CREDIT AGREEMENT
Contract Categories:
Business Finance
- Credit Agreements
EX-10.2 29 y95660exv10w2.txt CREDIT AGREEMENT EXHIBIT 10.2 ------------ ================================================================================ $255,000,000 CREDIT AGREEMENT DATED AS OF FEBRUARY 12, 2004, AMONG PLY GEM INDUSTRIES, INC., AS U.S. BORROWER, CWD WINDOWS AND DOORS, INC. AS CANADIAN BORROWER, PLY GEM HOLDINGS, INC. AND THE OTHER GUARANTORS PARTY HERETO, AS GUARANTORS, THE LENDERS PARTY HERETO, UBS SECURITIES LLC AND DEUTSCHE BANK SECURITIES INC., AS JOINT LEAD ARRANGERS AND BOOKRUNNERS, CIBC WORLD MARKETS CORP. AND MERRILL LYNCH & CO., MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, AS CO-ARRANGERS, UBS AG, STAMFORD BRANCH, AS ISSUING BANK, ADMINISTRATIVE AGENT AND COLLATERAL AGENT, UBS LOAN FINANCE LLC, AS SWINGLINE LENDER, DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH, AS SYNDICATION AGENT, AND CANADIAN IMPERIAL BANK OF COMMERCE AND MERRILL LYNCH CAPITAL CORPORATION, AS CO-DOCUMENTATION AGENTS Cahill Gordon & Reindel LLP 80 Pine Street New York, NY 10005 ================================================================================ TABLE OF CONTENTS Section Page - ------- ---- ARTICLE I DEFINITIONS SECTION 1.01 Defined Terms...................................................2 SECTION 1.02 Classification of Loans and Borrowings.........................38 SECTION 1.03 Terms Generally................................................38 SECTION 1.04 Accounting Terms; GAAP.........................................38 SECTION 1.05 Resolution of Drafting Ambiguities.............................38 ARTICLE II THE CREDITS SECTION 2.01 Commitments....................................................38 SECTION 2.02 Loans..........................................................39 SECTION 2.03 Borrowing Procedure............................................40 SECTION 2.04 Evidence of Debt; Repayment of Loans...........................41 SECTION 2.05 Fees...........................................................42 SECTION 2.06 Interest on Loans..............................................42 SECTION 2.07 Termination and Reduction of Commitments.......................43 SECTION 2.08 Interest Elections.............................................44 SECTION 2.09 Amortization of Term Borrowings................................45 SECTION 2.10 Optional and Mandatory Prepayments of Loans and Mandatory Offers to Redeem...................................46 SECTION 2.11 Alternate Rate of Interest.....................................50 SECTION 2.12 Increased Costs................................................50 SECTION 2.13 Breakage Payments..............................................51 SECTION 2.14 Payments Generally; Pro Rata Treatment; Sharing of Setoffs.....52 SECTION 2.15 Taxes..........................................................53 SECTION 2.16 Mitigation Obligations; Replacement of Lenders.................55 SECTION 2.17 Swingline Loans................................................56 SECTION 2.18 Letters of Credit..............................................57 ARTICLE III REPRESENTATIONS AND WARRANTIES SECTION 3.01 Organization; Powers...........................................62 SECTION 3.02 Authorization; Enforceability..................................62 SECTION 3.03 No Conflicts...................................................63 SECTION 3.04 Financial Statements; Projections..............................63 SECTION 3.05 Properties.....................................................64 SECTION 3.06 Intellectual Property..........................................64 SECTION 3.07 Equity Interests and Subsidiaries..............................65 SECTION 3.08 Litigation; Compliance with Laws...............................65 -i- Section Page - ------- ---- SECTION 3.09 Agreements.....................................................66 SECTION 3.10 Federal Reserve Regulations....................................66 SECTION 3.11 Investment Company Act; Public Utility Holding Company Act.....66 SECTION 3.12 Use of Proceeds................................................66 SECTION 3.13 Taxes..........................................................67 SECTION 3.14 No Material Misstatements......................................67 SECTION 3.15 Labor Matters..................................................67 SECTION 3.16 Solvency.......................................................67 SECTION 3.17 Employee Benefit Plans.........................................68 SECTION 3.18 Environmental Matters..........................................68 SECTION 3.19 Insurance......................................................69 SECTION 3.20 Security Documents.............................................69 SECTION 3.21 Acquisition Documents; Representations and Warranties in Acquisition Agreement.....................................71 SECTION 3.22 Anti-Terrorism Law.............................................71 SECTION 3.23 Subordination of Senior Subordinated Notes.....................72 ARTICLE IV CONDITIONS TO CREDIT EXTENSIONS SECTION 4.01 Conditions to Initial Credit Extension.........................72 SECTION 4.02 Conditions to All Credit Extensions............................77 ARTICLE V AFFIRMATIVE COVENANTS SECTION 5.01 Financial Statements, Reports, etc.............................78 SECTION 5.02 Litigation and Other Notices...................................80 SECTION 5.03 Existence; Businesses and Properties...........................80 SECTION 5.04 Insurance......................................................81 SECTION 5.05 Obligations and Taxes..........................................82 SECTION 5.06 Employee Benefits..............................................82 SECTION 5.07 Maintaining Records; Access to Properties and Inspections; Annual Meetings.................. ...........................83 SECTION 5.08 Use of Proceeds................................................83 SECTION 5.09 Compliance with Environmental Laws; Environmental Reports......83 SECTION 5.10 Additional Collateral; Additional Guarantors...................83 SECTION 5.11 Security Interests; Further Assurances.........................86 SECTION 5.12 Information Regarding Collateral...............................86 SECTION 5.13 Post-Closing Matters...........................................87 ARTICLE VI NEGATIVE COVENANTS SECTION 6.01 Indebtedness...................................................89 SECTION 6.02 Liens..........................................................91 SECTION 6.03 Sale and Leaseback Transactions................................93 SECTION 6.04 Investment, Loan and Advances..................................93 -ii- Section Page - ------- ---- SECTION 6.05 Mergers and Consolidations.....................................94 SECTION 6.06 Asset Sales....................................................95 SECTION 6.07 Acquisitions...................................................96 SECTION 6.08 Dividends......................................................97 SECTION 6.09 Transactions with Affiliates...................................97 SECTION 6.10 Financial Covenants............................................99 SECTION 6.11 Prepayments of Other Indebtedness; Modifications of Organizational Documents and Other Documents, etc...........100 SECTION 6.12 Limitation on Certain Restrictions on Subsidiaries............101 SECTION 6.13 Limitation on Issuance of Capital Stock.......................101 SECTION 6.14 Limitation on Creation of Subsidiaries........................102 SECTION 6.15 Business......................................................102 SECTION 6.16 Limitation on Accounting Changes..............................102 SECTION 6.17 Fiscal Year...................................................102 SECTION 6.18 Lease Obligations.............................................102 SECTION 6.19 No Further Negative Pledge....................................102 SECTION 6.20 Anti-Terrorism Law; Anti-Money Laundering.....................103 SECTION 6.21 Embargoed Person..............................................103 ARTICLE VII GUARANTEE SECTION 7.01 The Guarantee.................................................103 SECTION 7.02 Obligations Unconditional.....................................104 SECTION 7.03 Reinstatement.................................................105 SECTION 7.04 Subrogation; Subordination....................................105 SECTION 7.05 Remedies......................................................105 SECTION 7.06 Instrument for the Payment of Money...........................106 SECTION 7.07 Continuing Guarantee..........................................106 SECTION 7.08 General Limitation on Guarantee Obligations...................106 SECTION 7.09 Release of Guarantors.........................................106 ARTICLE VIII EVENTS OF DEFAULT SECTION 8.01 Events of Default.............................................106 ARTICLE IX COLLATERAL ACCOUNT; APPLICATION OF COLLATERAL PROCEEDS SECTION 9.01 Collateral Account............................................109 SECTION 9.02 Proceeds of Destruction, Taking and Collateral Dispositions................................ ...............110 SECTION 9.03 Application of Proceeds.......................................110 -iii- Section Page - ------- ---- ARTICLE X THE AGENTS SECTION 10.01 Appointment...................................................111 SECTION 10.02 Agent in Its Individual Capacity..............................111 SECTION 10.03 Exculpatory Provisions........................................111 SECTION 10.04 Reliance by Agent.............................................112 SECTION 10.05 Delegation of Duties..........................................112 SECTION 10.06 Successor Agent...............................................112 SECTION 10.07 Non-Reliance on Agent and Other Lenders.......................113 SECTION 10.08 Name Agents...................................................113 SECTION 10.09 Indemnification...............................................113 ARTICLE XI MISCELLANEOUS SECTION 11.01 Notices.......................................................113 SECTION 11.02 Waivers; Amendment............................................114 SECTION 11.03 Expenses; Indemnity...........................................117 SECTION 11.04 Successors and Assigns........................................119 SECTION 11.05 Survival of Agreement.........................................121 SECTION 11.06 Counterparts; Integration; Effectiveness......................121 SECTION 11.07 Severability..................................................122 SECTION 11.08 Right of Setoff...............................................122 SECTION 11.09 Governing Law; Jurisdiction; Consent to Service of Process....122 SECTION 11.10 Waiver of Jury Trial..........................................123 SECTION 11.11 Headings......................................................123 SECTION 11.12 Confidentiality...............................................123 SECTION 11.13 Interest Rate Limitation......................................123 SECTION 11.14 Lender Addendum...............................................124 SECTION 11.15 Obligations Absolute..........................................124 SECTION 11.16 Judgment Currency.............................................124 ANNEXES Annex I Applicable Margin Annex II Amortization Table SCHEDULES Schedule 1.01(a) Assumed Debt Schedule 1.01(b) Consolidated EBITDA Adjustments Schedule 1.01(c) Material Indebtedness Schedule 1.01(d) Mortgaged Property Schedule 1.01(e) Refinancing Indebtedness to Be Repaid Schedule 1.01(f) U.S. Subsidiary Guarantors Schedule 3.03 Governmental Approvals; Compliance with Laws Schedule 3.05(b) Real Property Schedule 3.07(a) Subsidiaries -iv- Schedule 3.07(c) Corporate Organizational Chart Schedule 3.09(c) Material Agreements Schedule 3.17 Employee Benefit Plans Schedule 3.18 Environmental Matters Schedule 3.19 Insurance Schedule 3.21 Acquisition Documents Schedule 4.01(g) Local Counsel Schedule 4.01(n)(vi) Landlord Access Agreements Schedule 4.01(o)(iii) Title Insurance Amounts Schedule 5.13(c) Post-Closing Matters Schedule 6.01(b) Existing Indebtedness Schedule 6.02(c) Existing Liens Schedule 6.04(b) Existing Investments Schedule 6.09(n) Existing Affiliate Agreements EXHIBITS Exhibit A Form of Administrative Questionnaire Exhibit B Form of Assignment and Assumption Exhibit C-1 Form of U.S. Borrowing Request Exhibit C-2 Form of Canadian Borrowing Request Exhibit D Form of Compliance Certificate Exhibit E Form of Interest Election Request Exhibit F Form of Joinder Agreement Exhibit G-1 Form of U.S. Landlord Access Agreement Exhibit G-2 Form of Canadian Landlord Access Agreement Exhibit H Form of LC Request Exhibit I Form of Lender Addendum Exhibit J-1 Form of Mortgage Exhibit J-2 Form of Canadian Mortgage Exhibit J-3 Form of Leasehold Mortgage Exhibit K-1 Form of U.S. Term Note Exhibit K-2 Form of Canadian Term Note Exhibit K-3 Form of Revolving Note Exhibit K-4 Form of Swingline Note Exhibit L-1 Form of Perfection Certificate Exhibit L-2 Form of Perfection Certificate Supplement Exhibit M-1 Form of U.S. Security Agreement Exhibit M-2 Form of Canadian Security Agreement Exhibit N-1 Form of Opinion of Company Counsel Exhibit N-2 Form of Opinion of Local Counsel Exhibit N-3 Form of Opinion of Canadian Counsel Exhibit O Form of Solvency Certificate Exhibit P-1 Form of U.S. Intercompany Note Exhibit P-2 Form of Canadian Intercompany Note Exhibit Q Form of U.S. Tax Compliance Certificate -v- CREDIT AGREEMENT This CREDIT AGREEMENT (this "AGREEMENT") dated as of February 12, 2004, among PLY GEM INDUSTRIES, INC., a Delaware corporation ("U.S. BORROWER"), CWD Windows and Doors, Inc., a corporation organized under the federal laws of Canada ("CANADIAN BORROWER" and, together with U.S. Borrower, each a "BORROWER" and collectively the "BORROWERS"), PLY GEM HOLDINGS, INC., a Delaware corporation ("PARENT"), the Subsidiary Guarantors (such term and each other capitalized term used but not defined herein having the meaning given to it in ARTICLE I), the Lenders, UBS SECURITIES LLC and DEUTSCHE BANK SECURITIES INC., as joint lead arrangers and bookrunners (in such capacity, "JOINT LEAD ARRANGERS"), CIBC WORLD MARKETS CORP. and MERRILL LYNCH & CO., MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, as co-arrangers (in such capacities, "CO-ARRANGERS"), CANADIAN IMPERIAL BANK OF COMMERCE and MERRILL LYNCH CAPITAL CORPORATION, as co-documentation agents (in such capacities, "CO-DOCUMENTATION AGENTS"), DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH, as syndication agent (in such capacity, "SYNDICATION AGENT"), UBS LOAN FINANCE LLC, as swingline lender (in such capacity, "SWINGLINE LENDER"), and UBS AG, STAMFORD BRANCH, as issuing bank (in such capacity, "ISSUING BANK"), as administrative agent (in such capacity, "ADMINISTRATIVE AGENT") for the Lenders and as collateral agent (in such capacity, "COLLATERAL AGENT") for the Secured Parties and the Issuing Bank. WITNESSETH: WHEREAS, Holdings has entered into a stock purchase agreement, dated as of December 19, 2003, as amended on January 23, 2004 and February 12, 2004 (as further amended, supplemented or otherwise modified from time to time in accordance with the provisions hereof and thereof, the "ACQUISITION Agreement"), with Nortek Inc., a Delaware corporation, and WDS LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Nortek, Inc. (collectively, the "SELLER"), to acquire (the "ACQUISITION") all of the capital stock of U.S. Borrower, and on or prior to the Closing Date, Holdings will transfer its rights and obligations under the Acquisition Agreement to Parent. WHEREAS, the Refinancing, the Acquisition, the issuance of the Senior Subordinated Notes and the Equity Financing shall be consummated simultaneously herewith. WHEREAS, U.S. Borrower has requested the U.S. Lenders to extend credit in the form of (a) U.S. Term Loans on the Closing Date, in an aggregate principal amount not in excess of $160.0 million, and (b) Revolving Loans at any time and from time to time prior to the Revolving Maturity Date, in an aggregate principal amount at any time outstanding not in excess of $65.0 million, of which no more than $3.0 million may be drawn on the Closing Date. WHEREAS, Canadian Borrower has requested the Canadian Term Loan Lenders to extend credit in the form of Canadian Term Loans on the Closing Date, in an aggregate principal amount not in excess of $30.0 million. WHEREAS, U.S. Borrower has requested the Swingline Lender to make Swingline Loans, at any time and from time to time prior to the Revolving Maturity Date, in an aggregate principal amount at any time outstanding not in excess of $10.0 million. WHEREAS, U.S. Borrower has requested the Issuing Bank to issue letters of credit, in an aggregate face amount at any time outstanding not in excess of $35.0 million, for the account of U.S. Borrower and its Subsidiaries. WHEREAS, the proceeds of the Loans are to be used in accordance with SECTION 3.12. NOW, THEREFORE, the Lenders are willing to extend such credit to the Borrowers and the Issuing Bank is willing to issue letters of credit for the account of U.S. Borrower on the terms and subject to the conditions set forth herein. Accordingly, the parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.01 DEFINED TERMS. As used in this Agreement, the following terms shall have the meanings specified below: "ABR," when used in reference to any Loan or Borrowing, is used when such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate. "ABR BORROWING" shall mean a Borrowing comprised of ABR Loans. "ABR LOAN" shall mean any ABR Term Loan or ABR Revolving Loan. "ABR REVOLVING LOAN" shall mean any Revolving Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of ARTICLE II. "ABR TERM LOAN" shall mean any Term Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of ARTICLE II. "ACQUISITION" shall have the meaning assigned to such term in the first recital hereto. "ACQUISITION AGREEMENT" shall have the meaning assigned to such term in the first recital hereto. "ACQUISITION CONSIDERATION" shall mean the purchase consideration for any Permitted Acquisition and all other payments by Parent or any of its Subsidiaries in exchange for, or as part of, or in connection with, any Permitted Acquisition (other than fees and expenses related to such Permitted Acquisition), whether paid in cash or by exchange of Equity Interests or of properties or otherwise and whether payable at or prior to the consummation of such Permitted Acquisition or deferred for payment at any future time, whether or not any such future payment is subject to the occurrence of any contingency, and includes any and all payments representing the purchase price and any assumptions of Indebtedness, "earn-outs" and other agreements to make any payment the amount of which is, or the terms of payment of which are, in any respect subject to or contingent upon the revenues, income, cash flow or profits (or the like) of any person or business; PROVIDED that any such future payment that is subject to a contingency shall be considered Acquisition Consideration only to the extent of the reserve, if any, required under GAAP at the time of such sale to be established in respect thereof by Parent or any of its Subsidiaries. "ACQUISITION DOCUMENTS" shall mean the collective reference to the Acquisition Agreement and the other documents listed on SCHEDULE 3.21. "ADDITIONAL TERM LOANS" shall have the meaning assigned to such term in SECTION 11.02(d). -2- "ADJUSTED LIBOR RATE" shall mean, with respect to any Eurodollar Borrowing for any Interest Period, (a) an interest rate per annum (rounded upward, if necessary, to the next 1/100th of 1%) determined by the Administrative Agent to be equal to the LIBOR Rate for such Eurodollar Borrowing in effect for such Interest Period divided by (b) 1 MINUS the Statutory Reserves (if any) for such Eurodollar Borrowing for such Interest Period. "ADMINISTRATIVE AGENT" shall have the meaning assigned to such term in the preamble hereto and includes each other person appointed as the successor pursuant to ARTICLE X. "ADMINISTRATIVE AGENT FEES" shall have the meaning assigned to such term in SECTION 2.05(b). "ADMINISTRATIVE QUESTIONNAIRE" shall mean an Administrative Questionnaire in the form of EXHIBIT A, or such other form as may be supplied from time to time by the Administrative Agent. "ADVISORY SERVICES AGREEMENT" means the advisory services agreement, dated as of February 12, 2004, among U.S. Borrower and Sponsor. "AFFILIATE" shall mean, when used with respect to a specified person, another person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the person specified; PROVIDED, HOWEVER, that, for purposes of SECTION 6.09, the term "Affiliate" shall also include (i) any person that directly or indirectly owns more than 10% of any class of Equity Interests of the person specified or (ii) any person that is an executive officer or director of the person specified. "AGENTS" shall mean the Arrangers, the Co-Documentation Agents, the Syndication Agent, the Administrative Agent and the Collateral Agent; and "AGENT" shall mean any of them. "AGREEMENT" shall have the meaning assigned to such term in the preamble hereto. "ALTERNATE BASE RATE" shall mean, for any day, a rate per annum (rounded upward, if necessary, to the next 1/100th of 1%) equal to the greater of (a) the Base Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day PLUS 0.50%. If the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms of the definition thereof, the Alternate Base Rate shall be determined without regard to clause (b) of the preceding sentence until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Base Rate or the Federal Funds Effective Rate shall be effective on the effective date of such change in the Base Rate or the Federal Funds Effective Rate, respectively. "ANTI-TERRORISM LAWS" shall have the meaning assigned to such term in SECTION 3.22. "APPLICABLE FEE" shall mean, for any day, with respect to any Commitment, the applicable percentage set forth in ANNEX I under the caption "Applicable Fee". "APPLICABLE MARGIN" shall mean, for any day, with respect to any (i) Term Loan, (x) 2.75% for Eurodollar Loans and (y) 1.75% for ABR Loans, and (ii) Revolving Loan, the applicable percentage set forth in ANNEX I. "ARRANGERS" shall mean the Joint Lead Arrangers and the Co-Arrangers. -3- "ASSET SALE" shall mean (a) any conveyance, sale, lease, sublease, assignment, transfer or other disposition (including by way of merger or consolidation and including any Sale and Leaseback Transaction) of any property excluding sales of inventory and dispositions of cash equivalents, in each case, in the ordinary course of business, by Parent or any of its Subsidiaries and (b) any issuance or sale of any Equity Interests of any Subsidiary of Parent, in each case, to any person other than (i) either Borrower, (ii) any Subsidiary Guarantor or (iii) other than for purposes of SECTION 6.06, any other Subsidiary. "ASSIGNMENT AND ASSUMPTION" shall mean an assignment and assumption entered into by a Lender and an assignee, and accepted by the Administrative Agent, substantially in the form of EXHIBIT B, or such other form as shall be approved by the Administrative Agent. "ASSUMED DEBT" shall mean the Indebtedness set forth on SCHEDULE 1.01(a) hereto. "BAILEE LETTER" shall have the meaning assigned thereto in the Security Agreement. "BASE RATE" shall mean, for any day, a rate per annum that is equal to the corporate base rate of interest established by the Administrative Agent in the United States for dollars from time to time; each change in the Base Rate shall be effective on the date such change is effective. The corporate base rate is not necessarily the lowest rate charged by the Administrative Agent to its customers. "BOARD" shall mean the Board of Governors of the Federal Reserve System of the United States. "BOARD OF DIRECTORS" shall mean, with respect to any person, (i) in the case of any corporation, the board of directors of such person, (ii) in the case of any limited liability company, the board of managers of such person, (iii) in the case of any partnership, the Board of Directors of the general partner of such person and (iv) in any other case, the functional equivalent of the foregoing. "BORROWER" shall have the meaning assigned to such term in the preamble hereto. "BORROWING" shall mean (a) Loans of the same Class and Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect, or (b) a Swingline Loan. "BORROWING REQUEST" shall mean either a U.S. Borrowing Request or a Canadian Borrowing Request as the context shall require. "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or other day on which banks in New York City are authorized or required by law to close; PROVIDED, HOWEVER, that when used in connection with a Eurodollar Loan, the term "Business Day" shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market. "BUTLER PROPERTY" shall have the meaning assigned to such term in SECTION 5.13(a). "CALCULATION PERIOD" shall have the meaning assigned to such term in SECTION 2.06(f). "CANADIAN BORROWER" shall have the meaning assigned to such term in the preamble hereto. -4- "CANADIAN BORROWING REQUEST" shall mean a request by Canadian Borrower in accordance with the terms of SECTION 2.03 and substantially in the form of EXHIBIT C-2, or such other form as shall be approved by the Administrative Agent. "CANADIAN COLLATERAL ACCOUNT" shall mean a collateral account or sub-account established and maintained by the Collateral Agent for the benefit of the Canadian Secured Parties, in accordance with the provisions of SECTION 9.01. "CANADIAN GUARANTEED OBLIGATIONS" shall have the meaning assigned to such term in SECTION 7.01. "CANADIAN GUARANTORS" shall have the meaning assigned to such term in SECTION 7.01. "CANADIAN INTERCOMPANY NOTE" shall mean a promissory note substantially in the form of EXHIBIT P-2. "CANADIAN LOAN PARTIES" shall mean Canadian Borrower and the Canadian Guarantors; PROVIDED that Parent and U.S. Borrower shall only constitute Canadian Loan Parties in their capacities as Canadian Guarantors. "CANADIAN MORTGAGED PROPERTY" shall mean the Mortgaged Property owned or leased by the Canadian Loan Parties. "CANADIAN OBLIGATIONS" shall mean (a) obligations of Canadian Borrower and the other Canadian Loan Parties from time to time arising under or in respect of the due and punctual payment of (i) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Canadian Term Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise and (ii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of Canadian Borrower and the other Canadian Loan Parties under this Agreement and the other Loan Documents, (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of Canadian Borrower and the other Canadian Loan Parties under or pursuant to this Agreement and the other Loan Documents, (c) the due and punctual payment and performance of all obligations of Canadian Borrower and the other Canadian Loan Parties under each Hedging Agreement relating to either the Canadian Term Loans or foreign currency exchange rates entered into with any counterparty that was a Lender or an Affiliate of a Lender at the time such Hedging Agreement was entered into (provided that each shall provide that it terminates or expires upon, or prior to, the repayment of all Loans hereunder) (each, a "PERMITTED CANADIAN HEDGING AGREEMENT") and (d) the due and punctual payment and performance of all obligations in respect of overdrafts and related liabilities owed to any Canadian Term Loan Lender, any Affiliate of a Canadian Term Loan Lender, the Administrative Agent or the Collateral Agent arising from treasury, depositary and cash management services or in connection with any automated clearinghouse transfer of funds, in each case, with respect to Canadian Term Loans. "CANADIAN SECURED PARTIES" shall mean, collectively, the Administrative Agent, the Collateral Agent, each other Agent, the Lenders and each party to a Permitted Canadian Hedging Agreement if such person executes and delivers to the Administrative Agent a letter agreement in form and substance reasonably acceptable to the Administrative Agent pursuant to which such person (i) appoints the -5- Collateral Agent as its agent under the applicable Loan Documents and (ii) agrees to be bound by the provisions of SECTIONS 11.03 and 11.09. "CANADIAN SECURITY AGREEMENT" shall mean a Security Agreement substantially in the form of EXHIBIT M-2 among the Canadian Loan Parties and Collateral Agent for the benefit of the Canadian Secured Parties. "CANADIAN SECURITY AGREEMENT COLLATERAL" shall mean all property pledged or granted as collateral pursuant to the Canadian Security Agreement delivered on the Closing Date or thereafter pursuant to SECTION 5.10. "CANADIAN SECURITY DOCUMENTS" shall mean the Canadian Security Agreement, the Mortgages entered into by the Canadian Loan Parties and each other security document or pledge agreement delivered in accordance with applicable local or foreign law to grant a valid, perfected security interest in any property as collateral for the Canadian Obligations, and all financing statements or instruments of perfection required by this Agreement, the Canadian Security Agreement or any other such security document or pledge agreement to be filed with respect to the security interests in property and fixtures created pursuant to the Canadian Security Agreement and any other document or instrument utilized to pledge as collateral for the Canadian Obligations any property. "CANADIAN SUBSIDIARY" shall mean a Subsidiary of Canadian Borrower. "CANADIAN SUBSIDIARY GUARANTOR" shall mean a Canadian Subsidiary that is or becomes a party to this Agreement pursuant to SECTION 5.10. "CANADIAN TERM LOAN" shall mean the term loans made by the Canadian Term Loan Lenders to Canadian Borrower pursuant to SECTION 2.01(b). Each Canadian Term Loan shall be either an ABR Term Loan or a Eurodollar Term Loan. "CANADIAN TERM LOAN COMMITMENT" shall mean, with respect to each Canadian Term Loan Lender, the commitment, if any, of such Canadian Term Loan Lender to make a Canadian Term Loan hereunder on the Closing Date in the amount set forth on Schedule I to the Lender Addendum executed and delivered by such Canadian Term Loan Lender. The aggregate amount of the Lenders' Canadian Term Loan Commitments is $30.0 million. "CANADIAN TERM LOAN LENDERS" shall mean (a) the financial institutions that have become a party hereto pursuant to a Lender Addendum that provide Canadian Term Loan Commitments or make Canadian Term Loans and (b) any financial institution that has become a party hereto pursuant to an Assignment and Assumption that provides Canadian Term Loan Commitments or makes Canadian Term Loans, other than, in each case, any such financial institution that has ceased to be a party hereto pursuant to an Assignment and Assumption. "CAPEX CARRYFOWARD AMOUNT" shall have the meaning assigned to such term in SECTION 6.10(c). "CAPITAL EXPENDITURES" shall mean, for any period, without duplication, the increase during that period in the gross property, plant or equipment account in the consolidated balance sheet of U.S. Borrower and its Subsidiaries, determined in accordance with GAAP, whether such increase is due to purchase of properties for cash or financed by the incurrence of Indebtedness, but excluding (i) expenditures made in connection with the replacement, substitution or restoration of property pursuant -6- to SECTION 2.10(f) and (ii) any portion of such increase attributable solely to acquisitions of property, plant and equipment in Permitted Acquisitions. "CAPITAL LEASE OBLIGATIONS" of any person shall mean the obligations of such person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP. "CASH EQUIVALENTS" shall mean, as to any person, (a) securities issued, or directly, unconditionally and fully guaranteed or insured, by the United States or Canada or any agency or instrumentality thereof (PROVIDED that the full faith and credit of the United States or Canada is pledged in support thereof) having maturities of not more than one year from the date of acquisition by such person; (b) time deposits and certificates of deposit of (1) any Lender or Agent or (2) any commercial bank having, or which is the principal banking subsidiary of a bank holding company organized under the laws of the United States or Canada, any state or province thereof or the District of Columbia having, capital and surplus aggregating in excess of $500.0 million and a rating of "A" (or such other similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) with maturities of not more than one year from the date of acquisition by such person; (c) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (a) above entered into with any bank meeting the qualifications specified in clause (b) above, which repurchase obligations are secured by a valid perfected security interest in the underlying securities; (d) commercial paper issued by any person incorporated in the United States or Canada rated at least A-1 or the equivalent thereof by Standard & Poor's Rating Service or at least P-1 or the equivalent thereof by Moody's Investors Service Inc., and in each case maturing not more than one year after the date of acquisition by such person; (e) investments in money market funds substantially all of whose assets are comprised of securities of the types described in clauses (a) through (d) above; and (f) demand deposit accounts maintained in the ordinary course of business. "CASH INTEREST EXPENSE" shall mean, for any period, Consolidated Interest Expense for such period, LESS the sum of (a) interest on any debt paid by the increase in the principal amount of such debt including by issuance of additional debt of such kind and (b) items described in clause (c) or, other than to the extent paid in cash, clauses (f) and (g) of the definition of "Consolidated Interest Expense." "CASUALTY EVENT" shall mean any loss of title or any loss of or damage to or destruction of, or any condemnation or other taking (including by any Governmental Authority) of, any property of Parent or any of its Subsidiaries. "Casualty Event" shall include but not be limited to any taking of all or any part of any Real Property of any person or any part thereof, in or by condemnation or other eminent domain proceedings pursuant to any law, or by reason of the temporary requisition of the use or occupancy of all or any part of any Real Property of any person or any part thereof by any Governmental Authority, civil or military, or any settlement in lieu thereof. "CDC" shall have the meaning assigned to such term in SECTION 5.13(a). "CERCLA" shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. section 9601 et seq. A "CHANGE IN CONTROL" shall be deemed to have occurred if: (a) Parent at any time ceases to own 100% of the Equity Interests of U.S. Borrower or, prior to an IPO at Parent, Holdings ceases to own 100% of the Equity Interests of Parent; -7- (b) at any time a change of control (as defined in the documentation for any Material Indebtedness) shall occur; (c) prior to an IPO, (i) the Permitted Holders cease to own (directly or indirectly), or to have the power to vote or direct the voting of, Voting Stock of U.S. Borrower representing a majority of the voting power of the total outstanding Voting Stock of U.S. Borrower or (ii) the Permitted Holders cease to own (directly or indirectly) Equity Interests representing a majority of the total economic interests of the Equity Interests of U.S. Borrower; (d) following an IPO, (i) the Permitted Holders shall fail to own (directly or indirectly), or to have the power to vote or direct the voting of, Voting Stock of U.S. Borrower representing more than 35% of the voting power of the total outstanding Voting Stock of U.S. Borrower, (ii) the Permitted Holders cease to own (directly or indirectly) Equity Interests representing more than 35% of the total economic interests of the Equity Interests of U.S. Borrower or (iii) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause such person or group shall be deemed to have "beneficial ownership" of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of Voting Stock of U.S. Borrower representing more than the voting power of the Voting Stock of U.S. Borrower owned by the Permitted Holders; or (e) following an IPO, during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the IPO Entity (together with any new directors whose election to such Board of Directors or whose nomination for election was approved by a vote of a majority of the members of the Board of Directors of the IPO Entity, which members comprising such majority are then still in office and were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the IPO Entity. For purposes of this definition, a person shall not be deemed to have beneficial ownership of Equity Interests subject to a stock purchase agreement, merger agreement or similar agreement until the consummation of the transactions contemplated by such agreement. "CHANGE IN LAW" shall mean (a) the adoption of any law, treaty, order, policy, rule or regulation or any interpretation or application thereof by any Governmental Authority after the date of this Agreement, (b) any change in any law, treaty, order, policy, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or Issuing Bank (or for purposes of SECTION 2.12(b), by any lending office of such Lender or by such Lender's or Issuing Bank's holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement. "CHARGES" shall have the meaning assigned to such term in SECTION 11.13. "CLASS," when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans, U.S. Term Loans, Canadian Term Loans or Swingline Loans and, when used in reference to any Commitment, refers to whether such Commitment is a Revolving Commitment, U.S. Term Loan Commitment, Canadian Term Loan Commitment or Swingline Commitment, in each case, under this Agreement as originally in effect or pursuant to SECTION 11.02(d), of which such Loan, Borrowing or Commitment shall be a part. -8- "CLOSING DATE" shall mean the date of the initial Credit Extension hereunder. "CO-ARRANGERS" shall have the meaning assigned to such term in the preamble hereto. "CO-DOCUMENTATION AGENTS" shall have the meaning assigned to such term in the preamble hereto. "CODE" shall mean the Internal Revenue Code of 1986, as amended from time to time. "COLLATERAL" shall mean, collectively, all of the U.S. Security Agreement Collateral, the Canadian Security Agreement Collateral, the Mortgaged Property and all other property of whatever kind and nature pledged as collateral under any Security Document. "COLLATERAL ACCOUNT" shall mean the Canadian Collateral Account or the U.S. Collateral Account, as applicable. "COLLATERAL AGENT" shall have the meaning assigned to such term in the preamble hereto. "COMMERCIAL LETTER OF CREDIT" shall mean any letter of credit or similar instrument issued for the purpose of providing credit support in connection with the purchase of materials, goods or services by U.S. Borrower or any of its Subsidiaries in the ordinary course of their businesses. "COMMITMENT" shall mean, with respect to any Lender, such Lender's Revolving Commitment, U.S. Term Loan Commitment, Canadian Term Loan Commitment or Swingline Commitment, and any Commitment to make Term Loans or Revolving Loans of a new Class extended by such Lender as provided in SECTION 11.02(d). "COMMITMENT FEE" shall have the meaning assigned to such term in SECTION 2.05(a). "COMPANIES" shall mean Parent and its Subsidiaries; and "COMPANY" shall mean any one of them. "COMPLIANCE CERTIFICATE" shall mean a certificate of a Financial Officer substantially in the form of EXHIBIT D. "CONFIDENTIAL INFORMATION MEMORANDUM" shall mean that certain confidential information memorandum dated as of January 2004 relating to U.S. Borrower and its subsidiaries. "CONSOLIDATED AMORTIZATION EXPENSE" shall mean, for any period, the amortization expense of U.S. Borrower and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. "CONSOLIDATED CURRENT ASSETS" shall mean, as at any date of determination, the total assets of U.S. Borrower and its Subsidiaries which may properly be classified as current assets on a consolidated balance sheet of U.S. Borrower and its Subsidiaries in accordance with GAAP. "CONSOLIDATED CURRENT LIABILITIES" shall mean, as at any date of determination, the total liabilities of U.S. Borrower and its Subsidiaries which may properly be classified as current liabilities (other than the current portion of any Loans) on a consolidated balance sheet of U.S. Borrower and its Subsidiaries in accordance with GAAP. -9- "CONSOLIDATED DEPRECIATION EXPENSE" shall mean, for any period, the depreciation expense of U.S. Borrower and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. "CONSOLIDATED EBITDA" shall mean, for any period, Consolidated Net Income for such period, adjusted by (x) ADDING THERETO, in each case only to the extent (and in the same proportion) deducted in determining such Consolidated Net Income (and with respect to the portion of Consolidated Net Income attributable to any Subsidiary of U.S. Borrower (other than any Foreign Subsidiary or any U.S. Subsidiary Guarantor) only if a corresponding amount would be permitted at the date of determination to be distributed to U.S. Borrower by such Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its Organizational Documents and all agreements (other than any municipal loan or related agreements entered into in connection with the incurrence of industrial or economic revenue bonds), instruments, judgments, decrees, orders, statutes, rules and regulations applicable to such Subsidiary or its equityholders): (a) Consolidated Interest Expense for such period, (b) Consolidated Amortization Expense for such period, (c) Consolidated Depreciation Expense for such period, (d) Consolidated Tax Expense for such period, (e) costs and expenses directly incurred in connection with the Transactions during such period (not to exceed $30.0 million) to the extent actually incurred and expensed within one year of the Closing Date, (f) the aggregate amount of all other non-cash items reducing Consolidated Net Income (excluding any non-cash charge that results in an accrual of a reserve for cash charges in any future period) for such period, (g) the amount of management fees paid to Sponsor for such period pursuant to the Advisory Services Agreement in accordance with SECTION 6.09(e), (h) Restructuring Expenses in an aggregate amount not to exceed $10.0 million in any Test Period and any Restructuring Expenses in connection with the disposition of Thermal-Gard, Inc., and (y) SUBTRACTING THEREFROM the aggregate amount of all non-cash items increasing Consolidated Net Income (other than the accrual of revenue or recording of receivables in the ordinary course of business) for such period, and (z) ADDING THERETO OR SUBTRACTING THEREFROM, without duplication of amounts included as Restructuring Expenses, with respect to any part of a Test Period, the adjustments to Consolidated EBITDA set forth on SCHEDULE 1.01(b). Other than for purposes of calculating Excess Cash Flow, Consolidated EBITDA shall be calculated on a Pro Forma Basis (including any Pro Forma Cost Savings) to give effect to the Acquisition, any Permitted Acquisition, each Permitted Sale and Leaseback Transaction and other Asset Sales for consideration individually or in the aggregate in excess of $3.0 million during any Test Period consummated at any time on or after the first day of the Test Period thereof as if the Acquisition and each such Permitted Acquisition had been effected on the first day of such period and as if each such Permitted Sale and -10- Leaseback Transaction and other Asset Sale had been consummated on the day prior to the first day of such period. Notwithstanding the foregoing, Consolidated EBITDA for each of the first three fiscal quarters of 2003 shall be increased by the amounts indicated on SCHEDULE 1.01(b) to account for the items described thereon to the extent any such amounts were deducted in computing Consolidated Net Income. "CONSOLIDATED INDEBTEDNESS" shall mean, as at any date of determination, without duplication, (x) the aggregate amount of all Indebtedness of U.S. Borrower and its Subsidiaries less (y) cash and Cash Equivalents on hand of U.S. Borrower and its Subsidiaries in excess of $2.0 million other than restricted cash that is not held in a Collateral Account, determined on a consolidated basis in accordance with GAAP. "CONSOLIDATED INTEREST COVERAGE RATIO" shall mean, for any Test Period, the ratio of (x) Consolidated EBITDA for such Test Period to (y) Cash Interest Expense for such Test Period. "CONSOLIDATED INTEREST EXPENSE" shall mean, for any period, the total consolidated interest expense (less interest income) of U.S. Borrower and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP PLUS, without duplication: (a) imputed interest on Capital Lease Obligations of U.S. Borrower and its Subsidiaries for such period; (b) commissions, discounts and other fees and charges owed by U.S. Borrower or any of its Subsidiaries with respect to letters of credit securing financial obligations, bankers' acceptance financing and receivables financings for such period; (c) amortization of debt issuance costs, debt discount or premium and other financing fees and expenses incurred by U.S. Borrower or any of its Subsidiaries for such period; (d) cash contributions to any employee stock ownership plan or similar trust made by U.S. Borrower or any of its Subsidiaries to the extent such contributions are used by such plan or trust to pay interest or fees to any person (other than U.S. Borrower or a Wholly Owned Subsidiary) in connection with Indebtedness incurred by such plan or trust for such period; (e) all interest paid or payable with respect to discontinued operations of U.S. Borrower or any of its Subsidiaries for such period; (f) the interest portion of any deferred payment obligations of U.S. Borrower or any of its Subsidiaries for such period; and (g) all interest on any Indebtedness of U.S. Borrower or any of its Subsidiaries of the type described in clause (f) or (j) of the definition of "Indebtedness" for such period; PROVIDED that (A) to the extent directly related to the Transactions, debt issuance costs, debt discount or premium and other financing fees and expenses shall be excluded from the calculation of Consolidated Interest Expense and (B) the amortization during such period of other capitalized financing costs shall be excluded from the calculation of Consolidated Interest Expense; PROVIDED that in the case of clause (B) the aggregate amount of amortization relating to such capitalized financing costs deducted in calculating Consolidated Interest Expense shall not exceed 5% of the aggregate amount of the financing giving rise thereto. -11- Consolidated Interest Expense shall be calculated on a Pro Forma Basis (including any Pro Forma Cost Savings) to give effect to any Indebtedness incurred, assumed or permanently repaid or extinguished during the relevant Test Period in connection with the Acquisition, any Permitted Acquisitions, each Permitted Sale and Leaseback Transaction and other Asset Sales for consideration individually or in the aggregate in excess of $3.0 million during any Test Period as if such incurrence, assumption, repayment or extinguishing had been effected on the first day of such period. "CONSOLIDATED NET INCOME" shall mean, for any period, the consolidated net income (or loss) of U.S. Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP; PROVIDED that there shall be excluded from such net income (to the extent otherwise included therein), without duplication: (a) the net income (or loss) of any person (other than a Subsidiary of U.S. Borrower) in which any person other than U.S. Borrower and its Subsidiaries has an ownership interest, except to the extent that cash in an amount equal to any such income has actually been received by U.S. Borrower or (subject to clause (b) below) any of its Subsidiaries during such period; (b) the net income of any Subsidiary of U.S. Borrower (other than a Foreign Subsidiary or a U.S. Subsidiary Guarantor) during such period to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary of that income is not permitted by operation of the terms of its Organizational Documents or any agreement (other than any municipal loan or related agreements entered into in connection with the incurrence of industrial or economic revenue bonds), instrument, judgment, decree, order, statute, rule or regulation applicable to that Subsidiary during such period, except that U.S. Borrower's equity in net loss of any such Subsidiary for such period, other than any non-cash loss that does not result in an accrual or reserve for cash charges in any future period, shall be included in determining Consolidated Net Income; (c) any gain (or loss), together with any related provisions for taxes on any such gain (or the tax effect of any such loss), realized during such period by U.S. Borrower or any of its Subsidiaries upon (i) any Asset Sale (other than any dispositions in the ordinary course of business) by U.S. Borrower or any of its Subsidiaries, (ii) the disposition of any Cash Equivalents or (iii) the repayment or cancellation of any Indebtedness of U.S. Borrower or any of its Subsidiaries; (d) gains and losses due solely to fluctuations in currency values and the related tax effects determined in accordance with GAAP for such period; (e) earnings resulting from any reappraisal, revaluation or write-up of assets; (f) unrealized gains and losses with respect to Hedging Obligations for such period; (g) other than for purposes of the definition of Excess Cash Flow, any extraordinary or nonrecurring gain (or extraordinary or nonrecurring loss), together with any related provision for taxes on any such gain (or the tax effect of any such loss), recorded or recognized by U.S. Borrower or any of its Subsidiaries during such period; PROVIDED that such nonrecurring losses shall not exceed $5.0 million in any Test Period; (h) any expenses or reserves for liabilities to the extent that the U.S. Borrower or any of its Subsidiaries is entitled to indemnification therefore under binding agreements; PROVIDED that any liabilities for which the U.S. Borrower or such Subsidiary is not actually indemnified shall -12- reduce Consolidated Net Income in the period in which it is determined that the U.S. Borrower or such Subsidiary will not be indemnified; and (i) the net income (or loss) of Thermal-Gard, Inc., so long as U.S. Borrower is using commercially reasonable efforts to dispose of it or discontinue its operations. For purposes of this definition of "Consolidated Net Income," "NONRECURRING" means any gain or loss as of any date that is not reasonably likely to recur within two years following such date; PROVIDED that if there was a gain or loss similar to such gain or loss within the two years preceding such date, such gain or loss shall not be deemed nonrecurring and (2) Consolidated Net Income shall be reduced (to the extent not already reduced thereby) by the amount of any payments to or on behalf of Parent made pursuant to SECTIONS 6.08(c) and (d). "CONSOLIDATED SENIOR INDEBTEDNESS" shall mean, as at any date of determination, the difference of Consolidated Indebtedness on such date less the aggregate amount of all Subordinated Indebtedness of the Borrowers and the Subsidiary Guarantors determined on a consolidated basis in accordance with GAAP. "CONSOLIDATED TAX EXPENSE" shall mean, for any period, the tax expense of U.S. Borrower and its Subsidiaries, for such period, determined on a consolidated basis in accordance with GAAP. "CONTESTED COLLATERAL LIEN CONDITIONS" shall mean, with respect to any Permitted Lien of the type described in clauses (a), (b), (e) and (f) of SECTION 6.02, the following conditions: (a) any proceeding instituted contesting such Lien shall operate to stay the sale or forfeiture of any portion of the Collateral on account of such Lien; (b) to the extent such Lien is in an amount in excess of $1,000,000, the appropriate Loan Party shall maintain cash reserves in accordance with GAAP; and (c) such Lien shall in all respects be subject and subordinate in priority to the Lien and security interest created and evidenced by the Security Documents, except if and to the extent that the law or regulation creating, permitting or authorizing such Lien provides that such Lien is or must be superior to the Lien and security interest created and evidenced by the Security Documents. "CONTINGENT OBLIGATION" shall mean, as to any person, any obligation, agreement, understanding or arrangement of such person guaranteeing or intended to guarantee any Indebtedness, leases, dividends or other obligations ("PRIMARY OBLIGATIONS") 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 primary obligation or any property constituting direct or indirect security therefor; (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation 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 primary obligation of the ability of the primary obligor to make payment of such primary obligation; (d) with respect to bankers' acceptances, letters of credit and similar credit arrangements, until a reimbursement obligation arises (which reimbursement obligation shall constitute Indebtedness); or (e) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof; PROVIDED, HOWEVER, that the term "Contingent Obligation" shall not include endorsements of instruments for deposit or collection in the ordinary course of business or any product warranties. The amount of any Contingent Obligation shall be deemed to be an amount equal to the -13- stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for which such person may be liable, whether singly or jointly, pursuant to the terms of the instrument evidencing such Contingent Obligation) 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. "CONTROL" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract or otherwise, and the terms "CONTROLLING" and "CONTROLLED" shall have meanings correlative thereto. "CONTROL AGREEMENT" shall have the meaning assigned to such term in the U.S. Security Agreement. "CREDIT EXTENSION" shall mean, as the context may require, (i) the making of a Loan by a Lender or (ii) the issuance of any Letter of Credit, or the amendment, extension or renewal of any existing Letter of Credit, by the Issuing Bank. "DEBT ISSUANCE" shall mean the incurrence by Parent or any of its Subsidiaries of any Indebtedness after the Closing Date (other than as permitted by SECTION 6.01). "DEBT SERVICE" shall mean, for any period, Cash Interest Expense for such period plus scheduled principal amortization of all Indebtedness for such period. "DEFAULT" shall mean any event, occurrence or condition which is, or upon notice, lapse of time or both would constitute, an Event of Default. "DEFAULT RATE" shall have the meaning assigned to such term in SECTION 2.06(c). "DISQUALIFIED CAPITAL STOCK" shall mean any Equity Interest which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (a) matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the first anniversary of the Final Maturity Date, (b) is convertible into or exchangeable (unless at the sole option of the issuer thereof) for (i) debt securities or (ii) any Equity Interests referred to in (a) above, in each case at any time on or prior to the first anniversary of the Final Maturity Date, or (c) contains any repurchase obligation which may come into effect prior to payment in full of all Obligations; PROVIDED, FURTHER, HOWEVER, that any Equity Interests that would not constitute Disqualified Capital Stock but for provisions thereof giving holders thereof (or the holders of any security into or for which such Equity Interests is convertible, exchangeable or exercisable) the right to require the issuer thereof to redeem such Equity Interests upon the occurrence of a change in control or an asset sale occurring prior to the first anniversary of the Final Maturity Date shall not constitute Disqualified Capital Stock if such Equity Interests provide that the issuer thereof will not redeem any such Equity Interests pursuant to such provisions prior to the repayment in full of the Obligations. "DIVIDEND" with respect to any person shall mean that such person has declared or paid a dividend or returned any equity capital to the holders of its Equity Interests or authorized or made any other distribution, payment or delivery of property (other than Qualified Capital Stock of such person) or cash to the holders of its Equity Interests as such, or redeemed, retired, purchased or otherwise acquired, directly or indirectly, for consideration any of its Equity Interests outstanding (or any options or warrants -14- issued by such person with respect to its Equity Interests), or set aside any funds for any of the foregoing purposes, or shall have permitted any of its Subsidiaries to purchase or otherwise acquire for consideration any of the Equity Interests of such person outstanding (or any options or warrants issued by such person with respect to its Equity Interests). Without limiting the foregoing, "Dividends" with respect to any person shall also include all payments made or required to be made by such person with respect to any stock appreciation rights, plans, equity incentive or achievement plans or any similar plans or setting aside of any funds for the foregoing purposes. "DOLLARS" or "$" shall mean lawful money of the United States. "DOMESTIC SUBSIDIARY" shall mean any Subsidiary that is organized or existing under the laws of the United States, any state thereof or the District of Columbia. "EMBARGOED PERSON" shall have the meaning assigned to such term in SECTION 6.21. "ENVIRONMENT" shall mean ambient air, surface water and groundwater (including potable water, navigable water and wetlands), the land surface or subsurface strata, natural resources, the workplace or as otherwise defined in any Environmental Law. "ENVIRONMENTAL CLAIM" shall mean any claim, notice, demand, order, action, suit, proceeding or other communication alleging liability for investigation, remediation, removal, cleanup, response, corrective action, damages to natural resources, personal injury, property damage, fines, penalties or other costs resulting from, related to or arising out of (i) the presence, Release or threatened Release in or into the Environment of Hazardous Material at any location or (ii) any violation of Environmental Law, and shall include any claim seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from, related to or arising out of the presence, Release or threatened Release of Hazardous Material or alleged injury or threat of injury to health, safety or the Environment. "ENVIRONMENTAL LAW" shall mean any and all applicable present and future treaties, laws, statutes, ordinances, regulations, rules, decrees, orders, judgments, consent orders, consent decrees, code or other binding requirements, and the common law and judicial or agency interpretation, policy or guidance, relating to protection of public health or the Environment, the Release or threatened Release of Hazardous Material, natural resources or natural resource damages, or occupational safety or health. "ENVIRONMENTAL PERMIT" shall mean any permit, license, approval, consent or other authorization required by or from a Governmental Authority under Environmental Law. "EQUIPMENT" shall have the meaning assigned to such term in the U.S. Security Agreement. "EQUITY FINANCING" shall mean the cash contribution of approximately $136.7 million by Sponsor, its affiliates and certain members of U.S. Borrower's management to Holdings in return for Equity Interests in Holdings, and the contribution of such cash by Holdings to Parent in connection with the funding of the Acquisition. "EQUITY INTEREST" shall mean, with respect to any person, any and all shares, interests, participations or other equivalents, including membership interests (however designated, whether voting or nonvoting), of equity of such person, including, if such person is a partnership, partnership interests (whether general or limited) and any other interest or participation that confers on a person the right to receive a share of the profits and losses of, or distributions of property of, such partnership, whether out- -15- standing on the date hereof or issued after the Closing Date, but excluding debt securities convertible or exchangeable into such equity. "EQUITY INVESTORS" shall mean Sponsor and one or more investors reasonably satisfactory to the Administrative Agent and the Arrangers. "EQUITY ISSUANCE" shall mean, without duplication, (i) any issuance or sale by Parent or Holdings after the Closing Date of any Equity Interests in Parent or Holdings (including any Equity Interests issued upon exercise of any warrant or option), as applicable, or any warrants or options to purchase such Equity Interests or (ii) any contribution to the capital of Parent or Holdings; PROVIDED, HOWEVER, that an Equity Issuance shall not include (x) any Preferred Stock Issuance or Debt Issuance, (y) any such sale or issuance by Holdings of its Equity Interests (including its Equity Interests issued upon exercise of any warrant or option or warrants or options to purchase its Equity Interests but excluding Disqualified Capital Stock), in each case, to directors, officers or employees of any Company and (z) any Excluded Issuance. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time. "ERISA AFFILIATE" shall mean, with respect to any person, any trade or business (whether or not incorporated) that, together with such person, is treated as a single employer under Section 414(b) or (c) of the Code, or solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code. "ERISA EVENT" shall mean (a) any "reportable event," as defined in Section 4043 of ERISA or the regulations issued thereunder, with respect to a Plan (other than an event for which the 30-day notice period is waived by regulation); (b) the existence with respect to any Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived, the failure to make by its due date a required installment under Section 412(m) of the Code with respect to any Plan or the failure to make any required contribution to a Multiemployer Plan; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by any Company or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by any Company or any of its ERISA Affiliates from the PBGC or a plan administrator of any notice relating to the intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan, or the occurrence of any event or condition which could reasonably be expected to constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Plan; (f) except as set forth on SCHEDULE 3.17, the incurrence by any Company or any of its ERISA Affiliates of any liability with respect to the withdrawal from any Plan or Multiemployer Plan; (g) except as set forth on SCHEDULE 3.17, the receipt by any Company or its ERISA Affiliates of any notice concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA; (h) the making of any amendment to any Plan which could result in the imposition of a lien or the posting of a bond or other security; and (i) the occurrence of a nonexempt prohibited transaction (within the meaning of Section 4975 of the Code or Section 406 of ERISA) which could reasonably be expected to result in liability to any Company. "EURODOLLAR BORROWING" shall mean a Borrowing comprised of Eurodollar Loans. "EURODOLLAR LOAN" shall mean any Eurodollar Revolving Loan or Eurodollar Term Loan. -16- "EURODOLLAR REVOLVING BORROWING" shall mean a Borrowing comprised of Eurodollar Revolving Loans. "EURODOLLAR REVOLVING LOAN" shall mean any Revolving Loan bearing interest at a rate determined by reference to the Adjusted LIBOR Rate in accordance with the provisions of ARTICLE II. "EURODOLLAR TERM BORROWING" shall mean a Borrowing comprised of Eurodollar Term Loans. "EURODOLLAR TERM LOAN" shall mean any Term Loan bearing interest at a rate determined by reference to the Adjusted LIBOR Rate in accordance with the provisions of ARTICLE II. "EVENT OF DEFAULT" shall have the meaning assigned to such term in ARTICLE VIII. "EXCESS AMOUNT" shall have the meaning assigned to such term in SECTION 2.10(h)(ii). "EXCESS CASH FLOW" shall mean, for any Excess Cash Flow Period, Consolidated EBITDA for such Excess Cash Flow Period, MINUS, without duplication: (a) Debt Service for such Excess Cash Flow Period actually paid during such Excess Cash Flow Period; (b) Capital Expenditures during such Excess Cash Flow Period (excluding Capital Expenditures made in such Excess Cash Flow Period where a certificate in the form contemplated by the following clause (c) was previously delivered) that are paid in cash; (c) (x) Capital Expenditures that U.S. Borrower or any of its Subsidiaries shall, during such Excess Cash Flow Period, become obligated to make but that are not made during such Excess Cash Flow Period; PROVIDED that U.S. Borrower shall deliver a certificate to the Administrative Agent not later than 90 days after the end of such Excess Cash Flow Period, signed by a Responsible Officer of U.S. Borrower and certifying that such Capital Expenditures will be made in the following Excess Cash Flow Period or (y) the CapEx Carryforward Amount for such Excess Cash Flow Period less the CapEx Carryforward Amount from the prior Excess Cash Flow Period that is not used in such Excess Cash Flow Period; (d) the aggregate amount of investments made in cash during such period pursuant to SECTIONS 6.04(e), (i), (j), (k) and (m) (other than investments made with Excluded Issuances); (e) taxes of U.S. Borrower and its Subsidiaries that were paid in cash during such Excess Cash Flow Period or will be paid within six months after the end of such Excess Cash Flow Period and for which reserves have been established; (f) Permitted Tax Distributions that are paid during the respective Excess Cash Flow Period or will be paid within six months after the close of such Excess Cash Flow Period; (g) the absolute value of the difference, if negative, of the amount of Net Working Capital at the end of the prior Excess Cash Flow Period over the amount of Net Working Capital at the end of such Excess Cash Flow Period; -17- (h) losses excluded from the calculation of Consolidated Net Income by operation of clause (c) or (g) of the definition thereof that are paid in cash during such Excess Cash Flow Period; (i) to the extent added to determine Consolidated EBITDA, all items that did not result from a cash payment to U.S. Borrower or any of its Subsidiaries on a consolidated basis during such Excess Cash Flow Period; and (j) permanent repayments and prepayments of Indebtedness (other than the Obligations) made by U.S. Borrower and its Subsidiaries during such fiscal year to the extent funded with internally generated funds; PROVIDED that any amount deducted pursuant of any of the foregoing clauses that will be paid after the close of such Excess Cash Flow Period shall not be deducted again in a subsequent Excess Cash Flow Period; PLUS, without duplication: (i) the difference, if positive, of the amount of Net Working Capital at the end of the prior Excess Cash Flow Period over the amount of Net Working Capital at the end of such Excess Cash Flow Period; (ii) all proceeds received during such Excess Cash Flow Period of any Indebtedness to the extent used to finance any Capital Expenditure (other than Indebtedness under this Agreement to the extent there is no corresponding deduction to Excess Cash Flow above in respect of the use of such borrowings); (iii) to the extent any permitted Capital Expenditures referred to in (c) above do not occur in the Excess Cash Flow Period specified in the certificate of U.S. Borrower provided pursuant to (c) above, such amounts of Capital Expenditures that were not so made in the Excess Cash Flow Period specified in such certificates; (iv) any return of capital on or in respect of investments received in cash during such period other than proceeds of an Asset Sale, which investments were made pursuant to SECTION 6.04(e), (i), (j), (k) or (m) (other than investments made from Excluded Issuances); (v) income or gain excluded from the calculation of Consolidated Net Income by operation of clause (c) or (g) of the definition thereof that is realized in cash during such Excess Cash Flow Period (except to the extent such gain is subject to SECTION 2.10); (vi) if deducted in the computation of Consolidated EBITDA, interest income; and (vii) to the extent subtracted in determining Consolidated EBITDA, all items that did not result from a cash payment by U.S. Borrower or any of its Subsidiaries on a consolidated basis during such Excess Cash Flow Period; PROVIDED FURTHER that Excess Cash Flow for the fiscal year of U.S. Borrower ending on December 31, 2004 shall be deemed to be Excess Cash Flow as calculated above multiplied by 3/4. "EXCESS CASH FLOW PERIOD" shall mean each fiscal year of U.S. Borrower. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended. -18- "EXCLUDED ISSUANCE" shall mean an issuance and sale of Qualified Capital Stock of Holdings to the Permitted Holders and any corresponding issuance and sale of Qualified Capital Stock of Parent to Holdings financed with the net proceeds thereof. "EXCLUDED TAXES" shall mean, with respect to the Administrative Agent, any Lender, the Issuing Bank or any other recipient (each a "RECIPIENT," and collectively the "RECIPIENTS") of any payment to be made by or on account of any obligation of either Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income as a result of a present or former connection between the Recipient 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 Recipient having executed, delivered or performed its obligations or received a payment under, or enforced, or otherwise in connection with, this Agreement or any other Loan Document), (b) in the case of a Foreign Lender, any U.S. federal withholding taxes that are attributable to such Foreign Lender's failure to comply with the requirements of SECTION 2.15(e), (c) Taxes that are United States withholding taxes imposed on amounts payable to such Lender at the time such Lender becomes a party to this Agreement, except to the extent that such Lender's assignor (if any) was entitled, immediately prior to such assignment, to receive additional amounts or indemnification from either Borrower with respect to such withholding taxes pursuant to SECTION 2.15 (or would have been so entitled had the assignor's tax status (residence, etc.) immediately before such assignment been the same as the assignee's tax status immediately after such assignment) and (d) U.S. federal withholding taxes that are imposed as a result of an event occurring after the Lender becomes a Lender other than a Change in Law or regulation or interpretation thereof. "EXECUTIVE ORDER" shall have the meaning assigned to such term in SECTION 3.22. "EXECUTIVE ORDERS" shall have the meaning assigned to such term in SECTION 6.21. "EXISTING LIEN" shall have the meaning assigned to such term in SECTION 6.02(c). "FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System of the United States 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 for such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it. "FEE LETTER" shall mean the confidential Fee Letter, dated December 31, 2003, among Holdings, the Arrangers, UBS Loan Finance LLC, Deutsche Bank AG Cayman Islands Branch, Canadian Imperial Bank of Commerce and Merrill Lynch Capital Corporation. "FEES" shall mean the Commitment Fees, the Administrative Agent Fees, the LC Participation Fees and the Fronting Fees. "FINAL MATURITY DATE" shall mean the latest of the Revolving Maturity Date and the Term Loan Maturity Date. "FINANCIAL OFFICER" of any person shall mean the chief financial officer, principal accounting officer, treasurer or controller of such person. "FIRREA" shall mean the Federal Institutions Reform, Recovery and Enforcement Act of 1989, as amended. -19- "FOREIGN LENDER" shall mean any Lender that is not, for United States federal income tax purposes, (i) a citizen or resident of the United States, (ii) a corporation or partnership or entity treated as a corporation or partnership created or organized in or under the laws of the United States, or any political subdivision thereof, (iii) an estate whose income is subject to U.S. federal income taxation regardless of its source or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of such trust and one or more United States persons have the authority to control all substantial decisions of such trust. "FOREIGN PLAN" shall mean any employee benefit plan, program, policy, arrangement or agreement maintained or contributed to by any Company with respect to employees employed outside the United States. "FOREIGN SUBSIDIARY" shall mean a Subsidiary that is organized under the laws of a jurisdiction other than the United States or any state thereof or the District of Columbia. "FRONTING FEE" shall have the meaning assigned to such term in SECTION 2.05(c). "GAAP" shall mean generally accepted accounting principles in the United States applied on a consistent basis; PROVIDED that with respect to Canadian Borrower and any Canadian Subsidiaries organized under the laws of Canada or a province thereof, for purposes of Sections 3.13, 5.05, 5.07 and 5.09 "GAAP" shall mean generally accepted accounting principles in Canada applied on a consistent basis. "GOVERNMENTAL AUTHORITY" shall mean any federal, state, provincial, local or foreign court, central bank or governmental agency, authority, instrumentality or regulatory body or any subdivision thereof. "GOVERNMENTAL REAL PROPERTY DISCLOSURE REQUIREMENTS" shall mean any Requirement of Law of any Governmental Authority requiring notification of the buyer, lessee, mortgagee, assignee or other transferee of any Real Property, facility, establishment or business, or notification, registration or filing to or with any Governmental Authority, in connection with the sale, lease, mortgage, assignment or other transfer (including any transfer of control) of any Real Property, facility, establishment or business, of the actual or threatened presence or Release in or into the Environment, or the use, disposal or handling of Hazardous Material on, at, under or near the Real Property, facility, establishment or business to be sold, leased, mortgaged, assigned or transferred. "GUARANTEED OBLIGATIONS" shall mean the U.S. Guaranteed Obligations and/or the Canadian Guaranteed Obligations, as applicable. "GUARANTEES" shall mean the guarantees issued pursuant to ARTICLE VII by Parent and the Subsidiary Guarantors. "GUARANTORS" shall mean Parent and the Subsidiary Guarantors. "HAZARDOUS MATERIALS" shall mean the following: hazardous substances; hazardous wastes; polychlorinated biphenyls ("PCBs") or any substance or compound containing PCBs; asbestos or any asbestos-containing materials in any form or condition; radon or any other radioactive materials including any source, special nuclear or by-product material; petroleum, crude oil or any fraction thereof; and any other pollutant or contaminant or chemicals, wastes, materials, compounds, constituents or substances, subject to regulation or which can give rise to liability under any Environmental Laws. -20- "HEDGING AGREEMENT" shall mean any swap, cap, collar, forward purchase or similar agreements or arrangements dealing with interest rates, currency exchange rates or commodity prices, either generally or under specific contingencies. "HEDGING OBLIGATIONS" shall mean obligations under or with respect to Hedging Agreements. "HOLDINGS" shall mean Ply Gem Investment Holdings, Inc. (formerly known as CI Investment Holdings, Inc.), a Delaware corporation. "HOLDINGS SUBORDINATED INDEBTEDNESS" shall mean Indebtedness of Holdings owing to any Permitted Holder issued pursuant to the Subordinated Note Purchase Agreement attached hereto as EXHIBIT R. "INDEBTEDNESS" of any person shall mean, without duplication, (a) all obligations of such person for borrowed money or advances; (b) all obligations of such person evidenced by bonds, debentures, notes or similar instruments; (c) all obligations of such person upon which interest charges are customarily paid or accrued; (d) all obligations of such person under conditional sale or other title retention agreements relating to property purchased by such person; (e) all obligations of such person issued or assumed as the deferred purchase price of property or services (excluding trade accounts payable and accrued obligations incurred in the ordinary course of business on normal trade terms and not overdue by more than 90 days); (f) all Indebtedness of others secured by any Lien on property owned or acquired by such person, whether or not the obligations secured thereby have been assumed, but limited to the fair market value of such property; (g) all Capital Lease Obligations, Purchase Money Obligations and synthetic lease obligations of such person; (h) all Hedging Obligations to the extent required to be reflected on a balance sheet of such person; (i) all obligations of such person (not including any contingent obligations) for the reimbursement of any obligor in respect of letters of credit, letters of guaranty, bankers' acceptances and similar credit transactions; and (j) all Contingent Obligations of such person in respect of Indebtedness or obligations of others of the kinds referred to in clauses (a) through (i) above. The Indebtedness of any person shall include the Indebtedness of any other entity (including any partnership in which such person is a general partner) to the extent such person is liable therefor as a result of such person's ownership interest in or other relationship with such entity, except to the extent that terms of such Indebtedness expressly provide that such person is not liable therefor. "INDEMNIFIED TAXES" shall mean all Taxes other than Excluded Taxes. "INDEMNITEE" shall have the meaning assigned to such term in SECTION 11.03(b). "INFORMATION" shall have the meaning assigned to such term in SECTION 11.12. "INSTALLMENT CONTRACT" shall have the meaning assigned to such term in SECTION 5.13(a). "INSURANCE POLICIES" shall mean the insurance policies and coverages required to be maintained by each Loan Party which is an owner of Mortgaged Property with respect to the applicable Mortgaged Property pursuant to SECTION 5.04 and all renewals and extensions thereof. "INSURANCE REQUIREMENTS" shall mean, collectively, all provisions of the Insurance Policies, all requirements of the issuer of any of the Insurance Policies and all orders, rules, regulations and any other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) binding upon each Loan Party which is an owner of Mortgaged Property and applicable to the Mortgaged Property or any use or condition thereof. -21- "INTELLECTUAL PROPERTY" shall have the meaning assigned to such term in SECTION 3.06(a). "INTERCOMPANY NOTE" shall mean the U.S. Intercompany Note and the Canadian Intercompany Note. "INTEREST ELECTION REQUEST" shall mean a request by either Borrower to convert or continue a Revolving Borrowing or Term Borrowing in accordance with SECTION 2.08(b), substantially in the form of EXHIBIT E. "INTEREST PAYMENT DATE" shall mean (a) with respect to any ABR Loan (including Swingline Loans), the last Business Day of each March, June, September and December to occur during any period in which such Loan is outstanding, (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Loan with an Interest Period of more than three months' duration, each day prior to the last day of such Interest Period that occurs at intervals of three months' duration after the first day of such Interest Period, (c) with respect to any Revolving Loan or Swingline Loan, the Revolving Maturity Date or such earlier date on which the Revolving Commitments are terminated and (d) with respect to any Term Loan, the Term Loan Maturity Date. "INTEREST PERIOD" shall mean, with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months (or, if each affected Lender so agrees, nine months) thereafter, as the applicable Borrower may elect; PROVIDED that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (b) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing; PROVIDED, HOWEVER, that an Interest Period shall be limited to the extent required under SECTION 2.03(e). "INVESTMENTS" shall have the meaning assigned to such term in SECTION 6.04. "IPO" shall mean the first underwritten public offering by Parent or Holdings of its Equity Interests after the Closing Date pursuant to a registration statement filed with the Securities and Exchange Commission in accordance with the Securities Act. "IPO ENTITY" shall mean whichever of Parent or Holdings effects an IPO. "ISSUING BANK" shall mean, as the context may require, (a) UBS AG, Stamford Branch, with respect to Letters of Credit issued by it; (b) any other Lender that may become an Issuing Bank pursuant to SECTIONS 2.18(j) and (k) with respect to Letters of Credit issued by such Lender; or (c) collectively, all of the foregoing. "JOINDER AGREEMENT" shall mean a joinder agreement substantially in the form of EXHIBIT F. "JOINT LEAD ARRANGERS" shall have the meaning assigned to such term in the preamble hereto. -22- "JUDGMENT CURRENCY" shall have the meaning assigned to such term in SECTION 11.16. "JUDGMENT CURRENCY CONVERSION DATE" shall have the meaning assigned to such term in SECTION 11.16. "LANDLORD ACCESS AGREEMENT" shall mean (x) with respect to a Real Property located in the United States, a U.S. Landlord Access Agreement, substantially in the form of EXHIBIT G-1 and (y) with respect to a Real Property located in Canada, a Canadian Landlord Access Agreement, substantially in the form of EXHIBIT G-2, or, in either case, a landlord access agreement in such other form as may reasonably be acceptable to the Collateral Agent. "LC COMMITMENT" shall mean the commitment of the Issuing Bank to issue Letters of Credit pursuant to SECTION 2.18, as the same shall be reduced from time to time pursuant to SECTION 2.07 or SECTION 2.18. The amount of the LC Commitment shall initially be $35.0 million, but in no event exceed the Revolving Commitments. "LC DISBURSEMENT" shall mean a payment or disbursement made by the Issuing Bank pursuant to a Letter of Credit. "LC EXPOSURE" shall mean at any time the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time PLUS (b) the aggregate principal amount of all Reimbursement Obligations outstanding at such time; PROVIDED that for any purpose other than calculating a fee due under this Agreement the amount in clause (a) will be reduced by the amount of industrial or economic revenue bonds issued in connection with the Assumed Debt and held by a remarketing agent or trustee for the benefit of the Collateral Agent. The LC Exposure of any Revolving Lender at any time shall mean its Pro Rata Percentage of the aggregate LC Exposure at such time. "LC PARTICIPATION FEE" shall have the meaning assigned to such term in SECTION 2.05(c). "LC REQUEST" shall mean a request by U.S. Borrower in accordance with the terms of SECTION 2.18(b) and substantially in the form of EXHIBIT H, or such other form as shall be approved by the Administrative Agent. "LC SUB-ACCOUNT" shall have the meaning assigned to such term in SECTION 9.01(d). "LEASES" shall mean any and all leases, subleases, tenancies, options, concession agreements, rental agreements, occupancy agreements, franchise agreements, access agreements and any other agreements (including all amendments, extensions, replacements, renewals, modifications and/or guarantees thereof), whether or not of record and whether now in existence or hereafter entered into, affecting the use or occupancy of all or any portion of any Real Property. "LENDER ADDENDUM" shall mean with respect to any Lender on the Closing Date, a lender addendum in the form of EXHIBIT I, to be executed and delivered by such Lender on the Closing Date as provided in SECTION 11.14. "LENDER AFFILIATE" shall mean with respect to any Lender that is a fund that invests in bank loans, any other fund that invests in commercial loans and is managed or advised by the same investment advisor as such Lender or by an Affiliate of such advisor. "LENDERS" shall mean the U.S. Lenders and the Canadian Term Loan Lenders. -23- "LETTER OF CREDIT" shall mean any (i) Standby Letter of Credit and (ii) Commercial Letter of Credit, in each case, issued or to be issued by an Issuing Bank for the account of U.S. Borrower pursuant to SECTION 2.18. "LETTER OF CREDIT EXPIRATION DATE" shall mean the date which is fifteen days prior to the Revolving Maturity Date. "LIBOR RATE" shall mean, with respect to any Eurodollar Borrowing for any Interest Period therefor, the rate per annum determined by the Administrative Agent to be the arithmetic mean (rounded to the nearest 1/100th of 1%) of the offered rates for deposits in dollars with a term comparable to such Interest Period that appears on the Telerate British Bankers Assoc. Interest Settlement Rates Page (as defined below) at approximately 11:00 a.m., London, England time, on the second full Business Day preceding the first day of such Interest Period; PROVIDED, HOWEVER, that (i) if no comparable term for an Interest Period is available, the LIBOR Rate shall be determined using the weighted average of the offered rates for the two terms most nearly corresponding to such Interest Period and (ii) if there shall at any time no longer exist a Telerate British Bankers Assoc. Interest Settlement Rates Page, "LIBOR Rate" shall mean, with respect to each day during each Interest Period pertaining to Eurodollar Borrowings comprising part of the same Borrowing, the rate per annum equal to the rate at which the Administrative Agent is offered deposits in dollars at approximately 11:00 a.m., London, England time, two Business Days prior to the first day of such Interest Period in the London interbank market for delivery on the first day of such Interest Period for the number of days comprised therein and in an amount comparable to its portion of the amount of such Eurodollar Borrowing to be outstanding during such Interest Period. "TELERATE BRITISH BANKERS ASSOC. INTEREST SETTLEMENT RATES PAGE" shall mean the display designated as Page 3750 on the Telerate System Incorporated Service (or such other page as may replace such page on such service for the purpose of displaying the rates at which dollar deposits are offered by leading banks in the London interbank deposit market). "LIEN" shall mean, with respect to any property, (a) any mortgage, deed of trust, lien, pledge, encumbrance, claim, charge, assignment, hypothecation, security interest or encumbrance of any kind or any arrangement to provide priority or preference or any filing of any financing statement under the UCC or any other similar notice of Lien under any similar notice or recording statute of any Governmental Authority, including any easement, right-of-way or other encumbrance on title to Real Property, in each of the foregoing cases whether voluntary or imposed by law, and any agreement to give any of the foregoing; (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such property; and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities. "LOAN DOCUMENTS" shall mean this Agreement, each LC Request or application, the Notes (if any), the Security Documents, each Permitted U.S. Hedging Agreement, each Permitted Canadian Hedging Agreement and, solely for purposes of SECTION 8.01(e) hereof, the Fee Letter. "LOAN PARTIES" shall mean Parent, the Borrowers and the Subsidiary Guarantors. "LOANS" shall mean, as the context may require, a Revolving Loan, a U.S. Term Loan, a Canadian Term Loan or a Swingline Loan (and shall include any Loans contemplated by SECTION 11.02(e)). "MARGIN STOCK" shall have the meaning assigned to such term in Regulation U. -24- "MATERIAL ADVERSE EFFECT" shall mean (a) a material adverse effect on the condition (financial or otherwise), business, operations, assets, liabilities or prospects of Parent and its Subsidiaries, taken as a whole; (b) material impairment of the ability of the Loan Parties to fully and timely perform any of their obligations under any Loan Document; (c) material impairment of the rights of or benefits or remedies available to the Lenders or the Collateral Agent under any Loan Document; or (d) a material adverse effect on the Liens in favor of the Collateral Agent (for its benefit and for the benefit of the other Secured Parties) on the Collateral or the priority of such Liens. "MATERIAL INDEBTEDNESS" shall mean (a) the Indebtedness listed on SCHEDULE 1.01(c) and (b) any other Indebtedness (other than the Loans and Letters of Credit) or Hedging Obligations of Parent or any of its Subsidiaries in an aggregate outstanding principal amount exceeding $10.0 million. For purposes of determining Material Indebtedness, the "principal amount" in respect of any Hedging Obligations of any Loan Party at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that such Loan Party would be required to pay if the related Hedging Agreement were terminated at such time. "MAXIMUM RATE" shall have the meaning assigned to such term in SECTION 11.13. "MORTGAGE" shall mean an agreement, including, but not limited to, a mortgage, deed of trust or any other document, creating and evidencing a Lien on a Mortgaged Property, which (i) in the case of Real Property owned in fee by a U.S. Loan Party, shall be substantially in the form of EXHIBIT J-1, (ii) in the case of Real Property owned in fee by a Canadian Loan Party, shall be substantially in the form of Exhibit J-2, and (iii) in the case of leased Real Property, shall be substantially in the form of EXHIBIT J-3, or, in each case, another form reasonably satisfactory to the Collateral Agent, and, in each case, with such schedules and including such provisions as shall be necessary to conform such document to applicable local or foreign law or as shall be customary under applicable local or foreign law. "MORTGAGED PROPERTY" shall mean (a) each Real Property identified on SCHEDULE 1.01(d) hereto and (b) each Real Property, if any, which shall be subject to a Mortgage delivered after the Closing Date pursuant to SECTION 5.10(d) or (e) or SECTION 5.13. "MULTIEMPLOYER PLAN" shall mean a multiemployer plan within the meaning of Section 4001(a)(3) or Section 3(37) of ERISA (a) to which any Company or any ERISA Affiliate is then making or accruing an obligation to make contributions; (b) to which any Company or any ERISA Affiliate has within the preceding five plan years made contributions; or (c) with respect to which any Company could incur liability. "NET CASH PROCEEDS" shall mean: (a) with respect to any Asset Sale (other than any issuance or sale of Equity Interests), the cash proceeds received by Parent or any of its Subsidiaries (including cash proceeds subsequently received (as and when received by Parent or any of its Subsidiaries) in respect of non-cash consideration initially received) net of (i) selling expenses (including reasonable brokers' fees or commissions, legal, accounting and other professional and transactional fees, transfer and similar taxes and U.S. Borrower's good faith estimate of income taxes paid or payable in connection with such sale); (ii) amounts provided as a reserve, in accordance with GAAP, against (x) any liabilities under any indemnification obligations associated with such Asset Sale or (y) any other liabilities retained by Parent or any of its Subsidiaries associated with the properties sold in such Asset Sale (PROVIDED that, to the extent and at the time any such amounts are released from such reserve, such amounts shall constitute Net Cash Proceeds); (iii) U.S. Borrower's good faith estimate of payments required to be made with respect to unassumed liabilities relating to -25- the properties sold within 90 days of such Asset Sale (PROVIDED that, to the extent such cash proceeds are not used to make payments in respect of such unassumed liabilities within 90 days of such Asset Sale, such cash proceeds shall constitute Net Cash Proceeds); and (iv) the principal amount, premium or penalty, if any, interest and other amounts on any Indebtedness for borrowed money which is secured by a Lien on the properties sold in such Asset Sale (so long as such Lien was permitted to encumber such properties under the Loan Documents at the time of such sale) and which is repaid with such proceeds (other than any such Indebtedness assumed by the purchaser of such properties); (b) with respect to any Debt Issuance, any Equity Issuance or any other issuance or sale of Equity Interests by Holdings or any of its Subsidiaries, the cash proceeds thereof, net of customary fees, commissions, costs and other expenses incurred in connection therewith; and (c) with respect to any Casualty Event, the cash insurance proceeds, condemnation awards and other compensation received in respect thereof, net of all reasonable costs and expenses incurred in connection with the collection of such proceeds, awards or other compensation in respect of such Casualty Event. "NET WORKING CAPITAL" shall mean, at any time, Consolidated Current Assets at such time minus Consolidated Current Liabilities at such time. "NON-GUARANTOR SUBSIDIARY" shall mean each Subsidiary that is not a Subsidiary Guarantor. "NOTES" shall mean any notes evidencing the Term Loans, Revolving Loans or Swingline Loans issued pursuant to this Agreement, if any, substantially in the form of EXHIBIT K-1, K-2, K-3 or K-4. "OBLIGATIONS" shall mean the Canadian Obligations and the U.S. Obligations. "OFAC" shall have the meaning assigned to such term in SECTION 3.22. "OFFER TO REDEEM" shall have the meaning assigned to such term in SECTION 2.10(j). "OFFICERS' CERTIFICATE" shall mean a certificate executed by the chairman of the Board of Directors (if an officer), the chief executive officer or the president and one of the Financial Officers, each in his or her official (and not individual) capacity. "ORGANIZATIONAL DOCUMENTS" shall mean, with respect to any person, (i) in the case of any corporation, the certificate of incorporation and by-laws (or similar documents) of such person, (ii) in the case of any limited liability company, the certificate of formation and operating agreement (or similar documents) of such person, (iii) in the case of any limited partnership, the certificate of formation and limited partnership agreement (or similar documents) of such person, (iv) in the case of any general partnership, the partnership agreement (or similar document) of such person and (v) in any other case, the functional equivalent of the foregoing. "OTHER LIST" shall have the meaning assigned to such term in SECTION 6.21. "OTHER TAXES" shall mean any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies (including all interest, fines, penalties and additions to tax and related expenses with regard thereto) arising from any payment made or required to -26- be made under any Loan Document or from the execution, delivery, registration or enforcement of, or otherwise with respect to, any Loan Document. "PARENT" shall have the meaning assigned to such term in the preamble hereto. "PARTICIPANT" shall have the meaning assigned to such term in SECTION 11.04(e). "PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA. "PERFECTION CERTIFICATE" shall mean a certificate in the form of EXHIBIT L-1 or any other form approved by the Collateral Agent, as the same shall be supplemented from time to time by a Perfection Certificate Supplement or otherwise. "PERFECTION CERTIFICATE SUPPLEMENT" shall mean a certificate supplement in the form of EXHIBIT L-2 or any other form approved by the Collateral Agent. "PERMITTED ACQUISITION" shall mean any transaction or series of related transactions for the direct or indirect (a) acquisition of all or substantially all of the property of any person, or of any business or division of any person; (b) acquisition of in excess of 50% of the Equity Interests of any person, and otherwise causing such person to become a Subsidiary of such person; or (c) merger or consolidation or any other combination with any person (other than (x) among U.S. Borrower and/or its Subsidiaries as permitted by SECTIONS 6.05(c) and (d) and (y) between Parent and Holdings in connection with an IPO), if each of the following conditions is met: (i) no Default then exists or would result therefrom; (ii) after giving effect to such transaction on a Pro Forma Basis, (A) U.S. Borrower shall be in compliance with all covenants set forth in SECTION 6.10 as of the most recent Test Period (assuming, for purposes of SECTION 6.10, that such transaction, and all other Permitted Acquisitions consummated since the first day of the relevant Test Period for each of the financial covenants set forth in SECTION 6.10 ending on or prior to the date of such transaction, had occurred on the first day of such relevant Test Period), and (B) unless expressly approved by the Administrative Agent, the person or business to be acquired shall have generated positive cash flow for the Test Period most recently ended prior to the date of consummation of such acquisition; (iii) no Company shall, in connection with any such transaction, assume or remain liable with respect to any Indebtedness or other liability (including any material tax or ERISA liability) of the related seller or the business, person or properties acquired, except (A) to the extent permitted under SECTION 6.01 and (B) obligations not constituting Indebtedness incurred in the ordinary course of business and necessary or desirable to the continued operation of the underlying properties, and any other such liabilities or obligations not permitted to be assumed or otherwise supported by any Company hereunder shall be paid in full or released as to the business, persons or properties being so acquired on or before the consummation of such acquisition; (iv) the person or business to be acquired shall be, or shall be engaged in, a business of the type that U.S. Borrower and its Subsidiaries are permitted to be engaged in under SECTION 6.15 and the property acquired in connection with any such transaction shall be made subject to the Lien of the Security Documents to the extent required by SECTION 5.10 and shall be free and clear of any Liens, other than Permitted Collateral Liens; -27- (v) the Board of Directors of the person to be acquired shall not have indicated publicly its opposition to the consummation of such acquisition (which opposition has not been publicly withdrawn); (vi) all transactions in connection therewith shall be consummated in accordance with all applicable laws of all applicable Governmental Authorities; (vii) with respect to any transaction involving Acquisition Consideration of more than $10.0 million, unless the Administrative Agent shall otherwise agree, U.S. Borrower shall have provided the Administrative Agent and the Lenders with (A) historical financial statements for the last three fiscal years (or, if less, the number of years since formation) of the person or business to be acquired (audited if available and, in the case of a transaction involving Acquisition Consideration of more than $20.0 million, if available without undue cost or delay) and unaudited financial statements thereof for the most recent interim period which are available, (B) reasonably detailed projections for the succeeding five years pertaining to the person or business to be acquired and updated projections for U.S. Borrower after giving effect to such transaction, (C) a reasonably detailed description of all material information relating thereto and copies of all material documentation pertaining to such transaction, and (D) all such other information and data relating to such transaction or the person or business to be acquired as may be reasonably requested by the Administrative Agent or the Required Lenders; and (viii) at least 5 Business Days prior to the proposed date of consummation of the transaction, U.S. Borrower shall have delivered to the Agents and the Lenders an Officers' Certificate certifying that (A) such transaction complies with this definition (which shall have attached thereto reasonably detailed backup data and calculations showing such compliance), and (B) such transaction could not reasonably be expected to result in a Material Adverse Effect. "PERMITTED CANADIAN HEDGING AGREEMENT" shall have the meaning assigned to such term in the definition of "Canadian Obligations." "PERMITTED COLLATERAL LIENS" means (i) Contested Liens (as defined in the Security Agreement), (ii) the Liens described in clauses (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (m) and (n) of SECTION 6.02 and (iii) in the case of Mortgaged Property, "Permitted Collateral Liens" shall mean the Liens described in clauses (a), (b), (c), (d), (e), (g), (k) and (n) of SECTION 6.02; PROVIDED, HOWEVER upon the Closing Date or upon the date of delivery of each additional Mortgage under SECTION 5.10, 5.11 or 5.13, Permitted Collateral Liens shall mean only those Liens set forth in Schedule B to the applicable Mortgage. "PERMITTED HOLDERS" shall mean (1) Sponsor, Caxton Associates, LLC, Caxton-Iseman (Ply Gem) L.P., Frederick J. Iseman, Lee D. Meyer, John Wayne, Shawn Poe, Mark Watson, Bryan Sveinson, David S. McCready, Robert A. Ferris, Steven M. Lefkowitz and any other person that is a controlled Affiliate of any of the foregoing and (2) any Related Party of any of the foregoing; PROVIDED that in no event shall any operating portfolio company or any holding company for any operating portfolio company (other than U.S. Borrower) be a Permitted Holder. "PERMITTED LIENS" shall have the meaning assigned to such term in SECTION 6.02. "PERMITTED SALE AND LEASEBACK TRANSACTION" means a refinancing by U.S. Borrower or its Subsidiaries (other than Canadian Borrower or any Canadian Subsidiary) following the Closing Date of all or a portion of the Assumed Debt with the proceeds of one or more Sale and Leaseback Transactions effected as operating leases involving the applicable properties securing the Assumed Debt; PRO- -28- VIDED that (i) at the time of and immediately after giving effect to such Permitted Sale and Leaseback Transaction and the application of the proceeds thereof, no Default shall have occurred and be continuing and (ii) the proceeds of up to 525% of the aggregate operating lease payments in respect of such Permitted Sale and Leaseback Transaction (such amount, the "PERMITTED SALE AND LEASEBACK TRANSACTION AMOUNT") are used (x) first, to repay the applicable Assumed Debt being so refinanced and (y) second, are applied in accordance with Section 2.10(c) (it being understood that, to the extent a prepayment deposit is required by the terms of the Assumed Debt, U.S. Borrower may use proceeds of Revolving Loans to fund such prepayment deposit and use proceeds of the Sale and Leaseback Transaction to repay such Revolving Loans without any Commitment reduction). "PERMITTED SALE AND LEASEBACK TRANSACTION AMOUNT" shall have the meaning assigned to such term in the definition of "Permitted Sale and Leaseback Transaction." "PERMITTED TAX DISTRIBUTIONS" means payments, dividends or distributions by U.S. Borrower to Holdings or Parent or Parent to Holdings in order to pay consolidated or combined federal, state or local taxes not payable directly by U.S. Borrower or its Subsidiaries which payments by U.S. Borrower are not in excess of the tax liabilities that would have been payable by U.S. Borrower and its Subsidiaries on a stand-alone basis. "PERMITTED U.S. HEDGING AGREEMENT" shall have the meaning assigned to such term in the definition of "U.S. Obligations." "PERSON" shall mean any natural person, corporation, business trust, joint venture, association, company, limited liability company, partnership or government, or any agency or political subdivision thereof, in any case, whether acting in a personal, fiduciary or other capacity. "PLAN" shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA which is maintained or contributed to by any Company or its ERISA Affiliate or with respect to which any Company could incur liability (including under Section 4069 of ERISA). "PPSA" shall mean the Personal Property Security Act as in effect from time to time (except as otherwise specified) in any applicable Province of Canada. "PREFERRED STOCK" shall mean, with respect to any person, any and all preferred or preference Equity Interests (however designated) of such person whether now outstanding or issued after the Closing Date. "PREFERRED STOCK ISSUANCE" shall mean the issuance or sale by Holdings or any of its Subsidiaries of any Preferred Stock after the Closing Date (other than (x) as permitted by SECTION 6.01 or (y) any Excluded Issuance). "PREMISES" shall have the meaning assigned thereto in the applicable Mortgage. "PRO FORMA BASIS" shall mean on a basis reasonably satisfactory to the Administrative Agent. "PRO FORMA COST SAVINGS" shall mean, with respect to any Test Period, the reductions in costs that occurred during the Test Period that are (1) directly attributable to an asset acquisition and calculated on a basis that is consistent with Article 11 of Regulation S-X or (2) implemented, committed to be implemented or the commencement of implementation of which has begun in good faith by the busi- -29- ness that was the subject of any such asset acquisition within six months of the date of the asset acquisition and that are supportable and quantifiable by the underlying records of such business, as if, in the case of each of clauses (1) and (2), all such reductions in costs had been effected as of the beginning of such period, decreased by any incremental expenses incurred or to be incurred during the Test Period in order to achieve such reduction in costs. "PRO RATA PERCENTAGE" of any Revolving Lender at any time shall mean the percentage of the total Revolving Commitments of all Revolving Lenders represented by such Lender's Revolving Commitment. "PROPERTY" shall mean any right, title or interest in or to property or assets of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible and including Equity Interests or other ownership interests of any person and whether now in existence or owned or hereafter entered into or acquired, including all Real Property. "PURCHASE MONEY OBLIGATION" shall mean, for any person, the obligations of such person in respect of Indebtedness (including Capital Lease Obligations) incurred for the purpose of financing all or any part of the purchase price of any property (including Equity Interests of any person) or the cost of installation, construction or improvement of any property and any refinancing thereof; PROVIDED, HOWEVER, that (i) such Indebtedness is incurred within one year after such acquisition of such property by such person and (ii) the amount of such Indebtedness does not exceed 100% of the cost of such acquisition, installation, construction or improvement, as the case may be. "QUALIFIED CAPITAL STOCK" of any person shall mean any Equity Interests of such person that are not Disqualified Capital Stock. "REAL PROPERTY" shall mean, collectively, all right, title and interest (including any leasehold estate) in and to any and all parcels of or interests in real property owned, leased or operated by any person, whether by lease, license or other means, together with, in each case, all easements, hereditaments and appurtenances relating thereto, all improvements and appurtenant fixtures and equipment, all general intangibles and contract rights and other property and rights incidental to the ownership, lease or operation thereof. "REFINANCING" shall mean the repayment in full, and the termination of any commitment to make extensions of credit in connection with, all of the outstanding indebtedness of Parent or any of its Subsidiaries listed on SCHEDULE 1.01(e). "REGISTER" shall have the meaning assigned to such term in SECTION 11.04(c). "REGULATION D" shall mean Regulation D of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. "REGULATION S-X" shall mean Regulation S-X promulgated under the Securities Act. "REGULATION T" shall mean Regulation T of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. "REGULATION U" shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. -30- "REGULATION X" shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. "REIMBURSEMENT OBLIGATIONS" shall mean U.S. Borrower's obligations under SECTION 2.18(e) to reimburse LC Disbursements. "RELATED PARTY" means, with respect to any