Assignor’s rights and obligations under the Credit Agreement, the
Assignor shall cease to be a party to the Credit Agreement but shall continue
to be entitled to the benefits of Sections 2.10, 2.11, 3.5, 5.4 and 14.5
thereof).

 

3.2  This Assignment and Acceptance shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.  This Assignment
and Acceptance may be executed by one or more of the parties to this Assignment
and Acceptance on any number of separate counterparts (including by facsimile
or other electronic transmission), and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.  This Assignment and Acceptance and the rights
and obligations of the parties hereunder shall be construed in accordance with
and governed by and interpreted under the law of the state of New York.

 

2

 

 

EXHIBIT L-1

TO THE CREDIT AGREEMENT

 

FORM OF PROMISSORY NOTE

 

	
   

  	
  New York          

  
	
   

  	
   

  
	
  $

  	
  [             
  ], 200[ ]          

  

 

FOR VALUE RECEIVED, the undersigned, SEALY MATTRESS
COMPANY, an Ohio corporation (the “Borrower”), hereby unconditionally
promises to pay to the order of
[                        ]
or its registered assigns (the “Lender”), at the Administrative Agent’s
Office or such other place as JPMORGAN CHASE BANK, N.A. (the “Administrative
Agent”) shall have specified, in US Dollars and in immediately
available funds, in accordance with Section 2.5 of the Credit Agreement
(as defined below; capitalized terms used and not otherwise defined herein
shall have the meanings assigned to such terms in the Credit Agreement) on the
[Tranche A] [Tranche E] Term Loan Maturity Date, the principal amount of [             ]
US Dollars ($[    ]) or, if less, the aggregate unpaid
principal amount of all [Tranche A] [Tranche E] Term Loans, if any, made by the
Lender to the Borrower pursuant to the Credit Agreement.  The Borrower further unconditionally promises
to pay interest in like money at such office on the unpaid principal amount
hereof from time to time outstanding at the rates per annum and on the dates
specified in Section 2.8 of the Credit Agreement.

 

This Promissory Note is one of the promissory notes
referred to in Section 14.6 of the Third Amended and Restated Credit
Agreement dated as of August 25, 2006 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
among SEALY MATTRESS COMPANY, an Ohio corporation (the “Borrower”),
SEALY CANADA LTD./LTEE, a company organized under the laws of Canada (the “Canadian
Borrower”), certain subsidiaries of the Borrower (each a “Subsidiary”
and, collectively, the “Subsidiaries”), SEALY CORPORATION, a Delaware
corporation (“Parent”), SEALY MATTRESS CORPORATION, a Delaware
corporation (“Holdings”), the lending institutions from time to time
parties hereto (each a “Lender” and, collectively, the “Lenders”),
J.P. MORGAN SECURITIES INC., as
joint lead arranger and joint bookrunner (in such capacities, the “Joint
Lead Arranger” and “Joint Bookrunner”), CITIGROUP GLOBAL MARKETS INC. as joint lead arranger, joint
bookrunner, (in such capacities, the “Joint Lead Arranger” and “Joint
Bookrunner”) CITIBANK, N.A., as syndication agent (in such capacity, the “Syndication
Agent”), JPMORGAN CHASE BANK, N.A., as administrative agent (in such
capacity, the “Administrative Agent”), JPMORGAN CHASE BANK, N.A.,
TORONTO BRANCH, as Canadian administrative agent (in such capacity, the “Canadian
Administrative Agent”), and GENERAL ELECTRIC CAPITAL CORPORATION, WACHOVIA
BANK, NATIONAL ASSOCIATION, and LASALLE BANK NATIONAL ASSOCIATION, as
co-documentation agents (in such capacities, the “Co-Documentation Agents”).  This Promissory Note is subject to, and the
Lender is entitled to the benefits of, the provisions of the Credit Agreement,
and the [Tranche A] [Tranche E] Term Loans evidenced hereby are guaranteed and
secured as provided therein and in the other Credit Documents.  The [Tranche A] [Tranche E] Term Loans
evidenced 

 

 

hereby are subject to prepayment prior to the [Tranche
A] [Tranche E] Term Loan Maturity Date, in whole or in part, as provided in the
Credit Agreement.

 

All parties now and hereafter liable with respect to
this Promissory Note, whether maker, principal, surety, guarantor, endorser or
otherwise, hereby waive diligence, presentment, demand, protest and notice of
any kind whatsoever in connection with this Promissory Note.  No failure to exercise and no delay in
exercising, on the part of the Administrative Agent or the Lender, any right,
remedy, power or privilege hereunder or under the Credit Documents shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege.  A waiver by the
Administrative Agent or the Lender of any right, remedy, power or privilege
hereunder or under any Credit Document on any one occasion shall not be
construed as a bar to any right or remedy that the Administrative Agent or the
Lender would otherwise have on any future occasion.  The rights, remedies, powers and privileges
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any rights, remedies, powers and privileges provided by law.

 

All payments in respect of the principal of and
interest on this Promissory Note shall be made to the Person recorded in the
Register as the holder of this Promissory Note, as described more fully in
Section 2.5(d) of the Credit Agreement, and such Person shall be
treated as the Lender hereunder for all purposes of the Credit Agreement.

 

THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

	
   

  	
  SEALY MATTRESS COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

2

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