-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PbEM9IMnJVDs9bRcWr8KR8kD3SUPYQu1V1QciLSUX+E70ibNUOde7zhf2hesqP1k fesJKj8+nsev16MhvuqFOg== 0001005229-02-000028.txt : 20021203 0001005229-02-000028.hdr.sgml : 20021203 20021203121348 ACCESSION NUMBER: 0001005229-02-000028 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20021203 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20021203 FILER: COMPANY DATA: COMPANY CONFORMED NAME: YALE INDUSTRIAL PRODUCTS INC CENTRAL INDEX KEY: 0001062624 IRS NUMBER: 710585582 STATE OF INCORPORATION: MO FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-53759-06 FILM NUMBER: 02846869 BUSINESS ADDRESS: STREET 1: 140 JOHN JAMES AUDUBON PARKWAY CITY: AMHERST STATE: NY ZIP: 19228-1197 BUSINESS PHONE: 7166895400 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AUTOMATIC SYSTEMS INC CENTRAL INDEX KEY: 0001062623 IRS NUMBER: 430978181 STATE OF INCORPORATION: MO FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-53759-05 FILM NUMBER: 02846870 BUSINESS ADDRESS: STREET 1: 140 JOHN JAMES AUDUBON PARKWAY CITY: AMHERST STATE: NY ZIP: 19228-1197 BUSINESS PHONE: 7166895400 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LICO STEEL INC CENTRAL INDEX KEY: 0001062622 STATE OF INCORPORATION: MO FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-53759-04 FILM NUMBER: 02846871 BUSINESS ADDRESS: STREET 1: 140 JOHN JAMES AUDUBON PARKWAY CITY: AMHERST STATE: NY ZIP: 19228-1197 BUSINESS PHONE: 7166895400 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLUMBUS MCKINNON CORP CENTRAL INDEX KEY: 0001005229 STANDARD INDUSTRIAL CLASSIFICATION: CONSTRUCTION MACHINERY & EQUIP [3531] IRS NUMBER: 160547600 STATE OF INCORPORATION: NY FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-27618 FILM NUMBER: 02846868 BUSINESS ADDRESS: STREET 1: 140 JOHN JAMES AUDUBON PKWY CITY: AMHERST STATE: NY ZIP: 14228-1197 BUSINESS PHONE: 7166895400 MAIL ADDRESS: STREET 1: 140 JOHN JAMES AUDUBON PARKWAY CITY: AMHERST STATE: NY ZIP: 14228-1197 8-K 1 newca8k.txt NEW CREDIT FACILITY SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): DECEMBER 3, 2002 ----------------- COLUMBUS MCKINNON CORPORATION ----------------------------- (Exact name of registrant as specified in its charter) NEW YORK -------- (State or other jurisdiction of incorporation) 0-27618 16-0547600 ------------------------ --------------------------------- (Commission File Number) (IRS Employer Identification No.) 140 JOHN JAMES AUDUBON PARKWAY, AMHERST, NEW YORK 14228-1197 - ------------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code: (716) 689-5400 -------------- - -------------------------------------------------------------- (Former name or former address, if changed since last report) Item 5. OTHER EVENTS On November 27, 2002, the registrant announced the refinancing of its existing senior secured credit facility with a new senior secured credit facility and senior second secured term loan. A copy of new agreements and the press release issued in connection with such action are attached hereto as Exhibit 10.1, Exhibit 10.2, Exhibit 10.3, and Exhibit 99, respectively. .. Item 7. EXHIBITS EXHIBIT NUMBER DESCRIPTION 10.1 Amended and Restated Credit Agreement, dated as of November 21, 2002, among Columbus McKinnon Corporation, as Borrower, Larco Industrial Services Ltd., Columbus McKinnon Limited, the Guarantors named herein, the lenders from time to time party thereto, Fleet Capital Corporation, as Administrative Agent, Fleet National Bank, as Issuing Lender, and Fleet Securities, Inc. as Arranger. 10.2 Financing Agreement, dated as of November 21, 2002, by and among Columbus McKinnon Corporation, as Borrower, the Guarantors, the financial institutions from time to time party hereto, as Lenders, and Regiment Capital III, L.P., as Agent. 10.3 Financing Agreement, dated as of November 21, 2002, by and among Columbus McKinnon Limited, Larco Industrial Services Ltd., as Borrowers, the financial institutions from time to time party hereto, as Lenders, and Regiment Capital III, L.P., as Agent. 99 Press Release dated November 27, 2002 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. COLUMBUS MCKINNON CORPORATION ----------------------------- By: /S/ ROBERT L. MONTGOMERY, JR. ------------------------------ Name: Robert L. Montgomery, Jr. Title: Executive Vice President Dated: DECEMBER 3, 2002 EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION - -------------- ----------- 10.1 Fleet Amended and Restated Credit Agreement 10.2 Regiment Financing Agreement with Domestic Borrowers 10.3 Regiment Financing Agreement with Canadian Borrowers 99 Press Release dated November 27, 2002 EX-10 3 fleetagreement.txt FLEET CREDIT AGREEMENT - -------------------------------------------------------------------------------- AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT dated as of November 21, 2002 among COLUMBUS MCKINNON CORPORATION, as Borrower, LARCO INDUSTRIAL SERVICES LTD, COLUMBUS MCKINNON LIMITED, THE GUARANTORS NAMED HEREIN, THE LENDERS PARTY HERETO FROM TIME TO TIME, FLEET CAPITAL CORPORATION, as Administrative Agent FLEET NATIONAL BANK, as Issuing Lender, CONGRESS FINANCIAL CORPORATION (NEW ENGLAND), Co-Syndication Agent, KEY BANK N.A., as Co-Syndication Agent, MERRILL LYNCH CAPITAL, A DIVISION OF MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC., as Documentation Agent and FLEET SECURITIES, INC., as Arranger - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE OF CONTENTS PAGE ---- AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT............................1 ARTICLE 1. DEFINITIONS........................................................1 1.1. DEFINED TERMS......................................................1 1.2. CLASSIFICATION OF LOANS AND BORROWINGS............................41 1.3. TERMS GENERALLY...................................................41 1.4. ACCOUNTING TERMS; GAAP............................................41 1.5. JOINT AND SEVERAL OBLIGATIONS; DESIGNATED FINANCIAL OFFICERS................................................................42 ARTICLE 2. THE CREDITS.......................................................44 2.1. REVOLVING LOANS..................................................44 2.2. TERM LOAN.........................................................46 2.3. CONVERSION OPTIONS................................................47 2.4. DOMESTIC LETTERS OF CREDIT AND FOREIGN LETTERS OF CREDIT..........50 2.5. LOANS AND BORROWINGS; FUNDING OF BORROWINGS.......................55 2.6. EXPIRATION, TERMINATION OR REDUCTION OF COMMITMENTS..............57 2.7. PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF SET- OFFS; COLLECTION........................................................58 2.8. PREPAYMENT OF LOANS...............................................62 2.9. FEES..............................................................68 2.10. INCREASED COSTS..................................................69 2.11. TAXES; SETOFF; ETC..............................................70 2.12. MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS...................71 2.13. CHANGE IN DOMESTIC BORROWING BASE, CANADIAN BORROWING BASE AND TERM LOAN BORROWING BASE.............................72 2.14. CANADIAN FACILITY...............................................72 ARTICLE 3. GUARANTEE BY GUARANTORS...........................................73 3.1. THE GUARANTEE.....................................................73 3.2. OBLIGATIONS UNCONDITIONAL.........................................74 3.3. REINSTATEMENT.....................................................75 3.4. SUBROGATION.......................................................75 3.5. REMEDIES..........................................................76 3.6. INSTRUMENT FOR THE PAYMENT OF MONEY...............................76 3.7. CONTINUING GUARANTEE..............................................76 3.8. GENERAL LIMITATION ON AMOUNT OF OBLIGATIONS GUARANTEED..............................................................76 3.9. LUXEMBOURG GUARANTOR'S LIMITATION................................76 ARTICLE 4. THE COLLATERAL...................................................77 4.1. GRANT OF SECURITY INTEREST........................................77 4.2. SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CREDIT PARTIES......................................................78 4.3. COLLECTION OF PROCEEDS OF ACCOUNTS RECEIVABLE.....................86 4.4. FIXTURES, ETC....................................................88 4.5. RIGHT OF AGENT TO DISPOSE OF COLLATERAL, ETC......................89 4.6. RIGHT OF AGENT TO USE AND OPERATE COLLATERAL, ETC.................89 4.7. PROCEEDS OF COLLATERAL............................................90 -i- 4.8. RELATION TO COLLATERAL DOCUMENTS.................................90 4.9. MARSHALLING.......................................................91 ARTICLE 5. REPRESENTATIONS AND WARRANTIES....................................91 5.1. ORGANIZATION;POWERS...............................................91 5.2. AUTHORIZATION; ENFORCEABILITY.....................................92 5.3. GOVERNMENTAL APPROVALS; NO CONFLICTS..............................92 5.4. FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE...................92 5.5. PROPERTIES........................................................93 5.6. LITIGATION AND ENVIRONMENTAL MATTERS..............................94 5.7. COMPLIANCE WITH LAWS AND AGREEMENTS...............................96 5.8. INVESTMENT AND HOLDING COMPANY STATUS.............................96 5.9. TAXES.............................................................96 5.10. ERISA............................................................97 5.11. DISCLOSURE.......................................................97 5.12. CAPITALIZATION...................................................98 5.13. SUBSIDIARIES.....................................................98 5.14. MATERIAL INDEBTEDNESS, LIENS AND AGREEMENTS......................98 5.15. FEDERAL RESERVE REGULATIONS......................................99 5.16. SOLVENCY.........................................................99 5.17. FORCE MAJEURE...................................................100 5.18. ACCOUNTS RECEIVABLE.............................................100 5.19. LABOR AND EMPLOYMENT MATTERS....................................101 5.20. BANK ACCOUNTS...................................................102 5.21. OBLIGATIONS AS SENIOR DEBT......................................102 5.22. SENIOR SUBORDINATED NOTE DOCUMENTS AND TRANCHE B LOAN DOCUMENTS.........................................................102 5.23. CERTAIN TRANSACTIONS............................................102 5.24. COLUMBUS MCKINNON FINANCE CORPORATION...........................102 ARTICLE 6. CONDITIONS......................................................103 6.1. CLOSING DATE.....................................................103 6.2. EACH EXTENSION OF CREDIT.........................................107 ARTICLE 7. AFFIRMATIVE COVENANTS............................................108 7.1. FINANCIAL STATEMENTS AND OTHER INFORMATION.......................108 7.2. NOTICES OF MATERIAL EVENTS.......................................111 7.3. EXISTENCE; CONDUCT OF BUSINESS...................................112 7.4. PAYMENT OF OBLIGATIONS...........................................112 7.5. MAINTENANCE OF PROPERTIES; INSURANCE.............................112 7.6. BOOKS AND RECORDS; INSPECTION RIGHTS.............................113 7.7. FISCAL YEAR......................................................114 7.8. COMPLIANCE WITH LAWS.............................................114 7.9. USE OF PROCEEDS..................................................114 7.10. CERTAIN OBLIGATIONS RESPECTING SUBSIDIARIES.....................114 7.11. ERISA...........................................................114 7.12. ENVIRONMENTAL MATTERS; REPORTING AND ASSESSMENTS................115 7.13. MATTERS RELATING TO ADDITIONAL REAL PROPERTY COLLATERAL.........116 7.14. CASH DEPOSITS/BANK ACCOUNTS.....................................116 7.15. NEW GUARANTORS..................................................117 7.16. PUNCTUAL PAYMENT................................................117 7.17. FURTHER ASSURANCES..............................................117 -ii- 7.18. POST-CLOSING COVENANTS..........................................117 ARTICLE 8. NEGATIVE COVENANTS...............................................118 8.1. INDEBTEDNESS.....................................................118 8.2. LIENS............................................................119 8.3. CONTINGENT LIABILITIES...........................................121 8.4. FUNDAMENTAL CHANGES; ASSET SALES.................................121 8.5. INVESTMENTS; HEDGING AGREEMENTS..................................122 8.6. RESTRICTED JUNIOR PAYMENTS.......................................123 8.7. TRANSACTIONS WITH AFFILIATES.....................................123 8.8. RESTRICTIVE AGREEMENTS; RESTRICTIONS ON NEGATIVE PLEDGES AND UPSTREAM LIMITATION................................................124 8.9. SALE-LEASEBACK TRANSACTIONS......................................124 8.10. CERTAIN FINANCIAL COVENANTS.....................................124 8.11. LINES OF BUSINESS...............................................126 8.12. OTHER INDEBTEDNESS..............................................126 8.13. MODIFICATIONS OF CERTAIN DOCUMENTS; DESIGNATION OF SENIOR DEBT............................................................127 8.14. TRANCHE B PAYMENTS..............................................127 8.15. COLUMBUS MCKINNON FINANCE CORPORATION...........................128 ARTICLE 9. EVENTS OF DEFAULT................................................128 9.1. EVENTS OF DEFAULT................................................128 9.2. DISTRIBUTION OF COLLATERAL PROCEEDS..............................133 9.3. RECEIVERSHIP.....................................................133 ARTICLE 10. THE AGENT.......................................................134 10.1. APPOINTMENT AND AUTHORIZATION...................................134 10.2. AGENT'S RIGHTS AS LENDER........................................134 10.3. DUTIES AS EXPRESSLY STATED......................................135 10.4. RELIANCE BY AGENT...............................................135 10.5. ACTION THROUGH SUB-AGENTS.......................................136 10.6. RESIGNATION OF AGENT AND APPOINTMENT OF SUCCESSOR AGENT..................................................................136 10.7. LENDERS' INDEPENDENT DECISIONS..................................137 10.8. INDEMNIFICATION.................................................137 10.9. CONSENTS UNDER OTHER LOAN DOCUMENTS.............................138 10.10. DELINQUENT LENDERS.............................................138 10.11. ELECTRONIC COMMUNICATIONS......................................138 ARTICLE 11. MISCELLANEOUS...................................................139 11.1. NOTICES.........................................................139 11.2. WAIVERS; AMENDMENTS.............................................139 11.3. EXPENSES; INDEMNITY: DAMAGE WAIVER..............................141 11.4. SUCCESSORS AND ASSIGNS..........................................145 11.5. SURVIVAL........................................................150 11.6. COUNTERPARTS; INTEGRATION; REFERENCES TO AGREEMENT; EFFECTIVENESS..........................................................150 11.7. SEVERABILITY....................................................151 11.8. RIGHT OF SETOFF.................................................151 11.9. SUBORDINATION BY CREDIT PARTIES.................................152 11.10. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS................................................................152 -iii- 11.11. WAIVER OF JURY TRIAL...........................................153 11.12. HEADINGS AND DRAFTING..........................................153 11.13. CONFIDENTIALITY................................................153 -iv- AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT THIS AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT dated as of November 21, 2002 is by and among COLUMBUS MCKINNON CORPORATION, a New York corporation (the "BORROWER"), LARCO INDUSTRIAL SERVICES LTD, a business corporation organized under the laws of the Province of Ontario, COLUMBUS MCKINNON LIMITED, a business corporation organized under the laws of Canada, the Guarantors named herein, the lenders from time to time party hereto, FLEET CAPITAL CORPORATION, as Administrative Agent, FLEET NATIONAL BANK, as Issuing Lender and FLEET SECURITIES, INC., as Arranger. WHEREAS, the Borrower has previously entered into that certain Credit Agreement dated as of March 31, 1998 (as amended, the "EXISTING CREDIT AGREEMENT"), among the Borrower, the lenders named therein, and Fleet National Bank, as Agent; WHEREAS, pursuant to a certain Assignment and Acceptance, dated November 21, 2002 (the "ASSIGNMENT"), among the Borrower, the lenders party to the Existing Credit Agreement, the Administrative Agent and the Lenders party to this Agreement, (i) the lenders under the Existing Credit Agreement have assigned to the Lenders the outstanding loans and other obligations under the Existing Credit Agreement and (ii) the Agent under the Existing Credit Agreement has assigned to the Administrative Agent hereunder all of its liens, security interests, and collateral security under the Existing Credit Agreement; and WHEREAS, it is the intention and desire of the parties that the loans and other obligations under the Existing Credit Agreement be amended and restated as set forth herein such that the rights, obligations, liens, security interests, and collateral security assigned pursuant to the Assignment shall hereafter be evidenced by this Agreement and the other Loan Documents referred to herein. NOW, THEREFORE, the parties agree that, effective as of the Closing Date, the Existing Credit Agreement shall be amended and restated as set forth herein. The parties hereto agree as follows: ARTICLE 1. DEFINITIONS 1.1. DEFINED TERMS. As used in this Agreement, the following terms have the meanings specified below: "ACCOUNTS RECEIVABLE/LOAN RECONCILIATION REPORT" means a certificate signed by a Designated Financial Officer in substantially the form of EXHIBIT B-3 hereto. "ACCUMULATED OTHER COMPREHENSIVE GAIN (OR LOSS)" means "accumulated other comprehensive gain (or loss)" as defined under GAAP. "ADDITIONAL MORTGAGE" has the meaning assigned to such term in subsection 7.13(a). "ADDITIONAL MORTGAGED PROPERTY" means any Real Property Asset that is now owned or leased, or hereinafter acquired or leased, by the Credit Parties, on which the Agent determines to acquire a Mortgage following the Closing Date. "ADMINISTRATIVE QUESTIONNAIRE" means an Administrative Questionnaire in a form supplied by the Agent. "ADVANCE REQUEST" means a written request signed by a Designated Financial Officer for a Borrowing in accordance with subsection 2.1(b), in substantially the form of EXHIBIT B-4 annexed hereto or such other form acceptable to the Agent. "AFFILIATE" means, with respect to a specified Person, another Person that Controls or is Controlled by or is under common Control with the Person specified. Notwithstanding anything herein to the contrary, in no event shall the Agent or any Lender be considered an "Affiliate" of any Credit Party. "AGENT" means Fleet Capital Corporation in its capacities as administrative agent for the Lenders hereunder. "AGENT'S OFFICE" means One Federal Street, Boston, Massachusetts 02110. "AGREEMENT" means this Amended and Restated Credit and Security Agreement, including the Schedules and Exhibits hereto, as from time to time amended and supplemented in accordance with the term hereof. "APPLICABLE MARGIN" means, for any Type of Loans (a) for the Initial Payment Period (as defined below) the following percentages per annum: - -------------------------------------------------------------------------------- APPLICABLE MARGIN (% PER ANNUM) ----------------------------------------- BASE RATE LOANS LIBOR RATE LOANS - ----------------------- ----------------------------------------- Revolving Loans 1.50% 2.75% Term Loan 2.00% 3.25% - -------------------------------------------------------------------------------- and (b) for any Payment Period (as defined below) other than the Initial Payment Period, the respective rates indicated below for Loans of such Type opposite the applicable Senior Leverage Ratio indicated below (or as provided in the final paragraph of this definition, for part of a Payment Period): - -------------------------------------------------------------------------------- APPLICABLE MARGIN (% PER ANNUM) - -------------------------------------------------------------------------------- REVOLVING LOANS TERM LOANS - --------- ------------- --------------------------- --------------------------- SENIOR LEVERAGE LIBOR BASE RATE LIBOR BASE RATE LEVEL RATIO RATE LOANS LOANS RATE LOANS LOANS - --------- ------------- ------------- ------------- ------------- ------------- I >3.00:1 3.00% 1.75% 3.50% 2.25% - --------- ------------- ------------- ------------- ------------- ------------- II => 2.00:1 2.75% 1.50% 3.25% 2.00% and <3.00:1 - --------- ------------- ------------- ------------- ------------- ------------- III < 2.00:1 2.50% 1.25% 3.00% 1.75% - --------- ------------- ------------- ------------- ------------- ------------- For purposes hereof, a "PAYMENT PERIOD" means (i) initially, the period commencing on the Closing Date to and including the third Business Day after the date of delivery of the financial statements required by subsection 7.1(b) and the Compliance Certificate required by subsection 7.1(e) for the fiscal period of the Credit Parties ended March 31, 2003 (the "INITIAL PAYMENT PERIOD"), and (ii) thereafter, the period commencing on the day immediately succeeding the last day of the prior Payment Period to but not including the third Business Day after the earlier of (x) the due date of the next Compliance Certificate required to be delivered by the Borrower to the Agent pursuant to subsection 7.1(e) concurrently with the delivery by the Borrower of the financial statements required by subsection 7.1(b), or (y) the date of the actual receipt by the Agent of such Compliance Certificate. Subject to and in accordance with the final paragraph of this definition, the Applicable Margin shall be effective for each Payment Period (or in the circumstances described in the final paragraph of this definition, such portion of a Payment Period). The Applicable Margin for any Payment Period except the Initial Payment Period shall be determined on the basis of the Compliance Certificate required to be delivered to the Agent pursuant to subsection 7.1(e) concurrently with the delivery by the Borrower of the corresponding financial statements required by subsection 7.1(b), setting forth, among other things, a calculation of the Senior Leverage Ratio as at the last day of the fiscal quarter immediately preceding such Payment Period. Anything in this Agreement to the contrary notwithstanding, the Applicable Margin shall be the rates applicable to Level I in the table above if the Compliance Certificate required to be delivered by subsection 7.1(e) and the financial statements required by subsection 7.1(b), respectively, shall not be delivered within three (3) Business Days after the same shall be due (but only with respect to the portion of such Payment Period prior to the delivery of such certificate). "APPLICABLE PERCENTAGE" means the percentage of the total Commitments or Loans of all Classes hereunder represented by the aggregate amount of such Lender's Commitments or Loans of all Classes hereunder. "APPLICABLE RECIPIENT" has the meaning assigned to such term in subsection 2.7(f). "APPRAISED VALUE" means the fair market value of any Real Property Assets determined by the most recent appraisal performed by a qualified independent appraiser, in form and substance acceptable to the Agent. "APPROVED FUND" means, with respect to any Lender that is a fund that invests in commercial 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 investment advisor. "APPROVED RESTRUCTURING CHARGES" means cash restructuring charges incurred by the Borrower and/or its Subsidiaries and approved by the Agent up to an amount not to exceed $4,500,000 in the aggregate from the Closing Date to the second anniversary of the Closing Date (of which no more than $2,300,000 shall be paid in cash by the Borrower and/or its Subsidiaries from September 30, 2002 through March 31, 2003); PROVIDED however, no more than $2,000,000 in cash restructuring charges for any one facility, plant or other Property shall constitute Approved Restructuring Charges. "ARRANGER" means Fleet Securities, Inc. "ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 11.4), and accepted by the Agent, in the form of EXHIBIT E annexed hereto or any other form approved by the Agent which complies with the provisions of Section 11.4. "ASSIGNMENTS OF MORTGAGE" means the several Assignments of Mortgage, made in favor the Agent, upon certain of the Real Property Assets of the Credit Parties set forth in SCHEDULE 1.1, in the form and substance acceptable to the Agent. "ASSIGNMENT OF SECURITY INTEREST IN COPYRIGHTS" means the Assignment of Security Interest in Copyrights, made by Fleet National Bank, as Agent under the Existing Credit Agreement, in favor of the Agent, in the form and substance acceptable to the Agent. "ASSIGNMENTS OF SECURITY INTEREST IN PATENTS" means the several Assignments of Security Interest in Patents, made by Fleet National Bank, as Agent under the Existing Credit Agreement, in favor of the Agent, in the form and substance acceptable to the Agent. "ASSIGNMENTS OF SECURITY INTEREST IN TRADEMARKS" means the several Assignments of Security Interest in Trademarks, made by Fleet National Bank, as Agent under the Existing Credit Agreement, in favor of the Agent, in the form and substance acceptable to the Agent. "AUDUBON EUROPE" means Audubon Europe S.A.R.L, a company duly founded and validly existing under the laws of Luxembourg. "AVAILABILITY BLOCK" means the aggregate mandatory prepayments which have not been applied to repay the Loans or Tranche B Loans in accordance with subsections 2.8(c) or Section 8.14, as the case may be. The Availability Block shall be reduced by the amount of the optional prepayments made to the Lenders and/or Tranche B Lenders in accordance with subsections 2.8(a) or Section 8.14, as the case may be. "AVAILABLE FUNDS" means all deposits in the Controlled Accounts which have been made by 2:00 p.m., Boston, Massachusetts time, on a Business Day, or such later time as the Agent and the Cash Management Bank shall have expressly consented to. "BASE RATE" means the higher of (i) the variable annual rate of interest so designated from time to time by Fleet National Bank as its "prime rate", such rate being a reference rate and not necessarily representing the lowest or best rate being charged to any customer, and (ii) one-half of one percent (1/2%) above the Federal Funds Effective Rate. For the purposes of this definition, "Federal Funds Effective Rate" shall mean for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding 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 such day on such transactions received by the Agent from three funds brokers of recognized standing selected by the Agent. Changes in the Base Rate resulting from any changes in Fleet National Bank's "prime rate" shall take place immediately without notice or demand of any kind. "BOARD" means the Board of Governors of the Federal Reserve System of the United States of America. "BORROWER" means Columbus McKinnon Corporation, a New York corporation. "BORROWING" means Loans of a particular Class of the same Type, made, converted or continued on the same date and, in the case of LIBOR Rate Loans, as to which a single LIBOR Interest Period is in effect. "BORROWING BASE CERTIFICATE" means a certificate signed by a Designated Financial Officer certifying the amount of the Domestic Borrowing Base and Canadian Borrowing Base as of the date set forth therein, in substantially the form of EXHIBIT B-1 hereto. "BUSINESS DAY" means any day that is not a Saturday, Sunday or other day on which commercial banks in Boston, Massachusetts are authorized or required by law to remain closed; PROVIDED that, when used in connection with a LIBOR Rate Loan, the term "BUSINESS DAY" shall also exclude any day on which banks are not open for dealings in U.S. dollar deposits in the London interbank market. "CANADIAN BORROWERS" means, collectively, Larco Industrial Services Ltd., a business corporation organized under the laws of the Province of Ontario and Columbus McKinnon Limited, a business corporation organized under the laws of Canada. "CANADIAN BORROWING BASE" means, at the relevant time of reference thereto, an amount determined by the Agent by reference to the most recent Borrowing Base Certificate delivered to the Agent and the Lenders pursuant to subsection 7.1(f) which is equal to the lesser of the Canadian Sublimit and the Dollar Equivalent sum of: (a) 85% of Eligible Accounts of the Canadian Borrowers, PLUS (b) 40% of the lower of cost or fair market value of Eligible Inventory of the Canadian Borrowers; PROVIDED, that in no event shall the SUM of (i) the amount of the Domestic Borrowing Base comprised of Eligible Inventory of the Borrower and its Domestic Subsidiaries which are Guarantors, plus (ii) the amount of the Canadian Borrowing Base comprised of Eligible Inventory of the Canadian Borrowers, exceed $25,000,000 at any time, PLUS (c) 60% of the Appraised Value of the Canadian Real Property, MINUS (d) the Environmental Reserve allocable to the Canadian Borrowing Base (in the Agent's discretion); MINUS (e) reserves for foreign exchange and interest rate derivative exposure and such other reserves as the Agent in its sole discretion shall deem appropriate from time to time, including without limitation, such reserve for amounts owing by any Canadian Borrower to any Person to the extent secured by a Lien on, or trust over, any Property of such Canadian Borrower, including Prior Claims, landlord, bailee and customs claims which are not subordinated to the satisfaction of Agent, and Eligible Inventory of such Canadian Borrower subject to rights of suppliers under Section 81.1 of the Bankruptcy and Insolvency Act (Canada); The Canadian Borrowing Base shall be calculated in U.S Dollars and Canadian dollars. In determining the Canadian Borrowing Base from time to time, the Agent may, but shall not be required to, rely upon reports or analyses generated by the Borrower (including, without limitation, Borrowing Base Certificates/Collateral Update Certificates) and reports or analyses generated by or on behalf of the Agent or any Lender or by third party collateral examination. Notwithstanding anything to the contrary set forth herein, the Agent may in its sole discretion at any time and from time to time, subject to subsections 11.2(b)(xi)) and (b)(xii), adjust the percentages of Eligible Accounts or Eligible Inventory, change eligibility criteria contained in the definitions of Eligible Accounts or Eligible Inventory, and change and/or establish reserves (such reserves to be standard and customary for facilities of this nature) taken in respect of Eligible Inventory and Eligible Accounts from time to time based upon the results of any appraisals or other sources of information which demonstrate in the Agent's reasonable judgment based on due inquiry a change in the collectability of accounts receivable of the Canadian Borrowers and/or the marketability or composition of inventory of the Canadian Borrowers and/or other market changes affecting the value of accounts or inventory comprising the Canadian Borrowing Base. "CANADIAN COMMITMENT LETTER" means that certain Commitment Letter, between the Canadian Lender and the Canadian Borrowers pursuant to which the Canadian Lender has agreed to provide a revolving credit facility to the Canadian Borrowers. "CANADIAN EXCESS AMOUNT" means, as of any date of determination thereof, an amount in Dollars equal to the result of (a) the Dollar Equivalent of all loans and other advances outstanding under the Canadian Facility MINUS the Canadian Borrowing Base. "CANADIAN FACILITY" means the facility provided by the Canadian Lender to the Canadian Borrowers, subject to Section 2.14 hereof. "CANADIAN INTERCREDITOR AGREEMENT" means an intercreditor agreement, in form and substance satisfactory to the Agent, between the Agent and the Canadian Lender, with respect to the Canadian Facility. "CANADIAN LENDER" means The Bank of Nova Scotia, a chartered bank under the laws of Canada, or such other or successor lender(s) approved by the Agent that shall be providing the Canadian Facility to the Canadian Borrowers. "CANADIAN LETTER OF CREDIT" has the meaning assigned to such term in subsection 2.14(a). "CANADIAN LOAN DOCUMENTS" means, collectively, the Canadian Intercreditor Agreement, Debentures, the Canadian Security Agreement, the Canadian Patent and Trademark Agreements, the Canadian Commitment Letter, the Canadian Letter of Credit and all other instruments and documents, including without limitation PPSA financing statements, and the like, required to be executed or delivered pursuant to this Agreement or any Canadian Loan Document. "CANADIAN REAL PROPERTY" means the real property located at 107 and 445 Brook Road North, Coburg, Ontario, Canada K9A 9W5 and 863 and 871 Arvin Avenue, Hamilton, Ontario, L8E SN8 and owned by the Canadian Borrowers, so long as such property shall be subject to a First Priority Lien in favor of the Agent. "CANADIAN PATENT AND TRADEMARK AGREEMENTS" means the several patent and trademark agreements, made by the Credit Parties in favor of the Agent, in form and substance satisfactory to the Agent. "CANADIAN SECURITY AGREEMENT" means the security agreement, made by the Credit Parties in favor of the Agent, to be governed by Ontario law, in form and substance satisfactory to the Agent. "CANADIAN SUBLIMIT" has the meaning assigned to such term in subsection 2.14(a). "CAPITAL EXPENDITURES" means, for any period, the sum for the Borrower and its consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP) of the aggregate amount of expenditures made or liabilities incurred during such period (including the aggregate amount of Capital Lease Obligations incurred during such period) to acquire or construct fixed assets, plant and equipment (including renewals, improvements and replacements, but excluding repairs) computed in accordance with GAAP; PROVIDED that such term shall not include any such expenditures in connection with any replacement or repair of Property affected by a Casualty Event. "CAPITAL LEASE OBLIGATIONS" of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP. "CAPITAL STOCK" means (a) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, and (b) with respect to any Person that is not a corporation, any and all partnership, membership or other equity interests of such Person and any and all warrants, rights or options to purchase any of the foregoing. "CASH MANAGEMENT BANK" means Fleet National Bank. "CASUALTY EVENT" means, with respect to any Property of any Person, any loss of or damage to, or any condemnation or other taking of, such Property for which such Person or any of its Subsidiaries receives insurance proceeds, or proceeds of a condemnation award or other compensation. "CHANGE IN LAW" means (a) the adoption of any law, rule or regulation after the Closing Date, (b) any change after the Closing Date in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority or (c) compliance by any Lender or the Issuing Lender (or, for purposes of subsection 2.10(b), by any lending office of such Lender or by such Lender's or the Issuing Lender's holding company, if any) with any request, guideline or directive (whether or not having the force of law), other than a request or directive to comply with any law, rule or regulation in effect on the Closing Date, of any Governmental Authority made or issued after the Closing Date. "CHANGE OF CONTROL" means each occurrence of any of the following: (a) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Borrower (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of the Borrower was approved by a vote of at least a majority of the directors of the Borrower then still in office who were either directors at the beginning of such period, or whose election or nomination for election was previously approved) cease for any reason to constitute a majority of the Board of Directors of the Borrower; (b) any Person or group of persons (within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission under said Act), directly or indirectly, of twenty-five percent (25%) or more of the outstanding shares of Capital Stock of the Borrower; (c) the Borrower shall cease to have beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of 100% of the aggregate voting power of the Capital Stock of each other Credit Party, free and clear of all Liens (other than any Liens granted hereunder and Permitted Liens); (d) except as permitted hereunder, (i) any Credit Party consolidates with or merges into another entity or conveys, transfers or leases all or substantially all of its properties and assets to another Person, or (ii) any entity consolidates with or merges into any Credit Party in a transaction pursuant to which the outstanding voting Capital Stock of such Credit Party is reclassified or changed into or exchanged for cash, securities or other property, other than any such transaction described in this clause (ii) in which either (A) in the case of any such transaction involving the Borrower, no Person or group (within the meaning of Section 13(d)(3) of the Exchange Act) has, directly or indirectly, acquired beneficial ownership of more than 25% of the aggregate outstanding voting Capital Stock of the Borrower or (B) in the case of any such transaction involving a Credit Party other than the Borrower, the Borrower has beneficial ownership of 100% of the aggregate voting power of all Capital Stock of the resulting, surviving or transferee entity; or (e) a "Change of Control" shall occur under the Senior Subordinated Note Indenture. "CLASS" when used in reference to any Loan, Borrowing or Commitment, refers to whether such Loan, the Loans comprising such Borrowing or the Loans that the a Lender holding such Commitment is obligated to make, are Revolving Loans, or a Term Loan. "CLOSING DATE" means the time specified in a written notice from the Agent when the conditions specified in Section 6.1 are satisfied (or waived in accordance with Section 11.2). "CODE" means the Internal Revenue Code of 1986, as amended from time to time. "COLLATERAL" means all of the property and assets and all interests therein and proceeds thereof now owned or hereafter acquired by any Credit Party upon which a Lien is granted or purported to be granted by such Credit Party as security for all or any part of the Obligations. "COLLATERAL DOCUMENT" means any Patent Agreement, any Trademark Agreement, any Assignment of Security Interest in Patents, any Assignment of Security Interest in Trademarks, any Assignment of Security Interest in Copyright, any Pledge Agreement, any Assignment of Mortgage, any Mortgage, any Copyright Mortgage, any Lockbox Agreement, any Control Agreement, any Canadian Patent and Trademark Agreement, any Canadian Security Agreement, and all other instruments and documents, including without limitation any Uniform Commercial Code financing statements, and the like, required to be executed or delivered pursuant to this Agreement or any Collateral Document. "COLLATERAL UPDATE CERTIFICATE" means a certificate signed by a Designated Financial Officer, in substantially the form of EXHIBIT B-2 annexed hereto. "COMMITMENTS" means (a) for all Lenders, the aggregate of the Total Revolving Credit Commitment and Total Term Loan Commitment, and (b) for each Lender the aggregate of such Lender's Revolving Credit Commitment and Term Loan Commitment. "COMPLIANCE CERTIFICATE" means a certificate signed by a Designated Financial Officer, in substantially the form of EXHIBIT D annexed hereto, (a) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (b) setting forth reasonably detailed calculations demonstrating compliance with Section 8.10, and (c) stating whether any change in GAAP or in the application thereof has occurred since the date of the audited financial statements referred to in Section 5.4 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate. "CONTINGENT OBLIGATION" means, with respect to any Person, any obligation 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, without limitation, (a) the direct or indirect guaranty, endorsement (other than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of a primary obligor, (b) the obligation to make take-or-pay or similar payments, if required, regardless of nonperformance by any other party or parties to an agreement, (c) any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (A) for the purchase or payment of any such primary obligation or (B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, assets, 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 or (iv) 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 any product warranties extended in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation with respect to which such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for which such Person may be liable pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability with respect thereto (assuming such Person is required to perform thereunder), as determined by such Person in good faith. "CONTROL" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "CONTROLLING" and "CONTROLLED" have meanings correlative thereto. A Person who owns or holds Capital Stock, beneficial interests or other securities representing five percent (5%) or more of the Total Voting Power of another Person shall be deemed, for purposes of this Agreement, to "control" such other Person. "CONTROL AGREEMENT" means, with respect to any Controlled Account, an agreement in accordance with subsection 4.3(b), in form and substance satisfactory to the Agent, executed and delivered by the Credit Parties, the depository institution at which such Controlled Account is maintained and the Agent on the Closing Date and thereafter in accordance with Section 7.14, as such agreement may be amended, supplemented or otherwise modified from time to time. "CONTROLLED ACCOUNT" has the meaning assigned to such term in subsection 4.3(a). "CONVERSION REQUEST" means a notice given by the Borrower to the Agent of the Borrower's election to convert or continue a Loan in accordance with Section 2.3. "COPYRIGHTS" means all copyrights, whether statutory or common law, owned by or assigned to the Credit Parties, and all exclusive and nonexclusive licenses to the Credit Parties from third parties or rights to use copyrights owned by such third parties, including, without limitation, the registrations, applications and licenses listed on SCHEDULE 5.5 hereto, along with any and all (a) renewals and extensions thereof, (b) income, royalties, damages, claims and payments now and hereafter due and/or payable with respect thereto, including, without limitation, damages and payments for past, present or future infringements thereof, (c) rights to sue for past, present and future infringements thereof, and (d) foreign copyrights and any other rights corresponding thereto throughout the world. "COPYRIGHT MORTGAGE" means any Memorandum of Grant of Security Interest in Copyrights, made by the applicable Credit Party in favor of the Agent and in substantially the form of EXHIBIT I. "CREDIT PARTIES" means the U.S. Credit Parties and the Canadian Borrowers. "DEBENTURE" means any debenture made by a Credit Party in favor of the Agent, for the benefit of the Agent and the Lenders, in form and substance satisfactory to the Agent, securing the Obligations. "DEFAULT" means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default. "DELINQUENT LENDER" has the meaning assigned to such term in Section 10.10. "DESIGNATED FINANCIAL OFFICER" means an individual holding one or more of the following offices with the Borrower or otherwise having executive responsibilities for financial matters and listed in SCHEDULE 1.5 hereto: chief financial officer, principal accounting officer, treasurer, assistant treasurer or controller. "DETERMINED VALUE" means, at the relevant time of reference thereto, the appraised value of Eligible Fixed Assets on an orderly liquidation basis determined by the most recent appraisal thereof conducted pursuant to subsection 7.6. To the extent that any Eligible Fixed Asset is encumbered by a lien or encumbrance which is a Permitted Lien not securing the Obligations, the amount of the Indebtedness secured by such lien or encumbrance shall be deducted from the value determined in accordance with the immediately preceding sentence of this definition of "Determined Value". "DISCLOSED MATTERS" means the actions, suits and proceedings and the environmental matters disclosed in SCHEDULE 5.6. "DISPOSITION" means any transaction, or series of related transactions, pursuant to which any Person or any of its Subsidiaries sells, assigns, transfers or otherwise disposes of any property or assets (whether now owned or hereafter acquired) to any other Person, in each case, whether or not the consideration therefor consists of cash, securities or other assets owned by the acquiring Person, excluding any sales of inventory in the ordinary course of business on ordinary business terms. "DOLLAR EQUIVALENT" means, on any particular date, with respect to any amount denominated in U.S. Dollars, such amount of U.S. Dollars, and with respect to any amount denominated in a currency other than U.S. Dollars, the amount (as conclusively ascertained by the Agent absent manifest error) of U.S. Dollars which could be purchased by the Agent with such amount or currency (in accordance with its normal banking practices) in the applicable foreign currency deposit markets with such amount of such currency at the spot rate of exchange prevailing at or about 11:00 a.m. (Boston time) on such date. "DOMESTIC BORROWING BASE" means, at the relevant time of reference thereto, an amount determined by the Agent by reference to the most recent Borrowing Base Certificate delivered to the Agent and the Lenders pursuant to subsection 7.1(f) which is equal to the sum of: (a) 85% of Eligible Accounts of the Borrower and its Domestic Subsidiaries which are Guarantors, PLUS (b) 40% of the lower of cost or fair market value of Eligible Inventory of the Borrower and its Domestic Subsidiaries which are Guarantors, PROVIDED, that in no event shall the SUM of (i) the amount of the Domestic Borrowing Base comprised of Eligible Inventory of the Borrower and its Domestic Subsidiaries which are Guarantors PLUS (ii) the amount of the Canadian Borrowing Base comprised of Eligible Inventory of the Canadian Borrowers, exceed $25,000,000 at any time, MINUS (c) the Environmental Reserve allocable to the Domestic Borrowing Base (in the Agent's discretion); MINUS (d) reserves for foreign exchange and interest rate derivative exposure and such other reserves as the Agent in its sole discretion shall deem appropriate from time to time; MINUS (e) the Availability Block. In determining the Domestic Borrowing Base from time to time, the Agent may, but shall not be required to, rely upon reports or analyses generated by the Borrower (including, without limitation, Borrowing Base Certificates and Collateral Update Certificates) and reports or analyses generated by or on behalf of the Agent or any Lender or by third party collateral examination. Notwithstanding anything to the contrary set forth herein, the Agent may in its sole discretion at any time and from time to time, subject to subsections 11.2(b)(xi)) and (b)(xii), adjust the percentages of Eligible Accounts or of Eligible Inventory, change eligibility criteria contained in the definitions of Eligible Accounts or Eligible Inventory, and change and/or establish reserves (such reserves to be standard and customary for facilities of this nature) taken in respect of Eligible Inventory and Eligible Accounts from time to time based upon the results of any appraisals or other sources of information which demonstrate in the Agent's reasonable judgment based on due inquiry a change in the collectability of accounts receivable of the Borrower or any Domestic Subsidiary and/or the marketability or composition of inventory of the Borrower or any Domestic Subsidiary and/or other market changes affecting the value of accounts or inventory comprising the Domestic Borrowing Base. "DOMESTIC EXCESS AVAILABILITY" means, as of any date of determination thereof, the result of: (a) Domestic Gross Availability at such time, MINUS (b) Domestic Revolving Credit Exposure at such time, MINUS (c) the Canadian Excess Amount at such time. "DOMESTIC GROSS AVAILABILITY" means, as of any date of determination thereof, the lesser of: (a) the Domestic Borrowing Base at such time, and (b) the Domestic Revolving Credit Commitment at such time. "DOMESTIC LC DISBURSEMENTS" means a payment made by the Issuing Lender pursuant to a Domestic Letter of Credit. "DOMESTIC LC EXPOSURE" means, at any time, the sum of (a) 100% of the aggregate undrawn amount of all outstanding standby and documentary Domestic Letters of Credit at such time, plus (b) the aggregate amount of all Domestic LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. "DOMESTIC LETTERS OF CREDIT" has the meaning assigned to such term in subsection 2.4(a)(i). "DOMESTIC REVOLVING CREDIT COMMITMENT" means, at any time, the Total Revolving Credit Commitment at such time, MINUS the Dollar Equivalent of the aggregate amount available to be drawn under the Canadian Letter of Credit. "DOMESTIC REVOLVING CREDIT EXPOSURE" means, at any time, the Total Revolving Credit Exposure MINUS the Dollar Equivalent of the aggregate amount available to be drawn under the Canadian Letter of Credit. "DOMESTIC SUBSIDIARY" means, at any time, any Subsidiary of the Borrower organized under the laws of the United States of America or any State thereof, including any Subsidiary of the Borrower listed in SCHEDULE 1.6 hereto. "DRAWDOWN DATE" means the date on which any Revolving Loan or Term Loan is made or is to be made, and the date on which any Revolving Loan is converted or continued in accordance with Section 2.3. "EBITDA" means, for any period and without duplications, (a) the net income of the Borrower and its Subsidiaries (determined on a consolidated basis in accordance with GAAP) for such period, PLUS (b) to the extent deducted in calculating net income without duplication (i) income taxes accrued during such period, (ii) Interest Expense during such period, (iii) depreciation, amortization and other Non-Cash Charges accrued for such period, and (iv) Approved Restructuring Charges incurred during such period, MINUS (c) to the extent such items were added in calculating net income (i) extraordinary gains during such period, (ii) gains from any Casualty Event, Disposition, or discontinued operation during such period, and (iii) interest and other income (excluding interest and other income related to CM Insurance Company, Inc.) during such period. "ELECTRONIC COMMUNICATIONS" has the meaning assigned to such term in Section 10.11. "ELIGIBLE ACCOUNTS" means (a) the aggregate face amount of the accounts receivable outstanding and owed to any Credit Party as determined in accordance with GAAP consistently applied and as entered on the books and records of such Credit Party in the ordinary course of the business operations of such Credit Party, MINUS (b) without duplication, the aggregate amount of any returns, discounts (which may, at the Agent's option, be calculated on the shortest term offered by such Credit Party), claims, credits, debit memoranda, customer deposits, chargebacks, contra accounts, allowances or excise taxes of any nature (whether issued, owing, granted or outstanding), and which satisfy each of the requirements set forth below: (i) the subject goods have been sold and/or services have been rendered on an absolute sale basis and on an open account basis to an account debtor which is not (A) a Governmental Authority or other Person such that the Assignment of Claims Act (or other similar legal or regulatory requirement) would apply to the pledge of receivables of such account debtor, unless the Assignment of Claims Act (or such other legal or regulatory requirement) has been complied with to the satisfaction of the Agent or (B) an Affiliate of such Credit Party; (ii) an invoice (in form and substance acceptable to the Agent) has been sent to the applicable account debtor and bears an invoice date contemporaneous with or later than the date of sale of such goods or rendering of such service; (iii) the account receivable does not arise from a sale to the account debtor on a bill-and-hold, guaranteed sale, sale-or-return, sale-on-assignment, sale-on-appraisal, consignment or any other repurchase or return basis; (iv) the account is not evidenced by chattel paper or an instrument of any kind, and has not been reduced to judgment; (v) the account debtor is not insolvent or the subject of any bankruptcy or insolvency proceedings of any kind; (vi) the account debtor is credit worthy and not experiencing financial difficulties that could affect the collectability of the account; (vii) the account debtor is an entity organized under the laws of one of the United States or one of the provinces of Canada whose main office is also located within the United States including Puerto Rico as within the United States or Canada, or, if the account debtor is not such an entity organized and located within the United States or Canada, the account is supported by a letter of credit issued or confirmed by a bank acceptable to the Agent or by other credit enhancements, in each case in form and substance satisfactory to the Agent; (viii) the account receivable is a valid and legally enforceable obligation of the account debtor thereunder, it is not subject to recoupment, offset (other than discount for prompt payment) or other defense on the part of such account debtor or to any claim on the part of such account debtor denying liability thereunder; (ix) the account receivable is not subject to any Lien of any kind except for the Lien of the Agent securing the obligations of such Credit Party under this Agreement and the Liens permitted hereunder; (x) the account receivable has not remained outstanding in whole or in part for more than sixty (60) days after the due date (invoiced in accordance with the Borrower's usual and customary terms as in effect on the Closing Date); (xi) the account receivable does not arise out of a transaction (direct or indirect) with an employee, officer, agent, director or stockholder of such Credit Party or any Affiliate of such Credit Party; (xii) the account receivable is not owing from an account debtor from whom fifty percent (50%) or more of the dollar amount of all accounts receivable are deemed ineligible under clause (x) above; (xii) the account receivable constitutes Collateral in which the Agent has a First Priority Lien securing the Obligations of such Credit Party under this Agreement; (xiv) such Credit Party has not made an agreement with the account debtor to extend the time of payment of the subject account receivable; (xv) the account debtor is not located in Minnesota (or any other jurisdiction which adopts a statute or other requirement with respect to which any Credit Party that obtains business from within such jurisdiction or is otherwise subject to such jurisdiction's tax law must file a "Business Activity Report" (or other applicable report) or make any other required filings in a timely manner in order to enforce its claims in such jurisdiction's courts or arising under such jurisdiction's laws); PROVIDED, that accounts receivable which would be Eligible Accounts but for the terms of this clause (xv) shall nonetheless be deemed to be Eligible Accounts if such Credit Party has filed a "Business Activity Report" (or other applicable report) with the applicable state office or is qualified to do business in such jurisdiction and, at the time the account receivable was created, was qualified to do business in such jurisdiction or had on file with the applicable state office a current "Business Activity Report" (or other applicable report); (xvi) the account receivable is (x) with respect to accounts receivable included in the Domestic Borrowing Base, denominated in U.S. Dollars and (y) with respect to accounts receivable included in the Canadian Borrowing Base, denominated in Canadian Dollars; (xvii) the account receivable does not consist of a progress billing or an excess billing; PROVIDED, however, that (A) the Agent may in its sole discretion exclude particular accounts from the definition of Eligible Accounts and may impose additional and/or more restrictive eligibility or valuation criteria than those set forth above as preconditions for any account to be deemed to be an Eligible Account hereunder, and (B) an account deemed to be an Eligible Account at any one point in time may be excluded by the Agent in its sole discretion at a future point in time. "ELIGIBLE FIXED ASSETS" means the machinery and equipment (i) owned by the Borrower and its Domestic Subsidiaries which are Guarantors, (ii) located in the United States of America, (iii) in which the Agent shall have a First Priority Lien, (iv) which are properly insured in accordance with the provisions of Section 7.5, and (v) which are listed on that certain schedule of Eligible Fixed Assets attached to the Term Loan Borrowing Base Certificate delivered to the Agent on or prior to the Closing Date. "ELIGIBLE INVENTORY" means finished goods, semi-finished goods, and raw materials and component parts inventory (exclusive of work in process, packaging, supplies, machinery and tooling) of any Credit Party recorded on the books and records of such Credit Party in the ordinary course of the business operations of such Credit Party valued on a first in first out basis (net of the LIFO reserve maintained by the Borrower and its Subsidiaries with respect to such inventory) at the lower of (a) the fair market value of such inventory, or (b) the cost of such inventory (net of all positive cost reserves maintained by the Borrower and its Subsidiaries with respect thereto, including, without limitation, the purchase price variance reserve, the absorption reserve and the price reserve), which inventory satisfies each of the following requirements: (i) is in good and merchantable condition; (ii) meets all standards imposed by any government agency having regulatory authority over such goods and/or their use, manufacture and/or sale; (iii) has been physically received in (A) with respect to inventory included in the Domestic Borrowing Base, the continental United States by the Borrower or a Domestic Subsidiary which is a Guarantor or (B) with respect to inventory included in the Canadian Borrowing Base, Canada by a Canadian Borrower, and, in each case, is located at a facility owned or leased by such Credit Party, is not in-transit, and is not subject to advance payment by such Credit Party; PROVIDED that no inventory located at a leased facility shall be deemed to be "Eligible Inventory" hereunder unless the landlord of such facility shall have entered into an agreement satisfactory in form and substance to the Agent acknowledging the Liens of the Agent and granting the Agent unrestricted access to such inventory; (iv) is currently held for sale and currently salable in the normal course of the business operations, or, as respects raw materials or semi-finished goods, is incorporated or is being held to be incorporated in customer products being produced or provided by any Credit Party; (v) does not constitute returned (unless suitable for resale), excess, obsolete, unsaleable, shopworn, seconds, used, damaged or unfit inventory; (vi) is not accounted for in the obsolescence reserve maintained by any Credit Party; has not remained in the possession of such Credit Party for more than twenty-four (24) months or has not otherwise been determined by the Agent in its sole discretion to constitute slow-moving inventory; (vii) is not subject to a sale to an account debtor on a bill-and-hold, guaranteed sale, sale-or-return, sale-on-approval, consignment or any other repurchase or return basis; (viii) is not subject to any Lien of any kind except for the Lien of the Agent securing Obligations under this Agreement and other Liens permitted hereunder; (ix) has not been sold to any Credit Party; and (x) constitutes Collateral in which the Agent has a First Priority Lien securing the Obligations; PROVIDED, however, that (A) the aggregate amount of Eligible Inventory shall be computed net of (I) the Inventory Accounting Variance Reserve and (II) such reserves for slow moving and other ineligible inventory as the Agent shall deem appropriate, (B) the Agent may in its sole discretion exclude particular items of inventory from the definition of Eligible Inventory and may impose additional and/or more restrictive eligibility or valuation criteria than those set forth above as preconditions for any item of inventory to be deemed to be Eligible Inventory hereunder, and (C) inventory deemed to be Eligible Inventory at any one point in time may be excluded by the Agent in its sole discretion at a future point in time. "ENVIRONMENTAL ACTIONS" means any complaint, summons, citation, notice, directive, order, claim, litigation, investigation, judicial or administrative proceeding, judgment, letter or other communication from any Person or Governmental Authority involving violations of Environmental Laws or Releases of Hazardous Materials (i) from any assets, properties or businesses owned or operated by any Credit Party or any of its Subsidiaries or any predecessor in interest; (ii) from adjoining properties or businesses; or (iii) onto any facilities which received Hazardous Materials generated by any Credit Party or any of its Subsidiaries or any predecessor in interest. "ENVIRONMENTAL LAWS" means all applicable laws, licenses, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters, including without limitation, the Resource Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental Response, Compensation and Liability Act of 1980 as amended ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Federal Clean Water Act, the Federal Clean Air Act, the Toxic Substances Control Act and all local, state and federal laws and regulations now or hereafter in effect and applicable relating to the presence, abatement, removal, disposal, transportation or treatment of materials containing asbestos. "ENVIRONMENTAL LIABILITIES" means all liabilities, Remedial Actions, monetary obligations, contingent or otherwise (including, without limitation, any liability for damages, losses, punitive damages, consequently damages, treble damages, costs and expense of environmental remediation, fines, penalties, sanctions, indemnities or interest incurred as a result of any claim or demand by any Governmental Authority or any third party), of any Credit Party directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the presence, generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the spill, leaking, pumping, pouring, discharging, injecting, disposing, dumping, escaping, release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing. "ENVIRONMENTAL PERMITS" has the meaning assigned to such term in Section 7.12(a). "ENVIRONMENTAL RESERVE" means a reserve established by the Agent in its sole discretion for the abatement or remediation of Hazardous Materials on or at any of the Real Property Assets. The Agent may, in its discretion, allocate all or any portion of the Environmental Reserve to the Domestic Borrowing Base, the Canadian Borrowing Base and the Term Loan Borrowing Base. "EQUITY RIGHTS" means, with respect to any Person, any subscriptions, options, warrants, commitments, preemptive rights or agreements of any kind (including any stockholders' or voting trust agreements) for the issuance or sale of, any additional shares of Capital Stock of any class, or partnership or other ownership interests of any type in, such Person or securities convertible into any of the foregoing. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, and regulations thereunder, in each case, as in effect from time to time. References to sections of ERISA shall be construed also to refer to any successor sections. "ERISA AFFILIATE" means any trade or business (whether or not incorporated) that, together with the Credit Parties, is treated as a single employer within the meaning of Sections 414(b), (c), (m) or (o) of the Code. Notwithstanding the foregoing, for purposes of any liability related to a Multiemployer Plan under Title IV of ERISA, the term "ERISA Affiliate" means any trade or business that, together with the Credit Parties, is treated as a single employer within the meaning of Section 4001(b) of ERISA. "ERISA EVENT" means (a) a "reportable event", as defined in Section 4043 of ERISA or the regulations issued thereunder for which the notice requirement has not been waived with respect to any Pension Plan, (b) the existence with respect to any Pension Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived, (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 Pension Plan, (d) the incurrence by any Credit Party or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Pension Plan, (e) the receipt by any Credit Party or any ERISA Affiliate from the PBGC or plan administrator of any notice relating to an intention to terminate any Pension Plan or Pension Plans or to appoint a trustee to administer any Pension Plan, or (f) the receipt by any Credit Party or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from any Credit Party or any ERISA Affiliate of any notice 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. "EVENT OF DEFAULT" has the meaning assigned to such term in Section 9.1. "EXCESS CASH FLOW" means, with respect to any Person for any period, (a) Net Income of such Person and its Subsidiaries for such period, PLUS (b) all non-cash items of such Person and its Subsidiaries deducted in determining Net Income for such period, LESS (c) the sum of (i) all non-cash items of such Person and its Subsidiaries added to the calculation of Net Income for such period, (ii) all scheduled cash principal payments on the Term Loans and Revolving Loans (only to the extent that the Revolving Credit Commitment is permanently reduced by the amount of such payments) made during such period and all scheduled prepayments of other Indebtedness of such Person or any of its Subsidiaries during such period to the extent such other Indebtedness is permitted to be incurred, and such payments are permitted to be made, under this Agreement, (iii) the cash portion of Capital Expenditures made by such Person and its Subsidiaries during such period to the extent permitted to be made under this Agreement, and (iv) all voluntary prepayments of principal made to the Lenders pursuant to subsection 2.8(a), and to the Tranche B Lenders permitted under Section 8.14, in each case in excess of the amount of the Availability Block made during or after the end of such period but prior to the date such Excess Cash Flow payment is required to be made pursuant to subsection 2.8(b) (it being understood that any such payment deducted pursuant to this clause (iv) shall not be deducted from Excess Cash Flow for any subsequent period). "EXCLUDED TAXES" means, with respect to the Agent, any Lender, the Issuing Lender or any other recipient of any payment to be made by or on account of any Obligation hereunder, (a) income, net worth or franchise taxes imposed on (or measured by) its net income or net worth by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its lending office is located or in which it is taxable solely on account of some connection other than the execution, delivery or performance of this Agreement or the receipt of income hereunder, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender, any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement or is attributable to such Foreign Lender's failure or inability to comply with subsection 2.11(e), except to the extent that such Foreign Lender's assignor (if any) was entitled, at the time of assignment, to receive additional amounts from the Borrower with respect to such withholding tax pursuant to subsection 2.11(a). "EXISTING CREDIT AGREEMENT" has the meaning assigned to such term in the Recital. "EXISTING INDEBTEDNESS" means (i) Indebtedness of the Credit Parties existing as of the Closing Date which is being repaid in full with the proceeds of the Loans made by the Lenders and the Tranche B Loans on the Closing Date including Indebtedness under the Existing Credit Facility and (ii) Indebtedness of the Credit Parties existing as of the Closing Date which is permitted to remain outstanding after the Closing Date under Section 8.1 and is listed on SCHEDULE 8.1 hereto. "EXISTING LETTERS OF CREDIT" means those certain existing letters of credit set forth on SCHEDULE 1.7 hereto. "EXTRAORDINARY RECEIPTS" means any cash received by the Borrower or any of its Subsidiaries not in the ordinary course of business (and not consisting of proceeds described in subsections 2.8(b)(i), (ii) or (iii) hereof), including, without limitation, (a) foreign, United States, state or local tax refunds, (b) pension plan reversions, (c) proceeds of insurance, (d) judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action, (e) condemnation awards (and payments in lieu thereof), (f) indemnity payments and (g) any purchase price adjustment received in connection with any purchase agreement. "FASB" means Financial Accounting Standards Board. "FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it. "FEE LETTER" has the meaning assigned to such term in subsection 2.9(a). "FIRST PRIORITY" means, with respect to any Lien created or purported to be created in any Collateral hereunder or pursuant to any Loan Document, that such Lien is the most senior Lien to which such Collateral, is subject. "FIXED CHARGE COVERAGE RATIO" means, for any Reference Period, the ratio of (a) (i) EBITDA for such Reference Period MINUS (ii) the aggregate amount of all Capital Expenditures during such Reference Period MINUS (iii) the aggregate amount paid, or required to be paid (without duplication), in cash in respect of the current portion of all income taxes for such Reference Period to (b) the sum for the Borrower and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of (i) the aggregate amount of Interest Expense for such Reference Period (net of the sum of (A) the PIK interest accrued during such Reference Period in respect of the Tranche B Loans, plus (B) the amortization during such Reference Period of financing costs incurred in connection with this Agreement, the Existing Credit Agreement, the Tranche B Financing Agreements and the Senior Subordinated Note Indenture) and (ii) the aggregate amount of regularly scheduled payments of principal in respect of Indebtedness for borrowed money (including the principal component of any payments in respect of Capital Lease Obligations) paid or required to be paid during such Reference Period. "FLEET" means Fleet Capital Corporation in its capacity as a Lender. "FOREIGN LC DISBURSEMENT" means a payment made by the Issuing Lender pursuant to a Foreign Letter of Credit, and shall include the Canadian Letter of Credit. "FOREIGN LC EXPOSURE" means, at any time, the sum of the Dollar Equivalent amounts of (a) 100% of the aggregate undrawn amount of all outstanding standby and documentary Foreign Letters of Credit at such time, PLUS (b) the aggregate amount of all Foreign LC Disbursements that have not yet been reimbursed by or on behalf of any Credit Party at such time. "FOREIGN LENDER" means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction. "FOREIGN LETTERS OF CREDIT" has the meaning assigned to such term in subsection 2.4(a)(ii), and shall include the Canadian Letter of Credit. "FOREIGN OFFICE" means, with respect to any Lender, an office of such Lender located outside of the United States of America. "FOREIGN SUBSIDIARY" means any Subsidiary of the Borrower organized under the laws of any jurisdiction other than the United States of America or any State thereof. "GAAP" means generally accepted accounting principles in effect from time to time in the United States, applied on a consistent basis, PROVIDED that for the purpose of Section 8.10 hereof and the definitions used therein, "GAAP" shall mean generally accepted accounting principles in effect on the Closing Date and consistent with those used in the preparation of the financial statements of the Borrower and its Subsidiaries, PROVIDED, further, that if there occurs after the Closing Date any change in GAAP that affects in any respect the calculation of any covenant contained in Section 8.10 hereof, the Agent and the Borrower shall negotiate in good faith amendments to the provisions of this Agreement that relate to the calculation of such covenant with the intent of having the respective positions of the Lenders and the Borrower after such change in GAAP conform as nearly as possible to their respective positions as of the Closing Date and, until any such amendments have been agreed upon, the covenants in Section 8.10 hereof shall be calculated as if no such change in GAAP has occurred. "GOVERNMENTAL AUTHORITY" means the government of the United States of America, Canada, any other nation or any political subdivision thereof, whether federal, provincial, state or local, and any agency, department, commission, board, bureau, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. "GUARANTEE" means a guarantee, an endorsement, a contingent agreement to purchase or to furnish funds for the payment or maintenance of, or otherwise to be or become contingently liable under or with respect to, the Indebtedness, other obligations, net worth, working capital or earnings of any Person, or a guarantee of the payment of dividends or other distributions upon the stock or equity interests of any Person, or an agreement to purchase, sell or lease (as lessee or lessor) property, products, materials, supplies or services primarily for the purpose of enabling a debtor to make payment of such debtor's obligations or an agreement to assure a creditor against loss, and including, without limitation, causing a bank or other financial institution to issue a letter of credit or other similar instrument for the benefit of another Person, but excluding endorsements for collection or deposit in the ordinary course of business. The terms "GUARANTEE" and "GUARANTEED" used as a verb shall have a correlative meaning. The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the primary obligations in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder). "GUARANTOR" means (i) the Borrower, (ii) each Subsidiary of the Borrower listed as a "Guarantor" on the signature pages hereto, and (iii) each other Person which becomes a Guarantor hereunder after the Closing Date by complying with the requirements of Section 7.15. "HAZARDOUS MATERIALS" means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature, in each case regulated pursuant to any Environmental Laws. "HEDGING AGREEMENT" means any interest rate protection agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement. "INDEBTEDNESS" means, with respect to any Person, without duplication, (a) all indebtedness and other obligations of such Person for borrowed money; (b) all obligations of such Person for the deferred purchase or acquisition price of Property or services (other than trade payables which are not for borrowed money) or other accounts payable (including accrued expenses and deferred taxes) incurred in the ordinary course of such Person's business and not outstanding for more than 90 days after the date such payable was created); (c) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (d) all reimbursement, payment or other obligations and liabilities of such Person created or arising under any conditional sales or other title retention agreement with respect to property used and/or acquired by such Person, even though the rights and remedies of the lessor, seller and/or lender thereunder may be limited to repossession or sale of such property; (e) all Capital Lease Obligations or Synthetic Leases of such Person; (f) all obligations and liabilities, contingent or otherwise, of such Person, in respect of letters of credit, acceptances or similar instruments issued or accepted by banks and other financial institutions for the account of such Person; (g) all obligations and liabilities, calculated on a basis satisfactory to the Agent and in accordance with accepted practice, of such Person in respect of Hedging Agreements; (h) all Contingent Obligations; (i) liabilities incurred under Title IV of ERISA with respect to any plan (other than a Multiemployer Plan) covered by Title IV of ERISA and maintained for employees of such Person or any of its ERISA Affiliates; (j) Withdrawal Liability incurred under ERISA by such Person or any of its ERISA Affiliates with respect to any Multiemployer Plan; and (k) all obligations referred to in clauses (a) through (j) of this definition of another Person secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) a Lien upon property owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness. The Indebtedness of any Person shall include the Indebtedness of any partnership of or joint venture in which such Person is a general partner or a joint venturer. "INDEMNIFIED TAXES" means all Taxes other than (a) Excluded Taxes and Other Taxes and (b) amounts constituting penalties or interest imposed with respect to Excluded Taxes or Other Taxes. "INTERCREDITOR AGREEMENT" means the Lien Subordination and Intercreditor Agreement, among the Lenders, the Agent, the Tranche B Agent and the Tranche B Lenders. "INTERCOMPANY INDEBTEDNESS" has the meaning assigned to such term in Section 11.9. "INTEREST EXPENSE" means, for any period, the sum, without duplication, for the Borrower and its Subsidiaries (determined on a consolidated basis in accordance with GAAP), of the following: (a) all interest in respect of Indebtedness accrued or paid during such period (whether or not actually paid during such period), PLUS (b) the net amounts payable (or MINUS the net amounts receivable) in respect of Hedging Agreements accrued during such period (whether or not actually paid or received during such period) excluding reimbursement of legal fees and other similar transaction costs and excluding payments required by reason of the early termination of Hedging Agreements in effect on the Closing Date, PLUS (c) all fees, including letter of credit fees and expenses, (but excluding reimbursement of legal fees), incurred hereunder and under the Tranche B Financing Agreements during such period. "INTEREST PAYMENT DATE" means (a) as to any Base Rate Loan, the first day of each calendar month with respect to interest accrued during the preceding calendar month with respect to such Base Rate Loan; and (b) as to any LIBOR Rate Loan, the earlier of (i) the last day of the Interest Period for such LIBOR Rate Loan and (ii) the first day of each calendar month with respect to interest accrued during the preceding calendar month. "INTEREST PERIOD" means, with respect to each Revolving Loan or all or any relevant portion of the Term Loan, (a) initially, the period commencing on the Drawdown Date of such Loan and ending on the last day of one of the periods set forth below, as selected by the Borrower in an Advance Request or as otherwise required by the terms of this Agreement (i) for any Base Rate Loan, the last day of the calendar month; and (ii) for any LIBOR Rate Loan, 1, 2, 3, or 6 months; and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Revolving Loan or all or such portion of the Term Loan and ending on the last day of one of the periods set forth above, as selected by the Borrower in a Conversion Request; PROVIDED that all of the foregoing provisions relating to Interest Periods are subject to the following: (a) if any Interest Period with respect to a LIBOR Rate Loan would otherwise end on a day that is not a LIBOR Business Day, that Interest Period shall be extended to the next succeeding LIBOR Business Day unless the result of such extension would be to carry such LIBOR Interest Period into another calendar month, in which event such LIBOR Interest Period shall end on the immediately preceding LIBOR Business Day; (b) if any Interest Period with respect to a Base Rate Loan would end on a day that is not a Business Day, that Interest Period shall end on the next succeeding Business Day; (c) if the Borrower shall fail to give notice as provided in Section 2.3, the Borrower shall be deemed to have requested a conversion of the affected LIBOR Rate Loan to a Base Rate Loan and the continuance of all Base Rate Loans as Base Rate Loans on the last day of the then current Interest Period with respect thereto; (d) any Interest Period relating to any LIBOR Rate Loan that begins on the last LIBOR Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such LIBOR Interest Period) shall end on the last LIBOR Business Day of a calendar month; and (e) any Interest Period that would otherwise extend beyond the Maturity Date shall end on the Maturity Date. "INVENTORY ACCOUNTING VARIANCE RESERVE" means a reserve in the amount of 5.5% of the total value of all Eligible Inventory of the Borrower and its Subsidiaries; PROVIDED however, the Inventory Accounting Variance Reserve shall be equal to zero if, and for so long as, the Borrower can demonstrate to the satisfaction of the Agent that the variance between actual inventory values and general ledger inventory values of the Borrower and its Subsidiaries does not exceed 3.0% of the total value of all Eligible Inventory of the Borrower and its Subsidiaries. "INVESTMENT" means, for any Person: (a) the acquisition (whether for cash, Property, services or securities or otherwise) of Capital Stock, bonds, notes, debentures, partnership, limited liability company or other ownership interests or other securities of any other Person or any agreement to make any such acquisition (including, without limitation, any "short sale" or any sale of any securities at a time when such securities are not owned by the Person entering into such short sale); (b) the making of any deposit with, or advance, loan or other extension of credit to, any other Person (including the purchase of Property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such Person, but excluding any such advance, loan or extension of credit representing the purchase price of inventory or supplies sold by such Person in the ordinary course of business, PROVIDED that in no event shall the term of any such inventory or supply advance, loan or extension of credit exceed 180 days); or (c) the entering into of any Guarantee of, or other contingent obligation with respect to, Indebtedness or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person. "IP COLLATERAL" means, collectively, the Collateral relating to intellectual property rights of the Credit Parties hereunder or under any other Loan Document. "ISSUING LENDER" means Fleet National Bank, an affiliate of the Agent, in its capacity as an issuer of Letters of Credit hereunder. "LANDLORD'S WAIVER AND CONSENT" means, with respect to any Leasehold Property, a letter, certificate or other instrument in writing from the lessor under the related lease, in the form approved by the Agent in its sole discretion. "LC DISBURSEMENT" means any Domestic LC Disbursement or any Foreign LC Disbursement. "LC GUARANTY" means a guaranty or indemnity in form and substance satisfactory to the Agent and the Issuing Lender pursuant to which the Agent shall guarantee the payment or performance by the Borrower and each Canadian Borrower of its reimbursement obligations in respect of Letters of Credit. "LEASEHOLD PROPERTY" means any leasehold interest of any Credit Party as lessee under any lease of real property, other than any such leasehold interest designated from time to time by the Agent in its sole discretion as not being required to be included in the Collateral and not being of material importance to the business or operations of the Credit Parties. "LENDERS" means the Persons listed on SCHEDULE 2.1 (including, without limitation, the Issuing Lender) and any other Person that shall have become a party hereto pursuant to an Assignment and Acceptance, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Acceptance. "LETTER OF CREDIT" means any Domestic Letter of Credit or Foreign Letter of Credit issued hereunder and includes, except as expressly set forth herein, the Canadian Letter of Credit. "LIBOR LENDING OFFICE" means initially, the office of such Lender designated as such by notice to the Borrower; thereafter, such other office of such Lender, if any, that shall be making or maintaining LIBOR Rate Loans. "LIBOR RATE" means, for any Interest Period with respect to a LIBOR Rate Loan, the rate of interest equal to (i) the rate determined by the Agent at which Dollar deposits for such LIBOR Interest Period are offered based on information presented on Telerate Page 3750 as of 11:00 a.m. London time on the second LIBOR Business Day prior to the first day of such LIBOR Interest Period, divided by (ii) a number equal to 1.00 minus the Eurocurrency Reserve Rate. If the rate described above does not appear on the Telerate System on any applicable interest determination date, the LIBOR Rate shall be the rate (rounded upward, if necessary, to the nearest one hundred-thousandth of a percentage point), determined on the basis of the offered rates for deposits in U.S. Dollars for a period of time comparable to such LIBOR Rate Loan which are offered by four major banks in the London interbank market at approximately 11:00 a.m. London time, on the second LIBOR Business Day prior to the first day of such Interest Period as selected by the Agent. The principal London office of each of the four major London banks will be requested to provide a quotation of its Dollar deposit offered rate. If at least two such quotations are provided, the rate for that date will be the arithmetic mean of the quotations. If fewer than two quotations are provided as requested, the rate for that date will be determined on the basis of the rates quoted for loans in U.S. Dollars to leading European banks for a period of time comparable to such Interest Period offered by major banks in New York City at approximately 11:00 a.m. New York City time, on the second LIBOR Business Day prior to the first day of such Interest Period. In the event that the Agent is unable to obtain any such quotation as provided above, it will be considered that LIBOR Rate pursuant to a LIBOR Rate Loan cannot be determined. "LIBOR RATE LOANS" means Loans bearing interest calculated by reference to the LIBOR Rate. "LIEN" means any mortgage, deed of trust, pledge, lien (statutory or otherwise), security interest, hypothecation, charge or other encumbrance or security or preferential arrangement of any nature, including, without limitation, any conditional sale or title retention arrangement, any capital lease and any assignment, deposit arrangement or financing lease intended as, or having the same effect as any of the foregoing. "LOAN DOCUMENTS" means this Agreement, the Revolving Credit Notes, the Term Notes, the Collateral Documents, the Fee Letter, the Canadian Loan Documents, the LC Guaranty, the Intercreditor Agreement and other instruments or documents delivered or to be delivered from time to time pursuant to this Agreement, as the same may be supplemented and amended from time to time in accordance with their respective terms. "LOANS" means the Revolving Loans and the Term Loan. "LOCKBOX" has the meaning assigned to such term in subsection 4.3(a). "LOCKBOX AGREEMENT" means, with respect to any Lockbox of the Credit Parties, an agreement in accordance with subsection 4.3(b), in form and substance satisfactory to the Agent, executed and delivered by the Credit Parties, the depository institution at which such Lockbox is maintained and the Agent on the Closing Date, as such agreement may be amended, supplemented or otherwise modified from time to time. "MA UCC" means the Uniform Commercial Code as in effect from time to time in the Commonwealth of Massachusetts. "MATERIAL ADVERSE EFFECT" means a material adverse effect on any of (a) the operations, business, assets, properties, condition (financial or otherwise) or prospects of the Borrower or the Credit Parties taken as a whole, (b) the ability of any Credit Party to pay or perform any of its obligations under this Agreement or the other Loan Documents to which it is a party, (c) the legality, validity or enforceability of this Agreement or any other Loan Document, (d) the rights and remedies of the Agent or any Lender under this Agreement or any other Loan Document, or (e) the validity, perfection or priority of a Lien in favor of the Agent for the benefit of the Lenders on any of the Collateral with an aggregate fair market value in excess of $100,000. "MATERIAL INDEBTEDNESS" means Indebtedness (other than the Loans or Letters of Credit), including, without limitation, obligations in respect of one or more Hedging Agreements, in an aggregate principal amount exceeding $1,000,000. For purposes of determining Material Indebtedness, the "principal amount" of the obligations of any Person in respect of a Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that such Person would be required to pay if such Hedging Agreement were terminated at such time. "MATERIAL LEASEHOLD PROPERTY" means a Leasehold Property reasonably determined by the Agent to be of material value as Collateral or of material importance to the operations of the Credit Parties and as to which the aggregate amount of all rents payable during any fiscal year exceeds $100,000. "MATERIAL OWNED PROPERTY" means any real property owned by any Credit Party that is reasonably determined by the Agent to be of material value as Collateral or of material importance to the operations of the Credit Parties. "MATERIAL RENTAL OBLIGATIONS" means obligations of the Credit Parties to pay rent under any one or more operating leases with respect to any real or personal property that is material to the business of the Credit Parties and as to which the aggregate amount of all rents payable during any fiscal year exceeds $100,000. "MATURITY DATE" means March 31, 2007. "MORTGAGED PROPERTY" means, at any time of determination, any and all real property owned or leased by the Credit Parties that are subject to a Mortgage in favor of the Agent for the benefit of the Lenders and the Agent, including without limitation the Properties listed on SCHEDULE 1.1. "MORTGAGES" means, collectively, the several security instruments (whether designated as a deed of trust or a mortgage, leasehold mortgage, assignment of leases and rents or by any similar title) executed and delivered by any Credit Party, in such form as may be approved by the Agent in its sole and reasonable discretion, in each case with such changes thereto as may be recommended by the Agent's local counsel based on local laws or customary local practices, with respect to the Real Property Assets owned or leased by a Credit Party, in each case as such security instrument or amendment may be amended, supplemented or otherwise modified from time to time. "MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section 4001(a)(3) of ERISA. "NET CASH PAYMENTS" means, (a) with respect to any Casualty Event, the aggregate amount of cash proceeds of insurance, condemnation awards and other compensation received by the Borrower or any of its Subsidiaries in respect of such Casualty Event net of (i) reasonable expenses incurred by the Borrower or any of its Subsidiaries in connection therewith and (ii) contractually required repayments of Indebtedness to the extent secured by any senior Lien permitted by Section 8.2 on any asset, and (iii) any income and transfer taxes payable by the Borrower or any of its Subsidiaries in respect of such Casualty Event; (b) with respect to any Disposition, the aggregate amount of all cash payments received by the Borrower or any of its Subsidiaries directly or indirectly in connection with such Disposition, whether at the time of such Disposition or after such Disposition under deferred payment arrangements or Investments entered into or received in connection with such Disposition, net of (i) the amount of any legal, title, transfer and recording tax expenses, commissions and other fees and expenses payable by the Borrower or any of its Subsidiaries in connection therewith, (ii) any Federal, state and local income or other Taxes payable by the Borrower or any of its Subsidiaries as a result thereof, and (iii) any repayments by the Borrower or any of its Subsidiaries of Indebtedness to the extent that such Indebtedness is secured by any senior Lien permitted by Section 8.2 on any asset that is the subject of such Disposition and the transferee of (or holder of a Lien on) such property requires that such Indebtedness be repaid as a condition to the purchase of such property, and (iv) any repayments by the Borrower or any of its Subsidiaries to minority stockholders if and to the extent permitted hereby; and (c) with respect to any incurrence of Indebtedness or offering of Capital Stock, the aggregate amount of all cash proceeds received by the Borrower or any of its Subsidiaries therefrom less all legal, underwriting and similar fees and expenses incurred in connection therewith; in each case of clause (a), (b) and (c) to the extent, but only to the extent, that the amounts so deducted are (x) actually paid to a Person that, except in the case of reasonable out-of-pocket expenses, is not an Affiliate of such Person or any of its Subsidiaries and (y) properly attributable to such transaction or to the asset that is the subject thereof. "NET INCOME" means, with respect to any Person for any period, the net income (loss) of such Person and its Subsidiaries for such period, determined on a consolidated basis and in accordance with GAAP, but excluding from the determination of Net Income (without duplication) (a) any extraordinary or non recurring gains or losses or gains or losses from Dispositions, (b) restructuring charges, (c) effects of discontinued operations and (d) interest income (excluding interest income from CM Insurance Company, Inc.). "NET WORTH" means, as of any date of determination thereof, the sum of Total Assets MINUS (a) Total Liabilities, PLUS (b) non-cash goodwill impairment charges recorded after the Closing Date in accordance with FASB Statement No. 142, and MINUS (c) the balance in the Accumulated Other Comprehensive Gain (Loss) equity account. "NON-CASH CHARGES" means, with respect to any calculation of net income for any period, all non-cash extraordinary losses and charges deducted in such calculation (as determined in accordance with GAAP (excluding inventory and account receiveable write-downs and charge-offs), including, without limitation, non-cash recognition of unrealized declines in the market value of marketable securities recorded in accordance with FASB Statement No. 115, non-cash asset impairment charges recorded in accordance with FASB Statement No. 142 and FASB Statement No. 144, and non-cash restructuring charges. "OBLIGATIONS" means all indebtedness, obligations and liabilities of any of the Borrower and its Subsidiaries to any of the Lenders, the Agent, the Cash Management Bank, and the Issuing Lender, individually or collectively, existing on the Closing Date or arising thereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising by contract, operation of law or otherwise, arising or incurred under this Agreement or any of the other Loan Documents or in respect of any of the Loans, the Notes, the Letters of Credit or other instruments at any time evidencing any thereof, including, without limitation, the aggregate outstanding principal balance of and all interest on the Loans made by the Lenders to the Borrower (including any interest accruing after the commencement of any proceeding by or against the Borrower under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law, and any other interest that would have accrued but for the commencement of such proceeding, whether or not any such interest is allowed as a claim enforceable against the Borrower in any such proceeding), and all reimbursement obligations in respect of Letters of Credit, (ii) all LC Disbursements, (iii) all fees, costs, charges, expenses and other obligations from time to time owing to the Lenders, the Issuing Lender, the Cash Management Bank, the Agent, or any of their Affiliates by the Credit Parties or any of their Subsidiaries hereunder or under any other Loan Document, and (iv) all overdraft obligations, fees, costs, charges, expenses and other obligations from time to time owing to the Lenders, the Issuing Lender, the Cash Management Bank, the Agent, or any of their Affiliates by the Credit Parties or any of their Subsidiaries in respect of any Hedging Agreement, cash management agreement (including ACH transactions), operating or deposit account, or other banking product from time to time made available to the Credit Parties or any of their Subsidiaries by the Agent, the Issuing Lender, the Cash Management Bank or any Lender or any of their Affiliates; PROVIDED that, with respect to any such amounts under this clause (iv) owing to a Lender or any of its Affiliates (other than the Cash Management Bank, the Agent and their Affiliates), the Agent shall have given its prior written approval to the inclusion of such amounts as Obligations hereunder. Notwithstanding the foregoing, it is expressly agreed that the Obligations of the Canadian Borrowers hereunder and under the other Loan Documents shall be limited to all indebtedness, obligations and liabilities arising or incurred in respect of the Canadian Facility, the Canadian Letter of Credit (and all LC Disbursements in respect thereof), and all overdraft obligations, fees, costs, charges, expenses and other obligations with respect to the Canadian Facility, and the Canadian Letter of Credit, from time to time owing to the Lenders, the Issuing Lender, or the Agent. "OPTIONAL CURRENCY" means any of the following currencies: Mexican peso, Canadian dollars, Danish crowns, or the "Euro", Japanese yen or United Kingdom pounds sterling. "OTHER TAXES" means any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement and the other Loan Documents, PROVIDED that there shall be excluded from "Other Taxes" all Excluded Taxes. "PATENT AGREEMENT" means any Patent Collateral Assignment and Security Agreement, made by any Credit Party in favor of the Agent and, in substantially the form of EXHIBIT H or in form and substance acceptable to the Agent. "PATENTS" means all patents issued or assigned to and all patent applications made by the Credit Parties and, to the extent that the grant of a security interest does not cause a breach or termination thereof, all exclusive and nonexclusive licenses to the Credit Parties from third parties or rights to use patents owned by such third parties, including, without limitation, the patents, patent applications and licenses listed on SCHEDULE 5.5 hereto, along with any and all (a) inventions and improvements described and claimed therein, (b) reissues, divisions, continuations, extensions and continuations-in-part thereof, (c) income, royalties, damages, claims and payments now and hereafter due and/or payable under and with respect thereto, including, without limitation, damages and payments for past or future infringements thereof, (d) rights to sue for past, present and future infringements thereof, and (e) any other rights corresponding thereto throughout the world. "PBGC" means the Pension Benefit Guaranty Corporation or any successor thereto. "PENSION PLAN" means any Plan that is a defined benefit pension plan subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which any Credit Party or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA and with respect to any Canadian Borrower, all pension and retirement plans relating to the current and former employees of such Canadian Borrower, whether registered or unregistered, funded or unfunded and written or oral. "PERMITTED INVESTMENTS" means: (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof; (b) investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from Standard and Poor's Ratings Service or from Moody's Investors Service, Inc.; (c) investments in certificates of deposit, banker's acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof which has a combined capital and surplus and undivided profits of not less than $250,000,000; (d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above; (e) advances, loans and extensions of credit to any director, officer or employee of the Credit Parties, if the aggregate outstanding amount of all such advances, loans and extensions of credit (excluding travel advances in the ordinary course of business) does not at any time exceed $500,000; (f) investments in money market mutual funds that are rated AAA by Standard & Poor's Rating Service; and (g) stocks, bonds, funds, covered call options, cash equivalents, and cash included in the portfolio of Investments owned by CM Insurance Company, Inc. under the investment objective of "Aggressive Growth/ Moderate Income" using the following asset guidelines: cash, 0% to 20%; bonds, 0% to 30%; stocks, 70% to 90%; other, 0% to 20%; in each case, invested at the discretion of Fleet Investment Advisors, Inc. and Gold-K Securities, Inc. "PERMITTED LIENS" has the meaning set forth in Section 8.2. "PERSON" means any natural person, corporation, limited liability company, trust, joint venture, association, joint-stock company, unincorporated organization, partnership, Governmental Authority or other enterprise or entity. "PLAN" means any employee benefit plan within the meaning of Section 3(3) of ERISA in which any Credit Party or any ERISA Affiliate is an "employer" as defined in Section 3(5) of ERISA or any employee benefit plan established and maintained by, or for the benefit of such Credit Party for the benefit of its respective employee, including, but not limited to, any Pension Plan or Multiemployer Plan. "PLEDGE AGREEMENT" means any pledge agreement, between a Credit Party and the Agent, in substantially the form of EXHIBIT F or in form and substance satisfactory to the Agent. "POST-DEFAULT RATE" means a rate of interest per annum equal to the Base Rate PLUS the Applicable Margin PLUS two percent (2%). "PREPAYMENT ESCROW ACCOUNT" has the meaning assigned to such term in subsection 2.8(c)(v). "PRIOR CLAIMS" means all Liens created by applicable law (in contrast with Liens voluntarily granted) which rank or are capable of ranking prior or pari passu with any Agent's Lien (or the applicable equivalent of such Liens) against all or part of the Collateral of the Canadian Borrowers, including for amounts owing for vacation pay, employee deductions and contributions, goods and services taxes, sales taxes, realty taxes, business taxes, workers' compensation, pension plan or fund obligations and overdue rents (to the extent, in the case of rents, that such rents are not already the subject of a reserve). "PROPERTY" means any interest of any kind in property or assets, whether real, personal or mixed, and whether tangible or intangible. "PROPRIETARY RIGHTS" has the meaning assigned to such term in subsection 5.5(b). "PTO" means the United States Patent and Trademark Office or any successor or substitute office in which filings are necessary or, in the opinion of the Agent, desirable in order to create or perfect Liens on any IP Collateral. "REAL PROPERTY ASSET" means, at any time of determination, any and all real property owned or leased by the Credit Parties. "REFERENCE PERIOD" means, as of any date of determination, the period of four (4) consecutive fiscal quarters of the Borrower and its Subsidiaries ending on such date, or if such date is not a fiscal quarter end date, the period of four (4) consecutive fiscal quarters most recently ended (in each case treated as a single accounting period). "REGISTER" has the meaning assigned to such term in Section 11.4. "REGISTERED PROPRIETARY RIGHTS" has the meaning assigned to such term in subsection 5.5(c). "REIMBURSEMENT OBLIGATION" has the meaning assigned to such term in subsection 2.4(e). "RELATED PARTIES" means, with respect to any specified Person, such Person's Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person's Affiliates. "RELEASE" means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, seeping, migrating, dumping or disposing of any Hazardous Material (including the abandonment or discarding of barrels, containers and other closed receptacles containing any Hazardous Material) into the indoor or outdoor environment, including, without limitation, the movement of Hazardous Materials through or in the ambient air, soil, surface or ground water, or property. "REMEDIAL ACTION" means all actions taken to (a) clean up, remove, remediate, contain, treat, monitor, assess, evaluate or in any other way address Hazardous Materials in the indoor or outdoor environment; (b) prevent or minimize a Release or threatened Release of Hazardous Materials so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment; (c) perform pre-remedial studies and investigations and post-remedial operation and maintenance activities; or (d) perform any other actions authorized by 42 U.S.C. ss. 9601. "REQUIRED LENDERS" means, as of any date, any combination of Lenders the sum of whose aggregate Revolving Credit Commitments (or, if the Revolving Credit Commitments have been terminated, whose outstanding Revolving Loans and risk associated with outstanding Letters of Credit) and outstanding principal amounts under the Term Loan constitute at least fifty-one percent (51%) of the sum of the Total Revolving Credit Commitment (or, if the Revolving Credit Commitments have been terminated, the total outstanding Revolving Loans and Letters of Credit) and the total outstanding principal amounts under the Term Loan. "RESET DATE" has the meaning assigned to such term in Section 2.7(b)(ii). "RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock of, or other equity interest in, any Credit Party or any of its Subsidiaries now or hereafter outstanding, except a dividend payable solely in shares of stock or other equity interests, (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of stock of, or other equity interest in, any Credit Party or any of its Subsidiaries now or hereafter outstanding, (iii) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of stock of, or other equity interest in, any Credit Party or any of its Subsidiaries, (iv) any payment or prepayment of principal of, premium, if any, or interest on, or redemption purchase, retirement, defeasance (including economic or legal defeasance), sinking fund or similar payment with respect to the Senior Subordinated Notes and/or any intercompany Indebtedness owing by the Borrower or any Guarantor, and (v) any payment made to any Affiliates of any Credit Party or any of its Subsidiaries in respect of management, consulting or other similar services provided to any Credit Party or any of its Subsidiaries. "RESTRICTIVE AGREEMENTS" has the meaning assigned to such term in subsection 5.13(b). "REVOLVING CREDIT AVAILABILITY PERIOD" means the period from and including the Closing Date to but excluding the earlier of (a) the Maturity Date and (b) the date of termination of the Revolving Credit Commitments, as terminated by the Borrower pursuant to Section 2.6 or by the Agent pursuant to Section 9.1. "REVOLVING CREDIT COMMITMENT" means, with respect to each Lender, the commitment of such Lender to make Revolving Loans and to acquire participations in Letters of Credit hereunder, as such commitment may be (a) reduced from time to time pursuant to Sections 2.6 and 2.8, or reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 11.4. The initial maximum amount of each Lender's Revolving Credit Commitment is set forth on SCHEDULE 2.1, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Revolving Credit Commitment, as applicable. "REVOLVING CREDIT COMMITMENT PERCENTAGE" means, with respect to each Lender, the percentage set forth on SCHEDULE 2.1 hereto as such Lender's percentage of the Total Revolving Credit Commitment. "REVOLVING CREDIT EXPOSURE" means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender's Revolving Loans at such time and such Lender's Applicable Percentage of the Total LC Exposure at such time. "REVOLVING CREDIT NOTES" means the promissory notes, substantially in the form of EXHIBIT A-1 annexed hereto, issued by the Borrower in favor of the Lenders. "REVOLVING LOAN" means a Loan made pursuant to subsection 2.1(a) that utilizes the Revolving Credit Commitments. "SENIOR FUNDED INDEBTEDNESS" means, at any time of determination, the sum of Total Funded Indebtedness MINUS the principal amount of the Senior Subordinated Notes outstanding at such time. "SENIOR LEVERAGE RATIO" means as at any date of determination, the ratio of (a) Senior Funded Indebtedness of the Borrower and its Subsidiaries outstanding on such date to (b) the EBITDA for the Reference Period ended on such date. "SENIOR SUBORDINATED NOTE DOCUMENTS" means the Senior Subordinated Note Indenture, the Senior Subordinated Notes and all other documents, instruments and agreements executed and delivered in connection with the Senior Subordinated Notes, in each case, as the same shall, subject to the terms and conditions of this Agreement, be amended, supplemented or otherwise modified and in effect from time to time. "SENIOR SUBORDINATED NOTE INDENTURE" means the Columbus McKinnon Corporation Series A and Series B 8 1/2% Senior Subordinated Notes Due 2008 Indenture, dated as of March 31, 1998 (as supplemented by the Supplemental Indenture, dated as of March 31, 1998, the Second Supplemental Indenture, dated as of February 12, 1999, the Third Supplemental Indenture, dated as of March 1, 1999, the Fourth Supplemental Indenture, dated as of November 1, 1999, the Fifth Supplemental Indenture, dated as of April 4, 2002 and the Sixth Supplemental Indenture, dated as of August 5, 2002), between the Borrower, as issuer, and State Street Bank and Trust Company, N.A., as trustee, as the same shall, subject to the terms and conditions of this Agreement, be further amended, supplemented or otherwise modified and in effect from time to time. "SENIOR SUBORDINATED NOTES" means the Borrower's 8 1/2% senior subordinated notes due 2008 issued pursuant to the Senior Subordinated Note Indenture, as the same shall, subject to the terms and conditions of this Agreement, be amended, supplemented or otherwise modified and in effect from time to time. "SETTLEMENT" means the making or receiving of payments, in immediately available funds, by the Lenders, to the extent necessary to cause each Lender's actual share of the outstanding amount of Revolving Loans (after giving effect to any Advance Request) to be equal to such Lender's Revolving Credit Commitment Percentage of the outstanding amount of such Revolving Loans (after giving effect to any Advance Request), in any case where, prior to such event or action, the actual share is not so equal. "SETTLEMENT DATE" has the meaning assigned to such term in subsection 2.5(d). "SETTLEMENT LOAN" has the meaning assigned to such term in subsection 2.5(e). "SPECIAL COUNSEL" means Bingham McCutchen LLP, in its capacity as special counsel to Fleet Capital Corporation, as Agent. "SUBSIDIARY" means, with respect to any Person at any date, any corporation, limited or general partnership, limited liability company, trust, estate, association, joint venture or other business entity (i) the accounts of which would be consolidated with those of such Person in such Person's consolidated financial statements if such financial statements were prepared in accordance with GAAP or (ii) of which more than 50% of (A) the outstanding Capital Stock having (in the absence of contingencies) ordinary voting power to elect a majority of the board of directors or other managing body of such Person, (B) in the case of a partnership or limited liability company, the interest in the capital or profits of such partnership or limited liability company or (C) in the case of a trust, estate, association, joint venture or other entity, the beneficial interest in such trust, estate, association or other entity business is, at the time of determination, owned or controlled directly or indirectly through one or more intermediaries, by such Person. References herein to "SUBSIDIARIES" shall, unless the context requires otherwise, be deemed to be references to Subsidiaries of the Borrower. "SYNTHETIC LEASE" means, any lease of goods or other property, whether real or personal, which is treated as an operating lease under GAAP and as a loan or financing for U.S. income tax purposes. "TAXES" means any and all taxes, levies, imposts, duties, deductions, charges, fees, withholdings, compulsory loans, restrictions or conditions of any nature now or hereafter imposed or levied by any Governmental Authority. "TERM LOAN" means the term loan made or to be made by the Lenders to the Borrower on the Closing Date in the aggregate principal amount of $33,000,000 pursuant to Section 2.2. "TERM LOAN BORROWING BASE" means, at the relevant time of reference thereto, an amount determined by the Agent by reference to the most recent Term Loan Borrowing Base Certificate delivered to the Agent and the Lenders pursuant to subsection 7.1(i) which is equal to the lesser of: (a) $33,000,000 and (b) the sum of: (i) 80% of the Determined Value of Eligible Fixed Assets owned by the Borrower and its Domestic Subsidiaries which are Guarantors, PLUS, (ii) 60% of the Appraised Value of the Term Loan Borrowing Base Properties A owned by the Borrower and its Domestic Subsidiaries which are Guarantors, PLUS, (iii) 70% of the Appraised Value of the Term Loan Borrowing Base Properties B owned by the Borrower and its Domestic Subsidiaries which are Guarantors; MINUS, (iv) the Environmental Reserve allocable to the Term Loan (in the Agent's discretion). "TERM LOAN BORROWING BASE CERTIFICATE" means a certificate signed by a Designated Financial Officer certifying the amount of the Term Loan Borrowing Base as of the date set forth therein, in substantially the form of EXHIBIT B-5 hereto. "TERM LOAN BORROWING BASE PROPERTIES A" means the Mortgaged Properties (together with their current Appraised Values) listed in SCHEDULE 1.1 - PART A. "TERM LOAN BORROWING BASE PROPERTIES B" means the Mortgaged Properties (together with their current Appraised Values) listed in SCHEDULE 1.1 - PART B. "TERM LOAN COMMITMENT" means, with respect to each Lender, the commitment of such Lender to fund its portion of the Term Loan to the Borrower on the Closing Date. The initial amount of each Lender's Term Loan Commitment is set forth on SCHEDULE 2.1. "TERM NOTES" means the promissory notes, substantially in the form of EXHIBIT A-2 annexed hereto, issued by the Borrower in favor of the Lenders and evidencing the Term Loan. "TITLE INSURANCE COMPANY" means Chicago Title Insurance Company. "TITLE POLICY" means in relation to each Mortgaged Property, an ALTA standard form title insurance policy issued by the Title Insurance Company (with such reinsurance or co-insurance as the Agent may require, any such reinsurance to be with direct access endorsements) in such amount as may be determined by the Agent insuring the priority of the Mortgage of such Mortgaged Property and that the Borrower or one of its Subsidiaries holds marketable fee simple title to such Mortgaged Property, subject only to the encumbrances permitted by such Mortgage and which shall not contain exceptions for mechanics liens, persons in occupancy or matters which would be shown by a survey (except as may be permitted by such Mortgage), shall not insure over any matter except to the extent that any such affirmative insurance is acceptable to the Agent in its sole discretion, and shall contain such endorsements and affirmative insurance as the Agent in its discretion may require, including but not limited to (a) comprehensive endorsement, (b) variable rate of interest endorsement, (c) usury endorsement, (d) revolving credit endorsement, (e) tie-in endorsement, (f) doing business endorsement and (g) ALTA form 3.1 zoning endorsement. "TOTAL ASSETS" means the sum of (a) all assets ("CONSOLIDATED BALANCE SHEET ASSETS") of the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP, PLUS (b) without duplication, all assets leased by the Borrower or any of its Subsidiaries as lessee under any Synthetic Lease to the extent that such assets would have been consolidated balance sheet assets had the Synthetic Lease been treated for accounting purposes as a Capital Lease Obligation. "TOTAL FUNDED INDEBTEDNESS" means, with respect to the Borrower and its Subsidiaries, the sum, without duplication, of (a) the aggregate amount of Indebtedness of the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP, relating to (i) the borrowing of money or the obtaining of credit, including the issuance of notes or bonds, (ii) the deferred purchase price of assets (other than trade payables incurred in the ordinary course of business), (iii) in respect of any Synthetic Leases or any Capital Lease Obligations, and (iv) the maximum drawing amount of all letters of credit outstanding, plus (b) Indebtedness of the type referred to in clause (a) of another Person guaranteed by the Borrower or any of its Subsidiaries. "TOTAL GROSS AVAILABILITY" means, at any time, the lesser of (a) the sum of (i) the Domestic Borrowing Base at such time plus (ii) the Canadian Borrowing Base at such time and (b) the Total Revolving Credit Commitment at such time. "TOTAL LIABILITIES" means all liabilities of the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP and classified as such on the consolidated balance sheet of the Borrower and its Subsidiaries and all other Indebtedness of the Borrower and its Subsidiaries, whether or not so classified. "TOTAL LC EXPOSURE" means the sum of the Domestic LC Exposure and the Foreign LC Exposure. "TOTAL REVOLVING CREDIT COMMITMENT" means the sum of the Revolving Credit Commitments of the Lenders, as in effect from time to time. On the Closing Date, the Total Revolving Credit Commitment is equal to $67,000,000. "TOTAL REVOLVING CREDIT EXPOSURE" means the total Revolving Credit Exposures of all of the Lenders. "TOTAL TERM LOAN COMMITMENT" means the sum of the Term Loan Commitments of the Lenders, as in effect from time to time. On the Closing Date, the Total Term Loan Commitment is equal to $33,000,000. "TOTAL VOTING POWER" means, with respect to any Person, the total number of votes which holders of securities having the ordinary power to vote, in the absence of contingencies, are entitled to cast in the election of directors of such Person. "TRADEMARK AGREEMENT" means any Trademark Collateral Security and Pledge Agreement, made by the any Credit Party in favor of the Agent and, in substantially the form of EXHIBIT G or in form and substance acceptable to the Agent. "TRADEMARKS" means all trademarks (including service marks), federal and state trademark registrations and applications made by the Credit Parties, common law trademarks and trade names owned by or assigned to the Credit Parties, all registrations and applications for the foregoing and all exclusive and nonexclusive licenses from third parties of the right to use trademarks of such third parties, including, without limitation, the registrations, applications, unregistered trademarks, service marks and licenses listed on SCHEDULE 5.5 hereto, along with any and all (a) renewals thereof, (b) income, royalties, damages and payments now and hereafter due and/or payable with respect thereto, including, without limitation, damages, claims and payments for past or future infringements thereof, (c) rights to sue for past, present and future infringements thereof, and (d) foreign trademarks, trademark registrations, and trade name applications for any thereof and any other rights corresponding thereto throughout the world. "TRANCHE B AGENT" means Regiment Capital III, L.P., a Delaware limited partnership, as agent for the Tranche B Lenders under the Tranche B Financing Agreements. "TRANCHE B CANADIAN FINANCING AGREEMENT" means the Financing Agreement, dated or to be dated on or prior to the Closing Date (as amended and in effect from time to time with the consent of the Agent and the Required Lenders), among the Canadian Borrowers, the financial institutions from time to time party thereto and Regiment Capital III, L.P., a Delaware limited partnership, as agent for such financial institutions from time to time party thereto. "TRANCHE B FINANCING" means the financing provided under the Tranche B Financing Agreements. "TRANCHE B FINANCING AGREEMENT" means the Financing Agreement, dated or to be dated on or prior to the Closing Date (as amended and in effect from time to time), among the Borrower, the Guarantors, the financial institutions from time to time party thereto (collectively, the "TRANCHE B LENDERS") and Regiment Capital III, L.P., a Delaware limited partnership, as agent for the Tranche B Lenders. "TRANCHE B FINANCING AGREEMENTS" means the Tranche B Canadian Financing Agreement, together with the Tranche B Financing Agreement. "TRANCHE B LOANS" means the loans made or to be made by the Tranche B Lenders to the Borrower in the aggregate principal amount of $70,000,000 pursuant the Tranche B Financing Agreements. "TRANCHE B LOAN DOCUMENTS" means, collectively, (i) the Tranche B Financing Agreement, (ii) the Tranche B Canadian Financing Agreement and (iii) all other agreements, instruments, and other documents executed and delivered in connection therewith, as amended and in effect from time to time with the consent of the Agent and the Required Lenders. "TRANCHE B LENDERS" means the lenders party to the Tranche B Financing Agreements. "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 LIBOR Rate or the Base Rate. "U.S. CREDIT PARTIES" means the Borrower and all Guarantors. "U.S. DOLLARS" or $ means lawful currency of the United States of America. "WHOLLY OWNED SUBSIDIARY" means, with respect to any Person at any date, any corporation, limited liability company, partnership, association or other entity of which securities or other ownership interests representing 100% of the equity or ordinary voting power (other than directors' qualifying shares) or, in the case of a partnership, 100% of the general partnership interests are, as of such date, directly or indirectly owned, controlled or held by such Person or one or more Wholly Owned Subsidiaries of such Person or by such Person and one or more Wholly Owned Subsidiaries of such Person. "WITHDRAWAL LIABILITY" means 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. 1.2. 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 "Term Loan") or by Type (e.g., a "Base Rate Loan" or a "LIBOR Rate Loan") or by Class and Type (e.g., a "LIBOR Rate Revolving Loan" or a "Base Rate Revolving Loan"). In similar fashion, (i) Borrowings may be classified and referred to by Class, by Type and by Class and Type, and (ii) Commitments may be classified and referred to by Class. 1.3. TERMS GENERALLY. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person's successors and assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties of any kind whatsoever, including cash, securities, accounts and contract rights. 1.4. ACCOUNTING TERMS; GAAP. Unless otherwise expressly provided herein, each accounting term used herein shall have the meaning given it under GAAP applied on a basis consistent with those used in preparing the financial statements of the Borrower and its Subsidiaries. 1.5. JOINT AND SEVERAL OBLIGATIONS; DESIGNATED FINANCIAL OFFICERS. (a) Each of the Credit Parties is accepting joint and several liability hereunder and under the other Loan Documents in consideration of the financial accommodations to be provided by the Lenders under this Agreement, for the mutual benefit, directly and indirectly, of each of the Credit Parties and in consideration of the undertakings of each other Credit Party to accept joint and several liability for the Obligations. (b) Each of the Credit Parties, jointly and severally, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Credit Parties with respect to the payment and performance of all of the Obligations (including, without limitation, any Obligations arising under this Section 1.5), it being the intention of the parties hereto that all of the Obligations shall be the joint and several Obligations of each of the Credit Parties without preferences or distinction among them. (c) If and to the extent that any of the Credit Parties shall fail to make any payment with respect to any of the Obligations as and when due or to perform any of the Obligations in accordance with the terms thereof, then in each such event the other Credit Parties will make such payment with respect to, or perform, such Obligation. (d) The Obligations of each of the Credit Parties under the provisions of this Section 1.5 constitute full recourse Obligations of each of the Credit Parties enforceable against each such corporation to the full extent of its properties and assets, irrespective of the validity, regularity or enforceability of this Agreement or any other circumstance whatsoever. (e) Except as otherwise expressly provided in this Agreement, each of the Credit Parties hereby waives notice of acceptance of its joint and several liability, notice of any Loans made under this Agreement, notice of any action at any time taken or omitted by the Lenders under or in respect of any of the Obligations, and, generally, to the extent permitted by applicable law, all demands, notices and other formalities of every kind in connection with this Agreement. Each of the Credit Parties hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Obligations, the acceptance of any payment of any of the Obligations, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by the Lenders at any time or times in respect of any default by any of the Credit Parties in the performance or satisfaction of any term, covenant, condition or provision of this Agreement, any and all other indulgences whatsoever by the Lenders in respect of any of the Obligations, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of the Obligations or the addition, substitution or release, in whole or in part, of any of the Credit Parties. Without limiting the generality of the foregoing, each of the Credit Parties assents to any other action or delay in acting or failure to act on the part of the Lenders with respect to the failure by any of the Credit Parties to comply with any of its respective Obligations, including, without limitation, any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws or regulations thereunder, which might, but for the provisions of this Section 1.5, afford grounds for terminating, discharging or relieving any of the Credit Parties, in whole or in part, from any of its Obligations under this Section 1.5, it being the intention of each of the Credit Parties that, so long as any of the Obligations hereunder remain unsatisfied, the Obligations of such Credit Parties under this Section 1.5 shall not be discharged except by performance and then only to the extent of such performance. The Obligations of each of the Credit Parties under this Section 1.5 shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, re-construction or similar proceeding with respect to any of the Credit Parties or the Lenders. The joint and several liability of the Credit Parties hereunder shall continue in full force and effect notwithstanding any absorption, merger, amalgamation or any other change whatsoever in the name, membership, constitution or place of formation of any of the Credit Parties or the Lender. (f) The provisions of this Section 1.5 are made for the benefit of the Lenders and their successors and assigns, and may be enforced in good faith by them from time to time against any or all of the Credit Parties as often as the occasion therefor may arise and without requirement on the part of the Lender first to marshal any of their claims or to exercise any of their rights against any other Credit Party or to exhaust any remedies available to them against any other Credit Party or to resort to any other source or means of obtaining payment of any of the Obligations hereunder or to elect any other remedy. The provisions of this Section 1.5 shall remain in effect until all of the Obligations shall have been paid in full or otherwise fully satisfied. If at any time, any payment, or any part thereof, made in respect of any of the Obligations, is rescinded or must otherwise be restored or returned by the Lenders upon the insolvency, bankruptcy or reorganization of any of the Credit Parties, or otherwise, the provisions of this Section 1.5 will forthwith be reinstated in effect, as though such payment had not been made. (g) Notwithstanding the foregoing or any other provision of this Agreement, it is expressly agreed that the joint and several liability of any Canadian Borrower hereunder and under the other Loan Documents shall be limited to the Obligations of the Canadian Borrowers and no Canadian Borrower shall otherwise be liable for the Obligations of any other Credit Party hereunder other than the other Canadian Borrower. (h) Any notice, request, waiver, consent or other action made, given or taken by any Credit Party shall bind all Credit Parties. (i) Each Credit Party hereby authorizes each of the Designated Financial Officers listed in SCHEDULE 1.5 hereto to act as agent for each Credit Party and to execute and deliver on behalf of each Credit Party such notices, requests, waivers, consents, certificates and other documents, and to take any and all actions required or permitted to be delivered or taken by any Credit Party hereunder. The Borrower may replace any of the Designated Financial Officers listed in SCHEDULE 1.5 hereto or add any additional Designated Financial Officers by delivering written notice to the Agent specifying the names of each new Designated Financial Officer and the offices held by each such Person. Each Credit Party hereby agrees that any such notices, requests, waivers, consents, certificates and other documents executed, delivered or sent by any Designated Financial Officer of the Borrower and any such actions taken by any Designated Financial Officer of the Borrower shall bind each Credit Party. ARTICLE 2. THE CREDITS 2.1. REVOLVING LOANS. (a) REVOLVING CREDIT COMMITMENTS. Subject to the terms and conditions set forth herein, each Lender agrees to make Revolving Loans to the Borrower from time to time during the Revolving Credit Availability Period in an aggregate principal amount that will not result in such Lender's Revolving Credit Exposure exceeding the lesser of (i) such Lender's Revolving Credit Commitment at such time and (ii) an amount equal to such Lender's Applicable Percentage of the sum of the (A) Domestic Borrowing Base at such time PLUS (B) the Canadian Borrowing Base at such time; PROVIDED that the Domestic Revolving Credit Exposure plus the Canadian Excess Amount shall not at any time exceed the Domestic Gross Availability. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans. (b) FUNDING OF REVOLVING LOANS. To request the funding of any Revolving Loan hereunder, the Borrower shall deliver to the Agent, an Advance Request in substantially the form of Exhibit B-4 hereto, by facsimile or electronic mail transmission, not later than 1:00 p.m., Boston, Massachusetts time, (i) two (2) Business Days prior to the proposed Drawdown Date of any Base Rate Loan and (ii) three (3) LIBOR Business Days prior to the proposed Drawdown Date of any LIBOR Rate Loan. Each such request shall specify (i) the principal amount of the Revolving Loan requested, (ii) the proposed Drawdown Date of such Revolving Loan, (ii) the Interest Period for such Revolving Loan, (iii) the Type of such Revolving Loan and (iv) the Domestic Gross Availability as set forth in the most recent Collateral Update Certificate/Borrowing Base Certificate delivered to Lender. Promptly following receipt of an Advance Request in compliance with this subsection 2.1(b), the Agent shall advise each Lender of the details thereof and of the amount of such Lender's Revolving Loan to be made as part of the requested Borrowing, and PROVIDED that no Default or Event of Default shall have occurred and be continuing or shall result therefrom, on the date such Advance Request is delivered to the Agent, the Lenders shall make a Revolving Loan to the Borrower in accordance with the terms of Section 2.5 in an amount equal to the amount set forth in such Advance Request. Each Advance Request shall be in a minimum aggregate amount of $1,000,000 or an integral multiple of $100,000 in excess thereof. (c) INTEREST ON REVOLVING LOANS. (i) Subject to clause (iv) of this subsection 2.1(d), each Revolving Loan which is a Base Rate Loan shall bear interest for the period commencing with the Drawdown Date thereof and ending on the last day of the calendar month with respect thereto at the rate per annum equal to the Base Rate plus the Applicable Margin with respect to Base Rate Loans as in effect from time to time. (ii) Subject to clause (iv) of this subsection 2.1(d), each Revolving Loan which is a LIBOR Rate Loan shall bear interest for the period commencing with the Drawdown Date thereof and ending on the last day of the LIBOR Rate Interest Period with respect thereto at the rate equal to the LIBOR Rate determined for such LIBOR Rate Interest Period PLUS the Applicable Margin with respect to LIBOR Rate Loans as in effect from time to time. (iii) The Borrower promises to pay interest on each Revolving Loan in arrears on each Interest Payment Date with respect thereto. (iv) Notwithstanding the foregoing, if there shall occur and be continuing any Event of Default, the principal of all Revolving Loans hereunder, at the option of the Agent or Required Lenders, shall bear interest at the Post-Default Rate during the period beginning on the date such Event of Default first occurred and ending on the date such Event of Default is cured or waived. All interest accrued at the Post-Default Rate shall be payable on demand. All accrued interest on Revolving Loans shall be payable upon expiration of the Revolving Credit Availability Period. All interest and fees hereunder shall be computed on the basis of a year of 360 days, and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). (d) REPAYMENT OF REVOLVING LOANS. The Borrower unconditionally promises to pay to the Agent for the account of each Lender the then unpaid principal amount of such Lender's Revolving Loans on the Maturity Date. In addition, if following any reduction in the Total Revolving Credit Commitment or at any other time the Domestic Revolving Credit Exposure plus the Canadian Excess Amount shall exceed the Domestic Gross Availability, the Borrower shall first, repay Revolving Loans in an aggregate amount equal to such excess, and second, provide cash collateral for the Total LC Exposure as specified in subsection 2.4(h) in an aggregate amount equal to 105% of such excess. (e) LOAN ACCOUNTS. Each Lender shall maintain in accordance with its usual practice an account evidencing the indebtedness of the Borrower to such Lender resulting from each Revolving Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. The Agent shall maintain accounts in which it shall record the amount of each Revolving Loan made hereunder, the amount of any principal, interest, fees and/or expenses due and payable or to become due and payable from the Borrower to each Lender hereunder and the amount of any sum received by the Agent hereunder for the account of the Lenders and each Lender's share thereof. The entries made in the account maintained by the Agent pursuant to this subsection 2.1(e) shall be prima facie evidence of the existence and amounts of the obligations recorded therein; PROVIDED that the failure of the Agent to maintain such account or any error therein shall not in any manner affect the obligation of the Borrower to repay the Revolving Loans in accordance with the terms of this Agreement. (f) REVOLVING CREDIT NOTE. Prior to the Closing Date, the Borrower shall prepare, execute and deliver to each Lender a Revolving Credit Note in the principal amount of such Lender's Revolving Credit Commitment. Thereafter, the Revolving Loans of each Lender evidenced by such Revolving Credit Note and interest thereon shall at all times (including after assignment pursuant to Section 11.4) be represented by one or more promissory notes in such form payable to the order of the payee named therein. 2.2. TERM LOAN. (a) FUNDING OF THE TERM LOAN. Subject to the terms and conditions set forth herein, each Lender agrees to fund its portion of the Term Loan in the full amount of its Term Loan Commitment on the Closing Date. Principal amounts of the Term Loan that have been repaid or prepaid may not be reborrowed. (b) INTEREST ON THE TERM LOAN. The outstanding principal amount of the Term Loan shall bear interest during each Interest Period relating to all or any portion of the Term Loan at the following rates: (i) To the extent that all or any portion of the Term Loan bears interest during such Interest Period at the Base Rate, the Term Loan or such portion shall bear interest during such Interest Period at the rate per annum equal to the Base Rate plus the Applicable Margin with respect to portions of Term Loans consisting of Base Rate Loans as in effect from time to time. (ii) To the extent that all or any portion of the Term Loan bears interest during such Interest Period at the LIBOR Rate, the Term Loan or such portion shall bear interest during such Interest Period at the rate per annum equal to the LIBOR Rate determined for such Interest Period plus the Applicable Margin with respect to portions of Term Loans consisting of LIBOR Rate Loans as in effect from time to time. (iii) The Borrower promises to pay interest on the Term Loan or any portion thereof outstanding during each Interest Period in arrears on each Interest Payment Date applicable to such Interest Period. (iv) Notwithstanding the foregoing, if there shall occur and be continuing any Event of Default, the outstanding principal balance of the Term Loan, at the option of the Agent or Required Lenders, shall bear interest at the Post-Default Rate during the period beginning on the date such Event of Default first occurred and ending on the date such Event of Default is cured or waived. All interest accrued at the Post-Default Rate shall be payable on demand. All interest hereunder shall be computed on the basis of a year of 360 days, and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). (c) REPAYMENT OF TERM LOAN. The Borrower hereby unconditionally promises to pay to the Agent for the account of the Lenders quarterly principal installments in respect of the Term Loan in sixteen (16) consecutive quarterly payments of $1,178,571.40, such installments to be due and payable on the first day of each calendar quarter of each calendar year, commencing on April 1, 2003, with a final payment equal to the remaining unpaid principal amount of the Term Loan due on the Maturity Date. If at any time the sum of the outstanding amount of the Term Loans exceeds the Term Loan Borrowing Base, then the Borrower shall immediately pay the amount of such excess to the Agent, for the ratable benefit of the Lenders. (d) LOAN ACCOUNTS. Each Lender shall maintain in accordance with its usual practice an account evidencing the indebtedness of the Borrower to such Lender in respect of the Term Loan, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. The Agent shall maintain accounts in which it shall record the amount of each Lender's portion of the Term Loan made hereunder, the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and the amount of any sum received by the Agent hereunder for the account of the Lenders and each Lender's share thereof. The entries made in the account maintained by the Agent pursuant to this subsection 2.2(d) shall be prima facie evidence of the existence and amounts of the obligations recorded therein; PROVIDED that the failure of the Agent to maintain such account or any error therein shall not in any manner affect the obligation of the Borrower to repay the Term Loan in accordance with the terms of this Agreement. (e) TERM NOTE. Prior to the Closing Date, the Borrower shall prepare, execute and deliver to each Lender a Term Note in the principal amount of such Lender's Term Loan Commitment. Thereafter, such Lender's portion of the Term Loan evidenced by such Term Note and interest thereon shall at all times (including after assignment pursuant to Section 11.4) be represented by one or more promissory notes in such form payable to the order of the payee named therein. 2.3. CONVERSION OPTIONS. (a) CONVERSION TO DIFFERENT TYPE OF REVOLVING LOAN. The Borrower may elect from time to time to convert any outstanding Revolving Loan to a Revolving Loan of another Type, PROVIDED that (a) with respect to any such conversion of a LIBOR Rate Loan to a Base Rate Loan, the Borrower shall give the Agent at least two (2) Business Days prior written notice of such election; (b) with respect to any such conversion of a Base Rate Loan to a LIBOR Rate Loan, the Borrower shall give the Agent at least three (3) LIBOR Business Days prior written notice of such election; (c) with respect to any such conversion of a LIBOR Rate Loan into a Base Rate Loan, such conversion shall only be made on the last day of the Interest Period with respect thereto and (d) no Revolving Loan may be converted into a LIBOR Rate Loan when any Default or Event of Default has occurred and is continuing. On the date on which such conversion is being made each Lender shall take such action as is necessary to transfer its Revolving Credit Commitment Percentage of such Revolving Loans to its Domestic Lending Office or its LIBOR Lending Office, as the case may be. All or any part of outstanding Revolving Loans of any Type may be converted into a Revolving Loan of another Type as provided herein, PROVIDED that any partial conversion shall be in an aggregate principal amount of $1,000,000 or a whole multiple thereof. Each Conversion Request relating to the conversion of a Revolving Loan to a LIBOR Rate Loan shall be irrevocable by the Borrower. (b) CONTINUATION OF TYPE OF REVOLVING LOAN. Any Revolving Loan of any Type may be continued as a Revolving Loan of the same Type upon the expiration of an Interest Period with respect thereto by compliance by the Borrower with the notice provisions contained in subsection 2.3(a); PROVIDED that no LIBOR Rate Loan may be continued as such when any Default or Event of Default has occurred and is continuing, but shall be automatically converted to a Base Rate Loan on the last day of the first Interest Period relating thereto ending during the continuance of any Default or Event of Default of which officers of the Agent active upon the Borrower's account have actual knowledge. In the event that the Borrower fails to provide any such notice with respect to the continuation of any LIBOR Rate Loan as such, then such LIBOR Rate Loan shall be automatically converted to a Base Rate Loan on the last day of the first Interest Period relating thereto. The Agent shall notify the Lenders promptly when any such automatic conversion contemplated by this subsection 2.3(b) is scheduled to occur. (c) LIBOR RATE LOANS. Any conversion to or from LIBOR Rate Loans shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, the aggregate principal amount of all LIBOR Rate Loans having the same Interest Period shall not be less than $1,000,000 or a whole multiple of $100,000 in excess thereof. No more than five (5) LIBOR Borrowings having different Interest Periods may be outstanding at any time. (d) ALTERNATE RATE OF INTEREST. If prior to the commencement of any Interest Period for a LIBOR Borrowing, (i) the Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the LIBOR Rate for such LIBOR Interest Period, (ii) if such Borrowing is of a particular Class of Loans, the Agent is advised by the Required Lenders with respect to the Revolving Loans or Terms Loans, as the case may be, that the LIBOR Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans of such Class included in such LIBOR Borrowing, or (iii) if the Agent or any Lender shall have determined in good faith that as a result of any Change in Law it is unlawful or impossible for any Lender to make or maintain any LIBOR Borrowing; then in each case the Agent shall give notice thereof to the Borrower and the affected Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Agent notifies the Borrower and such Lenders that the circumstances giving rise to such notice no longer exist, (x) any Advance Conversion Request for LIBOR Rate Loans submitted by the Borrower shall be automatically withdrawn and shall be deemed a request for a Base Rate Loan, (y) each LIBOR Rate Loan will automatically, on the last day of the then current Interest Period relating thereto, become a Base Rate Loan, and (z) the obligations of the Lenders to make LIBOR Rate Loans shall be suspended until the Agent determines that the circumstances giving rise to such suspension no longer exist, whereupon the Agent shall so notify the Borrower and the Lenders; PROVIDED that if as a result of a Change in Law the Lenders are prohibited from maintaining any outstanding LIBOR Borrowing, upon notice from the Agent, the Borrower shall immediately (A) convert such LIBOR Borrowing to a Base Rate Borrowing, or (B) repay such LIBOR Borrowing in full, together with all interest accrued thereon and all fees and other amounts payable to the Lenders hereunder (in either case, subject to the provisions of subsection 2.3(e) of this Agreement with respect to redeployment costs). (e) BREAK FUNDING PAYMENTS. In the event of (i) the payment of any principal of any LIBOR Rate Loan other than on the last day of the LIBOR Interest Period applicable thereto (including as a result of an Event of Default), (ii) the conversion of any LIBOR Rate Loan other than on the last day of the Interest Period applicable thereto, or (iii) the failure to borrow, convert, continue or prepay any LIBOR Rate Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice is permitted to be revocable and is revoked in accordance herewith), then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event (the "BREAKAGE COSTS"), as determined by such Lender in a manner consistent with its customs and practices. In the event that any Lender is entitled to receive compensation pursuant to this subsection 2.3(e), such Lender shall deliver a certificate to the Borrower setting forth the amount or amounts that such Lender is entitled to receive, and the Borrower shall pay such Lender such amount or amounts within three (3) days after receipt of such certificate. 2.4. DOMESTIC LETTERS OF CREDIT AND FOREIGN LETTERS OF CREDIT. (a) COMMITMENT TO ISSUE DOMESTIC LETTERS OF CREDIT AND FOREIGN LETTERS OF CREDIT AND LC GUARANTY. (i) Subject to the terms and conditions set forth herein, the Borrower may request the issuance of a letter of credit in U.S. currency (the "DOMESTIC LETTER OF CREDIT") for its own account and/or for the account of any of its Subsidiaries by the Issuing Lender, in a form acceptable to the Issuing Lender, at any time and from time to time during the Revolving Credit Availability Period; PROVIDED, however, that, after giving effect to such request, (a) the Domestic LC Exposure shall not, at any time, exceed $12,000,000 and (b) the Domestic Revolving Credit Exposure plus the Canadian Excess Amount shall not exceed the Domestic Gross Availability. Domestic Letters of Credit issued hereunder shall constitute utilization of the Revolving Credit 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 the Borrower to, or entered into by the Borrower with, the Issuing Lender relating to any Domestic Letter of Credit, the terms and conditions of this Agreement shall control. (ii) Subject to the terms and conditions set forth herein, the Borrower may request the issuance of a letter of credit in an Optional Currency (a "FOREIGN LETTER OF CREDIT") for its own account and/or for the account of any of its Subsidiaries by the Issuing Lender, in a form acceptable to the Issuing Lender, at any time and from time to time during the Revolving Credit Availability Period; PROVIDED, however, that, after giving effect to such request, (a) the Dollar Equivalent of the Foreign LC Exposure (exclusive of the Canadian Letter of Credit) shall not exceed $5,000,000 at any one time and (b) the Domestic Revolving Credit Exposure plus the Canadian Excess Amount shall not exceed the Domestic Gross Availability. Foreign Letters of Credit issued hereunder (exclusive of the Canadian Letter of Credit to the extent of the Canadian Borrowing Base) shall constitute utilization of the Domestic Revolving Credit Commitments in the amount of the Dollar Equivalent of such Foreign Letter of Credit. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Lender relating to any Foreign Letter of Credit, the terms and conditions of this Agreement shall control. (iii) The Agent agrees, on behalf of the Lenders and in reliance upon the agreement of the Lenders set forth in this subsection 2.4(d) and upon the representations and warranties of the Credit Parties contained herein, to enter into an LC Guaranty with the Issuing Lender to support the reimbursement obligations of the Borrower with respect to any Letter of Credit and the Canadian Borrowers with respect to the Canadian Letter of Credit. (b) NOTICE OF ISSUANCE, AMENDMENT, RENEWAL, EXTENSION; CERTAIN CONDITIONS. Subject to Section 2.14, to request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall deliver to the Issuing Lender and the Agent by electronic or facsimile transmission (at least two (2) Business Days prior to the requested date of issuance, amendment, renewal or extension) a letter of credit application and reimbursement agreement in the form required by the Issuing Lender. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit, the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the Domestic LC Exposure at such time shall not exceed $12,000,000 and the Dollar Equivalent of the Foreign LC Exposure at such time (exclusive of the Canadian Letter of Credit) shall not exceed $5,000,000, as the case may be and (ii) the Domestic Revolving Credit Exposure plus the Canadian Excess Amount at such time shall not exceed the Domestic Gross Availability. Any Letter of Credit issued, amended, renewed or extended hereunder shall provide for the payment of sight drafts for honor thereunder when presented in accordance with the terms thereof and when accompanied by the documents described therein. (c) EXPIRATION DATE. Each Letter of Credit shall expire (without giving effect to any extension thereof by reason of an interruption of business) at or prior to the close of business on the earlier of (i) the date 365 days, in the case of standby Letters of Credit, or 180 days, in the case of documentary Letters of Credit, after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, 365 days or 180 days, as applicable, after such renewal or extension) PROVIDED that any such standby Letter of Credit may provide for automatic extensions thereof to a date not later than 365 days beyond its current expiration date, and (ii) the date that is five (5) or, if confirmed by a confirmer, thirty (30), Business Days prior to the Maturity Date. No Letter of Credit may be extended beyond the date that is five Business Days prior to the Maturity Date. (d) PARTICIPATIONS. (i) By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) by the Issuing Lender, and without any further action on the part of the Issuing Lender, the Issuing Lender hereby grants to each Lender, and each Lender hereby acquires from the Issuing Lender, a participation in such Letter of Credit equal to such Lender's Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Agent, for the account of the Issuing Lender, such Lender's Applicable Percentage of each LC Disbursement made by the Issuing Lender and not reimbursed by the Borrower on the date due as provided in subsection 2.4(e), or of any reimbursement payment required to be refunded to the Borrower for any reason. (ii) By the issuance of the LC Guaranty by the Agent, and without any further action on the part of the Agent, the Agent hereby grants to each Lender, and each Lender hereby acquires from the Agent, a participation in the LC Guaranty equal to such Lender's Applicable Percentage of the aggregate amount guaranteed under the LC Guaranty. In the event the Agent is required to make any payment to the Issuing Lender under the LC Guaranty, each Lender hereby absolutely and unconditionally agrees to pay to the Agent, for the account of the Issuing Lender, such Lender's Applicable Percentage of each such payment made by the Agent and not reimbursed by the Borrower or the Canadian Borrowers, as the case may be pursuant to subsection 2.4(e), or of any reimbursement payment required to be refunded to the Borrower for any reason, and each Lender severally agrees that it shall be absolutely liable, without regard to the occurrence of any Default or Event of Default or any other condition precedent whatsoever, to the extent of such Lender's Applicable Percentage, to reimburse the Agent on demand for such payment. (e) REIMBURSEMENT. If the Issuing Lender shall make any LC Disbursement in respect of a Letter of Credit or the Agent shall make any payment under the LC Guaranty, the Borrower and/or, with respect to the Canadian Letter of Credit, the Canadian Borrowers, shall reimburse (each, a "REIMBURSEMENT OBLIGATION") the Issuing Lender in respect of such LC Disbursement or the Agent in respect of such payment under the LC Guaranty, as the case may be, by paying to the Agent for the account of the Issuing Lender or to the Agent with respect to such payment under the LC Guaranty, an amount in U.S. Dollars equal to such LC Disbursement (or the Dollar Equivalent of such LC Disbursement in the case of a Letter of Credit issued in an Optional Currency) or such payment under the LC Guaranty not later than 1:00 p.m., Boston, Massachusetts time, on (i) the Business Day that the Borrower or any Canadian Borrower receives notice of such LC Disbursement or such payment under the LC Guaranty, if such notice is received prior to 11:00 a.m., Boston, Massachusetts time, or (ii) the Business Day immediately following the day that the Borrower or any Canadian Borrower receives such notice, if such notice is not received prior to such time, PROVIDED that, subject to the conditions to borrowing set forth herein, payment of each such Reimbursement Obligation shall be made through the automatic funding of a Base Rate Borrowing in an amount equal to the amount of such Reimbursement Obligation, and the Borrower hereby irrevocably authorizes and directs the Agent to take such actions as may be necessary to effectuate such automatic funding of such Base Rate Borrowings. To the extent that any such Reimbursement Obligation is paid through the automatic funding of a Base Rate Borrowing, the Borrower's obligation to make such payment shall be discharged and replaced by the resulting Base Rate Borrowing. If the Borrower cannot satisfy the conditions to borrowing set forth herein such that the payment of any Reimbursement Obligation cannot be made through the automatic funding of a Base Rate Borrowing and/or the Borrower or any Canadian Borrower shall fail, for any reason, to make such payment when due, the Agent shall notify each Lender of the applicable LC Disbursement and/or such payments made by the Agent under the LC Guaranty, the unreimbursed portion thereof and such Lender's Applicable Percentage thereof. Promptly following receipt of such notice, each Lender shall pay to the Agent in U.S. Dollars its Applicable Percentage of the unreimbursed portion of the LC Disbursement and/or any payments made by the Agent under the LC Guaranty, in the same manner as provided in Section 2.5 with respect to Loans made by such Lender (and Section 2.5 shall apply to the payment obligations of the Lenders, treating each such payment as a Loan for this purpose), and the Agent shall promptly pay to the Issuing Lender the amounts so received by it from the Lenders. Promptly following receipt by the Agent of any payment from the Borrower or any Canadian Borrower pursuant to this paragraph, the Agent shall distribute such payment to the Issuing Lender or, to the extent that the Lenders have made payments pursuant to this paragraph to purchase participation interests in the LC Disbursement and/or the LC Guaranty, then to such Lenders and the Issuing Lender as their interests may appear. Any payment made by a Lender pursuant to this paragraph to purchase a participation interest in any LC Disbursement or any LC Guaranty shall not constitute a Loan and shall not relieve the Borrower or any Canadian Borrower of its obligation to reimburse such LC Disbursement or any payment made by the Agent under the LC Guaranty. For the avoidance of doubt, all Reimbursement Obligations with respect to Domestic Letters of Credit or Foreign Letters of Credit, as the case may be, shall be paid in U.S. Dollars. The Borrower shall indemnify and hold harmless the Issuing Lender and the Agent for any loss, cost or expense incurred by such Persons as a result of any change in the currency exchange rate occurring during the period between the date that the Issuing Lender makes payment on any Letter of Credit denominated in an Optional Currency and/or the Agent makes any payment of the LC Guaranty with respect to any Letter of Credit denominated in an Optional Currency and the date on which the Issuing Lender and/or the Agent receives final reimbursement in U.S. Dollars for the Dollar Equivalent of the amount of such payment. (f) OBLIGATIONS ABSOLUTE. The Borrower's and the Canadian Borrowers' obligations to reimburse LC Disbursements or any payment made by the Agent under the LC Guaranty, as provided in subsection 2.4(e) shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or the LC Guaranty, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Lender to the beneficiary under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit and (iv) any other event or circumstance whatsoever (other than gross negligence or willful misconduct of the Issuing Lender), whether or not similar to any of the foregoing, that might, but for the provisions of this Section 2.4, constitute a legal or equitable discharge of the Borrower's obligations hereunder. (g) INTERIM INTEREST. If the Issuing Lender and/or the Agent shall make any LC Disbursement in respect of any Letter of Credit and/or any payment in respect of the LC Guaranty , and if the Borrower cannot satisfy the conditions to borrowing set forth herein such that payment of the Reimbursement Obligation resulting from such LC Disbursement or with respect to the LC Guaranty cannot be made through the automatic funding of a Base Rate Borrowing, then, unless the Borrower or the Canadian Borrowers, as applicable, shall reimburse such LC Disbursement or such payment made by the Agent with respect to the LC Guaranty in full on the date such LC Disbursement or such payment is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement or such payment is made to but excluding the date that the Borrower or the Canadian Borrowers, as applicable, reimburses such LC Disbursement or such payment, at the rate per annum then applicable to Base Rate Loans; PROVIDED that, if the Borrower or any Canadian Borrower, as applicable, fails to reimburse such LC Disbursement or such payment when due pursuant to subsection 2.4(e), then interest calculated at the Post-Default Rate shall accrue on the unpaid amount thereof. Interest accrued pursuant to this paragraph shall be for the account of the Issuing Lender or the Agent, as the case may be, except that interest accrued on and after the date of payment by any Lender pursuant to subsection 2.4(e) shall be for the account of such Lender to the extent of such payment. (h) CASH COLLATERALIZATION. If either (i) an Event of Default shall occur and be continuing and the Borrower receives notice from the Agent or the Required Lenders demanding the deposit of cash collateral pursuant to this paragraph, or (ii) the Borrower shall be required to provide cash collateral in the amount equal to 105% of the Total LC Exposure pursuant to subsections 2.1(d) or 2.8(b), the Borrower shall immediately deposit with the Agent an amount in cash equal to, in the case of an Event of Default, the Total LC Exposure as of such date PLUS any accrued and unpaid interest thereon and any letter of credit fees incurred thereunder accrued or to be accrued and, in the case of any cash collateral required to be provided pursuant to subsections 2.1(d) or 2.8(b), the amount required under subsections 2.1(d) or 2.8(b), as the case may be; 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 described in clause (g) or (h) of Section 9.1. Such deposit shall be held by the Agent as collateral in the first instance for the Total LC Exposure under this Agreement and thereafter for the payment of any other obligations of the Credit Parties hereunder. 2.5. LOANS AND BORROWINGS; FUNDING OF BORROWINGS. (a) LOANS AND BORROWINGS. Each Loan of a particular Class shall be made as part of a Borrowing consisting of Loans of such Class made by the Lenders ratably in accordance with their respective Commitments of such Class. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; PROVIDED that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender's failure to make Loans as required herein. (b) FUNDING OF BORROWINGS. Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 2:00 p.m., Boston, Massachusetts time to the account of the Agent most recently designated by it for such purpose by notice to the Lenders. The Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to one or more accounts of the Borrower maintained with the Agent; PROVIDED that Revolving Base Rate Loans made to finance the reimbursement of an LC Disbursement under any Letter of Credit as provided in subsection 2.4(e) or any payment made by the Agent under the LC Guaranty shall be remitted by the Agent to the Issuing Lender. (c) AGENT'S ASSUMPTION THAT EACH LENDER WILL MAKE LOANS. Unless the Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Agent such Lender's share of such Borrowing, the Agent may assume that such Lender has made such share available on such date in accordance with paragraph (b) of this Section 2.5 and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Agent, then the applicable Lender and the Borrower agree to pay to the Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower but excluding the date of payment to the Agent, at the Federal Funds Effective Rate. If such Lender pays such amount to the Agent, then such amount shall constitute such Lender's Loan included in such Borrowing. (d) SETTLEMENT. In order to facilitate the administration of the Loans under this Agreement, the Agent and Lenders agree (such agreement shall not be for the benefit of or enforceable by the Credit Parties) that settlement among them with respect to the Revolving Loans may take place on a periodic basis (but not less frequently than once each week) on dates determined from time to time by the Agent (each a "SETTLEMENT DATE"), which may occur before or after the occurrence or during the continuance of any Default or Event of Default. On each Settlement Date, payment shall be made by or to each Lender in the manner provided herein and in accordance with the settlement report delivered by the Agent to the Lenders with respect to such Settlement Date so that, as of each Settlement Date and after giving effect to the transactions to take place on such Settlement Date, each Lender shall hold its Applicable Percentage of all outstanding Revolving Loans and its Applicable Percentage of the Total LC Exposure. (e) SETTLEMENT LOANS. Between Settlement Dates, the Agent may but shall not be obligated to advance (or may request that one of its Affiliates advance), to the Borrower out of the Agent's (or such Affiliate's) own funds up to $7,500,000 in the aggregate of Borrowings that are Base Rate Revolving Loans requested or deemed requested pursuant to this Agreement (any such Borrowing funded exclusively by the Agent or its Affiliate being referred to as a "SETTLEMENT LOAN"). Each Settlement Loan shall constitute a Revolving Loan hereunder and shall be subject to all of the terms, conditions and security applicable to other Revolving Loans, except that all payments thereon shall be payable to the Agent (or its Affiliate) solely for its own account. The obligation of the Borrower to repay such Settlement Loans to the Agent (or its Affiliate) shall be evidenced by the records of the Agent and need not be evidenced by any promissory note. The Agent shall not (and shall not permit any of its Affiliates to) make any Settlement Loan if (i) the Agent shall have received written notice from any Lender that one or more of the applicable conditions precedent set forth in Sections 6.1 or 6.2 hereof will not be satisfied on the requested funding date of the applicable Borrowing or (ii) the Agent has actual knowledge that the requested Borrowing would exceed the limitations set forth in Section 2.1 on the funding date. On each Settlement Date, or, if earlier, upon demand by the Agent for payment thereof, the then outstanding Settlement Loans shall be immediately due and payable. The Borrower shall be deemed to have requested Loans to be made on each Settlement Date in the amount of all outstanding Settlement Loans and the proceeds of such Loans shall be applied to the repayment of such Settlement Loans. The Agent shall notify the Lenders of the outstanding balance of the Loans prior to 1:00 p.m. (Boston time) on each Settlement Date and each Lender shall deposit with the Agent an amount equal to its Applicable Percentage of the amount of Revolving Loans deemed requested in immediately available funds not later than 3:00 p.m. (Boston time) on such Settlement Date, and without regard to whether any Default or Event of Default exists or any of the conditions in Sections 6.1 or 6.2 are not satisfied. If any Settlement Loan is not repaid on the due date thereof, then on the second Business Day after the Agent's request each Lender (other than the Agent in its capacity as a Lender) shall purchase a participating interest in such Settlement Loan in an amount equal to its Applicable Percentage of such Settlement Loan by transferring to the Agent, in immediately available funds, the amount of such participation, without duplication for any payment previously made. The proceeds of Settlement Loans may be used solely for purposes for which Loans generally may be used in accordance with this Agreement. If any amounts received by the Agent in respect of any Settlement Loans are later required to be returned or paid by the Agent to the Borrower or their respective representatives or successors-in-interest, whether by court order, settlement or otherwise, the other Lenders shall, upon demand by the Agent, pay to the Agent for its own account, an amount equal to each other Lender's Applicable Percentage of all such amounts required to be returned by the Agent. 2.6. EXPIRATION, TERMINATION OR REDUCTION OF COMMITMENTS. (a) EXPIRATION OF REVOLVING CREDIT COMMITMENTS. Unless previously terminated, (i) the Revolving Credit Commitments shall expire at the close of business on the Maturity Date, and (ii) the Term Loan Commitments shall terminate immediately after the funding of the Term Loan on the Closing Date. (b) REDUCTION OF REVOLVING CREDIT COMMITMENTS. The Borrower may at any time and from time to time reduce the Revolving Credit Commitments; PROVIDED that (i) each reduction of the Revolving Credit Commitments shall be in an amount that is at least equal to $1,000,000 or any greater multiple of $1,000,000, and (ii) the Borrower shall not reduce the Revolving Credit Commitments if, after giving effect to any concurrent repayment, the Domestic Revolving Credit Exposure would exceed the Domestic Revolving Credit Commitment. The Borrower shall notify the Agent of any election to reduce the Revolving Credit Commitment at least five (5) Business Days prior to the effective date of such reduction, specifying the effective date thereof. Each notice of reduction of the Revolving Credit Commitment shall be irrevocable. Each reduction of the Revolving Credit Commitment shall be permanent and shall be made ratably among the Lenders in accordance with their respective Revolving Credit Commitments. (c) OPTIONAL TERMINATION OF REVOLVING CREDIT COMMITMENTS. Subject to the provisions of subsection 2.6(d), the Borrower shall have the right at any time to terminate the Revolving Credit Commitments. The Borrower shall notify the Agent of any election to terminate the Revolving Credit Commitments under this subsection 2.6(c) in writing at least five (5) Business Days prior to the effective date of such termination, specifying the effective date thereof. Each notice of termination of the Revolving Credit Commitments shall be irrevocable. Any termination of the Revolving Credit Commitments shall be permanent. (d) TERMINATION FEE. In connection with any termination of the Revolving Credit Commitments, the Borrower shall (i) repay the entire principal balance of, and all accrued interest and fees owing with respect to, the Revolving Loans and the Term Loans, and (ii) pay to the Agent, for the account of each Lender, a termination fee equal to the product of (A) the sum of (x) the average amount of the Revolving Credit Commitments during the twelve (12) months preceding the date of termination (or, if such termination occurs prior to the first anniversary of the Closing Date, during the period between the Closing Date and the date of termination), and (y) the average amount of the aggregate outstanding principal balance of the Term Loan during the twelve months preceding the date of termination (or, if such termination occurs prior to the first anniversary of the Closing Date, during the period between the Closing Date and the date of termination) MULTIPLIED by (B) the applicable termination percentage set forth below: ----------------------------------------------------------------------- Period during which Applicable TERMINATION DATE OCCURS TERMINATION PERCENTAGE ------------------------------------------------ ---------------------- Prior to the first anniversary of the Closing Date 1.0% ------------------------------------------------ ---------------------- On or after the first anniversary of the Closing Date but prior to the second anniversary of the Closing Date 0.5% ------------------------------------------------ --------------------- From and after the second anniversary of the Closing Date 0% ------------------------------------------------ ---------------------- 2.7. PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF SET-OFFS; COLLECTION. (a) PAYMENTS GENERALLY. The Borrower and the Canadian Borrowers shall be obligated to make each payment required to be made by the Borrower or such Canadian Borrower hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or otherwise) prior to 1:00 p.m. Boston, Massachusetts time, on the date when due, in immediately available funds, in U.S. Dollars, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All payments shall be made to the Agent at its offices in Boston, Massachusetts, except that payments pursuant to Sections 2.4, 2.10, 2.11, 11.3 and subsection 2.3(e) shall be made directly to the Persons entitled thereto. The Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof, and the Borrower and the Canadian Borrowers shall have no liability in the event timely or correct distribution of such payments is not so made. If any payment shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. Notwithstanding anything to the contrary set forth herein, subject to the conditions to the funding of Revolving Loans set forth herein, all payments of interest, fees and any other amounts due to be paid by the Borrower or any Canadian Borrower hereunder shall be made through the automatic funding of Base Rate Revolving Loans in amounts equal to the amounts of such interest, fees or other amounts due to be paid by the Borrower or such Canadian Borrower hereunder, and the Borrower and each Canadian Borrower hereby irrevocably authorizes and directs the Agent to take such actions as may be necessary to effectuate such automatic funding of Base Rate Revolving Loans, and, upon funding of any such Base Rate Revolving Loan, the Borrower's and each Canadian Borrower's obligation to make such payment shall be discharged and replaced by the resulting Base Rate Revolving Loan. The Borrower and each Canadian Borrower expressly acknowledges and agrees that (i) the Agent may, in its sole discretion, effectuate the automatic funding of a Revolving Loan pursuant to this subsection 2.7(a) even though at the time of, or after giving effect to, the funding of such Revolving Loans the Domestic Revolving Credit Exposure exceeds the Domestic Gross Availability, and (ii) if any one or more of the conditions to the funding of Revolving Loans cannot be satisfied and the Agent, in its sole discretion, refuses to fund a Base Rate Revolving Loan in an amount sufficient to satisfy the amount of any interest, fees or other amounts due hereunder, the Borrower and such Canadian Borrower shall remain obligated to pay the full amount of such interest, fees or other amounts as and when the same shall become due. (b) CURRENCY MATTERS. (i) U.S. Dollars are the currency of account and payment for each and every sum at any time due from the Credit Parties hereunder. No payment to the Agent, any Lender or the Issuing Lender (whether under any judgment or court order or otherwise) shall discharge the obligation or liability in respect of which it was made unless and until the Agent or such Lender shall have received payment in full in U.S. Dollars in which such obligation or liability was incurred, and to the extent that the amount of any such payment shall, on actual conversion into U.S. Dollars, fall short of such obligation or liability actual or contingent expressed in U.S. Dollars, the Borrower shall indemnify and hold harmless the Agent, the Issuing Lender or such Lender, as the case may be, with respect to the amount of the shortfall. (ii) Not later than 1:00 p.m. (Boston time) on the last Business Day of each calendar month (the "CALCULATION DATE") or such other date as the Agent may from time to time specify, the Agent shall determine the Dollar Equivalent of Total LC Exposures as of such date. The Dollar Equivalent so determined shall become effective on the first Business Day immediately following such determination (a "RESET DATE") and shall remain effective until the next succeeding Reset Date. (iii) If, on any Reset Date, the Dollar Equivalent of the aggregate outstanding amount of all Revolving Loans and Total LC Exposure exceeds the Total Gross Availability, for three (3) or more consecutive Business Days (but only as to the Reset Date), then the Borrower shall repay or prepay the Revolving Loans in accordance with this Agreement in an aggregate principal amount such that, after giving effect thereto, the aggregate outstanding amount (expressed in U.S. Dollars) of all Revolving Loans PLUS Total LC Exposure no longer exceeds the Total Gross Availability. (iv) If on any Reset Date, the Dollar Equivalent of the Foreign LC Exposure (exclusive of the Canadian Letter of Credit) exceeds $5,000,000, then the Borrower shall immediately upon demand provide cash collateral to the Agent in the amount of such excess. (c) PREPAYMENTS OF REVOLVING LOANS PRIOR TO EVENT OF DEFAULT. (i) CREDIT FOR FUNDS RECEIVED. Prior to the occurrence of an Event of Default, (A) all funds and cash proceeds in the form of money, checks and like items received in the Controlled Account maintained at the Cash Management Bank as contemplated by Section 4.3(a) shall be credited, on the same Business Day on which the Agent determines that good collected funds have been received, and, prior to the receipt of good collected funds, on a provisional basis until final receipt of good collected funds, and applied as contemplated by subsection 2.7(c)(ii), (B) all funds and cash proceeds in the form of a wire transfer received in the Controlled Account maintained at the Cash Management Bank as contemplated by Section 4.3(a) shall be credited on the same Business Day as the Agent's receipt of such amounts (or up to such later date as the Agent determines that good collected funds have been received), and applied as contemplated by subsection 2.7(c)(ii), and (C) all funds and cash proceeds in the form of an automated clearing house transfer received in the Controlled Account maintained at the Cash Management Bank as contemplated by Section 4.3(a) shall be credited, on the next Business Day following the Agent's receipt of such amounts (or up to such later date as the Agent determines that good collected funds have been received), and applied as contemplated by subsection 2.7(c)(ii). For purposes of the foregoing provisions of this subsection 2.7(c)(i), the Agent shall not be deemed to have received any such funds or cash proceeds on any day unless received by the Agent before 1:00 p.m. (Boston time) on such day. The Borrower further acknowledges and agrees that any such provisional credits or credits in respect of wire or automatic clearing house funds transfers shall be subject to reversal if final collection in good funds of the related item is not received by, or final settlement of the funds transfer is not made in favor of, the Agent in accordance with the Agent's customary procedures and practices for collecting provisional items or receiving settlement of funds transfers. (ii) APPLICATION OF PAYMENTS. Prior to an Event of Default, funds received in the Controlled Account maintained at the Cash Management Bank as contemplated by Section 4.3(a) and for which the Borrower has received credit shall be applied as follows: (A) first, to pay amounts then due and payable under this Agreement, the Notes and the other Loan Documents (including, without limitation, pursuant to Section 2.8); (B) second, to reduce Revolving Loans made by the Agent pursuant to subsection 2.5(e) and for which Settlement has not then been made; (C) third, to reduce Revolving Loans which are Base Rate Loans; (D) fourth, to reduce Revolving Loans which are LIBOR Rate Loans; (E) fifth, to reduce the Term Loan; and (F) sixth, to the Borrower's operating account maintained with the Cash Management Bank. All prepayments of the Revolving Loans pursuant to this subsection 2.7(c) shall be subject to the provisions of Section 2.3(e) and shall be allocated among the Lenders making such Revolving Loans, in proportion, as nearly as practicable, to the respective unpaid principal amount of such Revolving Loans outstanding, with adjustments to the extent practicable to equalize any prior payments or repayments not exactly in proportion. Prior to the occurrence of an Event of Default, the Borrower may elect to avoid the Breakage Costs associated with any prepayment of LIBOR Rate Loans by providing to the Agent cash in an amount sufficient to cash collateralize such LIBOR Rate Loans, but in no event shall the Borrower be deemed to have paid such LIBOR Rate Loans until such cash has been paid to the Agent for application to such Libor Rate Loans. The Agent may elect to cause such cash collateral to be deposited into either (i) a cash collateral account pursuant to the terms of a cash collateral agreement executed by the Borrower and the Agent and in form and substance satisfactory to the Agent or (ii) a Controlled Account with appropriate instructions prohibiting the Borrower's withdrawal of such funds so long as they remain cash collateral. In each such case, the Borrower agrees to execute and deliver to the Agent such instruments and documents, including Uniform Commercial Code financing statements and agreements with any third party depository banks, as the Agent may request. (d) APPLICATION OF PAYMENTS AFTER EVENT OF DEFAULT. After the occurrence and during the continuance of an Event of Default, funds received in the Controlled Account maintained at the Cash Management Bank as contemplated by Section 4.3(a) and for which the Borrower has received credit and proceeds of Collateral received by the Agent shall be applied as set forth in Section 9.2. (e) PRO RATA TREATMENT. If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans (or participations in LC Disbursements) (other than pursuant to Sections 2.4, 2.10 or 2.11), resulting in such Lender receiving payment of a greater proportion of the aggregate principal amount of its Loans (and participations in LC Disbursements) and accrued interest thereon than the proportion of such amounts received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans (and LC Disbursements) of the other Lenders to the extent necessary so that the benefit of such payments shall be shared by all the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans (and participations in LC Disbursements); 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 unless the Lender from which such payment is recovered is required to pay interest thereon, in which case each Lender returning funds to such Lender shall pay its pro rata share of such interest, and (ii) the provisions of this paragraph shall not be construed to apply to 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 any Credit Party or any of its Subsidiaries or Affiliate thereof (as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent they may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation. (f) AGENT'S ASSUMPTION THAT BORROWER WILL MAKE PAYMENTS. Unless the Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Agent for the account of the Lenders or the Issuing Lender entitled thereto (the "APPLICABLE RECIPIENT") hereunder that the Borrower will not make such payment, the Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Applicable Recipient the amount due. In such event, if the Borrower has not in fact made such payment, then each Applicable Recipient severally agrees to repay to the Agent forthwith on demand the amount so distributed to such Applicable Recipient 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 Agent, at the Federal Funds Effective Rate. (g) LENDER'S FAILURE TO MAKE PAYMENT. If any Lender shall fail to make any payment required to be made by it pursuant to subsections 2.4(d), 2.4(e), 2.5(c) or 2.7(d), then the Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Agent or the account of such Lender to satisfy such Lender's obligations under such subsection until all such unsatisfied obligations are fully paid. 2.8. PREPAYMENT OF LOANS. (a) OPTIONAL PREPAYMENTS OF LOANS. The Borrower shall have the right at any time and from time to time to prepay the Revolving Loans in whole or in part, subject to prior notice in accordance with subsection 2.8(c) in the case of LIBOR Rate Loans, and subject to the payment of any amounts due under subsection 2.3(e) and, if the Revolving Credit Commitment is terminated, subsection 2.6(d). The Borrower shall have the right at any time and from time to time to prepay the Term Loan in whole or in part, subject to prior notice in accordance with subsection 2.8(c) and subject to the payment of any amounts due under subsection 2.3(e) and, if the Term Loan is repaid in full, subsection 2.6(d), and PROVIDED that each such prepayment of the Term Loan shall be in an amount that is at least equal to $500,000 or any greater multiple of $100,000. Each optional prepayment of the Term Loan shall reduce the Availability Block by the amount of such prepayment. (b) MANDATORY PREPAYMENTS. The Borrower shall be obligated to, and shall, make prepayments of the Loans hereunder (and reduce the Revolving Credit Commitments hereunder) as follows: (i) INCURRENCE OF DEBT. Without limiting the obligation of the Borrower to obtain the consent of the Required Lenders to any incurrence of Indebtedness not otherwise permitted hereunder, the Borrower agrees, on the closing of any incurrence of Indebtedness by the Borrower or any of its Subsidiaries (other than Indebtedness permitted pursuant to Section 8.1) to prepay the Loans hereunder (and provide cash collateral for Total LC Exposure as specified in subsection 2.4(h)), and the Revolving Credit Commitments hereunder shall be subject to automatic reduction, upon the date of such incurrence of Indebtedness, in an aggregate amount equal to 100% of the amount of the Net Cash Payments from such incurrence of Indebtedness received by the Borrower and its Subsidiaries, such prepayment and reduction to be effected in each case in the manner and to the extent specified in subsection 2.8(c) below. (ii) SALE OR OFFERING OF SECURITIES. The Borrower agrees on the closing of any offering or sale of equity securities by the Borrower or any of its Subsidiaries, to prepay the Loans hereunder (and provide cash collateral for Total LC Exposure as specified in subsection 2.4(h)), upon the date of such sale or offering of securities, in an aggregate amount equal to 100% of the amount of Net Cash Payments from such offering of securities received by the Borrower and its Subsidiaries, and such prepayment to be effected in each case in the manner and to the extent specified in subsection 2.8(c) below. (iii) SALE OF ASSETS. Without limiting the obligation of the Borrower or any Canadian Borrower (as the case may be) to obtain the consent of the Required Lenders to any Disposition not otherwise permitted hereunder, the Borrower agrees, on the date of any Disposition (other than Dispositions permitted under Section 8.4(c) of assets not comprising the Term Loan Borrowing Base or Canadian Borrowing Base to the extent that the aggregate Net Cash Payments received therefrom do not exceed $500,000) by the Borrower or any of its Subsidiaries, to prepay the Loans hereunder (and provide cash collateral for Total LC Exposure as specified in subsection 2.4(h)), upon the date of such Disposition, in an aggregate amount equal to 100% of the amount of such Net Cash Payments from such Disposition received by the Borrower or any of its Subsidiaries on the date of such Disposition and such prepayment to be effected in each case in the manner and to the extent specified in subsection 2.8(c) below. (iv) EXTRAORDINARY RECEIPTS. Upon the receipt by any Credit Party or any of its Subsidiaries of any Extraordinary Receipts, the Borrower shall make a prepayment to the Loans (and provide cash collateral for Total LC Exposure as specified in subsection 2.4(h)), and such prepayment to be effected in each case in the manner and to the extent specified in subsection 2.8(c) below in an amount equal to 100% of such Extraordinary Receipts, net of any reasonable expenses incurred in collecting such Extraordinary Receipts; PROVIDED, that in the case of insurance proceeds received in connection with a Casualty Event with respect to Property having an aggregate market value less than $1,500,000, so long as, at the time of receipt and use of such insurance proceeds, no Event of Default shall have occurred and be continuing, the Credit Parties shall be entitled to use such insurance proceeds (in an amount not in excess of $1,500,000) to repair or replace the Property affected by such Casualty Event, PROVIDED, further, that (A) until so used, such insurance proceeds shall be deposited into a cash collateral account (and when so deposited such insurance proceeds shall constitute Collateral for the Obligations then outstanding), (B) such insurance proceeds may be used solely to repair or replace the Property that was the subject of such Casualty Event with other Property of the same type, (C) such insurance proceeds must be used and such Property must be repaired or replaced within 180 days after the date of receipt thereof, and (D) upon the occurrence and during the continuance of an Event of Default or after such 180 day period shall have expired, such insurance proceeds, if not so used, shall be applied to the prepayment of Loans and cover for Total LC Exposure as provided in this subsection 2.8(c). (v) EXCESS CASH FLOW. (A) Within ten (10) days of delivery to the Agent and the Lenders of audited annual financial statements pursuant to Section 7.1(a)(i), commencing with the delivery to the Agent and the Lenders of the financial statements for the fiscal year ended March 31, 2004 or, if such financial statements are not delivered to the Agent and the Lenders on the date such statements are required to be delivered pursuant to Section 7.01(a)(i), ten (10) days after the date such statements are required to be delivered to the Agent and the Lenders pursuant to Section 7.01(a)(i), the Borrower shall make a prepayment in the manner and to the extent specified in subsection 2.8(c) below in an amount equal to 50% of the Excess Cash Flow of the Borrower and its Subsidiaries for such fiscal year. (vi) EXCESS CASH AND PERMITTED INVESTMENTS. In the event that the aggregate amount of the cash and Permitted Investments of the Credit Parties and their Subsidiaries (excluding the amount in the Prepayment Escrow Account and investments permitted under clause (g) of the definition of Permitted Investments) exceeds at any time $1,500,000, the Borrower shall immediately make a prepayment of the Loans in the manner and to the extent specified in subsections 2.8(a) or (c) below in an amount equal to such excess. (c) APPLICATION OF PREPAYMENTS. (i) In the event of any mandatory prepayment of Loans pursuant to subsections 2.8(b)(i), (ii) and (v), the proceeds shall be applied as follows: FIRST, if such prepayment is made at a time when any part of the Term Loan remains outstanding, such prepayment shall be applied to the repayment of the Term Loan, to be shared and applied ratably among the Lenders in proportion to the outstanding amount of the Term Loan owing to each Lender, and applied against the remaining scheduled installments of the Term Loan in the inverse order of maturity; and SECOND, after the Term Loan has been repaid in full, the amount of any mandatory prepayment shall be applied, to repay Revolving Loans, and, to provide cash collateral for Total LC Exposure as specified in Section 2.4(h), and (A) with respect to any mandatory prepayment of Loans pursuant to subsections 2.8(b)(i) and (ii), with a corresponding increase in Availability Block and a corresponding permanent reduction in the Revolving Credit Commitments and (B) with respect to any mandatory prepayment of Loans pursuant to subsection 2.8(b)(v), (x) so long as no Default or Event of Default shall have occurred and be continuing, with a corresponding increase in the Availability Block, but no permanent reduction in the Revolving Credit Commitments, and (y) if a Default or Event of Default shall have occurred and be continuing, with a corresponding increase in the Availability Block and a corresponding permanent reduction in the Revolving Credit Commitments. (ii) Upon receipt of Net Cash Payments from the Disposition of, or from Casualty Events of any property comprising the Term Loan Borrowing Base pursuant to subsections 2.8(b)(iii) and 2.8(b)(iv), the Net Cash Payments from such sale or such Casualty Event shall be applied as follows: (A) so long as no Default or Event of Default shall have occurred and be continuing, (1) an amount equal to the lesser of (aa) the appraised value of such asset (as determined by the Agent by reference to the most recent appraisal obtained by the Agent) and (bb) 100% of the Net Cash Payment, shall be applied to the repayment of the Term Loan to be shared and applied ratably among the Lenders in proportion to the outstanding amount of the Term Loan owing to each Lender, and applied against the remaining scheduled installments of the Term Loan in inverse order of maturity; and (2) any remaining proceeds shall be applied to repay Revolving Loans, and, to provide cash collateral for Total LC Exposure as specified in Section 2.4(h), with a corresponding increase in the Availability Block, but with no permanent reduction in the Revolving Credit Commitments; and (B) if a Default or an Event of Default shall have occurred and be continuing, 100% of the Net Cash Payment, shall be applied as follows: FIRST, if any part of the Term Loan remains outstanding, to the repayment of the Term Loan to be shared and applied ratably among the Lenders in proportion to the outstanding amount of the Term Loan owing to each Lender, and applied against the remaining scheduled installments of the Term Loan in inverse order of maturity; and SECOND, after the Term Loan has been repaid in full, to repay Revolving Loans, and, to provide cash collateral for Total LC Exposure as specified in Section 2.4(h), with a corresponding increase in the Availability Block and a corresponding permanent reduction in the Revolving Credit Commitments. (iii) Upon receipt of Net Cash Payments from the Disposition of, or from Casualty Events of any property not comprising the Term Loan Borrowing Base pursuant to subsections 2.8(b)(iii), Extraordinary Receipts pursuant to subsections 2.8(b)(iv), or the event of any mandatory prepayment of Loans pursuant to subsections 2.8(b)(vi), 100% of such Net Cash Payments shall be applied (A) so long as no Default or Event of Default shall have occurred and be continuing, to repay any outstanding Revolving Loans and to provide cash collateral for Total LC Exposure as specified in Section 2.4(h)), with a corresponding increase in the Availability Block, but with no corresponding permanent reduction in the Revolving Credit Commitments (unless however, if the Term Loan has been paid in full, in which case with a corresponding permanent reduction in the Revolving Credit Commitments) and (B) if a Default or an Event of Default shall have occurred and be continuing, to the repayment of the Term Loan to be shared and applied ratably among the Lenders in proportion to the outstanding amount of the Term Loan owing to each Lender, and applied against the remaining scheduled installments of the Term Loan in inverse order of maturity; and after the Term Loan has been repaid in full, to repay Revolving Loans, and, to provide cash collateral for Total LC Exposure as specified in Section 2.4(h), with a corresponding increase in the Availability Block and a corresponding permanent reduction in the Revolving Credit Commitments. (iv) Upon receipt of Net Cash Payments from the Disposition of, or Casualty Event relating to, any asset comprising the Canadian Borrowing Base or otherwise owned by a Canadian Borrower 100% of such Net Cash Payments from such Disposition or such Casualty Event shall be applied to reduce the Canadian Facility and: (A) with respect to the Disposition of, or Casualty Event relating to the Canadian Real Property, with a corresponding increase in the Availability Block and a reduction in the commitment under the Canadian Facility and in the amount of the Canadian Letter of Credit; and (B) with respect to the Disposition of, or Casualty Event relating to any asset other than the Canadian Real Property (1) so long as no Default or Event of Default shall have occurred and be continuing, with a corresponding increase in the Availability Block, but with no permanent reduction in the commitment under the Canadian Facility or in the amount of the Canadian Letter of Credit; and (2) if a Default or an Event of Default shall have occurred and be continuing, with a corresponding increase in the Availability Block and a reduction in the commitment under the Canadian Facility and in the amount of the Canadian Letter of Credit. (v) To the extent all outstanding Revolving Loans are paid in full and the Total LC Exposure has been cash collateralized after making any mandatory prepayment under this Section 2.8, any remaining proceeds (which have not been applied to repay the Term Loans or Tranche B Loans) shall be held in an escrow account (the "PREPAYMENT ESCROW ACCOUNT") to be established by the Borrower and the Agent at Fleet National Bank on or prior to the Closing Date. The funds then on deposit in the Prepayment Escrow Account shall be applied to prepay the Term Loans or Tranche B Loans, in accordance with subsections 2.8(a) or (c) or Section 8.14, as the case may be. With respect to any mandatory prepayment of LIBOR Rate Loans, such mandatory prepayment shall be subject to subsection 2.3(e). (d) NOTIFICATION OF CERTAIN PREPAYMENTS. The Borrower shall notify the Agent by telephone (confirmed by telecopy) of any voluntary prepayment of the Term Loan, any LIBOR Rate Loan, or any Tranche B Loan not later than 1:00 p.m., Boston, Massachusetts time, three Business Days before the date of such prepayment. The Borrower shall notify the Agent of any mandatory prepayment of the Loans pursuant to subsection 2.8(b) hereunder as soon as practicable. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid. Promptly following receipt of any such notice relating to a Borrowing, the Agent shall advise the Lenders of the contents thereof. (e) PREPAYMENTS ACCOMPANIED BY INTEREST. All prepayments of the Term Loan shall be accompanied by accrued interest through the date of prepayment. 2.9. FEES. (a) FEES. The Borrower shall pay to the Agent for the account of each Lender and the Agent, fees and expenses in the amount and at the times specified in the Fee Letter. (b) UNUSED FEE. The Borrower shall pay to the Agent for the account of each Lender unused fees in respect of the Revolving Credit Commitments, in an aggregate amount equal to the product of (x) the rate per annum equal to one-half of one percent (1/2%), MULTIPLIED BY (y) the daily average unused amounts of the respective Revolving Credit Commitment of such Lender during the period from and including the date on which the Closing Date shall occur to but excluding the date on which the Revolving Credit Commitments terminate. Accrued unused fees shall be payable monthly in arrears on the first day of each month and on the date on which the Revolving Credit Commitments terminate. All unused 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). (c) LETTER OF CREDIT FEES. The Borrower shall pay the Agent through the Agent's Treasury and International Services Group with respect to Letters of Credit issued hereunder the following fees: (i) with respect to each standby or documentary Letter of Credit and the LC Guaranty issued hereunder, to the Agent for the accounts of the Lenders a participation fee with respect to their participations in such Letters of Credit or LC Guaranty which fee shall accrue at a rate per annum equal to (x) the Applicable Margin with respect to LIBOR Rate Revolving Loans MULTIPLIED BY (y) the average daily amount of outstanding Letters of Credit during the period from and including the Closing Date to but excluding the later of the date on which there shall no longer be any Letters of Credit outstanding hereunder; (ii) with respect to each documentary or standby Letter of Credit issued hereunder, to the Issuing Lender, a fronting fee equal to 0.25% per annum of the available amount of each Letter of Credit, along with the Issuing Lender's standard fees with respect, but not limited, to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder; (iii) Accrued fees for Letters of Credit 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), and shall be payable monthly in arrears on the first day of each month and on the date the Revolving Credit Commitments terminate, or such other date as the Agent or the Issuing Lender may from time to time specify, commencing on the first such date to occur after the Closing Date, PROVIDED that any such fees accruing after the date on which the Revolving Credit Commitments terminate shall be payable on demand. (d) All fees payable hereunder shall be paid on the dates due, in immediately available funds. Fees paid shall not be refundable under any circumstances, absent manifest error in the determination thereof, and unless otherwise agreed by the Agent, all fees shall be paid in U.S. Dollars. 2.10. INCREASED COSTS. (a) If any Change in Law shall: (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender or the Issuing Lender; or (ii) impose on any Lender or the Issuing Lender or the London interbank market any other condition affecting this Agreement or LIBOR Rate Loans made by such Lender or any Letter of Credit or participation therein; and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any LIBOR Rate Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or the Issuing Lender 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 Lender hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender or the Issuing Lender, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Lender, as the case may be, for such additional costs incurred or reduction suffered. (b) If any Lender or the Issuing Lender reasonably determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender's or the Issuing Lender's capital or on the capital of such Lender's or the Issuing Lender'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 Lender, to a level below that which such Lender or the Issuing Lender or such Lender's or the Issuing Lender's holding company could have achieved but for such Change in Law (taking into consideration such Lender's or the Issuing Lender's policies and the policies of such Lender's or the Issuing Lender's holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or the Issuing Lender, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Lender, or such Lender's or the Issuing Lender's holding company, for any such reduction suffered. (c) A certificate of a Lender or the Issuing Lender setting forth the amount or amounts necessary to compensate such Lender or the Issuing Lender or its holding company, as the case may be, as specified in subsections 2.10(a) or 2.10(b) above shall be delivered to the Borrower and shall be conclusive so long as it reflects a reasonable basis for the calculation of the amounts set forth therein and does not contain any manifest error. The Borrower shall pay such Lender or the Issuing Lender 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 Lender to demand compensation pursuant to this Section 2.10 shall not constitute a waiver of such Lender's or the Issuing Lender's right to demand such compensation; PROVIDED that the Borrower shall not be required to compensate a Lender or the Issuing Lender pursuant to this Section 2.10 for any increased costs or reductions incurred more than six months prior to the date that such Lender or the Issuing Lender, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender's or the Issuing Lender's intention to claim compensation therefor; PROVIDED further that, if the Change in Law giving rise to such increased costs or reductions is (i) retroactive and (ii) occurred within such six-month period, then the six-month period referred to above may be extended to include the period of retroactive effect thereof, but in no event any period prior to the Closing Date. 2.11. TAXES; SETOFF; ETC. (a) Any and all payments by or on account of any Obligations of the Borrower and the Canadian Borrowers hereunder shall be made without recoupment, setoff or counterclaim and free and clear of and without deduction for any Indemnified Taxes or Other Taxes; PROVIDED that if the Borrower or any Canadian Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.11) the Agent, any Lender or the Issuing Lender (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower or such Canadian Borrower shall make such deductions and (iii) the Borrower or such Canadian Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. (b) In addition, the Borrower and the Canadian Borrowers shall pay all Other Taxes to the relevant Governmental Authority in accordance with applicable law. (c) The Borrower and each Canadian Borrower shall indemnify the Agent, each Lender and the Issuing Lender, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 2.11) paid by the Agent, such Lender or the Issuing Lender, as the case may be (and any penalties, interest and reasonable expenses arising therefrom or with respect thereto during the period prior to the Borrower or such Canadian Borrower, as the case may be making the payment demanded under this paragraph (c)), 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 the Borrower or any Canadian Borrower, as the case may be by a Lender or the Issuing Lender, or by the Agent on its own behalf or on behalf of a Lender or the Issuing Lender shall be conclusive absent manifest error. (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower or any Canadian Borrower to a Governmental Authority, the Borrower or such Canadian Borrower shall deliver to the 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 Agent. (e) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of a jurisdiction in which the Borrower or any Canadian Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower or such Canadian Borrower (with a copy to the Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower or such Canadian Borrower, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate. 2.12. MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS. (a) DESIGNATION OF A DIFFERENT LENDING OFFICE. If any Lender requests compensation under Section 2.10, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.11, 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 judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.10 or 2.11, as the case may be, in the future and (ii) would not subject such Lender to any material unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment. (b) REPLACEMENT OF LENDERS. If any Lender requests compensation under Section 2.10, or if any Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.11, or if any Lender defaults in its obligation to fund Loans hereunder, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 11.4, all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); PROVIDED that (i) the Borrower shall have received the prior written consent of the Agent and the Issuing Lender, which consents shall not unreasonably be withheld or delayed, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans (and participations in LC Disbursements), accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the 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 2.10 or payments required to be made pursuant to Section 2.11, such assignment will result in a 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 the Borrower to require such assignment and delegation cease to apply. 2.13. CHANGE IN DOMESTIC BORROWING BASE, CANADIAN BORROWING BASE AND TERM LOAN BORROWING BASE. The Domestic Borrowing Base and the Canadian Borrowing Base shall be determined weekly (or at such other interval as may be specified pursuant to subsection 7.1) by the Agent by reference to the Borrowing Base Certificate, commercial finance and collateral audit reports, the Collateral Update Certificate or Accounts Receivable/Loan Reconciliation Report delivered to the Lenders and the Agent pursuant to subsection 7.1(g). The Term Loan Borrowing Base shall be determined from time to time by the Agent by reference to the appraisals or reappraisals of Eligible Fixed Assets or Real Property Assets delivered to the Lenders and the Agent pursuant to subsection 7.1, respectively and other information obtained by or provided to the Agent. The Agent shall give to the Borrower written notice of any change in the Domestic Borrowing Base, Canadian Borrowing Base or Term Loan Borrowing Base, as the case may be determined by the Agent. Such notice shall be effective upon its receipt by the Borrower. 2.14 CANADIAN FACILITY. (a) On, and from time to time after, the Closing Date, the Agent shall, subject to the terms and conditions set forth herein, cause the Issuing Lender to issue for the account of the Borrower and the Canadian Borrowers, and for the benefit of the Canadian Lender, a letter of credit (the "CANADIAN LETTER OF CREDIT") in the original face amount of $6,000,000 U.S. Dollars or the Canadian Dollar equivalent thereof (the "CANADIAN SUBLIMIT"). The face amount of the Canadian Letter of Credit and the Canadian Sublimit are subject to change from time upon the agreement of the Borrower, the Agent and the Issuing Lender; PROVIDED however, the Canadian Sublimit may not be increased by more than $2,000,000 without the prior consent of the Required Lenders. (b) The Canadian Lender and the Canadian Borrowers shall execute and deliver a commitment letter (the "CANADIAN COMMITMENT LETTER"), pursuant to which the Canadian Lender shall agree to lend to the Canadian Borrowers and the Canadian Borrowers may borrow, repay and reborrow from time to time between the Closing Date and the Maturity Date upon notice pursuant to the Canadian Commitment Letter, such sums as are requested by the Canadian Borrowers up to a maximum aggregate amount outstanding (after giving effect to all amounts requested) at any one time equal to Canadian Sublimit; PROVIDED that (after giving effect to all amounts requested under the Canadian Facility) the Domestic Revolving Credit Exposure plus the Canadian Excess Amount shall not at any time exceed the Domestic Gross Availability. The Agent shall have the right pursuant to the Canadian Commitment Letter and the Canadian Intercreditor Agreement to limit from time to time the amount of loans and other extensions of credit which may be advanced by the Canadian Lender to the Canadian Borrowers. (c) The Obligations of the Canadian Borrowers to the Issuing Lender, the Agent and the Lenders in respect of the Canadian Letter of Credit, shall be (i) guaranteed by the Borrower and the Guarantors pursuant to the Guarantee and (ii) secured by a First Priority Lien in favor of the Agent, for the benefit of the Lenders and the Agent, on all tangible and intangible property and assets of such Canadian Borrowers, wherever located, whether now owned or existing or hereafter acquired or arising, together with any and all additions thereto and replacements therefor and proceeds and products thereof, as further set forth in the Canadian Security Documents. ARTICLE 3. GUARANTEE BY GUARANTORS 3.1. THE GUARANTEE. The Guarantors hereby guarantee to each Lender, the Issuing Lender and the Agent and their respective successors and assigns the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) as well as the performance, of all of the Obligations. The Guarantors hereby further agree that if the Borrower or any Canadian Borrower, as the case may be, shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise) or perform any of its Obligations, the Guarantors will promptly pay or perform the same, without any demand or notice whatsoever, all of which are expressly waived by the Guarantor and that in the case of any extension of time of payment or renewal of any of the Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) or perform in accordance with the terms of such extension or renewal. Payments by the Guarantors hereunder may be required by the Agent on any number of occasions. 3.2. OBLIGATIONS UNCONDITIONAL. The obligations of the Guarantors under Section 3.1 are absolute and unconditional irrespective of the value, genuineness, validity, regularity or enforceability of this Agreement, the other Loan Documents 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 Obligations, and, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, it being the intent of this Section 3.2 that the obligations of the Guarantors hereunder shall be absolute and unconditional under any and all circumstances. 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 and unconditional as described above: (i) at any time or from time to time, without notice to such Guarantors, the time for any performance of, place or manner of payment or compliance with any of the Obligations shall be extended, compromised, renewed, modified or such performance or compliance shall be waived, as the case may be; (ii) the maturity of any of the Obligations shall be accelerated, or any of the Obligations shall be modified, supplemented or amended in any respect, or any right hereunder or under the other Loan Documents or any other agreement or instrument referred to herein or therein shall be waived or any other guarantee of any of the Obligations or any security therefor shall be released or exchanged in whole or in part or otherwise dealt with; (iii) the adequacy of any rights which the Agent or any Lender may have against any collateral security or other means of obtaining repayment of any of the Obligations; (iv) any lien or security interest granted to, or in favor of, the Agent, the Issuing Lender or any Lender or Lenders as security for any of the Obligations shall fail to be perfected, any rights which the Agent, the Issuing Lender or any Lender or Lenders might have in such Collateral shall have failed to be preserved or any substitution, exchange, surrender, release, loss or destruction of any such collateral security; (v) the addition, substitution or release of any entity or other Person primarily or secondarily liable for any Obligation; or (vi) any act or omission which might in any manner or to any extent vary the risk of such Guarantor or otherwise operate as a release or discharge of such Guarantor, all of which may be done without notice to such Guarantor. The Guarantors hereby expressly waive promptness, diligence, presentment, demand of payment, protest and all notices whatsoever, any requirement that the Agent, the Issuing Lender or any Lender exhaust any right, power or remedy or proceed against the Borrower or any Canadian Borrower hereunder or under the other Loan Documents 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 Obligations and all defenses which may be available by virtue of any valuation, stay, moratorium law or other similar law now or hereafter in effect. The Guarantors expressly and knowingly waive all suretyship defenses which might otherwise accrue without their Obligations hereunder and under the other Loan Documents. To the fullest extent permitted by law, each Guarantor hereby expressly waives any and all rights or defenses arising by reason of (A) any "one action" or "anti-deficiency" law which would otherwise prevent the Agent or any Lender from bringing any action, including any claim for a deficiency, or exercising any other right or remedy (including any right of set-off), against such Guarantor before or after the Agent's or such Lender's commencement or completion of any foreclosure action, whether judicially, by exercise of power of sale or otherwise, or (B) any other law which in any other way would otherwise require any election of remedies by the Agent or any Lender. 3.3. REINSTATEMENT. The obligations of the Guarantors under this Article 3 shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of the Borrower or any Canadian Borrower in respect of its Obligations is rescinded or must be otherwise restored by any holder of any of its Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, and each Guarantor agrees that it will indemnify the Agent, the Issuing Lender and each Lender on demand for all reasonable costs and expenses (including fees and expenses of counsel) incurred by the Agent, any Lender or the Issuing Lender in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law. 3.4. SUBROGATION. Until such time as the Obligations shall have been indefeasibly paid in full, each of the Guarantors shall not exercise and hereby waives all rights of subrogation, reimbursement, restitution, contribution or otherwise whether arising by contract or operation of law (including, without limitation, any such right arising under the Federal Bankruptcy Code of 1978, as amended) or by reason of any payment by it pursuant to the provisions of this Article 3 and further agrees with the Borrower and the Canadian Borrowers for the benefit of each creditor of the Borrower and the Canadian Borrowers (including, without limitation, the Agent, the Issuing Lender and each Lender) that any such payment by it shall constitute a contribution of capital by such Guarantor to the Borrower or the Canadian Borrowers, as the case may be. Each Guarantor will not prove any claim in competition with the Agent or any Lender in respect of any payment hereunder in any bankruptcy, insolvency or reorganization case or proceedings of any nature. The Guarantors waive any benefit of and any right to participate in any collateral security which may be held by the Agent or any Lender. 3.5. REMEDIES. The Guarantors agree that, as between the Guarantors and the Lenders, the Obligations of the Borrower and/or the Canadian Borrowers hereunder may be declared to be forthwith due and payable as provided in Section 9.1 (and shall be deemed to have become automatically due and payable in the circumstances provided in Section 9.1) for purposes of Section 3.1 notwithstanding any stay, injunction or other prohibition preventing such declaration (or such Obligations from becoming automatically due and payable) as against the Borrower or any Canadian 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 the Borrower or any Canadian Borrower) shall forthwith become immediately due and payable by the Guarantors for purposes of Section 3.1. 3.6. INSTRUMENT FOR THE PAYMENT OF MONEY. Each of the Guarantors hereby acknowledges that the guarantee in this Article 3 constitutes an instrument for the payment of money, and consents and agrees that the Agent, the Issuing Lender, or any Lender, 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 summary judgment or such other expedited procedure as may be available for a suit on a note or other instrument for the payment of money. 3.7. CONTINUING GUARANTEE. The guarantee in this Article 3 is a continuing guarantee, and shall apply to all Obligations whenever arising. 3.8. GENERAL LIMITATION ON AMOUNT OF OBLIGATIONS GUARANTEED. In any action or proceeding involving any state or non-U.S. corporate law, or any state or Federal or non-U.S. bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of the Guarantors under Section 3.1 would otherwise be held or determined to be void, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under Section 3.1, then, notwithstanding any other provision hereof to the contrary, the amount of such liability shall, without any further action by the Guarantors, any Lender, Agent or 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. 3.9. LUXEMBOURG GUARANTOR'S LIMITATION. Notwithstanding anything to the contrary contained herein, the maximum aggregate liability of Audubon Europe S.a.r.l. under this Section 3 in respect of the Obligations and under the Tranche B Financing Agreement in respect of the Guaranteed Obligations as defined therein shall not exceed ninety-five percent (95%) of the aggregate of its net equity and its preferred equity certificates, as stated in its most recently approved financial statements. ARTICLE 4. THE COLLATERAL 4.1. GRANT OF SECURITY INTEREST. As collateral security for due and punctual payment and performance of all of its Obligations, each Credit Party hereby pledges and assigns to the Agent, and grants to the Agent for the ratable benefit of the Lenders, the Issuing Lender and the Cash Management Bank a continuing security interest in and lien on, all tangible and intangible property and assets of such Credit Party, wherever located, whether now owned or existing or hereafter acquired or arising, together with any and all additions thereto and replacements therefor and proceeds and products thereof (collectively referred to for purposes of this Article 4 as "COLLATERAL"), including, without limitation the property described below: (a) all tangible and intangible personal property, including without limitation all present and future goods, inventory (including, without limitation, all merchandise, raw materials, work in process, finished goods and supplies), machinery, equipment, motor vehicles, rolling stock, tools, furniture, fixtures, office supplies, computers, computer software and associated equipment, whether now owned or hereafter acquired, including, without limitation, all tangible personal property used in the operation of the business of such Credit Party; (b) all rights under all present and future authorizations, permits, licenses and franchises issued, granted or licensed to such Credit Party for the operation of its business; (c) all Patents of such Credit Party; (d) all Trademarks of such Credit Party; (e) all Copyrights of such Credit Party; (f) the entire goodwill of business of such Credit Party and all other general intangibles (including know-how, trade secrets, customer lists, proprietary information, inventions, domain names, methods, procedures and formulae) connected with the use of and symbolized by any Patents, Trademarks or Copyrights of such Credit Party; (g) all rights under all present and future vendor or customer contracts and all franchise, distribution, design, consulting, construction, engineering, management and advertising and related agreements; (h) all rights under all present and future leases of real and personal property; and (i) all other personal property, including, without limitation, all present and future accounts (including health-care-insurance receivables), accounts receivable, cash, cash equivalents, deposits, deposit accounts, loss carry back, tax refunds, insurance claims and proceeds, premiums, rebates and refunds, choses in action, commercial tort claims, securities and all other investment property, partnership interests, limited liability company interests, contracts, contract rights, rights to the payment of money, general intangibles (including without limitation, all payment intangibles, all customer and advertiser mailing lists, intellectual property, patents, copyrights, trademarks, trade secrets, trade names, domain names, goodwill, customer lists, advertiser lists, catalogs and other printed materials, publications, indexes, lists, data and other documents and papers relating thereto, blueprints, designs, charts, and research and development, whether on paper, recorded electronically or otherwise), all websites (including without limitation, all content, HTML documents, audiovisual material, software, data, hardware, access lines, connections, copyrights, trademarks, patents and trade secrets relating to such websites) and domain names, any information stored on any medium, including electronic medium, related to any of the personal property of such Credit Party, all financial books and records and other books and records relating, in any manner, to the business of such Credit Party, all proposals and cost estimates and rights to performance, all instruments and promissory notes, documents and chattel paper (whether tangible or electronic), and all debts, obligations and liabilities in whatever form owing to such Credit Party from any person, firm or corporation or any other legal entity, whether now existing or hereafter arising, now or hereafter received by or belonging or owing to such Credit Party; and all guaranties and security therefor, and all letters of credit rights (whether or not the letter of credit is evidenced by a writing) and other supporting obligations in respect of such debts, obligations and liabilities. Any of the foregoing terms which are defined in the MA UCC shall have the meaning provided in the MA UCC, as amended and in effect from time to time, as supplemented and expanded by the foregoing. 4.2. SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CREDIT PARTIES. Each Credit Party hereby warrants and covenants to the Agent and the Lenders that: (a) Such Credit Party has delivered to the Agent a Perfection Certificate in substantially the form of EXHIBIT C hereto. All information set forth in such Perfection Certificate is complete, true and correct in all material respects and there has been no change in any of such information since the date on which the Perfection Certificate was signed by such Credit Party. (b) No Credit Party will change its jurisdiction of organization, type of organization or other legal structure, principal or any other place of business, or the location of any Collateral from the locations set forth in the Perfection Certificate delivered by such Credit Party, or make any change in its name or conduct its business operations under any fictitious business name or trade name, without, in any such case, at least thirty (30) days' prior written notice to the Agent; PROVIDED that the inventory of such Credit Party may be in the possession of manufacturers or processors in any jurisdiction in which all necessary UCC financing statements have been filed by the Agent and with respect to which the Agent has received waiver letters from all landlords, warehousemen and processors in form and substance acceptable to the Agent. (c) Each Credit Party represents and warrants to the Lenders and the Agent as follows: (i) except for the security interest created by this Agreement and other Liens permitted hereunder, there is no financing statement, security agreement, chattel mortgage, real estate mortgage or other document filed or recorded with any filing records, registry or other public office, that purports to cover, affect or give notice of any present or possible future Lien on any assets or property of the Credit Parties or any rights relating thereto, (ii) such Credit Party is the owner of or has other rights in or power to transfer the Collateral, free from any right or claim of any Person or any adverse lien, except for the security interest created by this Agreement and other Liens permitted hereunder, (iii) none of the Collateral constitutes, or is the proceeds of, "farm products" as defined inss.9-102(a)(34) of the MA UCC, (iv) none of the account debtors or other Persons obligated on any of the Collateral is a Governmental Authority covered by the Federal Assignment of Claims Act or like federal, state or local statute or rule in respect of such Collateral and (v) such Credit Party has at all times operated its business in compliance with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal of Hazardous Materials. (d) Each Credit Party covenants with the Lenders and the Agent that, such Credit Party shall defend its rights in the Collateral against all claims and demands of all Persons at any time claiming the same or any interests therein adverse to the Agent or any of the Lenders. (e) Each Credit Party represents and warrants to the Lenders and the Agent that all filings, assignments, pledges and deposits of documents or instruments have been made and all other actions have been taken that are necessary or advisable, under applicable law, to establish and perfect the Agent's security interest in the Collateral. The Collateral and the Agent's rights with respect to the Collateral are not subject to any setoff, claims, withholdings or other defenses. (f) Except for Collateral that is obsolete or no longer used in their business, the Credit Parties will keep the Collateral in good order and repair (normal wear excepted) and will not use the same in violation of law or any policy of insurance thereon and keep the Collateral adequately insured at all times in accordance with the provisions of Section 7.5. The Credit Parties will pay promptly when due all taxes, assessments, governmental charges and levies upon the Collateral or for its use or operation, except for taxes and assessments permitted to be contested as provided in Section 7.4. Following the occurrence and during the continuance of an Event of Default, the Agent may at its option discharge any taxes or Liens to which any Collateral is at any time subject (other than Permitted Liens), and may, upon the failure of the Credit Parties to do so in accordance with this Agreement, purchase insurance on any Collateral and pay for the repair, maintenance or preservation thereof, and each Credit Party agrees to reimburse the Agent on demand for any payments or expenses incurred by the Agent or the Lenders pursuant to the foregoing authorization and any unreimbursed amounts shall constitute Obligations for all purposes hereof. (g) The Agent may from time to time request and each Credit Party shall deliver copies of all customer lists and vendor lists. (h) Each Credit Party hereby irrevocably authorizes the Agent, at any time and from time to time, to file in any jurisdiction financing statements and amendments thereto that (i) indicate the Collateral (x) as all assets of such Credit Party or words of similar effect, regardless of whether any particular asset falls within the scope of Article 9 of the MA UCC or such other jurisdiction or (y) as being of an equal or lesser scope or with greater detail and (ii) which contain any other information required by Article 9 of the MA UCC (including Part 5 thereof) for the sufficiency or filing office acceptance of any financing statement or amendment, including whether (A) any Credit Party is an organization, the type of organization and any organization identification number issued to such Credit Party and (B) in the case of a financing statement filed as a fixture filing or indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of the real property to which the Collateral relates. The Credit Parties agree to furnish any such information to the Agent promptly upon request. Each Credit Party also ratifies its authorization for the Agent to have filed in any Uniform Commercial Code jurisdiction any like initial financing statements or amendments thereto if filed prior to the Closing Date. (i) Each Credit Party agrees that it will join with the Agent in executing and, at its own expense file and refile, or permit the Agent to file and refile such financing statements, continuation statements and other documents (including, without limitation, Patent Agreements, Trademark Agreements, Copyright Mortgages and licenses to use software and other property protected by copyright), in such offices (including, without limitation, the PTO, the United States Copyright Office, and appropriate state patent, trademark and copyright offices), as the Agent may reasonably deem necessary or appropriate, wherever required or permitted by law, in order to perfect and preserve the rights and interests granted to the Agent in the Collateral. Each Credit Party will give the Agent notice of each office at which records of such Credit Party pertaining to all intangible items of Collateral are kept. Except as may be provided in such notice, the records concerning all intangible Collateral are and will be kept at the address shown in the respective Perfection Certificate for such Credit Party as the principal place of business of such Credit Party. (j) The Credit Parties are the sole and exclusive owners of the websites and domain names listed on SCHEDULE 4.2(J) hereto and have registered such domain names with all applicable authorities which provides for the exclusive use by the Credit Parties of such domain names. The websites do not contain any material, the publication of which may result in (a) the violation of rights of any Person or (b) a right of any Person against the publisher or distributor of such material. (k) The Credit Parties shall, annually by the end of the first fiscal quarter following the previous fiscal year, provide written notice to the Agent of all applications for registration of Patents, Trademarks or Copyrights, to the extent such applications exist, made during the preceding calendar year. The Credit Parties shall file and prosecute diligently all applications for registration of Patents, Trademarks or Copyrights now or hereafter pending that would be necessary to the business of the Credit Parties to which any such applications pertain, and to do all acts, in any such instance, necessary to preserve and maintain all rights in such registered Patents, Trademarks or Copyrights unless such Patents, Trademarks or Copyrights are not material to the business of the Credit Parties, as reasonably determined by the Credit Parties consistent with prudent and commercially reasonable business practices. Any and all costs and expenses incurred in connection with any such actions shall be borne by the Credit Parties. Except in accordance with prudent and commercially reasonable business practices, the Credit Parties shall not abandon any right to file a Patent, Trademark or Copyright application or any pending Patent, Trademark or Copyright application or any registered Patent, Trademark or Copyright, in each case material to its business, without the consent of the Agent. (l) The domain name servers used in connection with the domain names of the Credit Parties and all other relevant information pertaining to such domain names, and the administrative contacts used in connection with the registration of such domain names are identified on SCHEDULE 4.2 hereto. No Credit Party will change such domain name servers without 10 days' prior written notice to the Agent. No Credit Party will cause a change in the identity of any domain name administrative contact without 10 days' prior written notice to the Agent. (m) If any Credit Party is, now or at any time hereafter, a beneficiary under a letter of credit in the face amount in excess of $100,000, such Credit Party shall promptly notify the Agent thereof and, at the request and option of the Agent, such Credit Party shall, pursuant to an agreement in form and substance satisfactory to the Agent, either (i) arrange for the issuer and any confirmer or other nominated Person of such letter of credit to consent to an assignment to the Agent of the proceeds of the letter of credit or (ii) arrange for the Agent to become the transferee beneficiary of the letter of credit, with the Agent agreeing, in each case, that the proceeds of the letter of credit are to be applied by the Agent against the Obligations as provided in this Agreement. (n) To the extent any Credit Party shall, now or at any time hereafter, hold or acquire any promissory note or other instrument or tangible chattel paper (the principal amount of which is greater than $100,000), such Credit Party will promptly notify the Lender thereof and, at the request and option of the Lender, such Debtor will endorse, assign and deliver such promissory note or other instrument or tangible chattel paper to the Lender to be held as Collateral hereunder, together with such instruments of transfer or assignment thereof reasonably satisfactory in form and substance to the Lender. (o) If any Credit Party shall, now or at any time hereafter, hold or acquire any certificated securities, such Credit Party shall forthwith endorse, assign and deliver the same to the Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Agent may from time to time specify; PROVIDED, however, except with respect to entities which are disregarded entities for U.S. income tax purposes, such Credit Party shall only be required to endorse, assign and deliver shares representing sixty-five percent (65%) of the Capital Stock of such Credit Party's first-tier Foreign Subsidiaries. If any securities now or hereafter acquired by any Credit Party are uncertificated and are issued to such Credit Party or its nominee directly by the issuer thereof, such Credit Party shall promptly notify the Agent thereof and, at the Agent's request and option, pursuant to an agreement in form and substance satisfactory to the Agent, either (i) cause the issuer to agree to comply without further consent of such Credit Party or such nominee, at any time with instructions from the Agent as to such securities, or (ii) arrange for the Agent to become the registered owner of the securities. If any securities, whether certificated or uncertificated, or other investment property now or hereafter acquired by any Credit Party are held by such Credit Party or its nominee through a securities intermediary or commodity intermediary, such Credit Party shall promptly notify the Agent thereof and, at the Agent's request and option, pursuant to an agreement in form and substance satisfactory to the Agent, either (A) cause such securities intermediary or (as the case may be) commodity intermediary to agree to comply, in each case without further consent of such Credit Party or such nominee, at any time with entitlement orders or other instructions from the Agent to such securities intermediary as to such securities or other investment property, or (as the case may be) to apply any value distributed on account of any commodity contract as directed by the Agent to such commodity intermediary, or (B) in the case of financial assets or other investment property held through a securities intermediary, arrange for the Agent to become the entitlement holder with respect to such investment property, with such Credit Party being permitted, only with the consent of the Agent, to exercise rights to withdraw or otherwise deal with such investment property. The Agent agrees with each Credit Party that the Agent shall not give any such entitlement orders or instructions or directions to any such issuer, securities intermediary or commodity intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by such Credit Party, unless an Event of Default has occurred and is continuing, or, after giving effect to any such investment and withdrawal rights not otherwise permitted by the Loan Documents, would occur. The provisions of this paragraph shall not apply to any financial assets credited to a securities account for which the Agent is the securities intermediary. (p) For each deposit account or other accounts that any Credit Party, now or at any time hereafter, opens or maintains (other than a deposit account for which the Agent is the depositary bank), such Credit Party shall, at the Agent's request and option, pursuant to an agreement in form and substance satisfactory to the Agent, either (i) cause the depositary bank or such Person to agree to comply without further consent of such Credit Party, at any time with instructions from the Agent to such depositary bank or such Person directing the disposition of funds from time to time credited to or held in such deposit account or other account, as the case may be, or (ii) arrange for the Agent to become the customer of the depositary bank or other Person with respect to the deposit account or other account, with such Credit Party being permitted, only with the consent of the Agent, to exercise rights to withdraw funds from such deposit account or other account. The provisions of this paragraph shall not apply to (A) a deposit account for which the Agent is in automatic control, (B) any deposit accounts specially and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of such Credit Party's salaried employees, (C) the deposit accounts or other accounts listed on SCHEDULE 4.2(P), and (D) deposit accounts or local bank accounts not subject to the Agent's control so long as (x) the aggregate amount of funds on deposit in all such local bank accounts does not exceed $500,000, and (y) the aggregate amount of funds on deposit in any such local bank account does not exceed $50,000. (q) No Credit Party holds any commercial tort claims, as defined in Article 9 of the MA UCC, except as indicated in the Perfection Certificates. If any of the Credit Parties shall at any time acquire a commercial tort claim, such Credit Party shall promptly notify the Lender in a writing signed by such Credit Party of the brief details thereof and grant to the Lender in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to the Lender. (r) If any Collateral is, now or at any time hereafter, in the possession of a bailee, the Credit Parties shall promptly notify the Agent thereof and, at the Agent's request and option, shall promptly obtain an acknowledgement from the bailee, in form and substance satisfactory to the Agent, that the bailee holds such Collateral for the benefit of the Agent and such bailee's agreement to comply, without further consent of such Credit Party, at any time with instructions of the Agent as to such Collateral. The Agent agrees with each Credit Party that the Agent shall not give any such instructions unless an Event of Default has occurred and is continuing or would occur after taking into account any action by such Credit Party with respect to the bailee. (s) If any Credit Party, now or at any time hereafter, holds or acquires an interest in any electronic chattel paper or any "transferable record," as that term is defined in Section 201 of the federal Electronic Signatures in Global and National Commerce Act, or inss.16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, such Credit Party shall promptly notify the Agent thereof and, at the request and option of the Agent, shall take such action as the Agent may reasonably request to vest in the Agent control, underss.9-105 of the MA UCC, of such electronic chattel paper or control under Section 201 of the federal Electronic Signatures in Global and National Commerce Act or, as the case may be, ss.16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable record. The Agent agrees with each Credit Party that the Agent will arrange, pursuant to procedures satisfactory to the Agent and so long as such procedures will not result in the Agent's loss of control, for such Credit Party to make alterations to the electronic chattel paper or transferable record permitted under UCCss.9-105 or, as the case may be, Section 201 of the federal Electronic Signatures in Global and National Commerce Act orss.16 of the Uniform Electronic Transactions Act, unless an Event of Default has occurred and is continuing or would occur after taking into account any action by such Credit Party with respect to such electronic chattel paper or transferable record. (t) If any Credit Party has accounts receivable in respect of which the account debtor is located in Minnesota, the Credit Parties represent and warrant that the applicable Credit Party has filed and shall file all legally-required Notice of Business Activities Reports and comparable reports with the appropriate Governmental Authorities. (u) Each Credit Party further agrees, upon the request of the Agent and at the Agent's option, to take any and all other actions as the Agent may determine to be necessary or useful for the attachment, perfection and first priority of, and the ability of the Agent to enforce, the Agent's security interest in any and all of the Collateral, including, without limitation, (i) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto, certificates and other documents or instruments as may be necessary to enable the Agent to perfect or from time to time renew the security interest granted hereby or by any other Loan Document under the MA UCC, to the extent, if any, that such Credit Party's signature thereon is required therefor, including, without limitation, such financing statements and amendments thereto, certificates and other documents as may be necessary to perfect a security interest in any additional Collateral hereafter acquired by such Credit Party or in any replacements or proceeds thereof, (ii) causing the Agent's name to be noted as secured party on any certificate of title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability of the Agent to enforce, the Agent's security interest in such Collateral, (iii) complying with any provision of any statute, regulation or treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment, perfection or priority of, or ability of the Agent to enforce, the Agent's security interest in such Collateral, (iv) obtaining governmental and other third party waivers, consents and approvals, in form and substance satisfactory to the Agent, including, without limitation, any consent of any licensor, lessor or other Person obligated on Collateral, (v) obtaining waivers from mortgagees and landlords in form and substance satisfactory to the Agent and (vi) taking all actions under any earlier versions of the MA UCC or under any other law, as reasonably determined by the Agent to be applicable in any relevant MA UCC or other jurisdiction, including any foreign jurisdiction. (v) Each Credit Party authorizes and appoints the Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Credit Party or in the Agent's own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments that may be necessary or useful to accomplish the purposes of this Agreement and, without limiting the generality of the foregoing, hereby gives said attorneys the power and right, on behalf of such Credit Party, without notice to or assent by such Credit Party, to do the following: (i) upon the occurrence and during the continuance of an Event of Default, generally to sell, transfer, pledge, make any agreement with respect to or otherwise dispose of or deal with any of the Collateral in such manner as is consistent with the MA UCC and as fully and completely as though the Agent were the absolute owner thereof for all purposes, and to do, at the Credit Parties' expense, at any time, or from time to time, all acts and things which the Agent deems necessary or useful to protect, preserve or realize upon the Collateral and the Agent's security interest therein, in order to effect the intent of this Agreement, all no less fully and effectively as any Credit Party might do, including, without limitation, (A) the filing and prosecuting of registration and transfer applications with the appropriate federal, state or local agencies or authorities with respect to trademarks, copyrights and patentable inventions and processes, (B) upon written notice to such Credit Party, the exercise of voting rights with respect to voting securities, which rights may be exercised, if the Agent so elects, with a view to causing the liquidation of assets of the issuer of any such securities and (C) the execution, delivery and recording, in connection with any sale or other disposition of any Collateral, of the endorsements, assignments or other instruments of conveyance or transfer with respect to such Collateral; and (ii) to the extent that such Credit Party's authorization given in this subsection 4.2(v) is not sufficient, to file such financing statements with respect hereto, with or without such Credit Party's signature, or a photocopy of this Agreement in substitution for a financing statement, as the Agent may deem appropriate and to execute in such Credit Party's name such financing statements and amendments thereto and continuation statements which may require such Credit Party's signature. To the extent permitted by law, each Credit Party hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and is irrevocable. The powers conferred on the Agent hereunder are solely to protect the interests of the Agent and the Lenders in the Collateral and shall not impose any duty upon the Agent to exercise any such powers. The Agent shall be accountable only for the amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to any Credit Party for any act or failure to act, except for the Agent's own gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction. 4.3. COLLECTION OF PROCEEDS OF ACCOUNTS RECEIVABLE. (a) On or before the Closing Date, the Credit Parties (other than the Canadian Borrowers) shall (i) direct all of their account debtors and other obligors to make all payments on accounts receivable of such Credit Parties directly to post office boxes (each a "LOCKBOX" and collectively the "LOCKBOXES") under the control of the Cash Management Bank and/or such other financial institutions as shall be acceptable to the Agent, (ii) establish accounts (each a "CONTROLLED ACCOUNT" and collectively the "CONTROLLED ACCOUNTS") in the Agent's name for the benefit of the Borrower with the Cash Management Bank and/or such other financial institutions as shall be acceptable to the Agent, into which all payments received in the Lockboxes shall be deposited, and into which such Credit Parties will immediately deposit all payments made for inventory or services sold or rendered by such Credit Parties and received by such Credit Parties in the identical form in which such payments were made, whether by cash or check, (iii) (A) to cause each financial institution other than the Cash Management Bank with which a Lockbox and/or Controlled Account has been established to, enter into a Lockbox Agreement and/or Control Agreement, as applicable, confirming that the amounts on deposit in such Lockbox and/or Controlled Account, as applicable, are the property of and are under the control of the Agent, and that such financial institution has no right to setoff against such Lockbox or Controlled Account or against any other account maintained by such financial institution into which the contents of such Controlled Account are transferred, and (B) to direct such financial institution to cause all funds held in such Lockbox and/or Controlled Account to be wired, or otherwise transferred in immediately available funds in a manner satisfactory to the Agent, no less frequently than once each day to, and only to, a Controlled Account with the Cash Management Bank, and (iv) to cause each of their Subsidiaries and Affiliate, and any other Person acting for or in concert with such Credit Parties that receives any monies, checks, notes, drafts or other payments relating to or as proceeds of accounts receivable or any Collateral, to receive and hold such items in trust for, and as the sole and exclusive property of, the Agent and, immediately upon receipt thereof, shall remit the same or cause the same to be remitted in hand to the Controlled Accounts; PROVIDED that, for purposes of administrative convenience, the Agent may in its reasonable discretion, permit such Credit Parties from time to time to maintain one or more accounts with one or more financial institutions other than the Cash Management Bank and with such maximum cash balances as the Agent deems appropriate, and for which such Credit Parties may, at the discretion of the Agent, be permitted to have direct access. All funds received in the Controlled Account maintained at the Cash Management Bank as contemplated by this Section 4.3(a) and for which the Borrower has received credit shall be applied in accordance with such subsection 2.7(c). (b) On or before the Closing Date, each Canadian Borrower shall (i) direct all of their account debtors and other obligors to make all payments on accounts receivable of such Canadian Borrower directly to the operating account (the "NS ACCOUNT") maintained by the Canadian Lender and/or such other financial institutions as shall be acceptable to the Agent; (ii) cause each of its Subsidiaries and Affiliates, and any other Person acting for or in concert with such Canadian Borrower that receives any monies, checks, notes, drafts or other payments relating to or as proceeds of accounts receivable of such Canadian Borrower, to receive and hold such items in trust for, and as the sole and exclusive property of, the Agent and, immediately upon receipt thereof, to remit the same or cause the same to be remitted in hand to the NS Account. The Credit Parties acknowledge that upon receipt by the Canadian Lender of written notice from the Agent that an Event of Default has occurred and is continuing, the Canadian Lender shall have the right and obligation to comply with any instructions originated by the Agent directing disposition of funds in such accounts without further consent of any Credit Party. Each Canadian Borrower agrees to enter into a Lockbox Agreement, a Control Agreement or a blocked account agreement with the Canadian Lender and the Agent, as the Agent may reasonably request. All funds received in the NS Account for which the Borrower has received credit shall be applied in the manner specified in subsection 2.8(c)(iv). (c) Each Credit Party acknowledges that the Cash Management Bank is an affiliate of the Agent and that the Cash Management Bank and the Agent are parties to cash management agreements that confirm that the Agent has dominion and control over all accounts of the Credit Parties or the Agent maintained by the Cash Management Bank, and all funds from time to time held in such accounts. The Borrower, the Agent and the Cash Management Bank hereby agree that the Cash Management Bank shall comply with any instructions originated by the Agent directing disposition of funds in such accounts without further consent of the Borrower. Each Credit Party agrees to enter into such Lockbox Agreements and Control Agreements with the Cash Management Bank and the Agent as the Agent may reasonably request. (d) The Credit Parties agree to pay all reasonable fees, costs and expenses which the Credit Parties incur in connection with opening and maintaining a Lockbox and Controlled Account. All of such fees, costs and expenses which remain unpaid pursuant to any Lockbox or Control Agreement with the Credit Parties, to the extent same shall have been paid by the Agent hereunder, shall constitute Loans hereunder, shall be payable to the Agent by the Credit Parties upon demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder. All checks, drafts, instruments and other items of payment or proceeds of Collateral delivered to the Canadian Lender, the Agent or the Cash Management Bank in kind shall be endorsed by the Credit Parties, to the Agent, and, if that endorsement of any such item shall not be made for any reason, the Canadian Lender, the Agent and the Cash Management Bank are each hereby irrevocably authorized to endorse the same on behalf of the Credit Parties. For the purpose of this subsection 4.3(d), each Credit Party irrevocably hereby makes, constitutes and appoints the Agent (and all Persons designated by the Agent for that purpose, including, without limitation, the Cash Management Bank and the Canadian Lender) as such Credit Party's true and lawful attorney and agent-in-fact (i) to endorse the name of such Credit Party upon said items of payment and/or proceeds of Collateral of the Credit Parties and upon any chattel paper, document, instrument, invoice or similar document or agreement relating to any account receivable of the Credit Parties or goods pertaining thereto; (ii) to take control in any manner of any item of payment or proceeds thereof; (iii) to have access to any lockbox or postal box into which any mail of the Credit Parties is deposited; and (iv) open and process all mail addressed to the Credit Parties and deposited therein. (e) The Agent (and all Persons designated by the Agent for such purpose, including, without limitation, the Cash Management Bank) may, at any time and from time to time after the occurrence and during the continuance of an Event of Default, whether before or after notification to any account debtor and whether before or after the maturity of any of the Obligations, (i) enforce collection of any accounts receivable or contract rights of the Credit Parties by suit or otherwise; (ii) exercise all of the rights and remedies of the Credit Parties with respect to proceedings brought to collect any accounts receivable; (iii) surrender, release or exchange all or any part of any accounts receivable of the Credit Parties, or compromise or extend or renew for any period (whether or not longer than the original period) any indebtedness thereunder; (iv) sell or assign any account receivable of the Credit Parties upon such terms, for such amount and at such time or times as the Agent deems advisable; (v) prepare, file and sign the names of the Credit Parties on any proof of claim in bankruptcy or other similar document against any account debtor indebted on an account receivable of the Credit Parties; and (vi) do all other acts and things which are necessary, in the Agent's sole discretion, to fulfill the Obligations of the Credit Parties under this Agreement and to allow the Agent to collect the accounts receivable. In addition to any other provision hereof or in any of the other Loan Documents, the Agent may at any time on or after the occurrence of an Event of Default, at the sole expense of the Credit Parties, notify any parties obligated on any of the accounts receivable of the Credit Parties to make payment directly to the Agent of any amounts due or to become due thereunder. 4.4. FIXTURES, ETC. It is the intention of the parties hereto that (except for Collateral located on any Mortgaged Property) none of the Collateral shall become fixtures and each Credit Party will take all such reasonable action or actions as may be necessary to prevent any of the Collateral from becoming fixtures. Without limiting the generality of the foregoing, each Credit Party will, if requested by the Agent, use commercially reasonable efforts to obtain waivers of Liens, in form satisfactory to the Agent, from each lessor of real property on which any of the Collateral is or is to be located to the extent requested by the Agent. 4.5. RIGHT OF AGENT TO DISPOSE OF COLLATERAL, ETC. Upon the occurrence and during the continuance of any Event of Default, subject to the provisions of the MA UCC or other applicable law, the Agent shall have the right to take possession of the Collateral and, in addition thereto, the right to enter upon any premises on which the Collateral or any part thereof may be situated and remove the same therefrom. The Agent may require the Credit Parties to make the Collateral (to the extent the same is moveable) available to the Agent at a place to be designated by the Agent or transfer any information related to the Collateral to the Agent by electronic medium. The Agent may in its discretion require any Credit Party to assemble all or any part of the Collateral at such location or locations within the jurisdiction(s) of such Credit Party's principal office(s) or at such other locations as the Agent may reasonably designate. Unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, the Agent will give the Credit Parties at least seven (7) days' prior written notice of the time and place of any public sale thereof or of the time after which any private sale or any other intended disposition thereof is to be made. Any such notice shall be deemed to meet any requirement hereunder or under any applicable law (including the MA UCC) that reasonable notification be given of the time and place of such sale or other disposition. In addition, each Credit Party waives any and all rights that it may have to a judicial hearing in advance of the enforcement of any of the Agent's rights and remedies hereunder. 4.6. RIGHT OF AGENT TO USE AND OPERATE COLLATERAL, ETC. Upon the occurrence and during the continuance of any Event of Default, subject to the provisions of the MA UCC or other applicable law, the Agent shall have the right and power (a) to take possession of all or any part of the Collateral, and to exclude the Credit Parties and all Persons claiming under the Credit Parties wholly or partly therefrom, and thereafter to hold, store, and/or use, operate, manage and control the same, and (b) to grant a license to use, or cause to be granted a license to use, any or all of the Patents, Trademarks and Copyrights (in the case of Trademarks, along with the goodwill associated therewith), but subject to the terms of any licenses. Upon any such taking of possession, the Agent may, from time to time, at the expense of the Credit Parties, make all such repairs, replacements, alterations, additions and improvements to and of the Collateral as the Agent may deem proper. In any such case the Agent shall have the right to manage and control the Collateral and to carry on the business and to exercise all rights and powers of the Credit Parties in respect thereto as the Agent shall deem proper, including the right to enter into any and all such agreements with respect to the operation of the Collateral or any part thereof as the Agent may see fit; and the Agent shall be entitled to collect and receive all rents, issues, profits, fees, revenues and other income of the same and every part thereof. Such rents, issues, profits, fees, revenues and other income shall be applied to pay the expenses of holding and operating the Collateral and of conducting the business thereof, and of all maintenance, repairs, replacements, alterations, additions and improvements, and to make all payments which the Agent may be required or may elect to make, if any, for taxes, assessments, insurance and other charges upon the Collateral or any part thereof, and all other payments which the Agent may be required or authorized to make under any provision of this Agreement (including legal costs and reasonable attorneys' fees). The Agent shall apply the remainder of such rents, issues, profits, fees, revenues and other income as provided in Section 4.7. 4.7. PROCEEDS OF COLLATERAL. After deducting all reasonable costs and expenses of collection, storage, custody, sale or other disposition and delivery (including reasonable legal costs and attorneys' fees) and all other charges against the Collateral, the Agent shall apply the residue of the proceeds of any such sale or disposition to the Obligations in accordance with the terms hereof and any surplus shall be returned to the Credit Parties or to any Person or party lawfully entitled thereto. In the event the proceeds of any sale, lease or other disposition of the Collateral are insufficient to pay all of the Obligations in full, the Credit Parties will be liable for the deficiency, together with interest thereon at the Post-Default Rate, and the cost and expenses of collection of such deficiency, including (to the extent permitted by law), without limitation, reasonable attorneys' fees, expenses and disbursements. 4.8. RELATION TO COLLATERAL DOCUMENTS. The provisions of this Agreement supplement the provisions of any real estate mortgage or deed of trust granted by any Credit Party to the Agent, for the benefit of the Lenders and the Agent, and which secures the payment or performance of any of the Obligations. Nothing contained in any such real estate mortgage or deed of trust shall derogate from any of the rights or remedies of the Agent or any of the Lenders hereunder. In addition, to the provisions of this Agreement being so read and construed with any such mortgage or deed of trust, the provisions of this Agreement shall be read and construed with the Collateral Documents referred to below in the manner so indicated. (a) PLEDGE AGREEMENTS. Concurrently herewith each Credit Party is executing and delivering to the Agent, for the benefit of the Lenders and the Agent, a Pledge Agreement pursuant to which such Credit Party is pledging to the Agent (a) 100% of the shares of the Capital Stock of its Domestic Subsidiary or Subsidiaries, and/or Audubon Europe, as the case may be, (b) 65% of the shares of the Capital Stock of its Foreign Subsidiary or Subsidiaries (other than Audubon Europe) and (c) all promissory notes held by or payable to such Credit Party. Such pledge shall be governed by the terms of such pledge agreement and not by the terms of this Agreement. (b) TRADEMARK AND PATENT AGREEMENTS. Concurrently herewith each Credit Party is executing and delivering to the Agent, for the benefit of the Lenders and the Agent, a Trademark Agreement and a Patent Agreement pursuant to which such Credit Party is assigning to the Agent, for the benefit of the Lenders and the Agent, certain Collateral consisting of trademarks, service marks and trademark and service mark rights, patent and patent rights, together with the goodwill appurtenant thereto. The provisions of the Trademark Agreement and the Patent Agreement are supplemental to the provisions of this Agreement, and nothing contained in the Trademark Agreement or the Patent Agreement shall derogate from any of the rights or remedies of the Agent or any of the Lenders hereunder. Neither the delivery of, nor anything contained in, the Trademark Agreement or the Patent Agreement shall be deemed to prevent or postpone the time of attachment or perfection of any security interest in such Collateral created hereby. (c) COPYRIGHT MORTGAGES, ETC. Concurrently herewith each Credit Party is also executing and delivering to the Agent, for the benefit of the Lenders and the Agent, for recording in the United States Copyright Office (the "COPYRIGHT OFFICE") a Memorandum of Grant of Security Interest in Copyrights. Such Credit Party represents and warrants to the Lenders and the Agent that such Copyright Mortgage identifies all now existing material copyrights and other rights in and to all material copyrightable works of such Credit Party, identified, where applicable, by title, author and/or Copyright Office registration number and date. Each Credit Party represents and warrants to the Lenders and the Agent that it has registered all material copyrights with the Copyright Office, as identified in such Copyright Mortgage. Each Credit Party covenants, promptly following such Credit Party's acquisition thereof, to provide to the Agent like identifications of all material copyrights and other rights in and to all material copyrightable works hereafter acquired by such Credit Party, to register such copyrights with the Copyright Office and to execute and deliver to the Agent, for the benefit of the Lenders and the Agent, a supplemental Memorandum of Grant of Security Interest in Copyrights, in form and substance satisfactory to the Agent, for the benefit of the Lenders and the Agent, modified to reflect such subsequent acquisitions and registrations. 4.9. MARSHALLING. Neither the Agent nor any Lender shall be required to marshal any present or future collateral security (including but not limited to the Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of the rights and remedies of the Agent or any Lender hereunder and of the Agent or any Lender in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however existing or arising. To the extent that it lawfully may, each Credit Party hereby agrees that it will not invoke any law relating to the marshalling of collateral which might cause delay in or impede the enforcement of the Agent's rights and remedies under this Agreement or under any other instrument creating or evidencing any of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, such Credit Party hereby irrevocably waives the benefits of all such laws. ARTICLE 5. REPRESENTATIONS AND WARRANTIES Each Credit Party represents and warrants to the Lenders, the Issuing Lender and the Agent, as to itself and each other Credit Party, that: 5.1. ORGANIZATION; POWERS. Each of the Borrower and its Subsidiaries has been duly formed or organized and is validly existing and in good standing under the laws of its jurisdiction of organization or formation. Each of the Borrower and its Subsidiaries has all requisite power to own its property and authority to carry on its business as now conducted and as presently contemplated, and is qualified to do business in, and is in good standing and duly authorized to do business in, every jurisdiction where such qualification is required, except where the failure to have such power or authority or to be so qualified or in good standing, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 5.2. AUTHORIZATION; ENFORCEABILITY. The borrowing of the Loans and the grant of security interests pursuant to the Loan Documents are within the power and authority of the Borrower and each of its Subsidiaries, as applicable, and have been duly authorized by all necessary action on the part of the Borrower and each of its Subsidiaries, as applicable. This Agreement and the other Loan Documents have been duly authorized, executed and delivered by the Borrower and each of its Subsidiaries, as applicable and constitute legal, valid and binding obligations of the Borrower and each of its Subsidiaries, as applicable, enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. 5.3. GOVERNMENTAL APPROVALS; NO CONFLICTS. The borrowing of the Loans and the grant of the security interests pursuant to the Loan Documents (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority which has not been obtained, except as disclosed on SCHEDULE 5.3, (b) will not violate any applicable law, policy or regulation or the organizational documents of the Borrower or any of its Subsidiaries or any order of any Governmental Authority, (c) will not violate or result in a default under any material term of any indenture, agreement or other instrument binding upon the Borrower or any of its Subsidiaries, or any of their assets, or give rise to a right thereunder to require any payment to be made by the Borrower or any of its Subsidiaries, and (d) except for the Liens created by the Loan Documents, will not result in the creation or imposition of any Lien on any asset of the Borrower or any of its Subsidiaries. 5.4. FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE. (a) The Credit Parties have heretofore delivered to the Agent and the Lenders the following financial statements: (i) the consolidated balance sheets and statements of operations and cash flows of the Borrower and its Subsidiaries, as of and for the fiscal years ended March 31, 2000, March 31, 2001, and March 31, 2002, audited and accompanied by an opinion of the Borrower's independent public accountants; (ii) the unaudited consolidated balance sheet and statements of operations and cash flows of the Borrower and its Subsidiaries, as of and for the fiscal year-to-date period ended September 30, 2002, certified by a Designated Financial Officer that such financial statements fairly present the financial condition of the Borrower and its Subsidiaries as at such date and the results of the operations of the Borrower and its Subsidiaries for the period ended on such date and that all such financial statements, including the related schedules and notes thereto have been prepared in all material respects in accordance with GAAP applied consistently throughout the periods involved, except as disclosed on SCHEDULE 5.4; and (iii) the projected consolidated balance sheets, statements of operations and cash flows, for the Borrower and its Subsidiaries for the fiscal years ended March 31, 2003 through March 31, 2007. Except as disclosed on SCHEDULE 5.4, such financial statements (except for the projections) present fairly, in all material respects, the respective consolidated financial position and results of operations and cash flows of the respective entities as of such respective dates and for such periods in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in the case of such unaudited or pro forma statements. The projections were prepared by the Borrower in good faith and were based on assumptions that were reasonable when made. (b) Except as disclosed on SCHEDULE 5.4, since September 30, 2002, there has been no material adverse change in the business, assets, operations or condition, financial or otherwise, of the Borrower and its Subsidiaries from that set forth in the September 30, 2002 financial statements referred to in clause (ii) of paragraph (a) above. (c) Neither the Borrower nor any of its Subsidiaries has on the Closing Date any contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments in each case that are material, except as referred to or reflected or provided for in the financial statements described in this Section 5.4 or in SCHEDULE 5.4 annexed hereto, or as otherwise permitted pursuant to this Agreement. (d) SCHEDULE 5.4(D) hereto contains the calculation of EBITDA and other financial information, including restructuring charges for the fiscal quarters ending March 31, 2002, June 30, 2002 and September 30, 2002. 5.5. PROPERTIES. (a) Each of the Borrower and its Subsidiaries has good and marketable title to, or valid, subsisting and enforceable leasehold interests in, all of its Properties material to its business. All machinery and equipment of each of the Borrower and its Subsidiaries is in good operating condition and repair, and all necessary replacements of and repairs thereto have be made so as to preserve and maintain the value and operating efficiency of such machinery and equipment. (b) Set forth on SCHEDULE 5.5 hereto is a complete list of all Patents, Trademarks and Copyrights. The Borrower and its Subsidiaries own, or are licensed to use, all Patents, Trademarks and Copyrights and other intellectual property material to their business (collectively, the "PROPRIETARY RIGHTS"), and to the knowledge of the Borrower and its Subsidiaries, the use thereof by the Borrower or any of its Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. (c) SCHEDULE 5.5 clearly identifies all Patents, Trademarks and Copyrights that have been duly registered in, filed in or issued by the PTO or the United States Register of Copyrights (collectively, the "REGISTERED PROPRIETARY Rights"). The Registered Proprietary Rights have been properly maintained and renewed in accordance with all applicable provisions of law and administrative regulations in the United States, as applicable. The Borrower and its Subsidiaries have taken commercially reasonable steps to protect their Registered Proprietary Rights and to maintain the confidentiality of all Proprietary Rights that are not generally in the public domain. (d) As of the Closing Date, SCHEDULE 5.5 annexed hereto contains a true, accurate and complete list of (i) all Real Property Assets, whether owned or leased, and (ii) all leases, subleases or assignments of leases (together with all amendments, modifications, supplements, renewals or extensions of any thereof) affecting each Leasehold Property, regardless of whether the Borrower or any of its Subsidiaries is the landlord or tenant (whether directly or as an assignee or successor in interest) under such lease, sublease or assignment. Except as specified in SCHEDULE 5.5, each agreement listed in clause (ii) of the immediately preceding sentence is in full force and effect and neither the Borrower nor any of its Subsidiaries has any knowledge of any default that has occurred and is continuing thereunder, and each such agreement constitutes the legal, valid and binding obligation of the Borrower and each of its Subsidiaries, as applicable, enforceable against the Borrower and each of its Subsidiaries, as applicable, in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally or by equitable principles. 5.6. LITIGATION AND ENVIRONMENTAL MATTERS. (a) Except as set forth on SCHEDULE 5.6, there are no Environmental Actions of any kind by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower and its Subsidiaries, threatened against or affecting the Borrower or any of its Subsidiaries that (i) if adversely determined, could have a Material Adverse Effect or (ii) relates to this Agreement or any other Loan Document or any transaction contemplated hereby or thereby. (b) The Borrower and its Subsidiaries have taken all necessary steps to investigate the past and present condition and usage of the Real Property Assets and the operations conducted thereon and, based upon such diligent investigation, have determined, except as set forth on SCHEDULE 5.6, that: (i) none of the Borrower, its Subsidiaries or any operator of the Real Property Assets currently or formerly owned, leased or operated by the Borrower, any of its Subsidiaries or any predecessor-in-interest or any operations thereon are in violation or alleged violation, in any material respect, of any Environmental Laws; (ii) neither the Borrower nor any of its Subsidiaries has become subject to any Environmental Liabilities and do not know of any basis for any Environmental Liabilities, in each case, which would have a Material Adverse Effect; (iii) neither the Borrower nor any of its Subsidiaries has received notice from any third party including, without limitation, any Governmental Authority, (A) that any one of them has been identified by a Governmental Authority as a potentially responsible party under Environmental Law; (B) that the Borrower, its Subsidiaries or any predecessor-in-interest has generated, transported or disposed of any Hazardous Materials at any site at which a Governmental Authority has conducted or has ordered a party to conduct a Remedial Action, removal or other response action pursuant to any Environmental Law; or (C) that the Borrower or any of its Subsidiaries is or shall be a named party to any Environmental Action arising out of any third party's incurrence of costs, expenses, losses or damages of any kind whatsoever in connection with the Release of Hazardous Materials; (iv) (A) no portion of the Real Property Assets currently or formerly owned, leased or operated by the Borrower or any of its Subsidiaries has been used for the generation, handling, processing, storage or disposal of Hazardous Materials except in material accordance with applicable Environmental Laws; and no underground tank or other underground storage receptacle for Hazardous Materials is located on any portion of the Real Property Assets currently or formerly owned, leased or operated by the Borrower or any of its Subsidiaries; (B) in the course of any activities conducted by the Borrower or any of its Subsidiaries or operators of its properties, no Hazardous Materials have been generated or are being used on the Real Property Assets currently or formerly owned, leased or operated by the Borrower or any of its Subsidiaries except in material accordance with applicable Environmental Laws; (C) there have been no Releases (i.e. any past or present releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, disposing or dumping) or threatened Releases of Hazardous Materials on, upon, into or from the properties of the Borrower or any of its Subsidiaries, which Releases would have a material adverse effect on the value of any of the Real Property Assets or adjacent properties; (D) to the best knowledge of the Borrower and its Subsidiaries, there have been no generation, storage, disposal or Releases on, upon, from or into any real property in the vicinity of any of the Real Property Assets which, through soil or groundwater contamination, may have come to be located on, and which would have a material adverse effect on the value of, any Real Property Asset; and (E) in addition, any Hazardous Materials that have been generated on any of the Real Property Assets currently or formerly owned, leased or operated by the Borrower, any of its Subsidiaries or any predecessor-in-interest have been transported offsite only by carriers having an identification number issued by any Governmental Authority, treated or disposed of, to the knowledge of the Borrower or any of its Subsidiaries, only by treatment or disposal facilities maintaining valid permits as required under applicable Environmental Laws, which transporters and facilities have been and are, to the best knowledge of the Borrower and its Subsidiaries, operating in material compliance with such permits and applicable Environmental Laws; and (v) none of the Borrower, its Subsidiaries or any of the Real Property Assets are subject to any applicable Environmental Law requiring the performance of Hazardous Material site assessments, or the removal or remediation of Hazardous Materials, or the giving of notice to any Governmental Authority or the recording or delivery to other Persons of an environmental disclosure document or statement by virtue of the transactions set forth herein and contemplated hereby, or as a condition to the recording of any Mortgage or to the effectiveness of any other transactions contemplated hereby. (c) Since the Closing Date, there has been no change in the status of the Disclosed Matters that, individually or in the aggregate, has had, or materially increased the likelihood of having, a Material Adverse Effect. 5.7. COMPLIANCE WITH LAWS AND AGREEMENTS. Except as set forth on SCHEDULE 5.7, each of the Borrower and its Subsidiaries is in material compliance with all laws, decrees, judgments, licenses, rules, regulations, policies, permits, approvals and orders of any Governmental Authority applicable to it, its property or the operation of its business and all material terms of indentures, agreements and other instruments binding upon it or its property. 5.8. INVESTMENT AND HOLDING COMPANY STATUS. Neither the Borrower nor any of its Subsidiaries is (a) an "investment company", or an "affiliated company" or a "principal underwriter" of an "investment company", as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended, (b) a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company", as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935, as amended or (c) a "bank holding company" as defined in, or subject to regulation under, the Bank Holding Company Act of 1956, as amended. 5.9. TAXES. Except as set forth on SCHEDULE 5.9, each of the Borrower and its Subsidiaries has timely made, filed or caused to be filed all Tax returns, declarations and reports required to have been filed or made and has paid or caused to be paid all Taxes required to have been paid by it, except (a) as of the Closing Date, Taxes that are being contested in good faith by appropriate proceedings, so long as such contest operates to suspend the enforcement of compliance therewith, the collection thereof and/or the imposition of any penalty, fine or Lien with respect thereto, and for which the Borrower or any of its Subsidiaries has set aside on its books adequate reserves with respect thereto in accordance with GAAP, which reserves shall be acceptable to Agent and (b) after the Closing Date, as permitted by Section 7.4. There are no unpaid Taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and none of the officers of the Borrower or any of its Subsidiaries knows of any basis for any such claim. 5.10. ERISA. Except as set forth on SCHEDULE 5.10, neither the Borrower nor any of its Subsidiaries has any Pension Plans. No ERISA Event has occurred or is reasonably expected to occur with respect to any Plan. Neither the Borrower nor any of its Subsidiaries has a present intention to terminate any Pension Plan (except in connection with the transactions described in Schedules 8.4(b) and 8.4(c)), with respect to which the Borrower or any of its Subsidiaries would incur a cost of more than $100,000 to terminate such Plan, including amounts required to be contributed to fund such Plan upon termination thereof and all costs and expenses associated therewith, including, without limitation, attorneys' and actuaries' fees and expenses in connection with such termination and reasonable expenses and settlement or judgment costs and attorneys' fees and expenses in connection with any litigation related to such termination. 5.11. DISCLOSURE. As of the Closing Date, the Borrower and its Subsidiaries have disclosed to the Agent all material agreements, instruments and corporate or other restrictions to which the Borrower or any of its Subsidiaries is subject after the Closing Date, and all other matters known to the Borrower or any of its Subsidiaries, that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. The organizational structure of the Borrower and its Subsidiaries is as set forth on SCHEDULE 5.12 annexed hereto. The information, reports, financial statements, exhibits and schedules furnished at or prior to the Closing Date in writing by or on behalf of the Borrower and its Subsidiaries to the Agent in connection with the negotiation, preparation or delivery of this Agreement and the other Loan Documents or included herein or therein or delivered pursuant hereto or thereto, on the Closing Date, when taken as a whole do not contain any untrue statement of material fact or omit to state any material fact necessary to make the statements herein or therein, in light of the circumstances under which they were made, not materially misleading. All written information furnished after the Closing Date by the Borrower and its Subsidiaries to the Agent and/or the Lenders in connection with this Agreement and the other Loan Documents and the transactions contemplated hereby and thereby will be true, complete and accurate in every material respect, or (in the case of pro forma information and projections) prepared in good faith based on reasonable assumptions, on the date as of which such information is stated or certified. There is no fact known to the Borrower or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect that has not been disclosed herein, in the other Loan Documents or in a report, financial statement, exhibit, schedule, disclosure letter or other writing furnished to the Agent for use in connection with the transactions contemplated hereby or thereby. 