person, (1) any controlling stockholder, controlling member, general partner, Subsidiary, or spouse or immediate family member (in the case of an individual), of such person, (2) any estate, trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners or owners of which consist solely of one or more Permitted Holders and/or such other persons referred to in the immediately preceding clause (1), or (3) any executor, administrator, trustee, manager, director or other similar fiduciary of any person referred to in the immediately preceding clause (2), acting solely in such capacity. "RELEASE" shall mean any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, dispersing, emanating or migrating of any Hazardous Material in, into, onto or through the Environment. "REQUIRED LENDERS" shall mean, at any time, Lenders having Loans, LC Exposure and unused Revolving and Term Loan Commitments representing more than 50% of the sum of all Loans outstanding, LC Exposure and unused Revolving and Term Loan Commitments at such time. "REQUIREMENTS OF LAW" shall mean, collectively, any and all requirements of any Governmental Authority including any and all laws, ordinances, rules, regulations or similar statutes or case law. "RESPONSE" shall mean (a) "response" as such term is defined in CERCLA, 42 U.S.C. section 9601(24), and (b) all other actions required by any Governmental Authority or voluntarily undertaken to (i) clean up, remove, treat, abate or in any other way address any Hazardous Material in the environment; (ii) prevent the Release or threat of Release, or minimize the further Release, of any Hazardous Material; or (iii) perform studies and investigations in connection with, or as a precondition to, clause (i) or (ii) above. "RESPONSIBLE OFFICER" of any person shall mean any executive officer or Financial Officer of such person and any other officer or similar official thereof with responsibility for the administration of the obligations of such person in respect of this Agreement. "RESTRUCTURING EXPENSES" shall mean losses, expenses and charges incurred in connection with restructuring by U.S. Borrower and/or one or more of its Subsidiaries, including in connection with integration of acquired businesses or persons, disposition of one or more Subsidiaries or businesses, exiting of one or more lines of businesses and relocation or consolidation of facilities, including severance, lease termination and other non-ordinary-course, non-operating costs and expenses in connection therewith. "REVOLVING AVAILABILITY PERIOD" shall mean the period from and including the Closing Date to but excluding the earlier of (i) the Business Day preceding the Revolving Maturity Date and (ii) the date of termination of the Revolving Commitments. "REVOLVING BORROWING" shall mean a Borrowing comprised of Revolving Loans. -31- "REVOLVING COMMITMENT" shall mean, with respect to each U.S. Lender, the commitment, if any, of such U.S. Lender to make Revolving Loans hereunder up to the amount set forth on Schedule I to the Lender Addendum executed and delivered by such U.S. Lender or by an amendment to this Agreement pursuant to SECTION 11.02(d), or in the Assignment and Assumption pursuant to which such U.S. Lender assumed its Revolving Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to SECTION 2.07 and (b) reduced or increased from time to time pursuant to assignments by or to such U.S. Lender pursuant to SECTION 11.04. The aggregate amount of the Lenders' Revolving Commitments on the Closing Date is $65.0 million. "REVOLVING EXPOSURE" shall mean, with respect to any U.S. Lender at any time, the aggregate principal amount at such time of all outstanding Revolving Loans of such U.S. Lender, PLUS the aggregate amount at such time of such Lender's LC Exposure, PLUS the aggregate amount at such of such Lender's Swingline Exposure. "REVOLVING LENDER" shall mean a U.S. Lender with a Revolving Commitment. "REVOLVING LOAN" shall mean a Loan made by the U.S. Lenders to U.S. Borrower pursuant to SECTION 2.01(c). Each Revolving Loan shall either be an ABR Revolving Loan or a Eurodollar Revolving Loan. "REVOLVING MATURITY DATE" shall mean the date which is five years after the Closing Date or, if such date is not a Business Day, the first Business Day thereafter. "ROLLOVER EQUITY" shall mean the phantom equity interest of certain existing equityholders of Seller in Holdings valued at $4.3 million on terms and conditions satisfactory to the Administrative Agent in its reasonable judgment. "SALE AND LEASEBACK TRANSACTION" has the meaning assigned to such term in SECTION 6.03. "SDN LIST" shall have the meaning assigned to such term in SECTION 6.21. "SECURED PARTIES" shall mean the U.S. Secured Parties and the Canadian Secured Parties. "SECURITIES ACT" shall mean the Securities Act of 1933. "SECURITIES COLLATERAL" shall have the meaning assigned to such term in the U.S. Security Agreement or the Canadian Security Agreement, as applicable. "SECURITY AGREEMENT" shall mean the U.S. Security Agreement or the Canadian Security Agreement, as applicable. "SECURITY DOCUMENTS" shall mean the U.S. Security Documents and the Canadian Security Documents. "SELLER" shall have the meaning assigned to such term in the first recital hereto. "SENIOR LEVERAGE RATIO" shall mean, at any date of determination, the ratio of Consolidated Senior Indebtedness on such date to Consolidated EBITDA for the Test Period then most recently ended. -32- "SENIOR SUBORDINATED NOTE AGREEMENT" shall mean any indenture, note purchase agreement or other agreement pursuant to which the Senior Subordinated Notes are issued as in effect on the date hereof and thereafter amended from time to time subject to the requirements of this Agreement. "SENIOR SUBORDINATED NOTE DOCUMENTS" shall mean the Senior Subordinated Notes, the Senior Subordinated Note Agreement, the Senior Subordinated Note Guarantees and all other documents executed and delivered with respect to the Senior Subordinated Notes or the Senior Subordinated Note Agreement. "SENIOR SUBORDINATED NOTE GUARANTEES" shall mean the guarantees of Parent and the U.S. Subsidiary Guarantors pursuant to the Senior Subordinated Note Agreement. "SENIOR SUBORDINATED NOTES" shall mean U.S. Borrower's 9.0% Senior Subordinated Notes due 2014 issued pursuant to the Senior Subordinated Note Agreement and any registered notes issued by U.S. Borrower in exchange for, and as contemplated by, such notes with substantially identical terms as such notes. "SPONSOR" shall mean Caxton-Iseman Capital, Inc. "STANDBY LETTER OF CREDIT" shall mean any standby letter of credit or similar instrument issued for the purpose of supporting (a) workers' compensation liabilities of U.S. Borrower or any of its Subsidiaries, (b) the obligations of third-party insurers of U.S. Borrower or any of its Subsidiaries arising by virtue of the laws of any jurisdiction requiring third-party insurers to obtain such letters of credit, (c) performance, payment, deposit or surety obligations of U.S. Borrower or any of its Subsidiaries if required by law or governmental rule or regulation or in accordance with custom and practice in the industry, (d) Indebtedness of U.S. Borrower or any of its Subsidiaries permitted to be incurred under SECTION 6.01 or (e) any other purpose not prohibited hereunder and acceptable to the Issuing Bank. "STATUTORY RESERVES" shall mean for any Interest Period for any Eurodollar Borrowing, the average maximum rate at which reserves (including any marginal, supplemental or emergency reserves) are required to be maintained during such Interest Period under Regulation D by member banks of the United States Federal Reserve System in New York City with deposits exceeding one billion dollars against "Eurodollar liabilities" (as such term is used in Regulation D). Eurodollar Borrowings shall be deemed to constitute Eurodollar liabilities and to be subject to such reserve requirements without benefit of or credit for proration, exceptions or offsets which may be available from time to time to any Lender under Regulation D. "SUBORDINATED INDEBTEDNESS" shall mean Indebtedness of either Borrower or any Guarantor that is by its terms subordinated in right of payment to the Obligations of such Borrower and such Guarantor, as applicable, including the Senior Subordinated Notes. "SUBSIDIARY" shall mean, with respect to any person (the "PARENT") at any date, (i) any person the accounts of which would be consolidated with those of the parent in the parent's consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date and (ii) any other corporation, limited liability company, association or other business entity of which securities or other ownership interests representing more than 50% of the voting power of all Equity Interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Board of Directors thereof are, as of such date, owned, controlled or held by the parent and/or one or more subsidiaries of the parent. Unless the context requires otherwise, "Subsidiary" refers to a Subsidiary of U.S. Borrower. -33- "SUBSIDIARY GUARANTOR" shall mean each U.S. Subsidiary Guarantor and each Canadian Subsidiary Guarantor. "SUCCESSFUL SYNDICATION" shall have the meaning given to such term in the Fee Letter. "SURVEY" shall mean a survey of any Mortgaged Property (and all improvements thereon) which is (a) (i) prepared by a surveyor or engineer licensed to perform surveys in the jurisdiction where such Mortgaged Property is located, (ii) dated (or redated) not earlier than six months prior to the date of delivery thereof unless there shall have occurred within six months prior to such date of delivery any exterior construction on the site of such Mortgaged Property or any easement, right of way or other interest in the Mortgaged Property has been granted or become effective through operation of law or otherwise with respect to such Mortgaged Property which, in either case, can be depicted on a survey, in which events, as applicable, such survey shall be dated (or redated) after the completion of such construction or if such construction shall not have been completed as of such date of delivery, not earlier than 20 days prior to such date of delivery, or after the grant or effectiveness of any such easement, right of way or other interest in the Mortgaged Property, (iii) certified by the surveyor (in a manner reasonably acceptable to the Administrative Agent) to the Administrative Agent, the Collateral Agent and the Title Company, (iv) complying in all respects with the minimum detail requirements of the American Land Title Association as such requirements are in effect on the date of preparation of such survey and (v) sufficient for the Title Company to remove all standard survey exceptions from the title insurance policy (or commitment) relating to such Mortgaged Property and issue the endorsements of the type required by SECTION 4.01(o)(iii) or (b) otherwise acceptable to the Collateral Agent. "SWINGLINE COMMITMENT" shall mean the commitment of the Swingline Lender to make loans pursuant to SECTION 2.17, as the same may be reduced from time to time pursuant to SECTION 2.07 or SECTION 2.17. The amount of the Swingline Commitment shall initially be $10.0 million, but in no event exceed the Revolving Commitments. "SWINGLINE EXPOSURE" shall mean at any time the aggregate principal amount at such time of all outstanding Swingline Loans. The Swingline Exposure of any Revolving Lender at any time shall equal its Pro Rata Percentage of the aggregate Swingline Exposure at such time. "SWINGLINE LENDER" shall have the meaning assigned to such term in the preamble hereto. "SWINGLINE LOAN" shall mean any loan made by the Swingline Lender pursuant to SECTION 2.17. "SYNDICATION AGENT" shall have the meaning assigned to such term in the preamble hereto. "TAX RETURN" shall mean all returns, statements, filings, attachments and other documents or certifications required to be filed in respect of Taxes. "TAXES" shall mean (i) any and all present or future taxes, duties, levies, imposts, assessments, deductions, withholdings or other similar charges imposed by the U.S. Internal Revenue Service or any other taxing authority (whether domestic or foreign and including any federal, state, U.S. possession, county, local, provincial or foreign government or any subdivision or taxing agency thereof), whether computed on a separate, consolidated, unitary, combined or other basis and any and all liabilities (including interest, fines, penalties or additions to tax) with respect to the foregoing, and (ii) any transferee, successor, joint and several, contractual or other liability (including liability pursuant to Treasury Regulation -34- Section 1.1502-6 (or any similar provision of state, local or non-U.S. law)) in respect of any item described in clause (i). "TERM BORROWING" shall mean a Borrowing comprised of Term Loans. "TERM LOAN COMMITMENTS" shall mean the U.S. Term Loan Commitments and the Canadian Term Loan Commitments. "TERM LOAN LENDER" shall mean a Lender with a Term Loan Commitment or an outstanding Term Loan. "TERM LOAN MATURITY DATE" shall mean the date which is seven years after the Closing Date or, if such date is not a Business Day, the first Business Day thereafter. "TERM LOAN REPAYMENT DATE" shall have the meaning assigned to such term in SECTION 2.09(a). "TERM LOANS" shall mean the U.S. Term Loans and the Canadian Term Loans. "TEST PERIOD" shall mean, at any time, the four consecutive fiscal quarters of U.S. Borrower then last ended (in each case taken as one accounting period) for which financial statements have been or are required to be delivered pursuant to SECTION 5.01(a) or (b). "TITLE COMPANY" shall mean any title insurance company as shall be retained by U.S. Borrower and reasonably acceptable to the Administrative Agent. "TITLE POLICY" shall have the meaning assigned to such term in SECTION 4.01(o)(iii). "TOTAL LEVERAGE RATIO" shall mean, at any date of determination, the ratio of Consolidated Indebtedness on such date to Consolidated EBITDA for the Test Period then most recently ended. "TRANSACTION DOCUMENTS" shall mean the Acquisition Documents, the Senior Subordinated Note Documents and the Loan Documents. "TRANSACTIONS" shall mean, collectively, the transactions to occur on or prior to the Closing Date pursuant to the Transaction Documents, including (a) the consummation of the Acquisition; (b) the execution, delivery and performance of the Loan Documents and the initial borrowings hereunder; (c) the Refinancing; (d) the Equity Financing; (e) the issuance of the Senior Subordinated Notes; (f) the issuance of the Rollover Equity; and (g) the payment of all fees and expenses to be paid on or prior to the Closing Date and owing in connection with the foregoing. "TRANSFERRED GUARANTOR" shall have the meaning assigned to such term in SECTION 7.09. "TYPE," when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBOR Rate or the Alternate Base Rate. "UCC" shall mean the Uniform Commercial Code as in effect from time to time (except as otherwise specified) in any applicable state or jurisdiction. "UNITED STATES" shall mean the United States of America. -35- "U.S. BORROWER" shall have the meaning assigned to such term in the preamble hereto. "U.S. BORROWING REQUEST" shall mean a request by U.S. Borrower in accordance with the terms of SECTION 2.03 and substantially in the form of EXHIBIT C-1, or such other form as shall be approved by the Administrative Agent. "U.S. COLLATERAL ACCOUNT" shall mean a collateral account or sub-account established and maintained by the Collateral Agent for the benefit of the U.S. Secured Parties, in accordance with the provisions of SECTION 9.01. "U.S. GUARANTEED OBLIGATIONS" shall have the meaning assigned to such term in SECTION 7.01. "U.S. GUARANTORS" shall have the meaning assigned to such term in SECTION 7.01. "U.S. INTERCOMPANY NOTE" shall mean a promissory note substantially in the form of EXHIBIT P-1. "U.S. LENDERS" shall mean (a) the financial institutions that have become a party hereto pursuant to a Lender Addendum that make U.S. Loans or provide Commitments to U.S. Borrower and (b) any financial institution that has become a party hereto pursuant to an Assignment and Assumption that makes U.S. Loans or provides a Commitment to U.S. Borrower, other than, in each case, any such financial institution that has ceased to be a party hereto pursuant to an Assignment and Assumption. Unless the context clearly indicates otherwise, the term "U.S. Lenders" shall include the Swingline Lender. "U.S. LOAN PARTIES" shall mean Parent, U.S. Borrower and the U.S. Subsidiary Guarantors. "U.S. LOANS" shall mean all Loans other than the Canadian Term Loans. "U.S. MORTGAGED PROPERTY" shall mean the Mortgaged Properties owned or leased by the U.S. Loan Parties. "U.S. OBLIGATIONS" shall mean (a) obligations of U.S. Borrower and the other U.S. Loan Parties from time to time arising (including by way of Article VII) under or in respect of the due and punctual payment of (i) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the U.S. Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by U.S. Borrower and the other U.S. Loan Parties under this Agreement in respect of any Letter of Credit, when and as due, including payments in respect of Reimbursement Obligations, interest thereon and obligations to provide cash collateral and (iii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of U.S. Borrower and the other U.S. Loan Parties under this Agreement and the other Loan Documents, (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of U.S. Borrower and the other U.S. Loan Parties under or pursuant to this Agreement and the other Loan Documents, (c) the due and punctual payment and performance of all obligations of U.S. Borrower and the other U.S. Loan Parties under each Hedging Agreement relating to either the U.S. Loans or foreign currency exchange -36- rates entered into with any counterparty that was a Lender or an Affiliate of a Lender at the time such Hedging Agreement was entered into (provided that each shall provide that it terminates or expires upon, or prior to, the repayment of all Loans hereunder) (each, a "PERMITTED U.S. HEDGING AGREEMENT") and (d) the due and punctual payment and performance of all obligations in respect of overdrafts and related liabilities owed to any U.S. Lender, any Affiliate of a U.S. Lender, the Administrative Agent or the Collateral Agent arising from treasury, depositary and cash management services or in connection with any automated clearinghouse transfer of funds, in each case, with respect to U.S. Loans. "U.S. SECURED PARTIES" shall mean, collectively, the Administrative Agent, the Collateral Agent, each other Agent, the U.S. Lenders and each party to a Permitted U.S. Hedging Agreement if such person executes and delivers to the Administrative Agent a letter agreement in form and substance reasonably acceptable to the Administrative Agent pursuant to which such person (i) appoints the Collateral Agent as its agent under the applicable Loan Documents and (ii) agrees to be bound by the provisions of SECTIONS 11.03 and 11.09. "U.S. SECURITY AGREEMENT" shall mean a Security Agreement substantially in the form of EXHIBIT M-1 among the U.S. Loan Parties and Collateral Agent for the benefit of the Secured Parties. "U.S. SECURITY AGREEMENT COLLATERAL" shall mean all property pledged or granted as collateral pursuant to the U.S. Security Agreement delivered on the Closing Date or thereafter pursuant to SECTION 5.10. "U.S. SECURITY DOCUMENTS" shall mean the U.S. Security Agreement, the Mortgages entered into by the U.S. Loan Parties and each other security document or pledge agreement delivered in accordance with applicable local or foreign law to grant a valid, perfected security interest in any property as collateral for the Obligations, and all UCC or other financing statements or instruments of perfection required by this Agreement, the U.S. Security Agreement, any Mortgage or any other such security document or pledge agreement to be filed with respect to the security interests in property and fixtures created pursuant to the U.S. Security Agreement or any Mortgage and any other document or instrument utilized to pledge as collateral for the Obligations any property. "U.S. SUBSIDIARIES" shall mean all Subsidiaries of U.S. Borrower other than Canadian Borrower and Canadian Subsidiaries. "U.S. SUBSIDIARY GUARANTOR" shall mean each U.S. Subsidiary listed on SCHEDULE 1.01(f), and each other U.S. Subsidiary that is or becomes a party to this Agreement pursuant to SECTION 5.10. "U.S. TERM LOAN" shall mean the term loans made by the U.S. Lenders to U.S. Borrower pursuant to SECTION 2.01(a). Each U.S. Term Loan shall be either an ABR Term Loan or a Eurodollar Term Loan. "U.S. TERM LOAN COMMITMENT" shall mean, with respect to each U.S. Lender, the commitment, if any, of such U.S. Lender to make a U.S. Term Loan hereunder on the Closing Date in the amount set forth on Schedule I to the Lender Addendum executed and delivered by such U.S. Lender. The aggregate amount of the Lenders' U.S. Term Loan Commitments is $160.0 million. "VOTING STOCK" shall mean, with respect to any person, any class or classes of Equity Interests pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the Board of Directors of such person. -37- "WHOLLY OWNED SUBSIDIARY" shall mean, as to any person, (a) any corporation 100% of whose capital stock (other than directors' qualifying shares) is at the time owned by such person and/or one or more Wholly Owned Subsidiaries of such person and (b) any partnership, association, joint venture, limited liability company or other entity in which such person and/or one or more Wholly Owned Subsidiaries of such person have a 100% equity interest at such time. "WITHDRAWAL LIABILITY" shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA. SECTION 1.02 CLASSIFICATION OF LOANS AND BORROWINGS. For purposes of this Agreement, Loans may be classified and referred to by Class (E.G., a "REVOLVING LOAN") or by Type (E.G., a "EURODOLLAR LOAN") or by Class and Type (E.G., a "EURODOLLAR REVOLVING LOAN"). Borrowings also may be classified and referred to by Class (E.G., a "REVOLVING BORROWING," "BORROWING OF U.S. TERM LOANS") or by Type (E.G., a "EURODOLLAR BORROWING") or by Class and Type (E.G., a "EURODOLLAR REVOLVING BORROWING"). SECTION 1.03 TERMS GENERALLY. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include," "includes" and "including" shall be deemed to be followed by the phrase "without limitation." The word "will" shall be construed to have the same meaning and effect as the word "shall." Unless the context requires otherwise (a) any definition of or reference to any Loan Document, agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any person shall be construed to include such person's successors and assigns, (c) the words "herein," "hereof" and "hereunder," and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof and (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, unless otherwise indicated. SECTION 1.04 ACCOUNTING TERMS; GAAP. Except as otherwise expressly provided herein, all financial statements to be delivered pursuant to this Agreement shall be prepared in accordance with GAAP as in effect from time to time and all terms of an accounting or financial nature shall be construed and interpreted in accordance with GAAP, as in effect on the date hereof unless otherwise agreed to by U.S. Borrower and the Required Lenders. SECTION 1.05 RESOLUTION OF DRAFTING AMBIGUITIES. Each Loan Party acknowledges and agrees that it was represented by counsel in connection with the execution and delivery of the Loan Documents to which it is a party, that it and its counsel reviewed and participated in the preparation and negotiation hereof and thereof and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation hereof or thereof. ARTICLE II THE CREDITS SECTION 2.01 COMMITMENTS. Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Lender agrees, severally and not jointly: -38- (a) to make a U.S. Term Loan to U.S. Borrower on the Closing Date in the principal amount not to exceed its U.S. Term Loan Commitment; and (b) to make a Canadian Term Loan to Canadian Borrower on the Closing Date in the principal amount not to exceed its Canadian Term Loan Commitment; and (c) to make Revolving Loans to U.S. Borrower, at any time and from time to time on or after the Closing Date until the earlier of the Revolving Maturity Date and the termination of the Revolving Commitment of such Lender in accordance with the terms hereof, in an aggregate principal amount at any time outstanding that will not result in such Lender's Revolving Exposure exceeding such Lender's Revolving Commitment; PROVIDED that Borrower may only borrow $2.7 million of Revolving Loans on the Closing Date. Amounts paid or prepaid in respect of Term Loans may not be reborrowed. Within the limits set forth in clause (b) above and subject to the terms, conditions and limitations set forth herein, U.S. Borrower may borrow, pay or prepay and reborrow Revolving Loans. SECTION 2.02 LOANS. (a) Each Loan (other than Swingline Loans) shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their applicable Commitments; PROVIDED that the failure of any Lender to make any Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Loan required to be made by such other Lender). Except for Loans deemed made pursuant to SECTION 2.18(e)(ii), (x) ABR Loans comprising any Borrowing shall be in an aggregate principal amount that is (i) an integral multiple of $500,000 and not less than $2.5 million or (ii) equal to the remaining available balance of the applicable Commitments and (y) the Eurodollar Loans comprising any Borrowing shall be in an aggregate principal amount that is (i) an integral multiple of $500,000 and not less than $2.5 million or (ii) equal to the remaining available balance of the applicable Commitments. (b) Subject to SECTIONS 2.11 and 2.12, each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the applicable Borrower may request pursuant to SECTION 2.03. 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 any exercise of such option shall not affect the obligation of the applicable Borrower to repay such Loan in accordance with the terms of this Agreement. Borrowings of more than one Type may be outstanding at the same time; PROVIDED that the Borrowers shall not be entitled to request any Borrowing that, if made, would result in more than ten Eurodollar Borrowings outstanding hereunder at any one time. For purposes of the foregoing, Borrowings having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Borrowings. (c) Except with respect to Loans made pursuant to SECTION 2.18(e)(ii), each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds to such account in New York City as the Administrative Agent may designate not later than 12:00 noon, New York City time, and the Administrative Agent shall promptly credit the amounts so received to an account as directed by U.S. Borrower in the applicable U.S. Borrowing Request maintained with the Administrative Agent or, if a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, return the amounts so received to the respective Lenders. (d) Unless the Administrative Agent shall have received notice from a Lender prior to 11:00 a.m. on the date of any Borrowing that such Lender will not make available to the Administrative -39- Agent such Lender's portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with paragraph (c) above, and the Administrative Agent may, in reliance upon such assumption, make available to the applicable Borrower on such date a corresponding amount. If the Administrative Agent shall have so made funds available, then, to the extent that such Lender shall not have made such portion available to the Administrative Agent, each of such Lender and such Borrower severally agrees to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to such Borrower until the date such amount is repaid to the Administrative Agent at (i) in the case of either Borrower, the interest rate applicable at the time to the Loans comprising such Borrowing and (ii) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount shall constitute such Lender's Loan as part of such Borrowing for purposes of this Agreement, and such Borrower's obligation to repay the Administrative Agent such corresponding amount pursuant to this SECTION 2.02(d) shall cease. (e) Notwithstanding any other provision of this Agreement, the Borrowers shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Revolving Maturity Date or Term Loan Maturity Date, as applicable. SECTION 2.03 BORROWING PROCEDURE. To request a Revolving Borrowing or Term Borrowing, the applicable Borrower shall deliver, by hand delivery or telecopy, a duly completed and executed Borrowing Request to the Administrative Agent (i) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of the proposed Borrowing or (ii) in the case of an ABR Borrowing, not later than 10:00 a.m., New York City time, on the date of the proposed Borrowing. Each Borrowing Request shall be irrevocable and shall specify the following information in compliance with SECTION 2.02: (a) whether the requested Borrowing is to be a Borrowing of Revolving Loans, U.S. Term Loans or Canadian Term Loans; (b) the aggregate amount of such Borrowing; (c) the date of such Borrowing, which shall be a Business Day; (d) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; (e) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term "Interest Period"; PROVIDED that until the earlier of (x) the date on which the Syndication Agent shall have notified U.S. Borrower that a Successful Syndication has been achieved and (y) 60 days after the Closing Date, the Interest Period shall be seven days; (f) the location and number of the applicable Borrower's account to which funds are to be disbursed, which shall comply with the requirements of SECTION 2.02(c); and (g) that the conditions set forth in SECTIONS 4.02(b) THROUGH (d) have been satisfied as of the date of the notice. -40- If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Revolving Borrowing, then the applicable Borrower shall be deemed to have selected an Interest Period of one month's duration (subject to the proviso in clause (e) above). Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender's Loan to be made as part of the requested Borrowing. SECTION 2.04 EVIDENCE OF DEBT; REPAYMENT OF LOANS. (a) U.S. Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each U.S. Term Loan Lender, the principal amount of each U.S. Term Loan of such U.S. Term Loan Lender as provided in SECTION 2.09, (ii) to the Administrative Agent for the account of each Revolving Lender, the then unpaid principal amount of each Revolving Loan of such Revolving Lender on the Revolving Maturity Date and (iii) to the Swingline Lender, the then unpaid principal amount of each Swingline Loan on the earlier of the Revolving Maturity Date and the first date after such Swingline Loan is made that is the 15th or last day of a calendar month and is at least two Business Days after such Swingline Loan is made; PROVIDED that on each date that a Revolving Borrowing is made, U.S. Borrower shall repay all Swingline Loans that were outstanding on the date such Borrowing was requested. (b) Canadian Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Canadian Term Loan Lender, the principal amount of each Canadian Term Loan of such Canadian Term Loan Lender as provided in SECTION 2.09. (c) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrowers to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement. (d) The Administrative Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Type and Class thereof and the Interest Period applicable thereto; (ii) the amount of any principal or interest due and payable or to become due and payable from each Borrower to each Lender hereunder; and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender's share thereof. (e) The entries made in the accounts maintained pursuant to paragraphs (c) and (d) above shall be PRIMA FACIE evidence of the existence and amounts of the obligations therein recorded; PROVIDED that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of the Borrowers to repay the Loans in accordance with their terms. (f) Any Lender by written notice to the applicable Borrower (with a copy to the Administrative Agent) may request that Loans of any Class made by it be evidenced by a promissory note. In such event, the applicable Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) in the form of EXHIBIT K-I, K-2, K-3 or K-4, as the case may be. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to SECTION 11.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns). -41- SECTION 2.05 FEES. (a) COMMITMENT FEE. Each Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee (a "COMMITMENT FEE") equal to the Applicable Fee per annum on the average daily unused amount of each Commitment of such Lender to such Borrower during the period from and including the date hereof to but excluding the date on which such Commitment terminates. Accrued Commitment Fees shall be payable in arrears (A) on the last Business Day of March, June, September and December of each year, commencing on the first such date to occur after the date hereof, and (B) on the date on which such Commitment terminates. Commitment Fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). For purposes of computing Commitment Fees with respect to Revolving Commitments, a Revolving Commitment of a Lender shall be deemed to be used to the extent of the outstanding Revolving Loans and LC Exposure of such Lender (and the Swingline Exposure of such Lender shall be disregarded for such purpose). (b) ADMINISTRATIVE AGENT FEES. U.S. Borrower agrees to pay to the Administrative Agent, for its own account, the administrative fees set forth in the Fee Letter or such other fees payable in the amounts and at the times separately agreed upon between U.S. Borrower and the Administrative Agent (the "ADMINISTRATIVE AGENT FEES"). (c) LC AND FRONTING FEES. U.S. Borrower agrees to pay (i) to the Administrative Agent for the account of each Revolving Lender a participation fee ("LC PARTICIPATION FEE") with respect to its participations in Letters of Credit, which shall accrue at a rate equal to the Applicable Margin from time to time used to determine the interest rate on Eurodollar Revolving Loans pursuant to SECTION 2.06 on the average daily amount of such Lender's LC Exposure (excluding any portion thereof attributable to Reimbursement Obligations) during the period from and including the Closing Date to but excluding the later of the date on which such Lender's Revolving Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee ("FRONTING FEE"), which shall accrue at the rate of 0.25% per annum on the average daily amount of the LC Exposure (excluding any portion thereof attributable to Reimbursement Obligations) during the period from and including the Closing Date to but excluding the later of the date of termination of the Revolving Commitments and the date on which there ceases to be any LC Exposure, as well as the Issuing Bank's customary fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Accrued LC Participation Fees and Fronting Fees shall be payable in arrears (i) on the last Business Day of March, June, September and December of each year, commencing on the first such date to occur after the Closing Date, and (ii) on the date on which the Revolving Commitments terminate. Any such fees accruing after the date on which the Revolving Commitments terminate shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand therefor. All LC Participation Fees and Fronting Fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). (d) All Fees shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, if and as appropriate, among the Lenders, except that U.S. Borrower shall pay the Fronting Fees directly to the Issuing Bank. Once paid, none of the Fees shall be refundable under any circumstances. SECTION 2.06 INTEREST ON LOANS. (a) Subject to the provisions of SECTION 2.06(c), the Loans comprising each ABR Borrowing, including each Swingline Loan, shall bear interest at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin in effect from time to time. -42- (b) Subject to the provisions of SECTION 2.06(c), the Loans comprising each Eurodollar Borrowing shall bear interest at a rate per annum equal to the Adjusted LIBOR Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin in effect from time to time. (c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by either Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall, to the extent permitted by applicable law, bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal and premium, if any, of or interest on any Loan, 2% PLUS the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this SECTION 2.06 or (ii) in the case of any other amount, 2% PLUS the rate applicable to ABR Revolving Loans as provided in SECTION 2.06(a) (in either case, the "DEFAULT RATE"). (d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan; PROVIDED that (i) interest accrued pursuant to SECTION 2.06(C) shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan or a Swingline Loan), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion. (e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or Adjusted LIBOR Rate shall be determined by the Administrative Agent in accordance with the provisions of this Agreement and such determination shall be conclusive absent manifest error. (f) For purposes of the Interest Act (Canada), whenever interest payable pursuant to this Agreement is calculated with respect to any monetary Obligation relating to the Canadian Term Loans on the basis of a period other than a calendar year (the "CALCULATION PERIOD"), each rate of interest determined pursuant to such calculation expressed as an annual rate is equivalent to such rate as so determined, MULTIPLIED by the actual number of days in the calendar year in which the same is to be ascertained and DIVIDED by the number of days in the Calculation Period. (g) The principle of deemed reinvestment of interest with respect to any monetary Obligation relating to the Canadian Term Loans shall not apply to any interest calculation under this Agreement. (h) The rates of interest with respect to any monetary Obligation relating to the Canadian Term Loans stipulated in this Agreement are intended to be nominal rates and not effective rates or yields. SECTION 2.07 TERMINATION AND REDUCTION OF COMMITMENTS. (a) The Term Loan Commitments shall automatically terminate at 5:00 p.m., New York City time, on the Closing Date, The Revolving Commitments, the Swingline Commitment and the LC Commitment shall automatically terminate on the Revolving Maturity Date. Notwithstanding the foregoing, all the Commitments shall automatically terminate at 5:00 p.m., New York City time, on March 31, 2004, if the initial Credit Extension shall not have occurred by such time. -43- (b) At its option, the applicable Borrower may at any time terminate, or from time to time permanently reduce, the Commitments of any Class; PROVIDED that (i) each reduction of the Commitments of any Class shall be in an amount that is an integral multiple of $1.0 million and not less than $5.0 million and (ii) the Revolving Commitments shall not be terminated or reduced if, after giving effect to any concurrent prepayment of the Revolving Loans in accordance with SECTION 2.10, the aggregate amount of Revolving Exposures would exceed the aggregate amount of Revolving Commitments. (c) The applicable Borrower shall notify the Administrative Agent in writing of any election to terminate or reduce the Commitments under SECTION 2.07(c) at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by a Borrower pursuant to this Section shall be irrevocable; PROVIDED that a notice of termination of the Commitments delivered by a Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by a Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments of any Class shall be permanent. Each reduction of the Commitments of any Class shall be made ratably among the Lenders in accordance with their respective Commitments of such Class. (d) The LC Commitment shall automatically be reduced on a dollar for dollar basis by the face amount of letters of credit terminated in connection with any Permitted Sale and Leaseback Transaction one Business Day after the receipt of such proceeds; PROVIDED that the LC Commitment shall not be reduced below $10.0 million pursuant to this SECTION 2.07(d). SECTION 2.08 INTEREST ELECTIONS. (a) Each Revolving Borrowing and Term Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the applicable Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrowers may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. Notwithstanding anything to the contrary, the Borrowers shall not be entitled to request any conversion or continuation that, if made, would result in more than ten Eurodollar Borrowings outstanding hereunder at any one time. This Section shall not apply to Swingline Borrowings, which may not be converted or continued. Any interest or conversion election pursuant to this Agreement does not constitute a new Borrowing but simply an adjustment of the basis on which interest payable to the applicable Lenders will be calculated. (b) To make an election pursuant to this Section, the applicable Borrower shall deliver, by hand delivery or telecopy, a duly completed and executed Interest Election Request to the Administrative Agent not later than the time that a Borrowing Request would be required under SECTION 2.03 if such Borrower were requesting a Revolving Borrowing or Term Borrowing of the Type resulting from such election to be made on the effective date of such election. Each Interest Election Request shall be irrevocable. (c) Each Interest Election Request shall specify the following information in compliance with SECTION 2.02: (i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, or if outstanding Borrowings -44- are being combined, allocation to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing); (ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day; (iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and (iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term "Interest Period"; PROVIDED that until the earlier of (x) the date on which the Syndication Agent shall have notified U.S. Borrower that a Successful Syndication has been achieved and (y) 60 days after the Closing Date, the Interest Period shall be seven days. If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the applicable Borrower shall be deemed to have selected an Interest Period of one month's duration (subject to the proviso in clause (iv) above). (d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender's portion of each resulting Borrowing. (e) If an Interest Election Request with respect to a Eurodollar Borrowing is not timely delivered prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing, the Administrative Agent or the Required Lenders may require, by notice to U.S. Borrower, that (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto. SECTION 2.09 AMORTIZATION OF TERM BORROWINGS. (a) U.S. Borrower shall pay to the Administrative Agent, for the account of the U.S. Lenders, on the dates set forth on ANNEX II, or if any such date is not a Business Day, on the immediately preceding Business Day (each such date, a "TERM LOAN REPAYMENT DATE"), a principal amount of the U.S. Term Loans equal to the amount set forth on ANNEX II for such date (as adjusted from time to time pursuant to SECTION 2.10(h)), together in each case with accrued and unpaid interest on the principal amount to be paid to but excluding the date of such payment. (b) Canadian Borrower shall pay to the Administrative Agent, for the account of the Canadian Term Loan Lenders, on the Term Loan Repayment Dates, a principal amount of the Canadian Term Loans equal to the amount set forth on ANNEX II for such date (as adjusted from time to time pursuant to SECTION 2.10(H)), together in each case with accrued and unpaid interest on the principal amount to be paid to but excluding the date of such payment. (c) To the extent not previously paid, all Term Loans shall be due and payable on the Term Loan Maturity Date. -45- SECTION 2.10 OPTIONAL AND MANDATORY PREPAYMENTS OF LOANS AND MANDATORY OFFERS TO REDEEM. (a) OPTIONAL PREPAYMENTS. Each Borrower shall have the right at any time and from time to time to prepay any Borrowing made by such Borrower, in whole or in part, subject to the requirements of this SECTION 2.10; PROVIDED that each partial prepayment shall be in an amount that is an integral multiple of $500,000 and not less than $2.5 million. (b) REVOLVING LOAN PREPAYMENTS. (i) In the event of the termination of all the Revolving Commitments, U.S. Borrower shall, on the date of such termination, repay or prepay all its outstanding Revolving Borrowings and all outstanding Swingline Loans and replace all outstanding Letters of Credit or cash collateralize all outstanding Letter of Credit in accordance with the procedures set forth in SECTION 2.18(i). (ii) In the event of any partial reduction of the Revolving Commitments, then (x) at or prior to the effective date of such reduction, the Administrative Agent shall notify U.S. Borrower and the Revolving Lenders of the sum of the Revolving Exposures after giving effect thereto and (y) if the sum of the Revolving Exposures would exceed the aggregate amount of Revolving Commitments after giving effect to such reduction, then U.S. Borrower shall, on the date of such reduction, FIRST, repay or prepay Swingline Loans, SECOND, repay or prepay Revolving Borrowings and THIRD, replace outstanding Letters of Credit or cash collateralize outstanding Letters of Credit in accordance with the procedures set forth in SECTION 2.18(i), in an aggregate amount sufficient to eliminate such excess. (iii) In the event that the sum of all Lenders' Revolving Exposures exceeds the Revolving Commitments then in effect, U.S. Borrower shall, without notice or demand, immediately FIRST, repay or prepay Revolving Borrowings, and SECOND, replace outstanding Letters of Credit or cash collateralize outstanding Letters of Credit in accordance with the procedures set forth in SECTION 2.18(i), in an aggregate amount sufficient to eliminate such excess. (iv) In the event that the aggregate LC Exposure exceeds the LC Commitment then in effect, U.S. Borrower shall, without notice or demand, immediately replace outstanding Letters of Credit or cash collateralize outstanding Letters of Credit in accordance with the procedures set forth in SECTION 2.18(i), in an aggregate amount sufficient to eliminate such excess. (c) ASSET SALES. (I) Not later than three Business Days following the receipt of any Net Cash Proceeds from a Permitted Sale and Leaseback Transaction, U.S. Borrower shall utilize the portion of the Permitted Sale and Leaseback Transaction Amount which has not been applied towards the prepayment of the Assumed Debt being refinanced or the repayment of Revolving Loans made to fund any prepayment deposit required by the terms of the Assumed Debt being refinanced to make an Offer to Redeem, in accordance with SECTIONS 2.10(h), (i) and (j), the maximum principal amount of Borrowings that may be redeemed by applying an aggregate amount equal to 100% of the portion of the Permitted Sale and Leaseback Transaction Amount not so applied. (II) Not later than three Business Days following the receipt of any Net Cash Proceeds from an Asset Sale pursuant to SECTION 6.06(h), U.S. Borrower shall make an Offer to Redeem the maximum principal amount of Borrowings that may be redeemed by applying an amount equal to 100% of such Net Cash Proceeds to such Offer to Redeem in accordance with SECTIONS 2.10(h), (i) and (j); PROVIDED that (x) notwithstanding anything to the contrary in SECTION 2.10(H) such amount shall first be applied to redeem the Canadian Term Loans on behalf of the Canadian Borrower and (y) any such amount remaining after the redemption in full of the Canadian Term Loans shall be applied in accordance with SECTION 2.10(c)(III). -46- (III) Not later than three Business Days following the receipt of any Net Cash Proceeds of any Asset Sale (other than a Permitted Sale and Leaseback Transaction or an Asset Sale pursuant to SECTION 6.06(h)) by Parent, U.S. Borrower or any U.S. Subsidiary, U.S. Borrower shall make an Offer to Redeem the maximum principal amount of Borrowings that may be redeemed by applying an amount equal to 100% of such Net Cash Proceeds to make redemptions in accordance with SECTIONS 2.10(h), (i) and (j); and not later than one Business Day following the receipt of any Net Cash Proceeds of any Asset Sale by Canadian Borrower or any Canadian Subsidiary, the Borrowers shall make an Offer to Redeem the maximum principal amount of Borrowings that may be redeemed by applying an amount equal to 100% of such Net Cash Proceeds to make redemptions in accordance with SECTIONS 2.10(h), (i) and (j); PROVIDED, in each case, that: (i) so long as no Default shall then exist or would arise therefrom, no such Offer to Redeem shall be required under this SECTION 2.10(c)(III)(i) with respect to (A) any Asset Sale permitted by SECTION 6.06(a), (B) the disposition of property which constitutes a Casualty Event, or (C) Asset Sales for fair market value resulting in no more than $250,000 in Net Cash Proceeds per Asset Sale (or series of related Asset Sales) and less than $1.5 million in Net Cash Proceeds in any fiscal year; PROVIDED that clause (C) shall not apply in the case of any Asset Sale described in clause (b) of the definition thereof or to an Asset Sale pursuant to SECTION 6.06(h); and (ii) so long as no Default shall then exist or would arise therefrom and the aggregate of Net Cash Proceeds of Asset Sales shall not exceed $20.0 million in any fiscal year of U.S. Borrower (not including for purposes of this limit only, Net Cash Proceeds of Permitted Sale and Leaseback Transactions or an Asset Sale pursuant to SECTION 6.06(h)), no Offer to Redeem shall be required on such date to the extent that (A) U.S. Borrower shall have delivered an Officers' Certificate to the Administrative Agent on or prior to such date stating that such Net Cash Proceeds are expected to be reinvested in fixed or capital assets within 365 days following the date of such Asset Sale (which Officers' Certificate shall set forth the estimates of the proceeds to be so expended); and (B) all Net Cash Proceeds in respect of all Asset Sales (other than those referred to in clause (C) of SECTION 2.10(c)(III)(i) in excess of $10.0 million in the aggregate at any time shall be held in the applicable Collateral Account and released therefrom only in accordance with the provisions of ARTICLE IX; PROVIDED that if all or any portion of such Net Cash Proceeds is not so reinvested within such 365-day period, such unused portion shall be applied to make an Offer to Redeem on the last day of such period as provided in this SECTION 2.10(c)(III); and PROVIDED, FURTHER, that if the property subject to such Asset Sale constituted Collateral, then all property purchased with the Net Cash Proceeds thereof pursuant to this subsection shall be made subject to the Lien of the applicable Security Documents in favor of the Collateral Agent, for its benefit and for the benefit of the other Secured Parties in accordance with SECTIONS 5.10 and 5.11. (d) DEBT ISSUANCE. Not later than one Business Day following the receipt of any Net Cash Proceeds of any Debt Issuance by Parent, U.S. Borrower or any of its U.S. Subsidiaries, U.S. Borrower shall make an Offer to Redeem the maximum principal amount of Borrowings that may be redeemed by applying an amount equal to 100% of such Net Cash Proceeds to make redemptions in accordance with SECTIONS 2.10(h), (i) and (j). Not later than one Business Day following the receipt of any Net Cash Proceeds of any Debt Issuance by Canadian Borrower or any Canadian Subsidiary, the Borrowers, shall make an Offer to Redeem the maximum principal amount of Borrowings that may be redeemed by applying an amount equal to 100% of such Net Cash Proceeds to make redemptions in accordance with SECTIONS 2.10(h), (i) and (j). (e) EQUITY ISSUANCE OR PREFERRED STOCK ISSUANCE. Not later than one Business Day following the receipt of any Net Cash Proceeds of any Equity Issuance, U.S. Borrower shall apply an amount equal to 50% of such Net Cash Proceeds to make prepayments in accordance with SEC- -47- TIONS 2.10(h) and (i). Not later than one Business Day following the receipt of any Net Cash Proceeds of any Preferred Stock Issuance by Holdings, Parent, U.S. Borrower or any of its U.S. Subsidiaries, U.S. Borrower shall apply an amount equal to 100% of such Net Cash Proceeds to make prepayments in accordance with SECTIONS 2.10(h) and (i). (f) CASUALTY EVENTS. Not later than one Business Day following the receipt of any Net Cash Proceeds from a Casualty Event by Parent, U.S. Borrower or any of its U.S. Subsidiaries, U.S. Borrower shall make an Offer to Redeem the maximum principal amount of Borrowings that may be redeemed by applying an amount equal to 100% of such Net Cash Proceeds to make redemptions in accordance with SECTIONS 2.10(h), (i) and (j); and not later than one Business Day following the receipt of any Net Cash Proceeds from a Casualty Event by Canadian Borrower or any Canadian Subsidiary, the Borrowers, shall make an Offer to Redeem the maximum principal amount of Borrowings that may be redeemed by applying an amount equal to 100% of such Net Cash Proceeds to make redemptions in accordance with SECTIONS 2.10(h), (i) and (j); PROVIDED, in each case, that: (i) so long as no Default shall then exist or arise therefrom, no Offer to Redeem shall be required on such date to the extent that U.S. Borrower shall have delivered an Officers' Certificate to the Administrative Agent on or prior to such date stating that such proceeds are expected to be used to repair, replace or restore any property in respect of which such Net Cash Proceeds were paid or to invest in other fixed or capital assets, no later than 365 days (or such longer period as may be approved by the Administrative Agent) following the date of receipt of such proceeds; PROVIDED that if the property subject to such Casualty Event constituted Collateral under the Security Documents, then all property purchased with the Net Cash Proceeds thereof pursuant to this subsection shall be made subject to the Lien of the applicable Security Documents in favor of the Collateral Agent, for its benefit and for the benefit of the other Secured Parties in accordance with SECTIONS 5.10 and 5.11; (ii) all Net Cash Proceeds in respect of all Casualty Events in excess of $10.0 million in the aggregate shall be held in the applicable Collateral Account and released therefrom only in accordance with the provisions of ARTICLE IX; and (iii) if any portion of such Net Cash Proceeds shall not be so applied within such 365-day (or longer) period, such unused portion shall be applied to make an Offer to Redeem on the last day of such period as provided in this SECTION 2.10(f). (g) EXCESS CASH FLOW. No later than the earlier of (i) 90 days after the end of each Excess Cash Flow Period and (ii) the date on which the financial statements with respect to such fiscal year in which such Excess Cash Flow Period occurs are delivered pursuant to SECTION 5.01(a), U.S. Borrower shall make prepayments in accordance with SECTIONS 2.10(h) and (i) in an aggregate amount equal to the excess of (x) 50% of Excess Cash Flow for the Excess Cash Flow Period then ended less (y) any voluntary prepayments of Term Loans and any permanent voluntary reductions to the Revolving Commitments to the extent that an equal amount of the Revolving Loans simultaneously is repaid, in each case so long as such amounts are not already reflected in Debt Service, during such Excess Cash Flow Period; PROVIDED that only 25% of Excess Cash Flow for the Excess Cash Flow Period then ended need be applied pursuant to this SECTION 2.10(g) if the Senior Leverage Ratio is less than 1.5:1.0 as of the end of such Excess Cash Flow Period. (h) APPLICATION OF PREPAYMENTS AND REDEMPTIONS. (i) Prior to any optional (subject to SECTION 2.10(a)) or mandatory prepayment or redemption pursuant to any Offer to Redeem hereunder, the applicable Borrower shall select the Borrowing or Borrowings to be prepaid or redeemed and shall specify such selection in the notice of such prepayment or Offer to Redeem pursuant to SECTION 2.10(i), -48- subject to the provisions of this SECTION 2.10(h). Subject to SECTION 2.10(h)(iii), any prepayments or redemptions of Term Loans pursuant to SECTION 2.10(a), (c), (d), (e), (f) or (g) shall be applied to reduce scheduled prepayments required under SECTIONS 2.09(a) and (b) on a PRO RATA basis among the prepayments remaining to be made on each Term Loan Repayment Date and shall be applied, in the case of prepayments or redemptions to be made solely by U.S. Borrower, FIRST, to U.S. Term Loans and SECOND if all U.S. Term Loans have been repaid, to Canadian Term Loans on behalf of Canadian Borrower, and, in the case of prepayments or redemptions by the Borrowers, FIRST, by Canadian Borrower to Canadian Term Loans and SECOND, if all Canadian Term Loans have been repaid, by U.S. Borrower to U.S. Term Loans. After application of redemptions and mandatory prepayments described above in this SECTION 2.10(h) and to the extent there are redemption or mandatory prepayment amounts remaining after such application, the Revolving Commitments shall be permanently reduced ratably among the Revolving Lenders in accordance with their applicable Revolving Commitments in an aggregate amount equal to such excess, and U.S. Borrower shall comply with SECTION 2.10(b). (ii) Amounts to be applied pursuant to this SECTION 2.10 to the prepayment or redemption of Term Loans and Revolving Loans shall be applied, as applicable, first to reduce outstanding ABR Term Loans and ABR Revolving Loans, respectively. Any amounts remaining after each such application shall be applied to prepay or redeem Eurodollar Term Loans or Eurodollar Revolving Loans, as applicable. Notwithstanding the foregoing, if the amount of any prepayment of Loans required under this SECTION 2.10 shall be in excess of the amount of the ABR Loans at the time outstanding (an "EXCESS AMOUNT"), only the portion of the amount of such prepayment or redemption as is equal to the amount of such outstanding ABR Loans shall be immediately prepaid or redeemed and, at the election of the applicable Borrower, the balance of such required prepayment shall be either (A) deposited in the applicable Collateral Account and applied to the prepayment or redemption of Eurodollar Loans on the last day of the then next-expiring Interest Period for Eurodollar Loans; PROVIDED that (i) interest in respect of such Excess Amount shall continue to accrue thereon at the rate provided hereunder for the Loans which such Excess Amount is intended to repay until such Excess Amount shall have been used in full to repay such Loans and (ii) at any time while a Default has occurred and is continuing, the Administrative Agent may, and upon written direction from the Required Lenders shall, apply any or all proceeds then on deposit in either Collateral Account to the payment of such Loans in an amount equal to such Excess Amount or (B) prepaid immediately, together with any amounts owing to the Lenders under SECTION 2.13. (iii) Notwithstanding SECTIONS 2.10(e) and 2.10(g), the aggregate amount of all prepayments by the Borrowers with respect to each Canadian Term Loan pursuant to SECTIONS 2.10(e) and 2.10(g) and SECTION 2.09 as in effect on the Closing Date within the first five years following the Closing Date shall not exceed 25% of the initial principal amount of that Canadian Term Loan, except for payments required as a result of an acceleration of the Obligations of the Borrowers pursuant to ARTICLE VIII. For greater certainty and notwithstanding any other provision of this Agreement, the failure of the Borrowers to make any prepayment contemplated in SECTIONS 2.10(e) and 2.10(g) or SECTION 2.09 solely as a consequence of the immediately preceding sentence shall not constitute a Default. (i) NOTICE OF PREPAYMENT OR OFFER TO REDEEM. The applicable Borrower shall notify the Administrative Agent (and, in the case of prepayment of a Swingline Loan, the Swingline Lender) by written notice of any prepayment or Offer to Redeem hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of prepayment, (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, one Business Day before the date of prepayment, (iii) in the case of prepayment of a Swingline Loan, not later than 11:00 a.m., New York City time, on the date of prepayment and (iv) in the case of an Offer to Redeem, five Business Days prior to the proposed date of redemption. Each such notice shall be irrevocable; PROVIDED that, if a notice of prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by SECTION 2.07, then such notice of prepayment may be -49- revoked if such termination is revoked in accordance with SECTION 2.07. Each such notice shall specify the prepayment or redemption date, the principal amount of each Borrowing or portion thereof to be prepaid or redeemed and, in the case of a mandatory prepayment or Offer to Redeem, a reasonably detailed calculation of the amount of such prepayment. Promptly following receipt of any such notice (other than a notice relating solely to Swingline Loans), the Administrative Agent shall advise the Lenders of the contents thereof. Such notice to the Lenders may be by electronic communication. Each partial prepayment or Offer to Redeem of any Borrowing shall be in an amount that would be permitted in the case of a Credit Extension of the same Type as provided in SECTION 2.02, except as necessary to apply fully the required amount of a mandatory prepayment. Each prepayment or Offer to Redeem of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing and otherwise in accordance with this SECTION 2.10. Prepayments and Offers to Redeem shall be accompanied by accrued interest to the extent required by SECTION 2.06. The Administrative Agent shall advise the applicable Borrower if an Offer to Redeem is accepted or declined by the Lenders on the Business Day prior to the proposed redemption date. If an Offer to Redeem is declined all funds that were to be used to redeem Borrowings shall revert to the applicable Borrower. (j) MANDATORY OFFERS TO REDEEM. When required by SECTIONS 2.10(c), (d) and (f), each Borrower shall make an offer to redeem Borrowings made by the Borrowers in accordance with the terms of SECTION 2.10(i), which offer may be accepted or declined by the Lenders in accordance with SECTION 11.02(e) (an "OFFER TO REDEEM"). If any Offer to Redeem is accepted, all redemptions shall be made in accordance with SECTION 2.10(h). SECTION 2.11 ALTERNATE RATE OF INTEREST. If prior to the commencement of any Interest Period for a Eurodollar Borrowing: (a) the Administrative Agent determines (which determination shall be final and conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBOR Rate for such Interest Period; or (b) the Administrative Agent is advised in writing by the Required Lenders that the Adjusted LIBOR Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period; then the Administrative Agent shall give written notice thereof to U.S. Borrower and the Lenders as promptly as practicable thereafter and, until the Administrative Agent notifies U.S. Borrower and the Lenders that the circumstances giving rise to such notice no longer exist (which the Administrative Agent agrees to use its commercially reasonable efforts to do promptly after it learns such circumstances cease to exist), (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing. SECTION 2.12 INCREASED COSTS. (a) If any Change in Law shall: (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against property of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBOR Rate) or the Issuing Bank; or -50- (ii) impose on any Lender or the Issuing Bank or the London interbank market any other condition or expense affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein; and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender, the Issuing Bank or such Lender's or the Issuing Bank's holding company, if any, of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or the Issuing Bank hereunder (whether of principal, interest or otherwise), then the applicable Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered, it being understood that, to the extent duplicative of the provisions of SECTION 2.15, this SECTION 2.12 shall not apply to Taxes. (b) If any Lender or the Issuing Bank determines (in good faith, but in its sole absolute discretion) that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender's or the Issuing Bank's capital or on the capital of such Lender's or the Issuing Bank's holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding company could have achieved but for such Change in Law (taking into consideration such Lender's or the Issuing Bank's policies and the policies of such Lender's or the Issuing Bank's holding company with respect to capital adequacy), then from time to time the applicable Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding company for any such reduction suffered. (c) A certificate of a Lender or the Issuing Bank setting forth in reasonable detail the amount or amounts necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this SECTION 2.12 shall be delivered to the applicable Borrower (with a copy to the Administrative Agent) and shall be conclusive and binding absent manifest error. Such Borrower shall pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof. (d) Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this SECTION 2.12 shall not constitute a waiver of such Lender's or the Issuing Bank's right to demand such compensation; PROVIDED that neither Borrower shall be required to compensate a Lender or the Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than 180 days prior to the date that such Lender or the Issuing Bank, as the case may be, notifies such Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender's or the Issuing Bank's intention to claim compensation therefor; PROVIDED, FURTHER, that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall not begin earlier than the date of effectiveness of the Change in Law. SECTION 2.13 BREAKAGE PAYMENTS. In the event of (a) the payment or prepayment, whether optional or mandatory, of any principal of any Eurodollar Loan earlier than the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan earlier than the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Revolving Loan or Term Loan on the date specified in any notice delivered pursuant hereto or (d) the assignment of any Eurodollar Loan earlier than the last day of the Interest Period applicable thereto as a result of a request by a Borrower pursuant to SECTION 2.16, then, in -51- any such event, such Borrower shall compensate each Lender for the loss (other than lost profit or spread), cost and expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBOR Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the Eurodollar market. A certificate of any Lender setting forth in reasonable detail any amount or amounts that such Lender is entitled to receive pursuant to this SECTION 2.13 shall be delivered to the applicable Borrower (with a copy to the Administrative Agent) and shall be conclusive and binding absent manifest error. Such Borrower shall pay such Lender the amount shown as due on any such certificate within 5 days after receipt thereof. SECTION 2.14 PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF SETOFFS. (a) Each Borrower shall make each payment required to be made by it hereunder or under any other Loan Document (whether of principal, interest, fees or Reimbursement Obligations, or of amounts payable under SECTION 2.12, 2.13 or 2.15, or otherwise) on or before the time expressly required hereunder or under such other Loan Document for such payment (or, if no such time is expressly required, prior to 2:00 p.m., New York City time), on the date when due, in immediately available funds, without setoff, deduction or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at its offices at 677 Washington Boulevard, Stamford, Connecticut, except payments to be made directly to the Issuing Bank or Swingline Lender as expressly provided herein and except that payments pursuant to SECTIONS 2.12, 2.13, 2.15 and 11.03 shall be made directly to the persons entitled thereto and payments pursuant to other Loan Documents shall be made to the persons specified therein. The Administrative Agent shall distribute any such payments received by it for the account of any other person to the appropriate recipient promptly following receipt thereof. If any payment under any Loan Document shall be due on a day that is not a Business Day, unless specified otherwise, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments under each Loan Document shall be made in dollars, except as expressly specified otherwise. (b) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, Reimbursement Obligations, interest and fees then due hereunder, such funds shall be applied (i) FIRST, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) SECOND, towards payment of principal and Reimbursement Obligations then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and Reimbursement Obligations then due to such parties. (c) If any Lender shall, by exercising any right of setoff or counterclaim or otherwise (including by exercise of its rights under SECTION 9.1 of the Security Agreement), obtain payment in respect of any principal of or interest on any of its Revolving Loans, Term Loans or participations in LC Disbursements or Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans, Term Loans and participations in LC Disbursements and Swingline Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans, Term Loans and participations in LC Disbursements and Swingline Loans of other Lend- -52- ers to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans, Term Loans and participations in LC Disbursements and Swingline Loans; PROVIDED that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by either Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to U.S. Borrower or any of its Subsidiaries or Affiliates (as to which the provisions of this paragraph shall apply). Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation. If under applicable bankruptcy, insolvency or any similar law any Secured Party receives a secured claim in lieu of a setoff or counterclaim to which this SECTION 2.14(c) applies, such Secured Party shall to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights to which the Secured Party is entitled under this SECTION 2.14(c) to share in the benefits of the recovery of such secured claim. (d) Unless the Administrative Agent shall have received notice from the applicable Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that such Borrower will not make such payment, the Administrative Agent may assume that such Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if such Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. (e) If any Lender shall fail to make any payment required to be made by it pursuant to SECTION 2.02(c), 2.14(d), 2.17(d), 2.18(d), 2.18(e) or 11.03(d), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender's obligations under such Sections until all such unsatisfied obligations are fully paid. SECTION 2.15 TAXES. (a) Any and all payments by or on account of any obligation of either Borrower hereunder or under any other Loan Document shall be made without setoff, counterclaim or other defense and free and clear of and without deduction or withholding for any and all Indemnified Taxes; PROVIDED that if either Borrower or any Secured Party shall be required by law to deduct or pay any Indemnified Taxes from or in respect of such payments, then (i) the sum payable shall be increased as necessary so that after making or allowing for all required deductions and payments (including deductions, withholdings or payments applicable to additional sums payable under this SECTION 2.15) the Administrative Agent, any Lender or the Issuing Bank, as the case may be, receives an amount equal to the sum it would have received had no such deductions, withholdings or payments been required, (ii) such Borrower shall make such deductions or withholdings, as are required to be made by it and (iii) such Borrower shall pay the full amount deducted or withheld by it to the relevant Governmental Authority in accordance with applicable law. -53- (b) In addition, such Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law. (c) Each Borrower shall indemnify the Administrative Agent, each Lender and the Issuing Bank, within 10 Business Days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of such Borrower hereunder or under any other Loan Document, or otherwise with regard to any Loan Document, (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this SECTION 2.15) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to either Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error. (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes and in any event within 30 days of any such payment being due, by either Borrower to a Governmental Authority, such Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent. (e) Each Foreign Lender shall deliver to the Borrowers and the Administrative Agent two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or, in the case of a Foreign 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", a statement substantially in the form of Exhibit Q and a Form W-8BEN, or any subsequent versions thereof or successors thereto, properly completed and duly executed by such Foreign Lender claiming complete exemption from, or a reduced rate of, U.S. federal withholding tax on all payments by the Borrowers under this Agreement and the other Loan Documents. Such forms shall be delivered by each Foreign Lender on or before the date it becomes a party to this Agreement. In addition, each Foreign Lender shall deliver such forms within ten (10) Business Days after receipt of a written notification from the Borrowers that any form previously delivered by such Foreign Lender is invalid or is due to expire or to become obsolete. Each Foreign Lender shall promptly notify the Borrowers at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrowers (or any other form of certification adopted by the U.S. taxing authorities for such purpose). Notwithstanding any other provision of this paragraph, a Foreign Lender shall not be required to deliver any form pursuant to this paragraph that such Foreign Lender is not legally able to deliver. (f) If the Administrative Agent or a Lender determines in its reasonable discretion that it is entitled to claim a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by a Borrower or with respect to which a Borrower has paid additional amounts pursuant to this SECTION 2.15, it promptly shall notify the applicable Borrower of the availability of such refund claim. Upon receipt of a written request from a Borrower, such Administrative Agent or Lender shall use reasonable efforts to file a timely claim to such taxation authority for such refund, solely at the Borrower's expense. If the Administrative Agent or a Lender receives a refund (including pursuant to a claim for refund made pursuant to the preceding sentence) or in respect of any Indemnified Taxes or Other Taxes with respect to which a Borrower has paid additional amounts pursuant to this SECTION 2.15, it shall within 30 days from the date of such receipt pay over the amount of such refund to the applicable Borrower, net of all reasonable out-of-pocket expenses of such Administrative Agent or Lender (as determined in the Administrative Agent's or Lender's reasonable discretion) and without interest (other than interest paid by the relevant taxation authority with respect to such refund); PROVIDED, HOWEVER, that (i) each Borrower, -54- upon the request of the Administrative Agent or such Lender (or assignee), agrees to repay the amount paid over to such Borrower (PLUS any penalties, interest or other charges (including Taxes) imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender (or assignee) within a reasonable time (not to exceed 20 days) after receipt of written notice that the Administrative Agent or such Lender (or assignee) is required to repay such refund to such Governmental Authority and (ii) such Administrative Agent or Lender shall not be required to make any payment under this SECTION 2.15(f) if an Event of Default shall have occurred and be continuing. Nothing contained in this SECTION 2.15(f) shall require the Administrative Agent or any Lender (or assignee) to make available its Tax Returns or any other information which it deems confidential to a Borrower or any other person. Notwithstanding anything to the contrary, in no event will any Lender be required to pay any amount to a Borrower the payment of which would place such Lender in a less favorable net after-tax position than such Lender would have been in if the additional amounts giving rise to such refund of any Indemnified Taxes had never been paid. (g) The Administrative Agent and each Lender agrees, upon written request from a Borrower, to use reasonable efforts (subject to overall policy considerations of the Administrative Agent or such Lender, as the case may be, and legal and regulatory restrictions) to avoid or minimize any amounts that might otherwise be payable by a Borrower pursuant to this SECTION 2.15; provided that such effort shall not impose on the Administrative Agent or any Lender any additional costs or any other economic, legal, regulatory or other disadvantage, as determined in the Administrative Agent's or such Lender's sole discretion; provided, further, that nothing in this SECTION 2.15(g) shall affect or postpone any of the obligations of a Borrower or the rights of any Administrative Agent or Lender pursuant to this SECTION 2.15. (h) The agreements in this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. SECTION 2.16 MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS. (a) MITIGATION OF OBLIGATIONS. If any Lender requests compensation under SECTION 2.12, or if a Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to SECTION 2.15, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the reasonable judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to SECTION 2.12 or 2.15, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrowers, as applicable, hereby agree to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment. A certificate setting forth such costs and expenses in reasonable detail submitted by such Lender to the Administrative Agent shall be conclusive absent manifest error. (b) REPLACEMENT OF LENDERS. If any Lender requests compensation under SECTION 2.12, or if a Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to SECTION 2.15, or any Lender is a non-consenting Lender under Section 11.02(c), or if any Lender defaults in its obligation to fund Loans hereunder, then the applicable Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 11.04), all of its interests, rights and obligations under this Agreement to an assignee selected by such Borrower that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); PROVIDED that (i) such Borrower shall have -55- received the prior written consent of the Administrative Agent (and, if a Revolving Commitment is being assigned, the Issuing Bank and Swingline Lender), which consents shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder (assuming for this purpose that the Loans of such Lender were being prepaid) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or such Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under SECTION 2.12 or payments required to be made pursuant to SECTION 2.15, such assignment will result in a material reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling a Borrower to require such assignment and delegation cease to apply. SECTION 2.17 SWINGLINE LOANS. (a) SWINGLINE COMMITMENT. Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to U.S. Borrower from time to time during the Revolving Availability Period, in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding $10.0 million or (ii) the sum of the total Revolving Exposures exceeding the total Revolving Commitments; PROVIDED that the Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Loan. Within the foregoing limits and subject to the terms and conditions set forth herein, U.S. Borrower may borrow, repay and reborrow Swingline Loans. (b) SWINGLINE LOANS. To request a Swingline Loan, U.S. Borrower shall deliver, by hand delivery or telecopy, a duly completed and executed U.S. Borrowing Request to the Administrative Agent and the Swingline Lender, not later than 2:00 p.m., New York City time, on the day of a proposed Swingline Loan. Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and the amount of the requested Swingline Loan. Each Swingline Loan shall be an ABR Loan. The Swingline Lender shall make each Swingline Loan available to U.S. Borrower by means of a credit to the general deposit account of U.S. Borrower with the Swingline Lender (or, in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in SECTION 2.18(e), by remittance to the Issuing Bank) by 3:00 p.m., New York City time, on the requested date of such Swingline Loan. U.S. Borrower shall not request a Swingline Loan if at the time of or immediately after giving effect to the Extension of Credit contemplated by such request a Default has occurred and is continuing or would result therefrom. Swingline Loans shall be made in minimum amounts of $500,000 and integral multiples of $250,000 above such amount. (c) PREPAYMENT. U.S. Borrower shall have the right at any time and from time to time to repay any Swingline Loan, in whole or in part, upon giving written notice to the Swingline Lender and the Administrative Agent before 12:00 (noon), New York City time, on the proposed date of repayment. (d) PARTICIPATIONS. The Swingline Lender may at any time in its discretion by written notice given to the Administrative Agent (PROVIDED such notice requirement shall not apply if the Swingline Lender and the Administrative Agent are the same entity) not later than 11:00 A.M., New York City time, on the next succeeding Business Day following such notice require the Revolving Lenders to acquire participations on such Business Day in all or a portion of the Swingline Loans then outstanding. Such notice shall specify the aggregate amount of Swingline Loans in which Revolving Lenders will participate. Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Revolving Lender, specifying in such notice such Lender's Pro Rata Percentage of such Swingline Loan -56- or Loans. Each Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of the Swingline Lender, such Lender's Pro Rata Percentage of such Swingline Loan or Loans. Each Revolving Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever (so long as such payment shall not cause such Lender's Revolving Exposure to exceed such Lender's Revolving Commitment). Each Revolving Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in SECTION 2.02(c) with respect to Loans made by such Lender (and SECTION 2.02 shall apply, MUTATIS MUTANDIS, to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Revolving Lenders. The Administrative Agent shall notify U.S. Borrower of any participations in any Swingline Loan acquired by the Revolving Lenders pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender. Any amounts received by the Swingline Lender from U.S. Borrower (or other party on behalf of U.S. Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent. Any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Revolving Lenders that shall have made their payments pursuant to this paragraph, as their interests may appear. The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve U.S. Borrower of any default in the payment thereof. SECTION 2.18 LETTERS OF CREDIT (a) GENERAL. Subject to the terms and conditions set forth herein, U.S. Borrower may request the Issuing Bank, and the Issuing Bank agrees, to issue Letters of Credit for its own account or the account of a Subsidiary in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time during the Revolving Availability Period (PROVIDED that U.S. Borrower shall be a co-applicant, and be jointly and severally liable, with respect to each Letter of Credit issued for the account of a Subsidiary). The Issuing Bank shall have no obligation to issue, and U.S. Borrower shall not request the issuance of, any Letter of Credit at any time if after giving effect to such issuance, the LC Exposure would exceed the LC Commitment or the total Revolving Exposure would exceed the total Revolving Commitments. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by U.S. Borrower to, or entered into by U.S. Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control. (b) REQUEST FOR ISSUANCE, AMENDMENT, RENEWAL, EXTENSION; CERTAIN CONDITIONS. To request the issuance of a Letter of Credit or the amendment, renewal or extension of an outstanding Letter of Credit, U.S. Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) an LC Request to the Issuing Bank and the Administrative Agent not later than 11:00 a.m. on the third Business Day preceding the requested date of issuance, amendment, renewal or extension (or such later date and time as is acceptable to the Issuing Bank). A request for an initial issuance of a Letter of Credit shall specify in form and detail satisfactory to the Issuing Bank: (i) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); -57- (ii) the amount thereof; (iii) the expiry date thereof (which shall not be later than the close of business on the Letter of Credit Expiration Date); (iv) the name and address of the beneficiary thereof; (v) whether the Letter of Credit is to be issued for its own account or for the account of one of its Subsidiaries (PROVIDED that U.S. Borrower shall be a co-applicant, and therefore jointly and severally liable, with respect to each Letter of Credit issued for the account of a Subsidiary); (vi) the documents to be presented by such beneficiary in connection with any drawing thereunder; (vii) the full text of any certificate to be presented by such beneficiary in connection with any drawing thereunder; and (viii) such other matters as the Issuing Bank may require. A request for an amendment, renewal or extension of any outstanding Letter of Credit shall specify in form and detail satisfactory to the Issuing Bank: (i) the Letter of Credit to be amended, renewed or extended; (ii) the proposed date of amendment, renewal or extension thereof (which shall be a Business Day); (iii) the nature of the proposed amendment, renewal or extension; and (iv) such other matters as the Issuing Bank may require. If requested by the Issuing Bank, U.S. Borrower also shall submit a letter of credit application on the Issuing Bank's standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and, upon issuance, amendment, renewal or extension of each Letter of Credit, U.S. Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension, (i) the LC Exposure shall not exceed the LC Commitment, (ii) the total Revolving Exposures shall not exceed the total Revolving Commitments and (iii) the conditions set forth in ARTICLE IV in respect of such issuance, amendment, renewal or extension shall have been satisfied. Unless the Issuing Bank shall agree otherwise, no Letter of Credit shall be in an initial amount less than $100,000, in the case of a Commercial Letter of Credit, or $500,000, in the case of a Standby Letter of Credit, or is to be denominated in a currency other than Dollars. (c) EXPIRATION DATE. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) in the case of a Standby Letter of Credit, (x) the date which is no later than one year after the date of the issuance of such Standby Letter of Credit (or, in the case of any renewal or extension thereof, no later than one year after such renewal or extension) and (y) the Letter of Credit Expiration Date and (ii) in the case of a Commercial Letter of Credit, (x) the date that is no later than 180 days after the date of issuance of such Commercial Letter of Credit (or, in the case of any renewal or extension thereof, no later than 180 days after such renewal or extension) and (y) the Letter of Credit Expiration Date. -58- (d) PARTICIPATIONS. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby irrevocably grants to each Revolving Lender, and each Revolving Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Revolving Lender's Pro Rata Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Revolving Lender's Pro Rata Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed by U.S. Borrower on the date due as provided in SECTION 2.18(e), or of any reimbursement payment required to be refunded to U.S. Borrower for any reason. Each Revolving Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit, the occurrence and continuance of a Default, reduction or termination of the Commitments, or expiration, termination or cash collateralization of any Letter of Credit and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. (e) REIMBURSEMENT. (i) If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, U.S. Borrower shall reimburse such LC Disbursement by paying to the Issuing Bank an amount equal to such LC Disbursement not later than 3:00 p.m., New York City time, on the date that such LC Disbursement is made if U.S. Borrower shall have received notice of such LC Disbursement prior to 11:00 a.m., New York City time, on such date, or, if such notice has not been received by U.S. Borrower prior to such time on such date, then not later than 3:00 p.m., New York City time, on the Business Day immediately following the day that U.S. Borrower receives such notice; PROVIDED that U.S. Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with SECTION 2.03 that such payment be financed with ABR Revolving Loans in an equivalent amount and, to the extent so financed, U.S. Borrower's obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Loans. (ii) If U.S. Borrower fails to make such payment when due, the Issuing Bank shall notify the Administrative Agent and the Administrative Agent shall notify each Revolving Lender of the applicable LC Disbursement, the payment then due from U.S. Borrower in respect thereof and such Revolving Lender's Pro Rata Percentage thereof. Each Revolving Lender shall pay by wire transfer of immediately available funds to the Administrative Agent not later than 2:00 p.m., New York City time, on such date (or, if such Revolving Lender shall have received such notice later than 12:00 noon, New York City time, on any day, not later than 11:00 a.m., New York City time, on the immediately following Business Day), an amount equal to such Revolving Lender's Pro Rata Percentage of the unreimbursed LC Disbursement in the same manner as provided in SECTION 2.02(c) with respect to Revolving Loans made by such Revolving Lender, and the Administrative Agent will promptly pay to the Issuing Bank the amounts so received by it from the Revolving Lenders. The Administrative Agent will promptly pay to the Issuing Bank any amounts received by it from U.S. Borrower pursuant to the above paragraph prior to the time that any Revolving Lender makes any payment pursuant to the preceding sentence and any such amounts received by the Administrative Agent from U.S. Borrower thereafter will be promptly remitted by the Administrative Agent to the Revolving Lenders that shall have made such payments and to the Issuing Bank, as appropriate. (iii) If any Revolving Lender shall not have made its Pro Rata Percentage of such LC Disbursement available to the Administrative Agent as provided above, each of such Revolving Lender and U.S. Borrower severally agrees to pay interest on such amount, for each day from and including the date such amount is required to be paid in accordance with the foregoing to but excluding the date such amount is paid, to the Administrative Agent for the account of the Issuing Bank at (i) in the case of U.S. -59- Borrower, the rate per annum set forth in SECTION 2.18(H) and (ii) in the case of such Lender, at a rate determined by the Administrative Agent in accordance with banking industry rules or practices on interbank compensation. (f) OBLIGATIONS ABSOLUTE. The Reimbursement Obligation of U.S. Borrower as provided in SECTION 2.18(e) shall be absolute, unconditional and irrevocable, and shall be paid and performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein; (ii) any draft or other document presented under a Letter of Credit being proved to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that fails to comply with the terms of such Letter of Credit; (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this SECTION 2.18, constitute a legal or equitable discharge of, or provide a right of setoff against, the obligations of U.S. Borrower hereunder; (v) the fact that a Default shall have occurred and be continuing; or (vi) any material adverse change in the business, property, results of operations, prospects or condition, financial or otherwise, of U.S. Borrower and its Subsidiaries. None of the Agents, the Lenders, the Issuing Bank or any of their Affiliates shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; PROVIDED that the foregoing shall not be construed to excuse the Issuing Bank from liability to U.S. Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by U.S. Borrower to the extent permitted by applicable law) suffered by U.S. Borrower that are caused by the Issuing Bank's failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit. (g) DISBURSEMENT PROCEDURES. The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly give written notice to the Administrative Agent and U.S. Borrower of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; PROVIDED that any failure to give or delay in giving such notice shall not relieve U.S. Borrower of its Reimbursement Obligation to the Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement (other than with respect to the timing of such Reimbursement Obligation set forth in SECTION 2.18(e)). (h) INTERIM INTEREST. If the Issuing Bank shall make any LC Disbursement, then, unless U.S. Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest payable on demand, for each day from and including the date such LC Disbursement is made to but excluding the date that U.S. Borrower reimburses such LC -60- Disbursement, at the rate per annum determined pursuant to SECTION 2.06(a) until the day after U.S. Borrower is notified of such LC Disbursement and thereafter pursuant to SECTION 2.06(c). Interest accrued pursuant to this paragraph shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Lender pursuant to SECTION 2.18(e) to reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment. (i) CASH COLLATERALIZATION. If any Event of Default shall occur and be continuing, on the Business Day that U.S. Borrower receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, U.S. Borrower shall deposit in the LC Sub-Account, in the name of the Collateral Agent and for the benefit of the Revolving Lenders, an amount in cash equal to the LC Exposure as of such date plus any accrued and unpaid interest thereon; PROVIDED that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to U.S. Borrower described in paragraph (g) or (h) of ARTICLE VIII. Funds in the LC Sub-Account shall be applied by the Collateral Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of outstanding Reimbursement Obligations or, if the maturity of the Loans has been accelerated (but subject to the consent of Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure), be applied to satisfy other Obligations of U.S. Borrower under this Agreement. If U.S. Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount PLUS any accrued interest or realized profits with respect to such amounts (to the extent not applied as aforesaid) shall be returned to U.S. Borrower within three Business Days after all Events of Default have been cured or waived. (j) ADDITIONAL ISSUING BANKS. U.S. Borrower may, at any time and from time to time, designate one or more additional Revolving Lenders to act as an issuing bank under the terms of this Agreement, with the consent of the Administrative Agent (which consent shall not be unreasonable withheld), the Issuing Bank and such Revolving Lender(s). Any Lender designated as an issuing bank pursuant to this paragraph (j) shall be deemed (in addition to being a Revolving Lender) to be the Issuing Bank with respect to Letters of Credit issued or to be issued by such Revolving Lender, and all references herein and in the other Loan Documents to the term "Issuing Bank" shall, with respect to such Letters of Credit, be deemed to refer to such Revolving Lender in its capacity as Issuing Bank, as the context shall require. (k) RESIGNATION OR REMOVAL OF THE ISSUING BANK. The Issuing Bank may resign as Issuing Bank hereunder at any time upon at least 30 days' prior notice to the Lenders, the Administrative Agent and U.S. Borrower. The Issuing Bank may be replaced at any time by written agreement among U.S. Borrower, each Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of the Issuing Bank or any such additional Issuing Bank. At the time any such resignation or replacement shall become effective, U.S. Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to SECTION 2.05(c). From and after the effective date of any such resignation or replacement or addition, as applicable, (i) the successor or additional Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued by it thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed to refer to such successor or such addition or to any previous Issuing Bank, or to such successor or such addition and all previous Issuing Banks, as the context shall require. After the resignation or replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such resignation or replace- -61- ment, but shall not be required to issue additional Letters of Credit. If at any time there is more than one Issuing Bank hereunder, U.S. Borrower may, in its discretion, select which Issuing Bank is to issue any particular Letter of Credit. (l) OTHER. The Issuing Bank shall be under no obligation to issue any Letter of Credit if (i) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the Issuing Bank from issuing such Letter of Credit, or any law applicable to the Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the Issuing Bank shall prohibit, or request that the Issuing Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the Issuing Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the Issuing Bank is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the Issuing Bank any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the Issuing Bank in good faith deems material to it; or (ii) the issuance of such Letter of Credit would violate one or more policies of the Issuing Bank. The Issuing Bank shall be under no obligation to amend any Letter of Credit if (A) the Issuing Bank would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit. ARTICLE III REPRESENTATIONS AND WARRANTIES Each Loan Party represents and warrants to the Administrative Agent, the Collateral Agent, the Issuing Bank and each of the Lenders (with references to the Companies being references thereto after giving effect to the Transactions unless otherwise expressly stated) that: SECTION 3.01 ORGANIZATION; POWERS. Each Company (a) is duly organized and validly existing under the laws of the jurisdiction of its organization, (b) has all requisite power and authority to carry on its business as now conducted and to own and lease its property and (c) is qualified and in good standing (to the extent such concept is applicable in the applicable jurisdiction) to do business in every jurisdiction where such qualification is required, except in such jurisdictions where the failure to so qualify or be in good standing, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. There is no existing default under any Organizational Document of any Company or any event which, with the giving of notice or passage of time or both, would constitute a default by any party thereunder. SECTION 3.02 AUTHORIZATION; ENFORCEABILITY. The Transactions to be entered into by each Loan Party are within such Loan Party's powers and have been duly authorized by all necessary action on the part of such Loan Party. This Agreement has been duly executed and delivered by each Loan Party and constitutes, and each other Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, a legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, -62- reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. SECTION 3.03 NO CONFLICTS. Except as set forth on SCHEDULE 3.03, the Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except (i) such as have been obtained or made and are in full force and effect, (ii) filings necessary to perfect Liens created by the Loan Documents and (iii) consents, approvals, registrations, filings, permits or actions the failure to obtain or perform which could not reasonably be expected to result in a Material Adverse Effect, (b) will not violate the Organizational Documents of any Company or any law, judgment, decree or order of any Governmental Authority, (c) will not violate or result in a default or require any consent or approval under any indenture, agreement, Organizational Document or other instrument binding upon any Company or its property, or give rise to a right thereunder to require any payment to be made by any Company, except for violations, defaults or the creation of such rights that could not reasonably be expected to result in a Material Adverse Effect, and (d) will not result in the creation or imposition of any Lien on any property of any Company, except Liens created by the Loan Documents and Permitted Liens. SECTION 3.04 FINANCIAL STATEMENTS; PROJECTIONS. (a) U.S. Borrower has heretofore delivered to the Lenders the consolidated balance sheets and related statements of income, stockholders' equity and cash flows of U.S. Borrower (i) as of and for the fiscal years ended December 31, 2000, December 31, 2001 and December 31, 2002, audited by and accompanied by the unqualified opinion of Ernst & Young, LLP, independent public accountants, and (y) as of and for the nine-month period ended September 30, 2003 and for the comparable period of the preceding fiscal year, in each case, certified by the chief financial officer of U.S. Borrower. Such financial statements and all financial statements delivered pursuant to SECTIONS 5.01(a) and (b) have been prepared in accordance with GAAP and present fairly and accurately, in all material respects, the financial condition and results of operations and cash flows of U.S. Borrower as of the dates and for the periods to which they relate. Except as set forth in such financial statements, there are no liabilities of any Company of any kind, whether accrued, contingent, absolute, determined, determinable or otherwise, which could reasonably be expected to result in a Material Adverse Effect, and there is no existing condition, situation or set of circumstances which could reasonably be expected to result in such a liability, other than liabilities under the Loan Documents and the Senior Subordinated Note Documents. (b) U.S. Borrower has heretofore delivered to the Lenders U.S. Borrower's unaudited PRO FORMA consolidated balance sheet and statements of income and cash flows and PRO FORMA EBITDA for the fiscal year ended December 31, 2002, and as of and for the nine-month period ended September 30, 2003 and for the four-quarter period ended September 30, 2003, in each case after giving effect to the Transactions as if they had occurred on such date in the case of the balance sheet and as of the beginning of all periods presented in the case of the statements of income and cash flows. Such PRO FORMA financial statements have been prepared in good faith by the Loan Parties, based on the assumptions stated therein (which assumptions are believed by the Loan Parties on the date hereof and on the Closing Date to be reasonable), are based on the best information available to the Loan Parties as of the date of delivery thereof, accurately reflect all adjustments required to be made to give effect to the Transactions, and present fairly in all material respects the PRO FORMA consolidated financial position and results of operations of U.S. Borrower as of such date and for such periods, assuming that the Transactions had occurred at such dates. (c) The forecasts of financial performance of Parent and its subsidiaries furnished to the Lenders have been prepared in good faith by U.S. Borrower and based on assumptions believed by U.S. Borrower to reasonable. -63- (d) Since December 31, 2002, there has been no event, change, circumstance or occurrence that, individually or in the aggregate, has had or could reasonably be expected to result in a Material Adverse Effect. SECTION 3.05 PROPERTIES. (a) Each Company has good title to, or valid leasehold interests in, all its property material to its business, free and clear of all Liens except for, in the case of Collateral, Permitted Collateral Liens and, in the case of all other material property, Permitted Liens and minor irregularities or deficiencies in title that, individually or in the aggregate, do not interfere with its ability to conduct its business as currently conducted or to utilize such property for its intended purpose. The property of the Companies, taken as a whole, (i) is in good operating order, condition and repair (ordinary wear and tear excepted), except to the extent that the failure to be in such condition could not reasonably be expected to result in a Material Adverse Effect, and (ii) constitutes all the property which is required for the business and operations of the Companies as presently conducted. (b) SCHEDULE 3.05(b) contains a true and complete list of each interest in Real Property (i) owned by any Company as of the date hereof and describes the type of interest therein held by such Company and (ii) leased, subleased or otherwise occupied or utilized by any Company, as lessee, sublessee, franchisee or licensee, as of the date hereof and describes the type of interest therein held by such Company and whether such lease, sublease or other instrument requires the consent of the landlord thereunder or other parties thereto to the Transactions. (c) No Company has received any notice of, nor has any knowledge of, the occurrence or pendency or contemplation of any Casualty Event in excess of $5.0 million affecting all or any portion of its property. No Mortgage encumbers improved Real Property that is located in an area that has been identified by the Secretary of Housing and Urban Development as an area having special flood hazards within the meaning of the National Flood Insurance Act of 1968 unless flood insurance available under such Act has been obtained in accordance with SECTION 5.04. (d) Each Company owns or has rights to use all of the Collateral and all material rights with respect to any of the foregoing used in, necessary for or material to each Company's business as currently conducted. The use by each Company of such Collateral and all such rights with respect to the foregoing do not infringe on the rights of any person other than such infringement which could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. No claim has been made and remains outstanding that any Company's use of any Collateral does or may violate the rights of any third party that could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. (e) The Equipment of each Company is in good repair, working order and condition, reasonable wear and tear excepted. Each Company shall cause the Equipment to be maintained and preserved in good repair, working order and condition, reasonable wear and tear excepted, and shall as quickly as commercially practicable make or cause to be made all repairs, replacements and other improvements which are necessary or appropriate in the conduct of each Company's business. SECTION 3.06 INTELLECTUAL PROPERTY. (a) OWNERSHIP/NO CLAIMS. Each Loan Party owns, or is licensed to use, all patents, patent applications, trademarks, trade names, servicemarks, copyrights, technology, trade secrets, proprietary information, domain names, know-how and processes necessary for the conduct