5.12. CAPITALIZATION. As of the Closing Date, the capital structure and ownership of the Subsidiaries of the Borrower are correctly described on SCHEDULE 5.12. As of the Closing Date, the authorized, issued and outstanding Capital Stock of the Borrower and each of its Subsidiaries consists of the Capital Stock described on SCHEDULE 5.12, all of which is duly and validly issued and outstanding, fully paid and nonassessable. Except as set forth on SCHEDULE 5.12, as of the Closing Date, (x) there are no outstanding Equity Rights with respect to the Borrower or any of its Subsidiaries and, (y) there are no outstanding obligations of the Borrower or any of its Subsidiaries to repurchase, redeem, or otherwise acquire any shares of Capital Stock of or other interest in the Borrower or any of its Subsidiaries, nor are there any outstanding obligations of the Borrower or any of its Subsidiaries to make payments to any Person, such as "phantom stock" payments, where the amount thereof is calculated with reference to the fair market value or equity value of the Borrower or any of its Subsidiaries. 5.13. SUBSIDIARIES. (a) Set forth on SCHEDULE 5.13 is a complete and correct list of all Subsidiaries of the Credit Parties as of the Closing Date, together with, for each such Subsidiary, (i) the jurisdiction of organization of such Subsidiary, (ii) each Person holding ownership interests in such Subsidiary and (iii) the nature of the ownership interests held by each such Person and the percentage of ownership of such Subsidiary represented by such ownership interests. Except as disclosed in SCHEDULE 5.13, (x) each Credit Party and its respective Subsidiaries owns, free and clear of all Liens (other than Liens permitted hereunder), and has the unencumbered right to vote, all outstanding ownership interests in each Person shown to be held by it in SCHEDULE 5.13, (y) all of the issued and outstanding Capital Stock of each such Person organized as a corporation is validly issued, fully paid and nonassessable and (z) there are no outstanding Equity Rights with respect to such Person. (b) Except as set forth on SCHEDULE 8.8, as of the Closing Date, neither the Borrower nor any of its Subsidiaries is subject to any indenture, agreement, instrument or other arrangement containing any provision of the type described in Section 8.8 ("RESTRICTIVE AGREEMENTS"), other than any such provision the effect of which has been unconditionally, irrevocably and permanently waived. (c) Each of the Domestic Subsidiaries (other than CM Insurance Company, Inc.) is a Guarantor and a Credit Party hereunder. 5.14. MATERIAL INDEBTEDNESS, LIENS AND AGREEMENTS. (a) SCHEDULE 5.14 hereto contains a complete and correct list, as of the Closing Date, of any Indebtedness or any extension of credit (or commitment for any extension of credit) to, or guarantee by, the Borrower or any of its Subsidiaries in an amount in excess of $100,000, and the aggregate principal or face amount outstanding or that may become outstanding with respect thereto is correctly described on SCHEDULE 5.14. (b) SCHEDULE 5.14 hereto contains a complete and correct list, as of the Closing Date, of each Lien (other than the Liens in favor of the Agent) securing Indebtedness of any Person and covering any property of the Borrower or any of its Subsidiaries, and the aggregate Indebtedness secured (or which may be secured) by each such Lien and the Property covered by each such Lien is correctly described in the appropriate part of SCHEDULE 5.14. (c) SCHEDULE 5.14 hereto contains a complete and correct list, as of the Closing Date, of each contract and arrangement to which the Borrower or any of its Subsidiaries is a party for which breach, nonperformance, cancellation or failure to renew would have a Material Adverse Effect other than purchase orders made in the ordinary course of business and subject to customary terms. (d) To the extent requested by the Agent, true and complete copies of each agreement listed on the appropriate part of SCHEDULE 5.14 have been delivered to the Agent, together with all amendments, waivers and other modifications thereto. All such agreements are valid, subsisting, in full force and effect, are currently binding and will continue to be binding upon the Borrower and each of its Subsidiaries that is a party thereto and, to the best knowledge of the Borrower and its Subsidiaries, binding upon the other parties thereto in accordance with their terms. The Borrower and its Subsidiaries are not in default under any such agreements, the occurrence of which could have a Material Adverse Effect. 5.15. FEDERAL RESERVE REGULATIONS. Neither the Borrower nor any of its Subsidiaries is engaged principally or as one of its important activities in the business of extending credit for the purpose of purchasing or carrying margin stock (as defined in Regulation U of the Board). The making of the Loans hereunder, the use of the proceeds thereof as contemplated hereby, and the security arrangements contemplated by the Loan Documents, will not violate or be inconsistent with any of the provisions of Regulations T, U, or X of the Board. 5.16. SOLVENCY. As of the Closing Date and after giving effect to the initial Loans hereunder and the consummation of the transactions contemplated hereby and by the Tranche B Loan Documents: (a) the aggregate value of all properties of the Borrower and its Subsidiaries at their present fair saleable value on a going concern basis (i.e., the amount that may be realized within a reasonable time, considered to be six months to one year, either through collection or sale at the regular market value, conceiving the latter as the amount that could be obtained for such properties within such period by a capable and diligent businessman from an interested buyer who is willing to purchase under ordinary selling conditions), exceed the amount of all the debts and liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) of the Borrower and its Subsidiaries; (b) the Borrower and its Subsidiaries will not, on a consolidated basis, have an unreasonably small capital with which to conduct their business operations as heretofore conducted; and (c) the Borrower and its Subsidiaries will have, on a consolidated basis, sufficient cash flow to enable them to pay their debts as they mature. 5.17. FORCE MAJEURE. Since September 30, 2002, none of the business, properties and other assets of the Borrower and its Subsidiaries is affected by any fire or other casualty, strike, lockout or other labor trouble, embargo, sabotage, confiscation, contamination, riot, civil disturbance, activity of armed forces or act of God that has or could reasonably be expected to have a Material Adverse Effect. 5.18. ACCOUNTS RECEIVABLE. The Agent may rely, in determining which accounts receivable are Eligible Accounts, on all statements and representations made by the Credit Parties with respect to such accounts receivable. Unless otherwise indicated to the Agent in writing: (a) Each account receivable is genuine and in all respects what it purports to be, and it is not evidenced by a judgment; (b) Each account receivable arises out of a completed, bona fide sale and delivery of goods or rendition of services by a Credit Party in the ordinary course of its business and in accordance with the terms and conditions of all purchase orders, contracts or other documents relating thereto and forming a part of the contract between such Credit Party and the account debtor, and, in the case of goods, title to the goods has passed from the Credit Party to the account debtor; (c) Each account receivable is for a liquidated amount maturing as stated in the duplicate invoice covering such sale or rendition of services, a copy of which has been furnished or is available to the Agent; (d) Each account receivable, and the Agent's security interest therein, is not, and will not (by voluntary act or omission of the Credit Parties) be in the future, subject to any offset, Lien, deduction, defense, dispute, counterclaim or any other adverse condition except for disputes resulting in returned goods where the amount in controversy is deemed by the Agent to be immaterial, and each such account receivable is absolutely owing to one of the Credit Parties and is not contingent in any respect or for any reason; (e) No Credit Party has made any agreement with any account debtor for any extension, compromise, settlement or modification of any account receivable or any deduction therefrom, except discounts or allowances which are granted by the Credit Parties in the ordinary course of their businesses for prompt payment and which are reflected in the calculation of the net amount of each respective invoice related thereto and are reflected in the Borrowing Base Certificates and Collateral Update Certificates furnished to the Agent hereunder; (f) To the best knowledge of the Credit Parties, the account debtor under each account receivable had the capacity to contract at the time any contract or other document giving rise to an account receivable was executed and such account debtor is not insolvent; and (g) To the best knowledge of the Credit Parties, there are no proceedings or actions which are threatened or pending against any account debtor which might result in any material adverse change in such account debtor's financial condition or the collectability of any account receivable. 5.19. LABOR AND EMPLOYMENT MATTERS. (a) Except as set forth on SCHEDULE 5.19, (A) to the knowledge of the Borrower or any of its Subsidiaries, no employee of the Borrower or any of its Subsidiaries is represented by a labor union, no labor union has been certified or recognized as a representative of any such employee, and the Borrower and its Subsidiaries do not have any obligation under any collective bargaining agreement or other agreement with any labor union or any obligation to recognize or deal with any labor union, and there are no such contracts or other agreements pertaining to or which determine the terms or conditions of employment of any employee of the Borrower or any of its Subsidiaries; (B) to the knowledge of the Borrower or any of its Subsidiaries, there are no pending or threatened representation campaigns, elections or proceedings; (C) the Borrower and its Subsidiaries do not have knowledge of any strikes, slowdowns or work stoppages of any kind, or threats thereof, and no such activities occurred during the 24-month period preceding the Closing Date; (D) neither the Borrower nor any of its Subsidiaries has engaged in, admitted committing or been held to have committed any unfair labor practice; and (E) to the knowledge of the Borrower or any of its Subsidiaries, there are no controversies or grievances between the Borrower or any of its Subsidiaries and any of its employees or representatives thereof; in each case, which would have a Material Adverse Effect. (b) Except as set forth on SCHEDULE 5.19, the Borrower and its Subsidiaries have at all times complied in all material respects, and are in material compliance with, all applicable laws, rules and regulations respecting employment, wages, hours, compensation, benefits, and payment and withholding of taxes in connection with employment. (c) Except as set forth on SCHEDULE 5.19, to the knowledge of the Borrower or any of its Subsidiaries, the Borrower and its Subsidiaries have at all times complied with, and are in compliance with, all applicable laws, rules and regulations respecting occupational health and safety, whether now existing or subsequently amended or enacted, including, without limitation, the Occupational Safety & Health Act of 1970, 29 U.S.C. Section 651 et seq. and the state analogies thereto, all as amended or superseded from time to time, and any common law doctrine relating to worker health and safety, except for noncompliance which could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. 5.20. BANK ACCOUNTS. SCHEDULE 5.20 lists all banks and other financial institutions at which the Borrower and each of its Subsidiaries maintains deposits and/or other accounts as of the Closing Date, and such Schedule correctly identifies the name and address of each depository, the name in which the account is held, a description of the purpose of the account, and the complete account number. 5.21. OBLIGATIONS AS SENIOR DEBT. The Obligations constitute Senior Debt (as defined in the Senior Subordinated Note Indenture) and Designated Senior Debt (as defined in the Senior Subordinated Note Indenture). As such, all of the Obligations (and the Agent and Lenders) are entitled to the benefits of each of the subordination and other provisions contained in the Senior Subordinated Note Indenture which are available in respect of Senior Debt and Designated Senior Debt (and to the holders thereof), and each of such subordination and other provisions is in full force and effect and enforceable in accordance with its terms. 5.22. SENIOR SUBORDINATED NOTE DOCUMENTS AND TRANCHE B LOAN DOCUMENTS. The Credit Parties have heretofore furnished to the Agent true, complete and correct copies of each of the Senior Subordinated Note Documents and the Tranche B Loan Documents (including schedules, exhibits and annexes thereto). The Senior Subordinated Note Documents and the Tranche B Loan Documents have not been amended, supplemented or modified, and constitute the complete understanding among the parties thereto in respect of the matters and transactions covered thereby, except for amendments thereto delivered to the Agent prior to the Closing Date. Each of the Senior Subordinated Note Documents and the Tranche B Loan Documents is in full force and effect, and neither the Borrower nor any of its Subsidiaries is in default under any of such documents. 5.23. CERTAIN TRANSACTIONS. Except for arm's length transactions pursuant to which the Borrower or any of its Subsidiaries makes payments in the ordinary course of business upon terms no less favorable than the Borrower or any of its Subsidiaries could obtain from third parties, none of the officers, directors, or employees of the Borrower or any of its Subsidiaries is presently a party to any transaction with the Borrower or any of its Subsidiaries (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Borrower, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner. 5.24. COLUMBUS MCKINNON FINANCE CORPORATION. Columbus McKinnon Finance Corporation does not (i) own any assets other than that certain intercompany promissory note issued by Columbus McKinnon Limited and made to Columbus McKinnon Finance Corporation in the aggregate face amount of C$3,750,000, (ii) have any liabilities or (iii) engage in any business. ARTICLE 6. CONDITIONS 6.1. CLOSING DATE. The obligations of the Lenders to make Revolving Loans, of the Lenders to make Term Loans, and of the Issuing Lender to issue Letters of Credit hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 11.2): (a) CORPORATE ACTION. All corporate action necessary for the valid execution, delivery and performance by the Credit Parties of the Loan Documents shall have been duly and effectively taken, and satisfactory evidence thereof shall have been provided to the Agent. (b) LOAN DOCUMENTS, ETC. Each of the Loan Documents shall have been duly and properly authorized, executed and delivered by the respective parties thereto and shall be in full force and effect in a form satisfactory to the Agent. (c) SENIOR SUBORDINATED NOTE DOCUMENTS. Certified copies of the Senior Subordinated Note Documents as amended and in effect on the Closing Date shall have been delivered to the Agent. (d) TRANCHE B LOAN DOCUMENTS. Certified copies of the Tranche B Loan Documents as amended and in effect on the Closing Date shall have been delivered to the Agent. (e) ORGANIZATIONAL STRUCTURE. The corporate organizational structure, capitalization and ownership of the Credit Parties, shall be as set forth on SCHEDULES 5.12 and 5.13 annexed hereto. The Agent shall have had the opportunity to review, and shall be satisfied with, the Credit Parties' state and federal tax assumptions, and the ownership, capital, organization and structure of the Credit Parties. (f) OFFICER'S CERTIFICATE; GOOD STANDING CERTIFICATES. The Agent shall have received from each Credit Party a certificate as to the good standing of each from the Secretary of State or other appropriate official of the jurisdiction of its organization, dated no earlier than November 1, 2002. The Agent shall also have received from each Credit Party a certificate of an authorized officer certifying the following attachments thereto: (a) a copy of its certificate or articles of incorporation, partnership agreement or constitutive documents, in each case as amended to date, certified by the Secretary of State or other appropriate official of the jurisdiction of its organization, (b) a true and correct copy of its by-laws, including all amendments thereto, as applicable (c) a true and correct copy of the resolutions of its board of directors authorizing the transactions contemplated under this Agreement and under the other Loan Documents. Such Officer's Certificate shall also give the name and bear a specimen signature of each individual who shall be authorized (i) to sign the Loan Documents, to which such Credit Party is a party on behalf of such Credit Party; (ii) to make an Advance Request and a request for a Letter of Credit, as applicable; and (iii) to give notices and to take other action on such Credit Party's behalf under the Loan Documents to which such Credit Party is a party. (g) EXISTENCE AND GOOD STANDING. The Agent shall have received such documents and certificates as the Agent or Special Counsel may reasonably request relating to the organization, existence and good standing of each Credit Party, the authorization of the transactions contemplated hereby and any other legal matters relating to the Credit Parties, this Agreement or the other Loan Documents, all in form and substance reasonably satisfactory to the Agent and Special Counsel. (h) SECURITY INTERESTS IN PERSONAL AND REAL PROPERTY. The Agent shall have received evidence satisfactory to it that the Credit Parties shall have taken or caused to be taken all such actions, executed and delivered or caused to be executed and delivered all such agreements, documents and instruments and made or caused to be made all such filings and recordings (other than filings or recordings to be made by the Agent on or after the Closing Date) that may be necessary or, in the opinion of the Agent, desirable in order to create in favor of the Agent, for the benefit of the Lenders, valid and (upon such filing and recording) perfected First Priority security interests in the entire personal and real property Collateral and the Canadian Collateral. (i) LEASES; LANDLORD'S WAIVERS AND CONSENTS. In the case of each Material Leasehold Property existing as of the Closing Date, copies of the lease, and all amendments thereto, between the applicable Credit Party and the landlord or tenant party thereto, together with a Landlord's Waiver and Consent with respect thereto and where required by the terms of any lease, the consent of the mortgagee, ground lessor or other party. (j) ENVIRONMENTAL REPORTS. The Agent shall have received reports and other information, in form, scope and substance satisfactory to the Agent, regarding environmental matters relating to such Real Property Assets as the Agent shall require, which reports shall include Phase I and/or Phase II environmental assessments as specified by the Agent for each such Real Property Asset, which conform to the ASTM Standard Practice for Environmental Site Assessments, and the Agent shall be satisfied with the results of such reports and other information. Such reports shall be conducted by one or more environmental consulting firms reasonably satisfactory to the Agent. The Credit Parties shall deliver a similar satisfactory environmental assessment prior to the acquisition of any future Real Property Asset. (k) EVIDENCE OF INSURANCE. The Agent shall have received certificates from the Credit Parties' insurance brokers that all insurance required to be maintained pursuant to Section 7.5 is in full force and effect and that the Agent on behalf of the Lenders has been named as additional insured or loss payee thereunder to the extent required under Section 7.5. (l) NECESSARY GOVERNMENTAL PERMITS, LICENSES AND AUTHORIZATIONS AND CONSENTS; ETC. The Credit Parties shall have obtained all other permits, licenses, authorizations and consents from all other Governmental Authorities and all consents of other Persons with respect to Material Indebtedness, Liens and material agreements listed on SCHEDULE 5.14 (and so identified thereon) annexed hereto, in each case that are necessary or advisable in connection with the transactions contemplated by the Loan Documents, and each of the foregoing shall be in full force and effect, in each case other than those the failure to obtain or maintain which, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. No action, request for stay, petition for review or rehearing, reconsideration or appeal with respect to any of the foregoing shall be pending, and the time for any applicable Governmental Authority to take action to set aside its consent on its own motion shall have expired. (m) TRANCHE B FINANCING. On or prior to the Closing Date, the Agent shall have received evidence that the Tranche B Financing shall have been consummated and that the Borrower has received net cash proceeds from the Tranche B Financing in an aggregate amount of not less than $65,000,000 and that the Borrower has deposited such net cash proceeds into an account of the Borrower maintained with the Cash Management Bank. (n) EXISTING INDEBTEDNESS; LIENS. The Agent shall have received evidence that all principal, interest, and other amounts owing in respect of all Existing Indebtedness of the Credit Parties (other than Indebtedness permitted to remain outstanding in accordance with Section 8.1 hereof) will be repaid in full as of the Closing Date, and that with respect to all Indebtedness permitted to remain outstanding in accordance with Section 8.1 hereof, any defaults or events of default existing as of the Closing Date with respect to such Indebtedness will be cured or waived immediately following the funding of the initial Loans. The Agent shall have received evidence that as of the Closing Date, the Property of the Credit Parties is not subject to any Liens (other than Liens permitted to remain outstanding in accordance with Section 8.2 hereof). (o) FINANCIAL STATEMENTS; PROJECTIONS. The Agent shall have received the certified financial statements and projections referred to in Section 5.4 hereof and the same shall not be inconsistent with the information previously provided to the Agent. (p) FINANCIAL OFFICER CERTIFICATE. The Agent shall have received a certificate, dated the Closing Date and signed by a Designated Financial Officer, confirming compliance with the conditions set forth in paragraphs (a) and (b) of Section 6.2 on the Closing Date. (q) NO MATERIAL ADVERSE CHANGE. There shall have occurred no material adverse change (in the reasonable opinion of the Agent) in the businesses, operations, properties (including tangible properties), or conditions (financial or otherwise), assets, liabilities or income of the Credit Parties, taken as a whole, since September 30, 2002. (r) OPINION OF COUNSEL TO CREDIT PARTIES. The Agent shall have received favorable written opinions (addressed to the Agent and dated the Closing Date) of (i) Opinion of Phillips, Lytle, Hitchcock, Blaine & Huber LLP, special counsel to the Credit Parties, covering such matters relating to the Credit Parties, this Agreement, the other Loan Documents or the transactions contemplated hereby as the Agent shall reasonably request; (ii) Opinion of Hodgson Russ LLP, bond counsel to the Credit Parties regarding the Senior Indenture Notes; (iii) Opinion of Blake, Cassels & Graydon LLP, Canadian local counsel to the Canadian Borrowers; (iv) Opinion of Shook, Hardy & Bacon L.L.P., Missouri local counsel to Audubon West, Inc. and LICO Steel, Inc.; (v) Opinion of Brune & Neff, Oklahoma local counsel to Crane Equipment & Service, Inc.; (vi) Opinion of Linklaters Loesch, Luxembourg local counsel to Audubon Europe; (vii) Opinion of Theodore Hadzi-Antich, environmental counsel to the Credit Parties; and (viii) Opinion of Timothy R. Harvey, Manager - Legal Affairs of the Borrower. (s) BORROWING BASE AND COLLATERAL UPDATE CERTIFICATES. A Designated Financial Officer shall have executed and delivered to the Agent a Collateral Update Certificate substantially in the form of EXHIBIT B-2 annexed hereto, which Collateral Update Certificate shall show Domestic Excess Availability under the Revolving Credit Commitments of not less than $15,000,000 (after giving effect to the payment of all sums and expenses, the issuance of all Letters of Credit and the funding of all Loans to be paid, issued or funded on the Closing Date). (t) LOCKBOX ACCOUNTS/CONTROLLED ACCOUNTS. The Credit Parties shall have established such Lockbox Accounts and Controlled Accounts with the Cash Management Bank and such other financial institutions as may be approved by the Agent as required in accordance with Section 4.3 hereof, and shall have entered into all Lockbox Agreements, Control Agreements and/or blocked account agreements as shall be required by the Agent. (u) COMMERCIAL FINANCE EXAMINATION. The Agent shall have received and be satisfied with the results of a commercial finance examination of the accounts receivable and inventory of the Credit Parties. (v) INVENTORY APPRAISAL. The Agent shall have received and be satisfied with the results of an appraisal of the inventory of the Credit Parties. (w) APPRAISAL. The Agent shall have received MAI Appraisal dated as of a recent date for each of the Eligible Fixed Assets and Real Property Assets in form and substance satisfactory to the Agent. (x) SOLVENCY CERTIFICATE. The Agent shall have received an officer's certificate of the Borrower dated as of the Closing Date as to the solvency of the Borrower and its Subsidiaries following the consummation of the transactions contemplated herein and in form and substance satisfactory to the Agent. (y) TITLE INSURANCE. The Agent shall have received a Title Policy covering each Mortgaged Property (or commitments to issue such policies, with all conditions to issuance of the Title Policy deleted by an authorized agent of the Title Insurance Company) together with proof of payment of all fees and premiums for such policies, from the Title Insurance Company and in amounts satisfactory to the Agent, insuring the interest of the Agent and each of the Lenders as mortgagee under the Mortgages. (z) FEES AND EXPENSES. The Agent and the Issuing Lender shall have received all fees and other amounts due and payable to such Person and Special Counsel at or prior to the Closing Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder. (aa) OTHER DOCUMENTS. The Agent shall have received all material contracts, instruments, opinions, certificates, assurances and other documents as the Agent or any Lender or Special Counsel shall have reasonably requested and the same shall be reasonably satisfactory to each of them. 6.2. EACH EXTENSION OF CREDIT. The obligation of each Lender and the Canadian Lender to make a Loan on the occasion of any Borrowing, and of the Issuing Lender to issue, amend, renew or extend any Letter of Credit, is subject to the satisfaction of the following conditions: (a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of each Credit Party set forth in this Agreement and the other Loan Documents shall be true and correct in all material respects on and as of the date of such Borrowing, or (as applicable) the date of issuance, amendment, renewal or extension of such Letter of Credit, both before and after giving effect thereto and to the use of the proceeds thereof (or, if any such representation or warranty is expressly stated to have been made as of a specific date, such representation or warranty shall be or have been true and correct as of such specific date and PROVIDED that, to the extent any change in circumstances expressly permitted by this Agreement causes any representation and warranty set forth herein to no longer be true, such representation and warranty shall be deemed modified to reflect such change in circumstances). (b) PROCEEDINGS AND DOCUMENTS. All proceedings in connection with the transactions contemplated by this Agreement, the other Loan Documents and all other documents incident thereto shall be satisfactory in substance and in form to the Lenders and to the Agent and the Agent's Special Counsel, and the Lenders, the Agent and such counsel shall have received all information and such counterpart originals or certified or other copies of such documents as the Agent may reasonably request. (c) NO DEFAULTS. At the time of, and immediately after giving effect to, such Borrowing, or (as applicable) the date of issuance, amendment, renewal or extension of such Letter of Credit, no Default shall have occurred and be continuing. ARTICLE 7. AFFIRMATIVE COVENANTS Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed, each Credit Party covenants and agrees with the Agent and the Lenders that: 7.1. FINANCIAL STATEMENTS AND OTHER INFORMATION. The Credit Parties will furnish to the Agent and each Lender: (a) as soon as available and in any event within 90 days after the end of each fiscal year of the Borrower and its Subsidiaries: (i) consolidated and consolidating statements of operations and cash flows of the Borrower and its Subsidiaries for such fiscal year and the related consolidated and consolidating balance sheets of the Borrower and its Subsidiaries as at the end of such fiscal year, setting forth in each case in comparative form the corresponding consolidated and consolidating figures for the preceding fiscal year, and consolidated statements of shareholders' equity for such fiscal year, and (ii) an opinion of independent certified public accountants of recognized national standing (without a "going concern" or like qualification or exception and without any qualification or exception as to the scope of such audit) stating that the consolidated financial statements referred to in the preceding clause (i) fairly present in all material respects the consolidated financial condition and results of operations of the Borrower and its Subsidiaries as at the end of, and for, such fiscal year in accordance with GAAP. (b) as soon as available and in any event within 45 days after the end of each fiscal quarter of the Borrower and its Subsidiaries: (i) consolidated and consolidating statements of operations and the consolidated statements of cash flows of the Borrower and its Subsidiaries for such fiscal quarter and for the period from the beginning of the respective fiscal year to the end of such fiscal quarter, and the related consolidated and consolidating balance sheets of the Borrower and its Subsidiaries as at the end of such period, setting forth in each case in comparative form the corresponding consolidated and consolidating figures for the corresponding period in the preceding fiscal year, and the corresponding figures for the budgets (except with respect to consolidating balance sheets) most recently delivered to the Agent for such period, and (ii) a certificate of a Designated Financial Officer, which certificate shall state that said consolidated and consolidating financial statements referred to in the preceding clause (i) fairly present in all material respects the consolidated financial condition and results of operations of the Borrower and its Subsidiaries, consistently applied, as at the end of, and for, such period (subject to normal year-end audit adjustments and the omission of footnotes) in accordance with GAAP; (c) as soon as available and in any event within 30 days after the end of each of the first 11 months in each fiscal year of the Borrower and its Subsidiaries: (i) consolidated statements of operations and cash flows of the Borrower and its Subsidiaries for such month and for the period from the beginning of the respective fiscal year to the end of such month, and the related consolidated balance sheets of the Borrower and its Subsidiaries as at the end of such period, setting forth in each case in comparative form the corresponding consolidated figures for the corresponding period in the preceding fiscal year, and the corresponding figures for the budgets most recently delivered to the Agent for such period, and (ii) a certificate of a Designated Financial Officer, which certificate shall state that said consolidated financial statements referred to in the preceding clause (i) fairly present in all material respects the consolidated financial condition and results of operations of the Borrower and its Subsidiaries, consistently applied, as at the end of, and for, such period (subject to normal year-end audit adjustments and the omission of footnotes) in accordance with GAAP; (d) as soon as available and in any event within 30 days after the beginning of each fiscal year of the Borrower and its Subsidiaries, statements of budgeted consolidated and consolidating income and the consolidated statements of cash flows for the Borrower and its Subsidiaries for each fiscal month in such period and a budgeted consolidated balance sheet of the Borrower and its Subsidiaries as of the last day of each fiscal month in such period, and the projected Domestic Excess Availability as of the last day of each fiscal month in such period, together with supporting assumptions which shall be reasonable when made, all prepared in good faith in reasonable detail and consistent with the Borrower's past practices in preparing budgets and otherwise reasonably satisfactory in scope to the Agent; (e) as soon as available and in any event (i) within 90 days after the end of each fiscal year, a Compliance Certificate duly executed by a Designated Financial Officer with respect to the annual financial statements delivered pursuant to subsection (a)(i) above, (ii) within 45 days after the end of each fiscal quarter of the Borrower and its Subsidiaries, a Compliance Certificate duly executed by a Designated Financial Officer with respect to the quarterly financial statements delivered pursuant to subsection 7.1(b)(i) above, and (iii) within 30 days after the end of each fiscal month of the Borrower and its Subsidiaries, a Compliance Certificate duly executed by a Designated Financial Officer with respect to the monthly financial statements delivered pursuant to subsection 7.1(c)(i) above; (f) as soon as available and in any event no later than 1:00 p.m. (Boston time) on Wednesday of each week (or, if such day is not a Business Day, on the preceding Business Day)(or with such greater frequency as the Agent may reasonably request), a Borrowing Base Certificate in the form attached hereto as EXHIBIT B-1, with respect to the Collateral of the Borrower as of the close of business on the previous Friday (or, if such day is not a Business Day, on the preceding Business Day) (provided that inventory and the total ineligible accounts may be calculated as of the close of business on the last Business Day of the previous month), together with such other information relating to the Collateral as the Agent shall reasonably request, and accompanied by such supporting detail and documentation as the Agent shall reasonably request; (g) as soon as available and in any event within thirty (30) days after the end of each month with respect to such month (or more frequently if requested by the Agent), (i) a Borrowing Base Certificate in the form attached hereto as EXHIBIT B-1 (ii) a Collateral Update Certificate in the form attached hereto as EXHIBIT B-2, (iii) an Accounts Receivable/Loan Reconciliation Report in the form attached hereto as EXHIBIT B-3, (iv) a summary of inventory by type and location, (v) an accounts receivable aging report (which report shall contain amounts denominated in U.S. Dollars), and (vi) such other information relating to the Collateral as the Agent shall reasonably request, in each case, accompanied by such supporting detail and documentation as the Agent shall reasonably request; (h) as soon as available and in any event no later than 1:00 p.m. (Boston time) on each day that the Borrower makes any request for any Borrowing hereunder, an Advance Request in the form attached hereto as EXHIBIT B-4; (i) as soon as available and in any event no later than 45 days after the last Business Day of each calendar quarter, a Term Loan Borrowing Base Certificate in the form attached hereto as EXHIBIT B-5, together with an updated list of Eligible Fixed Assets and such other information relating to the Term Loan Borrowing Base Collateral as the Agent shall reasonably request, and accompanied by such supporting detail and documentation as the Agent shall reasonably request; (j) as soon as available and in any event within ten (10) days after the end of each month (or more frequently if requested by the Agent), a rolling thirteen (13) week cash flow projection, of the Borrower and its Subsidiaries in a form and in such details as is reasonably satisfactory to the Agent, updating the prior cash flow projection and, for prior periods ending up to one week prior to the date of the report, showing actual performance and any variances of actual performance from projected performance; (k) promptly upon receipt thereof, copies of all management letters and accountants' letters received by the Credit Parties; (l) promptly after submission to any Governmental Authority, all documents and information furnished to such Governmental Authority in connection with any investigation of any Credit Party other than routine inquiries by such Governmental Authority; (m) as soon as possible and in any event within five (5) days after execution, receipt or delivery thereof, copies of any material notices that any Credit Party executes or receives in connection with any Material Indebtedness (including, without limitation, the Senior Subordinated Notes and the Tranche B Loans); (n) as soon as possible and in any event within five (5) days after execution, receipt or delivery thereof, copies of any material notices that any Credit Party executes or receives in connection with the sale or other Disposition of the Capital Stock of, or all or substantially all of the assets of, any Credit Party; (o) promptly after the sending or filing thereof, copies of all statements, reports and other information any Credit Party sends to any holders of its Indebtedness or its securities or files with the SEC or any national (domestic or foreign) securities exchange; and (p) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Credit Parties, or compliance with the terms of this Agreement, as the Agent or any Lender may reasonably request. 7.2. NOTICES OF MATERIAL EVENTS. The Credit Parties will furnish to the Agent and each Lender prompt written notice of the following: (a) the occurrence of any Default hereunder or under the Tranche B Financing Agreement or Tranche B Canadian Agreement; (b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting any Credit Party or Affiliate (i) with respect to any claim in excess of $100,000 or (ii) that, if adversely determined, could reasonably be expected to have a Material Adverse Effect; (c) the occurrence of any ERISA Event related to the Plan of any Credit Party or knowledge after due inquiry of any ERISA Event related to a Plan of any other ERISA Affiliate that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in liability of the Credit Parties in an aggregate amount exceeding $100,000; and (d) any other development that has, or could reasonably be expected to have, a Material Adverse Effect. Each notice delivered under this Section 7.2 shall be accompanied by a statement of a Designated Financial Officer setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto. 7.3. EXISTENCE; CONDUCT OF BUSINESS. The Borrower and each of its Subsidiaries shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business; PROVIDED that the foregoing shall not prohibit any merger, consolidation, liquidation, dissolution or any discontinuance or sale of such business permitted under Section 8.4. 7.4. PAYMENT OF OBLIGATIONS. The Borrower and each of its Subsidiaries shall pay its obligations, including Tax liabilities, in an amount in excess of $100,000 before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, so long as such contest operates to suspend the enforcement of compliance therewith, the collection thereof and/or the imposition of any penalty, fine or Lien with respect thereto and (b) such Person has set aside on its books adequate reserves with respect thereto in accordance with GAAP, which reserves shall be acceptable to Agent. 7.5. MAINTENANCE OF PROPERTIES; INSURANCE. The Borrower and each of its Subsidiaries shall (a) keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and (b) maintain insurance, with financially sound and reputable insurance companies, as may be required by law and such other insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations, including, without limitation, business interruption and product liability insurance. Such insurance shall be in such minimum amounts that such Person will not be deemed a co-insurer under applicable insurance laws, regulations and policies and otherwise shall be in such amounts, contain such terms, be in such forms and be for such periods as may be reasonably satisfactory to the Agent. Without limiting the generality of the foregoing, the Borrower and each of its Subsidiaries will maintain or cause to be maintained replacement value casualty insurance on the Collateral under such policies of insurance, in each case with such insurance companies, in such amounts, with such deductibles, and covering such terms and risks as are at all times satisfactory to the Agent in its commercially reasonable judgment. All general liability and other liability policies with respect to the Credit Parties shall name the Agent for the benefit of the Lenders as an additional insured thereunder as its interests may appear, and all business interruption and casualty insurance policy shall contain a loss payable clause or endorsement, satisfactory in form and substance to the Agent, that names the Agent for the benefit of the Lenders as the loss payee thereunder. All policies of insurance shall provide for at least 30 days prior written notice to the Agent of any modifications or cancellation of such policy. 7.6. BOOKS AND RECORDS; INSPECTION RIGHTS. The Borrower and each of its Subsidiaries shall keep proper books of record and account in which entries are made of all dealings and transactions in relation to its business and activities which fairly record such transactions and activities. The Borrower and each of its Subsidiaries shall permit any representatives designated by the Agent or any Lender to visit and inspect its properties, to examine and make extracts from its books and records, to conduct audits, physical counts, valuations, appraisals or examinations and verifications (whether by internal commercial finance examiners or independent auditors) of all Collateral and the Borrower and each of its Subsidiaries, and to discuss its affairs, finances and condition with its officers and independent accountants at any reasonable times and as frequently as the Agent deems appropriate; PROVIDED that, so long as no Default has occurred and is continuing, all such visits shall be on reasonable prior notice, at reasonable times during regular business hours; and PROVIDED further that after the occurrence and during the continuance of any Default, the Agent and the Lenders may visit at any reasonable times. The Borrower shall reimburse the Agent and the Lenders for all examination and inspections costs, internal costs at the Agent's customary rates in effect from time to time, plus all out-of-pocket expenses incurred in connection with such audits, physical counts, valuations, appraisals or examinations. Each of the Credit Parties authorizes the Agent and, if accompanied by the Agent, the Lenders to communicate directly with such Credit Party's independent certified public accountants and authorizes such accountants to disclose to the Agent and the Lenders any and all financial statements and other supporting financial documents and schedules including copies of any management letters with respect to the business, financial condition and other affairs of the Borrower or any of its Subsidiaries. At the request of the Agent, each Credit Party shall deliver a letter addressed to such accountants instructing them to comply with the provisions of this Section 7.6. The Credit Parties, in consultation with the Agent, will arrange for a meeting to be held at least once every year (and after the occurrence and during the continuance of a Default, more frequently, if requested by the Agent or the Required Lenders) with the Lenders and the Agent hereunder at which the business and operations of the Credit Parties are discussed. The Credit Parties will permit independent appraisers and environmental consultants selected by the Agent to visit the properties of the Credit Parties and perform appraisals and examinations of the machinery, equipment and Real Property Assets of the Credit Parties at such times and with such frequencies as the Agent shall reasonably request; PROVIDED that, so long as no Default has occurred and is continuing, the Agent shall not request that the equipment or Real Property Assets of the Credit Parties be appraised or examined by independent appraisers or environmental consultants more frequently than once every year commencing on the first anniversary of the Closing Date. The Borrower shall reimburse the Agent and the Lenders for all fees, costs and expenses charged by such independent appraisers and environmental consultants for each such appraisal and examination. 7.7. FISCAL YEAR. To enable the ready and consistent determination of compliance with the covenants set forth in Section 8.10 hereof, the Borrower and each of its Subsidiaries shall maintain their current fiscal year and current method of determining the last day of the first three fiscal quarters in each fiscal year. 7.8. COMPLIANCE WITH LAWS. The Borrower and each of its Subsidiaries shall comply in all material respects with (i) all permits, licenses and authorizations, including, without limitation, environmental permits, licenses and authorizations, issued by a Governmental Authority, (ii) all laws, rules, regulations and orders including, without limitation, Environmental Laws, of any Governmental Authority and (iii) all contractual obligations, in each case applicable to it or its property. 7.9. USE OF PROCEEDS. The proceeds of the Loans will be used only for (i) the refinancing of Existing Indebtedness, (ii) fees and expenses incurred in connection with the transactions contemplated by this Agreement, the Tranche B Financing Agreements and (iii) for general corporate and working capital purposes of the Credit Parties. No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations T, U and X. 7.10. CERTAIN OBLIGATIONS RESPECTING SUBSIDIARIES. Each Credit Party will, and will cause each of its Subsidiaries to, take such action from time to time as shall be necessary to ensure that the percentage of the issued and outstanding shares of Capital Stock of any class or character owned by it in any of its Subsidiaries on the Closing Date is not at any time decreased, other than by reason of transfers to another Credit Party. 7.11. ERISA. The Credit Parties (a) will maintain, and cause each ERISA Affiliate to maintain, each Plan in material compliance with the provisions of such Plan and all applicable requirements of ERISA and of the Code and with all applicable rulings and regulations issued under the provisions of ERISA and of the Code and (b) will not and, to the extent authorized, will not permit any of the ERISA Affiliates to (i) engage in any transaction with respect to any Plan which would subject any Credit Party to either a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code, (ii) fail to make full payment when due of all amounts which, under the provisions of any Plan, any Credit Party or any ERISA Affiliate is required to pay as contributions thereto, or permit to exist any accumulated funding deficiency (as such term is defined in Section 302 of ERISA and Section 412 of the Code), whether or not waived, with respect to any Pension Plan or (iii) fail to make any payments to any Multiemployer Plan that any Credit Party or any of the ERISA Affiliates may be required to make under any agreement relating to such Multiemployer Plan or any law pertaining thereto. 7.12. ENVIRONMENTAL MATTERS; REPORTING AND ASSESSMENTS. (a) The Credit Parties will observe and comply in all material respects with, and cause each of their Subsidiaries to observe and comply in all material respects with, all Environmental Laws and all permits and authorizations issued by any Governmental Authority under Environmental Law (collectively, "ENVIRONMENTAL PERMITS"). The Credit Parties will give the Agent prompt written notice of (a) any presence, Release or threat of Release of any Hazardous Materials at or from any Real Property Asset, (b) any actual or alleged violation as to any Environmental Law or Environmental Permit by any Credit Party, (c) the commencement of any Environmental Action or Remedial Action or other communication to it or of which it has knowledge, or with the exercise of due diligence, should have had knowledge regarding the presence or suspected presence of any Hazardous Material at, on about, under, within or in connection with any Real Property Asset or any migration thereof from or to such Real Property Asset, (d) the discovery of any occurrence or condition on any real property adjoining or in the vicinity of any Real Property Asset that could cause such Real Property Asset or any part thereof to be subject to any restrictions on ownership, occupancy, transferability, or use, or subject the owner or any Person having any interest in such Real Property Asset to any liability, penalty, or disability under any Environmental Law, and (e) the receipt of any notice or discovery of any information regarding any actual, alleged, or potential Release, disposal or any other presence or existence of any Hazardous Material at, on, about, under, within, near or in connection with any Real Property Asset; in each case, which (x) would have a material adverse effect on any Environmental Permits held by any Credit Party, (y) will, or is likely to, have a Material Adverse Effect, or (z) will require a material expenditure by such Credit Party to cure such alleged problem or violation. (b) The Agent may, from time to time, in its reasonable discretion, obtain one or more environmental assessments or audits of any Real Property Asset prepared by a hydrogeologist, an independent engineer or other qualified consultant or expert approved by the Agent to evaluate or confirm (a) whether any Hazardous Materials are present in the soil, sediment, air or water at such Real Property Asset and (b) whether the use and operation of such Real Property Asset complies with all Environmental Laws; PROVIDED that, so long as no Default has occurred and is continuing, the Agent shall not request any such environmental assessments or audits of any Real Property Asset more frequently than once every other year. Environmental assessments may include, without limitation, detailed visual inspections of such Real Property Asset, including any and all storage areas, storage tanks, drains, dry wells and leaching areas, and the taking of soil samples, surface water samples and ground water samples, as well as such other investigations or analyses as the Agent deems appropriate. Subject to Section 7.6 all such environmental assessments shall be conducted and made at the sole expense of the Borrower. 7.13. MATTERS RELATING TO ADDITIONAL REAL PROPERTY COLLATERAL. (a) In the event that any Credit Party acquires any Material Owned Property after the Closing Date that the Agent determines is an Additional Mortgaged Property or in the event that the Agent determines that any Real Property Asset existing on the Closing Date has become an Additional Mortgaged Property after the Closing Date, the Borrower shall deliver to the Agent, as soon as practicable after the Agent has notified the Borrower that such Real Property Asset is an Additional Mortgaged Property, fully executed and notarized Mortgages ("ADDITIONAL MORTGAGES"), in proper form for recording in all appropriate places in all applicable jurisdictions, encumbering the interest of the applicable Credit Party in such Additional Mortgaged Property, together with mortgagee title insurance policies or commitments therefor, and copies of all surveys, deeds, title exception documents, flood hazard certificates and other documents as the Agent may reasonably require, together with copies of all deeds with respect to such Additional Mortgaged Property. (b) In the event that any Credit Party enters into any lease with respect to any Material Leasehold Property after the Closing Date, the Borrower shall deliver to the Agent copies of the lease, and all amendments thereto, between the Credit Party and the landlord or tenant, together with a Landlord's Waiver and Consent with respect thereto and where required by the terms of any such lease, the consent of the mortgagee, ground lessor or other party. (c) If requested by the Agent, the Credit Parties shall permit an independent real estate appraiser satisfactory to the Agent, upon reasonable notice, to visit and inspect any Additional Mortgaged Property for the purpose of preparing an appraisal of such Additional Mortgaged Property satisfying the requirements of all applicable laws and regulations (in each case to the extent required under such laws and regulations as determined by the Agent in its sole discretion). 7.14. CASH DEPOSITS/BANK ACCOUNTS. The Credit Parties shall take all actions necessary to maintain, preserve and protect the rights and interests of the Agent with respect to all cash deposits of the Credit Parties and all other proceeds of Collateral and shall not, without the Agent's prior written consent, open any deposit or other bank account, or instruct any account debtor to make payment to any account other than to an established dominion account, Lockbox Account or other Controlled Account under the Agent's control; PROVIDED that so long as no Default or Event of Default shall have occurred and be continuing, the Credit Parties shall be permitted to maintain (i) payroll accounts and other accounts not subject to the Agent's control so long as the aggregate amount of funds on deposit in all such payroll accounts does not materially exceed estimated payroll for the next payroll period, and (ii) local bank accounts not subject to the Agent's control so long as (x) the aggregate amount of funds on deposit in all such local bank accounts does not exceed $500,000, and (y) the aggregate amount of funds on deposit in any such local bank account does not exceed $50,000. 7.15. NEW GUARANTORS. The Credit Parties will cause each Domestic Subsidiary created, acquired or otherwise existing on or after the Closing Date to immediately become a Guarantor and a Credit Party hereunder and shall execute and deliver, and cause such Domestic Subsidiary to execute and deliver, to the Agent, for the benefit of the Agent and the Lenders, all such Loan Documents and other documents, and take all such actions, and cause such Domestic Subsidiary to take all such actions, as may be required by the Agent in connection therewith. 7.16. PUNCTUAL PAYMENT. The Credit Parties will duly and punctually pay or cause to be paid the principal and interest on the Loans, all Reimbursement Obligations, all used fees, all letter of credit fees incurred hereunder, and all other amounts provided for in this Agreement and the other Loan Documents to which the Borrower or any of its Subsidiaries is a party, all in accordance with the terms of this Agreement and such other Loan Documents. 7.17. FURTHER ASSURANCES. The Credit Parties will, and will cause each of their Subsidiaries to, take such action and execute, acknowledge and deliver, at their sole cost and expense, such agreements, instruments or other documents as the Agent may require from time to time in order (a) to carry out more effectively the purposes of this Agreement and the other Loan Documents, (b) to subject to valid and perfected Liens any of the Collateral or any other property of any Credit Party and its Subsidiaries, (c) to establish and maintain the validity and effectiveness of any of the Loan Documents and the validity, perfection and First Priority of the Liens intended to be created thereby, and (d) to better assure, convey, grant, assign, transfer and confirm unto the Agent and each Lender the rights now or hereafter intended to be granted to it under this Agreement or any other Loan Document. 7.18. POST-CLOSING COVENANTS. (a) The Credit Parties will, within 20 days of the Closing Date, deliver to the Agent a pledge and security agreement, in form and substance satisfactory to the Agent, duly executed by certain of the Credit Parties, with respect to the pledge of the common stock of each of the following Subsidiaries of such Credit Parties: (i) Societe d'Exploitation des Raccords Gautier; (ii) Univeyor Electronic A/S; (iii) Columbus McKinnon de Mexico, S.A. de C.V.; and (iv) Yale Industrial Products GmbH. (b) The Credit Parties will, within 20 days of the Closing Date, deliver to the Agent an opinion from each of the following counsel to such Credit Parties, in form and substance satisfactory to the Agent, as to such matters as the Agent may reasonably request: (i) Stephen d'Errico, French counsel to Societe d'Exploitation des Raccords Gautier; (ii) Advokatfirmaet Borge Nielsen, Danish counsel to Univeyor Electronic A/S; (iii) Enrique Lumen, Mexican counsel to Columbus McKinnon De Mexico, S.A. de C.V.; and (iv) Donahue & Partners LLP, German counsel to Yale Industrial Products GmbH. (c) The Credit Parties will, within 90 days of the Closing Date, take such actions as may be necessary to cause the Agent's lien on each titled motor vehicle (the fair market value of which is greater than $5,000) of such Credit Parties to be noted on all certificates of title with respect to such vehicle, including without limitation filing applications for new certificates of title with respect thereto. (d) The Credit Parties will, and will cause each of their Subsidiaries, within 14 days of the Closing Date, to consummate each of the transactions contemplated in Schedule 8.4(c) with respect to each of Spreckels Land Company, Inc., Spreckels Development Company, Inc., Spreckels Water Company, Inc. and Spreckels Consolidated Industries, Inc. ARTICLE 8. NEGATIVE COVENANTS Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed, each Credit Party covenants and agrees with the Agent and the Lenders that: 8.1. INDEBTEDNESS. The Credit Parties will not, and will not permit any of their Subsidiaries to, create, incur, assume or permit to exist any Indebtedness, except: (a) Indebtedness created hereunder and under the Canadian Facility; (b) Existing Indebtedness on the Closing Date which is set forth in SCHEDULE 8.1 and has been designated on such schedule as Indebtedness that will remain outstanding following the funding of the initial Loans, and any extension, renewal, refunding or replacement of any such Indebtedness; PROVIDED, however, that (i) such extension, renewal, refunding or replacement is pursuant to terms that are not less favorable to the Credit Parties and the Lenders than the terms of the Indebtedness being extended, renewed, refunded or replaced and (ii) after giving effect to such extension, renewal, refunding or replacement, the amount of such Indebtedness is not greater than the amount of Indebtedness outstanding immediately prior to such extension, renewal, refunding or replacement; (c) Intercompany loans among the Borrower and Credit Parties which are Guarantors; PROVIDED, that (i) the Investment corresponding to such Indebtedness is permitted pursuant Section 8.5 hereof, (ii) such intercompany loan is evidenced by a promissory note, (iii) such promissory note is pledged to the Agent pursuant to the terms hereunder, and (iv) there are no restrictions whatsoever on the ability of the applicable Credit Party to repay such loan; (d) Guarantees permitted under section 8.3; (e) Indebtedness of any Foreign Subsidiary of the Borrower (other than the Canadian Borrowers) in an aggregate amount for all such Indebtedness not to exceed the local currency equivalent (as determined by the Agent from time by reference to the Exchange Rate) of $20,000,000 in the aggregate at any one time outstanding; PROVIDED that (i) the proceeds of such Indebtedness are transferred to the Borrower and applied to the repayment of the Revolving Loans, (ii) such Indebtedness is incurred solely by such Foreign Subsidiary, (iii) such Indebtedness is either unsecured or secured only by the assets of such Foreign Subsidiary, and (iv) no guaranty or other credit support of any kind is provided by any Person (including, without limitation, any Credit Party) of or for such Indebtedness or any holder thereof; and PROVIDED, further, that the Borrower shall notify the Agent in writing in advance prior to permitting any such Foreign Subsidiary to incur any Indebtedness under this Section 8.1(e); and (f) Indebtedness of any Credit Party to the Tranche B Lenders in an aggregate principal amount not to exceed $70,000,000 under the Tranche B Financing Agreements as in effect as of the Closing Date. 8.2. LIENS. The Credit Parties will not, and will not permit any of their Subsidiaries to, create, incur, assume or permit to exist any Lien on any Property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except (the following being called "PERMITTED LIENS"): (a) Liens created hereunder and under the other Loan Documents; (b) any Lien on any property or asset of any Credit Party existing on the Closing Date and set forth in SCHEDULE 8.2 (excluding, however, following the making of the initial Loans hereunder, the Liens in favor of any Person other than the Agent securing Indebtedness not designated on said schedule as Indebtedness to remain outstanding following the funding of the initial Loans), but not the extension of coverage thereof to other property or the extension of maturity, refinancing or other modification of the terms thereof or the increase of the Indebtedness secured thereby; (c) Liens imposed by any Governmental Authority for Taxes, assessments or charges in respect of obligations not yet delinquent or in the case of Taxes and assessments on Properties other than Mortgaged Properties not exceeding $250,000 in the aggregate more than 90 days overdue which are being contested in good faith and by appropriate proceedings, so long as such contest operates to suspend the enforcement of compliance with and/or collection thereof, and so long as adequate reserves with respect thereto are maintained on the books of the applicable Credit Party in accordance with GAAP and which reserves shall be acceptable to the Agent; (d) landlords', carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens on Properties other than Mortgaged Properties, and vendors' Liens imposed by statute or common law not securing the repayment of Indebtedness, arising in the ordinary course of business which are not overdue for a period of more than 60 days or which are being contested in good faith and by appropriate proceedings, promptly initiated and diligently conducted, and a reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made therefor, and so long as such contest operates to suspend the enforcement of compliance with and/or collection thereof, and Liens securing judgments (including, without limitation, pre-judgment attachments) the existence of which do not result in an Event of Default under Section 9.1(j) hereof; (e) pledges or deposits under worker's compensation, unemployment insurance and other social security legislation and pledges or deposits to secure the performance of bids, tenders, trade contracts (other than for borrowed money), leases (other than capital leases), utility purchase obligations, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (f) encumbrances on any Real Property Asset other than a Mortgaged Property consisting of easements, rights-of-way, zoning restrictions, easements, licenses, restrictions and other similar encumbrances incurred in the ordinary course of business, restrictions on the use of Property or minor imperfections in title thereto which, in the aggregate, are not material in amount, and which do not, in the aggregate, materially detract from the value of such Real Property Asset or materially interfere with the ordinary conduct of the business of any Credit Party; (g) Liens consisting of bankers' liens and rights of setoff, in each case, arising by operation of law, and Liens on documents presented in letter of credit drawings; (h) the replacement, extension or renewal of any Lien permitted by clauses (b) and (g) of this Section 8.2 upon or in the same property theretofore subject thereto in connection with the replacement, extension or renewal (without increase in the amount or any change in any direct or contingent obligor) of the Indebtedness secured thereby; and (i) Liens in favor of Tranche B Lenders which are junior in priority to the Liens in favor of the Agent under the Loan Documents. 8.3. CONTINGENT LIABILITIES. The Credit Parties will not, and will not permit any of their Subsidiaries to, Guarantee the Indebtedness or other obligations of any Person, or Guarantee the payment of dividends or other distributions upon the stock of, or the earnings of, any Person, except: (a) endorsements of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; (b) Guarantees and letters of credit in effect on the Closing Date which are disclosed in SCHEDULE 8.1, and any replacements thereof in amounts not exceeding such Guarantees; (c) obligations in respect of Letters of Credit; and (d) guarantees issued pursuant to the terms of this Agreement and the Tranche B Financing Agreements. 8.4. FUNDAMENTAL CHANGES; ASSET SALES. (a) The Credit Parties will not, and will not permit any of their Subsidiaries to, enter into any transaction of merger or consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), except that any Credit Party may, so long as no Default or Event of Default shall have occurred or be continuing or result therefrom, be merged or combined with or into any other Credit Party, PROVIDED that if such merger involves the Borrower or a Guarantor, (x) the Borrower or such Guarantor shall be the surviving entity and (y) no Change of Control shall result therefrom. The Credit Parties will not form any Subsidiary without the prior written consent of the Agent. The Credit Parties will not acquire any business or property from, or Capital Stock of, or other equity interests in, or be a party to any acquisition of, any Person except for purchases of property to be used in the ordinary course of business, Investments permitted under Section 8.5 and Capital Expenditures. (b) The Credit Parties will not, and will not permit any of their Subsidiaries to, convey, sell, lease, transfer or otherwise dispose (including any Disposition) of, in one transaction or a series of transactions, any part of their business or property, whether now owned or hereafter acquired (including, without limitation, receivables and leasehold interests), except: (i) obsolete property (including leasehold interests), tools or equipment no longer used or useful in their business, or worn out or in need of replacement and that are replaced with assets of reasonably equivalent value or utility or which are otherwise productive or useful in the conduct of such Credit Party's business; (ii) any inventory or other property sold or disposed of in the ordinary course of business and on ordinary business terms; (iii) sales of property from a Credit Party to another Credit Party permitted pursuant to Section 8.7; (iv) sales by the Borrower or any of its Subsidiaries of assets listed on SCHEDULE 8.4(B) hereto in the aggregate amount for all such sales not to exceed $5,000,000 so long as (A) no Default or Event of Default has occurred and is continuing or would result from the sale of any such asset, (B) each such sale is on arm's-length terms for fair and reasonable consideration, (C) not less than 85% of the proceeds from any such sale is in the form of cash, (D) the Net Cash Payments received from each such sale are not less than, with respect to each such asset, the amount corresponding to such asset set forth on such SCHEDULE 8.4(B) and (E) the Net Cash Payments of each such sale are applied in accordance with Section 2.8; and (v) sales by the Borrower or any of its Subsidiaries of any other assets so long as (A) no Default or Event of Default has occurred and is continuing or would result from the sale of such asset, (B) such sale is on arm's-length terms for fair and reasonable consideration, (C) not less than 85% of the proceeds from such sale is in the form of cash, (D) the Net Cash Payments are applied in accordance with Section 2.8, and (E) the aggregate fair market value of all such assets sold during any calendar year does not exceed $500,000. (c) Notwithstanding anything to the contrary contained in this Section 8.4, so long as no Default or Event of Default shall have occurred or be continuing or would result therefrom, the Credit Parties shall be permitted to consummate the transactions described on SCHEDULE 8.4(C). 8.5. INVESTMENTS; HEDGING AGREEMENTS. (a) The Credit Parties will not, and will not permit any of their Subsidiaries to, make or permit to remain outstanding any Investment, except: (i) Investments consisting of Guarantees permitted by Section 8.3; (ii) Investments by the Borrower and/or its Subsidiaries in the Borrower or any Guarantor; (iii) Investments of the Borrower and/or its Subsidiaries in any of the Borrower's Subsidiaries which are not Domestic Subsidiaries; PROVIDED that the aggregate amount of such Investments made after the Closing Date does not exceed $1,000,000; (iv) Investments existing on the Closing Date and described on SCHEDULE 8.5; (v) Permitted Investments; and (vi) Checking and deposit accounts with banks used in the ordinary course of business. (b) The Credit Parties will not, and will not permit any of their Subsidiaries to, enter into any Hedging Agreement, other than Hedging Agreements entered into in the ordinary course of business with the prior written consent of the Agent to hedge or mitigate risks to which the Credit Parties are exposed in the conduct of their business or the management of their liabilities. 8.6. RESTRICTED JUNIOR PAYMENTS. The Credit Parties will not, and will not permit any of their Subsidiaries, to declare or make any Restricted Junior Payment at any time, other than: (a) payments of dividends or management fees by a Subsidiary of the Borrower to the Borrower or another wholly-owned Subsidiary of the Borrower; (b) payments of dividends and distributions payable solely in common stock of such Person; (c) so long as no Default shall have occurred and be continuing and no Default shall be caused thereby, regularly scheduled payments of interest (but not principal or premium) in respect of the Senior Subordinated Notes on the dates and in the amounts set forth in the Senior Subordinated Note Documents; and (d) payments with respect to any intercompany loan permitted under Section 8.1(c). 8.7. TRANSACTIONS WITH AFFILIATES. Except as expressly permitted by this Agreement, the Credit Parties will not, and will not permit any of their Subsidiaries to, directly or indirectly (a) make any Investment in an Affiliate; (b) transfer, sell, lease, assign or otherwise dispose of any property to an Affiliate; (c) merge into or consolidate with an Affiliate, or purchase or acquire property from an Affiliate; or (d) enter into any other transaction directly or indirectly with or for the benefit of an Affiliate (including, without limitation, guarantees and assumptions of obligations of an Affiliate); PROVIDED that: (i) any Affiliate who is an individual may serve as a director, officer, employee or consultant of any Credit Party, receive reasonable compensation for his or her services in such capacity and benefit from Permitted Investments to the extent specified in clause (e) of the definition thereof; (ii) the Credit Parties may engage in and continue the transactions with or for the benefit of Affiliates which are described in SCHEDULE 8.7 or are referred to in Sections 8.5 or 8.6 (but only to the extent specified in such Sections); and (iii) the Credit Parties may engage in transactions with Affiliates in the ordinary course of business on terms which are no less favorable to the Credit Parties than those likely to be obtained in an arms' length transaction between a Credit Party and a non-affiliated third party. 8.8. RESTRICTIVE AGREEMENTS; RESTRICTIONS ON NEGATIVE PLEDGES AND UPSTREAM LIMITATION. The Credit Parties will not, and will not permit any of their Subsidiaries to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement (other than this Agreement, the Tranche B Financing Agreements and the other Loan Documents) that prohibits, restricts or imposes any condition upon (a) the ability of any such Person to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of such Person to pay dividends or other distributions with respect to any shares of its Capital Stock or other equity interests or to make or repay loans or advances to any other Person or to Guarantee the Indebtedness of any other Person; PROVIDED that (i) the foregoing shall not apply to restrictions and conditions imposed by law, (ii) the foregoing shall not apply to restrictions and conditions existing on the Closing Date identified on SCHEDULE 8.8 (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition), (iii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of stock or assets of a Subsidiary pending such sale, provided such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, (iv) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness, and (v) clause (a) of the foregoing shall not apply to customary provisions in leases and other contracts (excluding license agreements) restricting the assignment thereof. 8.9. SALE-LEASEBACK TRANSACTIONS. No Credit Party or any of its Subsidiaries will directly or indirectly, enter into any arrangements with any Person whereby such Person shall sell or transfer (or request another Person to purchase) any property, real, personal or mixed, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property from any Person. 8.10. CERTAIN FINANCIAL COVENANTS. (a) CAPITAL EXPENDITURES. The Borrower will not make, or permit any of its Subsidiaries to make, Capital Expenditures during any Reference Period ending during any fiscal year set forth in the table below, that exceed, in the aggregate, the amounts set forth opposite such fiscal year: --------------------------------------------------------------------- FISCAL YEAR MAXIMUM AMOUNT ------------------------------------------------- ------------------- 2003 Fiscal Year $6,000,000 ------------------------------------------------- ------------------- 2004 Fiscal Year $8,000,000 ------------------------------------------------- ------------------- 2005 Fiscal Year and each Fiscal Year thereafter $10,000,000 --------------------------------------------------------------------- (b) MAXIMUM SENIOR LEVERAGE RATIO. The Borrower shall not permit the Senior Leverage Ratio for any Reference Period ending on the date set forth in the table below, to exceed the ratio set forth opposite such date in such table: --------------------------------------------------------------------- PERIOD RATIO ------------------------------------------------- ------------------- Closing Date through September 30, 2003 3.25 to 1.00 ------------------------------------------------- ------------------- December 31, 2003 through September 30, 2004 3.00 to 1.00 ------------------------------------------------- ------------------- December 31, 2004 and each fiscal quarter ending thereafter 2.75 to 1.00 --------------------------------------------------------------------- (c) FIXED CHARGE COVERAGE RATIO. The Borrower shall not permit the Fixed Charge Coverage Ratio for any Reference Period ending on the date set forth in the table below, to be less than the ratio set forth opposite such date in such table: --------------------------------------------------------------------- PERIOD RATIO ------------------------------------------------- ------------------- Closing Date through March 31, 2004 1.05 to 1.00 ------------------------------------------------- ------------------- June 30, 2004 and each fiscal quarter ending thereafter 1.10 to 1.00 ------------------------------------------------- ------------------- (d) MINIMUM NET WORTH. The Borrower shall not permit Net Worth at any time during a period set forth in the table below, to be less than the amounts set forth opposite such date in such table: --------------------------------------------------------------------- PERIOD MINIMUM AMOUNT ------------------------------------------------- ------------------- Closing Date through March 31, 2004 $72,500,000 ------------------------------------------------- ------------------- June 30, 2004 through September 30, 2004 $74,500,000 ------------------------------------------------- ------------------- December 31, 2004 and each fiscal quarter ending thereafter $76,500,000 ------------------------------------------------- ------------------- (e) MINIMUM EBITDA OF THE U.S. CREDIT PARTIES. The Borrower shall not permit the EBITDA attributable to the U.S. Credit Parties, for any Reference Period to be less than $30,000,000. (f) MINIMUM EBITDA. (i) The Borrower shall not permit EBITDA, for the month of November 2002, to be less than $2,400,000. (ii) The Borrower shall not permit EBITDA, for any Reference Period ending on the date set forth in the table below, to be less than the amounts set forth opposite such date in such table: --------------------------------------------------------------------- PERIOD MINIMUM AMOUNT ------------------------------------------------- ------------------- December 31, 2002 $44,019,000 ------------------------------------------------- ------------------- January 31, 2003 $45,605,000 ------------------------------------------------- ------------------- February 28, 2003 $45,200,000 ------------------------------------------------- ------------------- March 31, 2003 through November 30, 2003 $42,620,000 ------------------------------------------------- ------------------- December 31, 2003 through March 31, 2004 $45,000,000 --------------------------------------------------------------------- 8.11. LINES OF BUSINESS. The Borrower will not, and will not permit any of its Subsidiaries to, engage to any substantial extent in any line or lines of business activity other than (i) the types of businesses engaged in by them as of the Closing Date and businesses substantially related thereto, and (ii) such other lines of business as may be consented to by the Required Lenders and the Agent. 8.12. OTHER INDEBTEDNESS. The Borrower will not, and will not permit any of its Subsidiaries to, purchase, redeem, retire or otherwise acquire for value, or set apart any money for a sinking, defeasance or other analogous fund for the purchase, redemption, retirement or other acquisition of, or make any voluntary payment or prepayment of the principal of or interest on, or any other amount owing in respect of any Senior Subordinated Notes or the Tranche B Loans, except to the extent permitted by Sections 8.6 or 8.14. 8.13. MODIFICATIONS OF CERTAIN DOCUMENTS; DESIGNATION OF SENIOR DEBT. The Borrower will not, and will not permit any of its Subsidiaries to, consent to any amendment or modification of or supplement to any of the provisions of any documents or agreements evidencing or governing the Subordinated Notes, the Tranche B Loans or any other Existing Indebtedness. The Credit Parties will designate the Credit Agreement and the Obligations hereunder as "Designated Senior Debt" under the Senior Subordinated Note Indenture, and will not designate any other Indebtedness other than the Tranche B Loans as "Designated Senior Debt" under the Senior Subordinated Note Indenture. 8.14. TRANCHE B PAYMENTS. The Credit Parties will not, and will not permit any of their Subsidiaries, to make any payments in respect of, or fund any acquisition, purchase, or participation in, in whole or in part the Tranche B Loans, except: (a) the Credit Parties may make regularly scheduled cash payments of interest, expenses and fees on the Tranche B Loans (exclusive of any Term Loan PIK Amount (as defined in the Tranche B Financing Agreement)); (b) so long as no Default or Event of Default exists or would result therefrom and commencing following receipt by the Agent of the financial statements for the fiscal year ending March 31, 2003, the Credit Parties may, not more than once per quarter following such fiscal year, prepay the principal of Tranche B Loans and the Term Loan PIK Amounts (as defined in the Tranche B Financing Agreement) in whole or in part, subject to the following conditions: (i) the Credit Parties shall have delivered to the Agent, not less than 30 days prior to the making of such prepayment, a certificate demonstrating, in form and substance satisfactory to the Agent, that: (A) the Credit Parties were in compliance with each of the Financial Covenants set forth in Section 8.10 for the fiscal quarter most recently ended immediately preceding the proposed prepayment date; (B) the Credit Parties project that they shall be in compliance with each of the Financial Covenants set forth in Section 8.10 for two consecutive quarters immediately following the proposed prepayment date, calculated on a pro forma basis giving effect to the making of such prepayment; (C) Domestic Excess Availability, calculated as at the end of the fiscal quarter most recently ended on (i) an actual basis and (ii) a pro forma basis giving effect to the making of such prepayment, shall have been no less than $15,000,000; and (D) Domestic Excess Availability, calculated as at the end of each of the three months ending after the making of such proposed prepayment on a pro forma basis giving effect to such prepayment, shall be projected to be not less than $15,000,000; and (ii) the Agent shall be satisfied that each of the foregoing calculations are true and correct and shall be satisfied that the minimum Domestic Excess Availability thresholds required have been and will be satisfied assuming the Credit Parties are honoring accounts payable in accordance with their usual and customary terms; and (c) At any time that the outstanding principal amount of the Tranche B Loans no longer exceeds the outstanding principal amount of the Term Loans, the Borrower shall, contemporaneously with the making of such prepayment of the Tranche B Loans, make an equivalent payment of the Term Loan (such payments of the Term Loan to be applied against the remaining required installments of the Term Loan in the inverse order of maturity thereof). (d) Each prepayment of Tranche B Loans made under this Section 8.14 shall reduce the Availability Block by the amount of such prepayment. 8.15. COLUMBUS MCKINNON FINANCE CORPORATION. Except as set forth in Section 5.24 the Borrower and each of its Subsidiaries will not permit Columbus McKinnon Finance Corporation to own any asset, incur any liabilities or engage in any business or activity. The Borrower will not permit Columbus McKinnon Limited to make, or Columbus McKinnon Finance Corporation to receive, any payment in respect of that certain intercompany promissory note issued by Columbus McKinnon Limited and made to Columbus McKinnon Finance Corporation in the aggregate face amount of C$3,750,000, other than a payment made substantially contemporaneously with either (a) the amalgamation of Columbus McKinnon Finance Corporation into a Credit Party or (b) the liquidation of Columbus McKinnon Finance Corporation and the distribution of all of its assets to a Credit Party. ARTICLE 9. EVENTS OF DEFAULT 9.1. EVENTS OF DEFAULT. The occurrence of any of the following events shall be deemed to constitute an "EVENT OF DEFAULT" hereunder: (a) the Credit Parties shall fail to pay to the Agent, the Issuing Lender, the Canadian Lender, the Cash Management Bank or the Lenders, any principal of or interest on any Loan or any Reimbursement Obligation in respect of any LC Disbursement or any other Obligation of the Credit Parties to the Agent, the Issuing Lender, the Canadian Lender, the Cash Management Bank or the Lenders when the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof, by acceleration of such due or prepayment date, or otherwise; (b) any representation or warranty made or deemed made by or on behalf of any Credit Party or any of its Subsidiaries in connection with this Agreement, any of the other Loan Documents or any amendment or modification hereof or thereof, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement, any of the other Loan Documents or any amendment or modification hereof or thereof, shall prove to have been incorrect in any material respect when made or deemed made; (c) the Credit Parties (i) shall fail to observe or perform any covenant, condition or agreement contained in Sections 7.1, 7.2, 7.5, 7.6, 7.9, 7.10, 7.12, 7.14, 7.15, 7.16 or in Article 8 (it being expressly acknowledged and agreed that any Event of Default resulting from the failure of the Credit Parties at any measurement date to satisfy any financial covenant set forth in Section 8.10 shall not be deemed to be "cured" or remedied by the Credit Parties' satisfaction of such financial covenant at any subsequent measurement date) or (ii) shall fail to observe or perform any other covenant, condition or agreement contained in Sections 7.3, 7.4, 7.7, 7.8, 7.11, 7.13, or 7.17, and such failure described in this clause (ii) shall continue unremedied for a period of 10 days after the earlier of (x) the date on which any officer of any Credit Party knows or should have known of such failure or (y) the date the Borrower receives notice thereof from the Agent; (d) the Borrower or any of its Subsidiaries shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in clauses (a), (b) or (c) of this Section 9.1) or any other Loan Document, and such failure shall continue unremedied for a period of 20 days after the earlier of (x) the date on which any officer of any Credit Party knows or should have known of such failure or (y) the date the Borrower receives notice thereof from the Agent; (e) the Borrower or any of its Subsidiaries shall fail to make any payment (whether of principal, interest or otherwise and regardless of amount) in respect of any Material Indebtedness or any Material Rental Obligation, when and as the same shall become due and payable, after giving effect to any grace period with respect thereto; (f) any event or condition occurs that results in (i) (A) any Material Indebtedness of the Borrower or any of its Subsidiaries becoming due prior to its scheduled maturity, (B) that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause such Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity, or (C) requires the Borrower or any of its Subsidiaries to offer to repay, repurchase, redeem, or defease such Material Indebtedness, or (ii) the lease with respect to any Material Rental Obligation of the Borrower or any of its Subsidiaries being terminated prior to its scheduled expiration date or that enables or permits (with or without the giving of notice, the lapse of time or both) the counterparty to such lease to cause such lease to be terminated prior to its scheduled expiration date; (g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any of its Subsidiaries or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any of its Subsidiaries or for a substantial part of its assets, and, in any such case, 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) the Borrower or any of its Subsidiaries shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (g) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any of its Subsidiaries or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing; (i) the Borrower or any of its Subsidiaries shall become unable, admit in writing or fail generally to pay its debts as they become due; (j) a final judgment or judgments for the payment of money (x) in excess of $1,000,000 in the aggregate (exclusive of judgment amounts fully covered by insurance where the insurer has admitted liability in respect of such judgment) or (y) in excess of $1,000,000 in the aggregate (regardless of insurance coverage), shall be rendered by one or more courts, administrative tribunals or other bodies having jurisdiction over the Borrower or any of its Subsidiaries and the same shall not be discharged (or provision shall not be made for such discharge), bonded, or a stay of execution thereof shall not be procured, within 60 days from the date of entry thereof and the Borrower or relevant Subsidiary shall not, within said period of 90 days, or such longer period during which execution of the same shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal; (k) an ERISA Event shall have occurred that, in the reasonable opinion of the Required Lenders, when taken together with all other ERISA Events that have occurred, could reasonably be expected to have a Material Adverse Effect; (l) there shall occur any Change of Control; (m) any of the following shall occur: (i) the Liens created hereunder or under the other Loan Documents shall at any time (other than by reason of the Agent relinquishing such Lien) cease to constitute valid and perfected Liens on any Collateral with an aggregate fair market value in excess of $100,000 which is intended to be covered thereby; (ii) except for expiration in accordance with its respective terms, any Loan Document shall for whatever reason be terminated, or shall cease to be in full force and effect; or (iii) the enforceability of any Loan Document shall be contested by the Borrower or any of its Subsidiaries; (n) there shall occur any loss theft, damage or destruction of any Collateral not fully covered (subject to such reasonable deductibles as the Agent shall have approved) by insurance which has or could reasonably be expected to have a Material Adverse Effect; (o) any Guarantor shall assert that its obligations under any Loan Document shall be invalid or unenforceable; (p) there shall occur any material adverse change (in the opinion of the Agent) on the businesses, operations, properties, conditions (financial or otherwise), assets, liabilities, income or prospects of the Borrower and its Subsidiaries; or (q) the Canadian Lender shall make a drawing under the Canadian Letter of Credit; (r) any Credit Party shall be liable for any Environmental Liabilities payment of which could reasonably be expected to have a Material Adverse Effect; (s) any bank at which any deposit account, Controlled Account, or Lockbox Account of any Credit Party is maintained shall fail to comply with any of the terms of any deposit account agreement, Control Agreement, Lockbox Agreement or similar agreement to which such bank is a party or any securities intermediary, commodity intermediary or other financial institution at any time in custody, control or possession of any investment property of any Credit Party shall fail to comply with any of the terms of any investment property control agreement to which such Person is a party; (t) any Credit Party is enjoined, restrained or in any way prevented by the order of any court or any Governmental Authority from conducting all or any material part of its business for more than fifteen (15) days; (u) any cessation of a substantial part of the business of any Credit Party for a period which materially and adversely affects the ability of such Person to continue its business on a profitable basis; (v) the loss, suspension or revocation of, or failure to renew, any license or permit now held or hereafter acquired by any Credit Party, if such loss, suspension, revocation or failure to renew could reasonably be expected to have a Material Adverse Effect; (w) the indictment, or the threatened indictment of any Credit Party under any criminal statute, or commencement or threatened commencement of criminal or civil proceedings against any Credit Party, pursuant to which statute or proceedings the penalties or remedies sought or available include forfeiture to any Governmental Authority of any material portion of the property of such Person; or (x) a "Default" or an "Event of Default" shall have occurred under the Tranche B Loan Documents; then, and in every such event (other than an event described in clause (g) or (h) of this Section 9.1), and at any time thereafter during the continuance of such event, the Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take any or all of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, (ii) notify the Borrower that the outstanding principal of the Loans shall bear interest at the Post-Default Rate, and thereupon the outstanding principal of the Loans shall bear interest at the Post-Default Rate, (iii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other Obligations, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Credit Parties, (iv) require that the Borrower deposit with the Agent cash collateral for all outstanding Letters of Credit, and (v) the Agent, the Issuing Lender, the Cash Management Bank and the Lenders may exercise all of the rights as secured party and mortgagee hereunder or under the other Loan Documents; and in case of any event with respect to the Credit Parties or any of its Subsidiaries described in clause (g) or (h) of this Section 9.1, the Commitments shall automatically terminate, the principal of the Loans then outstanding shall automatically bear interest at the Post-Default Rate, the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other Obligations shall automatically become due and payable, and the Borrower shall provide cash collateral in accordance with Section 2.4(h) without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Credit Parties, and the Agent, the Issuing Lender, the Cash Management Bank and the Lenders shall be permitted to exercise such rights as secured party and mortgagee hereunder or under the other Loan Documents to the extent permitted by applicable law. 9.2. DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that, following the occurrence or during the continuance of any Default or Event of Default, the Agent or any Lender, as the case may be, receives any monies in connection with the enforcement of any Loan Document, or otherwise with respect to the realization upon any of the Collateral, such monies shall be distributed for application as follows: (a) First, to the payment of, or (as the case may be) the reimbursement of the Agent for or in respect of all reasonable costs, expenses, disbursements and losses which shall have been incurred or sustained by the Agent in connection with the collection of such monies by the Agent, for the exercise, protection or enforcement by the Agent of all or any of the rights, remedies, powers and privileges of the Agent under this Agreement or any of the other Loan Documents or in respect of the Collateral or in support of any provision of adequate indemnity to the Agent against any Taxes or liens which by law shall have, or may have, priority over the rights of the Agent to such monies; (b) Second, to all other Obligations in such order or preference as the Required Lenders may determine; PROVIDED, however, that (i) distributions shall be made (A) PARI PASSU among Obligations with respect to fees payable to the Agent, the Issuing Lender and all other Obligations and (B) with respect to each type of Obligation owing to the Lenders, such as interest, principal, fees and expenses, among the Lenders PRO RATA, and (ii) the Agent may in its discretion make proper allowance to take into account any Obligations not then due and payable; (c) Third, upon payment and satisfaction in full or other provisions for payment in full satisfactory to the Lenders and the Agent of all of the Obligations, to the payment of any obligations required to be paid pursuant to ss.9-608(a)(1)(C) or 9-615(a)(3) of the Uniform Commercial Code of the Commonwealth of Massachusetts; and (d)Fourth, the excess, if any, shall be returned to the Borrower or to such other Persons as are entitled thereto. 