of its business as currently conducted (the "INTELLECTUAL PROPERTY"), except for those the failure to own or license which, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. No claim has been asserted and is pending by any person challenging or questioning the use of any such -64- Intellectual Property or the validity or effectiveness of any such Intellectual Property, nor does any Loan Party know of any valid basis for any such claim. To the knowledge of the Loan Parties, the use of such Intellectual Property by each Loan Party does not infringe the rights of any person, except for such claims and infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. (b) REGISTRATIONS. Except pursuant to licenses and other user agreements entered into by each Loan Party in the ordinary course of business that are listed in SCHEDULES 14(a) and 14(b) to the Perfection Certificate, on and as of the date hereof (i) each Loan Party owns and possesses the right to use, and has taken no affirmative action to authorize or enable any other person to use, any copyright, patent or trademark (as such terms are defined in the U.S. Security Agreement) listed in SCHEDULES 14(a) and 14(b) to the Perfection Certificate and (ii) all registrations listed in SCHEDULES 14(a) and 14(b) to the Perfection Certificate are valid and in full force and effect. (c) NO VIOLATIONS OR PROCEEDINGS. To each Loan Party's knowledge, on and as of the date hereof, there is no material violation by others of any right of such Loan Party with respect to any copyright, patent or trademark listed in SCHEDULES 14(a) and 14(b) to the Perfection Certificate, respectively, pledged by it under the name of such Loan Party. SECTION 3.07 EQUITY INTERESTS AND SUBSIDIARIES. (a) SCHEDULE 3.07(A) sets forth a list of (i) all the Subsidiaries of Parent and their jurisdiction of organization as of the Closing Date and (ii) the number of each class of its Equity Interests authorized, and the number outstanding, on the Closing Date and the number of shares covered by all outstanding options, warrants, rights of conversion or purchase and similar rights at the Closing Date. All Equity Interests of each Company owned by Parent and its Subsidiaries are duly and validly issued and are fully paid and non-assessable, and, other than the Equity Interests of U.S. Borrower, are owned by U.S. Borrower, directly or indirectly through Subsidiaries. All Equity Interests of U.S. Borrower are owned directly by Parent (or, after an IPO, the IPO Entity) and, prior to an IPO, all Equity Interests of Parent are owned directly by Holdings. Each Loan Party is the record and beneficial owner of, and has good and marketable title to, the Equity Interests pledged by it under the U.S. Security Agreement, free of any and all Liens, rights or claims of other persons, except the security interest created by the U.S. Security Agreement and there are no outstanding warrants, options or other rights to purchase, or shareholder, voting trust or similar agreements outstanding with respect to, or property that is convertible into, or that requires the issuance or sale of, any such Equity Interests. (b) No consent of any person including any other general or limited partner, any other member of a limited liability company, any other shareholder or any other trust beneficiary is necessary or reasonably desirable (from the perspective of a secured party) in connection with the creation, perfection or first priority status of the security interest of the Collateral Agent in any Equity Interests pledged to the Collateral Agent for the benefit of the Secured Parties under the Security Agreement or the exercise by the Collateral Agent of the voting or other rights provided for in the Security Agreement or the exercise of remedies in respect thereof. (c) An accurate organization chart, showing the ownership structure of Parent, U.S. Borrower and each Subsidiary on the Closing Date, and after giving effect to the Transactions, is set forth on SCHEDULE 3.07(c). SECTION 3.08 LITIGATION; COMPLIANCE WITH LAWS. (a) There are no actions, suits or proceedings at law or in equity by or before any Governmental Authority now pending or, to the knowledge of any Company, threatened against or affecting any Company or any business, property or rights of any Company (i) that involve any Loan Document or any of the Transactions or (ii) as to which -65- there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect. (b) Except for matters covered by SECTION 3.18, no Company or any of its property is in violation of, nor will the continued operation of its property as currently conducted violate, any Requirements of Law (including any zoning or building ordinance, code or approval or any building permits) or any restrictions of record or agreements affecting any Company's Real Property or is in default with respect to any judgment, writ, injunction, decree, rule or order of any Governmental Authority, where such violation or default, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. SECTION 3.09 AGREEMENTS. (a) No Company is a party to any agreement or instrument or subject to any corporate or other constitutional restriction that has resulted or could reasonably be expected to result in a Material Adverse Effect. (b) No Company is in default in any manner under any provision of any indenture or other agreement or instrument evidencing Indebtedness, or any other agreement or instrument to which it is a party or by which it or any of its property is or may be bound, where such default could reasonably be expected to result in a Material Adverse Effect, and no condition exists which, with the giving of notice or the lapse of time or both, would constitute such a default. (c) SCHEDULE 3.09(c) accurately and completely lists all material agreements (other than leases of Real Property set forth on SCHEDULE 3.05(b)) to which any Company is a party which are in effect on the date hereof in connection with the operation of the business conducted thereby and U.S. Borrower has delivered to the Administrative Agent complete and correct copies of all such material agreements, including any amendments, supplements or modifications with respect thereto, and as of the date hereof all such agreements are in full force and effect. SECTION 3.10 FEDERAL RESERVE REGULATIONS. (a) No Company is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock. (b) No part of the proceeds of any Loan or any Letter of Credit will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose that entails a violation of, or that is inconsistent with, the provisions of the regulations of the Board, including Regulation T, U or X. The pledge of the Securities Collateral pursuant to the Security Agreement does not violate such regulations. SECTION 3.11 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT. No Company is (a) an "investment company" or a company "controlled" by a person required to register as an "investment company," as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended, or (b) a "holding company," an "affiliate" of a "holding company" or a "subsidiary company" of a "holding company," as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935, as amended. SECTION 3.12 USE OF PROCEEDS. The Borrowers will use the proceeds of (a) the Term Loans to effect the Acquisition and the Refinancing and pay related fees and expenses, (b) the Revolving Loans after the Closing Date for general corporate purposes and up to $3.0 million on the Closing Date to effect the Acquisition and the Refinancing and pay related fees and expenses and (c) the Swingline Loans after the Closing Date for general corporate purposes. -66- SECTION 3.13 TAXES. Each Company has (a) timely filed or caused to be timely filed all federal Tax Returns and all state, local and foreign Tax Returns or materials required to have been filed by it and all such Tax Returns are true and correct in all material respects and (b) duly and timely paid, collected or remitted or caused to be duly and timely paid, collected or remitted all Taxes (whether or not shown on any Tax Return) due and payable, collectible or remittable by it and all assessments received by it, except Taxes (i) that are being contested in good faith by appropriate proceedings and for which such Company has set aside on its books adequate reserves in accordance with GAAP and (ii) which could not, individually or in the aggregate, have a Material Adverse Effect. Each Company has made adequate provision in accordance with GAAP for all Taxes not yet due and payable. Each Company is unaware of any proposed or pending tax assessments, deficiencies or audits that could be reasonably expected to, individually or in the aggregate, result in a Material Adverse Effect. No Company has ever been a party to any understanding or arrangement constituting a "tax shelter" within the meaning of Section 6111(c), Section 6111(d) or Section 6662(d)(2)(C)(iii) of the Code, or has ever "participated" in a "reportable transaction" within the meaning of Treasury Regulation Section 1.6011-4, except as could not be reasonably expected to, individually or in the aggregate, result in a Material Adverse Effect. SECTION 3.14 NO MATERIAL MISSTATEMENTS. No information, report, financial statement, certificate, Borrowing Request, LC Request, exhibit or schedule furnished by or on behalf of any Company to the Administrative Agent or any Lender in connection with the negotiation of any Loan Document or included therein or delivered pursuant thereto (including the Confidential Information Memorandum), taken as a whole, contained or contains any material misstatement of fact or omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were or are made, not misleading as of the date such information is dated or certified; PROVIDED that to the extent any such information, report, financial statement, exhibit or schedule was based upon or constitutes a forecast or projection, each Company represents only that it acted in good faith and utilized reasonable assumptions and due care in the preparation of such information, report, financial statement, exhibit or schedule. SECTION 3.15 LABOR MATTERS. As of the date hereof and the Closing Date, there are no strikes, lockouts or slowdowns against any Company pending or, to the knowledge of any Company, threatened. The hours worked by and payments made to employees of any Company have not been in violation of the Fair Labor Standards Act of 1938, as amended, or any other applicable federal, state, local or foreign law dealing with such matters in any manner which could reasonably be expected to result in a Material Adverse Effect. All payments due from any Company, or for which any claim may be made against any Company, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of such Company except where the failure to do so could not reasonably be expected to result in a Material Adverse Effect. The consummation of the Transactions will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which any Company is bound. SECTION 3.16 SOLVENCY. Immediately after the consummation of the Transactions to occur on the Closing Date and immediately following the making of each Loan and after giving effect to the application of the proceeds of each Loan, (a) the fair value of the properties of each Loan Party (individually and on a consolidated basis with its Subsidiaries) will exceed its debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of each Loan Party (individually and on a consolidated basis with its Subsidiaries) will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) each Loan Party (individually and on a consolidated basis with its Subsidiaries) will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) each Loan Party (individually and on a consolidated basis with its Subsidiaries) will not have unreasonably small -67- capital with which to conduct its business in which it is engaged as such business is now conducted and is proposed to be conducted following the Closing Date. SECTION 3.17 EMPLOYEE BENEFIT PLANS. (a) Except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, each Company and its ERISA Affiliates is in compliance with the applicable provisions of ERISA and the Code and the regulations and published interpretations thereunder. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events, could reasonably be expected to result in a Material Adverse Effect or the imposition of a Lien on any of the property of any Company. The present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $10.0 million the fair market value of the property of all such underfunded Plans. Except as set forth on SCHEDULE 3.17, using actuarial assumptions and computation methods consistent with subpart I of subtitle E of Title IV of ERISA, the aggregate liabilities of each Company or its ERISA Affiliates to all Multiemployer Plans in the event of a complete withdrawal therefrom, as of the close of the most recent fiscal year of each such Multiemployer Plan, could not reasonably be expected to result in a Material Adverse Effect. (b) Except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, to the extent applicable, each Foreign Plan has been maintained in substantial compliance with its terms and with the requirements of any and all applicable laws, statutes, rules, regulations and orders and has been maintained, where required, in good standing with applicable regulatory authorities. No Company has incurred any material unpaid obligation in connection with the termination of or withdrawal from any Foreign Plan. Except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, the present value of the accrued benefit liabilities (whether or not vested) under each Foreign Plan which is funded, determined as of the end of the most recently ended fiscal year of the respective Company on the basis of actuarial assumptions, each of which is reasonable, did not exceed the current value of the property of such Foreign Plan, and for each Foreign Plan which is not funded, the obligations of such Foreign Plan are properly accrued. SECTION 3.18 ENVIRONMENTAL MATTERS. (a) Except as set forth in SCHEDULE 3.18 and except as, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect: (i) The Companies and their businesses, operations and Real Property are and in the last six years have been in compliance with, and the Companies have no liability under, Environmental Law; (ii) The Companies have obtained all Environmental Permits required for the conduct of their businesses and operations, and the ownership, operation and use of their property, under Environmental Law, all such Environmental Permits are valid and in good standing; (iii) There has been no Release or threatened Release of Hazardous Material on, at, under or from any Real Property or facility presently or formerly owned, leased or operated by the Companies or their predecessors in interest that could result in liability by the Companies under Environmental Law; (iv) There is no Environmental Claim pending or, to the knowledge of the Companies, threatened against the Companies, or relating to the Real Property currently or formerly owned, leased or operated by the Companies or relating to the operations of the Companies, and -68- to the knowledge of the Companies, there are no actions, activities, circumstances, conditions, events or incidents that could form the basis of such an Environmental Claim; (v) No person with an indemnity or contribution obligation to the Companies relating to compliance with or liability under Environmental Law is in default with respect to such obligation; and (vi) No Company is obligated to perform any action or otherwise incur any expense under Environmental Law pursuant to any order, decree, judgment or agreement by which it is bound or has assumed by contract or agreement, and no Company is conducting or financing any Response pursuant to any Environmental Law with respect to any Real Property or any other location. (b) Except as set forth in SCHEDULE 3.18: (i) No Real Property or facility owned, operated or leased by the Companies and, to the knowledge of the Companies, no Real Property or facility formerly owned, operated or leased by the Companies or any of their predecessors in interest is (i) listed or proposed for listing on the National Priorities List promulgated pursuant to CERCLA or (ii) listed on the Comprehensive Environmental Response, Compensation and Liability Information System promulgated pursuant to CERCLA or (iii) included on any similar list maintained by any Governmental Authority including any such list relating to petroleum; (ii) No Lien has been recorded or, to the knowledge of any Company, threatened under any Environmental Law with respect to any Real Property or property of the Companies; (iii) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not require any notification, registration, filing, reporting, disclosure, investigation, remediation or cleanup pursuant to any Governmental Real Property Disclosure Requirements or any other Environmental Law; and (iv) The Companies have made available to the Lenders all material records and files in the possession, custody or control of, or otherwise reasonably available to, the Companies concerning compliance with or liability under Environmental Law, including those concerning the existence of Hazardous Material at Real Property or facilities currently or formerly owned, operated, leased or used by the Companies. SECTION 3.19 INSURANCE. SCHEDULE 3.19 sets forth a true, complete and correct description of all insurance maintained by each Company as of the Closing Date. All insurance maintained by the Companies is in full force and effect, all premiums have been duly paid, no Company has received notice of violation or cancellation thereof, the Premises, and the use, occupancy and operation thereof, comply in all material respects with all Insurance Requirements, and there exists no material default under any Insurance Requirement. Each Company has insurance in such amounts and covering such risks and liabilities as are customary for companies of a similar size engaged in similar businesses in similar locations. SECTION 3.20 SECURITY DOCUMENTS. (a) The U.S. Security Agreement is effective to create in favor of the Collateral Agent for the benefit of the Secured Parties, legal, valid and enforceable Liens on, and security interests in, the U.S. Security Agreement Collateral and (i) when financing statements and other filings in appropriate form are filed in the offices specified on SCHEDULE 7 to the Perfection Certificate and (ii) upon the taking of possession or control by the Collateral Agent of the U.S. -69- Security Agreement Collateral with respect to which a security interest may be perfected only by possession or control (which possession or control shall be given to the Collateral Agent to the extent possession or control by the Collateral Agent is required by the U.S. Security Agreement), the Liens created by the U.S. Security Agreement shall constitute fully perfected Liens on, and security interests in, all right, title and interest of the grantors thereunder in the U.S. Security Agreement Collateral (other than (A) the Intellectual Property Collateral (as defined in the U.S. Security Agreement) and (B) such U.S. Security Agreement Collateral in which a security interest cannot be perfected under the UCC as in effect at the relevant time in the relevant jurisdiction), in each case subject to no Liens other than Permitted Collateral Liens. (b) The Canadian Security Agreement is effective to create in favor of the Collateral Agent for the benefit of the Canadian Secured Parties, legal, valid and enforceable Liens on, and security interests in, the Canadian Security Agreement Collateral and (i) when financing statements and other filings in appropriate form are filed in the offices specified on SCHEDULE 7 to the Perfection Certificate and (ii) upon the taking of possession or control by the Collateral Agent of the Canadian Security Agreement Collateral with respect to which a security interest may be perfected only by possession or control (which possession or control shall be given to the Collateral Agent to the extent possession or control by the Collateral Agent is required by the Canadian Security Agreement), the Liens created by the Canadian Security Agreement shall constitute fully perfected Liens on, and security interests in, all right, title and interest of the grantors thereunder in the Canadian Security Agreement Collateral (other than (A) the Intellectual Property Collateral (as defined in the Canadian Security Agreement) and (B) such Canadian Security Agreement Collateral in which a security interest cannot be perfected under the PPSA as in effect at the relevant time in the relevant jurisdiction), in each case subject to no Liens other than Permitted Collateral Liens. (c) When the U.S. Security Agreement or a short form thereof is filed in the United States Patent and Trademark Office and the United States Copyright Office, the Liens created by such U.S. Security Agreement shall constitute fully perfected Liens on, and security interests in, all right, title and interest of the grantors thereunder in the Intellectual Property Collateral (as defined in such Security Agreement) in which a security interest may be perfected under applicable U.S. law, in each case subject to no Liens other than Permitted Collateral Liens. (d) Each Mortgage granted by a U.S. Loan Party is effective to create, in favor of the Collateral Agent, for its benefit and the benefit of the Secured Parties, legal, valid and enforceable first priority Liens on, and security interests in, all of such U.S. Loan Party's right, title and interest in and to the U.S. Mortgaged Properties thereunder and the proceeds thereof, subject only to Permitted Collateral Liens or other Liens acceptable to the Collateral Agent, and when such Mortgages are filed in the offices specified on SCHEDULE 1.01(d) (or, in the case of any such Mortgage executed and delivered after the date thereof in accordance with the provisions of SECTIONS 5.10, 5.11 and 5.13, when such Mortgage is filed in the offices specified in the local counsel opinion delivered with respect thereto in accordance with the provisions of SECTIONS 5.10, 5.11 and 5.13), such Mortgages shall constitute fully perfected Liens on, and security interests in, all right, title and interest of the Loan Parties in the U.S. Mortgaged Properties and the proceeds thereof, in each case prior and superior in right to any other person, other than Liens permitted by such Mortgage. (e) Each Mortgage granted by a Canadian Loan Party is effective to create, in favor of the Collateral Agent or its sub-agent, for its benefit and the benefit of the Canadian Secured Parties, legal, valid and enforceable first priority Liens on, and security interests in, all of such Canadian Loan Party's right, title and interest in and to the Canadian Mortgaged Properties thereunder and the proceeds thereof, subject only to Permitted Collateral Liens or other Liens acceptable to the Collateral Agent, and when such Mortgages are filed in the offices specified on SCHEDULE 1.01(d) (or, in the case of any such -70- Mortgage executed and delivered after the date thereof in accordance with the provisions of SECTIONS 5.10 and 5.11, when such Mortgage is filed in the offices specified in the local counsel opinion delivered with respect thereto in accordance with the provisions of SECTIONS 5.10 and 5.11), such Mortgages shall constitute fully perfected Liens on, and security interests in, all right, title and interest of the Loan Parties in the Canadian Mortgaged Properties and the proceeds thereof, in each case prior and superior in right to any other person, other than Liens permitted by such Mortgage. (f) Each Security Document delivered pursuant to SECTIONS 5.10, 5.11 and 5.13 will, upon execution and delivery thereof, be effective to create in favor of the Collateral Agent, for the benefit of the applicable Secured Parties, legal, valid and enforceable Liens on, and security interests in, all of the Loan Parties' right, title and interest in and to the Collateral thereunder, and when all appropriate filings or recordings are made in the appropriate offices as may be required under applicable law, such Security Document will constitute fully perfected Liens on, and security interests in, all right, title and interest of the Loan Parties in such Collateral, in each case subject to no Liens other than the applicable Permitted Collateral Liens. SECTION 3.21 ACQUISITION DOCUMENTS; REPRESENTATIONS AND WARRANTIES IN ACQUISITION AGREEMENT. (a) SCHEDULE 3.21 lists (i) each exhibit, schedule, annex or other attachment to the Acquisition Agreement and (ii) each agreement, certificate, instrument, letter or other document contemplated by the Acquisition Agreement or any item referred to in clause (i) to be entered into, executed or delivered or to become effective in connection with the Acquisition or otherwise entered into, executed or delivered in connection with the Acquisition. The Lenders have been furnished true and complete copies of each Acquisition Document to the extent executed and delivered on or prior to the Closing Date. (b) All representations and warranties of each Company set forth in the Acquisition Agreement were true and correct in all material respects as of the time such representations and warranties were made and shall be true and correct in all material respects as of the Closing Date as if such representations and warranties were made on and as of such date, unless stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date. SECTION 3.22 ANTI-TERRORISM LAW. (a) No Loan Party and, to the knowledge of the Loan Parties, none of its Affiliates is in violation of any laws relating to terrorism or money laundering ("ANTI-TERRORISM LAWS"), including Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the "EXECUTIVE Order"), and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56. (b) No Loan Party and to the knowledge of the Loan Parties, no Affiliate or broker or other agent of any Loan Party acting or benefiting in any capacity in connection with the Loans is any of the following: (i) a person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (ii) a person owned or controlled by, or acting for or on behalf of, any person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; -71- (iv) a person that commits, threatens or conspires to commit or supports "terrorism" as defined in the Executive Order; or (v) a person that is named as a "specially designated national and blocked person" on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control ("OFAC") at its official website or any replacement website or other replacement official publication of such list. (c) No Loan Party and, to the knowledge of the Loan Parties, no broker or other agent of any Loan Party acting in any capacity in connection with the Loans (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any person described in paragraph (b) above, (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order, or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law. SECTION 3.23 SUBORDINATION OF SENIOR SUBORDINATED NOTES. The Obligations are "Senior Debt," the U.S. Guaranteed Obligations are "Guarantor Senior Debt" and the Obligations and U.S. Guaranteed Obligations are "Designated Senior Debt," in each case, within the meaning of the Senior Subordinated Note Documents. ARTICLE IV CONDITIONS TO CREDIT EXTENSIONS SECTION 4.01 CONDITIONS TO INITIAL CREDIT EXTENSION. The obligation of each Lender and, if applicable, each Issuing Bank to fund the initial Credit Extension requested to be made by it shall be subject to the prior or concurrent satisfaction of each of the conditions precedent set forth in this SECTION 4.01. (a) LOAN DOCUMENTS. All legal matters incident to this Agreement, the Credit Extensions hereunder and the other Loan Documents shall be reasonably satisfactory to the Lenders, to the Issuing Bank and to the Administrative Agent and there shall have been delivered to the Administrative Agent an executed counterpart of each of the Loan Documents and the Perfection Certificate. (b) CORPORATE DOCUMENTS. The Administrative Agent shall have received: (i) a certificate of the secretary or assistant secretary of each Loan Party dated the Closing Date, certifying (A) that attached thereto is a true and complete copy of each Organizational Document of such Loan Party certified (to the extent applicable) as of a recent date by the Secretary of State of the state of its organization, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Loan Party authorizing the execution, delivery and performance of the Loan Documents to which such person is a party and, in the case of each Borrower, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect and (C) as to the incumbency and specimen signature of each officer executing any Loan Document or any other document delivered in connection herewith on behalf of such Loan Party (together with a certificate of another officer as to the incumbency and specimen signature of the secretary or assistant secretary executing the certificate in this clause (i)); -72- (ii) a certificate as to the good standing of each Loan Party (in so-called "long-form" if available) as of a recent date, from such Secretary of State (or other applicable Governmental Authority); and (iii) such other documents as the Lenders, the Issuing Bank or the Administrative Agent may reasonably request. (c) OFFICERS' CERTIFICATE. The Administrative Agent shall have received a certificate, dated the Closing Date and signed by the chief executive officer and the chief financial officer of U.S. Borrower, confirming compliance with the conditions precedent set forth in this SECTION 4.01 and SECTIONS 4.02(b), (c) and (d). (d) FINANCINGS AND OTHER TRANSACTIONS, ETC. (i) The Transactions shall have been consummated or shall be consummated simultaneously on the Closing Date, in each case in all material respects in accordance with the terms hereof and the terms of the Transaction Documents, without the waiver or amendment of any such terms not approved by the Joint Lead Arrangers (such consent not to be unreasonably withheld). (ii) U.S. Borrower shall have received not less than $225.0 million in gross proceeds from the issuance and sale of the Senior Subordinated Notes, and the Senior Subordinated Note Agreement shall be in form and substance reasonably satisfactory to the Lenders. (iii) The Equity Financing shall have been consummated. The terms of the Equity Financing and the Rollover Equity shall not require any payments or other distributions of cash or property in respect thereof other than payments in kind, or any purchases, redemptions or other acquisitions thereof for cash or property other than payments in kind, in each case prior to the payment in full of all obligations under the Loan Documents and the Senior Subordinated Notes, except as permitted by the Loan Documents. (iv) The Refinancing shall have been consummated in full to the reasonable satisfaction of the Lenders with all liens in favor of the existing lenders being unconditionally released; the Administrative Agent shall have received a "pay-off" letter in form and substance reasonably satisfactory to the Administrative Agent with respect to all debt being refinanced in the Refinancing; and the Administrative Agent shall have received from any person holding any Lien securing any such debt, such UCC termination statements, mortgage releases, releases of assignments of leases and rents, releases of security interests in Intellectual Property and other instruments, in each case in proper form for recording, as the Administrative Agent shall have reasonably requested to release and terminate of record the Liens securing such debt. (e) FINANCIAL STATEMENTS, PRO FORMA BALANCE SHEET; PROJECTIONS. The Lenders shall have received and shall be reasonably satisfied with the form and substance of the financial statements described in SECTION 3.04(B) and with the forecasts of the financial performance of Parent and its Subsidiaries. (f) INDEBTEDNESS AND MINORITY INTERESTS. After giving effect to the Transactions and the other transactions contemplated hereby, no Company shall have outstanding any Indebtedness or preferred stock other than (i) the Loans and Credit Extensions hereunder, (ii) the Senior Subordinated Notes, (iii) the Indebtedness listed on SCHEDULE 6.01(b), (iv) the Assumed Debt and (v) Indebtedness owed to either Borrower or any Guarantor. -73- (g) OPINIONS OF COUNSEL. The Administrative Agent shall have received, on behalf of itself, the other Agents, the Arrangers, the Lenders and the Issuing Bank, a favorable written opinion of (i) Paul Weiss, Rifkind, Wharton & Garrison LLP, special counsel for the Loan Parties, substantially to the effect set forth in EXHIBIT N-1, (ii) each local counsel listed on SCHEDULE 4.01(g), substantially to the effect set forth in EXHIBIT N-2, and (iii) Bennett Jones LLP, Canadian counsel for the Loan Parties, substantially to the effect set forth in EXHIBIT N-3, in each case (A) dated the Closing Date and (B) addressed to the Agents, the Issuing Bank and the Lenders, and (iii) a copy of each legal opinion delivered under the other Transaction Documents, accompanied by reliance letters from the party delivering such opinion authorizing the Agents, Lenders and the Issuing Bank to rely thereon as if such opinion were addressed to them. (h) SOLVENCY CERTIFICATE. The Administrative Agent shall have received a solvency certificate in the form of EXHIBIT O, dated the Closing Date and signed by the treasurer or the chief financial officer of U.S. Borrower. (i) REQUIREMENTS OF LAW. The Lenders shall be satisfied that Parent, its Subsidiaries and the Transactions shall be in full compliance with all material Requirements of Law, including Regulations T, U and X of the Board, and shall have received reasonably satisfactory evidence of such compliance reasonably requested by them. (j) CONSENTS. The Lenders shall be reasonably satisfied that all requisite Governmental Authorities and third parties shall have approved or consented to the Transactions, and there shall be no governmental or judicial action, actual or threatened, that has or would have, singly or in the aggregate, a reasonable likelihood of restraining, preventing or imposing burdensome conditions on the Transactions or the other transactions contemplated hereby. (k) LITIGATION. There shall be no litigation, public or private, or administrative proceedings, governmental investigation or other legal or regulatory developments, actual or threatened, that, singly or in the aggregate, could reasonably be expected to result in a Material Adverse Effect, or could materially and adversely affect the ability of Holdings, Parent, U.S. Borrower and their respective Subsidiaries to fully and timely perform their respective obligations under the Transaction Documents, or the ability of the parties to consummate the financings contemplated hereby or the other Transactions. (l) SOURCES AND USES. The sources and uses of the Loans shall be as set forth in SECTION 3.12. (m) FEES. The Arrangers and the Administrative Agent shall have received all Fees and other amounts due and payable on or prior to the Closing Date, including reimbursement or payment of all out-of-pocket expenses (including the legal fees and expenses of Cahill Gordon & Reindel LLP, special counsel to the Agents, and the fees and expenses of any local counsel, foreign counsel, appraisers, consultants and other advisors) required to be reimbursed or paid by either Borrower hereunder or under any other Loan Document. (n) PERSONAL PROPERTY REQUIREMENTS. The Collateral Agent shall have received: (i) all certificates, agreements or instruments representing or evidencing the Securities Collateral accompanied by instruments of transfer and stock powers undated and endorsed in blank; (ii) the Intercompany Note executed by and among Parent and each of its Subsidiaries (other than Canadian Borrower) and the Canadian Intercompany Note executed by and among -74- Canadian Borrower, Parent and each of its Subsidiaries, each accompanied by instruments of transfer undated and endorsed in blank; (iii) all other certificates, agreements, including control agreements, or instruments necessary to perfect the Collateral Agent's security interest in all Chattel Paper, all Instruments, all Deposit Accounts and all Investment Property of each Loan Party (as each such term is defined in either Security Agreement and to the extent required by either Security Agreement); (iv) financing statements in appropriate form for filing under the UCC and PPSA, filings with the United States Patent and Trademark Office, and the United States Copyright Office and such other documents under applicable Requirements of Law in each jurisdiction as may be necessary or appropriate or, in the opinion of the Collateral Agent, desirable to perfect the Liens created, or purported to be created, by the Security Documents under the laws of the United States, Canada or any State or Province thereof and, with respect to all UCC financing statements required to be filed pursuant to the Loan Documents, evidence satisfactory to the Administrative Agent that U.S. Borrower has retained, at its sole cost and expense, a service provider acceptable to the Administrative Agent for the tracking of all such financing statements and notification to the Administrative Agent, of, among other things, the upcoming lapse or expiration thereof; (v) certified copies of UCC, PPSA, United States Patent and Trademark Office, United States Copyright Office, tax and judgment lien searches, bankruptcy and pending lawsuit searches or equivalent reports or searches, each of a recent date listing all effective financing statements, lien notices or comparable documents that name any Loan Party as debtor and that are filed in those state and county jurisdictions in which any property of any Loan Party is located and the state and county jurisdictions in which any Loan Party is organized or maintains its principal place of business and such other searches that the Collateral Agent deems necessary or appropriate, none of which encumber the Collateral covered or intended to be covered by the Security Documents (other than Permitted Collateral Liens or any other Liens acceptable to the Collateral Agent); (vi) with respect to each location set forth on SCHEDULE 4.01(n)(vi), a Landlord Access Agreement or Bailee Letter, as applicable; PROVIDED that no such Landlord Access Agreement shall be required with respect to any Real Property that could not be obtained after the Loan Party that is the lessee or owner of the inventory or other personal property Collateral stored with the bailee thereof, as applicable, shall have used all commercially reasonable efforts to do so; and (vii) evidence acceptable to the Collateral Agent of payment or arrangements for payment by the Loan Parties of all applicable recording taxes, fees, charges, costs and expenses required for the recording of the Security Documents. (o) REAL PROPERTY REQUIREMENTS. The Collateral Agent shall have received: (i) a Mortgage, encumbering each Mortgaged Property in favor of the Collateral Agent, for the benefit of the applicable Secured Parties, duly executed and acknowledged by each Loan Party that is the owner of or holder of any interest in such Mortgaged Property, and otherwise in form for recording in the recording office of each applicable political subdivision where each such Mortgaged Property is situated, together with such certificates, affidavits, questionnaires or returns as shall be required in connection with the recording or filing thereof to create a lien under applicable law, and such financing statements and any other instruments necessary to grant a mortgage lien under the laws of any applicable jurisdiction, all of which shall be in form and substance reasonably satisfactory to Collateral Agent; -75- (ii) with respect to each Mortgaged Property, such consents, approvals, amendments, supplements, estoppels, tenant subordination agreements or other instruments as necessary to consummate the Transactions or as shall reasonably be deemed necessary by the Collateral Agent in order for the owner or holder of the fee or leasehold interest constituting such Mortgaged Property to grant the Lien contemplated by the Mortgage with respect to such Mortgaged Property; (iii) with respect to each Mortgage, a policy of title insurance (or marked up title insurance commitment having the effect of a policy of title insurance) insuring the Lien of such Mortgage as a valid first mortgage Lien on the Mortgaged Property and fixtures described therein in the amount equal to not less than 115% of the fair market value of such Mortgaged Property and fixtures, which fair market value is set forth on SCHEDULE 4.01(o)(iii), which policy (or such marked-up commitment) (each, a "TITLE POLICY") shall (A) be issued by the Title Company, (B) to the extent necessary, include such reinsurance arrangements (with provisions for direct access, if necessary) as shall be reasonably acceptable to the Collateral Agent, (C) contain a "tie-in" or "cluster" endorsement, if available under applicable law (I.E., policies which insure against losses regardless of location or allocated value of the insured property up to a stated maximum coverage amount), (D) have been supplemented by such endorsements (or where such endorsements are not available, opinions of special counsel, architects or other professionals reasonably acceptable to the Collateral Agent) as shall be reasonably requested by the Collateral Agent (including endorsements on matters relating to usury, first loss, last dollar, zoning, contiguity, revolving credit, doing business, non-imputation, public road access, survey, variable rate, environmental lien, subdivision, separate tax lot revolving credit, and so-called comprehensive coverage over covenants and restrictions), and (E) contain no exceptions to title other than Permitted Collateral Liens and exceptions acceptable to the Collateral Agent; (iv) with respect to each Mortgaged Property, such affidavits, certificates, information (including financial data) and instruments of indemnification (including a so-called "gap" indemnification) as shall be required to induce the Title Company to issue the Title Policy/ies and endorsements contemplated above; (v) evidence reasonably acceptable to the Collateral Agent of payment by U.S. Borrower of all Title Policy premiums, search and examination charges, escrow charges and related charges, mortgage recording taxes, fees, charges, costs and expenses required for the recording of the Mortgages and issuance of the Title Policies referred to above; (vi) with respect to each Real Property or Mortgaged Property, copies of all Leases in which U.S. Borrower or any Subsidiary holds the lessor's interest or other agreements relating to possessory interests, if any. To the extent any of the foregoing affect any Mortgaged Property, such agreement shall be subordinate to the Lien of the Mortgage to be recorded against such Mortgaged Property, either expressly by its terms or pursuant to a subordination, non-disturbance and attornment agreement, and shall otherwise be acceptable to the Collateral Agent; (vii) with respect to each Mortgaged Property, each Company shall have made all notifications, registrations and filings, to the extent required by, and in accordance with, all Governmental Real Property Disclosure Requirements applicable to such Mortgaged Property; and (viii) Surveys with respect to each Mortgaged Property. (p) INSURANCE. The Administrative Agent shall have received a copy of, or a certificate as to coverage under, the insurance policies required by SECTION 5.04 and the applicable provisions of the Security Documents, each of which shall be endorsed or otherwise amended to include a "standard" or -76- "New York" lender's loss payable or mortgagee endorsement (as applicable) and shall name the Collateral Agent, on behalf of the Secured Parties, as additional insured, in form and substance satisfactory to the Administrative Agent. (q) NO MATERIAL CHANGE. No change shall have occurred since October 4, 2003, and no additional information shall be disclosed to or discovered by the Administrative Agent (including, without limitation, information contained in any review or report required to be provided to it in connection with this Agreement), which the Administrative Agent determines has had or could reasonably be expected to have a material adverse effect on the business, results of operations, condition (financial or otherwise), assets or liabilities of Parent, U.S. Borrower and their respective subsidiaries taken as a whole. SECTION 4.02 CONDITIONS TO ALL CREDIT EXTENSIONS. The obligation of each Lender and each Issuing Bank to make any Credit Extension (including the initial Credit Extension) shall be subject to, and to the satisfaction of, each of the conditions precedent set forth below. (a) NOTICE. The Administrative Agent shall have received a Borrowing Request as required by Section 2.03 (or such notice shall have been deemed given in accordance with SECTION 2.03) if Loans are being requested or, in the case of the issuance, amendment, extension or renewal of a Letter of Credit, the Issuing Bank and the Administrative Agent shall have received a notice requesting the issuance, amendment, extension or renewal of such Letter of Credit as required by SECTION 2.18(b) or, in the case of the Borrowing of a Swingline Loan, the Swingline Lender and the Administrative Agent shall have received a U.S. Borrowing Request as required by SECTION 2.17(b). (b) NO DEFAULT. The Borrowers and each other Loan Party shall be in compliance in all material respects with all the terms and provisions set forth herein and in each other Loan Document on its part to be observed or performed, and, at the time of and immediately after giving effect to such Credit Extension and the application of the proceeds thereof, no Default shall have occurred and be continuing on such date. (c) REPRESENTATIONS AND WARRANTIES. Each of the representations and warranties made by any Loan Party set forth in ARTICLE III hereof (other than, in the case of the initial Credit Extension only, SECTION 3.04(d)) or in any other Loan Document shall be true and correct in all material respects (except that any representation and warranty that is qualified as to "materiality" or "Material Adverse Effect" shall be true and correct in all respects) on and as of the date of such Credit Extension with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date. (d) NO LEGAL BAR. No order, judgment or decree of any Governmental Authority shall purport to restrain any Lender from making any Loans to be made by it. No injunction or other restraining order shall have been issued, shall be pending or noticed with respect to any action, suit or proceeding seeking to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated by this Agreement or the making of Loans hereunder. Each of the delivery of a Borrowing Request or notice requesting the issuance, amendment, extension or renewal of a Letter of Credit and the acceptance by a Borrower of the proceeds of such Credit Extension shall constitute a representation and warranty by such Borrower and each other Loan Party that on the date of such Credit Extension (both immediately before and after giving effect to such Credit Extension and the application of the proceeds thereof) the conditions contained in this SECTION 4.02 have been satisfied. Each Borrower shall provide such information (including calculations in reasonable -77- detail of the covenants in SECTION 6.10) as the Administrative Agent may reasonably request to confirm that the conditions in this SECTION 4.02 have been satisfied. ARTICLE V AFFIRMATIVE COVENANTS Each Loan Party warrants, covenants and agrees with each Lender that so long as this Agreement shall remain in effect and until the Commitments have been terminated and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document shall have been paid in full and all Letters of Credit have been canceled or have expired and all amounts drawn thereunder have been reimbursed in full, unless the Required Lenders shall otherwise consent in writing, each Loan Party will, and will cause each of its Subsidiaries to: SECTION 5.01 FINANCIAL STATEMENTS, REPORTS, ETC. Furnish to the Administrative Agent and each Lender: (a) ANNUAL REPORTS. As soon as available and in any event within 90 days after the end of each fiscal year (but no later than the date on which Parent would be required to file a Form 10-K under the Exchange Act if it were subject to Section 15 and 13(d) of the Exchange Act), (i) the consolidated balance sheet of Parent as of the end of such fiscal year and related consolidated statements of income, cash flows and stockholders' equity for such fiscal year, in comparative form with such financial statements as of the end of, and for, the preceding fiscal year, and notes thereto (including a note with a consolidating balance sheet and statements of income and cash flows separating out Parent, U.S. Borrower and the Subsidiaries), all prepared in accordance with Regulation S-X and accompanied by an opinion of Ernst & Young LLP or other independent public accountants of recognized national standing reasonably satisfactory to the Administrative Agent (which opinion shall not be qualified as to scope or contain any going concern or other qualification), stating that such financial statements fairly present, in all material respects, the consolidated financial condition, results of operations and cash flows of Parent as of the dates and for the periods specified in accordance with GAAP and (ii) a management's discussion and analysis of the financial condition and results of operations for such fiscal year, including a discussion of sales by product category, as compared to the previous fiscal year and budgeted amounts (it being understood that the information required by clause (i) may be furnished in the form of a Form 10-K); (b) QUARTERLY REPORTS. As soon as available and in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year (but no later than the date on which Parent would be required to file a Form 10-Q under the Exchange Act if it were subject to Section 15 and 13(d) of the Exchange Act), (i) the consolidated balance sheet of Parent as of the end of such fiscal quarter and related consolidated statements of income and cash flows for such fiscal quarter and for the then elapsed portion of the fiscal year, in comparative form with the consolidated statements of income and cash flows for the comparable periods in the previous fiscal year, and notes thereto (including a note with a consolidating balance sheet and statements of income and cash flows separating out Parent, U.S. Borrower and the Subsidiaries), all prepared in accordance with Regulation S-X under the Securities Act and accompanied by a certificate of a Financial Officer stating that such financial statements fairly present, in all material respects, the consolidated financial condition, results of operations and cash flows of Parent as of the date and for the periods specified in accordance with GAAP consistently applied, and on a basis consistent with audited financial statements referred to in clause (a) of this Section, subject to normal year-end audit adjustments and (ii) a management's discussion and analysis of the financial condition -78- and results of operations for such fiscal quarter and the then elapsed portion of the fiscal year, including a discussion of sales by product category, as compared to the comparable periods in the previous fiscal year and budgeted amounts (it being understood that the information required by clause (i) may be furnished in the form of a Form 10-Q); (c) FINANCIAL OFFICER'S CERTIFICATE. (i) Concurrently with any delivery of financial statements under SECTION 5.01(a) or (b) above, a Compliance Certificate certifying that no Default has occurred or, if such a Default has occurred, specifying the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto; (ii) concurrently with any delivery of financial statements under SECTION 5.01 (a) or (b) above, a Compliance Certificate setting forth computations in reasonable detail satisfactory to the Administrative Agent demonstrating compliance with the covenants contained in SECTIONS 6.07(f) and 6.10 (including the aggregate amount of Excluded Issuances for such period and the uses therefor) and, in the case of SECTION 5.01(a) above, setting forth U.S. Borrower's calculation of Excess Cash Flow; and (iii) in the case of SECTION 5.01(a) above, a report of the accounting firm opining on or certifying such financial statements stating that in the course of its regular audit of the financial statements of Parent and its Subsidiaries, which audit was conducted in accordance with GAAP, such accounting firm obtained no knowledge that any Default insofar as it relates to financial or accounting matters has occurred or, if in the opinion of such accounting firm such a Default has occurred, specifying the nature and extent thereof; (d) FINANCIAL OFFICER'S CERTIFICATE REGARDING COLLATERAL. Concurrently with any delivery of financial statements under SECTION 5.01(a) above, a certificate of a Financial Officer setting forth the information required pursuant to the Perfection Certificate Supplement or confirming that there has been no change in such information since the date of the Perfection Certificate or latest Perfection Certificate Supplement; (e) PUBLIC REPORTS. Promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by any Company with the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, or distributed to holders of its Indebtedness pursuant to the terms of the documentation governing such Indebtedness (or any trustee, agent or other representative therefor), as the case may be; (f) MANAGEMENT LETTERS. Promptly after the receipt thereof by any Company, a copy of any final "management letter" received by any such person from its certified public accountants and the management's responses thereto; (g) BUDGETS. No later than 30 days after the first day of each fiscal year of Parent and U.S. Borrower, a budget in form reasonably satisfactory to the Administrative Agent (including budgeted statements of income for each of U.S. Borrower's business units and sources and uses of cash and balance sheets and a projection of sales by product category) prepared by each of Parent and U.S. Borrower, respectively, for each quarter of such fiscal year prepared in summary form, in each case, of Parent, Borrower and their respective subsidiaries, with appropriate presentation and discussion of the principal assumptions upon which such budgets are based, accompanied by the statement of a Financial Officer of each of Parent and U.S. Borrower to the effect that the budget of Parent and U.S. Borrower, respectively, is a reasonable estimate for the period covered thereby and, promptly when available, any significant revisions of such budget; -79- (h) ORGANIZATION. Within 90 days after the close of each fiscal year of Parent, Parent shall deliver an accurate organization chart as required by SECTION 3.07(c), or confirm that there are no changes to SCHEDULE 3.07(c); (i) ORGANIZATIONAL DOCUMENTS. Promptly provide copies of any Organizational Documents that have been amended or modified in accordance with the terms hereof and deliver a copy of any notice of default given or received by any Company under any Organizational Document within 15 days after such Company gives or receives such notice; and (j) OTHER INFORMATION. Promptly, from time to time, such other information regarding the operations, business affairs and financial condition of any Company, or compliance with the terms of any Loan Document, as the Administrative Agent or any Lender may reasonably request. SECTION 5.02 LITIGATION AND OTHER NOTICES. Furnish to the Administrative Agent and each Lender written notice of the following promptly (and, in any event, within three Business Days of any Company becoming aware thereof): (a) any Default, specifying the nature and extent thereof and the corrective action (if any) taken or proposed to be taken with respect thereto; (b) the filing or commencement of, or any threat or notice of intention of any person to file or commence, any action, suit, litigation or proceeding, whether at law or in equity by or before any Governmental Authority, (i) against any Company or any Affiliate thereof that could reasonably be expected to result in a Material Adverse Effect or (ii) with respect to any Loan Document; (c) any development that has resulted in, or could reasonably be expected to result in a Material Adverse Effect; (d) the occurrence of a Casualty Event in excess of $5.0 million; and (e) (i) the incurrence of any material Lien (other than Permitted Collateral Liens) on, or claim asserted against any of the Collateral or (ii) the occurrence of any other event which could materially affect the value of the Collateral. SECTION 5.03 EXISTENCE; BUSINESSES AND PROPERTIES. (a) Do or cause to be done all things necessary to preserve, renew and maintain in full force and effect its legal existence, except as otherwise expressly permitted under SECTION 6.05 or SECTION 6.06 or, in the case of any Subsidiary, where the failure to perform such obligations, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. (b) Do or cause to be done all things necessary to obtain, preserve, renew, extend and keep in full force and effect the rights, licenses, permits, privileges, franchises, authorizations, patents, copyrights, trademarks and trade names material to the conduct of its business; comply with all applicable Requirements of Law (including any and all zoning, building, Environmental Law, ordinance, code or approval or any building permits or any restrictions of record or agreements affecting the Real Property) and decrees and orders of any Governmental Authority, whether now in effect or hereafter enacted, except where the failure to comply, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect; pay and perform its obligations under all Leases and Transaction Documents except, in the case of all such documents other than the Loan Documents, where the -80- failure to comply, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect; and at all times maintain, preserve and protect all property material to the conduct of such business and keep such property in good repair, working order and condition (other than wear and tear occurring in the ordinary course of business) and from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith may be properly conducted at all times; PROVIDED that nothing in this SECTION 5.03(b) shall prevent (i) sales of property, consolidations or mergers by or involving any Company in accordance with SECTION 6.05 or SECTION 6.06; (ii) the withdrawal by any Company of its qualification as a foreign corporation in any jurisdiction where such withdrawal, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect; or (iii) the abandonment by any Company of any rights, franchises, licenses, trademarks, trade names, copyrights or patents that such person reasonably determines are not useful to its business or no longer commercially desirable. SECTION 5.04 INSURANCE. (a) Keep its insurable property adequately insured at all times by financially sound and reputable insurers; maintain such other insurance, to such extent and against such risks as is customary with companies in the same or similar businesses operating in the same or similar locations, including insurance with respect to Mortgaged Properties and other properties material to the business of the Companies against such casualties and contingencies and of such types and in such amounts with such deductibles as is customary in the case of similar businesses operating in the same or similar locations, including (i) physical hazard insurance on an "all risk" basis, (ii) commercial general liability against claims for bodily injury, death or property damage covering any and all insurable claims, (iii) explosion insurance in respect of any boilers, machinery or similar apparatus constituting Collateral, (iv) business interruption insurance, (v) worker's compensation insurance and such other insurance as may be required by any Requirement of Law and (vi) such other insurance against risks as the Administrative Agent may from time to time require (such policies to be in such form and amounts and having such coverage as may be reasonably satisfactory to the Administrative Agent and the Collateral Agent); PROVIDED that with respect to physical hazard insurance, neither the Collateral Agent nor the applicable Company shall agree to the adjustment of any claim thereunder without the consent of the other (such consent not to be unreasonably withheld or delayed); PROVIDED, FURTHER, that no consent of any Company shall be required during an Event of Default. (b) All such insurance shall (i) provide that no cancellation, material reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by the Collateral Agent of written notice thereof, (ii) name the Collateral Agent as mortgagee (in the case of property insurance) or additional insured on behalf of the applicable Secured Parties (in the case of liability insurance) or loss payee (in the case of property insurance), as applicable, (iii) if reasonably requested by the Collateral Agent, include a breach of warranty clause and (iv) be reasonably satisfactory in all other respects to the Collateral Agent. (c) Notify the Administrative Agent and the Collateral Agent immediately whenever any separate insurance concurrent in form or contributing in the event of loss with that required to be maintained under this SECTION 5.04 is taken out by any Company; and promptly deliver to the Administrative Agent and the Collateral Agent a duplicate original copy of such policy or policies. (d) With respect to each U.S. Mortgaged Property, obtain flood insurance in such total amount as the Administrative Agent or the Required Lenders may from time to time require, if at any time the area in which any improvements located on any Mortgaged Property is designated a "flood hazard area" in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency), and otherwise comply with the National Flood Insurance Program as set forth in the Flood Disaster Protection Act of 1973, as amended from time to time. -81- (e) Deliver to the Administrative Agent and the Collateral Agent and the Lenders a report of a reputable insurance broker with respect to such insurance and such supplemental reports with respect thereto as the Administrative Agent or the Collateral Agent may from time to time reasonably request. (f) No Loan Party that is an owner of Mortgaged Property shall take any action that is reasonably likely to be the basis for termination, revocation or denial of any insurance coverage required to be maintained under such Loan Party's respective Mortgage or that could be the basis for a defense to any claim under any Insurance Policy maintained in respect of the Premises, and each Loan Party shall otherwise comply in all material respects with all Insurance Requirements in respect of the Premises; PROVIDED, HOWEVER, that each Loan Party may, at its own expense and after written notice to the Administrative Agent, (i) contest the applicability or enforceability of any such Insurance Requirements by appropriate legal proceedings, the prosecution of which does not constitute a basis for cancellation or revocation of any insurance coverage required under this SECTION 5.04 or (ii) cause the Insurance Policy containing any such Insurance Requirement to be replaced by a new policy complying with the provisions of this SECTION 5.04. SECTION 5.05 OBLIGATIONS AND TAXES. (a) Pay its material Indebtedness and other material obligations promptly and in accordance with their terms and pay and discharge promptly when due all Taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or in respect of its property, before the same shall become delinquent or in default, as well as all lawful claims for labor, services, materials and supplies or otherwise that, if unpaid, might give rise to a Lien other than a Permitted Lien upon such properties or any part thereof; PROVIDED that such payment and discharge shall not be required with respect to any such Tax, assessment, charge, levy or claim so long as (i) the validity or amount thereof shall be contested in good faith by appropriate proceedings timely instituted and diligently conducted and the applicable Company shall have set aside on its books adequate reserves or other appropriate provisions with respect thereto in accordance with GAAP and such contested amounts, individually or in the aggregate, are not reasonably expected to have a Material Adverse Effect, (ii) such contest operates to suspend collection of the contested obligation, Tax, assessment or charge and enforcement of a Lien other than a Permitted Lien and (iii) in the case of Collateral, the applicable Company shall have otherwise complied with the Contested Collateral Lien Conditions. (b) Timely and correctly file all material Tax Returns required to be filed by it. Withhold, collect and remit all Taxes that it is required to collect, withhold or remit. (c) U.S. Borrower does not intend to treat the Loans as being a "reportable transaction" within the meaning of Treasury Regulation Section 1.6011-4. In the event U.S. Borrower determines to take any action inconsistent with such intention, it will promptly notify the Administrative Agent thereof. SECTION 5.06 EMPLOYEE BENEFITS. (a) Comply in all material respects with the applicable provisions of ERISA and the Code and (b) furnish to the Administrative Agent (x) as soon as possible after, and in any event within 10 days after any Responsible Officer of any Company or any ERISA Affiliates of any Company knows or has reason to know that, any ERISA Event has occurred that, alone or together with any other ERISA Event could reasonably be expected to result in liability of the Companies or any of their ERISA Affiliates in an aggregate amount exceeding $1.0 million or the imposition of a Lien, a statement of a Financial Officer of U.S. Borrower setting forth details as to such ERISA Event and the action, if any, that the Companies propose to take with respect thereto, and (y) upon request by the Administrative Agent, copies of (i) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by any Company or any ERISA Affiliate with the Internal Revenue Service with respect to each Plan; (ii) the most recent actuarial valuation report for each Plan; (iii) all notices received -82- by any Company or any ERISA Affiliate from a Multiemployer Plan sponsor or any governmental agency concerning an ERISA Event; and (iv) such other documents or governmental reports or filings relating to any Plan (or employee benefit plan sponsored or contributed to by any Company) as the Administrative Agent shall reasonably request. SECTION 5.07 MAINTAINING RECORDS; ACCESS TO PROPERTIES AND INSPECTIONS; ANNUAL MEETINGS. (a) Keep proper books of record and account in which full, true and correct entries in conformity with GAAP and all Requirements of Law are made of all dealings and transactions in relation to its business and activities. Each Company will permit any representatives designated by the Administrative Agent or any Lender to visit and inspect the financial records and the property of such Company at reasonable times and as often as reasonably requested and to make extracts from and copies of such financial records, and permit any representatives designated by the Administrative Agent or any Lender to discuss the affairs, finances, accounts and condition of any Company with the officers and employees thereof and advisors therefor (including independent accountants). (b) Within 120 days after the close of each fiscal year of the Companies, at the request of the Administrative Agent or Required Lenders, hold a meeting (at a mutually agreeable location and time or, at the option of the Administrative Agent, by conference call) with all Lenders who choose to attend such meeting at which meeting shall be reviewed the financial results of the previous fiscal year and the financial condition of the Companies and the budgets presented for the current fiscal year of the Companies. SECTION 5.08 USE OF PROCEEDS. Use the proceeds of the Loans only for the purposes set forth in SECTION 3.12 and request the issuance of Letters of Credit only for the purposes set forth in the definition of Commercial Letter of Credit or Standby Letter of Credit, as the case may be. SECTION 5.09 COMPLIANCE WITH ENVIRONMENTAL LAWS; ENVIRONMENTAL REPORTS. (a) Comply, and cause all lessees and other persons occupying Real Property owned, operated or leased by any Company to comply, in all material respects with all Environmental Laws and Environmental Permits applicable to its operations and Real Property; obtain and renew all material Environmental Permits applicable to its operations and Real Property; and conduct all Responses required by, and in accordance with, Environmental Laws; PROVIDED that no Company shall be required to undertake any Response to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances in accordance with GAAP. (b) If a Default caused by reason of a breach of SECTION 3.18 or SECTION 5.09(a) shall have occurred and be continuing for more than 20 days without the Companies commencing activities reasonably likely to cure such Default, at the written request of the Administrative Agent or the Required Lenders through the Administrative Agent, provide to the Lenders within 45 days after such request, at the expense of U.S. Borrower, an environmental assessment report regarding the matters which are the subject of such Default, including, where appropriate, any soil and/or groundwater sampling, prepared by an environmental consulting firm and, in the form and substance, reasonably acceptable to the Administrative Agent and indicating the presence or absence of Hazardous Materials and the estimated cost of any compliance or Response to address them. (c) Each Loan Party that is an owner of Mortgaged Property shall not install nor permit to be installed in the Mortgaged Property any Hazardous Materials, other than in compliance with applicable Environmental Laws. SECTION 5.10 ADDITIONAL COLLATERAL; ADDITIONAL GUARANTORS. (a) Subject to this SECTION 5.10, with respect to any property acquired after the Closing Date by any Loan Party that is -83- intended to be subject to the Lien created by any of the Security Documents but is not so subject, promptly (and in any event within 30 days after the acquisition thereof) (i) execute and deliver to the Administrative Agent and the Collateral Agent such amendments or supplements to the relevant Security Documents or such other documents as the Administrative Agent or the Collateral Agent shall deem reasonably necessary or advisable to grant to the Collateral Agent, for its benefit and for the benefit of the other applicable Secured Parties, a Lien on such property subject to no Liens other than Permitted Collateral Liens, and (ii) take all actions necessary to cause such Lien to be duly perfected to the extent required by such Security Document in accordance with all applicable Requirements of Law, including the filing of financing statements in such jurisdictions as may be reasonably requested by the Administrative Agent. The Borrowers shall otherwise take such actions and execute and/or deliver to the Collateral Agent such documents as the Administrative Agent or the Collateral Agent shall reasonably require to confirm the validity, perfection and priority of the Lien of the Security Documents against such after-acquired properties. (b) With respect to any person that is or becomes a U.S. Subsidiary after the Closing Date, promptly (and in any event within 30 days after such person becomes a U.S. Subsidiary) (i) deliver to the Collateral Agent the certificates, if any, representing all of the Equity Interests of such U.S. Subsidiary owned by Parent or any of its Subsidiaries, together with undated stock powers or other appropriate instruments of transfer executed and delivered in blank by a duly authorized officer of the holder(s) of such Equity Interests, and all intercompany notes owing from such U.S. Subsidiary to any Loan Party together with instruments of transfer executed and delivered in blank by a duly authorized officer of such Loan Party and (ii) cause such new U.S. Subsidiary (A) to execute a Joinder Agreement or such comparable documentation to become a U.S. Subsidiary Guarantor and a joinder agreement to the U.S. Security Agreement, substantially in the form annexed thereto or, in the case of a Foreign Subsidiary (other than a Canadian Subsidiary), execute a security agreement compatible with the laws of such Foreign Subsidiary's jurisdiction in form and substance reasonably satisfactory to the Administrative Agent, and (B) to take all actions necessary or advisable in the opinion of the Administrative Agent or the Collateral Agent to cause the Lien created by the U.S. Security Agreement to be duly perfected to the extent required by such agreement in accordance with all applicable Requirements of Law, including the filing of financing statements in such jurisdictions as may be reasonably requested by the Administrative Agent or the Collateral Agent. Notwithstanding the foregoing, (1) the Equity Interests required to be delivered to the Collateral Agent pursuant to clause (i) of this SECTION 5.10(b) shall not include any Equity Interests of a Foreign Subsidiary created or acquired after the Closing Date and (2) no Foreign Subsidiary shall be required to take the actions specified in clause (ii) of this SECTION 5.10(b), if, in the case of either clause (1) or (2), doing so would constitute an investment of earnings in United States property under Section 956 (or a successor provision) of the Code, which investment would or could reasonably be expected to trigger a NON DE MINIMIS increase in the net income of a United States shareholder of such Subsidiary pursuant to Section 951 (or a successor provision) of the Code, as reasonably determined by the Administrative Agent; PROVIDED that this exception shall not apply to (A) Voting Stock of any Subsidiary which is a first-tier controlled foreign corporation (as defined in Section 957(a) of the Code) representing 65% of the total voting power of all outstanding Voting Stock of such Subsidiary and (B) 100% of the Equity Interests not constituting Voting Stock of any such Subsidiary, except that any such Equity Interests constituting "stock entitled to vote" within the meaning of Treasury Regulation Section 1.956-2(c)(2) shall be treated as Voting Stock for purposes of this SECTION 5.10(b). (c) With respect to any person that is or becomes a Canadian Subsidiary after the Closing Date, promptly (and in any event within 30 days after such person becomes a Canadian Subsidiary) (i) deliver to the Collateral Agent, a pledge agreement in a form reasonably satisfactory to the Collateral Agent, the certificates, if any, representing all of the Equity Interests of such Canadian Subsidiary owned by Canadian Borrower or a Canadian Subsidiary, together with undated stock powers or other appropriate instruments of transfer executed and delivered in blank by a duly authorized officer of the -84- holder(s) of such Equity Interests, and all intercompany notes owing from such Canadian Subsidiary to any Loan Party together with instruments of transfer executed and delivered in blank by a duly authorized officer of such Loan Party and (ii) cause such new Subsidiary (A) to execute a Joinder Agreement or such comparable documentation to become a Canadian Subsidiary Guarantor and a joinder agreement to the Canadian Security Agreement, substantially in the form annexed thereto or, in the case of a Subsidiary not organized under the laws of Canada, execute a security agreement compatible with the laws of such Subsidiary's jurisdiction in form and substance reasonably satisfactory to the Administrative Agent, and (B) to take all actions necessary or advisable in the opinion of the Administrative Agent or the Collateral Agent to cause the Lien created by such security document to be duly perfected to the extent required by such agreement in accordance with all applicable Requirements of Law, including the filing of financing statements in such jurisdictions as may be reasonably requested by the Administrative Agent or the Collateral Agent. (d) Promptly grant to the Collateral Agent, within 60 days of the acquisition thereof, a security interest in and Mortgage on (i) each Real Property owned in fee by such U.S. Loan Party as is acquired by such U.S. Loan Party after the Closing Date and that, together with any improvements thereon, individually has a fair market value of at least $1.0 million, and (ii) unless the Collateral Agent otherwise consents, each leased Real Property of such U.S. Loan Party which lease individually has a fair market value of at least $1.0 million, in each case, as additional security for the Obligations (unless the subject property is already mortgaged to a third party to the extent permitted by SECTION 6.02). Such Mortgages shall be granted pursuant to documentation reasonably satisfactory in form and substance to the Administrative Agent and the Collateral Agent and shall constitute valid and enforceable perfected Liens subject only to Permitted Collateral Liens or other Liens acceptable to the Collateral Agent. The Mortgages or instruments related thereto shall be duly recorded or filed in such manner and in such places as are required by law to establish, perfect, preserve and protect the Liens in favor of the Collateral Agent required to be granted pursuant to the Mortgages and all taxes, fees and other charges payable in connection therewith shall be paid in full. Such U.S. Loan Party shall otherwise take such actions and execute and/or deliver to the Collateral Agent such documents as the Administrative Agent or the Collateral Agent shall require to confirm the validity, perfection and priority of the Lien of any existing Mortgage or new Mortgage against such after-acquired Real Property (including a Title Policy, a Survey and local counsel opinion (in form and substance reasonably satisfactory to the Administrative Agent and the Collateral Agent) in respect of such Mortgage). (e) Promptly grant to the Collateral Agent, within 60 days of the acquisition thereof, a security interest in and Mortgage creating a Lien on (i) each Real Property owned in fee by such Canadian Loan Party as is acquired by such Canadian Loan Party after the Closing Date and that, together with any improvements thereon, individually has a fair market value of at least $1.0 million, and (ii) unless the Collateral Agent otherwise consents, each leased Real Property of such Canadian Loan Party which lease individually has a fair market value of at least $1.0 million, in each case, as additional security for the Obligations (unless the subject property is already mortgaged to a third party to the extent permitted by SECTION 6.02). Such Mortgages shall be granted pursuant to documentation reasonably satisfactory in form and substance to the Administrative Agent and the Collateral Agent and shall constitute valid and enforceable perfected Liens subject only to Permitted Collateral Liens or other Liens acceptable to the Collateral Agent. The Mortgages or instruments related thereto shall be duly recorded or filed in such manner and in such places as are required by law to establish, perfect, preserve and protect the Liens in favor of the Collateral Agent required to be granted pursuant to the Mortgages and all taxes, fees and other charges payable in connection therewith shall be paid in full. Such Canadian Loan Party shall otherwise take such actions and execute and/or deliver to the Collateral Agent such documents as the Administrative Agent or the Collateral Agent shall require to confirm the validity, perfection and priority of the Lien of any existing Mortgage or new Mortgage against such after-acquired Real Property (including a Title Policy (if available in the relevant jurisdiction), Survey and local counsel opinion (including as to -85- title if a Title Policy is unavailable and otherwise in form and substance reasonably satisfactory to the Administrative Agent and the Collateral Agent) in respect of such Mortgage). (f) The parties hereto agree that the provisions of this SECTION 5.10 (other than this Section 5.10(f)) shall not apply to Non-Guarantor Subsidiaries. Either Borrower may designate any of its Subsidiaries acquired or formed after the Closing Date as a Non-Guarantor Subsidiary by written notice to the Administrative Agent; PROVIDED, HOWEVER, that if at any time any Non-Guarantor Subsidiary or group of Non-Guarantor Subsidiaries in the aggregate (other than any Foreign Subsidiary that is not required to take the actions specified in SECTION 5.10(b)(ii) by operation of the last sentence of SECTION 5.10(b)) not otherwise subject to SECTION 5.10(b) has assets with either a book value or fair market value in excess of $1.0 million, then such Borrower shall, and shall cause one or more of such Subsidiaries to, comply with SECTION 5.10(b) within the time frames set forth therein so that no Non-Guarantor Subsidiary or group of Non-Guarantor Subsidiaries in the aggregate holds property having either a book value or fair market value in excess of $1.0 million. SECTION 5.11 SECURITY INTERESTS; FURTHER ASSURANCES. Promptly, upon the reasonable request of the Administrative Agent, the Collateral Agent or any Lender, at U.S. Borrower's expense, execute, acknowledge and deliver, or cause the execution, acknowledgment and delivery of, and thereafter register, file or record, or cause to be registered, filed or recorded, in an appropriate governmental office, any document or instrument supplemental to or confirmatory of the Security Documents or otherwise deemed by the Administrative Agent or the Collateral Agent reasonably necessary or desirable for the continued validity, perfection and priority of the Liens on the Collateral covered thereby subject to no other Liens except as permitted by the applicable Security Document, or obtain any consents or waivers as may be necessary or appropriate in connection therewith. Deliver or cause to be delivered to the Administrative Agent and the Collateral Agent from time to time such other documentation, consents, authorizations, approvals and orders in form and substance reasonably satisfactory to the Administrative Agent and the Collateral Agent as the Administrative Agent and the Collateral Agent shall reasonably deem necessary to perfect or maintain the Liens on the Collateral pursuant to the Security Documents. Upon the exercise by the Administrative Agent, the Collateral Agent or the Required Lenders of any power, right, privilege or remedy pursuant to any Loan Document which requires any consent, approval, registration, qualification or authorization of any Governmental Authority execute and deliver all applications, certifications, instruments and other documents and papers that the Administrative Agent, the Collateral Agent or the Required Lenders may require. If the Administrative Agent, the Collateral Agent or the Required Lenders reasonably determine that they are required by law or regulation to have appraisals prepared in respect of the Real Property of any Loan Party constituting Collateral, the Borrowers shall provide to the Administrative Agent appraisals that satisfy the applicable requirements of the Real Estate Appraisal Reform Amendments of FIRREA or other applicable law and are otherwise in form and substance reasonably satisfactory to the Administrative Agent and the Collateral Agent. SECTION 5.12 INFORMATION REGARDING COLLATERAL. (a) Not effect any change (i) in any Loan Party's legal name, (ii) in the location of any Loan Party's chief executive office, (iii) in any Loan Party's identity or organizational structure, (iv) in any Loan Party's Federal Taxpayer Identification Number or organizational identification number, if any, (v) in any Loan Party's jurisdiction of organization (in each case, including by merging with or into any other entity, reorganizing, dissolving, liquidating, reorganizing or organizing in any other jurisdiction) or (vi) in the case of tangible personal property in Canada, the Province in which such property is located, unless a PPSA financing statement has already been filed in respect of the Loan Party in the province to which the property is re-located until (A) it shall have given the Collateral Agent and the Administrative Agent not less than 30 days' prior written notice (in the form of an Officers' Certificate), or such lesser notice period agreed to by the Collateral Agent, of its intention so to do, clearly describing such change and providing such other information in connection therewith as the Collateral Agent or the Administrative Agent may reasonably request -86- and (B) it shall have taken all action reasonably satisfactory to the Collateral Agent to maintain the perfection and priority of the security interest of the Collateral Agent for the benefit of the Secured Parties in the Collateral, if applicable. Each Loan Party agrees to promptly provide the Collateral Agent with certified Organizational Documents reflecting any of the changes described in the preceding sentence. Each Loan Party also agrees to promptly notify the Collateral Agent of any change in the location of any office in which it maintains books or records relating to Collateral owned by it or any office or facility at which Collateral is located (including the establishment of any such new office or facility), other than changes in location to a Mortgaged Property or a leased property subject to a Landlord Access Agreement. (b) Concurrently with the delivery of financial statements pursuant to SECTION 5.01(a), deliver to the Administrative Agent and the Collateral Agent a Perfection Certificate Supplement and a certificate of a Financial Officer and the chief legal officer of U.S. Borrower certifying that all UCC financing statements (including fixture filings, as applicable) or other appropriate filings, recordings or registrations, including all refilings, rerecordings and reregistrations, containing a description of the Collateral have been filed of record in each governmental, municipal or other appropriate office in each jurisdiction necessary to protect and perfect the security interests and Liens under the Security Documents for a period of not less than 18 months after the date of such certificate (except as noted therein with respect to any continuation statements to be filed within such period). SECTION 5.13 POST-CLOSING MATTERS. (a) The applicable Loan Parties shall use their commercially reasonable efforts to obtain and deliver to the Collateral Agent (unless waived or extended by the Collateral Agent in its discretion), within the time periods set forth below, to the extent such items have not provided as of the Closing Date, the following: (i) Landlord Access Agreements for the Real Properties located at 10228 Governor Lane Boulevard, Williamsport, MD; 1600 N. State Rte 291, Carefree Industrial Park, Independence, MO; 6th Avenue SW, Medicine Hat, Alberta, Canada; and 666 Henderson Drive, Regina, Saskatoon, Saskatchewan, Canada, each in form and substance reasonably acceptable to the Collateral Agent, unless the Collateral Agent, in its reasonable judgment, waives such delivery, with respect to each of the leased Real Properties set forth in this clause (i), within forty-five (45) days after the Closing Date; (ii) the property owners' consents to leasehold mortgage financing, on terms and conditions reasonably satisfactory to the Collateral Agent, with respect to the property located at 1274 Industrial Boulevard, Jasper, TN, within forty five (45) days after the Closing Date, and if such consent is so obtained, the applicable Loan Party will deliver to Collateral Agent, within thirty (30) days thereafter, with respect to the same, the following: (1) a duly executed and acknowledged Mortgage, financing statements and other instruments meeting the requirements of Section 4.01(o)(i) hereof; (2) such consents, approvals, amendments, supplements, estoppels, tenant subordination agreements or other instruments as required by Section 4.01(o)(ii); (3) a policy of title insurance meeting the requirements of Section 4.01(o)(iii); (4) policies or certificates of insurance as required by Section 4.01(p); (5) a Survey meeting the requirements of the definition of "Survey" contained in this Agreement; -87- (6) such affidavits, certificates, information (including financial data) and instruments of indemnification (including, without limitation, a so-called "gap" indemnification) as required by Section 4.01(o)(iv); (7) evidence of payment of all applicable premiums, charges, costs, taxes, etc. as required by Section 4.01(o)(v); (8) copies of all leases or other agreements, and subordination of such, as required by Section 4.01(o)(vi); (9) the notices, registration and filings required by Section 4.01(o)(vii); and (10) favorable written opinions of local counsel in the states in which each such Real Property is located, as required by Section 4.01(g); and if such consent to leasehold mortgage financing, set forth in this Section 5.13(a)(ii), is so obtained, the Mortgage and policy of title insurance referred to in clauses (1) and (3), respectively, shall be in the amount of $1,109,750; and (iii) consents to mortgage, or other secured, financing (which consents shall be in form and substance reasonably satisfactory to the Collateral Agent) of Napco, Inc.'s interest, as contract purchaser, under that certain Installment Sale Agreement dated April 16, 1996 between Napco, Inc. and the Community Development Corporation of Butler County, Pennsylvania ("CDC") (as seller thereunder) providing for the sale of certain premises (the "BUTLER PROPERTY") located in Butler, Pennsylvania and more particularly described in a Memorandum of Installment Sale Agreement dated April 16, 1996 and recorded in the Recorder's Office of Butler County, Pennsylvania on April 19, 1996 in Book 2618 at Page 629 (the "INSTALLMENT CONTRACT"), from (x) CDC under the Installment Contract and any related documentation, (y) The Pennsylvania Industrial Development Authority, as holder of one or more mortgages encumbering the Butler Property and (z) any other secured lender which has a mortgage or other security interest in the Butler Property or the Installment Contract, with ninety (90) days after the Closing Date, and if such consents are so obtained, Napco Inc. will deliver to Collateral Agent, within thirty (30) days thereafter, the documents, instruments, opinions and other items set forth in subsection (a)(ii)(1) through (10) of this Section; PROVIDED that the Collateral Agent, in its sole judgment, may require a collateral assignment of, or other security interest in, the Installment Contract in lieu of the Mortgage set forth in subsection (a)(ii)(1), but in such case the applicable Loan Party shall not be required to seek a second consent thereto. (b) If the applicable Loan Party which is the tenant under that certain lease for the Real Property located at 2121 Woodville Road, Oregon, Ohio, more particularly described in SCHEDULE 3.05(b), does not terminate such lease and vacate such Real Property on or before June 30, 2004, such Loan Party shall use commercially reasonable efforts to obtain within forty five (45) days thereafter, the property owner's consent to leasehold mortgage financing on terms and conditions reasonably satisfactory to Collateral Agent), and if such consent is so obtained, the applicable Loan Party shall deliver to Collateral Agent, within thirty (30) days thereafter, the documents, instruments, opinions and other items set forth in subsection (a)(ii)(1) through (10) of this Section. (c) If while any Obligations are outstanding, the mortgage(s) or deed(s) of trust encumbering, as of the Closing Date, any of the Real Properties identified on SCHEDULE 5.13(c) (which mortgage(s) or deed(s) of trust are more particularly described in the applicable title commitments referred to in SCHEDULE 6.02(c)) are satisfied or released, the applicable Loan Party shall deliver to Collat- -88- eral Agent with respect to any such Real Property, within thirty (30) days thereafter, the documents, instruments, opinions and other items set forth in subsection (a)(ii)(1) through (10) of this Section. (d) The applicable Loan Party shall obtain and deliver to the Collateral Agent, within ten (10) Business Days after the Closing Date, unless waived or extended by the Collateral Agent in its discretion (x) a survey for the Mortgaged Property located at 15159 Andrew Jackson Highway, Fair Bluff, North Carolina and (y) if not issued by Title Company on the Closing Date, endorsements to the Title Policy respecting such Mortgaged Real Property, removing the standard survey exception and providing the comprehensive and survey endorsements thereto within fifteen (15) Business Days after the delivery to the Collateral Agent of such Survey. ARTICLE VI NEGATIVE COVENANTS Each Loan Party warrants, covenants and agrees with each Lender that, so long as this Agreement shall remain in effect and until the Commitments have been terminated and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document have been paid in full and all Letters of Credit have been canceled or have expired and all amounts drawn thereunder have been reimbursed in full, unless the Required Lenders shall otherwise consent in writing, no Loan Party will, nor will they cause or permit any Subsidiaries to: SECTION 6.01 INDEBTEDNESS. Incur, create, assume or permit to exist, directly or indirectly, any Indebtedness, except (a) Indebtedness incurred under this Agreement and the other Loan Documents; (b) (i) Indebtedness outstanding on the Closing Date and listed on SCHEDULE 6.01(b), (ii) refinancings or renewals thereof or of the Indebtedness under clauses (iii) and (iv) below; PROVIDED that (A) any such refinancing Indebtedness is in an aggregate principal amount not greater than the aggregate principal amount of the Indebtedness being renewed or refinanced, PLUS the amount of any premiums required to be paid thereon and reasonable fees and expenses associated therewith, (B) such refinancing Indebtedness has a later or equal final maturity and longer or equal weighted average life than the Indebtedness being renewed or refinanced and (C) the covenants, events of default, subordination and other provisions thereof (including any guarantees thereof) shall be, in the aggregate in all material respects, no less favorable to the Lenders than those contained in the Indebtedness being renewed or refinanced; (iii) the Senior Subordinated Notes and Senior Subordinated Note Guarantees issued on the Closing Date (including any notes and guarantees issued in exchange therefor in accordance with the registration rights document entered into in connection with the issuance of the Senior Subordinated Notes and Senior Subordinated Note Guarantees); and (iv) additional Senior Subordinated Notes and Senior Subordinated Note Guarantees issued after the Closing Date (including any notes and guarantees issued in exchange therefor in accordance with the registration rights document entered into in connection with the issuance of the Senior Subordinated Notes and Senior Subordinated Note Guarantees) in an aggregate amount not to exceed $50.0 million less the aggregate amount of any Additional Term Loans and additional Senior Subordinated Note Guarantees issued after the Closing Date in accordance with the indenture governing the Senior Subordinated Notes by any Subsidiary Guarantor formed or acquired after the Closing Date; (c) Indebtedness under Hedging Obligations that are designed to protect against fluctuations in interest rates, foreign currency exchange rates or commodity prices, in each case not -89- entered into for speculative purposes; PROVIDED that if such Hedging Obligations relate to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by the Loan Documents and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate; (d) Indebtedness permitted by SECTION 6.04(f); (e) Indebtedness in respect of Purchase Money Obligations and Capital Lease Obligations, and refinancings or renewals thereof, in an aggregate amount not to exceed $10.0 million at any time outstanding; (f) Indebtedness incurred by Foreign Subsidiaries in an aggregate amount not to exceed $15.0 million (not including the Canadian Intercompany Note) at any time outstanding; (g) Indebtedness in respect of bid, performance or surety bonds, workers' compensation claims, self-insurance obligations and bankers acceptances issued for the account of any Company in the ordinary course of business, including guarantees or obligations of any Company with respect to letters of credit supporting such bid, performance or surety bonds, workers' compensation claims, self-insurance obligations and bankers acceptances (in each case other than for an obligation for money borrowed), in an aggregate amount not to exceed $10.0 million at any time outstanding; (h) Contingent Obligations of any Loan Party in respect of Indebtedness otherwise permitted under this SECTION 6.01; (i) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; PROVIDED, HOWEVER, that such Indebtedness is extinguished within five Business Days of incurrence; (j) the Canadian Intercompany Note; (k) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business; (l) unsecured Indebtedness of any Company in an aggregate amount not to exceed $20.0 million at any time outstanding; (m) Indebtedness assumed in connection with any Permitted Acquisition, and refinancing or renewals thereof, in an aggregate amount not to exceed $20.0 million at any time outstanding; (n) indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or property of U.S. Borrower or any Subsidiary of U.S. Borrower or Equity Interests of any Subsidiary of U.S. Borrower, other than guarantees of Indebtedness incurred by any person acquiring all or any portion of such business, property or Equity Interests for the purpose of financing any such acquisition; PROVIDED that the maximum aggregate liability in respect of all such obligations outstanding under this clause (n) shall at no time exceed (a) in the case of an acquisition, $10.0 million (PROVIDED that the amount of such liability shall be deemed to be the amount thereof, if -90- any, reflected on the balance sheet of U.S. Borrower or any Subsidiary (E.G., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by U.S. Borrower and its Subsidiaries in connection with such disposition; and (o) Indebtedness incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments made pursuant to SECTION 6.04(j), not to exceed $5.0 million at any time outstanding. SECTION 6.02 LIENS. Create, incur, assume or permit to exist, directly or indirectly, any Lien on any property now owned or hereafter acquired by it or on any income or revenues or rights in respect of any thereof, except the following (collectively, the "PERMITTED LIENS"): (a) inchoate Liens for taxes, assessments or governmental charges or levies not yet due and payable or delinquent and Liens for taxes, assessments or governmental charges or levies, which (i) are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, which proceedings (or orders entered in connection with such proceedings) have the effect of preventing the forfeiture or sale of the property subject to any such Lien, (ii) in the case of any such charge or claim which has or may become a Lien against any of the Collateral, such Lien and the contest thereof shall satisfy the Contested Collateral Lien Conditions and (iii) individually or in the aggregate, could not reasonably expected to have a Material Adverse Effect; (b) Liens in respect of property of any Company imposed by law, which were incurred in the ordinary course of business and do not secure Indebtedness for borrowed money, such as carriers', warehousemen's, materialmen's, landlords', workmen's, suppliers', repairmen's and mechanics' Liens and other similar Liens arising in the ordinary course of business, and (i) which do not in the aggregate materially detract from the value of the property of the Companies, taken as a whole, and do not materially impair the use thereof in the operation of the business of the Companies, taken as a whole, (ii) which, if they secure obligations that are then due and unpaid, are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, which proceedings (or orders entered in connection with such proceedings) have the effect of preventing the forfeiture or sale of the property subject to any such Lien, and (iii) in the case of any such Lien which has or may become a Lien against any of the Collateral, such Lien and the contest thereof shall satisfy the Contested Collateral Lien Conditions; (c) any Lien in existence on the Closing Date and set forth on SCHEDULE 6.02(c) and any Lien granted as a replacement or substitute therefor; PROVIDED that any such replacement or substitute Lien (i) except as permitted by SECTION 6.01(b)(ii)(A), does not secure an aggregate amount of Indebtedness, if any, greater than that secured on the Closing Date and (ii) does not encumber any property other than the property subject thereto on the Closing Date (any such Lien, an "EXISTING LIEN"); (d) easements, rights-of-way, restrictions (including zoning restrictions), covenants, licenses, encroachments, protrusions and other similar charges or encumbrances, and minor title deficiencies on or with respect to any Real Property, in each case whether now or hereafter in existence, not (i) securing Indebtedness, (ii) individually or in the aggregate materially impairing the value or marketability of such Real Property or (iii) individually or in the aggregate materially interfering with the ordinary conduct of the business of the Companies at such Real Property; -91- (e) Liens arising out of judgments, attachments or awards not resulting in a Default and in respect of which such Company shall in good faith be prosecuting an appeal or proceedings for review in respect of which there shall be secured a subsisting stay of execution pending such appeal or proceedings and, in the case of any such Lien which has or may become a Lien against any of the Collateral, such Lien and the contest thereof shall satisfy the Contested Collateral Lien Conditions; (f) Liens (other than any Lien imposed by ERISA) (x) imposed by law or deposits made in connection therewith in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security legislation, (y) incurred in the ordinary course of business to secure the performance of tenders, statutory obligations (other than excise taxes), surety, stay, customs and appeal bonds, statutory bonds, bids, leases, government contracts, trade contracts, performance and return of money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money) or (z) arising by virtue of deposits made in the ordinary course of business to secure liability for premiums to insurance carriers; PROVIDED that (i) with respect to clauses (x), (y) and (z) of this paragraph (f), such Liens are for amounts not yet due and payable or delinquent or, to the extent such amounts are so due and payable, such amounts are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, which proceedings for orders entered in connection with such proceedings have the effect of preventing the forfeiture or sale of the property subject to any such Lien, (ii) to the extent such Liens are not imposed by law, such Liens shall in no event encumber any property other than cash and Cash Equivalents, (iii) in the case of any such Lien against any of the Collateral, such Lien and the contest thereof shall satisfy the Contested Collateral Lien Conditions and (iv) the aggregate amount of deposits at any time pursuant to clause (y) and clause (z) of this paragraph (f) shall not exceed $2.5 million in the aggregate; (g) Leases of the properties of any Company, in each case entered into in the ordinary course of such Company's business so long as such Leases are subordinate in all respects to the Liens granted and evidenced by the Security Documents and do not, individually or in the aggregate, (i) interfere in any material respect with the ordinary conduct of the business of any Company or (ii) materially impair the use (for its intended purposes) or the value of the property subject thereto; (h) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by any Company in the ordinary course of business; (i) Liens securing Indebtedness incurred pursuant to SECTION 6.01(e); PROVIDED that any such Liens attach only to the property being financed pursuant to such Indebtedness and do not encumber any other property of any Company; (j) bankers' Liens, rights of setoff and other similar Liens existing solely with respect to cash and Cash Equivalents on deposit in one or more accounts maintained by any Company, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank with respect to cash management and operating account arrangements, including those involving pooled accounts and netting arrangements; PROVIDED that, unless such Liens are non-consensual and arise by operation of law, in no case shall any such Liens secure (either directly or indirectly) the repayment of any Indebtedness; -92- (k) Liens on property of a person existing at the time such person is acquired or merged with or into or consolidated with any Company to the extent permitted hereunder (and not created in anticipation or contemplation thereof); PROVIDED that such Liens do not extend to property not subject to such Liens at the time of acquisition (other than improvements thereon) and are no more favorable to the lienholders than such existing Lien; (l) Liens granted pursuant to the Security Documents to secure the Obligations; (m) licenses of Intellectual Property granted by any Company in the ordinary course of business and not interfering in any material respect with the ordinary conduct of business of the Companies; (n) the filing of UCC or PPSA financing statements solely as a precautionary measure in connection with operating leases or consignment of goods; (o) Liens securing Indebtedness incurred pursuant to SECTION 6.01(f); PROVIDED that (i) such Liens do not extend to, or encumber, property which constitutes Collateral and (ii) such Liens extend only to the property (or Equity Interests) of the Foreign Subsidiary incurring such Indebtedness; (p) the existence of the "equal and ratable" clause in the Senior Subordinated Note Documents (but not any security interests granted pursuant thereto); and (q) Liens incurred in the ordinary course of business of any Company with respect to obligations that do not in the aggregate exceed $5.0 million at any time outstanding, so long as such Liens, to the extent covering any Collateral, are junior to the Liens granted pursuant to the Security Documents; PROVIDED, HOWEVER, that no consensual Liens shall be permitted to exist, directly or indirectly, on any Securities Collateral, other than Liens granted pursuant to the Security Documents. SECTION 6.03 SALE AND LEASEBACK TRANSACTIONS. Enter into any arrangement, directly or indirectly, with any person whereby it shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property which it intends to use for substantially the same purpose or purposes as the property being sold or transferred (a "SALE AND LEASEBACK TRANSACTION") (other than a Permitted Sale and Leaseback Transaction) unless (i) the sale of such property is permitted by SECTION 6.06 and (ii) any Liens arising in connection with its use of such property are permitted by SECTION 6.02. SECTION 6.04 INVESTMENT, LOAN AND ADVANCES. Directly or indirectly, lend money or credit (by way of guarantee or otherwise) or make advances to any person, or purchase or acquire any stock, bonds, notes, debentures or other obligations or securities of, or any other interest in, or make any capital contribution to, any other person, or purchase or own a futures contract or otherwise become liable for the purchase or sale of currency or other commodities at a future date in the nature of a futures contract (all of the foregoing, collectively, "INVESTMENTS"), except that the following shall be permitted: (a) the Companies may consummate the Transactions in accordance with the provisions of the Transaction Documents; (b) Investments outstanding on the Closing