9.3. RECEIVERSHIP. Without limiting the generality of the foregoing or limiting in any way the rights of the Agent or the Lenders hereunder or under the other Loan Documents or otherwise under applicable law, at any time after (i) the entire principal balance of any Loan shall have become due and payable (whether at maturity, by acceleration or otherwise) and (ii) the Agent shall have provided to the Borrower not less than ten (10) days' prior written notice of its intention to apply for a receiver, the Agent shall be entitled to apply for and have a receiver appointed under state or federal law by a court of competent jurisdiction in any action taken by the Agent to enforce the Lenders' and the Agent's rights and remedies hereunder and under the other Loan Documents in order to manage, protect, preserve, sell and otherwise dispose of all or any portion of the Collateral and continue the operation of the business of the Credit Parties, and to collect all revenues and profits thereof and apply the same to the payment of all expenses and other charges of such receivership, including the compensation of the receiver, and to the payment of the Loans and other fees and expenses due hereunder and under the Loan Documents as aforesaid until a sale or other disposition of such Collateral shall be finally made and consummated. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH CREDIT PARTY HEREBY IRREVOCABLY CONSENTS TO AND WAIVES ANY RIGHT TO OBJECT TO OR OTHERWISE CONTEST THE APPOINTMENT OF A RECEIVER AS PROVIDED ABOVE. EACH CREDIT PARTY (I) GRANTS SUCH WAIVER AND CONSENT KNOWINGLY AFTER HAVING DISCUSSED THE IMPLICATIONS THEREOF WITH COUNSEL, (II) ACKNOWLEDGES THAT (A) THE UNCONTESTED RIGHT TO HAVE A RECEIVER APPOINTED FOR THE FOREGOING PURPOSES IS CONSIDERED ESSENTIAL BY AGENT IN CONNECTION WITH THE ENFORCEMENT OF THE LENDERS' AND THE AGENT'S RIGHTS AND REMEDIES HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS, AND (B) THE AVAILABILITY OF SUCH APPOINTMENT AS A REMEDY UNDER THE FOREGOING CIRCUMSTANCES WAS A MATERIAL FACTOR IN INDUCING THE LENDERS TO MAKE THE LOANS TO THE BORROWER; AND (III) AGREES TO ENTER INTO ANY AND ALL STIPULATIONS IN ANY LEGAL ACTIONS, OR AGREEMENTS OR OTHER INSTRUMENTS IN CONNECTION WITH THE FOREGOING AND TO COOPERATE FULLY WITH THE AGENT AND THE LENDERS IN CONNECTION WITH THE ASSUMPTION AND EXERCISE OF CONTROL BY THE RECEIVER OVER ALL OR ANY PORTION OF THE COLLATERAL. THE LENDERS AND AGENT ACKNOWLEDGE AND AGREE THAT NOTHING IN THIS SECTION 9.2 SHALL BE DEEMED TO CONSTITUTE A WAIVER OF THE RIGHT OF CREDIT PARTIES TO FILE FOR PROTECTION UNDER TITLE 11 OF THE UNITED STATES CODE AT ANY TIME. ARTICLE 10. THE AGENT 10.1. APPOINTMENT AND AUTHORIZATION. Each of the Lenders and the Issuing Lender hereby irrevocably appoints the Agent as its agent and authorizes the Agent to take such actions on its behalf and to exercise such powers as are delegated to the Agent by the terms of this Agreement and the other Loan Documents, together with such actions and powers as are reasonably incidental thereto. Without limiting the generality of the foregoing, each of the Lenders and the Issuing Lender hereby (a) authorizes the Agent to enter into the Intercreditor Agreement on its behalf and consents and agrees to be bound by the terms therein, (b) authorizes the Agent to release, from time to time, certain of the Collateral in connection with any sale or other disposition of assets permitted hereunder, and (c) authorizes the Agent to take such actions at any time to enforce such Lender's rights hereunder and under the other Loan Documents. The Agent shall be the "representative" of the Lenders for purposes of its designation as a secured party on all security filings. 10.2. AGENT'S RIGHTS AS LENDER. The Lender or other financial institution serving as the Agent or the Issuing Lender hereunder shall have the same rights and powers in its capacity as a Lender hereunder as any other Lender and may exercise the same as though it were not the Agent or the Issuing Lender, and such institution and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with any Credit Party or any of its Subsidiaries or other Affiliate thereof as if it were not the Agent or the Issuing Lender hereunder. 10.3. DUTIES AS EXPRESSLY STATED. Neither the Agent nor the Issuing Lender shall have any duties or obligations except those expressly set forth in this Agreement and the other Loan Documents. Without limiting the generality of the foregoing, (a) neither the Agent nor the Issuing Lender shall be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) neither the Agent nor the Issuing Lender shall have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by this Agreement and the other Loan Documents that the Agent or Issuing Lender is required to exercise in writing by the Required Lenders (or such other number or percentage of the Lenders as is required hereunder with respect to such action), and (c) except as expressly set forth herein and in the other Loan Documents, neither the Agent nor the Issuing Lender shall have any duty to disclose, or shall be liable for the failure to disclose, any information relating to any Credit Party or any of their respective Subsidiaries that is communicated to or obtained by the financial institution serving as the Agent or the Issuing Lender or any of its Affiliates or Approved Funds in any capacity. Neither the Agent nor the Issuing Lender 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 is required hereunder with respect to such action) or all of the Lenders if expressly required, or in the absence of its own gross negligence or willful misconduct. Neither the Agent nor the Issuing Lender shall be deemed to have knowledge of any Default other than a Default of the types specified in Section 9.1(a) unless and until written notice thereof is given to the Agent or the Issuing Lender by the Borrower or a Lender, and the Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in, or in connection with, this Agreement or the other Loan Documents, (ii) the contents of any certificate, report or other document delivered hereunder or under any of the other Loan Documents or in connection herewith of therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or in any other Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, the other Loan Documents or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article 6 or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Agent or the Issuing Lender. Neither the Agent nor the Issuing Lender shall, except to the extent the Agent expressly instructed by the Required Lenders with respect to collateral security hereunder and under the other Loan Documents, be required to initiate or conduct any litigation or collection proceedings hereunder or under any other Loan Document; PROVIDED, however, that the Agent shall not be required to take any action which exposes the Agent to personal liability or which is contrary to the Loan Documents or applicable law. 10.4. RELIANCE BY AGENT. The Agent and the Issuing Lender 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 the proper Person. The Agent and the Issuing Lender also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Agent and the Issuing Lender may consult with legal counsel, independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. The Agent and the Issuing Lender shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders (or, if so specified by this Agreement, all Lenders) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action (it being understood that this provision shall not release the Agent from performing any action with respect to the Borrower expressly required to be performed by it pursuant to the terms hereof) under this Agreement. The Agent and the Issuing Lender shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders (or, if so specified by this Agreement, all Lenders), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans. 10.5. ACTION THROUGH SUB-AGENTS. The Agent and the Issuing Lender may perform any and all of its duties, and exercise its rights and powers, by or through any one or more sub-agents appointed by the Agent or the Issuing Lender. The Agent and the Issuing Lender and any such sub-agent may perform any and all its duties and exercise its rights and powers through its Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Agent and the Issuing Lender and any such sub-agent, and shall apply to its activities in connection with the syndication of the credit facilities provided for herein as well as activities of the Agent or the Issuing Lender. 10.6. RESIGNATION OF AGENT AND APPOINTMENT OF SUCCESSOR AGENT. Subject to the appointment and acceptance of a successor Agent, as provided in this paragraph, the Agent may resign at any time by notifying the Lenders, the Issuing Lender and the Credit Parties. Upon any such resignation, the Required Lenders shall have the right, in consultation with the Credit Parties, to appoint a successor Agent. If no successor shall have been so appointed and shall have accepted such appointment within 30 days after such retiring Agent gives notice of its resignation, then such retiring Agent may, on behalf of the Lenders and the Issuing Lender, appoint a successor Agent, which shall be a bank with an office in Boston, Massachusetts or New York, New York, or an Affiliate of any such bank. Upon the acceptance of its appointment as 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 and under the other Loan Documents. The fees payable by the Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After an Agent's resignation hereunder, the provisions of this Article and Section 11.3 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Agent. 10.7. LENDERS' INDEPENDENT DECISIONS. Each Lender acknowledges that it has, independently and without reliance upon the Agent, the Issuing Lender 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 the Agent, the Issuing Lender 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 and the other Loan Documents, any related agreement or any document furnished hereunder or thereunder. Except as explicitly provided herein, neither the Agent nor the Issuing Lender has any duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect to such operations, business, property, condition or creditworthiness, whether such information comes into its possession on or before the first Event of Default or at any time thereafter. Neither the Agent nor the Issuing Lender shall be deemed a trustee or other fiduciary on behalf of any party. 10.8. INDEMNIFICATION. Each Lender agrees to indemnify and hold harmless the Agent and the Issuing Lender (to the extent not reimbursed under Section 11.3, but without limiting the obligations of the Borrower under Section 11.3), ratably in accordance with the aggregate principal amount of the respective Commitments of and/or Loans and Total LC Exposure held by the Lenders (or, if all of the Commitments shall have been terminated or expired, ratably in accordance with the aggregate outstanding amount of the Loans and Total LC Exposure held by the Lenders), for any and all liabilities (including pursuant to any Environmental Law), obligations, losses, damages, penalties, actions, judgments, deficiencies, suits, costs, expenses (including the fees and expenses of attorneys, consultants, appraisers, examiners, and other professionals engaged by the Agent in connection with this Agreement and/or the administration of the credit facilities contemplated hereby) or disbursements of any kind and nature whatsoever that may be imposed on, incurred by or asserted against the Agent or the Issuing Lender (including by any Lender) arising out of or by reason of any investigation in or in any way relating to or arising out of any Loan Document or any other documents contemplated by or referred to therein for any action taken or omitted to be taken by the Agent or the Issuing Lender under or in respect of any of the Loan Documents or other such documents or the transactions contemplated thereby (including the costs and expenses that the Borrower is obligated to pay under Section 11.3) or the enforcement of any of the terms hereof or thereof or of any such other documents; provided however, that no Lender shall be liable for any of the foregoing to the extent they are determined by a court of competent jurisdiction in a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of the party to be indemnified. The agreements set forth in this Section 10.8 shall survive the payment of all Loans and other obligations hereunder and shall be in addition to and not in lieu of any other indemnification agreements contained in any other Loan Document. 10.9. CONSENTS UNDER OTHER LOAN DOCUMENTS. Except as otherwise provided in this Agreement and the other Loan Documents, the Agent may, with the prior consent of the Required Lenders (but not otherwise), consent to any modification, supplement or waiver under any of the other Loan Documents. 10.10. DELINQUENT LENDERS. Notwithstanding anything to the contrary contained in this Agreement or any of the other Loan Documents, any Lender that fails to make available to the Agent its pro rata share of any Loan or to purchase any participation in any Letter of Credit as, when and to the full extent required by the provisions of this Agreement, shall be deemed delinquent (a "DELINQUENT LENDER") and shall be deemed a Delinquent Lender until such time as such delinquency is satisfied. A Delinquent Lender shall be deemed to have assigned any and all payments due to it from the Credit Parties, whether on account of outstanding Loans, unpaid Reimbursement Obligations, interest, fees or otherwise, to the remaining nondelinquent Lenders for application to, and reduction of, their respective pro rata shares of all outstanding Loans and unpaid Reimbursement Obligations. The Delinquent Lender hereby authorizes the Agent to distribute such payments to the nondelinquent Lenders in proportion to their respective pro rata shares of all outstanding Loans and unpaid Reimbursement Obligations. A Delinquent Lender shall be deemed to have satisfied in full a delinquency when and if, as a result of application of the assigned payments to all outstanding Loans and unpaid Reimbursement Obligations of the nondelinquent Lenders, the Lenders' respective pro rata shares of all outstanding Loans and unpaid Reimbursement Obligations have returned to those in effect immediately prior to such delinquency and without giving effect to the nonpayment causing such delinquency. 10.11. ELECTRONIC COMMUNICATIONS. The Credit Parties hereby authorize and request the Agent, the Cash Management Bank, the Canadian Lender, the Issuing Lender or any of their Affiliates to act on instructions given by telephone, telegraph, telefax, cable, wireless, telex, telecopy, electronic mail or other similar electronic means of communication (collectively, "ELECTRONIC COMMUNICATIONS") from an authorized representative of such Credit Party, including but not limited to instructions relating to the issuance and processing of letters of credit and collection transactions and other similar trade finance products, the execution of foreign exchange contracts and the directing the payment of moneys and transfers, deposits or withdrawals of funds, coins, precious metals, securities and other valuable assets from or to any account maintained by the Agent, the Cash Management Bank, the Canadian Lender, the Issuing Lender or such Affiliate as contemplated under this Agreement on behalf of such Credit Party. Each Credit Party further authorizes and directs the Agent, Cash Management Bank, Canadian Lender, Issuing Lender or any of their Affiliates to respond to any inquiry made through any of the Electronic Communications relating to the status of any account maintained by the Agent, the Cash Management Bank, the Canadian Lender, the Issuing Lender or such Affiliate as contemplated under this Agreement. Each of the Agent, the Cash Management Bank, the Canadian Lender, the Issuing Lender or any of their Affiliates, any branch or agency thereof and its respective directors, officers and employees shall not be liable for any error, delay, damage, claim or other loss, expense or cost arising out of any instruction given by Electronic Communications. All such risks are assumed by the Credit Parties. All instructions sent by telex shall contain the Credit Parties' answerback. The certifications, authorizations, directions and any restrictions contained herein will continue until the Agent, the Cash Management Bank, the Canadian Lender or the Issuing Lender actually receive written notice of any change or revocation. The Agent, the Cash Management Bank, the Canadian Lender and the Issuing Lender shall have the right to refuse any instructions through any of above-mentioned Electronic communications, in its/their discretion. ARTICLE 11. MISCELLANEOUS 11.1. NOTICES. Except in the case of notices and other communications expressly permitted to be given by telephone or in a manner set forth in Section 10.11, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telephonic facsimile (fax), as follows: (a) if to any Credit Party, to Columbus McKinnon Corporation, 140 John James Audubon Parkway, Amherst, New York 14228, Attention: Robert L. Montgomery, Jr., Executive Vice President, Telephone no. (716) 689-5405 and Fax no. (716) 689-5598 with a copy to Phillips, Lytle, Hitchcock, Blaine & Huber, 3400 HSBC Center, Buffalo, New York 14203-2887, Attention: Raymond H. Seitz, Esq., Telephone No.: (716) 847-7065 and Fax no. (716) 852-6100; (b) if to the Agent, to Fleet Capital Corporation, One Federal Street, Mail Stop MA DE 10307X, Boston, Massachusetts 02110, Attention: Daniel P. Corcoran, Jr. Telephone no. (617) 654-1163 and Fax no. (617) 654-1167, with a copy to Bingham McCutchen LLP, 150 Federal Street, Boston, MA 02110, Attention: Matthew F. Furlong, Telephone no. (617) 951-8904 and Fax no. (617) 951-8736; (c) if to any Lender (including Fleet in its capacity as the Issuing Lender), to it at its address (or fax number) set forth on Schedule 2.1; and (d) if to the Tranche B Agent, as required under the Intercreditor Agreement, at Regiment Capital III, L.P., 70 Federal Street, 7th Floor, Boston, Massachusetts 02110, Attention: Richard T. Miller, Telephone no. (617) 488-1617, Fax no. (617) 488-1668, with a copy to Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022, Attention: Frederic L. Ragucci, Esq., Telephone no. (212) 756-2000 and Fax no. (212) 593-5955. Any party hereto may change its address or fax number for notices and other communications hereunder by notice to the other parties hereto. 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. 11.2. WAIVERS; AMENDMENTS. (a) No failure or delay by the Agent, the Issuing Lender, the Canadian Lender, the Cash Management Bank or the Lenders in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Agent, the Issuing Lender, the Cash Management 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 this Agreement or consent to any departure by any Credit Party or Subsidiary therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 11.2, 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 the Agent, any Lender or the Issuing Lender may have had notice or knowledge of such Default at the time. (b) Neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Agent with the written consent of the Required Lenders and the Agent; PROVIDED that no such agreement shall:. (i) increase the Commitment of any Lender without the written consent of such Lender and the Agent; (ii) reduce the principal amount of any Loan or Reimbursement Obligation or reduce the rate of interest thereon (other than the decision not to charge, or to cease to charge, Post-Default Interest), or reduce any fees payable hereunder, without the written consent of each Lender affected thereby; (iii) postpone the scheduled date of payment of the principal amount of any Loan or Reimbursement Obligation (which excludes mandatory prepayments of the Loans required under Section 2.8(b)), or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, change the maturity date of any Loan, or postpone the scheduled date of expiration of any Commitment, or extend the ultimate expiration date of any Letter of Credit beyond the Maturity Date, without the written consent of each Lender affected thereby; (iv) except as expressly set forth in clause (x) below, change subsection 2.8(c) in a manner that would alter the application of prepayments thereunder, or change subsections 2.7(c), (d) or (e) in a manner that would alter the pro rata sharing of payments required thereby, without in each case the written consent of each Lender; (v) alter the rights or obligations of the Borrower to prepay Loans (other than mandatory prepayments of Loans under subsection 2.8(b)) without the written consent of each Lender; (vi) change any of the provisions of this Section 11.2 or the definition of "Required Lenders" or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or under any other Loan Document or make any determination or grant any consent hereunder or thereunder, without the written consent of each Lender; (vii) release all or substantially all of the Guarantors from their obligations in respect of its Guarantee under Article 3 or release all or substantially all of the Collateral (or terminate any Lien with respect thereto), except as expressly permitted in this Agreement, without the written consent of each Lender; (viii) waive any of the conditions precedent specified in Section 6.1 without the written consent of each Lender and the Agent; (x) subordinate the Loans to any other Indebtedness; (xi) increase the percentage of Eligible Accounts, Eligible Inventory or Appraised Value of the Canadian Real Property (as applicable) in the calculation of the Canadian Borrowing Base or the Domestic Borrowing Base, without the written consent of each Lender; or (xii) amend the definitions of "Domestic Borrowing Base" or "Canadian Borrowing Base" or of any definition of any component thereof, such that more credit would be available to the Borrower or the Canadian Borrowers, based on the same assets, as would have been available to the Borrower or the Canadian Borrowers immediately prior to such amendment, it being understood, however, that: the foregoing shall not (A) limit the adjustment by the Agent of any reserve in the Agent's administration of the Loans as otherwise permitted by this Agreement or (B) prevent the Agent, in its administration of the Loans, from restoring any component of Domestic Borrowing Base or Canadian Borrowing Base or Term Loan Borrowing Base which had been lowered by the Agent back to the value of such component, as stated in this Agreement or to an intermediate value; PROVIDED further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Agent or the Issuing Lender hereunder without the prior written consent of the Agent or the Issuing Lender, as the case may be. 11.3. EXPENSES; INDEMNITY: DAMAGE WAIVER. (a) The Credit Parties jointly and severally agree to pay, or reimburse the Agent or the Lenders, as applicable, for paying, (i) all reasonable out-of-pocket expenses incurred by the Agent and its Affiliates, including the reasonable fees, charges and disbursements of Special Counsel and any local counsel, in connection with the syndication of the credit facilities provided for herein, the preparation of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), or the administration or interpretation of the Loan Documents and other instruments mentioned herein (ii) all reasonable out-of-pocket expenses incurred by the Issuing Lender in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, (iii) all out-of-pocket expenses (including without limitation reasonable attorneys' fees and costs, which attorneys may be employees of the Agent, the Issuing Lender, the Canadian Lender, the Cash Management Bank or any Lender, and reasonable consulting, accounting, appraisal, investment banking and similar professional fees and charges) incurred by the Agent, the Issuing Lender, the Canadian Lender, the Cash Management Bank or any Lender, including the fees, costs, charges and disbursements of any counsel for the Agent, the Issuing Lender, the Canadian Lender, the Cash Management Bank or any Lender, in connection with (A) the enforcement or protection of their rights in connection with this Agreement and the other Loan Documents, including their rights under this Section 11.3, or in connection with the Loans made or Letters of Credit issued hereunder, including in connection with any workout, restructuring or negotiations in respect thereof, and (B) any litigation, proceeding or dispute whether arising hereunder or otherwise, in any way related to any Lender's or the Agent's relationship with the Borrower or any of its Subsidiaries, (iv) all reasonable fees, expenses and disbursements of the Agent incurred in connection with UCC and other collateral security searches, UCC and other collateral security filings, intellectual property searches, intellectual property filings or mortgage recordings, (v) any fees, costs, expenses and bank charges, including bank charges for returned checks, incurred by the Agent or the Cash Management Bank in establishing, maintaining or handling agency accounts, lock box accounts and other accounts for the collection of any of the Collateral, (vi) all Other Taxes levied by any Governmental Authority in respect of this Agreement or any of the other Loan Documents or any other document referred to herein or therein and all costs, expenses, Taxes, assessments and other charges incurred in connection with any filing, registration, recording or perfection of any security interest contemplated by any Loan Document or any other document referred to therein. The Agent shall be entitled to pay any of the foregoing fees and expenses by causing the debit of any account maintained by the Borrower or any of its Subsidiaries with the Agent, the Cash Management Bank, or any other institution with which the Agent shall have entered into an agency account agreement. (b) The Credit Parties jointly and severally agree to indemnify the Agent, the Issuing Lender, the Canadian Lender, the Cash Management Bank, each Lender and each Related Party of any of the foregoing Persons (each such Person being called an "INDEMNITEE") against, and hold each Indemnitee harmless from, any and all Environmental Costs, losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee and settlement costs, incurred by or asserted against any Indemnitee of every nature and character arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, the other Loan Documents or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or any other transactions contemplated hereby or thereby (other than breaches by the Agent, the Issuing Lender, the Canadian Lender, the Cash Management Bank or a Lender), (ii) any Loan or Letter of Credit or the actual or proposed use of the proceeds therefrom (including any refusal by the Issuing Lender to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence, disposal, escape, seepage, leakage, spillage, discharge, emission, Release or threatened Release of Hazardous Materials on or from any property owned, leased or operated by any Credit Party or any of its Subsidiaries, or any Environmental Liability related in any way to any Credit Party or any of its Subsidiaries (including, without limitation, remediation, removal, response, abatement, restoration, cleanup, legal, investigative, monitoring costs and related costs, the costs of removal, transportation and disposal of any and all Hazardous Materials from all or any portion of any Real Property Asset, costs required to take necessary precautions to protect against the release of Hazardous Materials at, on, in, about, under, within, near or in connection with the Real Property Assets in or into the air, soil, surface water, ground water, or soil vapor, any public domain, or any surrounding areas, and costs incurred to comply, in connection with all or any portion of the Real Property Assets, with all applicable laws with respect to Hazardous Materials), (iv) the reversal or withdrawal of any provisional credits granted by the Agent upon the transfer of funds from lock box, bank agency, concentration accounts or otherwise under any cash management arrangements with any Credit Party or in connection with the provisional honoring of funds transfers, checks or other items, (v) any action taken by such Indemnitee in accordance with instructions given to such Indemnitee by Electronic Communications, whether arising out of any investigation, litigation or proceeding brought by such Credit Party, by others on behalf of such Credit Party, by any third party or by any successors, or assigns such Credit Party and notwithstanding the fact that (A) the instructions received by such Indemnitee might have been unauthorized by such Credit Party or (B) such Indemnitee might have misinterpreted said instructions or made any other error, mistake or omission, absent gross negligence or willful misconduct, or (vi) any actual or prospective claim (including, but not limited to, claims with respect to wrongful death, personal injury or damage to property), litigation, investigation, Environmental Actions or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto, including any actual or alleged infringement of any patent, copyright, trademark, service mark or similar right of any Credit Party comprised in the Collateral; 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 from the gross negligence or willful misconduct of such Indemnitee. (c) To the extent that the Credit Parties fail to pay any amount required to be paid by them to the Agent under paragraph (a) or (b) of this Section 11.3, each Lender severally agrees to pay to the Agent such Lender's Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount. To the extent that the Credit Parties fail to pay any amount required to be paid by them to the Issuing Lender under paragraph (a) or (b) of this Section 11.3, each Lender severally agrees to pay to the Issuing Lender such Lender's Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount. (d) TO THE EXTENT PERMITTED BY APPLICABLE LAW, NONE OF THE CREDIT PARTIES SHALL ASSERT, AND EACH CREDIT PARTY HEREBY WAIVES, ANY CLAIM AGAINST ANY INDEMNITEE, ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE TRANSACTIONS CONTEMPLATED HEREBY, ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE PROCEEDS THEREOF. (e) All amounts due under this Section 11.3 shall be payable promptly after written demand therefor. (f) In the event that any investigation, site monitoring, containment, clean-up, removal, transportation, disposal, restoration, reporting, or sampling with respect to Hazardous Materials or soil, water, tanks, drums or other materials which contain or contained Hazardous Materials (a "REMEDIAL WORK") is necessary under any applicable local, state or federal law or regulation, any judicial order, or by any governmental or non-governmental entity or Person because of, or in connection with, the current or future presence, suspected presence, release or suspected release or threat of release of Hazardous Materials in or into the air, soil, ground water, surface water or soil vapor at, on, about, under, within, near, from or in connection with any Real Property Asset (or any portion thereof), the Credit Parties shall promptly commence, or cause to be commenced, and thereafter diligently prosecute to completion, all such Remedial Work. All Remedial Work shall be performed by licensed contractors qualified to perform such work under applicable federal, state and local law. All Environmental Costs related to such Remedial Work shall be paid by the Credit Parties including, without limitation, reasonable Environmental Costs incurred by any Indemnitee in connection with the monitoring or review of such Remedial Work by the Indemnitee or a third party engaged by Indemnitee. In the event the Credit Parties shall fail to promptly commence, or cause to be commenced, or fail to diligently prosecute to completion, such Remedial Work, the Agent may, but shall not be required to, cause such Remedial Work to be performed and all Environmental Costs shall become an Environmental Liability hereunder. 11.4. 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, except that no Credit Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender and the Agent (and any attempted assignment or transfer without such consent shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, the Related Parties of the Agent, the Issuing Lender, the Canadian Lender, the Cash Management Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) Each Lender may at any time and from time to time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of the Revolving Credit Commitment and the Loans at the time owing to it); PROVIDED that for any assignment: (i) except in the case of an assignment to a Lender prior to such assignment or an Affiliate of such a Lender or an Approved Fund (in which case, the assignee and assignor Lenders shall give notice of the assignment to the Agent), the Borrower and the Agent (and, in the case of an assignment of all or a portion of a Commitment or any Lender's obligations in respect of its Total LC Exposure, the Issuing Lender) each must give its prior written consent to such assignment (which consent shall not be unreasonably withheld, delayed or conditioned), (ii) except in the case of an assignment to a Lender or an Affiliate or Approved Fund of a Lender or an assignment of the entire remaining amount of the assigning Lender's aggregate Commitments, the aggregate amount of the Commitments of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Agent) shall not be less than $5,000,000 unless the Borrower and the Agent otherwise consent, (iii) each Lender shall assign its Revolving Credit Commitment, Revolving Loans, and Term Loan in the same proportions, such that after giving effect to such assignment, the Assignor's Applicable Percentage of the Revolving Credit Commitments and Revolving Loans shall be the same as the Assignor's Applicable Percentage of the outstanding Term Loan, and the Assignee's Applicable Percentage of the Revolving Credit Commitments and Revolving Loans shall be the same as the Assignee's Applicable Percentage of the outstanding Term Loan, (iv) the parties to each assignment shall execute and deliver to the Agent an Assignment and Acceptance, and, unless such assignment is to a Lender or its Affiliate or Approved Fund, shall pay a processing and recordation fee of $3,500, and (v) the assignee, if it shall not be a Lender, shall deliver to the Agent an Administrative Questionnaire; PROVIDED further that any consent of the Borrower otherwise required under this paragraph shall not be required if an Event of Default has occurred and is continuing or in the event of an assignment to an existing Lender. (c) Upon acceptance and recording pursuant to paragraph (e) of this Section 11.4, from and after the effective date specified in each Assignment and Acceptance, the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.10, 2.11 and 11.3 and subsection 2.3(e)). Notwithstanding anything therein to the contrary, no Approved Fund shall be entitled to receive any greater amount pursuant to Sections 2.10 and 2.11 and subsection 2.3(e) than the transferor Lender would have been entitled to receive in respect of the assignment effected by such transferor Lender had no assignment occurred. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with paragraph (b) of this Section 11.4 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (f) of this Section. (d) The Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices in Boston, Massachusetts a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the 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, and the Borrower, the Agent, the Issuing Lender and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Issuing Lender and any Lender or the Agent, at any reasonable time and from time to time upon reasonable prior notice. (e) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, together with each Note subject to such assignment, 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 11.4 and any written consent to such assignment required by paragraph (b) of this Section 11.4, the Agent shall accept such Assignment and Acceptance, record the information contained therein in the Register and give prompt notice thereof to the Borrower and the Lenders (other than the assigning Lender). No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph. Within five (5) Business Days after receipt of such notice, the Borrower, at its own expense, shall execute and deliver to the Agent, in exchange for each surrendered Note, a new Note to the order of such assignee in an amount equal to the amount assumed by such assignee pursuant to such Assignment and Acceptance and, if the assigning Lender has retained some portion of its obligations hereunder, a new Note to the order of the assigning Lender in an amount equal to the amount retained by it hereunder. Such new Notes shall provide that they are replacements for the surrendered Notes, shall be in an aggregate principal amount equal to the aggregate principal amount of the surrendered Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of the assigned Notes. (f) Any Lender may, without the consent of or notice to the Borrower, the Agent or the Issuing Lender, sell participations to one or more banks or other entities (a "PARTICIPANT") in all or a portion of such Lender's rights and obligations under this Agreement (including all or a portion of its Commitments 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 Borrower, the Agent, the Issuing Lender and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; PROVIDED that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 11.2(b), or in Section 11.2(c), that affects such Participant. Subject to paragraph (g) of this Section 11.4, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.10 and 2.11 and subsection 2.3(e) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section 11.4. (g) A Participant shall not be entitled to receive any greater payment under Section 2.10 or 2.11 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower's prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.11 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with subsection 2.11(e) as though it were a Lender. (h) 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 such pledge or assignment 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 assignee for such Lender as a party hereto. (i) Anything in this Section 11.4 to the contrary notwithstanding, no Lender may assign or participate any interest in any Loan held by it hereunder to any Credit Party or any of its Affiliates or Subsidiaries without the prior consent of each Lender and the Agent. (j) A Lender may furnish any information concerning any Credit Party or any of its Subsidiaries in the possession of such Lender from time to time to assignees and participants (including prospective assignees and participants) subject, however, to and so long as the recipient agrees in writing to be bound by, the provisions of Section 11.13. In addition, the Agent may furnish any information concerning any Credit Party, any of its Subsidiaries, or any Affiliate in the Agent's possession to any Affiliate of the Agent, subject, however, to the provisions of Section 11.13. The Credit Parties shall assist any Lender in effectuating any assignment or participation pursuant to this Section 11.4 (including during syndication) in whatever manner such Lender reasonably deems necessary, including participation in meetings with prospective transferees. (k) If any assignee Lender is an Affiliate of the Credit Parties, then any such assignee Lender shall have no right to vote as a Lender hereunder or under any of the other Loan Documents for purposes of granting consents or waivers or for purposes of agreeing to amendments or other modifications to any of the Loan Documents or for purposes of making requests to the Agent pursuant to Section 9.1, and the determination of the Required Lenders shall for all purposes of this Agreement and the other Loan Documents be made without regard to such assignee Lender's interest in any of the Loans or Reimbursement Obligations. If any Lender sells a participating interest in any of the Loans or Reimbursement Obligations to a Participant, and such Participant is any Credit Party or an Affiliate of such Credit Party, then such transferor Lender shall promptly notify the Agent of the sale of such participation. A transferor Lender shall have no right to vote as a Lender hereunder or under any of the other Loan Documents for purposes of granting consents or waivers or for purposes of agreeing to amendments or modifications to any of the Loan Documents or for purposes of making requests to the Agent pursuant to Section 9.1 to the extent that such participation is beneficially owned by any Credit Party or any Affiliate of such Credit Party, and the determination of the Required Lenders shall for all purposes of this Agreement and the other Loan Documents be made without regard to the interest of such transferor Lender in the Loans or Reimbursement Obligations to the extent of such participation. (l) Notwithstanding anything to the contrary contained in this subsection 11.4, any Lender (a "GRANTING LENDER") may grant to a special purpose funding vehicle (an "SPC") of such Granting Lender, identified as such in writing from time to time delivered by the Granting Lender to the Agent and the Credit Parties, the option to provide to such Credit Party all or any part of any Loan that such Granting Lender would otherwise be obligated to make to such Credit Party pursuant to this Agreement, PROVIDED that (i) nothing herein shall constitute a commitment to make any Loan by any SPC, (ii) the Granting Bank's obligations under this Agreement shall remain unchanged, (iii) the Granting Lender should retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement and (iv) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by the Granting Lender. Each party hereto hereby agrees that no SPC shall be liable for any expense reimbursement, indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the later of (i) the payment in full of all outstanding senior indebtedness of any SPC and (ii) the Maturity Date, it will not institute against, or join any other Person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or similar proceedings under the laws of the United States of America or any State thereof. In addition, notwithstanding anything to the contrary contained in this subsection 11.4(l), any SPC may (i) with notice to, but (except as specified below) without the prior written consent of, any Credit Party or the Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to its Granting Lender or to any financial institutions (consented to by the Agent and, so long as no Default or Event of Default has occurred and is continuing, such Credit Party, which consents shall not be unreasonably withheld or delayed) providing liquidity and/or credit facilities to or for the account of such SPC to fund the Loans made by such SPC or to support the securities (if any) issued by such SPC to fund such Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans (other than financial statements referred to in Sections 5.4 or 7.1) to any rating agency, commercial paper dealer or provider of a surety, guarantee or credit or liquidity enhancement to such SPC. In no event shall any Credit Party be obligated to pay to an SPC that has made a Loan any greater amount than such Credit Party would have been obligated to pay under this Agreement if the Granting Lender had made such Loan. An amendment to this subsection 11.4(l) without the written consent of an SPC shall be ineffective insofar as it alters the rights and obligations of such SPC. 11.5. SURVIVAL. All covenants, agreements, representations and warranties made by the Credit Parties and Subsidiaries herein and in the other Loan Documents, and in the certificates or other instruments delivered in connection with or pursuant to this Agreement and the other Loan Documents, shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the other 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 Agent, the Issuing Lender 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 so long as the principal of or any accrued interest on any Loan or any fee or any other Obligation payable under this Agreement or the other Loan Documents 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 2.10, 2.11, 10.3, and 11.4 and subsection 2.3(e) shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any other Loan Document or any provision hereof or thereof. 11.6. COUNTERPARTS; INTEGRATION; REFERENCES TO AGREEMENT; EFFECTIVENESS. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Agent or its counsel 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. Whenever there is a reference in any Loan Document or UCC Financing Statement to the "CREDIT AGREEMENT" to which the Agent, the Lenders and the Credit Parties are parties, such reference shall be deemed to be made to this Agreement among the parties hereto. Except as provided in Section 6.1, this Agreement shall become effective when it shall have been executed by the Agent and when the 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. 11.7. 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. 11.8. RIGHT OF SETOFF. Each Credit Party hereby grants to the Agent, the Cash Management Bank and each Lender that from time to time maintains any deposit accounts, holds or controls any funds, collateral or property, or otherwise becomes indebted to the Credit Parties a security interest in all deposits (general or special, time or demand, provisional or final) and funds at any time held and other indebtedness at any time owing by the Agent, the Cash Management Bank or any Lender to or for the credit or the account of any Credit Party as security for the Obligations, and the Credit Parties hereby agree that if an Event of Default shall have occurred and be continuing, the Agent, the Cash Management Bank and each Lender 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) or other funds, securities or other property of the Credit Parties at any time held and other indebtedness at any time owing by the Agent, the Cash Management Bank or such Lender to or for the credit or the account of any Credit Party against any and all of the Obligations, irrespective of whether or not the Agent or the Lenders shall have made any demand under this Agreement and although any of the Obligations may be unmatured. The rights of the Agent, the Canadian Lender, the Cash Management Bank and each Lender under this Section 11.8 are in addition to any other rights and remedies (including other rights of setoff) which the Agent, the Cash Management Bank or any such Lender may have. ANY AND ALL RIGHTS TO REQUIRE THE CASH MANAGEMENT BANK OR ANY LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF ANY CREDIT PARTY ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED. Each of the Lenders agree with each other Lender that (a) if an amount to be set off is to be applied to Indebtedness of any Credit Party to such Lender, other than Indebtedness evidenced by the Notes held by such Lender or constituting Reimbursement Obligations owed to such Lender, such amount shall be applied ratably to such other Indebtedness and to the Indebtedness evidenced by all such Notes held by such Lender or constituting Reimbursement Obligations owed to such Lender, and (b) if such Lender shall receive from any Credit Party, whether by voluntary payment, exercise of the right of setoff, counterclaim, cross action, enforcement of the claim evidenced by the Notes held by, or constituting Reimbursement Obligations owed to, such Lender by proceedings against such Credit Party at law or in equity or by proof thereof in bankruptcy, reorganization, liquidation, receivership or similar proceedings, or otherwise, and shall retain and apply to the payment of the Note or Notes held by, or Reimbursement Obligations owed to, such Lender any amount in excess of its ratable portion of the payments received by all of the Lenders with respect to the Notes held by, and Reimbursement Obligations owed to, all of the Lenders, such Lender will make such disposition and arrangements with the other Lenders with respect to such excess, either by way of distribution, PRO TANTO assignment of claims, subrogation or otherwise as shall result in each Lender receiving in respect of the Notes held by it or Reimbursement Obligations owed it, its proportionate payment as contemplated by this Agreement; PROVIDED that if all or any part of such excess payment is thereafter recovered from such Lender, such disposition and arrangements shall be rescinded and the amount restored to the extent of such recovery, but without interest. 11.9. SUBORDINATION BY CREDIT PARTIES. The Credit Parties hereby agree that all present and future Indebtedness of any Credit Party to another Credit Party ("INTERCOMPANY INDEBTEDNESS") shall be subordinate and junior in right of payment and priority to the Obligations, and each Credit Party agrees not to make, demand, accept or receive any payment in respect of any present or future Intercompany Indebtedness, including, without limitation, any payment received through the exercise of any right of setoff, counterclaim or cross claim, or any collateral therefor, unless and until such time as the Obligations shall have been indefeasibly paid in full; PROVIDED that, so long as no Default shall have occurred and be continuing and no Default shall be caused thereby, the Credit Parties may make and receive such payments as shall be customary in the ordinary course of the Credit Parties' business. If, notwithstanding the foregoing sentence, any Credit Party shall collect, enforce or receive any amounts in respect of such indebtedness while any Obligations are still outstanding, such amounts shall be collected, enforced and received by such Credit Party as trustee for the Lenders and the Agent and be paid over to the Agent, for the benefit of the Lenders and the Agent, on account of the Obligations, without affecting in any manner the liability of such Credit Party under the other provisions of this Agreement. Without in any way limiting the foregoing, in the event of any insolvency or bankruptcy proceedings, or any receivership, liquidation, reorganization, dissolution or other similar proceedings relative to any Credit Party or to its businesses, properties or assets, the Lenders shall be entitled to receive payment in full of all of the Obligations, before any Credit Party shall be entitled to receive any payment in respect of any present or future Intercompany Indebtedness. 11.10. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) This Agreement shall be construed in accordance with and governed by the law of The Commonwealth of Massachusetts. (b) Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the courts of The Commonwealth of Massachusetts and of the United States District Court for the District of Massachusetts, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents, 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 Massachusetts court (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 shall affect any right that the Agent, the Issuing Lender, the Canadian Lender. the Cash Management Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against any Credit Party or any of its Subsidiaries or its properties in the courts of any jurisdiction. (c) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any court referred to in paragraph (b) of this Section 11.10. 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 the manner provided for notices in Section 11.1. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law. 11.11. 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 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 BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.11. 11.12. HEADINGS AND DRAFTING. 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. Each of the parties hereto agrees that no party hereto shall be deemed to be the drafter of this Agreement. 11.13. CONFIDENTIALITY. Each Lender agrees to keep confidential information obtained by it pursuant hereto and the other Loan Documents confidential in accordance with such Lender's customary practices and agrees that it will only use such information in connection with the transactions contemplated by this Agreement and not disclose any of such information other than (a) to such Lender's employees, representatives, directors, attorneys, auditors, agents, professional advisors, trustees or Affiliates who are advised of the confidential nature of such information or to any direct or indirect contractual counterparty in swap agreements or such contractual counterparty's professional advisor (so long as such contractual counterparty or professional advisor to such contractual counterparty agrees to be bound by the provisions of this Section 11.13), (b) to the extent such information presently is or hereafter becomes available to such Lender on a non-confidential basis from any source of such information that is in the public domain at the time of disclosure, (c) to the extent disclosure is required by law (including applicable securities law), regulation, subpoena or judicial order or process (PROVIDED that notice of such requirement or order shall be promptly furnished to the Borrower unless such notice is legally prohibited) or requested or required by bank, securities, insurance or investment company regulators or auditors or any administrative body or commission to whose jurisdiction such Lender may be subject, (d) to any rating agency to the extent required in connection with any rating to be assigned to such Lender, (e) to assignees or participants or prospective assignees or participants who agree to be bound by the provisions of this Section 11.13, (f) to the extent required in connection with any litigation between any Credit Party and any Lender with respect to the Loans or this Agreement and the other Loan Documents or (g) with the Borrower's prior written consent. [Remainder of page intentionally left blank] 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. BORROWER -------- COLUMBUS MCKINNON CORPORATION By: /s/ Robert L. Montgomery ------------------------ Name: Robert L. Montgomery Title: Executive Vice President CANADIAN BORROWERS ------------------ LARCO INDUSTRIAL SERVICES LTD By: /s/ Robert L. Montgomery ------------------------ Name: Robert L. Montgomery Title: Treasurer COLUMBUS MCKINNON LIMITED By: /s/ Robert L. Montgomery ------------------------ Name: Robert L. Montgomery Title: Assistant Treasurer GUARANTORS ---------- YALE INDUSTRIAL PRODUCTS, INC. By: /s/ Robert L. Montgomery ------------------------ Name: Robert L. Montgomery Title: Treasurer CRANE EQUIPMENT & SERVICE, INC. By: /s/ Robert L. Montgomery ------------------------ Name: Robert L. Montgomery Title: Treasurer AUDUBON WEST, INC. By: /s/ Robert L. Montgomery ------------------------ Name: Robert L. Montgomery Title: Treasurer LICO STEEL, INC. By: /s/ Robert L. Montgomery ------------------------ Name: Robert L. Montgomery Title: Treasurer AUDUBON EUROPE S.A.R.L. By: /s/ Robert L. Montgomery ------------------------ Name: Robert L. Montgomery Title: Manager AGENT FLEET CAPITAL CORPORATION, as Administrative Agent By: /s/ Daniel P. Corcoran, Jr. -------------------------- Name: Daniel P. Corcoran, Jr. Title: Senior Vice President ISSUING LENDER -------------- FLEET NATIONAL BANK, as Issuing Lender By: /s/ Stephen P. Phalen --------------------- Name: Stephen P. Phalen Title: Senior Vice President CASH MANAGEMENT BANK -------------------- FLEET NATIONAL BANK, as Cash Management Bank By: /s/ Stephen P. Phalen --------------------- Name: Stephen P. Phalen Title: Senior Vice President LENDER ------ FLEET CAPITAL CORPORATION By: /s/ Daniel P. Corcoran, Jr. -------------------------- Name: Daniel P. Corcoran, Jr. Title: Senior Vice President LENDER ------ CITIZENS BUSINESS CREDIT COMPANY, A DIVISION OF CITIZENS LEASING, INC. By: /s/ Paul A. Rebholz ------------------- Name: Paul A. Rebholz Title: First Vice President LENDER ------ CONGRESS FINANCIAL CORPORATION (NEW ENGLAND) By: /s/ John Husse -------------- Name: John Husse Title: First Vice President LENDER ------ KEY BANK N.A. By: /s/ Mark R Hursty ----------------- Name: Mark R. Hursty Title: Vice President LENDER ------ LASALLE BUSINESS CREDIT, INC. By: /s/ Anthony J. Veith -------------------- Name: Anthony J. Veith Title: Senior Vice President LENDER ------ MANUFACTURERS AND TRADERS TRUST COMPANY By: /s/ Jeffrey P. Kenefick ----------------------- Name: Jeffrey P. Kenefick Title: Vice President LENDER ------ MERRILL LYNCH CAPITAL, A DIVISION OF MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC. By: /s/ T. Bukowski ----------------------- Name: T. Bukowski Title: Director EX-10 4 regiment.txt REGIMENT DOMESTIC CREDIT AGREEMENT FINANCING AGREEMENT DATED AS OF NOVEMBER 21, 2002 BY AND AMONG COLUMBUS MCKINNON CORPORATION, AS BORROWER, EACH SUBSIDIARY OF THE BORROWER LISTED AS A GUARANTOR ON THE SIGNATURE PAGES HERETO, AS GUARANTORS, THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY HERETO, AS LENDERS, AND REGIMENT CAPITAL III, L.P., AS AGENT TABLE OF CONTENTS Page ARTICLE I DEFINITIONS; CERTAIN TERMS......................................1 Section 1.01 Definitions................................................1 Section 1.02 Terms Generally...........................................24 Section 1.03 Accounting and Other Terms................................25 Section 1.04 Time References...........................................25 ARTICLE II THE LOANS......................................................25 Section 2.01 Term Loan Commitments.....................................25 Section 2.02 Making the Term Loan......................................26 Section 2.03 Repayment of the Term Loan; Evidence of Debt..............26 Section 2.04 Interest..................................................27 Section 2.05 Reduction of the Term Loan Commitment; Prepayment of the Term Loan.................................................28 Section 2.06 Fees......................................................31 Section 2.07 Securitization............................................32 Section 2.08 Taxes.....................................................32 ARTICLE III THE COLLATERAL.................................................34 Section 3.01 Grant of Security Interest................................34 Section 3.02 Special Representations, Warranties and Covenants of the Loan Parties.......................................35 Section 3.03 Fixtures, etc.............................................42 Section 3.04 Right of Agent to Dispose of Collateral, etc..............42 Section 3.05 Right of Agent to Use and Operate Collateral, etc.........42 Section 3.06 Proceeds of Collateral....................................43 Section 3.07 Relation to Collateral Documents..........................43 Section 3.08 Marshalling...............................................44 ARTICLE IV FEES, PAYMENTS AND OTHER COMPENSATION..........................45 Section 4.01 Audit and Collateral Monitoring Fees......................45 Section 4.02 Payments; Computations and Statements.....................45 Section 4.03 Sharing of Payments, Etc..................................46 Section 4.04 Apportionment of Payments.................................46 Section 4.05 Increased Costs and Reduced Return........................47 ARTICLE V CONDITIONS TO THE TERM LOAN....................................48 Section 5.01 Conditions Precedent to Effectiveness.....................48 ARTICLE VI REPRESENTATIONS AND WARRANTIES.................................53 Section 6.01 Representations and Warranties............................53 ARTICLE VII COVENANTS OF THE LOAN PARTIES..................................63 Section 7.01 Affirmative Covenants.....................................63 Section 7.02 Negative Covenants........................................72 ARTICLE VIII MANAGEMENT, COLLECTION AND STATUS OF ACCOUNTS RECEIVABLE AND OTHER COLLATERAL.....................................................81 Section 8.01 Management of Collateral..................................81 Section 8.02 Accounts Receivable Documentation.........................83 Section 8.03 Status of Accounts Receivable and Other Collateral........83 Section 8.04 Collateral Custodian......................................84 Section 8.05 Compliance with Working Capital Loan Agreement............84 ARTICLE IX EVENTS OF DEFAULT..............................................84 Section 9.01 Events of Default.........................................84 ARTICLE X AGENT..........................................................88 Section 10.01 Appointment...............................................88 Section 10.02 Nature of Duties..........................................89 Section 10.03 Rights, Exculpation, Etc..................................89 Section 10.04 Reliance..................................................90 Section 10.05 Indemnification...........................................90 Section 10.06 Agent Individually........................................90 Section 10.07 Successor Agent...........................................91 Section 10.08 Collateral Matters........................................91 Section 10.09 Agency for Perfection.....................................92 ARTICLE XI GUARANTY.......................................................93 Section 11.01 Guaranty..................................................93 Section 11.02 Guaranty Absolute.........................................93 Section 11.03 Waiver....................................................94 Section 11.04 Continuing Guaranty; Assignments..........................94 Section 11.05 Subrogation...............................................94 ARTICLE XII MISCELLANEOUS..................................................95 Section 12.01 Notices, Etc..............................................95 Section 12.02 Amendments, Etc...........................................96 Section 12.03 No Waiver; Remedies, Etc..................................97 Section 12.04 Expenses; Taxes; Attorneys' Fees..........................97 Section 12.05 Right of Set-off..........................................98 Section 12.06 Severability..............................................98 Section 12.07 Assignments and Participations............................98 Section 12.08 Counterparts.............................................101 Section 12.09 GOVERNING LAW............................................101 Section 12.10 CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE................................................101 Section 12.11 WAIVER OF JURY TRIAL, ETC................................102 Section 12.12 Consent by the Agent and Lenders.........................102 Section 12.13 No Party Deemed Drafter..................................103 Section 12.14 Reinstatement; Certain Payments..........................103 Section 12.15 Indemnification..........................................103 Section 12.16 Records..................................................104 Section 12.17 Binding Effect...........................................104 Section 12.18 Interest.................................................104 Section 12.19 Confidentiality..........................................106 Section 12.20 Integration..............................................106 FINANCING AGREEMENT Financing Agreement, dated as of November 21, 2002, by and among Columbus McKinnon Corporation, a New York corporation (the "BORROWER"), each subsidiary of the Borrower listed as a "GUARANTOR" on the signature pages hereto (each a "Guarantor" and collectively, the "GUARANTORS"), the financial institutions from time to time party hereto (each a "LENDER" and collectively, the "LENDERS"), and Regiment Capital III, L.P., a Delaware limited partnership, as agent for the Lenders (in such capacity, the "AGENT"). RECITALS The Borrower has asked the Lenders to extend credit to the Borrower consisting of a term loan in the aggregate principal amount of $60,000,000. The proceeds of the term loan shall be used to partially refinance the Existing Indebtedness (as hereinafter defined) under the Existing Credit Facility (as hereinafter defined), thereby constituting a partial replacement of the Existing Credit Facility, and to pay fees and expenses related to this Agreement. The Lenders are severally, and not jointly, willing to extend such credit to the Borrower subject to the terms and conditions hereinafter set forth. In consideration of the premises and the covenants and agreements contained herein, the parties hereto agree as follows: ARTICLE I DEFINITIONS; CERTAIN TERMS Section 1.01 DEFINITIONS. As used in this Agreement, the following terms shall have the respective meanings indicated below, such meanings to be applicable equally to both the singular and plural forms of such terms: "ACCOUNT DEBTOR" means each debtor, customer or obligor in any way obligated on or in connection with any Account Receivable. "ACCOUNT RECEIVABLE" means, with respect to any Person, any and all rights of such Person to payment for goods sold and/or services rendered, including accounts, general intangibles and any and all such rights evidenced by chattel paper, instruments or documents, whether due or to become due and whether or not earned by performance, and whether now or hereafter acquired or arising in the future, and any proceeds arising therefrom or relating thereto. "ACCUMULATED OTHER COMPREHENSIVE GAINS (OR LOSSES)" means "accumulated other comprehensive gains (or losses)" as defined under GAAP. "ACTION" has the meaning specified therefor in Section 12.12. "ADDITIONAL MORTGAGES" has the meaning specified therefor in Section 7.01(m). "ADDITIONAL MORTGAGED PROPERTY" means any Real Property Asset that is now owned or leased, or hereinafter acquired or leased, by the Loan Parties, which the Agent determines to acquire a Mortgage on following the Effective Date. "AFFILIATE" means, with respect to a specified Person, another Person that Controls or is Controlled by or is under common Control with the Person specified. Notwithstanding anything herein to the contrary, in no event shall any Agent or any Lender be considered an "Affiliate" of any Loan Party. "AGENT" has the meaning specified therefor in the preamble hereto. "AGENT ADVANCES" has the meaning specified therefor in Section 10.08(a). "AGENT'S ACCOUNT" means an account at a bank designated by the Agent from time to time as the account into which the Loan Parties shall make all payments to the Agent for the benefit of the Agent and the Lenders under this Agreement and the other Loan Documents. "AGREEMENT" means this Financing Agreement, including all amendments, modifications and supplements and any exhibits or schedules to any of the foregoing, and shall refer to the Agreement as the same may be in effect at the time such reference becomes operative. "ANNIVERSARY FEE" has the meaning specified therefor in Section 2.06(c). "ANNIVERSARY FEE PERCENTAGE" means a percentage equal to (a) on the first anniversary of the Effective Date, 1.00%, (b) on the second anniversary of the Effective Date, 1.25%, (c) on the third anniversary of the Effective Date, 1.50%, and (d) on the fourth anniversary of the Effective Date, 1.75%. "APPLICABLE MARGIN" means, as of any date of determination, a percentage equal to (a) during the period of time from and after the Effective Date up to the date that is immediately prior to the first anniversary of the Effective Date, 0.00%, (b) during the period of time from and including the date that is the first anniversary of the Effective Date up to the date that is immediately prior to the second anniversary of the Effective Date, 0.50%, (c) during the period of time from and including the date that is the second anniversary of the Effective Date up to the date that is immediately prior to the third anniversary of the Effective Date, 1.00%, and (d) during the period of time from and including the date that is the third anniversary of the Effective Date up to and including the Final Maturity Date, 1.50%. "APPRAISED VALUE" means the fair market value of any Real Property Assets determined by the most recent appraisal performed by a qualified independent appraiser, in form and substance acceptable to the Working Capital Agent. "APPROVED RESTRUCTURING CHARGES" means cash restructuring charges incurred by the Borrower and/or its Subsidiaries and approved by the Agent up to an amount not to exceed $4,500,000 in the aggregate from the Effective Date to the second anniversary of the Effective Date (of which no more than $2,300,000 shall be paid in cash by the Borrower and/or its Subsidiaries from September 30, 2002 through March 31, 2003); PROVIDED, HOWEVER, that no more than $2,000,000 - 2 - in cash restructuring charges for any one facility, plant or other Property shall constitute Approved Restructuring Charges. "ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered into by an assigning Lender and an assignee, and accepted by the Agent, in accordance with Section 12.07 hereof and substantially in the form of Exhibit J hereto or such other form acceptable to the Agent. "AUDUBON EUROPE" means Audubon Europe S.a.r.l., a company duly founded and validly existing under the laws of Luxembourg. "AUTHORIZED OFFICER" means, with respect to any Person, the chief executive officer, chief financial officer, president or executive vice president of such Person. "BANK" means JPMorgan Chase Bank, its successors or any other bank designated by the Agent to the Borrower from time to time. "BANKRUPTCY CODE" means the United States Bankruptcy Code (11 U.S.C.ss. 101, ET SEQ.), as amended, and any successor statute. "BASE INTEREST RATE" means the greater of (i) 11.50% per annum and (ii) the Reference Rate plus 5.00% per annum. "BOARD" means the Board of Governors of the Federal Reserve System of the United States. "BOARD OF DIRECTORS" means, with respect to any Person, the board of directors (or comparable managers) of such Person or any committee thereof duly authorized to act on behalf of the board. "BORROWER" has the meaning specified therefor in the preamble hereto. "BUSINESS DAY" means any day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required to close. "CANADIAN BORROWERS" means, collectively, Larco Industrial Services, Ltd., a business corporation organized under the laws of Canada, and Columbus McKinnon Limited, a business corporation organized under the laws of Canada. "CANADIAN AGENT" means Regiment Capital III, L.P., in its capacity as agent for the Canadian Lenders. "CANADIAN FINANCING AGREEMENT" means the Financing Agreement by and among the Canadian Borrowers, the Canadian Lenders and the Canadian Agent. "CANADIAN LENDERS" means the financial institutions from time to time party to the Canadian Financing Agreement. - 3 - "CANADIAN LOAN DOCUMENTS" means, collectively, the Canadian Financing Agreement and each other "Loan Document" as defined under the Canadian Financing Agreement. "CANADIAN TERM LOAN" means the term loan made by the Canadian Lenders to the Canadian Borrowers on the Effective Date pursuant to the Canadian Financing Agreement in the aggregate principal amount of $10,000,000. "CAPITAL EXPENDITURES" means, for any period, the sum for the Borrower and its consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP) of the aggregate amount of expenditures made or liabilities incurred during such period (including the aggregate amount of Capital Lease Obligations incurred during such period) to acquire or construct fixed assets, plant and equipment (including renewals, improvements and replacements, but excluding repairs) computed in accordance with GAAP; PROVIDED that such term shall not include any such expenditures in connection with any replacement or repair of Property affected by a Casualty Event. "CAPITAL GUIDELINE" means any law, rule, regulation, policy, guideline or directive (whether or not having the force of law and whether or not the failure to comply therewith would be unlawful) of any central bank or Governmental Authority (i) regarding capital adequacy, capital ratios, capital requirements, the calculation of a bank's capital or similar matters, or (ii) affecting the amount of capital required to be obtained or maintained by any Lender or any Person controlling any Lender or the manner in which any Lender or any Person controlling any Lender allocates capital to any of its contingent liabilities (including letters of credit), advances, acceptances, commitments, assets or liabilities. "CAPITAL LEASE OBLIGATIONS" of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP. "CAPITAL STOCK" means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, and (ii) with respect to any Person that is not a corporation, any and all partnership, membership or other equity interests of such Person. "CASH MANAGEMENT BANK" means Fleet National Bank. "CASUALTY EVENT" means, with respect to any Property of any Person, any loss of or damage to, or any condemnation or other taking of, such Property for which such Person or any of its Subsidiaries receives insurance proceeds, or proceeds of a condemnation award or other compensation. "CHANGE OF CONTROL" means each occurrence of any of the following: - 4 - (a) the acquisition, directly or indirectly, by any person or group (within the meaning of Section 13(d)(3) of the Exchange Act) of beneficial ownership of more than 25% of the aggregate outstanding voting power of the Capital Stock of the Borrower; (b) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Borrower (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of the Borrower was approved by a vote of at least a majority the directors of the Borrower then still in office who were either directors at the beginning of such period, or whose election or nomination for election was previously approved) cease for any reason to constitute a majority of the Board of Directors of the Borrower; (c) the Borrower shall cease to have beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of 100% of the aggregate voting power of the Capital Stock of each other Loan Party, free and clear of all Liens (other than any Liens granted hereunder and Permitted Liens); or (d) (i) any Loan Party consolidates with or merges into another entity or conveys, transfers or leases all or substantially all of its properties and assets to another Person other than as permitted under Section 7.02(d)(iii), or (ii) any entity consolidates with or merges into any Loan Party in a transaction pursuant to which the outstanding voting Capital Stock of such Loan Party is reclassified or changed into or exchanged for cash, securities or other property, other than any such transaction described in this clause (ii) in which either (A) in the case of any such transaction involving the Borrower, no person or group (within the meaning of Section 13(d)(3) of the Exchange Act) has, directly or indirectly, acquired beneficial ownership of more than 25% of the aggregate outstanding voting Capital Stock of the Borrower or (B) in the case of any such transaction involving a Loan Party other than the Borrower, the Borrower has beneficial ownership of 100% of the aggregate voting power of all Capital Stock of the resulting, surviving or transferee entity; or (e) a "Change of Control" shall occur under the Senior Subordinated Note Indenture. "CLOSING FEE" has the meaning specified therefor in Section 2.06(a). "COLLATERAL" means all of the property and assets and all interests therein and proceeds thereof now owned or hereafter acquired by any Person upon which a Lien is granted or purported to be granted by such Person as security for all or any part of the Obligations. "COLLATERAL DOCUMENT" means any Patent Agreement, any Trademark Agreement, any Copyright Mortgage, any Pledge Agreement (including, without limitation, any pledge and security agreement delivered pursuant to Section 5.01(d), 7.01(o) or 7.01(r)), any Mortgage, and any other instruments and documents, including without limitation Uniform Commercial Code financing statements, and the like, required to be executed or delivered pursuant to this Agreement or any Collateral Document. "COMPLIANCE CERTIFICATE" means a certificate signed by a Designated Financial Officer, substantially in the form of Exhibit H, (a) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the - 5 - details thereof and any action taken or proposed to be taken with respect thereto, (b) setting forth reasonably detailed calculations demonstrating compliance with Section 7.02(j), and (c) stating whether any change in GAAP or in the application thereof has occurred since the date of the audited financial statements referred to in Section 6.01(d) and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate. "CONTINGENT OBLIGATION" means, with respect to any Person, any obligation 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, without limitation, (i) the direct or indirect guaranty, endorsement (other than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of a primary obligor, (ii) the obligation to make take-or-pay or similar payments, if required, regardless of nonperformance by any other party or parties to an agreement, (iii) 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 (1) for the purchase or payment of any such primary obligation or (2) 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, assets, 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 or (D) 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 any product warranties extended in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation with respect to which such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for which such Person may be liable pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability with respect thereto (assuming such Person is required to perform thereunder), as determined by such Person in good faith. "CONTROL" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "CONTROLLING" and "CONTROLLED" have meanings correlative thereto. A Person who owns or holds capital stock, beneficial interests or other securities representing five percent (5%) or more of the Total Voting Power of another Person shall be deemed, for purposes of this Agreement, to "control" such other Person. "COPYRIGHT MORTGAGE" means a Memorandum of Grant of Security Interest in Copyrights made by a Loan Party in favor of the Agent, substantially in the form of Exhibit E. "COPYRIGHTS" means all copyrights, whether statutory or common law, owned by or assigned to the Loan Parties, and all exclusive and nonexclusive licenses to the Loan Parties from third parties or rights to use copyrights owned by such third parties, including, without limitation, the registrations, applications and licenses listed on Schedule 6.01(e) hereto, along with any and all (a) renewals and extensions thereof, (b) income, royalties, damages, claims - 6 - and payments now and hereafter due and/or payable with respect thereto, including, without limitation, damages and payments for past, present or future infringements thereof, (c) rights to sue for past, present and future infringements thereof, and (d) foreign copyrights and any other rights corresponding thereto throughout the world. "DEFAULT" means an event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default. "DESIGNATED FINANCIAL OFFICER" means an individual holding one or more of the following offices with the Borrower or otherwise having executive responsibilities for financial matters and listed in Schedule 1.01(B) hereto: chief financial officer, principal accounting officer, treasurer, assistant treasurer or controller. "DISCLOSED MATTERS" means the actions, suits and proceedings and the environmental matters disclosed in Schedule 6.01(f) hereto. "DISPOSITION" means any transaction, or series of related transactions, pursuant to which any Person or any of its Subsidiaries sells, assigns, transfers or otherwise disposes of any property or assets (whether now owned or hereafter acquired) to any other Person, in each case, whether or not the consideration therefor consists of cash, securities or other assets owned by the acquiring Person, EXCLUDING any sales of Inventory in the ordinary course of business on ordinary business terms. "DOLLAR," "DOLLARS" and the symbol "$" each means lawful money of the United States of America. "DOMESTIC SUBSIDIARY" means, at any time, any Subsidiary of the Borrower organized under the laws of the United States of America or any State thereof, including any Subsidiary of the Borrower listed in Schedule 1.01(C) hereto. "EBITDA" means, for any period and without duplication, (a) the net income of the Borrower and its Subsidiaries (determined on a consolidated basis in accordance with GAAP) for such period, PLUS (b) to the extent deducted in calculating net income without duplication (i) income taxes accrued during such period, (ii) Interest Expense during such period, (iii) depreciation, amortization and other Non-Cash Charges accrued for such period, and (iv) Approved Restructuring Charges incurred during such period, MINUS (c) to the extent such items were added in calculating net income (i) extraordinary gains during such period, (ii) gains from any Casualty Event, Disposition, or discontinued operation during such period, and (iii) interest and other income (excluding interest and other income related to CM Insurance Company, Inc.) during such period. "EFFECTIVE DATE" means the date, on or before November 30, 2002, on which all of the conditions precedent set forth in Section 5.01 are satisfied or waived and the Term Loan is made. "ENVIRONMENTAL ACTIONS" means any complaint, summons, citation, notice, directive, order, claim, litigation, investigation, judicial or administrative proceeding, judgment, letter or other communication from any Person or Governmental Authority involving violations of Environmental Laws or Releases of - 7 - Hazardous Materials (i) from any assets, properties or businesses owned or operated by any Loan Party or any of its Subsidiaries or any predecessor in interest; (ii) from adjoining properties or businesses; or (iii) onto any facilities which received Hazardous Materials generated by any Loan Party or any of its Subsidiaries or any predecessor in interest. "ENVIRONMENTAL LAWS" means the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.ss. 9601, ET SEQ. ("CERCLA")), the Hazardous Materials Transportation Act (49 U.S.C.ss.1801, ET SEQ.), the Resource Conservation and Recovery Act (42 U.S.C.ss. 6901, ET SEQ.), the Federal Clean Water Act (33 U.S.C.ss. 1251 ET SEQ.), the Clean Air Act (42 U.S.C.ss. 7401 ET SEQ.), the Toxic Substances Control Act (15 U.S.C.ss. 2601 ET SEQ.), the Occupational Safety and Health Act (29 U.S.C.ss. 651 ET seq.), and the Superfund Amendments and Reauthorization Act of 1986, as such laws may be amended or otherwise modified from time to time, and any other present or future federal, state, local or foreign statute, ordinance, rule, regulation, order, judgment, decree, permit, license or other binding determination of any Governmental Authority imposing liability or establishing standards of conduct for protection of the environment or other government restrictions relating to the protection of the environment or the Release, deposit or migration of any Hazardous Materials into the environment. "ENVIRONMENTAL LIABILITIES" means all liabilities, monetary obligations, Remedial Actions, losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts and consultants and costs of investigations and feasibility studies), fines, penalties, sanctions and interest incurred as a result of any claim or demand by any Governmental Authority or any third party, and which relate to any environmental condition or a Release of Hazardous Materials from or onto (i) any property presently or formerly owned by any Loan Party or any of its Subsidiaries or (ii) any facility which received Hazardous Materials generated by any Loan Party or any of its Subsidiaries. "ENVIRONMENTAL LIEN" means any Lien in favor of any Governmental Authority for Environmental Liabilities. "EQUITY RIGHTS" means, with respect to any Person, any subscriptions, options, warrants, commitments, preemptive rights or agreements of any kind (including any stockholders' or voting trust agreements) for the issuance or sale of, or securities convertible into, any additional shares of Capital Stock of any class, or partnership or other ownership interests of any type in, such Person. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, and regulations thereunder, in each case, as in effect from time to time. References to sections of ERISA shall be construed also to refer to any successor sections. "ERISA AFFILIATE" means any trade or business (whether or not incorporated) that, together with the Loan Parties, is treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of the Internal Revenue Code. Notwithstanding the foregoing, for purposes of any liability - 8 - related to a Multiemployer Plan under Title IV of ERISA, the term "ERISA Affiliate" means any trade or business that, together with the Loan Parties, is treated as a single employer within the meaning of Section 4001(b) of ERISA. "ERISA EVENT" means (a) a "reportable event", as defined in Section 4043 of ERISA or the regulations issued thereunder for which the notice requirement has not been waived with respect to any Pension Plan, (b) the existence with respect to any Pension Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Internal Revenue Code or Section 302 of ERISA), whether or not waived, (c) the filing pursuant to Section 412(d) of the Internal Revenue Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Pension Plan, (d) the incurrence by any Loan Party or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Pension Plan, (e) the receipt by any Loan Party or any ERISA Affiliate from the PBGC or plan administrator of any notice relating to an intention to terminate any Pension Plan or Pension Plans or to appoint a trustee to administer any Pension Plan, or (f) the receipt by any Loan Party or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from any Loan Party or any ERISA Affiliate of any notice 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. "EVENT OF DEFAULT" means any of the events set forth in Section 9.01. "EXCESS CASH FLOW" means, with respect to any Person for any period, (i) Net Income of such Person and its Subsidiaries for such period, PLUS (ii) all non-cash items of such Person and its Subsidiaries deducted in determining Net Income for such period, LESS (iii) the sum of (A) all non-cash items of such Person and its Subsidiaries added to the calculation of Net Income for such period, (B) all scheduled cash principal payments on the Term Loan and the Canadian Term Loan made during such period, and all scheduled cash principal payments on other Indebtedness of such Person or any of its Subsidiaries during such period (but, in the case of revolving loans, only to the extent that the commitments with respect thereto are permanently reduced by the amount of such payments) to the extent such other Indebtedness is permitted to be incurred, and such payments are permitted to be made, under this Agreement, (C) the cash portion of Capital Expenditures made by such Person and its Subsidiaries during such period to the extent permitted to be made under this Agreement and (D) all optional prepayments of principal on the Term Loan pursuant to Section 2.05(b) made to the Agent and the Lenders during and after the end of such period but on or prior to the date any Excess Cash Flow payment is required to be made pursuant to Section 2.05(c)(i) (it being understood that any such payment deducted pursuant to this clause (D) shall not be deducted from Excess Cash Flow for any subsequent period). "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "EXISTING CREDIT FACILITY" means the Credit Agreement, dated as of March 31, 1998, among the Borrower, the lenders named therein, and Fleet National Bank, as Agent. "EXISTING INDEBTEDNESS" means (i) Indebtedness of the Loan Parties existing as of the Effective Date which is being refinanced in full with the proceeds of the Term Loan and the Working Capital Loans on the Effective Date - 9 - including Indebtedness under the Existing Credit Facility and (ii) Indebtedness of the Loan Parties existing as of the Effective Date which is permitted to remain outstanding after the Effective Date under Section 7.02(a) and is listed on Schedule 7.02(a) hereto. "EXISTING LENDERS" means the lenders party to the Existing Credit Facility. "EXTRAORDINARY RECEIPTS" means any cash received by the Borrower or any of its Subsidiaries not in the ordinary course of business (and not consisting of proceeds described in Section 2.05(c)(ii) or (iii) hereof), including, without limitation, (i) foreign, United States, state or local tax refunds, (ii) pension plan reversions, (iii) proceeds of insurance, (iv) judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action, (v) condemnation awards (and payments in lieu thereof), (vi) indemnity payments and (vii) any purchase price adjustment received in connection with any purchase agreement. "FASB" means Financial Accounting Standards Board. "FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate per annum equal to, for each day during such period, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it. "FIELD SURVEY AND AUDIT" means a field survey and audit of the Loan Parties and an appraisal of the Collateral performed by auditors, examiners and/or appraisers selected by the Agent, at the sole cost and expense of the Borrower. "FINAL MATURITY DATE" means May 21, 2007, or such earlier date on which the Term Loan shall become due and payable in accordance with the terms of this Agreement and the other Loan Documents. "FINANCIAL STATEMENTS" means (i) the audited consolidated balance sheet of the Borrower and its Subsidiaries for the Fiscal Years ended March 31, 2000, March 31, 2001 and March 31, 2002, and the related consolidated statement of operations, shareholders' equity and cash flows for the Fiscal Years then ended, and (ii) the unaudited consolidated balance sheet of the Borrower and its Subsidiaries for the 6 months ended September 30, 2002, and the related consolidated statement of operations, shareholder's equity and cash flows for the 6 months then ended. "FISCAL YEAR" means the fiscal year of the Borrower and its Subsidiaries ending on March 31st of each year. "FIXED CHARGE COVERAGE RATIO" means, for any Reference Period, the ratio of (a) (i) EBITDA for such Reference Period MINUS (ii) the aggregate amount of all Capital Expenditures during such Reference Period MINUS (iii) the aggregate amount paid, or required to be paid (without duplication), in cash in respect of the current portion of all income taxes for such Reference Period to - 10 - (b) the sum for the Borrower and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of (i) the aggregate amount of Interest Expense for such Reference Period (net of the sum of (A) the capitalized interest accrued during such Reference Period in respect of the Term Loan and the Canadian Term Loan, PLUS (B) the amortization during such Reference Period of financing costs incurred in connection with this Agreement, the Canadian Financing Agreement, the Existing Credit Facility, the Working Capital Loan Agreement and the Senior Subordinated Note Indenture), and (ii) the aggregate amount of regularly scheduled payments of principal in respect of Indebtedness for borrowed money (including the principal component of any payments in respect of Capital Lease Obligations) paid or required to be paid during such Reference Period. "FOREIGN SUBSIDIARY" means any Subsidiary of the Borrower organized under the laws of any jurisdiction other than the United States of America or any State thereof. "GAAP" means generally accepted accounting principles in effect from time to time in the United States, applied on a consistent basis, PROVIDED that for the purpose of Section 7.02(j) hereof and the definitions used therein, "GAAP" shall mean generally accepted accounting principles in effect on the date hereof and consistent with those used in the preparation of the Financial Statements, PROVIDED, FURTHER, that if there occurs after the date of this Agreement any change in GAAP that affects in any respect the calculation of any covenant contained in Section 7.02(j) hereof, the Agent and the Borrower shall negotiate in good faith amendments to the provisions of this Agreement that relate to the calculation of such covenant with the intent of having the respective positions of the Lenders and the Borrower after such change in GAAP conform as nearly as possible to their respective positions as of the date of this Agreement and, until any such amendments have been agreed upon, the covenants in Section 7.02(j) hereof shall be calculated as if no such change in GAAP has occurred. "GOVERNMENTAL AUTHORITY" means any nation or government, any Federal, state, city, town, municipality, county, local or other political subdivision thereof or thereto and any department, commission, board, bureau, instrumentality, agency or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. "GUARANTEED OBLIGATIONS" has the meaning specified therefor in Section 11.01. "GUARANTOR" means (i) each Subsidiary of the Borrower listed as a "Guarantor" on the signature pages hereto, and (ii) each other Person which guarantees, pursuant to Section 7.01(o) or otherwise, all or any part of the Obligations. "GUARANTY" means (i) the guaranty of each Guarantor party hereto contained in ARTICLE XI hereof, and (ii) each guaranty substantially in the form of Exhibit A, made by any other Guarantor in favor of the Agent for the benefit of the Lenders pursuant to Section 7.01(o) or otherwise. "HAZARDOUS MATERIAL" means (a) any element, compound or chemical that is defined, listed or otherwise classified as a contaminant, pollutant, toxic pollutant, toxic or hazardous substance, extremely hazardous substance or chemical, hazardous waste, special waste, or solid waste under Environmental - 11 - Laws or that is likely to cause immediately, harm to or have an adverse effect on, the environment or risk to human health or safety, including, without limitation, any pollutant, contaminant, waste, hazardous waste, toxic substance or dangerous good which is defined or identified in any Environmental Law and which is present in the environment in such quantity or state that it contravenes any Environmental Law; (b) petroleum and its refined products; (c) polychlorinated biphenyls; (d) any substance exhibiting a hazardous waste characteristic, including, without limitation, corrosivity, ignitability, toxicity or reactivity as well as any radioactive or explosive materials; and (e) any raw materials, building components (including, without limitation, asbestos-containing materials) and manufactured products containing hazardous substances listed or classified as such under Environmental Laws. "HEDGING AGREEMENT" means any interest rate, foreign currency, commodity or equity swap, collar, cap, floor or forward rate agreement, or other agreement or arrangement designed to protect against fluctuations in interest rates or currency, commodity or equity values (including, without limitation, any option with respect to any of the foregoing and any combination of the foregoing agreements or arrangements), and any confirmation executed in connection with any such agreement or arrangement. "HIGHEST LAWFUL RATE" means, with respect to the Agent or any Lender, the maximum non-usurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the Obligations under laws applicable to the Agent or such Lender which are currently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum non-usurious interest rate than applicable laws now allow. "INDEBTEDNESS" means, with respect to any Person, without duplication, (i) all indebtedness of such Person for borrowed money; (ii) all obligations of such Person for the deferred purchase price of property or services (other than trade payables which are not for borrowed money) or other accounts payable (including accrued expenses and deferred taxes) incurred in the ordinary course of such Person's business and not outstanding for more than 90 days after the date such payable was created); (iii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments or upon which interest payments are customarily made; (iv) all reimbursement, payment or other obligations and liabilities of such Person created or arising under any conditional sales or other title retention agreement with respect to property used and/or acquired by such Person, even though the rights and remedies of the lessor, seller and/or lender thereunder may be limited to repossession or sale of such property; (v) all Capital Lease Obligations of such Person; (vi) all obligations and liabilities, contingent or otherwise, of such Person, in respect of letters of credit, acceptances and similar facilities; (vii) all obligations and liabilities, calculated on a basis satisfactory to the Agent and in accordance with accepted practice, of such Person under Hedging Agreements; (viii) all Contingent Obligations; (ix) liabilities incurred under Title IV of ERISA with respect to any plan (other than a Multiemployer Plan) covered by Title IV of ERISA and maintained for employees of such Person or any of its ERISA Affiliates; (x) Withdrawal Liability incurred under ERISA by such Person or any of its ERISA Affiliates with respect to any Multiemployer Plan; and (xi) all obligations referred to in clauses (i) through (x) of this definition of another Person secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) a Lien upon property - 12 - owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness. The Indebtedness of any Person shall include the Indebtedness of any partnership of or joint venture in which such Person is a general partner or a joint venturer. "INDEMNIFIED MATTERS" has the meaning specified therefor in Section 12.15. "INDEMNITEES" has the meaning specified therefor in Section 12.15. "INSOLVENCY PROCEEDING" means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, or extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief. "INTERCREDITOR AGREEMENT" means the Lien Subordination and Intercreditor Agreement, substantially in the form of Exhibit F, by and among the Borrower, the Agent, the Lenders, the Working Capital Agent and the Working Capital Lenders. "INTEREST EXPENSE" means, for any period, the sum, without duplication, for the Borrower and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following: (a) all interest in respect of Indebtedness accrued or paid during such period (whether or not actually paid during such period), PLUS (b) the net amounts payable (or MINUS the net amounts receivable) in respect of Hedging Agreements accrued during such period (whether or not actually paid or received during such period) excluding reimbursement of legal fees and other similar transaction costs and excluding payments required by reason of the early termination of Hedging Agreements in effect on the date hereof, PLUS (c) all fees, including letter of credit fees and expenses (but excluding reimbursement of legal fees), incurred hereunder and under the Canadian Financing Agreement and the Working Capital Loan Agreement during such period. "INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as amended (or any successor statute thereto) and the regulations thereunder. "INVENTORY" means, with respect to any Person, all goods and merchandise of such Person, including, without limitation, all raw materials, work-in-process, packaging, supplies, materials and finished goods of every nature used or usable in connection with the shipping, storing, advertising or sale of such goods and merchandise, whether now owned or hereafter acquired, and all such other property the sale or other disposition of which would give rise to an Account Receivable or cash. "INVESTMENT" means, for any Person: (a) the acquisition (whether for cash, Property, services or securities or otherwise) of Capital Stock, bonds, notes, debentures, partnership, limited liability company or other ownership interests or other securities of any other Person or any agreement to make any such acquisition (including, without limitation, any "short sale" or any sale of any securities at a time when such securities are not owned by the Person entering into such short sale); (b) the making of any deposit with, or advance, loan or other extension of credit to, any other Person (including the purchase of Property from another Person subject to an understanding or agreement, - 13 - contingent or otherwise, to resell such Property to such Person, but excluding any such advance, loan or extension of credit representing the purchase price of Inventory or supplies sold by such Person in the ordinary course of business, PROVIDED that in no event shall the term of any such Inventory or supply advance, loan or extension of credit exceed 180 days); or (c) the entering into of any Guaranty of, or other contingent obligation with respect to, Indebtedness or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person. "LANDLORD'S WAIVER AND CONSENT" means, with respect to any Leasehold Property, a letter, certificate or other instrument in writing from the lessor under the related Lease, in the form approved by the Agent in its sole discretion. "LEASE" means any lease of real property to which any Loan Party or any of its Subsidiaries is a party as lessor or lessee. "LEASEHOLD PROPERTY" means any leasehold interest of any Loan Party as lessee under any Lease, other than any such leasehold interest designated from time to time by the Agent in its sole discretion as not being required to be included in the Collateral and not being of material importance to the business or operations of the Loan Parties. "LENDER" has the meaning specified therefor in the preamble hereto. "LIABILITIES" has the meaning specified therefor in Section 2.07. "LIEN" means any mortgage, deed of trust, pledge, lien (statutory or otherwise), security interest, charge or other encumbrance or security or preferential arrangement of any nature, including, without limitation, any conditional sale or title retention arrangement, any capital lease and any assignment, deposit arrangement or financing lease intended as, or having the effect of, security. "LOAN ACCOUNT" means an account maintained hereunder by the Agent on its books of account at the Payment Office and, with respect to the Borrower, in which the Borrower will be charged with the Term Loan made to, and all other Obligations incurred by, the Borrower. "LOAN DOCUMENT" means this Agreement, any Guaranty, any Collateral Document, any UCC Filing Authorization Letter, the Participation Agreement, the Intercreditor Agreement, and any other agreement, instrument, and other document executed and delivered pursuant hereto or thereto or otherwise evidencing or securing the Term Loan or any other Obligation. "LOAN PARTY" means the Borrower and any Guarantor. "LOAN SERVICING FEE" has the meaning specified therefor in Section 2.06(b). "MATERIAL ADVERSE EFFECT" means a material adverse effect on any of (i) the operations, business, assets, properties, condition (financial or otherwise) or prospects of the Borrower or the Loan Parties taken as a whole, (ii) the ability of any Loan Party to perform any of its obligations under any Loan - 14 - Document to which it is a party, (iii) the legality, validity or enforceability of this Agreement or any other Loan Document, (iv) the rights and remedies of the Agent or any Lender under any Loan Document, or (v) the validity, perfection or priority of a Lien in favor of the Agent for the benefit of the Lenders on any of the Collateral with an aggregate fair market value in excess of $100,000. "MATERIAL INDEBTEDNESS" means Indebtedness (other than the Term Loan), including, without limitation, obligations in respect of one or more Hedging Agreements, in an aggregate principal amount exceeding $1,000,000. For purposes of determining Material Indebtedness, the "principal amount" of the obligations of any Person in respect of a Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that such Person would be required to pay if such Hedging Agreement were terminated at such time. "MATERIAL LEASEHOLD PROPERTY" means a Leasehold Property reasonably determined by the Agent to be of material value as Collateral or of material importance to the operations of the Loan Parties and as to which the aggregate amount of all rents payable during any Fiscal Year exceeds $100,000. "MATERIAL OWNED PROPERTY" means any real property owned by any Loan Party that is reasonably determined by the Agent to be of material value as Collateral or of material importance to the operations of the Loan Parties. "MATERIAL RENTAL OBLIGATIONS" means obligations of the Loan Parties to pay rent under any one or more operating leases with respect to any real or personal property that is material to the business of the Loan Parties and as to which the aggregate amount of all rents payable during any Fiscal Year exceeds $100,000. "MOODY'S" means Moody's Investors Service, Inc. and any successor thereto. "MORTGAGED PROPERTY" means, at any time of determination, any and all real property owned or leased by the Loan Parties that are subject to a Mortgage in favor of the Agent for the benefit of the Lenders and the Agent, including without limitation the Properties listed on Schedule 1.01(D). "MORTGAGES" means, collectively, the several security instruments (whether designated as a deed of trust or a mortgage, leasehold mortgage, assignment of leases and rents or by any similar title) executed and delivered by any Loan Party, in such form as may be approved by the Agent in its reasonable discretion, in each case with such changes thereto as may be recommended by the Agent's local counsel based on local laws or customary local practices, with respect to the Real Property Assets owned by a Loan Party. "MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which any Loan Party or any of its ERISA Affiliates has contributed to, or has been obligated to contribute, at any time during the preceding six (6) years. - 15 - "NET CASH PROCEEDS" means, (a) with respect to any Casualty Event, the aggregate amount of cash proceeds of insurance, condemnation awards and other compensation received by the Borrower or any of its Subsidiaries in respect of such Casualty Event net of (i) reasonable expenses incurred by the Borrower or any of its Subsidiaries in connection therewith and (ii) contractually required repayments of Indebtedness to the extent secured by a Lien permitted by Section 7.02(b) on such property and (iii) any income and transfer taxes payable by the Borrower or any of its Subsidiaries in respect of such Casualty Event; (b) with respect to any Disposition, the aggregate amount of all cash payments received by the Borrower or any of its Subsidiaries directly or indirectly in connection with such Disposition, whether at the time of such Disposition or after such Disposition under deferred payment arrangements or Investments entered into or received in connection with such Disposition, net of (i) the amount of any legal, title, transfer and recording tax expenses, commissions and other fees and expenses payable by the Borrower or any of its Subsidiaries in connection therewith, (ii) any Federal, state and local income or other Taxes payable by the Borrower or any of its Subsidiaries as a result thereof, and (iii) any repayments by the Borrower or any of its Subsidiaries of Indebtedness to the extent that such Indebtedness is secured by a Lien permitted by Section 7.02(b) on the property that is the subject of such Disposition and the transferee of (or holder of a Lien on) such property requires that such Indebtedness be repaid as a condition to the purchase of such property, and (iv) any repayments by the Borrower or any of its Subsidiaries to minority stockholders if and to the extent permitted hereby; and (c) with respect to any incurrence of Indebtedness or offering of Capital Stock, the aggregate amount of all cash proceeds received by the Borrower or any of its Subsidiaries therefrom less all legal, underwriting and similar fees and expenses incurred in connection therewith; in each case of clause (a), (b) and (c) to the extent, but only to the extent, that the amounts so deducted are (x) actually paid to a Person that, except in the case of reasonable out-of-pocket expenses, is not an Affiliate of such Person or any of its Subsidiaries and (y) properly attributable to such transaction or to the asset that is the subject thereof. "NET INCOME" means, with respect to any Person for any period, the net income (loss) of such Person and its Subsidiaries for such period, determined on a consolidated basis and in accordance with GAAP, but excluding from the determination of Net Income (without duplication) (a) any extraordinary or non recurring gains or losses or gains or losses from Dispositions, (b) restructuring charges, (c) effects of discontinued operations and (d) interest income (excluding interest income from CM Insurance Company, Inc.). "NET WORTH" means, as of any date of determination thereof, the sum of Total Assets MINUS (a) Total Liabilities, plus (b) non-cash goodwill impairment charges recorded after the Effective Date in accordance with FASB Statement No. 142, and MINUS (c) Accumulated Other Comprehensive Gains (or Losses). - 16 - "NON-CASH CHARGES" means, with respect to any calculation of net income for any period, all non-cash extraordinary losses and charges (excluding inventory write-downs and Accounts Receivable charge-offs) deducted in such calculation (as determined in accordance with GAAP, including, without limitation, non-cash recognition of unrealized declines in the market value of marketable securities recorded in accordance with FASB Statement No. 115, non-cash asset impairment charges recorded in accordance with FASB Statement No. 142 and FASB Statement No. 144 (in each case, to the extent not expected to result in cash charges in the future), and non-cash restructuring charges. "NOTICE OF BORROWING" has the meaning specified therefor in Section 2.02(a). "OBLIGATIONS" means all present and future indebtedness, obligations, and liabilities of each Loan Party to the Agent and the Lenders under the Loan Documents, whether or not the right of payment in respect of such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, equitable, secured, unsecured, and whether or not such claim is discharged, stayed or otherwise affected by any proceeding referred to in Section 9.01. Without limiting the generality of the foregoing, the Obligations of each Loan Party under the Loan Documents include (a) the obligation to pay principal, interest (including the Term Loan PIK Amount), charges, expenses, fees, attorneys' fees and disbursements, indemnities and other amounts payable by such Person under the Loan Documents, and (b) the obligation of such Person to reimburse any amount in respect of any of the foregoing that the Agent or any Lender (in its sole discretion) may elect to pay or advance on behalf of such Person. "PARTICIPANT REGISTER" has the meaning specified therefor in Section 12.07(b)(v). "PARTICIPATION AGREEMENT" means the Master Risk Participation Agreement, dated as of the date hereof, by and among the Loan Parties, the Canadian Agent and the Canadian Lenders. "PATENT AGREEMENT" means a Patent Collateral Assignment and Security Agreement made by a Loan Party in favor of the Agent, substantially in the form of Exhibit D. "PATENTS" means all patents issued or assigned to and all patent applications made by the Loan Parties and, to the extent that the grant of a security interest does not cause a breach or termination thereof, all exclusive and nonexclusive licenses to the Loan Parties from third parties or rights to use patents owned by such third parties, including, without limitation, the patents, patent applications and licenses listed on Schedule 6.01(e) hereto, along with any and all (a) inventions and improvements described and claimed therein, (b) reissues, divisions, continuations, extensions and continuations-in-part thereof, (c) income, royalties, damages, claims and payments now and hereafter due and/or payable under and with respect thereto, including, without limitation, damages and payments for past or future infringements thereof, (d) rights to sue for past, present and future infringements thereof, and (e) any other rights corresponding thereto throughout the world. - 17 - "PAYMENT OFFICE" means the Agent's office located at 70 Federal Street, 7th Floor, Boston, MA 02110, or at such other office or offices of the Agent as may be designated in writing from time to time by the Agent to the Borrower. "PBGC" means the Pension Benefit Guaranty Corporation or any successor thereto. "PENSION PLAN" means any Plan that is a defined benefit pension plan subject to the provisions of Title IV of ERISA or Section 412 of the Internal Revenue Code or Section 302 of ERISA, and in respect of which any Loan Party or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA. "PERMITTED INVESTMENTS" means: (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof; (b) investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from Standard and Poor's or from Moody's; (c) investments in certificates of deposit, banker's acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof which has a combined capital and surplus and undivided profits of not less than $250,000,000; (d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above; (e) advances, loans and extensions of credit to any director, officer or employee of the Loan Parties, if the aggregate outstanding amount of all such advances, loans and extensions of credit (excluding travel advances in the ordinary course of business) does not at any time exceed $500,000; (f) investments in money market mutual funds that are rated AAA by Standard & Poor's; and (g) stocks, bonds, funds, covered call options, cash equivalents and cash included in the portfolio of Investments owned by CM Insurance Company, Inc. under the investment objective of "Aggressive Growth/Moderate Income" using the following asset guidelines: cash, 0% to 20%; bonds, 0% to 30%; stocks, 70% to 90%; other, 0% to 20%; in each case, invested at the discretion of Fleet Investment Advisors, Inc. and Gold-K Securities, Inc. - 18 - "PERMITTED LIENS" has the meaning specified therefor in Section 7.02(b). "PERSON" means an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated organization, joint venture or other enterprise or entity or Governmental Authority. "PLAN" means any employee benefit plan within the meaning of Section 3(3) of ERISA in which any Loan Party or any ERISA Affiliate is an "employer" as defined in Section 3(5) of ERISA or any employee benefit plan established and maintained by, or for the benefit of such Loan Party for the benefit of its respective employees, including, but not limited to, any Pension Plan or Multiemployer Plan. "PLEDGE AGREEMENT" means a Pledge and Security Agreement made by a Loan Party in favor of the Agent for the benefit of the Lenders, substantially in the form of Exhibit B or otherwise acceptable to the Agent, securing the Obligations and delivered to the Agent. "POST-DEFAULT RATE" means a rate of interest per annum equal to the rate of interest otherwise in effect from time to time pursuant to the terms of this Agreement plus 3%. "PRO RATA SHARE" means, with respect to a Lender's obligation to make the Term Loan and receive payments of interest, fees, and principal with respect thereto, and all other matters (including, without limitation, the indemnification obligations arising under Section 10.05), the percentage obtained by dividing (i) such Lender's Term Loan Commitment, by (ii) the Total Term Loan Commitment, PROVIDED that if the Total Term Loan Commitment has been reduced to zero, the numerator shall be the aggregate unpaid principal amount of such Lender's portion of the Term Loan and the denominator shall be the aggregate unpaid principal amount of the Term Loan. "PROPERTY" means any interest of any kind in property or assets, whether real, personal or mixed, and whether tangible or intangible. "PROPRIETARY RIGHTS" has the meaning specified therefor in Section 6.01(e)(ii). "PTO" means the United States Patent and Trademark Office or any successor or substitute office in which filings are necessary or, in the opinion of the Agent, desirable in order to create or perfect Liens on any Patents or Trademarks. "RATING AGENCIES" has the meaning specified therefor in Section 2.07. "REAL PROPERTY ASSET" means, at any time of determination, any and all real property owned or leased by the Loan Parties. "REFERENCE BANK" means JPMorgan Chase Bank, its successors or any other commercial bank designated by the Agent to the Borrower from time to time. "REFERENCE PERIOD" means, as of any date of determination, the period of four (4) consecutive fiscal quarters of the Borrower and its Subsidiaries ending on such date, or if such date is not a fiscal quarter end date, the - 19 - period of four (4) consecutive fiscal quarters most recently ended (in each case treated as a single accounting period). "REFERENCE RATE" means the rate of interest publicly announced by the Reference Bank in New York, New York from time to time as its reference rate, base rate or prime rate. The reference rate, base rate or prime rate is determined from time to time by the Reference Bank as a means of pricing some loans to its borrowers and neither is tied to any external rate of interest or index nor necessarily reflects the lowest rate of interest actually charged by the Reference Bank to any particular class or category of customers. Each change in the Reference Rate shall be effective from and including the date such change is publicly announced as being effective. "REGISTER" has the meaning specified therefor in Section 12.07(b)(ii). "REGISTERED LOAN" has the meaning specified therefor in Section 12.07(b)(ii). "REGISTERED PROPRIETARY RIGHTS" has the meaning specified therefor in Section 6.01(e)(iii). "REGULATION T", "REGULATION U" and "REGULATION X" mean, respectively, Regulations T, U and X of the Board or any successor, as the same may be amended or supplemented from time to time. "RELEASE" means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, seeping, migrating, dumping or disposing of any Hazardous Material (including the abandonment or discarding of barrels, containers and other closed receptacles containing any Hazardous Material) into the indoor or outdoor environment, including, without limitation, the movement of Hazardous Materials through or in the ambient air, soil, surface or ground water, or property. "REMEDIAL ACTION" means all actions taken to (i) clean up, remove, remediate, contain, treat, monitor, assess, evaluate or in any other way address Hazardous Materials in the indoor or outdoor environment; (ii) prevent or minimize a Release or threatened Release of Hazardous Materials so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment; (iii) perform pre-remedial studies and investigations and post-remedial operation and maintenance activities; or (iv) perform any other actions authorized by 42 U.S.C. ss. 9601. "REQUIRED LENDERS" means Lenders whose Pro Rata Shares of the Term Loan aggregate at least 51%. "RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock of, or other equity interest in, any Loan Party or any of its Subsidiaries now or hereafter outstanding, except a dividend payable solely in shares of stock or other equity interests, (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of stock of, or other equity interest in, any Loan Party or any of its Subsidiaries now or hereafter outstanding, (iii) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or - 20 - other rights to acquire shares of any class of stock of, or other equity interest in, any Loan Party or any of its Subsidiaries, (iv) any payment or prepayment of principal of, premium, if any, or interest on, or redemption purchase, retirement, defeasance (including economic or legal defeasance), sinking fund or similar payment with respect to the Senior Subordinated Notes and/or any intercompany Indebtedness owing by the Borrower or any Guarantor, and (v) any payment made to any Affiliates of any Loan Party or any of its Subsidiaries in respect of management, consulting or other similar services provided to any Loan Party or any of its Subsidiaries. "RESTRICTIVE AGREEMENTS" has the meaning specified therefor in Section 6.01(m)(ii). "SEC" means the Securities and Exchange Commission or any other similar or successor agency of the Federal government administering the Securities Act. "SECURITIES ACT" means the Securities Act of 1933, as amended, or any similar Federal statute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect from time to time. "SECURITIZATION" has the meaning specified therefor in Section 2.07. "SECURITIZATION PARTIES" has the meaning specified therefor in Section 2.07. "SENIOR FUNDED INDEBTEDNESS" means, at any time of determination, the sum of Total Funded Indebtedness minus the principal amount of the Senior Subordinated Notes outstanding at such time. "SENIOR LEVERAGE RATIO" means as at any date of determination, the ratio of (a) Senior Funded Indebtedness of the Borrower and its Subsidiaries outstanding on such date to (b) the EBITDA for the Referenced Period ended on such date. "SENIOR SUBORDINATED NOTE DOCUMENTS" means the Senior Subordinated Note Indenture, the Senior Subordinated Notes and all other documents, instruments and agreements executed and delivered in connection with the Senior Subordinated Notes. "SENIOR SUBORDINATED NOTE INDENTURE" means the Columbus McKinnon Corporation Series A and Series B 8 1/2% Senior Subordinated Notes Due 2008 Indenture, dated as of March 31, 1998 (as supplemented by the Supplemental Indenture, dated as of March 31, 1998, the Second Supplemental Indenture, dated as of February 12, 1999, the Third Supplemental Indenture, dated as of March 1, 1999, the Fourth Supplemental Indenture, dated as of November 1, 1999, the Fifth Supplemental Indenture, dated as of April 4, 2002 and the Sixth Supplemental Indenture, dated as of August 5, 2002), between the Borrower, as issuer, and State Street Bank and Trust Company, N.A., as trustee. "SENIOR SUBORDINATED NOTES" means the Borrower's 8 1/2% senior subordinated notes due 2008 issued pursuant to the Senior Subordinated Note Indenture. - 21 - "STANDARD & POOR'S" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto. "SUBSIDIARY" means, with respect to any Person at any date, any corporation, limited or general partnership, limited liability company, trust, estate, association, joint venture or other business entity (i) the accounts of which would be consolidated with those of such Person in such Person's consolidated financial statements if such financial statements were prepared in accordance with GAAP or (ii) of which more than 50% of (A) the outstanding Capital Stock having (in the absence of contingencies) ordinary voting power to elect a majority of the board of directors or other managing body of such Person, (B) in the case of a partnership or limited liability company, the interest in the capital or profits of such partnership or limited liability company or (C) in the case of a trust, estate, association, joint venture or other entity, the beneficial interest in such trust, estate, association or other entity business is, at the time of determination, owned or controlled directly or indirectly through one or more intermediaries, by such Person. "SYNTHETIC LEASE" means, any lease of goods or other property, whether real or personal, which is treated as an operating lease under GAAP and as a loan or financing for U.S. income tax purposes. "TAXES" has the meaning specified therefor in Section 2.08(a). "TERM LOAN" means, collectively, the loans made by the Lenders to the Borrower on the Effective Date pursuant to Section 2.01(a). "TERM LOAN COMMITMENT" means, with respect to each Lender, the commitment of such Lender to make the Term Loan to the Borrower in the amount set forth in Schedule 1.01(A) hereto, as the same may be terminated or reduced from time to time in accordance with the terms of this Agreement. "TERM LOAN PIK AMOUNT" means, as at any date of determination, the amount of all interest accrued with respect to the Term Loan that has been paid-in-kind by being added to the outstanding principal balance of the Term Loan in accordance with Section 2.04(a). "TITLE INSURANCE POLICY" means a mortgagee's loan policy, in form and substance satisfactory to the Agent, together with all endorsements made from time to time thereto, issued by or on behalf of a title insurance company satisfactory to the Agent, insuring the Lien created by a Mortgage in an amount and on terms satisfactory to the Agent, delivered to the Agent. "TRADEMARK AGREEMENT" means a Trademark Collateral Security and Pledge Agreement made by a Loan Party in favor of the Agent, substantially in the form of Exhibit C. "TRADEMARKS" means all trademarks (including service marks), federal and state trademark registrations and applications made by the Loan Parties, common law trademarks and trade names owned by or assigned to the Loan Parties, all registrations and applications for the foregoing and all exclusive and nonexclusive licenses from third parties of the right to use trademarks of such third parties, including, without limitation, the registrations, applications, unregistered trademarks, service marks and licenses listed on Schedule 6.01(e) hereto, along with any and all (a) renewals thereof, (b) income, royalties, - 22 - damages and payments now and hereafter due and/or payable with respect thereto, including, without limitation, damages, claims and payments for past or future infringements thereof, (c) rights to sue for past, present and future infringements thereof, and (d) foreign trademarks, trademark registrations, and trade name applications for any thereof and any other rights corresponding thereto throughout the world. "TOTAL ASSETS" means the sum of (a) all assets ("CONSOLIDATED BALANCE SHEET ASSETS") of the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP, PLUS (b) without duplication, all assets leased by the Borrower or any of its Subsidiaries as lessee under any Synthetic Lease to the extent that such assets would have been consolidated balance sheet assets had the Synthetic Lease been treated for accounting purposes as a Capital Lease Obligation. "TOTAL FUNDED INDEBTEDNESS" means, with respect to the Borrower and its Subsidiaries, the sum, without duplication, of (a) the aggregate amount of Indebtedness of the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP, relating to (i) the borrowing of money or the obtaining of credit, including the issuance of notes or bonds, (ii) the deferred purchase price of assets (other than trade payables incurred in the ordinary course of business), (iii) in respect of any Synthetic Leases or any Capital Lease Obligations, and (iv) the maximum drawing amount of all letters of credit outstanding, PLUS (b) Indebtedness of the type referred to in clause (a) of another Person guaranteed by the Borrower or any of its Subsidiaries. "TOTAL LIABILITIES" means all liabilities of the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP and classified as such on the consolidated balance sheet of the Borrower and its Subsidiaries and all other Indebtedness of the Borrower and its Subsidiaries, whether or not so classified. "TOTAL TERM LOAN COMMITMENT" means the sum of the amounts of the Lenders' Term Loan Commitments. "TOTAL VOTING POWER" means, with respect to any Person, the total number of votes which holders of securities having the ordinary power to vote, in the absence of contingencies, are entitled to cast in the election of directors of such Person. "UCC FILING AUTHORIZATION LETTER" means a letter duly executed by each Loan Party authorizing the Agent to file appropriate financing statements on Form UCC-1 without the signature of such Loan Party in such office or offices as may be necessary or, in the opinion of the Agent, desirable to perfect the security interests purported to be created by each Collateral Document. "UNIFORM COMMERCIAL CODE" has the meaning specified therefor in Section 1.03. "WITHDRAWAL LIABILITY" means 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. - 23 - "WORKING CAPITAL AGENT" means Fleet Capital Corporation, as agent for the Working Capital Lenders under the Working Capital Loan Agreement. "WORKING CAPITAL AVAILABILITY" means "Domestic Excess Availability" as such term is defined in the Working Capital Loan Agreement as such agreement is in effect on the date hereof. "WORKING CAPITAL BORROWING BASE" means, collectively, the "Domestic Borrowing Base" and the "Canadian Borrowing Base" as each such term is defined in the Working Capital Loan Agreement as such agreement is in effect on the date hereof. "WORKING CAPITAL INDEBTEDNESS" means, collectively, the Indebtedness of the Borrowers owing to the Working Capital Agent and the Working Capital Lenders and (ii) the Indebtedness of the Canadian Borrowers owing to the Canadian Lender (as defined in the Working Capital Loan Agreement as in effect on the date hereof), in each case under the Working Capital Loan Agreement. 'WORKING CAPITAL LC EXPOSURE" means the "Total LC Exposure" as such term is defined in the Working Capital Loan Agreement as such agreement is in effect on the date hereof. "WORKING CAPITAL LENDERS" means the lenders from time to time party to the Working Capital Loan Agreement. "WORKING CAPITAL LOAN AGREEMENT" means the amended and restated credit and security agreement, dated as of the date hereof, by and among the Borrower, the Canadian Borrowers, the Guarantors, the Working Capital Lenders and the Working Capital Agent. "WORKING CAPITAL LOAN DOCUMENTS" means, collectively, (i) the Working Capital Loan Agreement, and (ii) all other agreements, instruments, and other documents executed and delivered in connection therewith. "WORKING CAPITAL LOANS" means, collectively, the (i) Working Capital Revolving Loans and (ii) the Working Capital Term Loan. "WORKING CAPITAL REVOLVING LOANS" means the "Revolving Loan" (as defined in the Working Capital Loan Agreement as in effect on the date hereof). "WORKING CAPITAL TERM LOAN" means the "Term Loan" (as defined in the Working Capital Loan Agreement as in effect on the date hereof). Section 1.02 TERMS GENERALLY. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring - 24 - 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, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any right or interest in or to assets and properties of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible. References in this Agreement to "determination" by the Agent include good faith estimates by the Agent (in the case of quantitative determinations) and good faith beliefs by the Agent (in the case of qualitative determinations). Section 1.03 ACCOUNTING AND OTHER TERMS. Unless otherwise expressly provided herein, each accounting term used herein shall have the meaning given it under GAAP applied on a basis consistent with those used in preparing the Financial Statements. All terms used in this Agreement which are defined in Article 8 or Article 9 of the Uniform Commercial Code as in effect from time to time in the State of New York (the "UNIFORM COMMERCIAL CODE") and which are not otherwise defined herein shall have the same meanings herein as set forth therein, provided that terms used herein which are defined in the Uniform Commercial Code as in effect in the State of New York on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute except as the Agent may otherwise determine. Section 1.04 TIME REFERENCES. Unless otherwise indicated herein, all references to time of day refer to Eastern Standard Time or Eastern daylight saving time, as in effect in New York City on such day. For purposes of the computation of a period of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding"; PROVIDED, HOWEVER, that with respect to a computation of fees or interest payable to the Agent or any Lender, such period shall in any event consist of at least one full day. ARTICLE II THE LOANS Section 2.01 TERM LOAN COMMITMENTS. (a) Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Lender severally agrees to make the Term Loan to the Borrower on the Effective Date, in an aggregate principal amount not to exceed the amount of such Lender's Term Loan Commitment. - 25 - (b) Notwithstanding the foregoing, the aggregate principal amount of the Term Loan made on the Effective Date shall not exceed the Total Term Loan Commitment. Any principal amount of the Term Loan which is repaid or prepaid may not be reborrowed. Section 2.02 MAKING THE TERM LOAN. The Borrower shall give the Agent prior telephonic notice (immediately confirmed in writing, substantially in the form of Exhibit G (a "NOTICE OF BORROWING")), not later than 12:00 noon (New York City time) on the date which is one (1) Business Day prior to the Effective Date. Such Notice of Borrowing shall be irrevocable and shall specify (i) the principal amount of the Term Loan, (ii) the use of the proceeds of the Term Loan, and (iii) the proposed borrowing date, which must be a Business Day. The Agent and the Lenders may act without liability upon the basis of written, telecopied or telephonic notice believed by the Agent in good faith to be from the Borrower (or from any Authorized Officer thereof designated in writing purportedly from the Borrower to the Agent). The Borrower hereby waives the right to dispute the Agent's record of the terms of any such telephonic Notice of Borrowing. The Agent and each Lender shall be entitled to rely conclusively on any Authorized Officer's authority to request the Term Loan on behalf of the Borrower until the Agent receives written notice to the contrary. The Agent and the Lenders shall have no duty to verify the authenticity of the signature appearing on any written Notice of Borrowing. (b) The Term Loan shall be made by the Lenders simultaneously and proportionately to their Pro Rata Shares of the Total Term Loan Commitment, it being understood that no Lender shall be responsible for any default by any other Lender in that other Lender's obligations to make the Term Loan requested hereunder, nor shall the Term Loan Commitment of any Lender be increased or decreased as a result of the default by any other Lender in that other Lender's obligation to make the Term Loan requested hereunder, and each Lender shall be obligated to make the Term Loan required to be made by it by the terms of this Agreement regardless of the failure by any other Lender. Section 2.03 REPAYMENT OF THE TERM LOAN; EVIDENCE OF DEBT. (a) The outstanding principal of the Term Loan shall be repaid in full on the Final Maturity Date. (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the Indebtedness of the Borrower to such Lender resulting from the Term Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (c) The Agent shall maintain accounts in which it shall record (i) the amount of the Term Loan made hereunder, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Agent hereunder for the account of the Lenders and each Lender's share thereof. (d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be PRIMA FACIE evidence of the existence and amounts of the obligations recorded therein; PROVIDED that the failure of any Lender or the Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Term Loan in accordance with the terms of this Agreement. - 26 - (e) Any Lender may request that the Term Loan made by it be evidenced by a promissory note. In such event, the Borrower shall 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 a form furnished by the Agent and reasonably acceptable to the Borrower. Thereafter, the Term Loan evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 12.07) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns). Section 2.04 INTEREST. (a) TERM LOAN. (i) The Term Loan shall bear interest on the principal amount thereof from time to time outstanding, from the date of the Term Loan until such principal amount becomes due, at a rate per annum equal to the sum of (A) the lesser of (1) the Base Interest Rate plus the Applicable Margin and (2) 15.0% PLUS (B) 1.25%; PROVIDED that, in the absence of a continuing Event of Default, that portion of such interest equal to 1.25% per annum shall, in the absence of an election by the Borrower to pay such interest in cash, be paid-in-kind by being added to the outstanding principal amount of the Term Loan, PROVIDED, FURTHER, that, the Borrower may, on or prior to the date that is 5 Business Days prior to due date thereof, elect to pay all accrued and unpaid interest under this Section 2.04(a)(i)(B) in cash. (ii) Notwithstanding anything to the contrary contained in Section 2.04(a)(i), (A) in the event that the Borrower repays in full in cash all Obligations (other than the Term Loan PIK Amount) under this Agreement and the other Loan Documents on or prior to the first anniversary of the Effective Date, the Borrower shall not be required to repay any of the Term Loan PIK Amount and (B) in the event that the Borrower repays in full in cash all Obligations (other than the Term Loan PIK Amount) under this Agreement and the other Loan Documents on or prior to the second anniversary of the Effective Date, the Borrower shall not be required to repay 50% of the Term Loan PIK Amount. (b) DEFAULT INTEREST. To the extent permitted by law, upon the occurrence and during the continuance of an Event of Default, the principal of, and all accrued and unpaid interest on, the Term Loan, fees, indemnities, or any other Obligations of the Loan Parties under this Agreement and the other Loan Documents, shall bear interest, from the date such Event of Default occurred until the date such Event of Default is cured or waived in writing in accordance herewith, at a rate per annum equal at all times to the Post-Default Rate. (c) INTEREST PAYMENT. Interest on the Term Loan shall be payable monthly, in arrears, on the first day of each month, commencing on the first day of the month following the month in which the Term Loan is made and at maturity (whether upon demand, by acceleration or otherwise). Interest at the Post-Default Rate shall be payable on demand. The Borrower hereby authorizes the Agent to, and the Agent may, from time to time, charge the Loan Account pursuant to Section 4.02 with the amount of any interest payment due and payable hereunder. - 27 - (d) GENERAL. All interest shall be computed on the basis of a year of 360 days for the actual number of days, including the first day but excluding the last day, elapsed. Section 2.05 REDUCTION OF THE TERM LOAN COMMITMENT; PREPAYMENT OF THE TERM LOAN. (a) REDUCTION OF THE TERM LOAN COMMITMENT. The Total Term Loan Commitment shall terminate at 5:00 p.m. (New York City time) on the Effective Date. (b) OPTIONAL PREPAYMENT. The Borrower may, upon at least five (5) Business Days' prior written notice to the Agent, prepay without penalty or premium the principal of the Term Loan, in whole or in part. Each prepayment made pursuant to this clause (b) shall be accompanied by the payment of accrued interest to the date of such payment on the amount prepaid. Each such prepayment shall be applied against the remaining installments of principal due on the Term Loan in the inverse order of maturity. (c) MANDATORY PREPAYMENT. (i) Within 10 days of delivery to the Agent and the Lenders of audited annual financial statements pursuant to Section 7.01(a)(i), commencing with the delivery to the Agent and the Lenders of the financial statements for the Fiscal Year ended March 31, 2004 or, if such financial statements are not delivered to the Agent and the Lenders on the date such statements are required to be delivered pursuant to Section 7.01(a)(i), 10 days after the date such statements are required to be delivered to the Agent and the Lenders pursuant to Section 7.01(a)(i), the Borrower shall make a prepayment to the Working Capital Loans and/or the Term Loan in accordance with Section 2.05(d) hereto in an amount equal to 50% of the Excess Cash Flow of the Borrower and its Subsidiaries for such Fiscal Year. (ii) Immediately upon any Disposition by any Loan Party or its Subsidiaries pursuant to Sections 7.02(d)(ii) and 7.02(d)(iii) (other than (A) Dispositions permitted under Section 7.02(d)(ii)(B) and (B) Dispositions permitted under Section 7.02(d)(iii) to the extent that the aggregate Net Cash Proceeds received therefrom do not exceed $500,000), the Borrower shall make a prepayment to the Working Capital Loans (which may include provision of cash collateral in respect of Working Capital LC Exposure) and/or the Term Loan in accordance with Section 2.05(d) hereto in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection with such Disposition. Nothing contained in this subsection (ii) shall permit any Loan Party or any of its Subsidiaries to make a Disposition of any property other than in accordance with Sections 7.02(d)(ii) and 7.02(d)(iii). (iii) Upon the issuance or incurrence by any Loan Party or any of its Subsidiaries of any Indebtedness (other than Indebtedness permitted pursuant to Section 7.02(a)), or the sale or issuance by any Loan Party or any of its Subsidiaries of any shares of its Capital Stock, the Borrower shall make a prepayment to the Working Capital Loans (which may include provision of cash collateral in respect of Working Capital LC Exposure) and/or the Term Loan in accordance with Section 2.05(d) hereto in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection therewith. - 28 - The provisions of this subsection (iii) shall not be deemed to be implied consent to any such issuance, incurrence or sale otherwise prohibited by the terms and conditions of this Agreement. (iv) Upon the receipt by any Loan Party or any of its Subsidiaries of any Extraordinary Receipts, the Borrower shall make a prepayment to the Working Capital Loans (which may include provision of cash collateral in respect of Working Capital LC Exposure) and/or the Term Loan in accordance with Section 2.05(d) hereto in an amount equal to 100% of such Extraordinary Receipts, net of any reasonable expenses incurred in collecting such Extraordinary Receipts; PROVIDED, that in the case of insurance proceeds received in connection with a Casualty Event with respect to Property having an aggregate market value less than $1,500,000, so long as, at the time of receipt and use of such insurance proceeds, no Event of Default shall have occurred and be continuing, the Loan Parties shall be entitled to use such insurance proceeds (in an amount not in excess of $1,500,000) to repair or replace the Property affected by such Casualty Event, PROVIDED, FURTHER, that (A) until so used, such insurance proceeds shall be deposited into a cash collateral account (and when so deposited such insurance proceeds shall constitute Collateral for the Obligations then outstanding), (B) such insurance proceeds may be used solely to repair or replace the Property that was the subject of such Casualty Event with other Property of the same type, (C) such insurance proceeds must be used and such Property must be repaired or replaced within 180 days after the date of receipt thereof, and (D) upon the occurrence and during the continuance of an Event of Default or after such 180 day period shall have expired, such insurance proceeds, if not so used, shall be applied to the prepayment of the Working Capital Loans and/or the Term Loan as provided in Section 2.05(d). (v) In the event that the aggregate amount of the cash and Permitted Investments (other than cash in the Prepayment Escrow Account (as defined in the Working Capital Loan Agreement) and Investments permitted pursuant to clause (g) of the definition of Permitted Investments) of the Loan Parties and their Subsidiaries exceeds at any time $1,500,000, the Borrower shall immediately make a prepayment to the Working Capital Loans (which may include provision of cash collateral in respect of Working Capital LC Exposure) and/or the Term Loan in accordance with Section 2.05(d) hereto in an amount equal to such excess. (d) APPLICATION OF PAYMENTS. Each prepayment pursuant to subsections (c)(i), (c)(ii), (c)(iii), (c)(iv) and (c)(v) above shall be applied as follows: (i) if the proceeds are from (A) any Disposition of any Account Receivable or Inventory or any insurance policy or condemnation award with respect to Inventory or (B) any event set forth in Section 2.05(c)(v), such proceeds shall be applied, first, to the Working Capital Revolving Loans until paid in full (which may include provision of cash collateral in respect of Working Capital LC Exposure), second, to the Working Capital Term Loan until paid in full and, third, to the Term Loan until paid in full; (ii) if the proceeds are from any Disposition of any of the Mortgaged Properties described on Schedule 1.01(E) or any insurance policy or condemnation award with respect to any such Mortgaged Properties, such proceeds shall be applied either to the Working Capital Term Loan or the Term Loan; - 29 - (iii) if the proceeds are from any Disposition of any Mortgaged Properties other than those described on Schedule 1.01(E) or any insurance policy or condemnation award with respect to any such Mortgaged Properties, such proceeds shall be applied, first, to the Working Capital Term Loan in an amount equal to the Appraised Value of such Mortgaged Properties (as set forth in the most recent appraisal of such Mortgaged Property delivered by the Working Capital Agent to the Agent) and, second, to the Term Loan until paid in full; (iv) subject to clause (v) below, if the proceeds are from the Disposition of any (A) other assets of the Loan Parties not described in clause (i), (ii) or (iii) above or (B) event set forth in Section 2.05(c)(i), (c)(iii) or (c)(iv), such proceeds shall be applied either to the Working Capital Term Loan or to the Term Loan; and (v) if the proceeds are from a Disposition of all or substantially all of the assets or Capital Stock of any Person or any insurance, which Disposition or proceeds of insurance includes both (1) Accounts Receivable or Inventory and (2) other assets, such proceeds shall be applied as follows: (A) an amount equal to the net book value of such Accounts Receivable and Inventory shall be applied to the Working Capital Revolving Loans (which may include provision of cash collateral in respect of Working Capital LC Exposure) and (B) the remaining proceeds shall be applied either to the Working Capital Term Loan or to the Term Loan; PROVIDED, that in the case of each of clauses (i) through (v) above, if either (x) the conditions to any prepayment of the Term Loan set forth in Section 8.14 of the Working Capital Loan Agreement (as in effect on the date hereof) are not satisfied or (y) the Borrower is required to apply such proceeds to the Working Capital Revolving Loans pursuant to the terms of the Working Capital Loan Agreement (as in effect on the date hereof), then the Borrower shall not be required to make such prepayment of the Term Loan to the extent that: (1) in the case of clause (x) or (y) above, either (AA) the Borrower actually applies the proceeds that would otherwise be required to be applied to the Term Loan pursuant to Section 2.05(c) and this Section 2.05(d) to the Working Capital Term Loan or (BB) the Borrower actually applies the proceeds that would otherwise be required to be applied to the Term Loan pursuant to Section 2.05(c) and this Section 2.05(d) to the Working Capital Revolving Loans (which may include provision of cash collateral in respect of Working Capital LC Exposure), and the Working Capital Agent, concurrently with such payment of the Working Capital Revolving Loans, (xx) makes a corresponding permanent reduction in the Revolving Credit Commitments (as defined in the Working Capital Loan Agreement as in effect on the date hereof) and (yy) except in the case of Section 2.05(c)(iii), establishes and maintains a corresponding permanent reserve against the Working Capital Borrowing Base, in the case of each of (xx) and (yy), in an amount equal to the amount of proceeds that would have otherwise been applied by the Borrower to the prepayment of the Term Loan pursuant to Section 2.05(c) and this Section 2.05(d), (2) in the case of clauses (x) or (y) above, (AA) the Borrower actually applies the proceeds that would otherwise be required to be applied to the Term Loan pursuant to Section 2.05(c) and this Section - 30 - 2.05(d) to the Working Capital Revolving Loans (which may include provision of cash collateral in respect of Working Capital LC Exposure) and (BB) concurrently with such payment of the Working Capital Revolving Loans, the Working Capital Agent establishes and maintains a reserve against the Working Capital Borrowing Base in an amount equal to the amount of proceeds that would have otherwise been applied by the Borrower to the prepayment of the Term Loan pursuant to Section 2.05(c) and this Section 2.05(d), PROVIDED, that, the amount of such proceeds that are applied to the Working Capital Revolving Loans pursuant to this subclause (2) shall be required to be applied to the prepayment of the Term Loan at any time after such application to the Working Capital Revolving Loans if either (xx) no breach of Section 8.14 of the Working Capital Loan Agreement (as in effect on the date hereof) would occur as a result of such prepayment of the Term Loan or (yy) the Working Capital Agent releases all or any portion of the reserve established against the Working Capital Borrowing Base at the time such proceeds were applied to the Working Capital Revolving Loans, or (3) in the case of clause (x) above at a time when the Working Capital Term Loan has been paid in full and such prepayment of the Term Loan is required pursuant to Section 2.05(c)(i), the Borrower makes such payment on a deferred basis (in whole or in part from time to time) to the extent that such payment(s) do not result in a breach of Section 8.14 of the Working Capital Loan Agreement (as in effect on the date hereof). Each such prepayment of the Working Capital Term Loan made pursuant to this subsection 2.05(d) shall be applied against the remaining installments of principal of the Working Capital Term Loan in the inverse order of maturity. (e) INTEREST AND FEES. Any prepayment made pursuant to this Section 2.05 shall be accompanied by accrued interest on the principal amount being prepaid to the date of prepayment, and if such prepayment would reduce the outstanding principal amount of the Term Loan to zero, such prepayment shall be accompanied by the payment of all fees accrued to such date pursuant to Section 2.06. (f) CUMULATIVE PREPAYMENTS. Except as otherwise expressly provided in this Section 2.05, payments with respect to any subsection of this Section 2.05 are in addition to payments made or required to be made under any other subsection of this Section 2.05. Section 2.06 FEES. (a) CLOSING FEE. On or prior to the Effective Date, the Borrower shall pay to the Agent for the account of the Lenders, in accordance with their Pro Rata Shares, a non-refundable closing fee (the "CLOSING FEE") equal to $2,100,000, which shall be deemed fully earned when paid. (b) LOAN SERVICING FEE. From and after the Effective Date and until the later of (i) the Final Maturity Date and (ii) the date on which all Obligations are paid in full, the Borrower shall pay to the Agent for the account of the Agent, a non-refundable loan servicing fee (the "LOAN SERVICING FEE") equal to $7,500 each month, which shall be deemed fully earned when paid and which shall be payable on the Effective Date (payable ratably based on the - 31 - number of days remaining in the month in which the Effective Date occurs) and monthly in advance thereafter on the first day of each month commencing on December 1, 2002. (c) ANNIVERSARY FEE. The Borrower shall pay to the Agent for the account of the Lenders, in accordance with their Pro Rata Shares, a non-refundable anniversary fee (the "ANNIVERSARY FEE") in an amount equal to the product of (i) Anniversary Fee Percentage MULTIPLIED BY (ii) the outstanding principal amount of the Term Loan, which shall be deemed fully earned when paid and which shall be payable on each anniversary of the Effective Date. Section 2.07 SECURITIZATION. The Loan Parties hereby acknowledge that the Lenders and their Affiliates may sell or securitize the Term Loan (a "SECURITIZATION") through the pledge of the Term Loan as collateral security for loans to the Lenders or their Affiliates or through the sale of the Term Loan or the issuance of direct or indirect interests in the Term Loan, which loans to the Lenders or their Affiliates or direct or indirect interests will be rated by Moody's, Standard & Poor's or one or more other rating agencies (the "RATING AGENCIES"). The Loan Parties shall cooperate with the Lenders and their Affiliates to effect the Securitization including, without limitation, by (a) amending this Agreement and the other Loan Documents, and executing such additional documents, as reasonably requested by the Lenders in connection with the Securitization, PROVIDED THAT (i) any such amendment or additional documentation does not impose material additional costs on the Loan Parties and (ii) any such amendment or additional documentation does not materially adversely affect the rights, or materially increase the obligations, of the Loan Parties under the Loan Documents or change or affect in a manner adverse to the Loan Parties the financial terms of the Term Loan, (b) providing such information as may be reasonably requested by the Lenders in connection with the rating of the Term Loan or the Securitization, and (c) providing in connection with any rating of the Term Loan a certificate (i) agreeing to indemnify the Lenders and their Affiliates, any of the Rating Agencies, or any party providing credit support or otherwise participating in the Securitization (collectively, the "SECURITIZATION PARTIES") for any losses, claims, damages or liabilities (the "LIABILITIES") to which the Lenders, their Affiliates or such Securitization Parties may become subject insofar as the Liabilities arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Loan Document or in any writing delivered by or on behalf of any Loan Party to the Lenders in connection with any Loan Document or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein, or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and such indemnity shall survive any transfer by the Lenders or their successors or assigns of the Term Loan and (ii) agreeing to reimburse the Lenders and their Affiliates for any legal or other expenses reasonably incurred by such Persons in connection with defending the Liabilities. Section 2.08 TAXES. (a) All payments made by any Loan Party hereunder or under any other Loan Document shall be made without set-off, counterclaim, deduction or other defense. All such payments shall be made free and clear of and without deduction for any present or future income, franchise, sales, use, excise, stamp or other taxes, levies, imposts, deductions, charges, fees, withholdings, restrictions or conditions of any nature now or hereafter imposed, levied, collected, withheld or assessed by any jurisdiction (whether pursuant to Federal, state, local or foreign law) or by any political subdivision or taxing authority thereof or therein, and all interest, penalties or additional amounts, excluding taxes on the net income of any Lender or the Agent imposed by the - 32 - jurisdiction in which such Lender or the Agent is organized or any political subdivision thereof or taxing authority thereof or any jurisdiction in which such Person's principal office is located or any political subdivision thereof or taxing authority thereof (such nonexcluded taxes, levies, imposts, deductions, charges, fees, withholdings, restrictions, conditions, interest, penalties and additional amounts being hereinafter collectively referred to as "TAXES"). If any Loan Party shall be required to deduct or to withhold any Taxes from or in respect of any amount payable hereunder or under any other Loan Document, (i) the amount so payable shall be increased so that after making all required deductions and withholdings (including Taxes on amounts payable pursuant to this sentence) the Lenders or the Agent, as the case may be, receive an amount equal to the sum they would have received had no such deduction or withholding been made, (ii) such Loan Party shall make such deduction or withholding, (iii) such Loan Party shall pay the full amount deducted or withheld to the relevant taxation authority in accordance with applicable law, and (iv) as promptly as possible thereafter, such Loan Party shall send the Lenders and the Agent an official receipt (or, if an official receipt is not available, such other documentation as shall be satisfactory to the Lenders or the Agent, as the case may be) evidencing payment of the amount or amounts so deducted or withheld. In addition, each Loan Party agrees to pay any present or future taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery, performance, recordation or filing of, or otherwise with respect to, this Agreement or any other Loan Document other than the foregoing excluded taxes (hereinafter referred to as "OTHER TAXES"). (b) The Loan Parties hereby jointly and severally indemnify and agree to hold the Lenders and the Agent harmless from and against Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.08) paid by any Lender or the Agent and any liability (including penalties, interest and expenses for nonpayment, late payment or otherwise) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Such indemnification shall be paid within 10 days from the date on which any such Lender or the Agent makes written demand therefor, which demand shall identify in reasonable detail the nature and amount of such Taxes or Other Taxes. (c) Each Lender that is organized in a jurisdiction outside the United States hereby agrees that it shall, no later than the Effective Date or, in the case of a Lender which becomes a party hereto pursuant to Section 12.07 hereof after the Effective Date, the date upon which such Lender becomes a party hereto (and from time to time thereafter upon the reasonable request of the Borrower or the Agent, but only if such Lender is legally able to do so), deliver to the Borrower and the Agent either (i) two accurate, complete and signed copies of either (x) U.S. Internal Revenue Service Form W-8ECI or successor form, or (y) U.S. Internal Revenue Service Form W-8BEN or successor form, in each case, indicating that such Lender is on the date of delivery thereof entitled to receive payments of interest hereunder free from, or subject to a reduced rate of, withholding of United States Federal income tax or (ii) in - 33 - the case of such a Lender that is entitled to claim exemption from withholding of United States Federal income tax under Section 871(h) or Section 881(c) of the Internal Revenue Code, (x) a certificate to the effect that such Lender is (A) not a "bank" within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (B) not a "10 percent shareholder" of the Borrower within the meaning of Section 881(c)(3)(B) of the Internal Revenue Code and (C) not a controller foreign corporation receiving interest from a related person within the meaning of Section 881(c)(3)(C) of the Internal Revenue Code and (y) two accurate, complete and signed copies of U.S. Internal Revenue Service Form W-8BEN or successor form. (d) If any Loan Party fails to perform any of its obligations under this Section 2.08, the Loan Parties shall indemnify the Lenders and the Agent for any taxes, interest or penalties that may become payable as a result of any such failure. The obligations of the Loan Parties under this Section 2.08 shall survive the termination of this Agreement and the payment of the Term Loan and all other amounts payable hereunder. ARTICLE III THE COLLATERAL Section 3.01 GRANT OF SECURITY INTEREST. As collateral security for all of the Obligations, each Loan Party hereby pledges and assigns to the Agent, and grants to the Agent for the benefit of the Lenders a continuing security interest in, all personal property of such Loan Party, wherever located and whether now or hereafter existing and whether now owned or hereafter acquired, of every kind and description, tangible or intangible (the "COLLATERAL"), including, without limitation, the following: (a) all Accounts; (b) all Chattel Paper (whether tangible or electronic); (c) the Commercial Tort Claims specified on Schedule 6.01(f) hereto; (d) all Deposit Accounts, all cash, and all other property from time to time deposited therein and the monies and property in the possession or under the control of the Agent or any Lender or any affiliate, representative, agent or correspondent of the Agent or any Lender; (e) all Documents; (f) all Equipment; (g) all Fixtures; (h) all General Intangibles (including, without limitation, all Payment Intangibles); (i) all Goods; (j) all Instruments (including, without limitation, Promissory Notes); - 34 - (k) all Inventory; (l) all Investment Property; (m) all Copyrights, Patents and Trademarks; (n) all Letter-of-Credit Rights; (o) all Supporting Obligations; (p) all other tangible and intangible personal property of such Loan Party (whether or not subject to the Uniform Commercial Code), including, without limitation, all bank and other accounts and all cash and all investments therein, all proceeds, products, offspring, accessions, rents, profits, income, benefits, substitutions and replacements of and to any of the property of such Loan Party described in the preceding clauses of this Section 3.01 (including, without limitation, any proceeds of insurance thereon and all causes of action, claims and warranties now or hereafter held by such Loan Party in respect of any of the items listed above), and all books, correspondence, files and other Records, including, without limitation, all tapes, desks, cards, Software, data and computer programs in the possession or under the control of such Loan Party or any other Person from time to time acting for such Loan Party that at any time evidence or contain information relating to any of the property described in the preceding clauses of this Section 3.01 or are otherwise necessary or helpful in the collection or realization thereof; and (q) all Proceeds, including all Cash Proceeds and Noncash Proceeds, and products of any and all of the foregoing Collateral; in each case howsoever such Loan Party's interest therein may arise or appear (whether by ownership, security interest, claim or otherwise). As used in this Section 3.01, the following terms shall have the respective meanings provided for in the Uniform Commercial Code: "Accounts", "Cash Proceeds", "Chattel Paper", "Commercial Tort Claim", "Deposit Account", "Documents", "Equipment", "Fixtures", "General Intangibles", "Goods", "Instruments", "Inventory", "Investment Property", "Letter-of-Credit Rights", "Noncash Proceeds", "Payment Intangibles", "Proceeds", "Promissory Notes", "Record", "Software", and "Supporting Obligations". Section 3.02 SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE LOAN PARTIES. Each Loan Party hereby warrants and covenants to the Agent and the Lenders that: (a) Such Loan Party has delivered to the Agent a Perfection Certificate, substantially in the form of Exhibit C to the Working Capital Loan Agreement. All information set forth in such Perfection Certificate is complete, true and correct in all material respects and there has been no change in any of such information since the date on which the Perfection Certificate was signed by such Loan Party. (b) No Loan Party will change its jurisdiction of organization, type of organization or other legal structure, principal or any other place of business, or the location of any Collateral from the locations - 35 - set forth in the Perfection Certificate delivered by such Loan Party, or make any change in its name or conduct its business operations under any fictitious business name or trade name, without, in any such case, at least 30 days' prior written notice to the Agent; PROVIDED that the Inventory of such Loan Party may be in the possession of manufacturers or processors in any jurisdiction in which all necessary Uniform Commercial Code financing statements have been filed by the Agent and with respect to which the Agent has received waiver letters from all landlords, warehousemen and processors in form and substance acceptable to the Agent. (c) Each Loan Party represents and warrants to the Lenders and the Agent as follows: (i) except for the security interest created by this Agreement and other Liens permitted hereunder, there is no financing statement, security agreement, chattel mortgage, real estate mortgage or other document filed or recorded with any filing records, registry or other public office, that purports to cover, affect or give notice of any present or possible future Lien on any assets or property of the Loan Parties or any rights relating thereto, (ii) such Loan Party is the owner of or has other rights in or power to transfer the Collateral, free from any right or claim of any Person or any adverse lien, except for the security interest created by this Agreement and other Liens permitted hereunder, (iii) none of the Collateral constitutes, or is the proceeds of, "farm products" as defined in ss.9-102(a)(34) of the Uniform Commercial Code, (iv) none of the Account Debtors or other Persons obligated on any of the Collateral is a Governmental Authority covered by the Federal Assignment of Claims Act or like federal, state or local statute or rule in respect of such Collateral and (v) such Loan Party has at all times operated its business in compliance with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal of Hazardous Materials. (d) Each Loan Party covenants with the Lenders and the Agent that, such Loan Party shall defend its rights in the Collateral against all claims and demands of all Persons at any time claiming the same or any interests therein adverse to the Agent or any of the Lenders. (e) Each Loan Party represents and warrants to the Lenders and the Agent that all filings, assignments, pledges and deposits of documents or instruments have been made and all other actions have been taken that are necessary or advisable, under applicable law, to establish and perfect the Agent's security interest in the Collateral. The Collateral and the Agent's rights with respect to the Collateral are not subject to any setoff, claims, withholdings or other defenses. (f) Except for Collateral that is obsolete or no longer used in their business, the Loan Parties will keep the Collateral in good order and repair (normal wear excepted) and will not use the same in violation of law or any policy of insurance thereon and keep the Collateral adequately insured at all times in accordance with the provisions of Section 7.01(e). The Loan Parties will pay promptly when due all taxes, assessments, governmental charges and levies upon the Collateral or for its use or operation, except for taxes and assessments permitted to be contested as provided in Section 7.01(d). Following the occurrence and during the continuance of an Event of Default, the Agent may at its option discharge any taxes or Liens to which any Collateral is at any time subject (other than Permitted Liens), and may, upon the failure of the Loan Parties to do so in accordance with this Agreement, purchase insurance on any - 36 - Collateral and pay for the repair, maintenance or preservation thereof, and each Loan Party agrees to reimburse the Agent on demand for any payments or expenses incurred by the Agent or the Lenders pursuant to the foregoing authorization and any unreimbursed amounts shall constitute Obligations for all purposes hereof. (g) The Agent may from time to time request and each Loan Party shall deliver copies of all customer lists and vendor lists. (h) Each Loan Party hereby irrevocably authorizes the Agent, at any time and from time to time, to file in any jurisdiction financing statements and amendments thereto that (i) indicate the Collateral (x) as all assets of such Loan Party or words of similar effect, regardless of whether any particular asset falls within the scope of Article 9 of the Uniform Commercial Code or such other jurisdiction or (y) as being of an equal or lesser scope or with greater detail and (ii) which contain any other information required by Article 9 of the Uniform Commercial Code (including Part 5 thereof) for the sufficiency or filing office acceptance of any financing statement or amendment, including whether (A) any Loan Party is an organization, the type of organization and any organization identification number issued to such Loan Party and (B) in the case of a financing statement filed as a fixture filing or indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of the real property to which the Collateral relates. The Loan Parties agree to furnish any such information to the Agent promptly upon request. Each Loan Party also ratifies its authorization for the Agent to have filed in any Uniform Commercial Code jurisdiction any like initial financing statements or amendments thereto if filed prior to the date hereof. (i) Each Loan Party agrees that it will join with the Agent in executing and, at its own expense file and refile, or permit the Agent to file and refile such financing statements, continuation statements and other documents (including, without limitation, Patent Agreements, Trademark Agreements, Copyright Mortgages and licenses to use software and other property protected by copyright), in such offices (including, without limitation, the PTO, the United States Copyright Office, and appropriate state patent, trademark and copyright offices), as the Agent may reasonably deem necessary or appropriate, wherever required or permitted by law, in order to perfect and preserve the rights and interests granted to the Agent in the Collateral. Each Loan Party will give the Agent notice of each office at which records of such Loan Party pertaining to all intangible items of Collateral are kept. Except as may be provided in such notice, the records concerning all intangible Collateral are and will be kept at the address shown in the respective Perfection Certificate for such Loan Party as the principal place of business of such Loan Party. (j) The Loan Parties are the sole and exclusive owners of the websites and domain names listed on Schedule 3.02(j) hereto and have registered such domain names with all applicable authorities which provides for the exclusive use by the Loan Parties of such domain names. The websites do not contain any material, the publication of which may result in (i) the violation of rights of any Person or (ii) a right of any Person against the publisher or distributor of such material. (k) The Loan Parties shall, annually by the end of the first fiscal quarter following the previous Fiscal Year, provide written notice to the - 37 - Agent of all applications for registration of Patents, Trademarks or Copyrights, to the extent such applications exist, made during the preceding Fiscal Year. The Loan Parties shall file and prosecute diligently all applications for registration of Patents, Trademarks or Copyrights now or hereafter pending that would be necessary to the business of the Loan Parties to which any such applications pertain, and to do all acts, in any such instance, necessary to preserve and maintain all rights in such registered Patents, Trademarks or Copyrights unless such Patents, Trademarks or Copyrights are not material to the business of the Loan Parties, as reasonably determined by the Loan Parties consistent with prudent and commercially reasonable business practices. Any and all costs and expenses incurred in connection with any such actions shall be borne by the Loan Parties. Except in accordance with prudent and commercially reasonable business practices, the Loan Parties shall not abandon any right to file a Patent, Trademark or Copyright application or any pending Patent, Trademark or Copyright application or any registered Patent, Trademark or Copyright, in each case material to its business, without the consent of the Agent. (l) The domain name servers used in connection with the domain names of the Loan Parties and all other relevant information pertaining to such domain names, and the administrative contacts used in connection with the registration of such domain names are identified on Schedule 3.02(j) hereto. No Loan Party will change such domain name servers without 10 days' prior written notice to the Agent. No Loan Party will cause a change in the identity of any domain name administrative contact without 10 days' prior written notice to the Agent. (m) If any Loan Party is, now or at any time hereafter, a beneficiary under a letter of credit in the face amount in excess of $100,000, such Loan Party shall promptly notify the Agent thereof and, at the request and option of the Agent, such Loan Party shall, pursuant to an agreement in form and substance satisfactory to the Agent, either (i) arrange for the issuer and any confirmer or other nominated Person of such letter of credit to consent to an assignment to the Agent of the proceeds of the letter of credit or (ii) arrange for the Agent to become the transferee beneficiary of the letter of credit, with the Agent agreeing, in each case, that the proceeds of the letter of credit are to be applied by the Agent against the Obligations as provided in this Agreement. (n) To the extent any Loan Party shall, now or at any time hereafter, hold or acquire any promissory note or other instrument or tangible chattel paper (the principal amount of which is greater than $100,000), such Loan Party will promptly notify the Agent thereof and, at the request and option of the Agent, such Debtor will endorse, assign and deliver such promissory note or other instrument or tangible chattel paper to the Agent to be held as Collateral hereunder, together with such instruments of transfer or assignment thereof reasonably satisfactory in form and substance to the Agent. (o) If any Loan Party shall, now or at any time hereafter, hold or acquire any certificated securities, such Loan Party shall forthwith endorse, assign and deliver the same to the Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Agent may from time to time specify; PROVIDED, HOWEVER, except with respect to entities which are disregarded entities for U.S. income tax purposes, such Loan Party shall only be required to endorse, assign and deliver shares representing sixty-five percent (65%) of the Capital Stock of such Loan Party's first-tier Foreign Subsidiaries. If any securities now or hereafter acquired by any Loan - 38 - Party are uncertificated and are issued to such Loan Party or its nominee directly by the issuer thereof, such Loan Party shall promptly notify the Agent thereof and, at the Agent's request and option, pursuant to an agreement in form and substance satisfactory to the Agent, either (i) cause the issuer to agree to comply without further consent of such Loan Party or such nominee, at any time with instructions from the Agent as to such securities, or (ii) arrange for the Agent to become the registered owner of the securities. If any securities, whether certificated or uncertificated, or other investment property now or hereafter acquired by any Loan Party are held by such Loan Party or its nominee through a securities intermediary or commodity intermediary, such Loan Party shall promptly notify the Agent thereof and, at the Agent's request and option, pursuant to an agreement in form and substance satisfactory to the Agent, either (A) cause such securities intermediary or (as the case may be) commodity intermediary to agree to comply, in each case without further consent of such Loan Party or such nominee, at any time with entitlement orders or other instructions from the Agent to such securities intermediary as to such securities or other investment property, or (as the case may be) to apply any value distributed on account of any commodity contract as directed by the Agent to such commodity intermediary, or (B) in the case of financial assets or other investment property held through a securities intermediary, arrange for the Agent to become the entitlement holder with respect to such investment property, with such Loan Party being permitted, only with the consent of the Agent, to exercise rights to withdraw or otherwise deal with such investment property. The Agent agrees with each Loan Party that the Agent shall not give any such entitlement orders or instructions or directions to any such issuer, securities intermediary or commodity intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by such Loan Party, unless an Event of Default has occurred and is continuing, or, after giving effect to any such investment and withdrawal rights not otherwise permitted by the Loan Documents, would occur. The provisions of this paragraph shall not apply to any financial assets credited to a securities account for which the Agent is the securities intermediary. (p) For each deposit account or other accounts that any Loan Party, now or at any time hereafter, opens or maintains (other than a deposit account for which the Agent is the depositary bank), such Loan Party shall, at the Agent's request and option, pursuant to an agreement in form and substance satisfactory to the Agent, either (i) cause the depositary bank or such Person to agree to comply without further consent of such Loan Party, at any time with instructions from the Agent to such depositary bank or such Person directing the disposition of funds from time to time credited to or held in such deposit account or other account, as the case may be, or (ii) arrange for the Agent to become the customer of the depositary bank or other Person with respect to the deposit account or other account, with such Loan Party being permitted, only with the consent of the Agent, to exercise rights to withdraw funds from such deposit account or other account. The provisions of this paragraph shall not apply to (A) a deposit account for which the Agent is in automatic control, (B) any deposit accounts specially and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of such Loan Party's salaried employees, (C) the deposit accounts or other accounts listed on Schedule 3.02(p), and (D) deposit accounts or local bank accounts not subject to the Agent's control so long as (1) the aggregate amount of funds on deposit in all such local bank accounts does not exceed $500,000, and (2) the aggregate amount of funds on deposit in any such local bank account does not exceed $50,000. - 39 - (q) No Loan Party holds any commercial tort claims, as defined in Article 9 of the Uniform Commercial Code, except as indicated in the Perfection Certificates. If any of the Loan Parties shall at any time acquire a commercial tort claim, such Loan Party shall promptly notify the Agent in a writing signed by such Loan Party of the brief details thereof and grant to the Agent in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to the Agent. (r) If any Collateral is, now or at any time hereafter, in the possession of a bailee, the Loan Parties shall promptly notify the Agent thereof and, at the Agent's request and option, shall promptly obtain an acknowledgement from the bailee, in form and substance satisfactory to the Agent, that the bailee holds such Collateral for the benefit of the Agent and such bailee's agreement to comply, without further consent of such Loan Party, at any time with instructions of the Agent as to such Collateral. The Agent agrees with each Loan Party that the Agent shall not give any such instructions unless an Event of Default has occurred and is continuing or would occur after taking into account any action by such Loan Party with respect to the bailee. (s) If any Loan Party, now or at any time hereafter, holds or acquires an interest in any electronic chattel paper or any "transferable record," as that term is defined in Section 201 of the federal Electronic Signatures in Global and National Commerce Act, or in ss.16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, such Loan Party shall promptly notify the Agent thereof and, at the request and option of the Agent, shall take such action as the Agent may reasonably request to vest in the Agent control, under ss.9-105 of the Uniform Commercial Code, of such electronic chattel paper or control under Section 201 of the federal Electronic Signatures in Global and National Commerce Act or, as the case may be, ss.16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable record. The Agent agrees with each Loan Party that the Agent will arrange, pursuant to procedures satisfactory to the Agent and so long as such procedures will not result in the Agent's loss of control, for such Loan Party to make alterations to the electronic chattel paper or transferable record permitted under Uniform Commercial Code ss.9-105 or, as the case may be, Section 201 of the federal Electronic Signatures in Global and National Commerce Act or ss.16 of the Uniform Electronic Transactions Act, unless an Event of Default has occurred and is continuing or would occur after taking into account any action by such Loan Party with respect to such electronic chattel paper or transferable record. (t) If any Loan Party has Accounts Receivable in respect of which the Account Debtor is located in Minnesota, the Loan Parties represent and warrant that the applicable Loan Party has filed and shall file all legally-required Notice of Business Activities Reports and comparable reports with the appropriate Governmental Authorities. (u) Each Loan Party further agrees, upon the request of the Agent and at the Agent's option, to take any and all other actions as the Agent may determine to be necessary or useful for the attachment, perfection and priority of, and the ability of the Agent to enforce, the Agent's security interest in any and all of the Collateral, including, without limitation, (i) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto, certificates and other documents or instruments as - 40 - may be necessary to enable the Agent to perfect or from time to time renew the security interest granted hereby or by any other Collateral Document under the Uniform Commercial Code, to the extent, if any, that such Loan Party's signature thereon is required therefor, including, without limitation, such financing statements and amendments thereto, certificates and other documents as may be necessary to perfect a security interest in any additional Collateral hereafter acquired by such Loan Party or in any replacements or proceeds thereof, (ii) causing the Agent's name to be noted as secured party on any certificate of title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability of the Agent to enforce, the Agent's security interest in such Collateral, (iii) complying with any provision of any statute, regulation or treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment, perfection or priority of, or ability of the Agent to enforce, the Agent's security interest in such Collateral, (iv) obtaining governmental and other third party waivers, consents and approvals, in form and substance satisfactory to the Agent, including, without limitation, any consent of any licensor, lessor or other Person obligated on Collateral, (v) obtaining waivers from mortgagees and landlords in form and substance satisfactory to the Agent and (vi) taking all actions under any earlier versions of the Uniform Commercial Code or under any other law, as reasonably determined by the Agent to be applicable in any relevant Uniform Commercial Code or other jurisdiction, including any foreign jurisdiction. (v) Each Loan Party authorizes and appoints the Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Loan Party or in the Agent's own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments that may be necessary or useful to accomplish the purposes of this Agreement and, without limiting the generality of the foregoing, hereby gives said attorneys the power and right, on behalf of such Loan Party, without notice to or assent by such Loan Party, to do the following: (i) upon the occurrence and during the continuance of an Event of Default, generally to sell, transfer, pledge, make any agreement with respect to or otherwise dispose of or deal with any of the Collateral in such manner as is consistent with the Uniform Commercial Code and as fully and completely as though the Agent were the absolute owner thereof for all purposes, and to do, at the Loan Parties' expense, at any time, or from time to time, all acts and things which the Agent deems necessary or useful to protect, preserve or realize upon the Collateral and the Agent's security interest therein, in order to effect the intent of this Agreement, all no less fully and effectively as any Loan Party might do, including, without limitation, (A) the filing and prosecuting of registration and transfer applications with the appropriate federal, state or local agencies or authorities with respect to trademarks, copyrights and patentable inventions and processes, (B) upon written notice to such Loan Party, the exercise of voting rights with respect to voting securities, which rights may be exercised, if the Agent so elects, with a view to causing the liquidation of assets of the issuer of any such securities and (C) the execution, delivery and recording, in connection with any sale or other disposition of any Collateral, of the endorsements, assignments or other instruments of conveyance or transfer with respect to such Collateral; and (ii) to the extent that such Loan Party's authorization given in this subsection 3.02(v) is not sufficient, to file such financing statements with respect hereto, with or without such Loan Party's signature, or a photocopy of this Agreement in substitution for a financing statement, as the Agent may deem appropriate and to execute in such Loan Party's name such financing statements and amendments thereto and continuation statements which may require such Loan - 41 - Party's signature. To the extent permitted by law, each Loan Party hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and is irrevocable. The powers conferred on the Agent hereunder are solely to protect the interests of the Agent and the Lenders in the Collateral and shall not impose any duty upon the Agent to exercise any such powers. The Agent shall be accountable only for the amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to any Loan Party for any act or failure to act, except for