Date and identified on SCHEDULE 6.04(b); -93- (c) the Companies may (i) acquire and hold accounts receivables owing to any of them if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary terms, (ii) invest in, acquire and hold cash and Cash Equivalents, (iii) endorse negotiable instruments held for collection in the ordinary course of business or (iv) make lease, utility and other similar deposits in the ordinary course of business; (d) Hedging Obligations incurred pursuant to SECTION 6.01(c); (e) loans and advances to directors, employees and officers of U.S. Borrower and the Subsidiaries for BONA FIDE business purposes and to purchase Equity Interests of Holdings, in aggregate amount not to exceed $5.0 million at any time outstanding; (f) Investments (i) by Parent, U.S. Borrower or any U.S. Subsidiary Guarantor in U.S. Borrower or any U.S. Subsidiary Guarantor, (ii) by Canadian Borrower or any Canadian Subsidiary Guarantor in Canadian Borrower or any Canadian Subsidiary Guarantor and (iii) by a Subsidiary that is not a Subsidiary Guarantor in any other Subsidiary that is not a Subsidiary Guarantor; PROVIDED that any Investment in the form of a loan or advance by or in a Loan Party shall be evidenced by an Intercompany Note and, in the case of a loan or advance by a Loan Party, pledged by such Loan Party as Collateral pursuant to the Security Documents; (g) Investments in securities of trade creditors or customers in the ordinary course of business received upon foreclosure or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers; (h) Investments made by U.S. Borrower or any Subsidiary as a result of consideration received in connection with an Asset Sale made in compliance with SECTION 6.06; (i) (x) Investments in Foreign Subsidiaries in an aggregate amount not to exceed $10.0 million at any time outstanding, after taking into account amounts returned in cash (including upon disposition) and (y) Investments in Foreign Subsidiaries with the proceeds of Excluded Issuances to the extent such proceeds have not been utilized for any other purpose; PROVIDED that any such Investment made in the form of a loan or advance shall be evidenced by an Intercompany Note and, in the case of a loan or advance by a Loan Party, pledged by such Loan Party as Collateral pursuant to the Security Documents; (j) loans and advances to suppliers, licensees, franchisees or customers of U.S. Borrower or any of its Subsidiaries made in the ordinary course of business in an aggregate amount, together with the aggregate amount of Indebtedness incurred pursuant to SECTION 6.01(o), not to exceed $5.0 million at any time outstanding; (k) Investments in Subsidiaries as a result of the consummation of Permitted Acquisitions; (l) Guarantees of Indebtedness not prohibited by SECTION 6.01; and (m) other investments in an aggregate amount not to exceed $20.0 million at any time outstanding. SECTION 6.05 MERGERS AND CONSOLIDATIONS. Wind up, liquidate or dissolve its affairs or enter into any transaction of merger or consolidation (or agree to do any of the foregoing at any future time), except that the following shall be permitted: -94- (a) Asset Sales in compliance with SECTION 6.06; (b) acquisitions in compliance with SECTION 6.07; (c) (x) any Company (other than Canadian Borrower or any Canadian Subsidiaries) may merge or consolidate with or into U.S. Borrower or any U.S. Subsidiary Guarantor (as long as U.S. Borrower or a U.S. Subsidiary Guarantor is the surviving person in such merger or consolidation and remains a Wholly Owned Subsidiary of Parent); PROVIDED that the Lien on and security interest in such property granted or to be granted in favor of the Collateral Agent under the Security Documents shall be maintained or created in accordance with the provisions of SECTION 5.10 or SECTION 5.11, as applicable and (y) any Non-Guarantor Subsidiary may transfer property or lease to or acquire or lease property from any Non-Guarantor Subsidiary or may be merged into any other Non-Guarantor Subsidiary; and (d) Canadian Borrower or any Canadian Subsidiaries may merge or consolidate with or into Canadian Borrower or any Canadian Subsidiary Guarantor (as long as Canadian Borrower or a Canadian Subsidiary Guarantor is the surviving person in such merger or consolidation and remains a Wholly Owned Subsidiary of Parent); PROVIDED that the Lien on and security interest in such property granted or to be granted in favor of the Collateral Agent under the Security Documents shall be maintained or created in accordance with the provisions of SECTION 5.10 or SECTION 5.11, as applicable; and (e) any Subsidiary (other than Canadian Borrower) may dissolve, liquidate or wind up its affairs at any time; PROVIDED that such dissolution, liquidation or winding up, as applicable, could not reasonably be expected to have a Material Adverse Effect; and (f) Holdings may merge with or into or consolidate with or into Parent in connection with any IPO, as long as the surviving person assumes all of the obligations of Parent under the Loan Documents and no Default shall have occurred and be continuing. To the extent the Required Lenders waive the provisions of this SECTION 6.05 with respect to the sale of any Collateral, or any Collateral is sold as permitted by this SECTION 6.05, such Collateral (unless sold to a Company) shall be sold free and clear of the Liens created by the Security Documents, and the Agents shall take all actions they deem appropriate in order to effect the foregoing. SECTION 6.06 ASSET SALES. Effect any Asset Sale, or agree to effect any Asset Sale, except that the following shall be permitted subject to SECTION 2.10(c): (a) disposition of used, worn out, obsolete or surplus property by any Loan Party in the ordinary course of business and the abandonment or other disposition of Intellectual Property that is, in the reasonable judgment of U.S. Borrower, no longer economically practicable to maintain or useful in the conduct of the business of the Companies taken as a whole; (b) Asset Sales (other than Asset Sales of Equity Interests in Canadian Borrower); PROVIDED that the aggregate consideration received in respect of all Asset Sales pursuant to this clause (b) shall not exceed $25.0 million in any four consecutive fiscal quarters of U.S. Borrower; (c) leases of real or personal property in the ordinary course of business and in accordance with the applicable Security Documents; (d) the Transactions as contemplated by the Transaction Documents; -95- (e) mergers and consolidations in compliance with SECTION 6.05; (f) Investments in compliance with SECTION 6.04; (g) Permitted Sale and Leaseback Transactions; (h) the sale of (i) all, but not less than all, of the Equity Interests in Canadian Borrower, or (ii) all or substantially all of the assets of Canadian Borrower; PROVIDED that, in the case of (ii), all Canadian Term Loans and Obligations related thereto are repaid prior to or simultaneously with such Asset Sale; (i) U.S. Borrower and the Subsidiaries may sell Cash Equivalents in the ordinary course of business; (j) sales, transfers and dispositions of accounts receivable in connection with the compromise, settlement or collection thereof; and (k) within 365 days after the consummation of a Permitted Acquisition, the sale, transfer or disposition for cash, and for fair market value, of assets acquired in connection with such Permitted Acquisition and not required in the operation of the business of U.S. Borrower or any of the Subsidiaries. To the extent the Required Lenders waive the provisions of this SECTION 6.06 with respect to the sale of any Collateral, or any Collateral is sold as permitted by this SECTION 6.06, such Collateral (unless sold to a Company) shall be sold free and clear of the Liens created by the Security Documents, and the Agents shall take all actions they deem appropriate in order to effect the foregoing. SECTION 6.07 ACQUISITIONS. Purchase or otherwise acquire (in one or a series of related transactions) any part of the property (whether tangible or intangible) of any person (or agree to do any of the foregoing at any future time), except that the following shall be permitted: (a) Capital Expenditures by U.S. Borrower and the Subsidiaries shall be permitted to the extent permitted by SECTION 6.10(c); (b) purchases and other acquisitions of inventory, materials, equipment and intangible property in the ordinary course of business; (c) Investments in compliance with SECTION 6.04; (d) leases of real or personal property in the ordinary course of business and in accordance with the applicable Security Documents; (e) the Transactions as contemplated by the Transaction Documents; (f) Permitted Acquisitions; and (g) mergers and consolidations in compliance with SECTION 6.05; PROVIDED that the Lien on and security interest in such property granted or to be granted in favor of the Collateral Agent under the Security Documents shall be maintained or created in accordance with the provisions of SECTION 5.10 or SECTION 5.11, as applicable. -96- SECTION 6.08 DIVIDENDS. Authorize, declare or pay, directly or indirectly, any Dividends with respect to any Company, except that the following shall be permitted: (a) Dividends by any Company to U.S. Borrower, Canadian Borrower or any Subsidiary of U.S. Borrower and to minority equityholders of any Subsidiary paid ratably; (b) payments by U.S. Borrower or by Holdings to permit Holdings or Parent, and which are used by Holdings or Parent, to redeem Equity Interests of U.S. Borrower, Holdings or Parent held by officers, directors or employees or former officers, directors or employees (or their transferees, estates or beneficiaries under their estates), upon their death, disability, retirement, severance or termination of employment or service; PROVIDED that the aggregate cash consideration paid for all such redemptions shall not exceed the sum of (A) $5.0 million during any calendar year (with unused amounts being available to be used in the following calendar year, but not in any succeeding calendar year) plus (B) the amount of any Net Cash Proceeds received by or contributed to U.S. Borrower from the issuance and sale after the Closing Date of Qualified Capital Stock of Parent, Holdings or U.S. Borrower to its officers, directors or employees that have not been applied to the payment of Dividends pursuant to this clause (b), plus (C) the Net Cash Proceeds of any "key-man" life insurance policies that have not been applied to the payment of Dividends pursuant to this clause (b); (c) (A) to the extent actually used by Parent and Holdings to pay such taxes, costs and expenses, payments by U.S. Borrower to or on behalf of Parent and Holdings in an amount sufficient to pay franchise taxes and other fees required to maintain the legal existence of Parent and Holdings and (B) payments by U.S. Borrower to or on behalf of Parent and Holdings in an amount sufficient to pay out-of-pocket legal, accounting and filing costs and other expenses in the nature of overhead of Parent and Holdings, in the case of clauses (A) and (B) in an aggregate amount not to exceed $500,000 in any fiscal year; (d) Permitted Tax Distributions by U.S. Borrower to Parent or Holdings, so long as Parent or Holdings uses such distributions to pay its taxes; (e) to the extent that the Net Cash Proceeds of any Permitted Sale and Leaseback Transaction exceed the Permitted Sale and Leaseback Transaction Amount, payments of such excess amount to Holdings to permit Holdings to pay a Dividend to the holders of Equity Interests of Holdings or a distribution to the holders of Indebtedness of Holdings; and (f) distributions to Parent in order to enable Parent or Holdings to pay, and which are used by Parent or Holdings to pay, customary and reasonable costs and expenses of an offering of securities of Parent or Holdings that is not consummated. SECTION 6.09 TRANSACTIONS WITH AFFILIATES. Enter into, directly or indirectly, any transaction or series of related transactions, whether or not in the ordinary course of business, with any Affiliate of any Company (other than between or among U.S. Borrower and one or more U.S. Subsidiary Guarantors or between or among Canadian Borrower and one or more Canadian Subsidiary Guarantors), other than on terms and conditions at least as favorable to such Company as would reasonably be obtained by such Company at that time in a comparable arm's-length transaction with a person other than an Affiliate, except that the following shall be permitted: (a) Dividends permitted by SECTION 6.08; -97- (b) Investments permitted by SECTIONS 6.04(E), (F), (I) and, to the extent such Investments are in Subsidiaries, (M); (c) reasonable and customary director, officer and employee compensation (including bonuses) and other benefits (including retirement, health, stock option and other benefit plans) and indemnification, compensation, employment and severance agreements, in each case approved by the Board of Directors; (d) transactions with customers, clients, suppliers, joint venture partners or purchasers or sellers of goods and services, in each case in the ordinary course of business and otherwise not prohibited by the Loan Documents; (e) so long as no Default exists, the payment of regular management fees and transaction fees payable upon acquisitions, divestitures and the sale of Parent, to Sponsor in the amounts and at the times specified in the Advisory Services Agreement, as in effect on the Closing Date or as thereafter amended or replaced in any manner, that, taken as a whole, is not more adverse to the interests of the Lenders in any material respect than such agreement as it was in effect on the Closing Date; (f) sales or issuances of Qualified Capital Stock to Affiliates of U.S. Borrower not otherwise prohibited by the Loan Documents and the granting of registration and other customary rights in connection therewith; (g) any transaction with an Affiliate where the only consideration paid by any Loan Party is Qualified Capital Stock; (h) the Transactions as contemplated by the Transaction Documents; (i) the entering into of a tax sharing agreement, or payments pursuant thereto, between U.S. Borrower and/or one or more Subsidiaries, on the one hand, and any other person with which U.S. Borrower or such Subsidiaries are required or permitted to file a consolidated tax return or with which U.S. Borrower or such Subsidiaries are part of a consolidated group for tax purposes, on the other hand, which payments by U.S. Borrower and its Subsidiaries are not in excess of the tax liabilities that would have been payable by them on a stand-alone basis; (j) entering into an agreement that provides registration rights to the shareholders of U.S. Borrower, Holdings or Parent or amending any such agreement with shareholders of U.S. Borrower, Holdings or Parent and the performance of such agreements; (k) any transaction with a joint venture or similar entity which would constitute a transaction with an Affiliate solely because U.S. Borrower or any of its Subsidiaries owns an equity interest in or otherwise controls such joint venture or similar entity; PROVIDED that no Affiliate of U.S. Borrower or any of its Subsidiaries other than U.S. Borrower or any Subsidiary of U.S. Borrower shall have a beneficial interest in such joint venture or similar entity; (l) any merger, consolidation or reorganization of U.S. Borrower with an Affiliate, solely for the purposes of (a) reorganizing to facilitate an IPO of securities of U.S. Borrower, Holdings, Parent or other holding company, (b) forming a holding company or (c) reincorporating U.S. Borrower in a new jurisdiction; -98- (m) sales of inventory between or among U.S. Borrower and/or one or more of its Subsidiaries in the ordinary course of business; and (n) (i) any agreement in effect on the Closing Date listed on SCHEDULE 6.09(n), as in effect on the Closing Date or as thereafter amended or replaced in any manner, that, taken as a whole, is not more adverse to the interests of the Lenders in any material respect than such agreement as it was in effect on the Closing Date or (ii) any transaction pursuant to any agreement referred to in the immediately preceding clause (i). SECTION 6.10 FINANCIAL COVENANTS.(a) (a) MAXIMUM TOTAL LEVERAGE RATIO. Permit the Total Leverage Ratio, at any date during any period set forth in the table below, to exceed the ratio set forth opposite such period in the table below: ----------------------------------------------------------------------- TEST PERIOD LEVERAGE RATIO ----------- -------------- ----------------------------------------------------------------------- Closing Date - March 31, 2005 6.25 to 1.0 ----------------------------------------------------------------------- April 1, 2005 - June 30, 2005 5.95 to 1.0 ----------------------------------------------------------------------- July 1, 2005 - March 31, 2006 5.75 to 1.0 ----------------------------------------------------------------------- April 1, 2006 - September 30, 2006 5.50 to 1.0 ----------------------------------------------------------------------- October 1, 2006 - March 31, 2007 5.25 to 1.0 ----------------------------------------------------------------------- April 1, 2007 - June 30, 2007 5.00 to 1.0 ----------------------------------------------------------------------- July 1, 2007 - December 31, 2007 4.75 to 1.0 ----------------------------------------------------------------------- January 1, 2008 - June 30, 2008 4.50 to 1.0 ----------------------------------------------------------------------- July 1, 2008 - September 30, 2008 4.25 to 1.0 ----------------------------------------------------------------------- October 1, 2008 and thereafter 4.00 to 1.0 ----------------------------------------------------------------------- (b) MINIMUM INTEREST COVERAGE RATIO. Permit the Consolidated Interest Coverage Ratio, for any Test Period ending during any period set forth in the table below, to be less than the ratio set forth opposite such period in the table below: ----------------------------------------------------------------------- INTEREST TEST PERIOD COVERAGE RATIO ----------- -------------- ----------------------------------------------------------------------- Closing Date - December 31, 2004 1.90 to 1.0 ----------------------------------------------------------------------- January 1, 2005 - March 31, 2006 2.00 to 1.0 ----------------------------------------------------------------------- April 1, 2006 - December 31, 2006 2.10 to 1.0 ----------------------------------------------------------------------- January 1, 2007 - June 30, 2007 2.25 to 1.0 ----------------------------------------------------------------------- July 1, 2007 - December 31, 2007 2.35 to 1.0 ----------------------------------------------------------------------- January 1, 2008 - September 30, 2008 2.50 to 1.0 ----------------------------------------------------------------------- October 1, 2008 and thereafter 2.75 to 1.0 ----------------------------------------------------------------------- -99- (c) LIMITATION ON CAPITAL EXPENDITURES. Permit the aggregate amount of Capital Expenditures made in any period set forth below, to exceed the amount set forth opposite such period below: ----------------------------------------------------------------------- PERIOD AMOUNT (IN MILLIONS) ------ -------------------- ----------------------------------------------------------------------- Closing Date - December 31, 2004 $15.0 ----------------------------------------------------------------------- January 1, 2005 - December 31, 2005 $15.0 ----------------------------------------------------------------------- January 1, 2006 - December 31, 2006 $15.0 ----------------------------------------------------------------------- January 1, 2007 - December 31, 2007 $16.0 ----------------------------------------------------------------------- January 1, 2008 - December 31, 2008 $16.0 ----------------------------------------------------------------------- Each calendar year ending after 2008 $16.0 ----------------------------------------------------------------------- ; PROVIDED, HOWEVER, that (x) if the aggregate amount of Capital Expenditures made in any fiscal year shall be less than the maximum amount of Capital Expenditures permitted under this SECTION 6.10(c) for such fiscal year (before giving effect to any carryover), then an amount of such shortfall not exceeding 50% of such maximum amount (without giving effect to clause (z) below) (the "CAPEX CARRYFORWARD AMOUNT") may be added to the amount of Capital Expenditures permitted under this SECTION 6.10(c) for the immediately succeeding (but not any other) fiscal year, (y) in determining whether any amount is available for carryover, the amount expended in any fiscal year shall first be deemed to be from the amount allocated to such fiscal year (before giving effect to any carryover) and (z) the amount set forth in the table above for any period may be increased by the amount of Net Cash Proceeds of Excluded Issuances designated for Capital Expenditures for such period during such period. SECTION 6.11 PREPAYMENTS OF OTHER INDEBTEDNESS; MODIFICATIONS OF ORGANIZATIONAL DOCUMENTS AND OTHER DOCUMENTS, ETC. Directly or indirectly: (a) make (or give any notice in respect thereof) any voluntary or optional payment or prepayment on or redemption or acquisition for value of, or any prepayment or redemption as a result of any asset sale, change of control or similar event of, any Indebtedness outstanding under the Senior Subordinated Notes or any other Subordinated Indebtedness, except as otherwise permitted by this Agreement; (b) amend or modify, or permit the amendment or modification of, any provision of any Transaction Document in any manner that is adverse in any material respect to the interests of the Lenders; (c) terminate, amend, modify (including electing to treat any Pledged Interests (as defined in the U.S. Security Agreement) as a "security" under Section 8-103 of the UCC) or change any of its Organizational Documents (including by the filing or modification of any certificate of designation) or any agreement to which it is a party with respect to its Equity Interests (including any stockholders' agreement), or enter into any new agreement with respect to its Equity Interests, other than any such amendments, modifications or changes or such new agreements which are not adverse in any material respect to the interests of the Lenders; PROVIDED that Parent may issue such Equity Interests, so long as such issuance is not prohibited by SECTION 6.13 or any other provision of this Agreement, and may amend its Organizational Documents to authorize any such Equity Interests; or -100- (d) cause or permit any other obligation (other than the Obligations and the Guaranteed Obligations) to constitute Designated Senior Debt (as defined in the Senior Subordinated Note Documents). SECTION 6.12 LIMITATION ON CERTAIN RESTRICTIONS ON SUBSIDIARIES. Directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Subsidiary to (a) pay dividends or make any other distributions on its capital stock or any other interest or participation in its profits owned by U.S. Borrower or any Subsidiary, or pay any Indebtedness owed to U.S. Borrower or a Subsidiary, (b) make loans or advances to U.S. Borrower or any Subsidiary or (c) transfer any of its properties to U.S. Borrower or any Subsidiary, except for such encumbrances or restrictions existing under or by reason of (i) applicable law; (ii) this Agreement and the other Loan Documents; (iii) the Senior Subordinated Note Documents as in effect on the Closing Date; (iv) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of a Subsidiary; (v) customary provisions restricting assignment of any agreement entered into by a Subsidiary in the ordinary course of business; (vi) any Lien permitted by SECTION 6.02 restricting the transfer of the property subject thereto; (vii) customary restrictions and conditions contained in any agreement relating to the sale of any property permitted under SECTION 6.06 pending the consummation of such sale; (viii) any agreement applicable to such Subsidiary in effect at the time such Subsidiary becomes a Subsidiary of U.S. Borrower, so long as such agreement was not entered into in connection with or in contemplation of such person becoming a Subsidiary of U.S. Borrower; (ix) customary provisions in partnership agreements, limited liability company organizational governance documents, asset sales and stock sale agreements and other similar agreements entered into in the ordinary course of business that restrict the transfer of ownership interests in such partnership, limited liability company or similar person; (x) restrictions on cash or other deposits or net worth imposed by suppliers or landlords under contracts entered into in the ordinary course of business; (xi) any instrument governing Indebtedness assumed in connection with any Permitted Acquisition, which encumbrance or restriction is not applicable to any person, or the properties or assets of any person, other than the person or the properties or assets of the person so acquired; (xii) in the case of any joint venture which is not a Loan Party in respect of any matters referred to in clauses (b) and (c) above, restrictions in such person's Organizational Documents or pursuant to any joint venture agreement or stockholders agreements solely to the extent of the Equity Interests of or property held in the subject joint venture or other entity; (xiii) any encumbrances or restrictions imposed by any amendments or refinancings that are otherwise permitted by the Loan Documents of the contracts, instruments or obligations referred to in clauses (iii), (viii) or (xi) above; PROVIDED that such amendments or refinancings are no more materially restrictive with respect to such encumbrances and restrictions than those prior to such amendment or refinancing; or (xiv) encumbrances or restrictions contained in Indebtedness of Foreign Subsidiaries, or municipal loan or related agreements entered into in connection with the incurrence of industrial or economic revenue bonds, permitted to be incurred under this Agreement; PROVIDED that any such encumbrances or restrictions are ordinary and customary with respect to the type of Indebtedness being incurred under the relevant circumstances and do not, in the good faith judgment of the Board of Directors of U.S. Borrower, materially impair either Borrower's ability to make payment on the Obligations when due. SECTION 6.13 LIMITATION ON ISSUANCE OF CAPITAL STOCK. (a) With respect to Parent, issue any Equity Interest that is not Qualified Capital Stock. (b) With respect to U.S. Borrower or any Subsidiary, issue any Equity Interest (including by way of sales of treasury stock) or any options or warrants to purchase, or securities convertible into, any Equity Interest, except (i) for stock splits, stock dividends and additional issuances of Equity Interests which do not decrease the percentage ownership of U.S. Borrower or any Subsidiaries in any class of the Equity Interest of such Subsidiary; (ii) Subsidiaries of U.S. Borrower formed after the Closing Date in accordance with SECTION 6.14 may issue Equity Interests to U.S. Borrower or the Subsidiary of -101- Borrower which is to own such Equity Interests; and (iii) U.S. Borrower may issue common stock that is Qualified Capital Stock to Parent. All Equity Interests issued in accordance with this SECTION 6.13(b) shall, to the extent required by SECTIONS 5.10 and 5.11 or any Security Document, be delivered to the Collateral Agent for pledge pursuant to the applicable Security Document. SECTION 6.14 LIMITATION ON CREATION OF SUBSIDIARIES. Establish, create or acquire any additional Subsidiaries without the prior written consent of the Required Lenders; PROVIDED that, without such consent, U.S. Borrower may (i) establish or create one or more Wholly Owned Subsidiaries of U.S. Borrower, (ii) establish, create or acquire one or more Subsidiaries in connection with an Investment made pursuant to SECTIONS 6.04(f), (k) or (m) or (iii) acquire one or more Subsidiaries in connection with a Permitted Acquisition, so long as, in each case, SECTION 5.10(b) shall be complied with. SECTION 6.15 BUSINESS. (a) With respect to Parent, engage in any business activities or have any properties or liabilities, other than (i) its ownership of the Equity Interests of U.S. Borrower, (ii) obligations under the Loan Documents and the Senior Subordinated Note Documents and (iii) activities and properties incidental, ancillary or complementary to the foregoing clauses (i) and (ii). (b) With respect to U.S. Borrower and the Subsidiaries, engage (directly or indirectly) in any business other than those businesses in which U.S. Borrower and its Subsidiaries are engaged on the Closing Date as described in the Confidential Information Memorandum (or, in the good faith judgment of the Board of Directors, which are substantially related thereto or are reasonable extensions thereof). SECTION 6.16 LIMITATION ON ACCOUNTING CHANGES. Make or permit, any significant change in accounting policies or reporting practices, without the consent of the Administrative Agent, which consent shall not be unreasonably withheld, except changes that are required by GAAP. SECTION 6.17 FISCAL YEAR. Change its fiscal year-end to a date other than December 31. SECTION 6.18 LEASE OBLIGATIONS. Create, incur, assume or suffer to exist any obligations as lessee for the rental or hire of real or personal property of any kind under leases or agreements to lease having an original term of one year or more other than (1) such obligations existing on the Closing Date, (2) such obligations acquired in connection with a Permitted Acquisition that are not incurred in anticipation of such Permitted Acquisition and are obligations only of any legal entities acquired in such Permitted Acquisition and (3) with respect to other obligations, created, incurred, assumed or suffered to exist after the Closing Date, such obligations that would cause the direct and contingent liabilities of U.S. Borrower and its Subsidiaries, on a consolidated basis, in respect of all such obligations created, incurred, assumed or suffered to exist after the Closing Date not to exceed the sum of (i) $5.0 million and (ii) amounts payable in respect of leases entered into in connection with Permitted Sale and Leaseback Transactions, payable in any period of 12 consecutive months. SECTION 6.19 NO FURTHER NEGATIVE PLEDGE. Enter into any agreement, instrument, deed or lease which prohibits or limits the ability of any Loan Party to create, incur, assume or suffer to exist any Lien upon any of their respective properties or revenues, whether now owned or hereafter acquired, or which requires the grant of any security for an obligation if security is granted for another obligation, except the following: (1) this Agreement and the other Loan Documents; (2) covenants in documents creating Liens permitted by SECTION 6.02 prohibiting further Liens on the properties encumbered thereby; (3) the Senior Subordinated Note Documents as in effect on the Closing Date; (4) any other agreement that does not restrict in any manner (directly or indirectly) Liens created pursuant to the Loan Documents on any Collateral securing the Obligations and does not require the direct or indirect -102- granting of any Lien securing any Indebtedness or other obligation by virtue of the granting of Liens on or pledge of property of any Loan Party to secure the Obligations; and (5) any prohibition or limitation that (a) exists pursuant to applicable law, (b) consists of customary restrictions and conditions contained in any agreement relating to the sale of any property permitted under SECTION 6.06 pending the consummation of such sale, (c) restricts subletting or assignment of any lease governing a leasehold interest of U.S. Borrower or a Subsidiary, (d) exists in any agreement in effect at the time such Subsidiary becomes a Subsidiary of U.S. Borrower, so long as such agreement was not entered into in contemplation of such person becoming a Subsidiary or (e) is imposed by any amendments or refinancings that are otherwise permitted by the Loan Documents of the contracts, instruments or obligations referred to in clause (3) or (5)(e); PROVIDED that such amendments and refinancings are no more materially restrictive with respect to such prohibitions and limitations than those prior to such amendment or refinancing. SECTION 6.20 ANTI-TERRORISM LAW; ANTI-MONEY LAUNDERING. (a) Directly or indirectly, (i) knowingly conduct any business or engage in making or receiving any contribution of funds, goods or services to or for the benefit of any person described in SECTION 3.22, (ii) knowingly deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order or any other Anti-Terrorism Law, or (iii) knowingly engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law (and the Loan Parties shall deliver to the Lenders any certification or other evidence requested from time to time by any Lender in its reasonable discretion, confirming the Loan Parties' compliance with this SECTION 6.20). (b) Cause or permit any of the funds of such Loan Party that are used to repay the Loans to be derived from any unlawful activity with the result that the making of the Loans would be in violation of law. SECTION 6.21 EMBARGOED PERSON. Cause or permit (a) any of the funds or properties of the Loan Parties that are used to repay the Loans to constitute property of, or be beneficially owned directly or indirectly by, any person subject to sanctions or trade restrictions under United States law ("EMBARGOED PERSON" or "EMBARGOED PERSONS") that is identified on (1) the "List of Specially Designated Nationals and Blocked Persons" (the "SDN LIST") maintained by OFAC and/or on any other similar list ("OTHER LIST") maintained by OFAC pursuant to any authorizing statute including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. Sections 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Order or regulation promulgated thereunder, with the result that the investment in the Loan Parties (whether directly or indirectly) is prohibited by law, or the Loans made by the Lenders would be in violation of law, or (2) the Executive Order, any related enabling legislation or any other similar Executive Orders (collectively, "EXECUTIVE ORDERS"), or (b) any Embargoed Person to have any direct or indirect interest, of any nature whatsoever in the Loan Parties, with the result that the investment in the Loan Parties (whether directly or indirectly) is prohibited by law or the Loans are in violation of law. ARTICLE VII GUARANTEE SECTION 7.01 THE GUARANTEE. Parent and each U.S. Subsidiary Guarantor (the "U.S. GUARANTORS") hereby, jointly and severally guarantee, as a primary obligor and not as a surety to each U.S. Secured Party and their respective successors and assigns, the prompt payment in full when due (whether at stated maturity, by required prepayment, declaration, demand, by acceleration or otherwise) of the principal of and interest (including any interest, fees, costs or charges that would accrue but for the provisions of the Title 11 of the United States Code after any bankruptcy or insolvency petition under Ti- -103- tle 11 of the United States Code) on the Loans made by the Lenders to, and the Notes held by each Lender of, U.S. Borrower, and all other U.S. Obligations from time to time owing to the Secured Parties by any U.S. Loan Party under any Loan Document in each case strictly in accordance with the terms thereof (such obligations being herein collectively called the "U.S. GUARANTEED OBLIGATIONS"). Parent, the U.S. Borrower and each Canadian Subsidiary Guarantor (the "CANADIAN GUARANTORS") hereby, jointly and severally guarantee, as a primary obligor and not as a surety to each Canadian Secured Party and their respective successors and assigns, the prompt payment in full when due (whether at stated maturity, by required prepayment, declaration, demand, by acceleration or otherwise) of the principal of and interest (including any interest, fees, costs or charges that would accrue but for the provisions of the Title 11 of the United States Code or other applicable bankruptcy or insolvency legislation after any bankruptcy or insolvency petition under Title 11 of the United States Code or other applicable bankruptcy or insolvency legislation) on the Loans made by the Lenders to, and the Notes held by each Lender of, Canadian Borrower, and all other Canadian Obligations from time to time owing to the Canadian Secured Parties by any Canadian Loan Party under any Loan Document in each case strictly in accordance with the terms thereof (such obligations being herein collectively called the "CANADIAN GUARANTEED OBLIGATIONS"). The U.S. Guarantors hereby jointly and severally agree that if U.S. Borrower or other U.S. Guarantor(s) shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise) any of the U.S. Guaranteed Obligations, the U.S. Guarantors will promptly pay the same in cash, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the U.S. Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or renewal. The Canadian Guarantors hereby jointly and severally agree that if Canadian Borrower or other Canadian Guarantor(s) shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise) any of the Canadian Guaranteed Obligations, the Canadian Guarantors will promptly pay the same in cash, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Canadian Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or renewal. SECTION 7.02 OBLIGATIONS UNCONDITIONAL. The obligations of the Guarantors under SECTION 7.01 shall constitute a guaranty of payment and to the fullest extent permitted by applicable law, are absolute, irrevocable and unconditional, joint and several, irrespective of the value, genuineness, validity, regularity or enforceability of the Guaranteed Obligations of the Borrowers under this Agreement, the Notes, if any, or any other agreement or instrument referred to herein or therein, or any substitution, release or exchange of any other guarantee of or security for any of the Guaranteed Obligations, and, irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or Guarantor (except for payment in full). Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of the Guarantors hereunder which shall remain absolute, irrevocable and unconditional under any and all circumstances as described above: (i) at any time or from time to time, without notice to the Guarantors, the time for any performance of or compliance with any of the Guaranteed Obligations shall be extended, or such performance or compliance shall be waived; (ii) any of the acts mentioned in any of the provisions of this Agreement or the Notes, if any, or any other agreement or instrument referred to herein or therein shall be done or omitted; (iii) the maturity of any of the Guaranteed Obligations shall be accelerated, or any of the Guaranteed Obligations shall be amended in any respect, or any right under the Loan Documents or any other agreement or instrument referred to herein or therein shall be amended or -104- waived in any respect or any other guarantee of any of the Guaranteed Obligations or any security therefor shall be released or exchanged in whole or in part or otherwise dealt with; (iv) any Lien or security interest granted to, or in favor of, Issuing Bank or any Lender or Agent as security for any of the Guaranteed Obligations shall fail to be perfected; or (v) the release of any other Guarantor pursuant to SECTION 7.09. The Guarantors hereby expressly waive diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that any Secured Party exhaust any right, power or remedy or proceed against either Borrower under this Agreement or the Notes, if any, or any other agreement or instrument referred to herein or therein, or against any other person under any other guarantee of, or security for, any of the Guaranteed Obligations. The Guarantors waive any and all notice of the creation, renewal, extension, waiver, termination or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by any Secured Party upon this Guarantee or acceptance of this Guarantee, and the Guaranteed Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Guarantee, and all dealings between the Borrowers and the Secured Parties shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee. This Guarantee shall be construed as a continuing, absolute, irrevocable and unconditional guarantee of payment without regard to any right of offset with respect to the Guaranteed Obligations at any time or from time to time held by Secured Parties, and the obligations and liabilities of the Guarantors hereunder shall not be conditioned or contingent upon the pursuit by the Secured Parties or any other person at any time of any right or remedy against either Borrower or against any other person which may be or become liable in respect of all or any part of the Guaranteed Obligations or against any collateral security or guarantee therefor or right of offset with respect thereto. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantors and the successors and assigns thereof, and shall inure to the benefit of the Lenders, and their respective successors and assigns, notwithstanding that from time to time during the term of this Agreement there may be no Guaranteed Obligations outstanding. SECTION 7.03 REINSTATEMENT. The obligations of the Guarantors under this ARTICLE VII shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of the Borrowers or other Loan Party in respect of the applicable Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the applicable Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise. SECTION 7.04 SUBROGATION; SUBORDINATION. Each Guarantor hereby agrees that until the indefeasible payment and satisfaction in full in cash of all applicable Guaranteed Obligations and the expiration and termination of the Commitments of the Lenders under this Agreement it shall waive any claim and shall not exercise any right or remedy, direct or indirect, arising by reason of any performance by it of its guarantee in SECTION 7.01, whether by subrogation or otherwise, against either Borrower or any other Guarantor of any of the applicable Guaranteed Obligations or any security for any of the applicable Guaranteed Obligations. Any Indebtedness of any Loan Party permitted pursuant to SECTION 6.01(d) shall be subordinated to such Loan Party's Obligations in the manner set forth in the Intercompany Note evidencing such Indebtedness. SECTION 7.05 REMEDIES. The Guarantors jointly and severally agree that, as between the Guarantors and the Lenders, the obligations of either Borrower under this Agreement and the Notes, if any, may be declared to be forthwith due and payable as provided in ARTICLE VIII (and shall be deemed to have become automatically due and payable in the circumstances provided in said ARTICLE VIII) for purposes of SECTION 7.01, notwithstanding any stay, injunction or other prohibition preventing such -105- declaration (or such obligations from becoming automatically due and payable) as against either Borrower and that, in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether or not due and payable by either Borrower) shall forthwith become due and payable by the applicable Guarantors for purposes of SECTION 7.01. SECTION 7.06 INSTRUMENT FOR THE PAYMENT OF MONEY. Each Guarantor hereby acknowledges that the guarantee in this ARTICLE VII constitutes an instrument for the payment of money, and consents and agrees that any Lender or Agent, at its sole option, in the event of a dispute by such Guarantor in the payment of any moneys due hereunder, shall have the right to bring a motion-action under New York CPLR Section 3213. SECTION 7.07 CONTINUING GUARANTEE. The guarantee in this ARTICLE VII is a continuing guarantee of payment, and shall apply to all applicable Guaranteed Obligations whenever arising. SECTION 7.08 GENERAL LIMITATION ON GUARANTEE OBLIGATIONS. In any action or proceeding involving any state corporate limited partnership or limited liability company law, or any applicable state, federal or foreign bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of any Guarantor under SECTION 7.01 would otherwise be held or determined to be void, voidable, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under SECTION 7.01, then, notwithstanding any other provision to the contrary, the amount of such liability shall, without any further action by such Guarantor, any Loan Party or any other person, be automatically limited and reduced to the highest amount that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding. SECTION 7.09 RELEASE OF GUARANTORS. If, in compliance with the terms and provisions of the Loan Documents, all or substantially all of the Equity Interests or property of any Guarantor are sold or otherwise transferred (a "TRANSFERRED GUARANTOR") to a person or persons, none of which is U.S. Borrower or a Subsidiary, such Transferred Guarantor shall, upon the consummation of such sale or transfer, be released from its obligations under this Agreement (including under SECTION 11.03 hereof) and its obligations to pledge and grant any Collateral owned by it pursuant to any Security Document and, in the case of a sale of all or substantially all of the Equity Interests of the Transferred Guarantor, the pledge of such Equity Interests to the Collateral Agent pursuant to the Security Documents shall be released, and the Collateral Agent shall take such actions as are necessary to effect each release described in this SECTION 7.09 in accordance with the relevant provisions of the Security Documents. ARTICLE VIII EVENTS OF DEFAULT SECTION 8.01 EVENTS OF DEFAULT. Upon the occurrence and during the continuance of the following events ("EVENTS OF DEFAULT"): (a) default shall be made in the payment of any principal of any Loan or any Reimbursement Obligation when and as the same shall become due and payable, whether at the due date thereof (including a Term Loan Repayment Date) or at a date fixed for prepayment (whether voluntary or mandatory) thereof or by acceleration thereof or otherwise; (b) default shall be made in the payment of any interest on any Loan or any Fee or any other amount (other than an amount referred to in paragraph (a) above) due under any Loan -106- Document, when and as the same shall become due and payable, and such default shall continue unremedied for a period of three Business Days; (c) any representation or warranty made or deemed made in or in connection with any Loan Document or the borrowings or issuances of Letters of Credit hereunder, or any representation, warranty, statement or information contained in any report, certificate, financial statement or other instrument furnished in connection with or pursuant to any Loan Document, shall prove to have been false or misleading in any material respect when so made, deemed made or furnished; (d) default shall be made in the due observance or performance by any Company of any covenant, condition or agreement contained in SECTION 5.02, 5.03(a) or 5.08 or in ARTICLE VI; (e) default shall be made in the due observance or performance by any Company of any covenant, condition or agreement contained in any Loan Document (other than those specified in paragraphs (a), (b) or (d) immediately above) and such default shall continue unremedied or shall not be waived for a period of 30 days after written notice thereof from the Administrative Agent or the Required Lenders to U.S. Borrower; (f) any Company shall (i) fail to pay any principal or interest, regardless of amount, due in respect of any Indebtedness (other than the Obligations), when and as the same shall become due and payable beyond any applicable grace period, or (ii) fail to observe or perform any other term, covenant, condition or agreement contained in any agreement or instrument evidencing or governing any such Indebtedness if the effect of any failure referred to in this clause (ii) is to cause, or to permit the holder or holders of such Indebtedness or a trustee or other representative on its or their behalf (with or without the giving of notice, the lapse of time or both) to cause, such Indebtedness to become due prior to its stated maturity or become subject to a mandatory offer purchase by the obligor; PROVIDED that it shall not constitute an Event of Default pursuant to this paragraph (f) unless the aggregate amount of all such Indebtedness referred to in clauses (i) and (ii) exceeds $10.0 million at any one time (PROVIDED that, in the case of Hedging Obligations, the amount counted for this purpose shall be the amount payable by all Companies if such Hedging Obligations were terminated at such time); (g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of any Company, or of a substantial part of the property of any Company, under Title 11 of the Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law; (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Company or for a substantial part of the property of any Company; or (iii) the winding-up or liquidation of any Company; and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; (h) any Company shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law; (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in clause (g) above; (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Company or for a substantial part of the property of any Company; (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding; (v) make a general -107- assignment for the benefit of creditors; (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due; (vii) take any action for the purpose of effecting any of the foregoing; or (viii) wind up or liquidate; (i) one or more judgments, orders or decrees for the payment of money in an aggregate amount in excess of $10.0 million shall be rendered against any Company or any combination thereof and the same shall remain undischarged, unvacated or unbonded for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to levy upon properties of any Company to enforce any such judgment; (j) one or more ERISA Events or with respect to Foreign Plans noncompliance with applicable legal requirements or Foreign Plan underfunding shall have occurred that, in the reasonable opinion of the Required Lenders, when taken together with all other such ERISA Events and with respect to Foreign Plans noncompliance with applicable legal requirements or Foreign Plan underfunding that have occurred, could reasonably be expected to result in a Material Adverse Effect or the imposition of a Lien on any properties of a Company; (k) any security interest and Lien purported to be created by any Security Document shall cease to be in full force and effect, or shall cease to give the Collateral Agent, for the benefit of the applicable Secured Parties, the Liens, rights, powers and privileges purported to be created and granted under such Security Documents (including a perfected first priority security interest in and Lien on, all of the Collateral thereunder (except as otherwise expressly provided in such Security Document)) in favor of the Collateral Agent, or shall be asserted by U.S. Borrower or any other Loan Party not to be, a valid, perfected, first priority (except as otherwise expressly provided in this Agreement or such Security Document) security interest in or Lien on the Collateral covered thereby; (l) any Loan Document or any material provisions thereof shall at any time and for any reason be declared by a court of competent jurisdiction to be null and void, or a proceeding shall be commenced by any Loan Party or any other person, or by any Governmental Authority, seeking to establish the invalidity or unenforceability thereof (exclusive of questions of interpretation of any provision thereof), or any Loan Party shall repudiate or deny any portion of its liability or obligation for the Obligations; (m) there shall have occurred a Change in Control; (n) the Acquisition shall not have occurred on the Closing Date in accordance with the terms and conditions of the Acquisition Agreement; or (o) the failure by either Borrower to make an Offer to Redeem when and as required by SECTION 2.10. then, and in every such event (other than an event with respect to Parent or either Borrower described in paragraph (g) or (h) above), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrowers, take either or both of the following actions, at the same or different times: (i) terminate forthwith the Commitments and (ii) declare the Loans and Reimbursement Obligations then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans and Reimbursement Obligations so declared to be due and payable, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrowers accrued hereunder and under any other Loan Document, shall become -108- forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrowers and the Guarantors, anything contained herein or in any other Loan Document to the contrary notwithstanding; and in any event, with respect to Parent or either Borrower described in paragraph (g) or (h) above, the Commitments shall automatically terminate and the principal of the Loans and Reimbursement Obligations then outstanding, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrowers accrued hereunder and under any other Loan Document, shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrowers and the Guarantors, anything contained herein or in any other Loan Document to the contrary notwithstanding. ARTICLE IX COLLATERAL ACCOUNT; APPLICATION OF COLLATERAL PROCEEDS SECTION 9.01 COLLATERAL ACCOUNT. (a) The Collateral Agent is hereby authorized to establish and maintain at its office at 677 Washington Boulevard, Stamford, Connecticut 06901, in the name of the Collateral Agent, a restricted deposit account designated "Ply Gem Industries, Inc. U.S. Collateral Account." Each U.S. Loan Party shall deposit into the U.S. Collateral Account from time to time (i) the cash proceeds of any of the U.S. Security Agreement Collateral (including pursuant to any disposition thereof) to the extent contemplated herein or in any other Loan Document, (ii) the cash proceeds of any Casualty Event with respect to U.S. Security Agreement Collateral, to the extent contemplated herein or in any other Loan Document, and (iii) any cash such U.S. Loan Party is required to pledge as additional