the Agent's own gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction. Section 3.03 FIXTURES, ETC. It is the intention of the parties hereto that (except for Collateral located on any Mortgaged Property) none of the Collateral shall become fixtures and each Loan Party will take all such reasonable action or actions as may be necessary to prevent any of the Collateral from becoming fixtures. Without limiting the generality of the foregoing, each Loan Party will, if requested by the Agent, use commercially reasonable efforts to obtain waivers of Liens, in form satisfactory to the Agent, from each lessor of real property on which any of the Collateral is or is to be located to the extent requested by the Agent. Section 3.04 RIGHT OF AGENT TO DISPOSE OF COLLATERAL, ETC. Upon the occurrence and during the continuance of any Event of Default, subject to the provisions of the Uniform Commercial Code or other applicable law, the Agent shall have the right to take possession of the Collateral and, in addition thereto, the right to enter upon any premises on which the Collateral or any part thereof may be situated and remove the same therefrom. The Agent may require the Loan Parties to make the Collateral (to the extent the same is moveable) available to the Agent at a place to be designated by the Agent or transfer any information related to the Collateral to the Agent by electronic medium. The Agent may in its discretion require any Loan Party to assemble all or any part of the Collateral at such location or locations within the jurisdiction(s) of such Loan Party's principal office(s) or at such other locations as the Agent may reasonably designate. Unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, the Agent will give the Loan Parties at least 7 days' prior written notice of the time and place of any public sale thereof or of the time after which any private sale or any other intended disposition thereof is to be made. Any such notice shall be deemed to meet any requirement hereunder or under any applicable law (including the Uniform Commercial Code) that reasonable notification be given of the time and place of such sale or other disposition. In addition, each Loan Party waives any and all rights that it may have to a judicial hearing in advance of the enforcement of any of the Agent's rights and remedies hereunder. Section 3.05 RIGHT OF AGENT TO USE AND OPERATE COLLATERAL, ETC. Upon the occurrence and during the continuance of any Event of Default, subject to the provisions of the Uniform Commercial Code or other applicable law, the Agent shall have the right and power (a) to take possession of all or any part of the Collateral, and to exclude the Loan Parties and all Persons claiming under the Loan Parties wholly or partly therefrom, and thereafter to hold, store, and/or use, operate, manage and control the same, and (b) to grant a license to use, or cause to be granted a license to use, any or all of the Patents, Trademarks and Copyrights (in the case of Trademarks, along with the goodwill associated therewith), but subject to the terms of any licenses. Upon any such taking of possession, the Agent may, from time to time, at the expense of the Loan - 42 - Parties, make all such repairs, replacements, alterations, additions and improvements to and of the Collateral as the Agent may deem proper. In any such case the Agent shall have the right to manage and control the Collateral and to carry on the business and to exercise all rights and powers of the Loan Parties in respect thereto as the Agent shall deem proper, including the right to enter into any and all such agreements with respect to the operation of the Collateral or any part thereof as the Agent may see fit; and the Agent shall be entitled to collect and receive all rents, issues, profits, fees, revenues and other income of the same and every part thereof. Such rents, issues, profits, fees, revenues and other income shall be applied to pay the expenses of holding and operating the Collateral and of conducting the business thereof, and of all maintenance, repairs, replacements, alterations, additions and improvements, and to make all payments which the Agent may be required or may elect to make, if any, for taxes, assessments, insurance and other charges upon the Collateral or any part thereof, and all other payments which the Agent may be required or authorized to make under any provision of this Agreement (including legal costs and reasonable attorneys' fees). The Agent shall apply the remainder of such rents, issues, profits, fees, revenues and other income as provided in Section 3.06. Section 3.06 PROCEEDS OF COLLATERAL. After deducting all reasonable costs and expenses of collection, storage, custody, sale or other disposition and delivery (including reasonable legal costs and attorneys' fees) and all other charges against the Collateral, the Agent shall apply the residue of the proceeds of any such sale or disposition to the Obligations in accordance with the terms hereof and any surplus shall be returned to the Loan Parties or to any Person or party lawfully entitled thereto. In the event the proceeds of any sale, lease or other disposition of the Collateral are insufficient to pay all of the Obligations in full, the Loan Parties will be liable for the deficiency, together with interest thereon at the Post-Default Rate, and the cost and expenses of collection of such deficiency, including (to the extent permitted by law), without limitation, reasonable attorneys' fees, expenses and disbursements. Section 3.07 RELATION TO COLLATERAL DOCUMENTS. The provisions of this Agreement supplement the provisions of any real estate mortgage or deed of trust granted by any Loan Party to the Agent, for the benefit of the Lenders and the Agent, and which secures the payment or performance of any of the Obligations. Nothing contained in any such real estate mortgage or deed of trust shall derogate from any of the rights or remedies of the Agent or any of the Lenders hereunder. In addition, to the provisions of this Agreement being so read and construed with any such mortgage or deed of trust, the provisions of this Agreement shall be read and construed with the Collateral Documents referred to below in the manner so indicated. (a) PLEDGE AGREEMENTS. Concurrently herewith each Loan Party is executing and delivering to the Agent, for the benefit of the Lenders and the Agent, a Pledge Agreement pursuant to which such Loan Party is pledging to the Agent (a) 100% of the shares of the Capital Stock of its Domestic Subsidiary or Subsidiaries, and/or Audubon Europe, as the case may be, (b) 65% of the shares of the Capital Stock of its Foreign Subsidiary or Subsidiaries (other than Audubon Europe) and (c) all intercompany promissory notes of such Loan Party. Such pledge shall be governed by the terms of such pledge agreement and not by the terms of this Agreement. (b) TRADEMARK AND PATENT AGREEMENTS. Concurrently herewith each Loan Party is executing and delivering to the Agent, for the benefit of the - 43 - Lenders and the Agent, a Trademark Agreement and a Patent Agreement pursuant to which such Loan Party is assigning to the Agent, for the benefit of the Lenders and the Agent, certain Collateral consisting of trademarks, service marks and trademark and service mark rights, patent and patent rights, together with the goodwill appurtenant thereto. The provisions of the Trademark Agreement and the Patent Agreement are supplemental to the provisions of this Agreement, and nothing contained in the Trademark Agreement or the Patent Agreement shall derogate from any of the rights or remedies of the Agent or any of the Lenders hereunder. Neither the delivery of, nor anything contained in, the Trademark Agreement or the Patent Agreement shall be deemed to prevent or postpone the time of attachment or perfection of any security interest in such Collateral created hereby. (c) COPYRIGHT MORTGAGES, ETC. Concurrently herewith each Loan Party is also executing and delivering to the Agent, for the benefit of the Lenders and the Agent, for recording in the United States Copyright Office (the "COPYRIGHT OFFICE") a Memorandum of Grant of Security Interest in Copyrights. Such Loan Party represents and warrants to the Lenders and the Agent that such Copyright Mortgage identifies all now existing material copyrights and other rights in and to all material copyrightable works of such Loan Party, identified, where applicable, by title, author and/or Copyright Office registration number and date. Each Loan Party represents and warrants to the Lenders and the Agent that it has registered all material copyrights with the Copyright Office, as identified in such Copyright Mortgage. Each Loan Party covenants, promptly following such Loan Party's acquisition thereof, to provide to the Agent like identifications of all material copyrights and other rights in and to all material copyrightable works hereafter acquired by such Loan Party, to register such copyrights with the Copyright Office and to execute and deliver to the Agent, for the benefit of the Lenders and the Agent, a supplemental Memorandum of Grant of Security Interest in Copyrights, in form and substance satisfactory to the Agent, for the benefit of the Lenders and the Agent, modified to reflect such subsequent acquisitions and registrations. Section 3.08 MARSHALLING. Neither the Agent nor any Lender shall be required to marshal any present or future collateral security (including but not limited to the Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of the rights and remedies of the Agent or any Lender hereunder and of the Agent or any Lender in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however existing or arising. To the extent that it lawfully may, each Loan Party hereby agrees that it will not invoke any law relating to the marshalling of collateral which might cause delay in or impede the enforcement of the Agent's rights and remedies under this Agreement or under any other instrument creating or evidencing any of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, such Loan Party hereby irrevocably waives the benefits of all such laws. - 44 - ARTICLE IV FEES, PAYMENTS AND OTHER COMPENSATION Section 4.01 AUDIT AND COLLATERAL MONITORING FEES. The Borrower acknowledges that pursuant to Section 7.01(f), representatives of the Agent and the Lenders may visit any or all of the Loan Parties and/or conduct audits, inspections, valuations and/or field examinations of any or all of the Loan Parties. The Borrower agrees to pay (i) $1,500 per day per examiner plus the examiner's out-of-pocket costs and reasonable expenses incurred in connection with all such visits, audits, inspections, valuations and field examinations and (ii) the cost of all visits, audits, inspections, valuations and field examinations conducted by a third party on behalf of the Agent or the Lenders. Section 4.02 PAYMENTS; COMPUTATIONS AND STATEMENTS. (a) The Borrower will make each payment under this Agreement not later than 12:00 noon (New York City time) on the day when due, in lawful money of the United States of America and in immediately available funds, to the Agent's Account. All payments received by the Agent after 12:00 noon (New York City time) on any Business Day will be credited to the Loan Account on the next succeeding Business Day. All payments shall be made by the Borrower without set-off, counterclaim, deduction or other defense to the Agent and the Lenders. After receipt, the Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal ratably to the Lenders in accordance with their Pro Rata Shares and like funds relating to the payment of any other amount payable to any Lender to such Lender, in each case to be applied in accordance with the terms of this Agreement, provided that the Agent will cause to be distributed all interest and fees received from or for the account of the Borrower not less than once each month and in any event promptly after receipt thereof. The Lenders and the Borrower hereby authorize the Agent to, and the Agent may, from time to time, charge the Loan Account of the Borrower with any amount due and payable by the Borrower under any Loan Document. Each of the Lenders and the Borrower agrees that the Agent shall have the right to make such charges whether or not any Default or Event of Default shall have occurred and be continuing. Any amount charged to the Loan Account of the Borrower shall be deemed an Obligation of the Borrower hereunder made by the Lenders to the Borrower, funded by the Agent on behalf of the Lenders. The Lenders and the Borrower confirm that any charges which the Agent may so make to the Loan Account of the Borrower as herein provided will be made as an accommodation to the Borrower and solely at the Agent's discretion. Whenever any payment to be made under any such Loan Document shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall in such case be included in the computation of interest or fees, as the case may be. All computations of fees shall be made by the Agent on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day) occurring in the period for which such fees are payable. Each determination by the Agent of an interest rate or fees hereunder shall be conclusive and binding for all purposes in the absence of manifest error. (b) The Agent shall provide the Borrower, promptly after the end of each calendar month, a summary statement (in the form from time to time used by the Agent) of the opening and closing daily balances in the Loan Account of the Borrower during such month, the amounts and dates of all payments on - 45 - account of the Term Loan during such month, the amount of interest accrued on the Term Loan during such month, and the amount and nature of any charges to the Loan Account made during such month on account of fees, commissions, expenses and other Obligations. All entries on any such statement shall be presumed to be correct and, 30 days after the same is sent, shall be final and conclusive absent manifest error. Section 4.03 SHARING OF PAYMENTS, ETC. If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of any Obligation in excess of its ratable share of payments on account of similar obligations obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in such similar obligations held by them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; PROVIDED, HOWEVER, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender's ratable share (according to the proportion of (i) the amount of such Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender of any interest or other amount paid by the purchasing Lender in respect of the total amount so recovered). The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 4.03 may, to the fullest extent permitted by law, exercise all of its rights (including the Lender's right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. Section 4.04 APPORTIONMENT OF PAYMENTS. Subject to Section 2.02 hereof and to any written agreement among the Agent and/or the Lenders: (a) all payments of principal and interest in respect of the Term Loan, all payments of fees (other than the Loan Servicing Fee set forth in Section 2.06 hereof and the audit and collateral monitoring fee provided for in Section 4.01) and all other payments in respect of any other Obligations, shall be allocated by the Agent among such of the Lenders as are entitled thereto, in proportion to their respective Pro Rata Shares or otherwise as provided herein or, in respect of payments not made on account of the Term Loan, as designated by the Person making payment when the payment is made. (b) After the occurrence and during the continuance of an Event of Default, the Agent may, and upon the direction of the Required Lenders shall, apply all payments in respect of any Obligations and all proceeds of the Collateral, subject to the provisions of this Agreement, (i) FIRST, to pay the Obligations in respect of any fees, expense reimbursements, indemnities and other amounts then due to the Agent until paid in full; (ii) SECOND, to pay interest due in respect of the Agent Advances until paid in full; (iii) THIRD, to pay principal of the Agent Advances until paid in full; (iv) FOURTH, ratably to pay the Obligations in respect of any fees and indemnities then due to the Lenders until paid in full; (v) FIFTH, ratably to pay interest due in respect of the Term Loan until paid in full; (vi) SIXTH, ratably to pay principal of the Term Loan until paid in full, and (vii) SEVENTH, to the ratable payment of all other Obligations then due and payable. (c) In each instance, so long as no Event of Default has occurred and is continuing, Section 4.04(b) shall not be deemed to apply to any - 46 - payment by the Borrower specified by the Borrower to the Agent to be for the prepayment of all or part of the principal of the Term Loan in accordance with the terms and conditions of Section 2.05. (d) For purposes of Section 4.04(b), "paid in full" with respect to interest shall include interest accrued after the commencement of any Insolvency Proceeding irrespective of whether a claim for such interest is allowable in such Insolvency Proceeding. (e) In the event of a direct conflict between the priority provisions of this Section 4.04 and other provisions contained in any other Loan Document, it is the intention of the parties hereto that both such priority provisions in such documents shall be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 4.04 shall control and govern. Section 4.05 INCREASED COSTS AND REDUCED RETURN. (a) If any Lender or the Agent shall have determined that the adoption or implementation of, or any change in, any law, rule, treaty or regulation, or any policy, guideline or directive of, or any change in, the interpretation or administration thereof by, any court, central bank or other administrative or Governmental Authority, or compliance by any Lender or the Agent or any Person controlling any such Lender or the Agent with any directive of, or guideline from, any central bank or other Governmental Authority or the introduction of, or change in, any accounting principles applicable to any Lender or the Agent or any Person controlling any such Lender or the Agent (in each case, whether or not having the force of law), shall (i) subject any Lender or the Agent, or any Person controlling any such Lender or the Agent to any tax, duty or other charge with respect to this Agreement or the Term Loan made by such Lender or the Agent, or change the basis of taxation of payments to any Lender or the Agent or any Person controlling any such Lender or the Agent of any amounts payable hereunder (except for taxes on the overall net income of any Lender or the Agent or any Person controlling any such Lender or the Agent), (ii) impose, modify or deem applicable any reserve, special deposit or similar requirement against the Term Loan or against assets of or held by, or deposits with or for the account of, or credit extended by, any Lender or the Agent or any Person controlling any such Lender or the Agent or (iii) impose on any Lender or the Agent or any Person controlling any such Lender or the Agent any other condition regarding this Agreement or the Term Loan, and the result of any event referred to in clauses (i), (ii) or (iii) above shall be to increase the cost to any Lender or the Agent of making the Term Loan or agreeing to make the Term Loan, or to reduce any amount received or receivable by any Lender or the Agent hereunder, then, upon demand by any such Lender or the Agent, the Borrower shall pay to such Lender or the Agent such additional amounts as will compensate such Lender or the Agent for such increased costs or reductions in amount. (b) If any Lender or the Agent shall have determined that any Capital Guideline or the adoption or implementation of, or any change in, any Capital Guideline by the Governmental Authority charged with the interpretation or administration thereof, or compliance by any Lender or the Agent or any Person controlling such Lender or the Agent with any Capital Guideline or with any request or directive of any such Governmental Authority with respect to any Capital Guideline, or the implementation of, or any change in, any applicable accounting principles (in each case, whether or not having the force of law), either (i) affects or would affect the amount of capital required or expected to - 47 - be maintained by any Lender or the Agent or any Person controlling such Lender or the Agent, and any Lender or the Agent determines that the amount of such capital is increased as a direct or indirect consequence of the Term Loan or any Lender's or the Agent's or any such other controlling Person's other obligations hereunder, or (ii) has or would have the effect of reducing the rate of return on any Lender's or the Agent's or any such other controlling Person's capital to a level below that which such Lender or the Agent or such controlling Person could have achieved but for such circumstances as a consequence of the Term Loan or any agreement to make the Term Loan, or such Lender's or the Agent's or such other controlling Person's other obligations hereunder (in each case, taking into consideration, such Lender's or the Agent's or such other controlling Person's policies with respect to capital adequacy), then, upon demand by any Lender or the Agent, the Borrower shall pay to such Lender or the Agent from time to time such additional amounts as will compensate such Lender or the Agent for such cost of maintaining such increased capital or such reduction in the rate of return on such Lender's or the Agent's or such other controlling Person's capital. (c) All amounts payable under this Section 4.05 shall bear interest from the date that is 10 days after the date of demand by any Lender or the Agent until payment in full to such Lender or the Agent at the Reference Rate. A certificate of such Lender or the Agent claiming compensation under this Section 4.05, specifying the event herein above described and the nature of such event shall be submitted by such Lender or the Agent to the Borrower, setting forth the additional amount due and an explanation of the calculation thereof, and such Lender's or the Agent's reasons for invoking the provisions of this Section 4.05, and shall be final and conclusive absent manifest error. ARTICLE V CONDITIONS TO THE TERM LOAN Section 5.01 CONDITIONS PRECEDENT TO EFFECTIVENESS. This Agreement shall become effective as of the Business Day (the "EFFECTIVE DATE") when each of the following conditions precedent shall have been satisfied in a manner satisfactory to the Agent: (a) PAYMENT OF FEES, ETC. The Borrower shall have paid on or before the date of this Agreement all fees, costs, expenses and taxes then payable pursuant to Section 2.06 and Section 12.04. (b) REPRESENTATIONS AND WARRANTIES; NO EVENT OF DEFAULT. The following statements shall be true and correct: (i) the representations and warranties contained in ARTICLE VI and in each other Loan Document, certificate or other writing delivered to the Agent or any Lender pursuant hereto or thereto on or prior to the Effective Date are true and correct on and as of the Effective Date as though made on and as of such date and (ii) no Default or Event of Default shall have occurred and be continuing on the Effective Date or would result from this Agreement or the other Loan Documents becoming effective in accordance with its or their respective terms. (c) LEGALITY. The making of the Term Loan shall not contravene any law, rule or regulation applicable to the Agent or any Lender. - 48 - (d) DELIVERY OF DOCUMENTS. The Agent shall have received on or before the Effective Date the following, each in form and substance satisfactory to the Agent and, unless indicated otherwise, dated the Effective Date: (i) a Pledge Agreement, duly executed by each Loan Party; (ii) a pledge and security agreement, duly executed by Yale Industrial Products, Inc., with respect to the pledge of the common stock of Audubon Europe; (iii) a Patent Agreement, duly executed by each Loan Party; (iv) a Trademark Agreement, duly executed by each Loan Party; (v) an Assignment of Trademarks and Service Marks (U.S.), in the form of Exhibit 1 to the Trademark Agreement, duly executed by each Loan Party; (vi) a Copyright Mortgage, duly executed by each Loan Party; (vii) a Mortgage with respect to each Mortgaged Property; (viii) evidence of the recording of each Mortgage in such office or offices as may be necessary or, in the opinion of the Agent, desirable to perfect the Lien purported to be created thereby or to otherwise protect the rights of the Agent and the Lenders thereunder; (ix) a Title Insurance Policy with respect to each Mortgage (other than with respect to the Mortgaged Properties listed on Schedule 1.01(E)), dated as of the Effective Date; (x) a survey of each Mortgaged Property (other than the Mortgaged Properties listed on Schedule 1.01(E)), in form and substance satisfactory to the Agent, certified to the Agent and to the issuer of the relevant Title Insurance Policy; (xi) a copy of each letter issued by the applicable State Governmental Authority, evidencing each Mortgaged Property's (other than the Mortgaged Properties listed on Schedule 1.01(E)) compliance with all applicable building codes, fire codes, other health and safety rules and regulations, parking, density and height requirements and other building and zoning laws; (xii) a UCC Filing Authorization Letter, duly executed by each Loan Party, together with appropriate financing statements on Form UCC-1 duly filed in such office or offices as may be necessary or, in the opinion of the Agent, desirable to perfect the security interests purported to be created hereby and by the Collateral Documents; (xiii) certified copies of request for copies of information on Form UCC-11, listing all effective financing statements which name as debtor any Loan Party and which are filed in the offices referred to in paragraph (xii) above, together with copies of such financing statements, none - 49 - of which, except as otherwise agreed in writing by the Agent, shall cover any of the Collateral and the results of searches for any tax Lien and judgment Lien filed against such Person or its property, which results, except as otherwise agreed to in writing by the Agent, shall not show any such Liens; (xiv) the Participation Agreement, duly executed by the Loan Parties; (xv) the Intercreditor Agreement, duly executed by the Working Capital Agent and the Working Capital Lenders, and acknowledged by the Loan Parties; (xvi) a copy of the resolutions of each Loan Party, certified as of the Effective Date by an Authorized Officer thereof, authorizing (A) the borrowings hereunder and the transactions contemplated by the Loan Documents to which such Loan Party is or will be a party, and (B) the execution, delivery and performance by such Loan Party of each Loan Document to which such Loan Party is or will be a party and the execution and delivery of the other documents to be delivered by such Person in connection herewith and therewith; (xvii) a certificate of an Authorized Officer of each Loan Party, certifying the names and true signatures of the representatives of such Loan Party authorized to sign each Loan Document to which such Loan Party is or will be a party and the other documents to be executed and delivered by such Loan Party in connection herewith and therewith, together with evidence of the incumbency of such authorized officers; (xviii) a certificate of the appropriate official(s) of the state of organization and each state of foreign qualification of each Loan Party certifying as to the subsistence in good standing of, and the payment of taxes by, such Loan Party in such states; (xix) a true and complete copy of the charter, certificate of formation, certificate of limited partnership or other publicly filed organizational document of each Loan Party certified as of a recent date not more than 30 days prior to the Effective Date by an appropriate official of the state of organization of such Loan Party which shall set forth the same complete name of such Loan Party as is set forth herein and the organizational number of such Loan Party, if an organized number is issued in such jurisdiction; (xx) a copy of the charter and by-laws, limited liability company agreement, operating agreement, agreement of limited partnership or other organizational document of each Loan Party, together with all amendments thereto, certified as of the Effective Date by an Authorized Officer of such Loan Party; (xxi) an opinion from each of the following counsel to the Borrower and its Subsidiaries, in form and substance satisfactory to the Agent, as to such matters as the Agent may reasonably request: (A) Phillips, Lytle, Hitchcock, Blaine & Huber LLP, counsel to the Loan Parties; - 50 - (B) Theodore Hadzi-Antich, environmental counsel to the Loan Parties; (C) Hodgson Russ LLP, bond counsel to the Loan Parties; (D) Shook, Hardy & Bacon L.L.P., Missouri counsel to Audubon West, Inc. and LICO Steel, Inc.; (E) Brune & Neff, Oklahoma counsel to Crane Equipment & Service, Inc.; (F) Linklaters Loesch, Luxembourg counsel to Audubon Europe; and (G) Opinion of the Manager - Legal Affairs of the Borrower. (xxii) a certificate of an Authorized Officer of each Loan Party, certifying as to the matters set forth in subsection (b) of this Section 5.01; (xxiii) a copy of the Financial Statements and the financial projections described in Section 6.01(d)(i) hereof, certified as of the Effective Date as true and correct by a Designated Financial Officer of the Borrower; (xxiv) a certificate of a Designated Financial Officer of each Loan Party, certifying as to the solvency of such Loan Party, which certificate shall be satisfactory in form and substance to the Agent; (xxv) evidence of the insurance coverage required by Section 7.01(e) and the terms of each Mortgage and such other insurance coverage with respect to the business and operations of the Loan Parties as the Agent may reasonably request, in each case, where requested by the Agent, with such endorsements as to the named insureds or loss payees thereunder as the Agent may request and providing that such policy may be terminated or canceled (by the insurer or the insured thereunder) only upon 30 days' prior written notice to the Agent and each such named insured or loss payee, together with evidence of the payment of all premiums due in respect thereof for such period as the Agent may request; (xxvi) a certificate of an Authorized Officer of the Borrower, certifying the names and true signatures of the persons that are authorized to provide the Notice of Borrowing and all other notices under this Agreement and the other Loan Documents; (xxvii) a Landlord's Waiver and Consent, executed by each landlord with respect to each Material Leasehold Property, together with a copy of the relevant Lease, and all amendments thereto, between the applicable Loan Party and the landlord party thereto; (xxviii) copies of the Canadian Loan Documents as in effect on the Effective Date, certified as true and correct copies thereof by an Authorized Officer of the Borrower, together with a certificate of an Authorized - 51 - Officer of the Borrower stating that such agreements remain in full force and effect and that none of the Canadian Borrowers has breached or defaulted in any of its obligations under such agreements; (xxix) copies of the Working Capital Loan Documents as in effect on the Effective Date, certified as true and correct copies thereof by an Authorized Officer of the Borrower, together with a certificate of an Authorized Officer of the Borrower stating that such agreements remain in full force and effect and that none of the Loan Parties has breached or defaulted in any of its obligations under such agreements; (xxx) copies of the Senior Subordinated Note Documents as in effect on the Effective Date, certified as true and correct copies thereof by an Authorized Officer of the Borrower, together with a certificate of an Authorized Officer of the Borrower stating that such agreements remain in full force and effect and that none of the Loan Parties has breached or defaulted in any of its obligations under such agreements; (xxxi) an assignment agreement with respect to the Existing Credit Facility and all related documents, duly executed by the Loan Parties and the Existing Lender in favor of the Working Capital Agent and the Working Capital Lenders, together with an assignment of mortgage in favor of the Working Capital Agent and the Working Capital Lenders for each mortgage filed by the Existing Lender on the Mortgaged Properties and UCC-3 amendments for all UCC-1 financing statements filed by the Existing Lender and covering any portion of the Collateral; (xxxii) a satisfactory ASTM 1527-00 Phase I Environmental Site Assessment ("Phase I ESA") (and, if requested by the Agent based upon the results of such Phase I ESA, an ASTM 1527-00 Phase II Environmental Site Assessment) of each Mortgaged Property (other than the Mortgaged Properties listed on Schedule 1.01(E)), in form and substance and by an independent firm satisfactory to the Agent; (xxxiii) copies of all lockbox agreements, control agreements and blocked account agreements delivered pursuant to the Working Capital Loan Agreement; and (xxxiv) such other agreements, instruments, approvals, opinions and other documents, each satisfactory to the Agent in form and substance, as the Agent may reasonably request. (e) MATERIAL ADVERSE EFFECT. The Agent shall have determined, in its sole judgment, that no event or development shall have occurred since September 30, 2002 which could have a Material Adverse Effect. (f) WORKING CAPITAL FINANCING. On or prior to the Effective Date, the Agent shall have received evidence that the transactions contemplated by the Working Capital Loan Agreement shall have been consummated. (g) APPROVALS. All consents, authorizations and approvals of, and filings and registrations with, and all other actions in respect of, any Governmental Authority or other Person required in connection with the making of the Term Loan or the conduct of the Loan Parties' business shall have been obtained and shall be in full force and effect. - 52 - (h) PROCEEDINGS; RECEIPT OF DOCUMENTS. All proceedings in connection with the making of the Term Loan and the other transactions contemplated by this Agreement and the other Loan Documents, and all documents incidental hereto and thereto, shall be satisfactory to the Agent and its counsel, and the Agent and such counsel shall have received all such information and such counterpart originals or certified or other copies of such documents as the Agent or such counsel may reasonably request. (i) MANAGEMENT REFERENCE CHECKS. The Agent shall have received satisfactory reference checks for, and shall have had an opportunity to meet with, key management of each Loan Party. (j) DUE DILIGENCE. The Agent shall have completed its business, legal and collateral due diligence with respect to each Loan Party and the results thereof shall be acceptable to the Agent, in its sole and absolute discretion. Without limiting the foregoing, the Agent shall have received a Field Survey and Audit, dated not earlier than 30 days prior to the Effective Date, and such Field Survey and Audit and the results thereof shall be acceptable to the Agent, in its sole and absolute discretion. (k) AVAILABILITY. After giving effect to the Term Loan, the Canadian Term Loan and the Working Capital Loans to be made on the Effective Date, (i) Working Capital Availability shall not be less than $15,000,000 and (ii) all liabilities of the Loan Parties shall be current. The Borrower shall deliver to the Agent a certificate of a Designated Financial Officer of the Borrower certifying as to the matters set forth in clauses (i) and (ii) above and containing the calculation of Working Capital Availability. ARTICLE VI REPRESENTATIONS AND WARRANTIES Section 6.01 REPRESENTATIONS AND WARRANTIES. Each Loan Party hereby represents and warrants to the Agent and the Lenders as follows: (a) ORGANIZATION; POWERS. Each of the Borrower and its Subsidiaries has been duly formed or organized and is validly existing and in good standing under the laws of its jurisdiction of organization or formation. Each of the Borrower and its Subsidiaries has all requisite power to own its property and authority to carry on its business as now conducted and as presently contemplated, and is qualified to do business in, and is in good standing and duly authorized to do business in, every jurisdiction where such qualification is required, except where the failure to have such power or authority or to be so qualified or in good standing, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. (b) AUTHORIZATION; ENFORCEABILITY. The borrowing of the Term Loan and the grant of security interests pursuant to the Loan Documents are within the power and authority of the Borrower and each of its Subsidiaries, as applicable and have been duly authorized by all necessary action on the part of the Borrower and each of its Subsidiaries, as applicable. This Agreement and the other Loan Documents have been duly authorized, executed and delivered by the - 53 - Borrower and each of its Subsidiaries, as applicable, and constitute legal, valid and binding obligations of the Borrower and each of its Subsidiaries, as applicable, enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. (c) GOVERNMENTAL APPROVALS; NO CONFLICTS. The borrowing of the Term Loan and the grant of the security interests pursuant to the Loan Documents (i) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority which has not been obtained, except as disclosed on Schedule 6.01(c), (ii) will not violate any applicable law, policy or regulation or the organizational documents of the Borrower or any of its Subsidiaries or any order of any Governmental Authority, (iii) will not violate or result in a default under any material term of any indenture, agreement or other instrument binding upon the Borrower or any of its Subsidiaries, or any of their assets, or give rise to a right thereunder to require any payment to be made by the Borrower or any of its Subsidiaries, and (iv) except for the Liens created by the Loan Documents, will not result in the creation or imposition of any Lien on any asset of the Borrower or any of its Subsidiaries. (d) FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE. (i) The Loan Parties have heretofore delivered to the Agent and the Lenders the following financial statements: (A) the consolidated balance sheets and statements of operations and cash flows of the Borrower and its Subsidiaries, as of and for the Fiscal Years ended March 31, 2000, March 31, 2001, and March 31, 2002, audited and accompanied by an opinion of the Borrower's independent public accountants; (B) the unaudited consolidated balance sheet and statements of operations and cash flows of the Borrower and its Subsidiaries, as of and for the fiscal year-to-date period ended September 30, 2002, certified by a Designated Financial Officer that such financial statements fairly present the financial condition of the Borrower and its Subsidiaries as at such date and the results of the operations of the Borrower and its Subsidiaries for the period ended on such date and that all such financial statements, including the related schedules and notes thereto have been prepared in all material respects in accordance with GAAP applied consistently throughout the periods involved, except as disclosed on Schedule 6.01(d); and (C) the projected consolidated balance sheets, statements of operations and cash flows, for the Borrower and its Subsidiaries for the Fiscal Years ended March 31, 2003 through March 31, 2007. Except as disclosed on Schedule 6.01(d), such financial statements (except for the projections) present fairly, in all material respects, the respective consolidated financial position and results of operations and cash flows of the respective entities as of such respective dates and for such periods in accordance with GAAP, subject to year-end audit adjustments and the absence of - 54 - footnotes in the case of such unaudited or pro forma statements. The projections were prepared by the Borrower in good faith and were based on assumptions that were reasonable when made. (ii) Except as disclosed on Schedule 6.01(d), since September 30, 2002, there has been no material adverse change in the business, assets, operations or condition, financial or otherwise, of the Borrower and its Subsidiaries from that set forth in the September 30, 2002 financial statements referred to in clause (B) of paragraph (i) above. (iii) Neither the Borrower nor any of its Subsidiaries has on the date hereof any contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments in each case that are material, except as referred to or reflected or provided for in the financial statements described in this Section 6.01(d) or in Schedule 6.01(d) hereto, or as otherwise permitted pursuant to this Agreement. (iv) Schedule 6.01(d)(iv) hereto contains the calculation of EBITDA and other financial information, including restructuring charges for the fiscal quarters ending March 31, 2002, June 30, 2002 and September 30, 2002. (e) PROPERTIES. (i) Each of the Borrower and its Subsidiaries has good and marketable title to, or valid, subsisting and enforceable leasehold interests in, all Property material to its business. All machinery and equipment of each of the Borrower and its Subsidiaries is in good operating condition and repair, and all necessary replacements of and repairs thereto have be made so as to preserve and maintain the value and operating efficiency of such machinery and equipment. (ii) Set forth on Schedule 6.01(e) hereto is a complete list of all Patents, Trademarks and Copyrights. The Borrower and its Subsidiaries own, or are licensed to use, all Patents, Trademarks and Copyrights and other intellectual property material to their business (collectively, the "PROPRIETARY RIGHTS"), and to the knowledge of the Borrower and its Subsidiaries, the use thereof by the Borrower or any of its Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. (iii) Schedule 6.01(e) clearly identifies all Patents, Trademarks and Copyrights that have been duly registered in, filed in or issued by the PTO or the United States Register of Copyrights (collectively, the "REGISTERED PROPRIETARY RIGHTS"). The Registered Proprietary Rights have been properly maintained and renewed in accordance with all applicable provisions of law and administrative regulations in the United States, as applicable. The Borrower and its Subsidiaries have taken commercially reasonable steps to protect their Registered Proprietary Rights and to maintain the confidentiality of all Proprietary Rights that are not generally in the public domain. (iv) As of the date hereof, Schedule 6.01(e) contains a true, accurate and complete list of (A) all Real Property Assets, whether owned or leased, and (B) all Leases, subleases or assignments of Leases (together with all amendments, modifications, supplements, renewals or - 55 - extensions of any thereof) affecting each Leasehold Property, regardless of whether the Borrower or any of its Subsidiaries is the landlord or tenant (whether directly or as an assignee or successor in interest) under such Lease, sublease or assignment. Except as specified in Schedule 6.01(e), each agreement listed in clause (B) of the immediately preceding sentence is in full force and effect and neither the Borrower nor any of its Subsidiaries has any knowledge of any default that has occurred and is continuing thereunder, and each such agreement constitutes the legal, valid and binding obligation of the Borrower and each of its Subsidiaries, as applicable, enforceable against the Borrower and each of its Subsidiaries, as applicable, in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally or by equitable principles. (f) LITIGATION AND ENVIRONMENTAL MATTERS. (i) Except as set forth on Schedule 6.01(f), there are no Environmental Actions of any kind by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower and its Subsidiaries, threatened against or affecting the Borrower or any of its Subsidiaries that (A) if adversely determined, could have a Material Adverse Effect or (B) relates to this Agreement or any other Loan Document or any transaction contemplated hereby or thereby. (ii) The Borrower and its Subsidiaries have taken all necessary steps to investigate the past and present condition and usage of the Real Property Assets and the operations conducted thereon and, based upon such diligent investigation, have determined, except as set forth on Schedule 6.01(f), that: (A) none of the Borrower, its Subsidiaries or any operator of the Real Property Assets currently or formerly owned, leased or operated by the Borrower, any of its Subsidiaries or any predecessor-in-interest or any operations thereon are in violation or alleged violation, in any material respect, of any Environmental Laws; (B) neither the Borrower nor any of its Subsidiaries has become subject to any Environmental Liabilities and do not know of any basis for any Environmental Liabilities which could reasonably be expected to result in any Environmental Liabilities in excess of $200,000 individually or $4,000,000 in the aggregate; (C) neither the Borrower nor any of its Subsidiaries has received notice from any third party including, without limitation, any Governmental Authority, (1) that any one of them has been identified by a Governmental Authority as a potentially responsible party under Environmental Law; (2) that the Borrower, its Subsidiaries or any predecessor-in-interest has generated, transported or disposed of any Hazardous Materials at any site at which a Governmental Authority has conducted or has ordered a party to conduct a Remedial Action, removal or other response action pursuant to any Environmental Law; or (3) that the Borrower or any of its Subsidiaries is or shall be a named party to any Environmental Action arising out of any third party's incurrence of costs, expenses, losses or damages of any kind whatsoever in connection with the Release of Hazardous Materials; - 56 - (D) (1) no portion of the Real Property Assets currently or formerly owned, leased or operated by the Borrower or any of its Subsidiaries has been used for the generation, handling, processing, storage or disposal of Hazardous Materials except in accordance in all material respects with applicable Environmental Laws; and no underground tank or other underground storage receptacle for Hazardous Materials is located on any portion of the Real Property Assets currently or formerly owned, leased or operated by the Borrower or any of its Subsidiaries; (2) there have been no Releases or threatened Releases of Hazardous Materials on, upon, into or from the properties of the Borrower or any of its Subsidiaries, which Releases would have a material adverse effect on the value of any of the Real Property Assets or adjacent properties; (3) to the best knowledge of the Borrower and its Subsidiaries, there have been no generation, storage, disposal or Releases on, upon, from or into any real property in the vicinity of any of the Real Property Assets which, through soil or groundwater contamination, may have come to be located on, and which would have a material adverse effect on the value of, any Real Property Asset; and (4) in addition, any Hazardous Materials that have been generated on any of the Real Property Assets currently or formerly owned, leased or operated by the Borrower, any of its Subsidiaries or any predecessor-in-interest have been transported offsite only by carriers having an identification number issued by any Governmental Authority, treated or disposed of, to the knowledge of the Borrower or any of its Subsidiaries, only by treatment or disposal facilities maintaining valid permits as required under applicable Environmental Laws, which transporters and facilities have been and are, to the best knowledge of the Borrower and its Subsidiaries, operating in compliance in all material respects with such permits and applicable Environmental Laws; and (E) none of the Borrower, its Subsidiaries or any of the Real Property Assets are subject to any applicable Environmental Law requiring the performance of Hazardous Material site assessments, or the removal or remediation of Hazardous Materials, or the giving of notice to any Governmental Authority or the recording or delivery to other Persons of an environmental disclosure document or statement by virtue of the transactions set forth herein and contemplated hereby, or as a condition to the recording of any Mortgage or to the effectiveness of any other transactions contemplated hereby. (iii) Since the date of this Agreement, there has been no change in the status of the Disclosed Matters that, individually or in the aggregate, has had, or materially increased the likelihood of having, a Material Adverse Effect. (g) COMPLIANCE WITH LAWS AND AGREEMENTS. Except as set forth on Schedule 6.01(g), each of the Borrower and its Subsidiaries is in material compliance with all laws, decrees, judgments, licenses, rules, regulations, policies, permits, approvals and orders of any Governmental Authority applicable to it, its property or the operation of its business and all material terms of indentures, agreements and other instruments binding upon it or its property. (h) INVESTMENT AND HOLDING COMPANY STATUS. Neither the Borrower nor any of its Subsidiaries is (i) an "investment company", or an "affiliated company" or a "principal underwriter" of an "investment company", as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended, (ii) a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company", as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935, as amended or - 57 - (iii) a "bank holding company" as defined in, or subject to regulation under, the Bank Holding Company Act of 1956, as amended. (i) TAXES. Except as set forth on Schedule 6.01(i), each of the Borrower and its Subsidiaries has timely made, filed or caused to be filed all Tax returns, declarations and reports required to have been filed or made and has paid or caused to be paid all Taxes required to have been paid by it, except (A) as of the Effective Date, Taxes that are being contested in good faith by appropriate proceedings, so long as such contest operates to suspend the enforcement of compliance therewith, the collection thereof and/or the imposition of any penalty, fine or Lien with respect thereto, and for which the Borrower or any of its Subsidiaries has set aside on its books adequate reserves with respect thereto in accordance with GAAP, which reserves shall be acceptable to Agent and (B) after the Effective Date, as permitted by Section 7.01(d). There are no unpaid Taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and none of the officers of the Borrower or any of its Subsidiaries knows of any basis for any such claim. (j) ERISA. Except as set forth on Schedule 6.01(j), neither the Borrower nor any of its Subsidiaries has any Pension Plans. No ERISA Event has occurred or is reasonably expected to occur with respect to any Plan. Neither the Borrower nor any of its Subsidiaries has a present intention to terminate any Pension Plan (except in connection with the transactions described in Schedules 7.02(d)(ii) and 7.02(d)(iii)), with respect to which the Borrower or any of its Subsidiaries would incur a cost of more than $100,000 to terminate such Plan, including amounts required to be contributed to fund such Plan upon termination thereof and all costs and expenses associated therewith, including, without limitation, attorneys' and actuaries' fees and expenses in connection with such termination and reasonable expenses and settlement or judgment costs and attorneys' fees and expenses in connection with any litigation related to such termination. (k) DISCLOSURE. As of the Effective Date, the Borrower and its Subsidiaries have disclosed to the Agent all material agreements, instruments and corporate or other restrictions to which the Borrower or any of its Subsidiaries is subject after the Effective Date, and all other matters known to the Borrower or any of its Subsidiaries, that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. The organizational structure of the Borrower and its Subsidiaries is as set forth on Schedule 6.01(l). The information, reports, financial statements, exhibits and schedules furnished at or prior to the Effective Date in writing by or on behalf of the Borrower and its Subsidiaries to the Agent in connection with the negotiation, preparation or delivery of this Agreement and the other Loan Documents or included herein or therein or delivered pursuant hereto or thereto, at the Effective Date, when taken as a whole do not contain any untrue statement of material fact or omit to state any material fact necessary to make the statements herein or therein, in light of the circumstances under which they were made, not materially misleading. All written information furnished after the Effective Date by the Borrower and its Subsidiaries to the Agent and/or the Lenders in connection with this Agreement and the other Loan Documents and the transactions contemplated hereby and thereby will be true, complete and accurate in every material respect, or (in the case of pro forma information and projections) prepared in good faith based on reasonable assumptions, on the date as of which such information is stated or certified. There is no fact known to the Borrower or any of its Subsidiaries that could reasonably be expected to - 58 - have a Material Adverse Effect that has not been disclosed herein, in the other Loan Documents or in a report, financial statement, exhibit, schedule, disclosure letter or other writing furnished to the Agent for use in connection with the transactions contemplated hereby or thereby. (l) CAPITALIZATION. As of the Effective Date, the capital structure and ownership of the Subsidiaries of the Borrower are correctly described on Schedule 6.01(l). As of the Effective Date, the authorized, issued and outstanding Capital Stock of the Borrower and each of its Subsidiaries consists of the Capital Stock described on Schedule 6.01(l), all of which is duly and validly issued and outstanding, fully paid and nonassessable. Except as set forth on Schedule 6.01(l), as of the Effective Date, (x) there are no outstanding Equity Rights with respect to the Borrower or any of its Subsidiaries and, (y) there are no outstanding obligations of the Borrower or any of its Subsidiaries to repurchase, redeem, or otherwise acquire any shares of Capital Stock of or other interest in the Borrower or any of its Subsidiaries, nor are there any outstanding obligations of the Borrower or any of its Subsidiaries to make payments to any Person, such as "phantom stock" payments, where the amount thereof is calculated with reference to the fair market value or equity value of the Borrower or any of its Subsidiaries. (m) SUBSIDIARIES. (i) Set forth on Schedule 6.01(m) is a complete and correct list of all Subsidiaries of the Loan Parties as of the date hereof, together with, for each such Subsidiary, (A) the jurisdiction of organization of such Subsidiary, (B) each Person holding ownership interests in such Subsidiary and (C) the nature of the ownership interests held by each such Person and the percentage of ownership of such Subsidiary represented by such ownership interests. Except as disclosed in Schedule 6.01(m), (x) each Loan Party and its respective Subsidiaries owns, free and clear of all Liens (other than Liens permitted hereunder), and has the unencumbered right to vote, all outstanding ownership interests in each Person shown to be held by it in Schedule 6.01(m), (y) all of the issued and outstanding Capital Stock of each such Person organized as a corporation is validly issued, fully paid and nonassessable and (z) there are no outstanding Equity Rights with respect to such Person. (ii) Except as set forth on Schedule 7.02(h), as of the date of this Agreement, neither the Borrower nor any of its Subsidiaries is subject to any indenture, agreement, instrument or other arrangement containing any provision of the type described in Section 7.02(h) ("RESTRICTIVE AGREEMENTS"), other than any such provision the effect of which has been unconditionally, irrevocably and permanently waived. (n) INDEBTEDNESS, LIENS AND AGREEMENTS. (i) Schedule 6.01(n) contains a complete and correct list, as of the Effective Date, of any Indebtedness or any extension of credit (or commitment for any extension of credit) to, or guarantee by, the Borrower or any of its Subsidiaries in an amount in excess of $100,000, and the aggregate principal or face amount outstanding or that may become outstanding with respect thereto is correctly described on Schedule 6.01(n). (ii) Schedule 6.01(n) contains a complete and correct list, as of the Effective Date, of each Lien (other than the Liens in favor of - 59 - the Agent) securing Indebtedness of any Person and covering any property of the Borrower or any of its Subsidiaries, and the aggregate Indebtedness secured (or which may be secured) by each such Lien and the Property covered by each such Lien is correctly described in the appropriate part of Schedule 6.01(n). (iii) Schedule 6.01(n) contains a complete and correct list, as of the Effective Date, of each contract and arrangement to which the Borrower or any of its Subsidiaries is a party for which breach, nonperformance, cancellation or failure to renew would have a Material Adverse Effect other than purchase orders made in the ordinary course of business and subject to customary terms. (iv) To the extent requested by the Agent, true and complete copies of each agreement listed on Schedule 6.01(n) have been delivered to the Agent, together with all amendments, waivers and other modifications thereto. All such agreements are valid, subsisting, in full force and effect, are currently binding and will continue to be binding upon the Borrower and each of its Subsidiaries that is a party thereto and, to the best knowledge of the Borrower and its Subsidiaries, binding upon the other parties thereto in accordance with their terms. The Borrower and its Subsidiaries are not in default under any such agreements, the occurrence of which could have a Material Adverse Effect. (o) FEDERAL RESERVE REGULATIONS. Neither the Borrower nor any of its Subsidiaries is engaged principally or as one of its important activities in the business of extending credit for the purpose of purchasing or carrying margin stock (as defined in Regulation U of the Board). The making of the Term Loan hereunder, the use of the proceeds thereof as contemplated hereby, and the security arrangements contemplated by the Loan Documents, will not violate or be inconsistent with any of the provisions of Regulations T, U, or X of the Board. (p) SOLVENCY. As of the Effective Date and after giving effect to the Term Loan hereunder and the consummation of the transactions contemplated hereby and by the Canadian Loan Documents and the Working Capital Loan Documents: (i) the aggregate value of all properties of the Borrower and its Subsidiaries at their present fair saleable value on a going concern basis (i.e., the amount that may be realized within a reasonable time, considered to be six months to one year, either through collection or sale at the regular market value, conceiving the latter as the amount that could be obtained for such properties within such period by a capable and diligent businessman from an interested buyer who is willing to purchase under ordinary selling conditions), exceed the amount of all the debts and liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) of the Borrower and its Subsidiaries; (ii) the Borrower and its Subsidiaries will not, on a consolidated basis, have an unreasonably small capital with which to conduct their business operations as heretofore conducted; and (iii) the Borrower and its Subsidiaries will have, on a consolidated basis, sufficient cash flow to enable them to pay their debts as they mature. - 60 - (q) FORCE MAJEURE. Since September 30, 2002, none of the business, properties and other assets of the Borrower and its Subsidiaries is affected by any fire or other casualty, strike, lockout or other labor trouble, embargo, sabotage, confiscation, contamination, riot, civil disturbance, activity of armed forces or act of God that has or could reasonably be expected to have a Material Adverse Effect. (r) ACCOUNTS RECEIVABLE. Unless otherwise indicated to the Agent in writing: (i) Each Account Receivable is genuine and in all respects what it purports to be, and it is not evidenced by a judgment; (ii) Each Account Receivable arises out of a completed, bona fide sale and delivery of goods or rendition of services by a Loan Party in the ordinary course of its business and in accordance with the terms and conditions of all purchase orders, contracts or other documents relating thereto and forming a part of the contract between such Loan Party and the Account Debtor, and, in the case of goods, title to the goods has passed from the Loan Party to the Account Debtor; (iii) Each Account Receivable is for a liquidated amount maturing as stated in the duplicate invoice covering such sale or rendition of services, a copy of which has been furnished or is available to the Agent; (iv) Each Account Receivable, and the Agent's security interest therein, is not, and will not (by voluntary act or omission of the Loan Parties) be in the future, subject to any offset, Lien, deduction, defense, dispute, counterclaim or any other adverse condition except for disputes resulting in returned goods where the amount in controversy is deemed by the Agent to be immaterial, and each such Account Receivable is absolutely owing to one of the Loan Parties and is not contingent in any respect or for any reason; (v) No Loan Party has made any agreement with any Account Debtor for any extension, compromise, settlement or modification of any Account Receivable or any deduction therefrom, except discounts or allowances which are granted by the Loan Parties in the ordinary course of their businesses for prompt payment and which are reflected in the calculation of the net amount of each respective invoice related thereto and are reflected in the borrowing base certificates and collateral update certificates furnished to the Agent hereunder; (vi) To the best knowledge of the Loan Parties, the Account Debtor under each Account Receivable had the capacity to contract at the time any contract or other document giving rise to an Account Receivable was executed and such Account Debtor is not insolvent; and (vii) To the best knowledge of the Loan Parties, there are no proceedings or actions which are threatened or pending against any Account Debtor which might result in any material adverse change in such Account Debtor's financial condition or the collectability of any Account Receivable. (s) LABOR AND EMPLOYMENT MATTERS. - 61 - (i) Except as set forth on Schedule 6.01(s), (A) to the knowledge of the Borrower or any of its Subsidiaries, no employee of the Borrower or any of its Subsidiaries is represented by a labor union, no labor union has been certified or recognized as a representative of any such employee, and the Borrower and its Subsidiaries do not have any obligation under any collective bargaining agreement or other agreement with any labor union or any obligation to recognize or deal with any labor union, and there are no such contracts or other agreements pertaining to or which determine the terms or conditions of employment of any employee of the Borrower or any of its Subsidiaries; (B) to the knowledge of the Borrower or any of its Subsidiaries, there are no pending or threatened representation campaigns, elections or proceedings; (C) the Borrower and its Subsidiaries do not have knowledge of any strikes, slowdowns or work stoppages of any kind, or threats thereof, and no such activities occurred during the 24-month period preceding the Effective Date; (D) neither the Borrower nor any of its Subsidiaries has engaged in, admitted committing or been held to have committed any unfair labor practice; and (E) to the knowledge of the Borrower or any of its Subsidiaries, there are no controversies or grievances between the Borrower or any of its Subsidiaries and any of its employees or representatives thereof; in each case, which would have a Material Adverse Effect. (ii) Except as set forth on Schedule 6.01(s), the Borrower and its Subsidiaries have at all times complied in all material respects, and are in material compliance with, all applicable laws, rules and regulations respecting employment, wages, hours, compensation, benefits, and payment and withholding of taxes in connection with employment. (iii) Except as set forth on Schedule 6.01(s), to the knowledge of the Borrower or any of its Subsidiaries, the Borrower and its Subsidiaries have at all times complied with, and are in compliance with, all applicable laws, rules and regulations respecting occupational health and safety, whether now existing or subsequently amended or enacted, including, without limitation, the Occupational Safety & Health Act of 1970, 29 U.S.C. Section 651 et seq. and the state analogies thereto, all as amended or superseded from time to time, and any common law doctrine relating to worker health and safety, except for noncompliance which could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. (t) BANK ACCOUNTS. Schedule 6.01(t) lists all banks and other financial institutions at which the Borrower and each of its Subsidiaries maintains deposits and/or other accounts as of the Effective Date, and such Schedule correctly identifies the name and address of each depository, the name in which the account is held, a description of the purpose of the account, and the complete account number. (u) OBLIGATIONS AS SENIOR DEBT. The Obligations constitute Senior Debt (as defined in the Senior Subordinated Note Indenture) and Designated Senior Debt (as defined in the Senior Subordinated Note Indenture). As such, all of the Obligations (and the Agent and Lenders) are entitled to the benefits of each of the subordination and other provisions contained in the Senior Subordinated Note Indenture which are available in respect of Senior Debt and Designated Senior Debt (and to the holders thereof), and each of such subordination and other provisions is in full force and effect and enforceable in accordance with its terms. - 62 - (v) SENIOR SUBORDINATED NOTE DOCUMENTS AND WORKING CAPITAL LOAN DOCUMENTS. The Loan Parties have heretofore furnished to the Agent true, complete and correct copies of each of the Senior Subordinated Note Documents and the Working Capital Loan Documents (including schedules, exhibits and annexes thereto). The Senior Subordinated Note Documents and the Working Capital Loan Documents have not been amended, supplemented or modified, and constitute the complete understanding among the parties thereto in respect of the matters and transactions covered thereby, except for amendments thereto delivered to the Agent prior to the Effective Date. Each of the Senior Subordinated Note Documents and the Working Capital Loan Documents is in full force and effect, and neither the Borrower nor any of its Subsidiaries is in default under any of such documents. (w) CERTAIN TRANSACTIONS. Except for arm's length transactions pursuant to which the Borrower or any of its Subsidiaries makes payments in the ordinary course of business upon terms no less favorable than the Borrower or any of its Subsidiaries could obtain from third parties, none of the officers, directors, or employees of the Borrower or any of its Subsidiaries is presently a party to any transaction with the Borrower or any of its Subsidiaries (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Borrower, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner. (x) COLUMBUS MCKINNON FINANCE CORPORATION. Columbus McKinnon Finance Corporation does not (i) own any assets other than that certain intercompany promissory note issued by Columbus McKinnon Limited and made to Columbus McKinnon Finance Corporation in the aggregate face amount of C$3,750,000, (ii) have any liabilities or (iii) engage in any business. ARTICLE VII COVENANTS OF THE LOAN PARTIES Section 7.01 AFFIRMATIVE COVENANTS. So long as any principal of or interest on the Term Loan or any other Obligation (whether or not due) shall remain unpaid, each Loan Party covenants and agrees with the Agent and the Lenders that: (a) FINANCIAL STATEMENTS AND OTHER INFORMATION. The Loan Parties will furnish to the Agent and each Lender: (i) as soon as available and in any event within 90 days after the end of each Fiscal Year of the Borrower and its Subsidiaries: (A) consolidated and consolidating statements of operations and cash flows of the Borrower and its Subsidiaries for such Fiscal Year and the related consolidated and consolidating balance sheets of the Borrower and its Subsidiaries as at the end of such Fiscal Year, setting forth in each case in comparative form the corresponding consolidated and - 63 - consolidating figures for the preceding Fiscal Year, and consolidated statements of shareholders' equity for such Fiscal Year, and (B) an opinion of independent certified public accountants of recognized national standing (without a "going concern" or like qualification or exception and without any qualification or exception as to the scope of such audit) stating that the consolidated financial statements referred to in the preceding clause (A) fairly present in all material respects the consolidated financial condition and results of operations of the Borrower and its Subsidiaries as at the end of, and for, such Fiscal Year in accordance with GAAP. (ii) as soon as available and in any event within 45 days after the end of each fiscal quarter of the Borrower and its Subsidiaries: (A) consolidated and consolidating statements of operations and consolidated statements of cash flows of the Borrower and its Subsidiaries for such fiscal quarter and for the period from the beginning of the respective Fiscal Year to the end of such fiscal quarter, and the related consolidated and consolidating balance sheets of the Borrower and its Subsidiaries as at the end of such period, setting forth in each case in comparative form the corresponding consolidated and consolidating figures for the corresponding period in the preceding Fiscal Year, and the corresponding figures for the budgets (except with respect to consolidating balance sheets) most recently delivered to the Agent for such period, and (B) a certificate of a Designated Financial Officer, which certificate shall state that said consolidated and consolidating financial statements referred to in the preceding clause (A) fairly present in all material respects the consolidated financial condition and results of operations of the Borrower and its Subsidiaries as at the end of, and for, such period (subject to normal year-end audit adjustments and the omission of footnotes) in accordance with GAAP; (iii) as soon as available and in any event within 30 days after the end of each of the first 11 months in each Fiscal Year of the Borrower and its Subsidiaries: (A) consolidated statements of operations and cash flows of the Borrower and its Subsidiaries for such month and for the period from the beginning of the respective Fiscal Year to the end of such month, and the related consolidated balance sheets of the Borrower and its Subsidiaries as at the end of such period, setting forth in each case in comparative form the corresponding consolidated figures for the corresponding period in the preceding Fiscal Year, and the corresponding figures for the budgets most recently delivered to the Agent for such period, and (B) a certificate of a Designated Financial Officer, which certificate shall state that said consolidated financial statements referred to in the preceding clause (A) fairly present in all material respects the consolidated financial condition and results of operations of the Borrower and its Subsidiaries as at the end of, and for, such period (subject to normal year-end audit adjustments and the omission of footnotes) in accordance with GAAP; - 64 - (iv) as soon as available and in any event within 30 days after the beginning of each Fiscal Year of the Borrower and its Subsidiaries, statements of budgeted consolidated and consolidating income and statements of budgeted consolidated cash flows for the Borrower and its Subsidiaries for each fiscal month in such period and a budgeted consolidated balance sheet of the Borrower and its Subsidiaries as of the last day of each fiscal month in such period, and the projected availability under the Working Capital Borrowing Base as of the last day of each fiscal month in such period, together with supporting assumptions which shall be reasonable when made, all prepared in good faith in reasonable detail and consistent with the Borrower's past practices in preparing budgets and otherwise reasonably satisfactory in scope to the Agent; (v) as soon as available and in any event (A) within 90 days after the end of each Fiscal Year, a Compliance Certificate duly executed by a Designated Financial Officer with respect to the annual financial statements delivered pursuant to subsection (a)(i) above, (B) within 45 days after the end of each fiscal quarter of the Borrower and its Subsidiaries, a Compliance Certificate duly executed by a Designated Financial Officer with respect to the quarterly financial statements delivered pursuant to subsection (a)(ii) above, and (C) within 30 days after the end of each fiscal month of the Borrower and its Subsidiaries, a Compliance Certificate duly executed by a Designated Financial Officer with respect to the monthly financial statements delivered pursuant to subsection (a)(iii) above; (vi) as soon as available and in any event no later than 1:00 p.m. (New York City time) on Wednesday of each week (or, if such day is not a Business Day, on the preceding Business Day) (or with such greater frequency as the Agent may reasonably request), a borrowing base certificate in the form delivered to the Working Capital Agent, with respect to the Collateral of the Borrower as of the close of business on the previous Friday (or, if such day is not a Business Day, on the preceding Business Day) (PROVIDED that Inventory and total ineligible accounts may be calculated as of the close of business on the last Business Day of the previous month), together with such other information relating to the Collateral as the Agent shall reasonably request, and accompanied by such supporting detail and documentation as the Agent shall reasonably request; (vii) as soon as available and in any event within 30 days after the end of each month with respect to such month (or more frequently if requested by the Agent), (A) a collateral update certificate in the form delivered to the Working Capital Agent, (B) an accounts receivable/loan reconciliation report in the form delivered to the Working Capital Agent, (C) a summary of Inventory by type and location, (D) an accounts receivable aging report (which report shall contain amounts denominated in Dollars), and (E) such other information relating to the Collateral as the Agent shall reasonably request, in each case, accompanied by such supporting detail and documentation as the Agent shall reasonably request; (viii) as soon as available and in any event no later than 45 days after the last Business Day of each calendar quarter, a term loan borrowing base certificate in the form delivered to the Working Capital Agent, together with an updated list of eligible fixed assets and such other information relating to the term loan borrowing base collateral under the Working Capital Loan Agreement as the Agent shall reasonably request, and accompanied by such supporting detail and documentation as the Agent shall reasonably request; - 65 - (ix) as soon as available and in any event within 10 days after the end of each month (or more frequently if requested by the Agent), a rolling 13 week cash flow projection, of the Borrower and its Subsidiaries in a form and in such details as is reasonably satisfactory to the Agent, updating the prior cash flow projection and, for prior periods ending up to one week prior to the date of the report, showing actual performance and any variances of actual performance from projected performance; (x) promptly upon receipt thereof, copies of all management letters and accountants' letters received by the Loan Parties; (xi) promptly after submission to any Governmental Authority, all documents and information furnished to such Governmental Authority in connection with any investigation of any Loan Party other than routine inquiries by such Governmental Authority; (xii) as soon as possible and in any event within 5 days after execution, receipt or delivery thereof, copies of any material notices that any Loan Party executes or receives in connection with any Material Indebtedness (including, without limitation, the Senior Subordinated Notes and the Working Capital Indebtedness); (xiii) as soon as possible and in any event within 5 days after execution, receipt or delivery thereof, copies of any material notices that any Loan Party executes or receives in connection with the sale or other Disposition of the Capital Stock of, or all or substantially all of the assets of, any Loan Party; (xiv) promptly after the sending or filing thereof, copies of all statements, reports and other information any Loan Party sends to any holders of its Indebtedness or its securities or files with the SEC or any national (domestic or foreign) securities exchange; (xv) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Loan Parties, or compliance with the terms of this Agreement, as the Agent or any Lender may reasonably request. (b) NOTICES OF MATERIAL EVENTS. The Loan Parties will furnish to the Agent and each Lender prompt written notice of the following: (i) the occurrence of any Default hereunder or any default or event of default under any Working Capital Loan Document; (ii) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting any Loan Party or Affiliate (A) with respect to any claim in excess of $100,000 or (B) that, if adversely determined, could reasonably be expected to have a Material Adverse Effect; (iii) the occurrence of any ERISA Event related to the Plan of any Loan Party or knowledge after due inquiry of any ERISA Event related to a Plan of any other ERISA Affiliate that, alone or together with any - 66 - other ERISA Events that have occurred, could reasonably be expected to result in liability of the Loan Parties in an aggregate amount exceeding $100,000; (iv) any other development that has, or could reasonably be expected to have, a Material Adverse Effect. Each notice delivered under this Section 7.01(b) shall be accompanied by a statement of a Designated Financial Officer setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto. (c) EXISTENCE; CONDUCT OF BUSINESS. The Borrower and each of its Subsidiaries shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business; PROVIDED that the foregoing shall not prohibit any merger, consolidation, liquidation, dissolution or any discontinuance or sale of such business permitted under Section 7.02(d). (d) PAYMENT OF OBLIGATIONS. The Borrower and each of its Subsidiaries shall pay its obligations (including Tax liabilities) in an amount in excess of $100,000, before the same shall become delinquent or in default, except where (i) the validity or amount thereof is being contested in good faith by appropriate proceedings, so long as such contest operates to suspend the enforcement of compliance therewith, the collection thereof and/or the imposition of any penalty, fine or Lien with respect thereto, (ii) such Person has set aside on its books adequate reserves with respect thereto in accordance with GAAP, which reserves shall be acceptable to Agent. (e) MAINTENANCE OF PROPERTIES; INSURANCE. The Borrower and each of its Subsidiaries shall (i) keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and (ii) maintain insurance, with financially sound and reputable insurance companies, as may be required by law and such other insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations, including, without limitation, business interruption and product liability insurance. Such insurance shall be in such minimum amounts that such Person will not be deemed a co-insurer under applicable insurance laws, regulations and policies and otherwise shall be in such amounts, contain such terms, be in such forms and be for such periods as may be reasonably satisfactory to the Agent. Without limiting the generality of the foregoing, the Borrower and each of its Subsidiaries will maintain or cause to be maintained replacement value casualty insurance on the Collateral under such policies of insurance, in each case with such insurance companies, in such amounts, with such deductibles, and covering such terms and risks as are at all times satisfactory to the Agent in its commercially reasonable judgment. All general liability and other liability policies with respect to the Loan Parties shall name the Agent for the benefit of the Lenders as an additional insured thereunder as its interests may appear, and all business interruption and casualty insurance policy shall contain a loss payable clause or endorsement, satisfactory in form and substance to the Agent, that names the Agent for the benefit of the Lenders as the loss payee thereunder. All policies of insurance shall provide for at least 30 days prior written notice to the Agent of any modifications or cancellation of such policy. - 67 - (f) BOOKS AND RECORDS; INSPECTION RIGHTS. The Borrower and each of its Subsidiaries shall keep proper books of record and account in which entries are made of all dealings and transactions in relation to its business and activities which fairly record such transactions and activities. The Borrower and each of its Subsidiaries shall permit any representatives designated by the Agent or any Lender to visit and inspect its properties, to examine and make extracts from its books and records, to conduct audits, physical counts, valuations, appraisals or examinations (whether by internal commercial finance examiners or independent auditors) of all Collateral and the Borrower and each of its Subsidiaries, and to discuss its affairs, finances and condition with its officers and independent accountants at any reasonable times and as frequently as the Agent deems appropriate provided that, so long as no Default has occurred and is continuing, (i) all such visits shall be on reasonable prior notice, at reasonable times during regular business hours, and (ii) the Agent and the Lenders shall not conduct any such audit, valuation or appraisal, in each case, more than once each year. The Borrower shall, in accordance with Section 4.01, reimburse the Agent and the Lenders for all costs incurred in connection with such audits, physical counts, valuations, appraisals or examinations. Each of the Loan Parties authorizes the Agent and, if accompanied by the Agent, the Lenders to communicate directly with such Loan Party's independent certified public accountants and authorizes such accountants to disclose to the Agent and the Lenders any and all financial statements and other supporting financial documents and schedules including copies of any management letters with respect to the business, financial condition and other affairs of the Borrower or any of its Subsidiaries. At the request of the Agent, each Loan Party shall deliver a letter addressed to such accountants instructing them to comply with the provisions of this Section 7.01(f). The Loan Parties, in consultation with the Agent, will arrange for a meeting to be held at least once every year (and after the occurrence and during the continuance of a Default, more frequently, if requested by the Agent or the Required Lenders) with the Lenders and the Agent hereunder at which the business and operations of the Loan Parties are discussed. The Loan Parties will permit environmental consultants selected by the Agent to visit the properties of the Loan Parties and perform examinations of the Real Property Assets of the Loan Parties at such times and with such frequencies as the Agent or any Lender shall reasonably request; PROVIDED that, so long as no Default has occurred and is continuing, the Agent and the Lenders shall not request that the Real Property Assets of the Loan Parties be examined by environmental consultants more frequently than once every year commencing on the first anniversary of the Effective Date. The Borrower shall reimburse the Agent and the Lenders for all fees, costs and expenses charged by such environmental consultants for each such examination. (g) FISCAL YEAR. To enable the ready and consistent determination of compliance with the covenants set forth in Section 7.02(j) hereof, the Borrower and each of its Subsidiaries shall maintain their current Fiscal Year and current method of determining the last day of the first three fiscal quarters in each Fiscal Year. (h) COMPLIANCE WITH LAWS. The Borrower and each of its Subsidiaries shall comply in all material respects with (i) all permits, licenses and authorizations, including, without limitation, environmental permits, licenses and authorizations, issued by a Governmental Authority, (ii) all laws, rules, regulations and orders including, without limitation, Environmental Laws, of any Governmental Authority and (iii) all contractual obligations, in each case applicable to it or its property. - 68 - (i) USE OF PROCEEDS. The proceeds of the Term Loan will be used only for (i) the refinancing of Existing Indebtedness, (ii) fees and expenses incurred in connection with the transactions contemplated by this Agreement, the Canadian Financing Agreement and the Working Capital Loan Agreement, and (iii) for general corporate and working capital purposes of the Loan Parties. No part of the proceeds of the Term Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations T, U and X. (j) CERTAIN OBLIGATIONS RESPECTING SUBSIDIARIES. Each Loan Party will, and will cause each of its Subsidiaries to, take such action from time to time as shall be necessary to ensure that the percentage of the issued and outstanding shares of Capital Stock of any class or character owned by it in any of its Subsidiaries on the date hereof is not at any time decreased, other than by reason of transfers to another Loan Party. (k) ERISA. The Loan Parties (i) will maintain, and cause each ERISA Affiliate to maintain, each Plan in material compliance with the provisions of such Plans and all applicable requirements of ERISA and of the Internal Revenue Code and with all applicable rulings and regulations issued under the provisions of ERISA and of the Internal Revenue Code and (ii) will not and, to the extent authorized, will not permit any of the ERISA Affiliates to (A) engage in any transaction with respect to any Plan which would subject any Loan Party to either a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Internal Revenue Code, (B) fail to make full payment when due of all amounts which, under the provisions of any Plan, any Loan Party or any ERISA Affiliate is required to pay as contributions thereto, or permit to exist any accumulated funding deficiency (as such term is defined in Section 302 of ERISA and Section 412 of the Internal Revenue Code), whether or not waived, with respect to any Pension Plan or (C) fail to make any payments to any Multiemployer Plan that any Loan Party or any of the ERISA Affiliates may be required to make under any agreement relating to such Multiemployer Plan or any law pertaining thereto. (l) ENVIRONMENTAL MATTERS; REPORTING AND ASSESSMENTS. (i) The Loan Parties will observe and comply in all material respects with, and cause each of their Subsidiaries to observe and comply in all material respects with, all Environmental Laws and all permits and authorizations issued by any Governmental Authority under Governmental Law (collectively, "ENVIRONMENTAL PERMITS"). The Loan Parties will give the Agent prompt written notice of (A) any presence, Release or threat of Release of any Hazardous Materials at or from any Real Property Asset, (B) any actual or alleged violation as to any Environmental Law or Environmental Permit by any Loan Party, (C) the commencement of any Environmental Action or Remedial Action or other communication to it or of which it has knowledge, or with the exercise of due diligence, should have had knowledge regarding the presence or suspected presence of any Hazardous Material at, on about, under, within or in connection with any Real Property Asset or any migration thereof from or to such Real Property Asset, (D) the discovery of any occurrence or condition on any real property adjoining or in the vicinity of any Real Property Asset that could cause such Real Property Asset or any part thereof to be subject to any restrictions on ownership, occupancy, transferability, or use, or subject the owner or any Person having any interest in such Real Property Asset to any liability, penalty, or disability under any Environmental Law, and (E) the receipt of any notice or discovery of any information regarding any actual, - 69 - alleged, or potential Release, disposal or any other presence or existence of any Hazardous Material at, on, about, under, within, near or in connection with any Real Property Asset; in each case, which (x) would have a material adverse effect on any Environmental Permits held by any Loan Party, (y) will, or is likely to, have a Material Adverse Effect, or (z) will require a material expenditure by such Loan Party to cure such alleged problem or violation. (ii) The Agent may, from time to time, in its reasonable discretion, obtain one or more environmental assessments or audits of any Real Property Asset prepared by a hydrogeologist, an independent engineer or other qualified consultant or expert approved by the Agent to evaluate or confirm (A) whether any Hazardous Materials are present in the soil, sediment, air or water at such Real Property Asset and (B) whether the use and operation of such Real Property Asset complies with all Environmental Laws; PROVIDED that, so long as no Default has occurred and is continuing, the Agent shall not request any such environmental assessments or audits of any Real Property Asset more frequently than once every other year. Environmental assessments may include, without limitation, detailed visual inspections of such Real Property Asset, including any and all storage areas, storage tanks, drains, dry wells and leaching areas, and the taking of soil samples, surface water samples and ground water samples, as well as such other investigations or analyses as the Agent deems appropriate. All such environmental assessments shall be conducted and made at the sole expense of the Borrower. (m) MATTERS RELATING TO ADDITIONAL REAL PROPERTY COLLATERAL. (i) In the event that any Loan Party acquires any Material Owned Property after the Effective Date that the Agent determines is an Additional Mortgaged Property or in the event that the Agent determines that any Real Property Asset existing on the Effective Date has become an Additional Mortgaged Property after the Effective Date, the Borrower shall deliver to the Agent, as soon as practicable after the Agent has notified the Borrower that such Real Property Asset is an Additional Mortgaged Property, fully executed and notarized Mortgages ("ADDITIONAL MORTGAGES"), in proper form for recording in all appropriate places in all applicable jurisdictions, encumbering the interest of the applicable Loan Party in such Additional Mortgaged Property, together with Title Insurance Policies or commitments therefor, and copies of all surveys, deeds, title exception documents, flood hazard certificates and other documents as the Agent may reasonably require, together with copies of all deeds with respect to such Additional Mortgaged Property. (ii) In the event that any Loan Party enters into any Lease with respect to any Material Leasehold Property after the Effective Date, the Borrower shall deliver to the Agent copies of the Lease, and all amendments thereto, between the Loan Party and the landlord or tenant, together with a Landlord's Waiver and Consent with respect thereto and where required by the terms of any such Lease, the consent of the mortgagee, ground lessor or other party. (iii) If requested by the Agent, the Loan Parties shall permit an independent real estate appraiser satisfactory to the Agent, upon reasonable notice, to visit and inspect any Additional Mortgaged Property for the purpose of preparing an appraisal of such Additional Mortgaged Property - 70 - satisfying the requirements of all applicable laws and regulations (in each case to the extent required under such laws and regulations as determined by the Agent in its sole discretion). (n) CASH DEPOSITS/BANK ACCOUNTS. The Loan Parties shall take all actions necessary to maintain, preserve and protect the rights and interests of the Agent with respect to all cash deposits of the Loan Parties and all other proceeds of Collateral and shall not, without the Agent's prior written consent, open any deposit or other bank account, or instruct any Account Debtor to make payment to any account other than to an established dominion account, lockbox account or other controlled account under the Working Capital Agent's control; PROVIDED that so long as no Default or Event of Default shall have occurred and be continuing, the Loan Parties shall be permitted to maintain (i) payroll accounts and other accounts not subject to the Working Capital Agent's control so long as the aggregate amount of funds on deposit in all such payroll accounts does not materially exceed estimated payroll for the next payroll period, and (ii) local bank accounts not subject to the Working Capital Agent's control so long as (x) the aggregate amount of funds on deposit in all such local bank accounts does not exceed $500,000, and (y) the aggregate amount of funds on deposit in any such local bank account does not exceed $50,000. (o) NEW GUARANTORS. The Loan Parties will cause each Domestic Subsidiary created, acquired or otherwise existing on or after the Effective Date to immediately become a Guarantor and a Loan Party hereunder and shall execute and deliver, and cause such Domestic Subsidiary to execute and deliver, to the Agent, for the benefit of the Agent and the Lenders, all such Loan Documents and other documents, and take all such actions, and cause such Domestic Subsidiary to take all such actions, as may be required by the Agent in connection therewith. (p) PUNCTUAL PAYMENT. The Loan Parties will duly and punctually pay or