collateral security hereunder pursuant to the Loan Documents. The Collateral Agent is hereby authorized to establish and maintain at its office at 677 Washington Boulevard, Stamford, Connecticut 06901, in the name of the Collateral Agent, a restricted deposit account designated "CWD Windows and Doors, Inc. Canadian Collateral Account." Each Canadian Loan Party shall deposit into the Canadian Collateral Account from time to time (i) the cash proceeds of any of the Canadian Security Agreement Collateral (including pursuant to any disposition thereof) to the extent contemplated herein or in any other Loan Document, (ii) the cash proceeds of any Casualty Event with respect to Canadian Security Agreement Collateral, to the extent contemplated herein or in any other Loan Document, and (iii) any cash such Canadian Loan Party is required to pledge as additional collateral security hereunder pursuant to the Loan Documents. (b) The balance from time to time in either Collateral Account shall constitute part of the relevant Collateral and shall not constitute payment of the Obligations until applied as hereinafter provided. So long as no Event of Default has occurred and is continuing or will result therefrom, the Collateral Agent shall within two Business Days of receiving a request of the applicable Loan Party for release of cash proceeds (i) from the Collateral Account constituting Net Cash Proceeds relating to any Casualty Event or Asset Sale remit such cash proceeds on deposit in either Collateral Account to or upon the order of such Loan Party, so long as such Loan Party has satisfied the conditions relating thereto set forth in SECTION 9.02 and (ii) with respect to the LC Sub-Account, remit such Net Cash Proceeds on deposit in the LC Sub-Account to or upon the order of such U.S. Loan Party (x) at such time as all Letters of Credit shall have been terminated and all of the liabilities in respect of the Letters of Credit have been paid in full or (y) otherwise in accordance with SECTION 2.18(i). At any time following the occurrence and during the continuance of an Event of Default, the Collateral Agent may (and, if instructed by the Required Lenders as specified herein, shall) in its (or their) discretion apply or cause to be applied (subject to collection) the balance from time to time outstanding to the credit of either Collateral Account to the payment of the applicable Obligations in the manner specified in SECTION 9.03 hereof subject, however, in the case of amounts deposited in the LC Sub-Account, to the provisions of SECTIONS 2.18(i) and 9.03. The -109- Loan Parties shall have no right to withdraw, transfer or otherwise receive any funds deposited in either Collateral Account except to the extent specifically provided herein. (c) Amounts on deposit in either Collateral Account shall be invested and reinvested from time to time in Cash Equivalents as the applicable Loan Party (or, after the occurrence and during the continuance of an Event of Default, the Collateral Agent) shall determine by written instruction to the Collateral Agent, or if no such instructions are given, then as the Collateral Agent, in its sole discretion, shall determine which Cash Equivalents shall be held in the name and be under the control of the Collateral Agent (or any sub-agent); PROVIDED that at any time after the occurrence and during the continuance of an Event of Default, the Collateral Agent may (and, if instructed by the Required Lenders as specified herein, shall) in its (or their) discretion at any time and from time to time elect to liquidate any such Cash Equivalents and to apply or cause to be applied the proceeds thereof to the payment of the applicable Obligations in the manner specified in SECTION 9.03 hereof subject, however, in the case of amounts deposited in the LC Sub-Account, to the provisions of SECTION 2.18(i). (d) Amounts deposited into the U.S. Collateral Account as cover for liabilities in respect of Letters of Credit under any provision of this Agreement requiring such cover shall be held by the Administrative Agent in a separate sub-account designated as the "LC Sub-Account" (the "LC SUB-ACCOUNT") and, subject to SECTION 2.18(I), all amounts held in the LC Sub-Account shall constitute collateral security to be applied in accordance with SECTION 2.18(i). (e) Earnings on the amounts deposited in any Collateral Account shall be for the account of the applicable Loan Party and absent any Default will be released to the applicable Borrower upon its request. SECTION 9.02 PROCEEDS OF DESTRUCTION, TAKING AND COLLATERAL DISPOSITIONS. So long as no Event of Default shall have occurred and be continuing, in the event the applicable Loan Party elects to reinvest Net Cash Proceeds in respect of any Asset Sale or Casualty Event in accordance with the provisions of SECTIONS 2.10(c) and 2.10(f) as applicable, the Collateral Agent shall receive at least 10 days' prior notice of each request for payment and shall not release any part of such Net Cash Proceeds, until the applicable Loan Party has furnished to the Collateral Agent (i) an Officers' Certificate setting forth: (A) a brief description of the reinvestment to be made, (B) the dollar amount of the expenditures to be made, or costs incurred by such Loan Party in connection with such reinvestment and (C) evidence that the properties acquired in connection with such reinvestment have a fair market value at least equal to the amount of such Net Cash Proceeds requested to be released from the applicable Collateral Account and (ii) all security agreements and Mortgages and other items required by the provisions of SECTIONS 5.10 and 5.11 to, among other things, subject such reinvestment properties to the Lien of the Security Documents in favor of the Collateral Agent, for its benefit and for the benefit of the other Secured Parties. SECTION 9.03 APPLICATION OF PROCEEDS. The proceeds received by the Collateral Agent in respect of any sale of, collection from or other realization upon all or any part of the Collateral pursuant to the exercise by the Collateral Agent of its remedies shall be applied, in full or in part, together with any other sums then held by the Collateral Agent pursuant to this Agreement, promptly by the Collateral Agent as follows: (a) FIRST, to the payment of all reasonable costs and expenses, fees, commissions and taxes of such sale, collection or other realization including compensation to the Collateral Agent and its agents and counsel, and all expenses, liabilities and advances made or incurred by the Collateral Agent in connection therewith and all amounts for which the Collateral Agent is entitled to indemnification pursuant to the provisions of any Loan Document, together with interest on each -110- such amount at the highest rate then in effect under this Agreement from and after the date such amount is due, owing or unpaid until paid in full; (b) SECOND, to the payment of all other reasonable costs and expenses of such sale, collection or other realization including compensation to the other applicable Secured Parties and their agents and counsel and all costs, liabilities and advances made or incurred by the other applicable Secured Parties in connection therewith, together with interest on each such amount at the highest rate then in effect under this Agreement from and after the date such amount is due, owing or unpaid until paid in full; (c) THIRD, without duplication of amounts applied pursuant to clauses (a) and (b) above, to the indefeasible payment in full in cash, PRO RATA, of interest and other amounts constituting applicable Obligations (other than principal and Reimbursement Obligations) in each case equally and ratably in accordance with the respective amounts thereof then due and owing; (d) FOURTH, to the indefeasible payment in full in cash, PRO RATA, of principal amount of the applicable Obligations (including Reimbursement Obligations); and (e) FIFTH, the balance, if any, to the person lawfully entitled thereto (including the applicable Loan Party or its successors or assigns) or as a court of competent jurisdiction may direct. In the event that any such proceeds are insufficient to pay in full the items described in clauses (a) through (e) of this SECTION 9.03, the applicable Loan Parties shall remain liable, jointly and severally, for any deficiency. ARTICLE X THE AGENTS SECTION 10.01 APPOINTMENT. Each Lender hereby irrevocably designates and appoints each of the Administrative Agent and the Collateral Agent as an agent of such Lender under this Agreement and the other Loan Documents. Each Lender irrevocably authorizes each Agent, in such capacity, through its agents or employees, to take such actions on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to such Agent by the terms of this Agreement and the other Loan Documents, together with such actions and powers as are reasonably incidental thereto. SECTION 10.02 AGENT IN ITS INDIVIDUAL CAPACITY. Each person serving as an Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent, and such person and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with U.S. Borrower or any Subsidiary or other Affiliate thereof as if it were not an Agent hereunder. SECTION 10.03 EXCULPATORY PROVISIONS. No Agent shall have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) no Agent shall be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) no Agent shall have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that such Agent is required to exercise in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in SEC- -111- TION 11.02), and (c) except as expressly set forth in the Loan Documents, no Agent shall have any duty to disclose or shall be liable for the failure to disclose, any information relating to U.S. Borrower or any of its Subsidiaries that is communicated to or obtained by the bank serving as such Agent or any of its Affiliates in any capacity. No Agent shall be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in SECTION 11.02) or in the absence of its own gross negligence or willful misconduct. No Agent shall be deemed to have knowledge of any Default unless and until written notice thereof is given to such Agent by a Borrower or a Lender, and no Agent shall be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in ARTICLE IV or elsewhere in any Loan Document. SECTION 10.04 RELIANCE BY AGENT. Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by a proper person. Each Agent also may rely upon any statement made to it orally and believed by it to be made by a proper person, and shall not incur any liability for relying thereon. Each Agent may consult with legal counsel (who may be counsel for either Borrower), independent accountants and other advisors selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or advisors. SECTION 10.05 DELEGATION OF DUTIES. Each Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by such Agent. Each Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Affiliates. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Affiliates of each Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent. SECTION 10.06 SUCCESSOR AGENT. Each Agent may resign as such at any time upon at least 30 days' prior notice to the Lenders, the Issuing Bank and U.S. Borrower. Upon any such resignation, the Required Lenders shall have the right, with, if no Default shall have occurred and be continuing, the consent of Borrower (such consent not to be unreasonably withheld), to appoint a successor Agent from among the Lenders. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Agent, which successor shall be a commercial banking institution organized under the laws of the United States (or any State thereof) or a United States branch or agency of a commercial banking institution, in each case, having combined capital and surplus of at least $250 million; PROVIDED that if such retiring Agent is unable to find a commercial banking institution which is willing to accept such appointment and which meets the qualifications set forth above, the retiring Agent's resignation shall nevertheless thereupon become effective, and the Lenders shall assume and perform all of the duties of the Agent hereunder until such time, if any, as the Required Lenders appoint a successor Agent. Upon the acceptance of its appointment as an Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. The fees -112- payable by U.S. Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between U.S. Borrower and such successor. After an Agent's resignation hereunder, the provisions of this ARTICLE X and SECTION 11.03 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Affiliates in respect of any actions taken or omitted to be taken by any of them while it was acting as Agent. SECTION 10.07 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender acknowledges that it has, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or related agreement or any document furnished hereunder or thereunder. SECTION 10.08 NAME AGENTS. The parties hereto acknowledge that the Co-Documentation Agents and the Syndication Agent hold such titles in name only, and that such titles confer no additional rights or obligations relative to those conferred on any Lender hereunder. SECTION 10.09 INDEMNIFICATION. The Lenders severally agree to indemnify each Agent in its capacity as such (to the extent not reimbursed by the Borrowers or the Guarantors and without limiting the obligation of the Borrowers or the Guarantors to do so), ratably according to their respective outstanding Loans and Commitments in effect on the date on which indemnification is sought under this SECTION 10.09 (or, if indemnification is sought after the date upon which all Commitments shall have terminated and the Loans and Reimbursement Obligations shall have been paid in full, ratably in accordance with such outstanding Loans and Commitments as 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 (whether before or after the payment of the Loans and Reimbursement Obligations) be imposed on, incurred by or asserted against such Agent in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan 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 such 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 that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from such Agent's gross negligence or willful misconduct. The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder. ARTICLE XI MISCELLANEOUS SECTION 11.01 NOTICES. Notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows: -113- (a) if to any Loan Party, to U.S. Borrower at: Ply Gem Industries, Inc. 303 West Major Kearney, Missouri 64060 Attention: Chief Financial Officer Telecopy No.: (816) 903-4330; (b) if to the Administrative Agent, the Collateral Agent or the Issuing Bank, to it at: UBS AG, Stamford Branch 677 Washington Boulevard Stamford, Connecticut 06901 Attention: Vladimira Holeckova Telecopy No.: (203) 719-4176; (c) if to a Lender, to it at its address (or telecopy number) set forth on the applicable Lender Addendum or in the Assignment and Assumption pursuant to which such Lender shall have become a party hereto; and (d) if to the Swingline Lender, to it at: UBS Loan Finance LLC 677 Washington Boulevard Stamford, Connecticut 06901 Attention: Vladimira Holeckova Telecopy No.: (203) 719-4176. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by telecopy or by certified or registered mail, in each case delivered, sent or mailed (properly addressed) to such party as provided in this SECTION 11.01 or in accordance with the latest unrevoked direction from such party given in accordance with this SECTION 11.01, and failure to deliver courtesy copies of notices and other communications shall in no event affect the validity or effectiveness of such notices and other communications. SECTION 11.02 WAIVERS; AMENDMENT. (a) No failure or delay by any Agent, the Issuing Bank or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of each Agent, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether any Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the time. -114- (b) Except as provided in paragraph (d) below, neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended, supplemented or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Borrowers and the Required Lenders or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent, the Collateral Agent (in the case of any Security Document) and the Loan Party or Loan Parties that are parties thereto, in each case with the written consent of the Required Lenders; PROVIDED that no such agreement shall: (i) increase the Commitment of any Lender without the written consent of such Lender; (ii) reduce the principal amount or premium of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any Fees payable hereunder, or change the currency of payment of any Obligation, without the written consent of each Lender affected thereby; (iii) postpone or extend the maturity of any Loan, or any scheduled date of payment of or the installment otherwise due on the principal amount of any Term Loan under SECTION 2.09, or the required date of payment of any Reimbursement Obligation, or any date for the payment of any interest or fees payable hereunder, or reduce the amount of, waive or excuse any such payment (except interest payable under SECTION 2.06(c)), or postpone the scheduled date of expiration of any Commitment or postpone the scheduled date of expiration of any Letter of Credit beyond the Revolving Maturity Date, without the written consent of each Lender affected thereby; (iv) change SECTION 2.14(b) or (c) in a manner that would alter the PRO RATA sharing of payments or setoffs required thereby, without the written consent of each Lender; (v) change the percentage set forth in the definition of "Required Lenders" or any other provision of any Loan Document (including this Section) specifying the number or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender (or each Lender of such Class, as the case may be); (vi) release any Guarantor from its Guarantee (except as expressly provided in ARTICLE VII), or limit its liability in respect of such Guarantee, without the written consent of each Lender; (vii) release all or a substantial portion of the Collateral from the Liens of the Security Documents or alter the relative priorities of the Obligations entitled to the Liens of the Security Documents (except in connection with securing additional Obligations equally and ratably with the other Obligations), in each case without the written consent of each Lender; (viii) change any provisions of any Loan Document in a manner that by its terms adversely affects the rights in respect of payments due to Lenders holding Loans of any Class differently than those holding Loans of any other Class, without the written consent of Lenders holding a majority in interest of the outstanding Loans and unused Commitments of each affected Class; (ix) without the consent of the Required Lenders and Term Loan Lenders holding more than 50% of the principal amount of the outstanding Term Loans, reduce the amount of, or extend the date of, any scheduled payment on the Term Loans required to be made under SECTION 2.09, change the order of application of prepayments among Term Loans and Revolving -115- Commitments under SECTION 2.10(h) or change the application of prepayments of Term Loans set forth in SECTION 2.10(h) to the remaining scheduled amortization payments to be made thereon under SECTION 2.09; or (x) without the consent of Term Loan Lenders holding more than 50% of the principal amount of each of the outstanding U.S. Term Loans and Canadian Term Loans, change the order of application of prepayments amounts of the U.S. Term Loans and the Canadian Term Loans under SECTION 2.10(h); PROVIDED, FURTHER, that (1) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Collateral Agent, the Issuing Bank or the Swingline Lender without the prior written consent of the Administrative Agent, the Issuing Bank or the Swingline Lender, as the case may be, (2) any waiver, amendment or modification of this Agreement that by its terms affects the rights or duties under this Agreement of the Revolving Lenders (but not the Term Loan Lenders), the Term Loan Lenders (but not the Revolving Lenders), or one Class of Term Loan Lenders (but no other Lenders) may be effected by an agreement or agreements in writing entered into by the Borrowers and requisite percentage in interest of the affected Class of Lenders that would be required to consent thereto under this Section if such Class of Lenders were the only Class of Lenders hereunder at the time, and (3) any waiver, amendment or modification prior to the completion of the primary syndication of the Commitments and Loans (as determined by the Administrative Agent) may not be effected without the written consent of the Administrative Agent. Notwithstanding the foregoing, any provision of this Agreement may be amended by an agreement in writing entered into by the Borrowers, the Required Lenders and the Administrative Agent (and, if their rights or obligations are affected thereby, the Issuing Bank and the Swingline Lender) if (x) by the terms of such agreement the Commitment of each Lender not consenting to the amendment provided for therein shall terminate upon the effectiveness of such amendment and (y) at the time such amendment becomes effective, each Lender not consenting thereto receives payment in full of the principal of, premium, if any, and interest accrued on each Loan made by it and all other amounts owing to it or accrued for its account under this Agreement. (c) If, in connection with any proposed change, waiver, discharge or termination of the provisions of this Agreement as contemplated by SECTION 11.02(b), the consent of the Required Lenders is obtained but the consent of one or more of such other Lenders whose consent is required is not obtained, then the Borrowers shall have the right to replace all, but not less than all, of such non-consenting Lender or Lenders (so long as all non-consenting Lenders are so replaced) with one or more persons pursuant to SECTION 2.16 so long as at the time of such replacement each such new Lender consents to the proposed change, waiver, discharge or termination. (d) Notwithstanding anything in SECTION 11.02(b) to the contrary, this Agreement and the other Loan Documents may be amended at any time and from time to time to increase the aggregate principal amount of U.S. Term Loans or to establish additional Classes of U.S. Term Loans (collectively, "ADDITIONAL TERM LOANS") by an agreement in writing entered into by the Borrowers, the Administrative Agent, the Collateral Agent and each person (including any Lender) that shall agree to make an Additional Term Loan (and each such person that shall not already be a Lender shall be reasonably acceptable to the Administrative Agent and shall, at the time such agreement becomes effective, become a Lender with the same effect as if it had originally been a Lender under this Agreement with the Term Loans set forth in such agreement); PROVIDED that (1) no more than an amount equal to $50.0 million of Additional Term Loans less the principal amount of all Senior Subordinated Notes issued after the Closing Date pursuant to SECTION 6.01(b) may be established pursuant to this SECTION 11.02(d) without the consent of the Required Lenders, (2) no Default or Event of Default has occurred and is continuing or would occur after giving effect thereto, (3) the covenants in SECTION 6.10 would be satisfied on a Pro Forma Basis on the date of any such amendment and for the most recent Test Period, after giving effect to -116- such Additional Term Loans, and (4) the Senior Leverage Ratio would not be greater than 2.5:1.0 after giving effect thereto. Any such agreement shall be reasonably satisfactory to the Administrative Agent, shall amend the provisions of this Agreement and the other Loan Documents and shall set forth the terms of the Additional Term Loans established thereby (including the amount and final maturity thereof (which shall not be earlier than the Term Loan Maturity Date), any provisions relating to the amortization or mandatory prepayment thereof (which shall be no more than ratable or PARI PASSU, as applicable, with the Term Loans), the interest to accrue and be payable thereon and any fees to be payable in respect thereof (PROVIDED that the Applicable Margins with respect to any Additional Term Loans shall not be more than 25 basis points higher than the Applicable Margins with respect to the Term Loans and that all other payment rights shall be pari passu with the Term Loans)) and effect such other changes (including changes to the provisions of this Section, SECTION 2.14 and the definition of "Required Lenders") as U.S. Borrower and the Administrative Agent shall deem necessary or advisable in connection with the Additional Term Loans; PROVIDED that no such agreement shall (i) effect any change described in SECTION 11.02(b) (i) through (ix) without the consent of each person required to consent to such change under such clause (it being agreed, however, that the Additional Term Loans will not, of themselves, be deemed to effect any of the changes described in SECTION 11.02(b)(vi) THROUGH (viii) and (1)), (ii) amend ARTICLE V, VI or VIII to establish any affirmative or negative covenant, Event of Default or remedy that by its terms benefits one or more Classes, but not all Classes, of Loans or Borrowings without the prior written consent of Lenders holding a majority in interest of the Loans and Commitments of each Class not so benefited (it being agreed that no provision requiring either Borrower to prepay Term Loans of one or more Classes pursuant to SECTIONS 2.10(c) through (h) shall be deemed to violate this clause) or (iii) change any other provision of this Agreement or any other Loan Document that creates rights in favor of Lenders holding Loans or Commitments of any existing Class, other than as necessary or advisable in the judgment of the Administrative Agent to cause such provision to take into account, or to make the benefits of such provision available to, Lenders holding Additional Term Loans. The Loans and Borrowings established pursuant to this paragraph shall constitute Loans and Borrowings under, and shall be entitled to all the benefits afforded by, this Agreement and the other Loan Documents, and shall, without limiting the foregoing, benefit equally and ratably from the Guarantees and security interests created by the Security Documents. The Loan Parties shall take any actions reasonably required by the Administrative Agent to ensure and/or demonstrate that the Lien and security interests granted by the Security Documents continue to be perfected under the UCC or otherwise after the establishment of any such Additional Term Loans. (e) Notwithstanding anything in this Agreement to the contrary, any Offer to Redeem shall be accepted by all Lenders to which such Offer to Redeem was made unless three Business Days prior to the proposed redemption date the Required Lenders give their consent for such Offer to Redeem to be declined by all such Lenders. SECTION 11.03 EXPENSES; INDEMNITY. (a) The Loan Parties agree, jointly and severally, to pay, promptly upon demand: (i) all reasonable costs and expenses incurred by the Arrangers, the Administrative Agent, the Collateral Agent, the Swingline Lender and the Issuing Bank, including the reasonable fees, charges and disbursements of Advisors for the Arrangers, the Administrative Agent, the Collateral Agent, the Swingline Lender and the Issuing Bank, in connection with the syndication of the Loans and Commitments, the preparation, execution and delivery of the Loan Documents, the administration of the Loans and Commitments, the perfection and maintenance of the Liens securing the Collateral and any actual or proposed amendment, supplement or waiver of any of the Loan Documents (whether or not the transactions contemplated hereby or thereby shall be consummated); -117- (ii) all costs and expenses incurred by the Administrative Agent or the Collateral Agent, including the reasonable fees, charges and disbursements of Advisors for the Administrative Agent and the Collateral Agent, in connection with any action, suit or other proceeding affecting the Collateral or any part thereof, in which action, suit or proceeding the Administrative Agent or the Collateral Agent is made a party or participates or in which the right to use the Collateral or any part thereof is threatened, or in which it becomes necessary in the judgment of the Administrative Agent or the Collateral Agent to defend or uphold the Liens granted by the Security Documents (including any action, suit or proceeding to establish or uphold the compliance of the Collateral with any Requirements of Law); (iii) all costs and expenses incurred by the Arrangers, the Administrative Agent, the Collateral Agent, the Swingline Lender, the Issuing Bank or any Lender, including the reasonable fees, charges and disbursements of Advisors for the Arrangers, the Administrative Agent, the Collateral Agent, the Swingline Lender, the Issuing Bank or any Lender, incurred in connection with the enforcement or protection of its rights under the Loan Documents, including its rights under this SECTION 11.03(a), or in connection with the Loans made or Letters of Credit issued hereunder and the collection of the Obligations, including all such costs and expenses incurred during any workout, restructuring or negotiations in respect of the Obligations; and (iv) all documentary and similar taxes and charges in respect of the Loan Documents. For purposes of this SECTION 11.03(a), "ADVISORS" shall mean legal counsel (including local counsel), auditors, accountants, consultants, appraisers or other advisors; PROVIDED that (x) in the case of clause (i), the engagement of any Advisors other than legal counsel (including local counsel) shall be subject to approval by U.S. Borrower (which approval shall not be unreasonably withheld) and (y) in the case of clause (iii), the engagement of any Advisors other than one firm of legal counsel by any Lender shall be subject to approval by the Administrative Agent. (b) The Loan Parties agree, jointly and severally, to indemnify the Agents, each Lender, the Issuing Bank and the Swingline Lender, each Affiliate of any of the foregoing persons and each of their respective partners, controlling persons, directors, officers, trustees, employees and agents (each such person being called an "INDEMNITEE") against, and to hold each Indemnitee harmless from, all reasonable out-of-pocket costs and any and all losses, claims, damages, liabilities, penalties, judgments, suits and related expenses, including reasonable counsel fees, charges and disbursements, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution, delivery, performance, administration or enforcement of the Loan Documents, (ii) any actual or proposed use of the proceeds of the Loans or issuance of Letters of Credit, (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto, or (iv) any actual or alleged presence or Release or threatened Release of Hazardous Materials, on, at, under or from any property owned, leased or operated by any Company at any time, or any Environmental Claim related in any way to any Company; PROVIDED that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted solely from the gross negligence or willful misconduct of such Indemnitee. (c) The provisions of this SECTION 11.03 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of the Loans and Reimbursement Obligations, the release of all or any portion of the Collateral, the expiration of the Commitments, the expiration of any Letter of Credit, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Agents, the Issuing Bank or any Lender. All -118- amounts due under this SECTION 11.03 shall be payable on written demand therefor accompanied by reasonable documentation with respect to any reimbursement, indemnification or other amount requested. (d) To the extent that either Borrower fails to promptly pay any amount required to be paid by it to the Agents, the Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Agents, the Issuing Bank or the Swingline Lender, as the case may be, such Lender's PRO RATA share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; PROVIDED that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against any of the Agents, the Issuing Bank or the Swingline Lender in its capacity as such. For purposes hereof, a Lender's "PRO RATA share" shall be determined based upon its share of the sum of the total Revolving Exposure, outstanding Term Loans and unused Commitments at the time. SECTION 11.04 SUCCESSORS AND ASSIGNS. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), except that the Borrowers may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent, the Collateral Agent, the Issuing Lender, the Swingline Lender and each Lender (and any attempted assignment or transfer by either Borrower without such consent shall be null and void). Nothing in this Agreement, express 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 Issuing Bank that issues any Letter of Credit) and, to the extent expressly contemplated hereby, the other Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) Any Lender shall have the right at any time to assign to one or more banks, insurance companies, investment companies or funds or other institutions (other than the Borrowers, Parent or any Subsidiary thereof) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); PROVIDED that (i) except in the case of an assignment to a Lender, an Affiliate of a Lender or a Lender Affiliate, the Administrative Agent and U.S. Borrower (and, in the case of an assignment of all or a portion of a Revolving Commitment or any Lender's obligations in respect of its LC Exposure or Swingline Exposure, the Issuing Bank and the Swingline Lender) must give its prior written consent to such assignment (which consents shall not be unreasonably withheld or delayed), (ii) except in the case of an assignment to a Lender, an Affiliate of a Lender or a Lender Affiliate, any assignment made in connection with the syndication of the Commitments and Loans by the Arrangers or an assignment of the entire remaining amount of the assigning Lender's Commitment or Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $2.5 million unless each of U.S. Borrower and the Administrative Agent otherwise consents, (iii) 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, except that this clause (iii) 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 other than an assignment of any rights and obligations with respect to any Term Loans which may be assigned only on a PRO RATA basis between U.S. Term Loans and Canadian Term Loans (I.E., an assignment of U.S. Term Loans representing a percentage of the total principal amount of U.S. Term Loans then outstanding shall be accompanied by an assignment of Canadian Term Loans representing the same percentage of the total principal amount of Canadian Term Loans then outstanding), (iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500, (v) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire and (vi) in the case of an assignment -119- to an Affiliate of Parent, such Affiliate hereby agrees that, unless it holds all Loans of the applicable Class, its Loans and Commitments shall be disregarded for purposes of determining the requisite percentage or number of Lenders (or Lenders of any Class) required to waive, amend or modify any rights under any Loan Document or make any determination or grant any consent thereunder; and PROVIDED, FURTHER, that any consent of U.S. Borrower otherwise required under this paragraph shall not be required if a Default has occurred and is continuing or during the primary syndication of the Commitments. Subject to acceptance and recording thereof pursuant to paragraph (d) of this Section, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement (PROVIDED that any liability of either Borrower to such assignee under SECTION 2.12 or 2.13 shall be limited to the amount, if any, that would have been payable thereunder by such Borrower in the absence of such assignment, except to the extent any such amounts are attributable to a Change in Law occurring after the date of such assignment), and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of SECTIONS 2.12, 2.13, 2.15 and 11.03). (c) The Administrative Agent, acting for this purpose as an agent of the Borrowers, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive in the absence of manifest error, and the Borrowers, the Administrative Agent, the Issuing Bank and the Lenders may treat each person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrowers, the Issuing Bank, the Collateral Agent, the Swingline Lender and any Lender (with respect to its own interest only), at any reasonable time and from time to time upon reasonable prior notice. (d) Upon its receipt of a duly completed Assignment and Assumption 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 Assumption 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. (e) Any Lender shall have the right at any time, without the consent of either Borrower, the Administrative Agent, the Issuing Bank or the Swingline Lender, to sell participations to one or more banks or other entities (a "PARTICIPANT") in all or a portion of such Lender's rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); PROVIDED that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers, the Administrative Agent, the Issuing Bank 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 the Loan Documents and to approve any amendment, modification or waiver of any provision of the Loan Documents; PROVIDED that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in clause (i), (ii) or (iii) of the first proviso to SEC- -120- TION 11.02(b) that affects such Participant. Subject to paragraph (f) of this Section, the Borrowers agree that each Participant shall be entitled to the benefits of SECTIONS 2.12, 2.13 and 2.15, so long as such Participant complies with the requirements of each such Section, 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 11.08 as though it were a Lender; PROVIDED that such Participant agrees in writing to be subject to SECTION 2.14(c) as though it were a Lender. Each Lender shall, acting for this purpose as an agent of the Borrowers, maintain at one of its offices a register for the recordation of the names and addresses of its Participants, and the amount and terms of its participations; PROVIDED that no Lender shall be required to disclose or share the information contained in such register with the Borrowers or any other party, except as required by applicable law. (f) A Participant shall not be entitled to receive any greater payment under SECTION 2.12, 2.13 or 2.15 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 prior written consent of the applicable Borrower (which consent shall not be unreasonably withheld or delayed). (g) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including 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 the case of any Lender that is a fund that invests in bank loans, such Lender may, without the consent of the Borrowers or the Administrative Agent, collaterally assign or pledge all or any portion of its rights under this Agreement, including the Loans and Notes or any other instrument evidencing its rights as a Lender under this Agreement, to any holder of, trustee for, or any other representative of holders of, obligations owed or securities issued, by such fund, as security for such obligations or securities. SECTION 11.05 SURVIVAL OF AGREEMENT. All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Agents, the Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of SECTIONS 2.12, 2.14, 2.15 and 11.03 and ARTICLE X shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the payment of the Reimbursement Obligations, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof. SECTION 11.06 COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and the Fee Letter constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. This Agreement shall become effective when it shall -121- have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement. SECTION 11.07 SEVERABILITY. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. SECTION 11.08 RIGHT OF SETOFF. If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates are hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of either Borrower against any and all of the obligations of such Borrower now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have. SECTION 11.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) This Agreement shall be construed in accordance with and governed by the law of the State of New York, without regard to conflicts of law principles that would require the application of the laws of another jurisdiction. (b) Each Loan Party hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any right that the Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against any Loan Party or its properties in the courts of any jurisdiction. (c) Each Loan Party hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in SECTION 11.09(b). Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (d) Each party to this Agreement irrevocably consents to service of process in any action or proceeding arising out of or relating to any Loan Document, in the manner provided for notices (other than telecopy) in SECTION 11.01. Nothing in this Agreement or any other Loan Document will af- -122- fect the right of any party to this Agreement to serve process in any other manner permitted by applicable law. SECTION 11.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. SECTION 11.11 HEADINGS. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement. SECTION 11.12 CONFIDENTIALITY. Each of the Administrative Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates' and Lender Affiliates' directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential pursuant to the terms hereof), (b) to the extent requested by any regulatory or self-regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this SECTION 11.12, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the applicable Borrower and its obligations or (iii) any rating agency for the purpose of obtaining a credit rating applicable to any Loan or Loan Party, (g) with the consent of U.S. Borrower or (h) to the extent such Information (i) is publicly available at the time of disclosure or becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis from a source other than U.S. Borrower or any Subsidiary. For the purposes of this Section, "INFORMATION" means all information received from U.S. Borrower or any Subsidiary relating to U.S. Borrower or any Subsidiary or its business that is clearly identified at the time of delivery as confidential, other than any such information that is available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by U.S. Borrower or any Subsidiary. Any person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such person has exercised the same degree of care to maintain the confidentiality of such Information as such person would accord to its own confidential information. SECTION 11.13 INTEREST RATE LIMITATION. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively, the "CHARGES"), -123- shall exceed the maximum lawful rate (the "MAXIMUM RATE") which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender. SECTION 11.14 LENDER ADDENDUM. Each Lender to become a party to this Agreement on the date hereof shall do so by delivering to the Administrative Agent a Lender Addendum duly executed by such Lender, the applicable Borrower and the Administrative Agent. SECTION 11.15 OBLIGATIONS ABSOLUTE. To the fullest extent permitted by applicable law, all obligations of the Loan Parties hereunder shall be absolute and unconditional irrespective of: (a) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of any Loan Party; (b) any lack of validity or enforceability of any Loan Document or any other agreement or instrument relating thereto against any Loan Party; (c) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from any Loan Document or any other agreement or instrument relating thereto; (d) any exchange, release or non-perfection of any other Collateral, or any release or amendment or waiver of or consent to any departure from any guarantee, for all or any of the Obligations; (e) any exercise or non-exercise, or any waiver of any right, remedy, power or privilege under or in respect hereof or any Loan Document; or (f) any other circumstances which might otherwise constitute a defense available to, or a discharge of, the Loan Parties, except for the defense of payment or performance of such obligations. SECTION 11.16 JUDGMENT CURRENCY. (a) Each Borrower's obligation hereunder and under the other Loan Documents to make payments in dollars shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any currency other than dollars, except to the extent that such tender or recovery results in the effective receipt by the Administrative Agent or the respective Lender of the full amount of dollars expressed to be payable to the Administrative Agent or such Lender under this Agreement or the other Loan Documents. If, for the purpose of obtaining or enforcing judgment against a Borrower in any court or in any jurisdiction, it becomes necessary to convert into or from any currency other than dollars (such other currency being hereinafter referred to as the "JUDGMENT CURRENCY") an amount due in dollars, the conversion shall be made at the rate of exchange (as quoted by the Administrative Agent or if the Administrative Agent does not quote a rate of exchange on such currency, by a known dealer in such currency designated by the Administrative Agent) determined, in each case, as of the Business Day immediately preceding the day on which the -124- 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, each Borrower covenants and agrees to pay, or cause to be paid, such additional amounts, if any (but in any event not a lesser amount) as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of dollars 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 any rate of exchange for this SECTION 11.16, such amounts shall include any premium and costs payable in connection with the purchase of dollars. [Signature Pages Follow] -125- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. PLY GEM INDUSTRIES, INC. By: /s/ Lee D. Meyer ---------------------------------- Name: Lee D. Meyer Title: President and Chief Executive Officer CWD WINDOWS AND DOORS, INC. By: /s/ Lee D. Meyer ---------------------------------- Name: Lee D. Meyer Title: Vice President PLY GEM HOLDINGS, INC. By: /s/ Lee D. Meyer ---------------------------------- Name: Lee D. Meyer Title: President and Chief Executive Officer GREAT LAKES WINDOW, INC. KROY BUILDING PRODUCTS, INC. NAPCO, INC. NAPCO WINDOW SYSTEMS, INC. THERMAL-GARD, INC. VARIFORM, INC. By: /s/ Lee D. Meyer ---------------------------------- Name: Lee D. Meyer Title: Vice President S-1 UBS SECURITIES LLC, as a Joint Lead Arranger By: /s/ David A. Juge ---------------------------------- Name: David A. Juge Title: Managing Director By: /s/ Oliver O. Trumbo II ---------------------------------- Name: Oliver O. Trumbo II Title: Director DEUTSCHE BANK SECURITIES INC., as a Joint Lead Arranger By: /s/ Kevin M. Sherlock ---------------------------------- Name: Kevin M. Sherlock Title: Director By: /s/ Mark Fedorcik ---------------------------------- Name: Mark Fedorcik Title: Managing Director CIBC WORLD MARKETS CORP., as a Co-Arranger By: /s/ Gerald Girardi ---------------------------------- Name: Gerald Girardi Title: Executive Director CIBC World Markets Corp., as Agent MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, as a Co-Arranger By: /s/ Sheila McGillicuddy ---------------------------------- Name: Sheila McGillicuddy Title: Director S-2 UBS AG, STAMFORD BRANCH, as Issuing Bank, Administrative Agent and Collateral Agent By: /s/ Juan Zuniga ---------------------------------- Name: Juan Zuniga Title: Associate Director Banking Products Services US By: /s/ Wilfred V. Saint ---------------------------------- Name: Wilfred V. Saint Title: Associate Director Banking Products Services US DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH, as Syndication Agent By: /s/ Paul J. O'Leary ---------------------------------- Name: Paul J. O'Leary Title: Vice President By: /s/ Susan LeFevre ---------------------------------- Name: Susan LeFevre Title: Director CANADIAN IMPERIAL BANK OF COMMERCE, as Co-Documentation Agent By: /s/ Gerald Girardi ---------------------------------- Name: Gerald Girardi Title: Executive Director CIBC World Markets Corp., as Agent MERRILL LYNCH CAPITAL CORPORATION, as Co-Documentation Agent By: /s/ Sheila McGillicuddy ---------------------------------- Name: Sheila McGillicuddy Title: Vice President UBS AG, LOAN FINANCE LLC, as Swingline Lender By: /s/ Juan Zuniga ---------------------------------- Name: Juan Zuniga Title: Associate Director Banking Products Services US By: /s/ Wilfred V. Saint ---------------------------------- Name: Wilfred V. Saint Title: Associate Director Banking Products Services US S-3 ANNEX I Applicable Margin REVOLVING LOANS TOTAL ------------------------ APPLICABLE LEVERAGE RATIO EURODOLLAR ABR FEE ------------------ ---------- ----------- ---------- Level I 2.50% 1.50% 0.50% ------- >4.50:1.0 Level II 2.25% 1.25% 0.50% -------- <4.50:1.0 but >3.75:1.0 Level III 2.00% 1.00% 0.375% --------- <3.75:1.0 but >3.00:1.0 Level IV 1.75% 0.75% 0.375% -------- <3.00:1.0 each change in the applicable margin or applicable fee resulting from a change in the total leverage ratio shall be effective with respect to all loans and letters of credit outstanding on and after the date of delivery to the administrative agent of the financial statements and certificates required by section 5.01(a) or (b) and section 5.01(c), respectively, indicating such change until the date immediately preceding the next date of delivery of such financial statements and certificates indicating another such change. notwithstanding the foregoing, the leverage ratio shall be deemed to be in level i (i) from the closing date to the date of delivery to the administrative agent of the financial statements and certificates required by section 5.01(a) or (b) and section 5.01(c) for the fiscal period ended at least six months after the closing date, (ii) at any time during which u.s. borrower has failed to deliver the financial statements and certificates required by section 5.01(a) or (b) and section 5.01(c), respectively, and (iii) at any time during the existence of an event of default. ANNEX II Amortization Table ------------------------------------------------------------------------- U.S. TERM LOAN CANADIAN TERM LOAN DATE AMOUNT AMOUNT ------------------------------------------------------------------------- June 30, 2004 $400,000 $75,000 ------------------------------------------------------------------------- September 30, 2004 $400,000 $75,000 ------------------------------------------------------------------------- December 31, 2004 $400,000 $75,000 ------------------------------------------------------------------------- March 31, 2005 $400,000 $75,000 ------------------------------------------------------------------------- June 30, 2005 $400,000 $75,000 ------------------------------------------------------------------------- September 30, 2005 $400,000 $75,000 ------------------------------------------------------------------------- December 31, 2005 $400,000 $75,000 ------------------------------------------------------------------------- March 31, 2006 $400,000 $75,000 ------------------------------------------------------------------------- June 30, 2006 $400,000 $75,000 ------------------------------------------------------------------------- September 30, 2006 $400,000 $75,000 ------------------------------------------------------------------------- December 31, 2006 $400,000 $75,000 ------------------------------------------------------------------------- March 31, 2007 $400,000 $75,000 ------------------------------------------------------------------------- June 30, 2007 $400,000 $75,000 ------------------------------------------------------------------------- September 30, 2007 $400,000 $75,000 ------------------------------------------------------------------------- December 31, 2007 $400,000 $75,000 ------------------------------------------------------------------------- March 31, 2008 $400,000 $75,000 ------------------------------------------------------------------------- June 30, 2008 $400,000 $75,000 ------------------------------------------------------------------------- September 30, 2008 $400,000 $75,000 ------------------------------------------------------------------------- December 31, 2008 $400,000 $75,000 ------------------------------------------------------------------------- March 31, 2009 $400,000 $75,000 ------------------------------------------------------------------------- June 30, 2009 $400,000 $75,000 ------------------------------------------------------------------------- September 30, 2009 $400,000 $75,000 ------------------------------------------------------------------------- December 31, 2009 $400,000 $75,000 ------------------------------------------------------------------------- March 31, 2010 $400,000 $75,000 ------------------------------------------------------------------------- June 30, 2010 $37,600,000 $7,050,000 ------------------------------------------------------------------------- September 30, 2010 $37,600,000 $7,050,000 ------------------------------------------------------------------------- December 31, 2010 $37,600,000 $7,050,000 ------------------------------------------------------------------------- February 12, 2011 $37,600,000 $7,050,000 ------------------------------------------------------------------------- Total $160,000,000 $30,000,000 ------------------------------------------------------------------------- SCHEDULE 1.01(b) ---------------- CONSOLIDATED EBITDA ADDBACKS (IN $ MILLIONS)
* To be finalized along with the 2003 audit. SCHEDULE 5.13(c) ---------------- 1. 30499 Tracy Road, Toledo, Ohio 2. 2719 N. Division Avenue, York, NE 3. 91 Variform Drive, Martinsburg, WV 4. 7501 Orr Road, Charlotte, NC