cause to be paid the principal and interest on the Term Loan, all fees and expenses, and all other Obligations under this Agreement and the other Loan Documents to which the Borrower or any of its Subsidiaries is a party, all in accordance with the terms of this Agreement and such other Loan Documents. (q) FURTHER ASSURANCES. The Loan Parties will, and will cause each of their Subsidiaries to, take such action and execute, acknowledge and deliver, at their sole cost and expense, such agreements, instruments or other documents as the Agent may require from time to time in order (i) to carry out more effectively the purposes of this Agreement and the other Loan Documents, (ii) to subject to valid and perfected Liens any of the Collateral or any other property of any Loan Party and its Subsidiaries, (iii) to establish and maintain the validity and effectiveness of any of the Loan Documents and the validity, perfection and priority of the Liens intended to be created thereby, and (iv) to better assure, convey, grant, assign, transfer and confirm unto the Agent and each Lender the rights now or hereafter intended to be granted to it under this Agreement or any other Loan Document. (r) FOREIGN PLEDGE AGREEMENTS. The Loan Parties will, within 20 days of the Effective Date, deliver to the Agent: - 71 - (i) a pledge and security agreement, in form and substance satisfactory to the Agent, duly executed by certain of the Loan Parties, with respect to the pledge of the common stock of each of the following Subsidiaries of such Loan Parties: (A) Societe d'Exploitation des Raccords Gautier; (B) Univeyor Electronic A/S; (C) Columbus McKinnon de Mexico, S.A. de C.V.; and (D) Yale Industrial Products GmbH; and (ii) an opinion from each of the following counsel to such Loan Parties, in form and substance satisfactory to the Agent, as to such matters as the Agent may reasonably request: (A) Stephen d'Errico, French counsel to Societe d'Exploitation des Raccords Gautier; (B) Advokatfirmaet Borge Nielsen, Danish counsel to Univeyor Electronic A/S; (C) Enrique Lumen, Mexican counsel to Columbus McKinnon De Mexico, S.A. de C.V.; and (D) Donahue & Partners LLP, German counsel to Yale Industrial Products GmbH. (s) MOTOR VEHICLE COLLATERAL. The Loan Parties will, within 90 days of the Effective Date, take such actions as may be necessary to cause the Agent's Lien on each titled motor vehicle (the fair market value of which is greater than $5,000) of the Loan Parties to be noted on all certificates of title with respect to such vehicle, including, without limitation, filing applications for new certificates of title with respect thereto. (t) PERMITTED CORPORATE RESTRUCTURING. The Loan Parties will, and will cause each of their Subsidiaries, within 14 days of the Effective Date, to consummate each of the transactions contemplated in Schedule 7.02(d)(iii) with respect to each of Spreckels Land Company, Inc., Spreckels Development Company, Inc., Spreckels Water Company, Inc. and Spreckels Consolidated Industries, Inc. Section 7.02 NEGATIVE COVENANTS. So long as any principal of or interest on the Term Loan or any other Obligation (whether or not due) shall remain unpaid, each Loan Party covenants and agrees with the Agent and the Lenders that: (a) INDEBTEDNESS. The Loan Parties will not, and will not permit any of their Subsidiaries to, create, incur, assume or permit to exist any Indebtedness, except: (i) Indebtedness created hereunder and under the Canadian Financing Agreement; - 72 - (ii) Existing Indebtedness on the Effective Date which is set forth in Schedule 7.02(a) and has been designated on such schedule as Indebtedness that will remain outstanding following the funding of the Term Loan, and any extension, renewal, refunding or replacement of any such Indebtedness; PROVIDED, HOWEVER, that (A) such extension, renewal, refunding or replacement is pursuant to terms that are not less favorable to the Loan Parties and the Lenders than the terms of the Indebtedness being extended, renewed, refunded or replaced and (B) after giving effect to such extension, renewal, refunding or replacement, the amount of such Indebtedness is not greater than the amount of Indebtedness outstanding immediately prior to such extension, renewal, refunding or replacement; (iii) Intercompany loans among the Borrower and Loan Parties which are Guarantors; PROVIDED, that (A) the Investment corresponding to such Indebtedness is permitted pursuant Section 7.02(e) hereof, (B) such intercompany loan is evidenced by a promissory note, (C) such promissory note is pledged to the Working Capital Agent and the Agent, and (D) there are no restrictions whatsoever on the ability of the applicable Loan Party to repay such loan; (iv) Guaranties permitted under Section 7.02(c); (v) Indebtedness of any foreign Subsidiary of the Borrower (other than the Canadian Borrowers) in an aggregate amount for all such Indebtedness not to exceed the local currency equivalent (as determined by the Agent) of $20,000,000 in the aggregate at any one time outstanding; PROVIDED that (A) the proceeds of such Indebtedness are transferred to the Borrower and applied to the Working Capital Loans and the Term Loan in accordance with Section 2.05(c)(iii) and Section 2.05(d), (B) such Indebtedness is incurred solely by such foreign Subsidiary, (C) such Indebtedness is either unsecured or secured only by the assets of such foreign Subsidiary, and (D) no guaranty or other credit support of any kind is provided by any Person (including, without limitation, any Loan Party) of or for such Indebtedness or any holder thereof; and PROVIDED, FURTHER, that the Borrower shall notify the Agent in writing in advance prior to permitting any such foreign Subsidiary to incur any Indebtedness under this Section 7.02(a)(v); and (vi) Working Capital Indebtedness in an aggregate principal amount not to exceed at any time outstanding the sum of (A) the lesser of (1) $67,000,000 and (2) 100% of the Working Capital Borrowing Base and (B) the outstanding principal amount of the term loan under the Working Capital Loan Agreement as reduced from time to time by the scheduled principal payments and prepayments of such term loan as set forth in the Working Capital Loan Agreement as in effect on the date hereof, PROVIDED, that Working Capital Indebtedness other than in respect of the Canadian Letter of Credit (as defined in the Working Capital Loan Agreement as in effect on the date hereof) shall not exceed at any time outstanding the sum of (x) the lesser of (I) $67,000,000 and (II) 100% of the Domestic Borrowing Base (as defined in the Working Capital Loan Agreement as in effect on the date hereof) and (y) the outstanding principal amount of the term loan under the Working Capital Loan Agreement as reduced from time to time by the scheduled principal payments and prepayments of such term loan as set forth in the Working Capital Loan Agreement as in effect on the date hereof, PROVIDED, FURTHER, that the Working Capital Agent, the Working Capital Lenders and the Loan Parties shall have executed and delivered to the Agent the Intercreditor Agreement; and the extension of maturity, replacement, refinancing - 73 - or modification of the terms thereof, provided that such extension, replacement, refinancing or modification (xx) is pursuant to terms that are not less favorable to the Loan Parties and the Lenders than the terms of the Working Capital Indebtedness being so extended, replaced, refinanced or modified, (yy) is subject to the Intercreditor Agreement or a similar intercreditor agreement, in form and substance satisfactory to the Agent and the Lenders, having substantially the same terms and conditions as the Intercreditor Agreement and (zz) in the case of the Working Capital Term Loan, shall not exceed the principal amount of the Working Capital Term Loan then outstanding. (b) LIENS. The Loan Parties will not, and will not permit any of their Subsidiaries to, create, incur, assume or permit to exist any Lien on any Property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including Accounts Receivable) or rights in respect of any thereof, except (the following being called "PERMITTED LIENS"): (i) Liens created under the Loan Documents and the Canadian Loan Documents; (ii) any Lien on any property or asset of any Loan Party existing on the Effective Date and set forth in Schedule 7.02(b) (excluding, however, following the making of the Term Loan hereunder, the Liens in favor of any Person other than the Agent securing Indebtedness not designated on said schedule as Indebtedness to remain outstanding following the funding of the Term Loan), but not the extension of coverage thereof to other property or the extension of maturity, refinancing or other modification of the terms thereof or the increase of the Indebtedness secured thereby; (iii) Liens imposed by any Governmental Authority for Taxes, assessments or charges in respect of obligations not yet delinquent or in the case of Taxes and assessments on Properties other than Mortgaged Properties not exceeding $250,000 in the aggregate more than 90 days overdue which are being contested in good faith and by appropriate proceedings, so long as such contest operates to suspend the enforcement of compliance with and/or collection thereof, and so long as adequate reserves with respect thereto are maintained on the books of the applicable Loan Party in accordance with GAAP and which reserves shall be acceptable to the Agent; (iv) landlords', carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens on Properties other than Mortgaged Properties, and vendors' Liens imposed by statute or common law not securing the repayment of Indebtedness, arising in the ordinary course of business which are not overdue for a period of more than 60 days or which are being contested in good faith and by appropriate proceedings promptly initiated and diligently conducted, and a reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made therefor, and so long as such contest operates to suspend the enforcement of compliance with and/or collection thereof, and Liens securing judgments (including, without limitation, pre-judgment attachments) the existence of which do not result in an Event of Default under Section 9.01(j) hereof; - 74 - (v) pledges or deposits under worker's compensation, unemployment insurance and other social security legislation and pledges or deposits to secure the performance of bids, tenders, trade contracts (other than for borrowed money), leases (other than capital leases), utility purchase obligations, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (vi) encumbrances on any Real Property Asset other than a Mortgaged Property consisting of easements, rights-of-way, zoning restrictions, easements, licenses, restrictions and other similar encumbrances incurred in the ordinary course of business, restrictions on the use of Property or minor imperfections in title thereto which, in the aggregate, are not material in amount, and which do not, in the aggregate, materially detract from the value of such Real Property Asset or materially interfere with the ordinary conduct of the business of any Loan Party; (vii) Liens consisting of bankers' liens and rights of setoff, in each case, arising by operation of law, and Liens on documents presented in letter of credit drawings; (viii) the replacement, extension or renewal of any Lien permitted by clauses (ii) and (vii) of this Section 7.02(b) upon or in the same property theretofore subject thereto in connection with the replacement, extension or renewal (without increase in the amount or any change in any direct or contingent obligor) of the Indebtedness secured thereby; and (ix) the Liens granted under the Working Capital Loan Documents to secure the Working Capital Indebtedness permitted pursuant to Section 7.02(a)(vi), provided that, the Working Capital Agent, the Working Capital Lenders and the Loan Parties shall have executed and delivered to the Agent the Intercreditor Agreement. (c) CONTINGENT LIABILITIES. The Loan Parties will not, and will not permit any of their Subsidiaries to, guarantee the Indebtedness or other obligations of any Person, or guarantee the payment of dividends or other distributions upon the stock of, or the earnings of, any Person, except: (i) guarantees issued pursuant to the terms of this Agreement, the Canadian Financing Agreement and the Working Capital Loan Agreement; (ii) endorsements of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; (iii) guarantees and letters of credit in effect on the date hereof which are disclosed in Schedule 7.02(a), and any replacements thereof in amounts not exceeding such guarantees; and (iv) obligations in respect of letters of credit issued under the Working Capital Loan Agreement. - 75 - (d) FUNDAMENTAL CHANGES; ASSET SALES. (i) The Loan Parties will not, and will not permit any of their Subsidiaries to, enter into any transaction of merger or consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), except that any Loan Party may, so long as no Default or Event of Default shall have occurred or be continuing or result therefrom, be merged or combined with or into any other Loan Party, PROVIDED that if such merger involves the Borrower or a Guarantor, (x) the Borrower or such Guarantor shall be the surviving entity and (y) no Change of Control shall result therefrom. The Loan Parties will not form any Subsidiary without the prior written consent of the Agent. The Loan Parties will not acquire any business or property from, or Capital Stock of, or other equity interests in, or be a party to any acquisition of, any Person except for purchases of property to be used in the ordinary course of business, Investments permitted under Section 7.02(e) and Capital Expenditures. (ii) The Loan Parties will not, and will not permit any of their Subsidiaries to, convey, sell, lease, transfer or otherwise dispose (including any Disposition) of, in one transaction or a series of transactions, any part of their business or property, whether now owned or hereafter acquired (including, without limitation, receivables and leasehold interests), except: (A) obsolete property (including leasehold interests), tools or equipment no longer used or useful in their business, or worn out or in need of replacement and that are replaced with assets of reasonably equivalent value or utility or which are otherwise productive or useful in the conduct of such Loan Party's business; (B) any Inventory or other property sold or disposed of in the ordinary course of business and on ordinary business terms; (C) sales of property from a Loan Party to another Loan Party permitted pursuant to Section 7.02(g); (D) sales by the Borrower or any of its Subsidiaries of the assets listed on Schedule 7.02(d)(ii) hereto in an aggregate amount for all such sales not to exceed $5,000,000, so long as (1) no Default or Event of Default has occurred and is continuing or would result from the sale of any such asset, (2) each such sale is on arm's-length terms for fair and reasonable consideration, (3) not less than 85% of the proceeds from any such sale is in the form of cash, (4) the Net Cash Proceeds received from each such sale are not less than, with respect to each such asset, the amount corresponding to such asset set forth on Schedule 7.02(d)(ii) and (5) the Net Cash Proceeds of each such sale are applied in accordance with Section 2.05(c)(ii); and (E) sales by the Borrower or any of its Subsidiaries of any other assets so long as (1) no Default or Event of Default has occurred and is continuing or would result from the sale of such asset, (2) such sale is on arm's-length terms for fair and reasonable consideration, (3) not less than 85% of the proceeds from such sale is in the form of cash, (4) the Net Cash Proceeds are applied in accordance with Section 2.05(c)(ii), and (5) - 76 - the aggregate fair market value of all such assets sold during any calendar year does not exceed $500,000. (iii) Notwithstanding anything to the contrary contained in this Section 7.02(d), so long as no Default or Event of Default shall have occurred or be continuing or would result therefrom, the Loan Parties shall be permitted to consummate the transactions described on Schedule 7.02(d)(iii). (e) INVESTMENTS; HEDGING AGREEMENTS. (i) The Loan Parties will not, and will not permit any of their Subsidiaries to, make or permit to remain outstanding any Investment, except: (A) Investments consisting of guarantees permitted by Section 7.02(c); (B) Investments by the Borrower and/or its Subsidiaries in the Borrower or any Guarantor; (C) Investments of the Borrower and/or its Subsidiaries in any of the Borrower's Subsidiaries which are not Domestic Subsidiaries; provided that the aggregate amount of such Investments made after the Effective Date does not exceed $1,000,000; (D) Investments existing on the Effective Date and described on Schedule 7.02(e); (E) Permitted Investments; and (F) Checking and deposit accounts with banks used in the ordinary course of business. (ii) The Loan Parties will not, and will not permit any of their Subsidiaries to, enter into any Hedging Agreement, other than Hedging Agreements entered into in the ordinary course of business with the prior written consent of the Agent to hedge or mitigate risks to which the Loan Parties are exposed in the conduct of their business or the management of their liabilities. (f) RESTRICTED JUNIOR PAYMENTS. The Loan Parties will not, and will not permit any of their Subsidiaries, to declare or make any Restricted Junior Payment at any time, other than: (i) payments of dividends or management fees by a Subsidiary of the Borrower to the Borrower or another wholly-owned Subsidiary of the Borrower; (ii) payments of dividends and distributions payable solely in common stock of such Person; - 77 - (iii) so long as no Default shall have occurred and be continuing and no Default shall be caused thereby, regularly scheduled payments of interest (but not principal or premium) in respect of the Senior Subordinated Notes on the dates and in the amounts set forth in the Senior Subordinated Note Documents; and (iv) payments with respect to intercompany loans permitted under Section 7.02(a)(iii). (g) TRANSACTIONS WITH AFFILIATES. Except as expressly permitted by this Agreement, the Loan Parties will not, and will not permit any of their Subsidiaries to, directly or indirectly (i) make any Investment in an Affiliate; (ii) transfer, sell, lease, assign or otherwise dispose of any property to an Affiliate; (iii) merge into or consolidate with an Affiliate, or purchase or acquire property from an Affiliate; or (iv) enter into any other transaction directly or indirectly with or for the benefit of an Affiliate (including, without limitation, guarantees and assumptions of obligations of an Affiliate); PROVIDED that: (A) any Affiliate who is an individual may serve as a director, officer, employee or consultant of any Loan Party, receive reasonable compensation for his or her services in such capacity and benefit from Permitted Investments to the extent specified in clause (e) of the definition thereof; (B) the Loan Parties may engage in and continue the transactions with or for the benefit of Affiliates which are described in Schedule 7.02(g) or are referred to in Sections 7.02(e) or 7.02(f) (but only to the extent specified in such Sections); and (C) the Loan Parties may engage in transactions with Affiliates in the ordinary course of business on terms which are no less favorable to the Loan Parties than those likely to be obtained in an arms' length transaction between a Loan Party and a non-affiliated third party. (h) RESTRICTIVE AGREEMENTS; RESTRICTIONS ON NEGATIVE PLEDGES AND UPSTREAM LIMITATION. The Loan Parties will not, and will not permit any of their Subsidiaries to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement (other than this Agreement, the Canadian Financing Agreement and the Working Capital Loan Agreement) that prohibits, restricts or imposes any condition upon (i) the ability of any such Person to create, incur or permit to exist any Lien upon any of its property or assets, or (ii) the ability of such Person to pay dividends or other distributions with respect to any shares of its Capital Stock or other equity interests or to make or repay loans or advances to any other Person or to guarantee the Indebtedness of any other Person; PROVIDED that (A) the foregoing shall not apply to restrictions and conditions imposed by law, (B) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 7.02(h) (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition), (C) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of stock or assets of a Subsidiary pending such sale, provided such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, (D) clause (i) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this - 78 - Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness, and (E) clause (i) of the foregoing shall not apply to customary provisions in leases and other contracts (excluding license agreements) restricting the assignment thereof. (i) SALE-LEASEBACK TRANSACTIONS. No Loan Party or any of its Subsidiaries will directly or indirectly, enter into any arrangements with any Person whereby such Person shall sell or transfer (or request another Person to purchase) any property, real, personal or mixed, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property from any Person. (j) CERTAIN FINANCIAL COVENANTS. (i) CAPITAL EXPENDITURES. The Borrower will not make, or permit any of its Subsidiaries to make, Capital Expenditures during any Reference Period ending during any Fiscal Year set forth in the table below, that exceed, in the aggregate, the amounts listed below opposite such Fiscal Year: --------------------------------------------------------------------- FISCAL YEAR MAXIMUM AMOUNT -------------------------------------------------- ------------------ 2003 Fiscal Year $6,000,000 -------------------------------------------------- ------------------ 2004 Fiscal Year $8,000,000 -------------------------------------------------- ------------------ 2005 Fiscal Year and each Fiscal Year thereafter $10,000,000 --------------------------------------------------------------------- (ii) MAXIMUM SENIOR LEVERAGE RATIO. The Borrower shall not permit the Senior Leverage Ratio for any Reference Period ending during a period set forth in the table below, to exceed the ratio set forth opposite such period in such table: --------------------------------------------------------------------- PERIOD RATIO -------------------------------------------------- ------------------ Effective Date through September 30, 2003 3.25 to 1.00 -------------------------------------------------- ------------------ December 31, 2003 through September 30, 2004 3.00 to 1.00 -------------------------------------------------- ------------------ December 31, 2004 and each fiscal quarter ending thereafter 2.75 to 1.00 --------------------------------------------------------------------- (iii) FIXED CHARGE COVERAGE RATIO. The Borrower shall not permit the Fixed Charge Coverage Ratio for any Reference Period ending during a period set forth in the table below, to be less than the ratio set forth opposite such period in such table: --------------------------------------------------------------------- PERIOD RATIO -------------------------------------------------- ------------------ Effective Date through March 31, 2004 1.05 to 1.00 -------------------------------------------------- ------------------ - 79 - -------------------------------------------------- ------------------ June 30, 2004 and each fiscal quarter ending thereafter 1.10 to 1.00 --------------------------------------------------------------------- (iv) MINIMUM NET WORTH. The Borrower shall not permit Net Worth at any time during a period set forth in the table below, to be less than the amounts set forth opposite such date in such table: --------------------------------------------------------------------- PERIOD MINIMUM AMOUNT -------------------------------------------------- ------------------ Effective Date through March 31, 2004 $72,500,000 -------------------------------------------------- ------------------ June 30, 2004 through September 30, 2004 $74,500,000 -------------------------------------------------- ------------------ December 31, 2004 and each fiscal quarter ending thereafter $76,500,000 --------------------------------------------------------------------- (v) MINIMUM EBITDA OF THE LOAN PARTIES. The Borrower shall not permit the EBITDA attributable to the Loan Parties for any Reference Period to be less than $30,000,000. (vi) MINIMUM EBITDA. (A) The Borrower shall not permit EBITDA for the month of November 2002 to be less than $2,400,000. (B) The Borrower shall not permit EBITDA for any Reference Period ending on the date set forth in the table below to be less than the amounts set forth opposite such date in such table: --------------------------------------------------------------------- PERIOD MINIMUM AMOUNT -------------------------------------------------- ------------------ December 31, 2002 $44,019,000 -------------------------------------------------- ------------------ January 31, 2003 $45,605,000 -------------------------------------------------- ------------------ February 28, 2003 $45,200,000 -------------------------------------------------- ------------------ March 31, 2003 through November 30, 2003 $42,620,000 -------------------------------------------------- ------------------ December 31, 2003 through March 31, 2004 $45,000,000 --------------------------------------------------------------------- (k) LINES OF BUSINESS. The Borrower will not, and will not permit any of its Subsidiaries to, engage to any substantial extent in any line or lines of business activity other than (i) the types of businesses engaged in by them as of the Effective Date and businesses substantially related thereto, and (ii) such other lines of business as may be consented to by the Agent and the Required Lenders. - 80 - (l) OTHER INDEBTEDNESS. The Borrower will not, and will not permit any of its Subsidiaries to, purchase, redeem, retire or otherwise acquire for value, or set apart any money for a sinking, defeasance or other analogous fund for the purchase, redemption, retirement or other acquisition of, or make any voluntary payment or prepayment of the principal of or interest on, or any other amount owing in respect of any Senior Subordinated Notes, except to the extent permitted by Section 7.02(f). (m) MODIFICATIONS OF CERTAIN DOCUMENTS; DESIGNATION OF SENIOR DEBT. The Borrower will not, and will not permit any of its Subsidiaries to, consent to any modification of or supplement to any of the provisions of any documents or agreements evidencing or governing the Subordinated Notes, the Working Capital Loans or any other Existing Indebtedness. The Loan Parties will designate the Agreement and the Obligations hereunder as "Designated Senior Debt" under the Senior Subordinated Note Indenture, and will not designate any other Indebtedness other than the Working Capital Loans as "Designated Senior Debt" under the Senior Subordinated Note Indenture. (n) COLUMBUS MCKINNON FINANCE CORPORATION. Except as set forth in Section 6.01(x) and as otherwise permitted by Section 7.02(d)(iii), the Borrower will not permit Columbus McKinnon Finance Corporation to own any asset, incur any liabilities or engage in any business. The Borrower will not permit Columbus McKinnon Limited to make, or Columbus McKinnon Finance Corporation to receive, any payment in respect of that certain intercompany promissory note issued by Columbus McKinnon Limited and made to Columbus McKinnon Finance Corporation in the aggregate face amount of C$3,750,000. ARTICLE VIII MANAGEMENT, COLLECTION AND STATUS OF ACCOUNTS RECEIVABLE AND OTHER COLLATERAL Section 8.01 MANAGEMENT OF COLLATERAL. The Agent (and all Persons designated by the Agent for such purpose) may, at any time and from time to time after the occurrence and during the continuance of an Event of Default, whether before or after notification to any Account Debtor and whether before or after the maturity of any of the Obligations, (i) enforce collection of any Accounts Receivable or contract rights of the Loan Parties by suit or otherwise; (ii) exercise all of the rights and remedies of the Loan Parties with respect to proceedings brought to collect any Accounts Receivable; (iii) surrender, release or exchange all or any part of any Accounts Receivable of the Loan Parties, or compromise or extend or renew for any period (whether or not longer than the original period) any Indebtedness thereunder; (iv) sell or assign any Account Receivable of the Loan Parties upon such terms, for such amount and at such time or times as the Agent deems advisable; (v) prepare, file and sign the names of the Loan Parties on any proof of claim in bankruptcy or other similar document against any Account Debtor indebted on an Account Receivable of the Loan Parties; and (vi) do all other acts and things which are necessary, in the Agent's sole discretion, to fulfill the Obligations of the Loan Parties under this Agreement and to allow the Agent to collect the Accounts Receivable. In addition to any other provision hereof or in any of the other Loan Documents, the Agent may at any time on or after the occurrence of an Event of Default, at the sole expense of the Loan Parties, notify any parties obligated on any of the - 81 - Accounts Receivable of the Loan Parties to make payment directly to the Agent of any amounts due or to become due thereunder. (b) Each Loan Party hereby appoints the Agent or its designee on behalf of the Agent as the Loan Parties' attorney-in-fact with power exercisable during the continuance of an Event of Default to endorse any Loan Party's name upon any notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Accounts Receivable, to sign any Loan Party's name on any invoice or bill of lading relating to any of the Accounts Receivable, drafts against Account Debtors with respect to Accounts Receivable, assignments and verifications of Accounts Receivable and notices to Account Debtors with respect to Accounts Receivable, to send verification of Accounts Receivable, and to notify the Postal Service authorities to change the address for delivery of mail addressed to any Loan Party to such address as the Agent may designate and to do all other acts and things necessary to carry out this Agreement. All acts of said attorney or designee are hereby ratified and approved, and said attorney or designee shall not be liable for any acts of omission or commission (other than acts of omission or commission constituting gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction), or for any error of judgment or mistake of fact or law; this power being coupled with an interest is irrevocable until the Term Loan and the other Obligations under the Loan Documents are paid in full and all of the Loan Documents are terminated. (c) Nothing herein contained shall be construed to constitute the Agent as agent of any Loan Party for any purpose whatsoever, and the Agent shall not be responsible or liable for any shortage, discrepancy, damage, loss or destruction of any part of the Collateral wherever the same may be located and regardless of the cause thereof (other than from acts of omission or commission constituting gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction). The Agent shall not, under any circumstance or in any event whatsoever, have any liability for any error or omission or delay of any kind occurring in the settlement, collection or payment of any of the Accounts Receivable or any instrument received in payment thereof or for any damage resulting therefrom (other than acts of omission or commission constituting gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction). The Agent, by anything herein or in any assignment or otherwise, does not assume any of the obligations under any contract or agreement assigned to the Agent and shall not be responsible in any way for the performance by any Loan Party of any of the terms and conditions thereof. (d) If any Account Receivable includes a charge for any tax payable to any Governmental Authority, the Agent is hereby authorized (but in no event obligated) in its discretion to pay the amount thereof to the proper taxing authority for the Loan Parties' account and to charge the Loan Parties therefor. The Loan Parties shall notify the Agent if any Account Receivable includes any taxes due to any such Governmental Authority and, in the absence of such notice, the Agent shall have the right to retain the full proceeds of such Account Receivable and shall not be liable for any taxes that may be due by reason of the sale and delivery creating such Account Receivable. (e) Notwithstanding any other terms set forth in the Loan Documents, the rights and remedies of the Agent and the Lenders herein provided, - 82 - and the obligations of the Loan Parties set forth herein, are cumulative of, may be exercised singly or concurrently with, and are not exclusive of, any other rights, remedies or obligations set forth in any other Loan Document or as provided by law. Section 8.02 ACCOUNTS RECEIVABLE DOCUMENTATION. The Loan Parties will at such intervals as the Agent may require, execute and deliver confirmatory written assignments of the Accounts Receivable to the Agent and furnish such further schedules and/or information as the Agent may require relating to the Accounts Receivable, including, without limitation, sales invoices or the equivalent, credit memos issued, remittance advices, reports and copies of deposit slips and copies of original shipping or delivery receipts for all merchandise sold. In addition, the Loan Parties shall notify the Agent of any non-compliance in respect of the representations, warranties and covenants contained in Section 8.03. The items to be provided under this Section 8.02 are to be in form reasonably satisfactory to the Agent and are to be executed and delivered to the Agent from time to time solely for its convenience in maintaining records of the Collateral. The Loan Parties' failure to give any of such items to the Agent shall not affect, terminate, modify or otherwise limit the Agent's Lien on the Collateral. The Loan Parties shall not re-date any invoice or sale or make sales on extended dating beyond that customary in the Loan Parties' industry, and shall not re-bill any Accounts Receivable without promptly disclosing the same to the Agent and providing the Agent with a copy of such re-billing, identifying the same as such. If the Loan Parties become aware of anything materially detrimental to any of the Loan Parties' customers' credit, the Loan Parties will promptly advise the Agent thereof. Section 8.03 STATUS OF ACCOUNTS RECEIVABLE AND OTHER COLLATERAL. With respect to Collateral of any Loan Party at the time the Collateral becomes subject to the Agent's Lien, each Loan Party covenants, represents and warrants: (a) such Loan Party shall be the sole owner, free and clear of all Liens (except for the Liens granted in the favor of the Agent for the benefit of the Lenders and Permitted Liens), and shall be fully authorized to sell, transfer, pledge and/or grant a security interest in each and every item of said Collateral; (b) each Account Receivable shall be a good and valid account representing an undisputed bona fide indebtedness incurred or an amount indisputably owed by the Account Debtor therein named, for a fixed sum as set forth in the invoice relating thereto with respect to an absolute sale and delivery upon the specified terms of goods sold or services rendered by such Loan Party; (c) no Account Receivable shall be subject to any defense, offset, counterclaim, discount or allowance except as may be stated in the invoice relating thereto, discounts and allowances as may be customary in such Loan Party's business and as otherwise disclosed to the Agent, and each Account Receivable will be paid when due; (d) none of the transactions underlying or giving rise to any Account Receivable shall violate any applicable state or federal laws or regulations, and all documents relating thereto shall be legally sufficient under such laws or regulations and shall be legally enforceable in accordance with their terms; (e) no agreement under which any deduction or offset of any kind, other than normal trade discounts, may be granted or shall have been made by such Loan Party at or before the time such Account Receivable is created; (f) all agreements, instruments and other documents relating to any Account Receivable shall be true and correct and in all material respects what they purport to be; (g) all signatures and endorsements that appear on all material agreements, instruments and other documents relating to any Account Receivable shall be genuine and all signatories and endorsers shall have full capacity to contract; (h) such Loan Party shall maintain books and records pertaining to said Collateral in such detail, form and scope as the Agent shall reasonably require; (i) such Loan Party shall immediately notify the Agent if any Account Receivable - 83 - arises out of contracts with any Governmental Authority, and will execute any instruments and take any steps required by the Agent in order that all monies due or to become due under any such contract shall be assigned to the Agent and notice thereof given to such Governmental Authority under the Federal Assignment of Claims Act or any similar state or local law; (j) such Loan Party will, immediately upon learning thereof, report to the Agent any material loss or destruction of, or substantial damage to, any of the Collateral, and any other matters affecting the value, enforceability or collectibility of any of the Collateral; (k) if any amount payable under or in connection with any Account Receivable is evidenced by a promissory note or other instrument, such promissory note or instrument shall be immediately pledged, endorsed, assigned and delivered to the Agent for the benefit of the Lenders as additional Collateral; (l) such Loan Party shall not re-date any invoice or sale or make sales on extended dating beyond that which is customary in the ordinary course of its business and in the industry; (m) such Loan Party shall conduct a physical count of its Inventory at such intervals as the Agent may reasonably request and such Loan Party shall promptly supply the Agent with a copy of such count accompanied by a report of the value (based on the lower of cost (on a first in first out basis) and market value) of such Inventory; and (n) such Loan Party is not and shall not be entitled to pledge the Agent's or any Lender's credit on any purchases or for any purpose whatsoever. Section 8.04 COLLATERAL CUSTODIAN. Upon the occurrence and during the continuance of any Default or Event of Default, the Agent may at any time and from time to time employ and maintain on the premises of any Loan Party a custodian selected by the Agent who shall have full authority to do all acts necessary to protect the Agent's and the Lenders' interests. Each Loan Party hereby agrees to, and to cause its Subsidiaries to, cooperate with any such custodian and to do whatever the Agent may reasonably request to preserve the Collateral. All costs and expenses incurred by the Agent by reason of the employment of the custodian shall be the responsibility of the Borrower and charged to the Loan Account. Section 8.05 COMPLIANCE WITH WORKING CAPITAL LOAN AGREEMENT. The Loan Parties shall comply with the cash management provisions of the Working Capital Loan Agreement (or any successor or replacement agreement acceptable to the Agent), PROVIDED that, if the Working Capital Loan Agreement shall have been terminated and the Loan Parties shall not have entered into a successor or replacement agreement acceptable to the Agent, then the Loan Parties shall enter into control agreements, lockbox agreements and other similar agreements in form and substance reasonably satisfactory to the Agent. ARTICLE IX EVENTS OF DEFAULT Section 9.01 EVENTS OF DEFAULT. If any of the following Events of Default shall occur and be continuing: (a) the Loan Parties shall fail to pay to the Agent or the Lenders, any principal of or interest on the Term Loan or any other Obligation of the Loan Parties to the Agent or the Lenders when the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment - 84 - thereof, by acceleration of such due or prepayment date, or otherwise; (b) any representation or warranty made or deemed made by or on behalf of any Loan Party or any of its Subsidiaries in connection with this Agreement, any of the other Loan Documents or any amendment or modification hereof or thereof, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement, any of the other Loan Documents or any amendment or modification hereof or thereof, shall prove to have been incorrect in any material respect when made or deemed made; (c) the Loan Parties (i) shall fail to observe or perform any covenant, condition or agreement contained in Sections 7.01(a), 7.01(b), 7.01(c), 7.01(e), 7.01(f), 7.01(g), 7.01(h), 7.01(i), 7.01(j), 7.01(k), 7.01(l), 7.01(n), 7.01(o), 7.01(p) or in Section 7.02 (it being expressly acknowledged and agreed that any Event of Default resulting from the failure of the Loan Parties at any measurement date to satisfy any financial covenant set forth in Section 7.02(j) shall not be deemed to be "cured" or remedied by the Loan Parties' satisfaction of such financial covenant at any subsequent measurement date) or (ii) shall fail to observe or perform any other covenant, condition or agreement contained in Sections 7.01(d), 7.01(m), 7.01(q), 7.01(r) or 7.01(s) and such failure described in this clause (ii) shall continue unremedied for a period of 10 days after the earlier of (x) the date on which any officer of any Loan Party knows or should have known of such failure or (y) the date the Borrower receives notice thereof from the Agent; (d) the Borrower or any of its Subsidiaries shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in clauses (a), (b) or (c) of this Section 9.01) or any other Loan Document, and such failure shall continue unremedied for a period of 20 days after the earlier of (x) the date on which any officer of any Loan Party knows or should have known of such failure or (y) the date the Borrower receives notice thereof from the Agent; (e) the Borrower or any of its Subsidiaries shall fail to make any payment (whether of principal, interest or otherwise and regardless of amount) in respect of any Material Indebtedness or any Material Rental Obligation, when and as the same shall become due and payable, after giving effect to any grace period with respect thereto; (f) any event or condition occurs that results in (i) (A) any Material Indebtedness of the Borrower or any of its Subsidiaries becoming due prior to its scheduled maturity, (B) that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause such Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity, or (C) requires the Borrower or any of its Subsidiaries to offer to repay, repurchase, redeem, or defease such Material Indebtedness, or (ii) the Lease with respect to any Material Rental Obligation of the Borrower or any of its Subsidiaries being terminated prior to its scheduled expiration date or that enables or permits (with or without the giving of notice, the lapse of time or both) the counterparty to such Lease to cause such Lease to be terminated prior to its scheduled expiration date; - 85 - (g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any of its Subsidiaries or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any of its Subsidiaries or for a substantial part of its assets, and, in any such case, 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) the Borrower or any of its Subsidiaries shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (g) of this Section 9.01, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any of its Subsidiaries or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing; (i) the Borrower or any of its Subsidiaries shall become unable, admit in writing or fail generally to pay its debts as they become due; (j) a final judgment or judgments for the payment of money (x) in excess of $1,000,000 in the aggregate (exclusive of judgment amounts fully covered by insurance where the insurer has admitted liability in respect of such judgment) or (y) in excess of $1,000,000 in the aggregate (regardless of insurance coverage), shall be rendered by one or more courts, administrative tribunals or other bodies having jurisdiction over the Borrower or any of its Subsidiaries and the same shall not be discharged (or provision shall not be made for such discharge), bonded, or a stay of execution thereof shall not be procured, within 60 days from the date of entry thereof and the Borrower or relevant Subsidiary shall not, within said period of 60 days, or such longer period during which execution of the same shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal; (k) an ERISA Event shall have occurred that, in the reasonable opinion of the Required Lenders, when taken together with all other ERISA Events that have occurred, could reasonably be expected to have a Material Adverse Effect; (l) any Loan Party shall be liable for any Environmental Liabilities payment of which could reasonably be expected to have a Material Adverse Effect; (m) there shall occur any Change of Control; (n) any of the following shall occur: (i) the Liens created hereunder or under the other Loan Documents shall at any time (other than by reason of the Agent relinquishing such Lien) cease to constitute valid and perfected Liens on any Collateral with an aggregate fair market value in excess of $100,000 which is intended to be covered thereby; (ii) except for expiration - 86 - in accordance with its terms, any Loan Document shall for whatever reason be terminated, or shall cease to be in full force and effect; or (iii) the enforceability of any Loan Document shall be contested by the Borrower or any of its Subsidiaries; (o) any bank at which any deposit account, blocked account, or lockbox account of any Loan Party is maintained shall fail to comply with any of the terms of any deposit account agreement, blocked account agreement, control Agreement or similar agreement to which such bank is a party or any securities intermediary, commodity intermediary or other financial institution at any time in custody, control or possession of any investment property of any Loan Party shall fail to comply with any of the terms of any investment property control agreement to which such Person is a party; (p) any Loan Party is enjoined, restrained or in any way prevented by the order of any court or any Governmental Authority from conducting all or any material part of its business for more than 15 days; (q) any cessation of a substantial part of the business of any Loan Party for a period which materially and adversely affects the ability of such Person to continue its business on a profitable basis; (r) the loss, suspension or revocation of, or failure to renew, any license or permit now held or hereafter acquired by any Loan Party, if such loss, suspension, revocation or failure to renew could reasonably be expected to have a Material Adverse Effect; (s) the indictment, or the threatened indictment of any Loan Party under any criminal statute, or commencement or threatened commencement of criminal or civil proceedings against any Loan Party, pursuant to which statute or proceedings the penalties or remedies sought or available include forfeiture to any Governmental Authority of any material portion of the property of such Person; (t) there shall occur any loss theft, damage or destruction of any Collateral not fully covered (subject to such reasonable deductibles as the Agent shall have approved) by insurance which has or could reasonably be expected to have a Material Adverse Effect; (u) any Guarantor shall assert that its obligations under any Loan Document shall be invalid or unenforceable; (v) there shall occur any material adverse change (in the opinion of the Agent) on the businesses, operations, properties, conditions (financial or otherwise), assets, liabilities, income or prospects of the Borrower and its Subsidiaries; (w) an "Event of Default" shall have occurred under the Canadian Financing Agreement or the Working Capital Loan Agreement; then, and in any such event, the Agent may, and shall at the request of the Required Lenders, by notice to the Borrower, (i) declare all or any portion of the Term Loan then outstanding to be due and payable, whereupon all or such - 87 - portion of the aggregate principal of the Term Loan, all accrued and unpaid interest thereon, all fees and all other amounts payable under this Agreement and the other Loan Documents shall become due and payable immediately, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by each Loan Party and (ii) exercise any and all of its other rights and remedies under applicable law, hereunder and under the other Loan Documents; PROVIDED, HOWEVER, that upon the occurrence of any Event of Default described in subsection (g), (h) or (i) of this Section 9.01, without any notice to any Loan Party or any other Person or any act by the Agent or any Lender, the Term Loan, together with all accrued and unpaid interest thereon, all fees and all other amounts due under this Agreement and the other Loan Documents shall become due and payable automatically and immediately, without presentment, demand, protest or notice of any kind, all of which are expressly waived by each Loan Party. ARTICLE X AGENT Section 10.01 APPOINTMENT. Each Lender hereby irrevocably appoints and authorizes the Agent to perform the duties of the Agent as set forth in this Agreement including: (i) to receive on behalf of each Lender any payment of principal of or interest on the Term Loan outstanding hereunder and all other amounts accrued hereunder for the account of the Lenders and paid to the Agent, and, subject to Section 2.02 of this Agreement, to distribute promptly to each Lender its Pro Rata Share of all payments so received; (ii) to distribute to each Lender copies of all material notices and agreements received by the Agent and not required to be delivered to each Lender pursuant to the terms of this Agreement, provided that the Agent shall not have any liability to the Lenders for the Agent's inadvertent failure to distribute any such notices or agreements to the Lenders; (iii) to maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Obligations, the Term Loan, and related matters and to maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Collateral and related matters; (iv) to execute or file any and all financing or similar statements or notices, amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to this Agreement or any other Loan Document; (v) to make the Term Loan and Agent Advances, for the Agent or on behalf of the applicable Lenders as provided in this Agreement or any other Loan Document; (vi) to perform, exercise, and enforce any and all other rights and remedies of the Lenders with respect to the Loan Parties, the Obligations, or otherwise related to any of same to the extent reasonably incidental to the exercise by the Agent of the rights and remedies specifically authorized to be exercised by the Agent by the terms of this Agreement or any other Loan Document; (vii) to incur and pay such fees necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to this Agreement or any other Loan Document; and (viii) subject to Section 10.03 of this Agreement, to take such action as the Agent deems appropriate on its behalf to administer the Term Loan and the Loan Documents and to exercise such other powers delegated to the Agent by the terms hereof or the other Loan Documents (including, without limitation, the power to give or to refuse to give notices, waivers, consents, approvals and instructions and the power to make or to refuse to make determinations and calculations) together with such powers as are reasonably incidental thereto to carry out the purposes hereof and thereof. As to any matters not expressly provided for by this Agreement and the other Loan Documents (including, without limitation, - 88 - enforcement or collection of the Term Loan), the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions of the Required Lenders shall be binding upon all Lenders. Section 10.02 NATURE OF DUTIES. The Agent shall have no duties or responsibilities except those expressly set forth in this Agreement or in the other Loan Documents. The duties of the Agent shall be mechanical and administrative in nature. The Agent shall not have by reason of this Agreement or any other Loan Document a fiduciary relationship in respect of any Lender. Nothing in this Agreement or any other Loan Document, express or implied, is intended to or shall be construed to impose upon the Agent any obligations in respect of this Agreement or any other Loan Document except as expressly set forth herein or therein. Each Lender shall make its own independent investigation of the financial condition and affairs of the Loan Parties in connection with the making and the continuance of the Term Loan hereunder and shall make its own appraisal of the creditworthiness of the Loan Parties and the value of the Collateral, and the Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into their possession before the Term Loan hereunder or at any time or times thereafter, provided that, upon the reasonable request of a Lender, the Agent shall provide to such Lender any documents or reports delivered to the Agent by the Loan Parties pursuant to the terms of this Agreement or any other Loan Document. If the Agent seeks the consent or approval of the Required Lenders to the taking or refraining from taking any action hereunder, the Agent shall send notice thereof to each Lender. The Agent shall promptly notify each Lender any time that the Required Lenders have instructed the Agent to act or refrain from acting pursuant hereto. Section 10.03 RIGHTS, EXCULPATION, ETC. The Agent and its directors, officers, agents or employees shall not be liable for any action taken or omitted to be taken by them under or in connection with this Agreement or the other Loan Documents, except for their own gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction. Without limiting the generality of the foregoing, the Agent (i) may treat the payee of the Term Loan as the owner thereof until the Agent receives written notice of the assignment or transfer thereof, pursuant to Section 12.07 hereof, signed by such payee and in form satisfactory to the Agent; (ii) may consult with legal counsel (including, without limitation, counsel to the Agent or counsel to the Loan Parties), independent public accountants, and other experts selected by any of them and shall not be liable for any action taken or omitted to be taken in good faith by any of them in accordance with the advice of such counsel or experts; (iii) make no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, certificates, warranties or representations made in or in connection with this Agreement or the other Loan Documents; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or the other Loan Documents on the part of any Person, the existence or possible existence of any Default or Event of Default, or to inspect the Collateral or other property (including, without limitation, the books and records) of any Person; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; and (vi) shall not be deemed to have made any representation or warranty regarding - 89 - the existence, value or collectibility of the Collateral, the existence, priority or perfection of the Agent's Lien thereon, or any certificate prepared by any Loan Party in connection therewith, nor shall the Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral. The Agent shall not be liable for any apportionment or distribution of payments made in good faith pursuant to Section 4.04, and if any such apportionment or distribution is subsequently determined to have been made in error the sole recourse of any Lender to whom payment was due but not made, shall be to recover from other Lenders any payment in excess of the amount which they are determined to be entitled. The Agent may at any time request instructions from the Lenders with respect to any actions or approvals which by the terms of this Agreement or of any of the other Loan Documents the Agent is permitted or required to take or to grant, and if such instructions are promptly requested, the Agent shall be absolutely entitled to refrain from taking any action or to withhold any approval under any of the Loan Documents until it shall have received such instructions from the Required Lenders. Without limiting the foregoing, no Lender shall have any right of action whatsoever against the Agent as a result of the Agent acting or refraining from acting under this Agreement or any of the other Loan Documents in accordance with the instructions of the Required Lenders. Section 10.04 RELIANCE. The Agent shall be entitled to rely upon any written notices, statements, certificates, orders or other documents or any telephone message believed by it in good faith to be genuine and correct and to have been signed, sent or made by the proper Person, and with respect to all matters pertaining to this Agreement or any of the other Loan Documents and its duties hereunder or thereunder, upon advice of counsel selected by it. Section 10.05 INDEMNIFICATION. To the extent that the Agent is not reimbursed and indemnified by any Loan Party, the Lenders will reimburse and indemnify the Agent from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, advances or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of this Agreement or any of the other Loan Documents or any action taken or omitted by the Agent under this Agreement or any of the other Loan Documents, in proportion to each Lender's Pro Rata Share, including, without limitation, advances and disbursements made pursuant to Section 10.08; PROVIDED, HOWEVER, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, advances or disbursements for which there has been a final judicial determination that such liability resulted from the Agent's gross negligence or willful misconduct. The obligations of the Lenders under this Section 10.05 shall survive the payment in full of the Term Loan and the termination of this Agreement. Section 10.06 AGENT INDIVIDUALLY. With respect to its Pro Rata Share of the Total Term Loan Commitment hereunder and the Term Loan made by it, the Agent shall have and may exercise the same rights and powers hereunder and is subject to the same obligations and liabilities as and to the extent set forth herein for any other Lender. The terms "Lenders" or "Required Lenders" or any similar terms shall, unless the context clearly otherwise indicates, include the Agent in its individual capacity as a Lender or one of the Required Lenders. The Agent and its Affiliates may accept deposits from, lend money to, and generally engage - 90 - in any kind of banking, trust or other business with the Borrower as if it were not acting as the Agent pursuant hereto without any duty to account to the other Lenders. Section 10.07 SUCCESSOR AGENT. (a) The Agent may resign from the performance of all its functions and duties hereunder and under the other Loan Documents at any time by giving at least 30 Business Days' prior written notice to the Borrower and each Lender. Such resignation shall take effect upon the acceptance by a successor Agent of appointment pursuant to clauses (b) and (c) below or as otherwise provided below. (b) Upon any such notice of resignation, the Required Lenders shall appoint a successor Agent. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the Agent, and the Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents. After the Agent's resignation hereunder as the Agent, the provisions of this ARTICLE X shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Agent under this Agreement and the other Loan Documents. (c) If a successor Agent shall not have been so appointed within said 30 Business Day period, the Agent shall then appoint a successor Agent who shall serve as the Agent until such time, if any, as the Required Lenders appoint a successor Agent as provided above. Section 10.08 COLLATERAL MATTERS. (a) The Agent may from time to time make such disbursements and advances ("AGENT ADVANCES") which the Agent, in its sole discretion, deems necessary or desirable to preserve, protect, prepare for sale or lease or dispose of the Collateral or any portion thereof, to enhance the likelihood or maximize the amount of repayment by the Borrower of the Term Loan and the other Obligations or to pay any other amount chargeable to the Borrower pursuant to the terms of this Agreement, including, without limitation, costs, fees and expenses as described in Section 12.04. The Agent Advances shall be repayable on demand, shall bear interest at the rate per annum set forth in Section 2.04 and shall be secured by the Collateral. The Agent Advances shall constitute Obligations hereunder which may be charged to the Loan Account in accordance with Section 4.02. The Agent shall notify each Lender and the Borrower in writing of each such Agent Advance, which notice shall include a description of the purpose of such Agent Advance. Without limitation to its obligations pursuant to Section 10.05, each Lender agrees that it shall make available to the Agent, upon the Agent's demand, in Dollars in immediately available funds, the amount equal to such Lender's Pro Rata Share of each such Agent Advance. If such funds are not made available to the Agent by such Lender, the Agent shall be entitled to recover such funds on demand from such Lender, together with interest thereon for each day from the date such payment was due until the date such amount is paid to the Agent, at the Federal Funds Rate for 3 Business Days and thereafter at the Reference Rate. (b) The Lenders hereby irrevocably authorize the Agent, at its option and in its discretion, to release any Lien granted to or held by the Agent upon any Collateral upon payment and satisfaction of the Term Loan and all - 91 - other Obligations which have matured and which the Agent has been notified in writing are then due and payable; or constituting property being sold or disposed of in compliance with the terms of this Agreement and the other Loan Documents; or constituting property in which the Loan Parties owned no interest at the time the Lien was granted or at any time thereafter; or if approved, authorized or ratified in writing by the Lenders. Upon request by the Agent at any time, the Lenders will confirm in writing the Agent's authority to release particular types or items of Collateral pursuant to this Section 10.08(b). (c) Without in any manner limiting the Agent's authority to act without any specific or further authorization or consent by the Lenders (as set forth in Section 10.08(b)), each Lender agrees to confirm in writing, upon request by the Agent, the authority to release Collateral conferred upon the Agent under Section 10.08(b). Upon receipt by the Agent of confirmation from the Lenders of its authority to release any particular item or types of Collateral, and upon prior written request by any Loan Party, the Agent shall (and is hereby irrevocably authorized by the Lenders to) execute such documents as may be necessary to evidence the release of the Liens granted to the Agent for the benefit of the Lenders upon such Collateral; PROVIDED, HOWEVER, that (i) the Agent shall not be required to execute any such document on terms which, in the Agent's opinion, would expose the Agent to liability or create any obligations or entail any consequence other than the release of such Liens without recourse or warranty, and (ii) such release shall not in any manner discharge, affect or impair the Obligations or any Lien upon (or obligations of any Loan Party in respect of) all interests in the Collateral retained by any Loan Party. (d) The Agent shall have no obligation whatsoever to any Lender to assure that the Collateral exists or is owned by the Loan Parties or is cared for, protected or insured or has been encumbered or that the Lien granted to the Agent pursuant to this Agreement or any other Loan Document has been properly or sufficiently or lawfully created, perfected, protected or enforced or is entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to the Agent in this Section 10.08 or in any other Loan Document, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, the Agent may act in any manner it may deem appropriate, in its sole discretion, given the Agent's own interest in the Collateral as one of the Lenders and that the Agent shall have no duty or liability whatsoever to any other Lender, except as otherwise provided herein. Section 10.09 AGENCY FOR PERFECTION. The Agent and each Lender hereby appoints the Agent and each other Lender as agent and bailee for the purpose of perfecting the security interests in and liens upon the Collateral in assets which, in accordance with Article 9 of the Uniform Commercial Code, can be perfected only by possession or control (or where the security interest of a secured party with possession or control has priority over the security interest of another secured party) and the Agent and each Lender hereby acknowledges that it holds possession of or otherwise controls any such Collateral for the benefit of the Agent and the Lenders as secured party. Should any Lender obtain possession or control of any such Collateral, such Lender shall notify the Agent thereof, and, promptly upon the Agent's request therefor shall deliver such Collateral to the Agent or in accordance with the Agent's instructions. Each Loan Party by its execution and delivery of this Agreement hereby consents to the foregoing. - 92 - ARTICLE XI GUARANTY Section 11.01 GUARANTY. Each Guarantor hereby unconditionally and irrevocably guarantees the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all Obligations of the Borrower now or hereafter existing under any Loan Document, whether for principal, interest (including, without limitation, all interest that accrues after the commencement of any Insolvency Proceeding of the Borrower), fees, commissions, expense reimbursements, indemnifications or otherwise (such obligations, to the extent not paid by the Borrower, being the "GUARANTEED OBLIGATIONS"), and agrees to pay any and all expenses (including reasonable counsel fees and expenses) incurred by the Agent and the Lenders in enforcing any rights under the guaranty set forth in this ARTICLE XI. Without limiting the generality of the foregoing, each Guarantor's liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by the Borrower to the Agent and the Lenders under any Loan Document but for the fact that they are unenforceable or not allowable due to the existence of an Insolvency Proceeding involving the Borrower. Section 11.02 GUARANTY ABSOLUTE. Each Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Loan Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Agent or the Lenders with respect thereto. The obligations of each Guarantor under this ARTICLE XI are independent of the Guaranteed Obligations, and a separate action or actions may be brought and prosecuted against each Guarantor to enforce such obligations, irrespective of whether any action is brought against any Loan Party or whether any Loan Party is joined in any such action or actions. The liability of each Guarantor under this ARTICLE XI shall be irrevocable, absolute and unconditional irrespective of, and each Guarantor hereby irrevocably waives any defenses it may now or hereafter have in any way relating to, any or all of the following: (a) any lack of validity or enforceability of any Loan Document or any agreement or instrument relating thereto; (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations, or any other amendment or waiver of or any consent to departure from any Loan Document, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to any Loan Party or otherwise; (c) any taking, exchange, release or non-perfection of any Collateral, or any taking, release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Guaranteed Obligations; (d) any change, restructuring or termination of the corporate, limited liability company or partnership structure or existence of any Loan Party; or - 93 - (e) any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by the Agent or the Lenders that might otherwise constitute a defense available to, or a discharge of, any Loan Party or any other guarantor or surety. This ARTICLE XI shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by the Agent, the Lenders or any other Person upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as though such payment had not been made. Section 11.03 WAIVER. Each Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Guaranteed Obligations and this ARTICLE XI and any requirement that the Agent or the Lenders exhaust any right or take any action against any Loan Party or any other Person or any Collateral. Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated herein and that the waiver set forth in this Section 11.03 is knowingly made in contemplation of such benefits. Each Guarantor hereby waives any right to revoke this ARTICLE XI, and acknowledges that this ARTICLE XI is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future. Section 11.04 CONTINUING GUARANTY; ASSIGNMENTS. This ARTICLE XI is a continuing guaranty and shall (a) remain in full force and effect until the later of the cash payment in full of the Guaranteed Obligations (other than indemnification obligations as to which no claim has been made) and all other amounts payable under this ARTICLE XI and the Final Maturity Date, (b) be binding upon each Guarantor, its successors and assigns and (c) inure to the benefit of and be enforceable by the Agent and the Lenders and their successors, pledgees, transferees and assigns. Without limiting the generality of the foregoing clause (c), any Lender may pledge, assign or otherwise transfer all or any portion of its rights and obligations under this Agreement (including, without limitation, all or any portion of its Term Loan) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted such Lender herein or otherwise, in each case as provided in Section 12.07. Section 11.05 SUBROGATION. No Guarantor will exercise any rights that it may now or hereafter acquire against any Loan Party or any other guarantor that arise from the existence, payment, performance or enforcement of such Guarantor's obligations under this ARTICLE XI, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Agent and the Lenders against any Loan Party or any other guarantor or any Collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any Loan Party or any other guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security solely on account of such claim, remedy or right, unless and until all of the Guaranteed Obligations and all other amounts payable under this ARTICLE XI shall have been paid in full in cash and the Final Maturity Date shall have occurred. If any amount shall be paid to any Guarantor in violation of the immediately preceding sentence at any time prior to the later of the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this ARTICLE XI and the Final Maturity Date, such amount shall be held in trust for the - 94 - benefit of the Agent and the Lenders and shall forthwith be paid to the Agent and the Lenders to be credited and applied to the Guaranteed Obligations and all other amounts payable under this ARTICLE XI, whether matured or unmatured, in accordance with the terms of this Agreement, or to be held as Collateral for any Guaranteed Obligations or other amounts payable under this ARTICLE XI thereafter arising. If (i) any Guarantor shall make payment to the Agent and the Lenders of all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other amounts payable under this ARTICLE XI shall be paid in full in cash and (iii) the Final Maturity Date shall have occurred, the Agent and the Lenders will, at such Guarantor's request and expense, execute and deliver to such Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to such Guarantor of an interest in the Guaranteed Obligations resulting from such payment by such Guarantor. Section 11.06 AUDUBON EUROPE. Notwithstanding anything to the contrary contained in this Agreement, the maximum aggregate liability of Audubon Europe under this Guaranty in respect of the Guaranteed Obligations and under the Working Capital Loan Agreement in respect of its guarantee thereunder shall not exceed 95% of the aggregate of its net equity and its preferred equity certificates, as stated in its most recently approved financial statements. ARTICLE XII MISCELLANEOUS Section 12.01 NOTICES, ETC. All notices and other communications provided for hereunder shall be in writing and shall be mailed, telecopied or delivered, if to any Loan Party, at the following address: Columbus McKinnon Corporation 140 John James Audubon Parkway Amherst, New York 14228 Attention: Robert L. Montgomery, Jr. Telephone: 716-689-5405 Telecopier: 716-689-5598 with a copy to: Phillips, Lytle, Hitchcock, Blaine & Huber 3400 HSBC Center Buffalo, New York 14203-2887 Attention: Raymond H. Seitz, Esq. Telephone: 716-847-7065 Telecopier: 716-852-6100 - 95 - if to the Agent, to it at the following address: Regiment Capital III, L.P. 70 Federal Street, 7th Floor Boston, Massachusetts 02110 Attention: Richard T. Miller Telephone: 617-488-1617 Telecopier: 617-488-1668 with a copy to: Schulte Roth & Zabel LLP 919 Third Avenue New York, New York 10022 Attention: Frederic L. Ragucci, Esq. Telephone: 212-756-2000 Telecopier: 212-593-5955 or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties complying as to delivery with the terms of this Section 12.01. All such notices and other communications shall be effective, (i) if mailed, when received or 3 days after deposited in the mails, whichever occurs first, (ii) if telecopied, when transmitted and confirmation received, or (iii) if delivered, upon delivery, except that notices to the Agent pursuant to ARTICLE II shall not be effective until received by the Agent. Section 12.02 AMENDMENTS, ETC. No amendment or waiver of any provision of this Agreement, and no consent to any departure by any Loan Party therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders or by the Agent with the consent of the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given, PROVIDED, HOWEVER, that no amendment, waiver or consent shall (i) reduce the principal of, or interest on, the Term Loan payable to any Lender, reduce the amount of any fee payable for the account of any Lender, or postpone or extend any date fixed for any payment of principal of, or interest or fees on, the Term Loan, in each case without the written consent of any Lender affected thereby, (ii) increase the Total Term Loan Commitment without the written consent of each Lender, (iii) change the percentage of the Term Loan Commitments or of the aggregate unpaid principal amount of the Term Loan that is required for the Lenders or any of them to take any action hereunder, (iv) amend the definition of "Required Lenders" or "Pro Rata Share", (v) release all or a substantial portion of the Collateral (except as otherwise provided in this Agreement and the other Loan Documents), subordinate any Lien granted in favor of the Agent for the benefit of the Lenders, or release the Borrower or any Guarantor, or (vi) amend, modify or waive Section 4.04 or this Section 12.02 of this Agreement, in each case, without the written consent of each Lender. Notwithstanding the foregoing, no amendment, waiver or consent shall, unless in writing and signed by the Agent, affect the rights or duties of the Agent (but not in its capacity as a Lender) under this Agreement or the other Loan Documents. - 96 - Section 12.03 NO WAIVER; REMEDIES, ETC. No failure on the part of the Agent or any Lender to exercise, and no delay in exercising, any right hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right under any Loan Document preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies of the Agent and the Lenders provided herein and in the other Loan Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law. The rights of the Agent and the Lenders under any Loan Document against any party thereto are not conditional or contingent on any attempt by the Agent and the Lenders to exercise any of their rights under any other Loan Document against such party or against any other Person. Section 12.04 EXPENSES; TAXES; ATTORNEYS' FEES. The Borrower will pay on demand, all costs and expenses incurred by or on behalf of the Agent and each Lender, regardless of whether the transactions contemplated hereby are consummated, including, without limitation, reasonable fees, costs, client charges and expenses of counsel for the Agent and each Lender, accounting, due diligence, periodic field audits, physical counts, valuations, investigations, searches and filings, monitoring of assets, appraisals of Collateral, title searches and reviewing environmental assessments, miscellaneous disbursements, examination, travel, lodging and meals, arising from or relating to: (a) the negotiation, preparation, execution, delivery, performance and administration of this Agreement and the other Loan Documents (including, without limitation, the preparation of any additional Loan Documents pursuant to Sections 7.01(m) and 7.01(o), or the review of any of the agreements, instruments and documents referred to in Sections 7.01(f) and 7.01(l)), (b) any requested amendments, waivers or consents to this Agreement or the other Loan Documents whether or not such documents become effective or are given, (c) the preservation and protection of any of the Lenders' rights under this Agreement or the other Loan Documents, (d) the defense of any claim or action asserted or brought against the Agent or any Lender by any Person that arises from or relates to this Agreement, any other Loan Document, the Agent's or the Lenders' claims against any Loan Party, or any and all matters in connection therewith, (e) the commencement or defense of, or intervention in, any court proceeding arising from or related to this Agreement or any other Loan Document, (f) the filing of any petition, complaint, answer, motion or other pleading by the Agent or any Lender, or the taking of any action in respect of the Collateral or other security, in connection with this Agreement or any other Loan Document, (g) the protection, collection, lease, sale, taking possession of or liquidation of, any Collateral or other security in connection with this Agreement or any other Loan Document, (h) any attempt to enforce any Lien or security interest in any Collateral or other security in connection with this Agreement or any other Loan Document, (i) any attempt to collect from any Loan Party, (j) all liabilities and costs arising from or in connection with the past, present or future operations of any Loan Party involving any damage to real or personal property or natural resources or harm or injury alleged to have resulted from any Release of Hazardous Materials on, upon or into such property, (k) any Environmental Liabilities incurred in connection with the investigation, removal, cleanup and/or remediation of any Hazardous Materials present or arising out of the operations of any facility of any Loan Party, (l) any Environmental Liabilities incurred in connection with any Environmental Lien, or (m) the receipt by the Agent or any Lender of any advice from professionals with respect to any of the foregoing. Without limitation of the foregoing or any other provision of any Loan Document: (x) the Borrower agrees to pay all stamp, document, transfer, recording or filing taxes or fees and similar impositions now or hereafter - 97 - determined by the Agent or any Lender to be payable in connection with this Agreement or any other Loan Document, and the Borrower agrees to save the Agent and each Lender harmless from and against any and all present or future claims, liabilities or losses with respect to or resulting from any omission to pay or delay in paying any such taxes, fees or impositions, (y) the Borrower agrees to pay all broker fees that may become due in connection with the transactions contemplated by this Agreement and the other Loan Documents, and (z) if the Borrower fails to perform any covenant or agreement contained herein or in any other Loan Document, the Agent may itself perform or cause performance of such covenant or agreement, and the expenses of the Agent incurred in connection therewith shall be reimbursed on demand by the Borrower. Section 12.05 RIGHT OF SET-OFF. Upon the occurrence and during the continuance of any Event of Default, the Agent or any Lender may, and is hereby authorized to, at any time and from time to time, without notice to any Loan Party (any such notice being expressly waived by the Loan Parties) and to the fullest extent permitted by law, set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other Indebtedness at any time owing by the Agent or such Lender to or for the credit or the account of any Loan Party against any and all obligations of the Loan Parties either now or hereafter existing under any Loan Document, irrespective of whether or not the Agent or such Lender shall have made any demand hereunder or thereunder and although such obligations may be contingent or unmatured. The Agent and each Lender agrees to notify such Loan Party promptly after any such set-off and application made by the Agent or such Lender provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Agent and the Lenders under this Section 12.05 are in addition to the other rights and remedies (including other rights of set-off) which the Agent and the Lenders may have under this Agreement or any other Loan Documents of law or otherwise. Section 12.06 SEVERABILITY. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. Section 12.07 ASSIGNMENTS AND PARTICIPATIONS. (a) This Agreement and the other Loan Documents shall be binding upon and inure to the benefit of each Loan Party and the Agent and each Lender and their respective successors and assigns; PROVIDED, HOWEVER, that none of the Loan Parties may assign or transfer any of its rights hereunder without the prior written consent of each Lender and any such assignment without the Lenders' prior written consent shall be null and void. (b) Each Lender may, with the written consent of the Agent, assign to one or more other lenders or other entities all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Term Loan); PROVIDED, HOWEVER, that (i) such assignment is in an amount which is at least $5,000,000 or a multiple of $1,000,000 in excess thereof (or the remainder of such Lender's Term Loan) (except such minimum amount shall not apply to an assignment by a Lender to an Affiliate of such Lender or a fund or account managed by such Lender or an Affiliate of such Lender or its investment manager), (ii) the parties to each such assignment shall execute and deliver to the Agent, for its acceptance, an Assignment and Acceptance, together with any promissory note subject to such assignment and - 98 - such parties shall deliver to the Agent a processing and recordation fee of $5,000 (except the payment of such fee shall not be required in connection with an assignment by a Lender to an Affiliate of such Lender or a fund or account managed by such Lender or an Affiliate of such Lender or its investment manager) and (iii) no written consent of the Agent shall be required in connection with any assignment by a Lender to an Affiliate of such Lender or a fund or account managed by such Lender or an Affiliate of such Lender or its investment manager. Upon such execution, delivery and acceptance, from and after the effective date specified in each Assignment and Acceptance, which effective date shall be at least 3 Business Days after the delivery thereof to the Agent (or such shorter period as shall be agreed to by the Agent and the parties to such assignment), (A) the assignee thereunder shall become a "Lender" hereunder and, in addition to the rights and obligations hereunder held by it immediately prior to such effective date, have the rights and obligations hereunder that have been assigned to it pursuant to such Assignment and Acceptance and (B) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto). The Agent shall provide the Borrower with notice of each assignment by a Lender which requires the Agent's consent pursuant to this Section 12.07(b) promptly after the effectiveness of such assignment. (i) By executing and delivering an Assignment and Acceptance, the assigning Lender and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (A) other than as provided in such Assignment and Acceptance, the assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any other Loan Document or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document furnished pursuant hereto; (B) the assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Loan Party or any of its Subsidiaries or the performance or observance by any Loan Party of any of its obligations under this Agreement or any other Loan Document furnished pursuant hereto; (C) such assignee confirms that it has received a copy of this Agreement and the other Loan Documents, together with such other documents and information it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (D) such assignee will, independently and without reliance upon the assigning Lender, the Agent or any Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents; (E) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and the other Loan Documents as are delegated to the Agent by the terms hereof and thereof, together with such powers as are reasonably incidental hereto and thereto; and (F) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement and the other Loan Documents are required to be performed by it as a Lender. (ii) The Agent shall, on behalf of the Borrower, maintain, or cause to be maintained at the Payment Office, a copy of each - 99 - Assignment and Acceptance delivered to and accepted by it and a register (the "REGISTER") for the recordation of the names and addresses of the Lenders and the principal amount of the Term Loan (the "REGISTERED LOANS") from time to time. The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Agent and the Lenders shall treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and any Lender at any reasonable time and from time to time upon reasonable prior notice. In the case of any assignment pursuant to Section 12.07(b)(iii), the assigning Lender shall maintain a comparable register on behalf of the Borrower. (iii) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an assignee, together with any promissory notes subject to such assignment, the Agent shall, if the Agent consents to such assignment and if such Assignment and Acceptance has been completed (i) accept such Assignment and Acceptance and (ii) record the information contained therein in the Register. (iv) A Registered Loan (and the registered note, if any, evidencing the same) may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register (and each registered note shall expressly so provide). Any assignment or sale of all or part of such Registered Loan (and the registered note, if any, evidencing the same) may be effected only by registration of such assignment or sale on the Register, together with the surrender of the registered note, if any, evidencing the same duly endorsed by (or accompanied by a written instrument of assignment or sale duly executed by) the holder of such registered note, whereupon, at the request of the designated assignee(s) or transferee(s), one or more new registered notes in the same aggregate principal amount shall be issued to the designated assignee(s) or transferee(s). Prior to the registration of assignment or sale of any Registered Loan (and the registered note, if any, evidencing the same), the Agent shall treat the Person in whose name such Registered Loan (and the registered note, if any, evidencing the same) is registered as the owner thereof for the purpose of receiving all payments thereon and for all other purposes, notwithstanding notice to the contrary. (v) In the event that any Lender sells participations in a Registered Loan, such Lender shall maintain a register on which it enters the name of all participants in the Registered Loans held by it (the "PARTICIPANT REGISTER"). A Registered Loan (and the registered note, if any, evidencing the same) may be participated in whole or in part only by registration of such participation on the Participant Register (and each registered note shall expressly so provide). Any participation of such Registered Loan (and the registered note, if any, evidencing the same) may be effected only by the registration of such participation on the Participant Register. (vi) Any foreign Person who purchases or is assigned or participates in any portion of such Registered Loan shall provide the Agent and the Lender with a completed Internal Revenue Service Form W-8BEN (Certificate of Foreign Status) or a substantially similar form for such purchaser, participant or any other affiliate who is a holder of beneficial interests in the Registered Loan. - 100 - (c) Each Lender may sell participations to one or more banks or other entities in or to all or a portion of its rights and obligations under this Agreement and the other Loan Documents (including, without limitation, all or a portion of its Term Loan); provided, that (i) such Lender's obligations under this Agreement (including without limitation, its Commitments hereunder) and the other Loan Documents shall remain unchanged; (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and the Borrower, the Agent 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 and the other Loan Documents; and (iii) a participant shall not be entitled to require such Lender to take or omit to take any action hereunder except (A) action directly effecting an extension of the maturity dates or decrease in the principal amount of the Term Loan, (B) action directly effecting an extension of the due dates or a decrease in the rate of interest payable on the Term Loan or the fees payable under this Agreement, or (C) actions directly effecting a release of all or a substantial portion of the Collateral or any Loan Party (except as set forth in Section 10.08 of this Agreement or any other Loan Document). The Loan Parties agree that each participant shall be entitled to the benefits of Section 2.08 and Section 4.05 of this Agreement with respect to its participation in any portion of the Term Loan as if it was a Lender. Section 12.08 COUNTERPARTS. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Agreement by telecopier shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telecopier also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each other Loan Document MUTATIS MUTANDIS. Section 12.09 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK. Section 12.10 CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK OR OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH LOAN PARTY HEREBY IRREVOCABLY ACCEPTS IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH LOAN PARTY HEREBY IRREVOCABLY APPOINTS THE SECRETARY OF STATE OF THE STATE OF NEW YORK AS ITS AGENT FOR SERVICE OF PROCESS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING AND FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED - 101 - COURTS AND IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS FOR NOTICES AS SET FORTH IN SECTION 12.01 AND TO THE SECRETARY OF STATE OF THE STATE OF NEW YORK, SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT AND THE LENDERS TO SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY LOAN PARTY IN ANY OTHER JURISDICTION. EACH LOAN PARTY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY LOAN PARTY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH LOAN PARTY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. Section 12.11 WAIVER OF JURY TRIAL, ETC. EACH LOAN PARTY, THE AGENT AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION THEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION, PROCEEDINGS OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH LOAN PARTY CERTIFIES THAT NO OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF THE AGENT OR ANY LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT OR ANY LENDER WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS. EACH LOAN PARTY HEREBY ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS ENTERING INTO THIS AGREEMENT. Section 12.12 CONSENT BY THE AGENT AND LENDERS. Except as otherwise expressly set forth herein to the contrary, if the consent, approval, satisfaction, determination, judgment, acceptance or similar action (an "ACTION") of the Agent or any Lender shall be permitted or required pursuant to any provision hereof or any provision of any other agreement to which any Loan Party is a party and to which the Agent or any Lender has succeeded thereto, such Action shall be required to be in writing and may be withheld or denied by the Agent or such Lender, in its sole discretion, with or without any reason, and without being subject to question or challenge on the grounds that such Action was not taken in good faith. - 102 - Section 12.13 NO PARTY DEEMED DRAFTER. Each of the parties hereto agrees that no party hereto shall be deemed to be the drafter of this Agreement. Section 12.14 REINSTATEMENT; CERTAIN PAYMENTS. If any claim is ever made upon the Agent or any Lender for repayment or recovery of any amount or amounts received by the Agent or such Lender in payment or on account of any of the Obligations, the Agent or such Lender shall give prompt notice of such claim to each other Lender and the Borrower, and if the Agent or such Lender repays all or part of such amount by reason of (i) any judgment, decree or order of any court or administrative body having jurisdiction over the Agent or such Lender or any of its property, or (ii) any good faith settlement or compromise of any such claim effected by the Agent or such Lender with any such claimant, then and in such event each Loan Party agrees that (A) any such judgment, decree, order, settlement or compromise shall be binding upon it notwithstanding the cancellation of any Indebtedness hereunder or under the other Loan Documents or the termination of this Agreement or the other Loan Documents, and (B) it shall be and remain liable to the Agent or such Lender hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by the Agent or such Lender. Section 12.15 INDEMNIFICATION. (a) GENERAL INDEMNITY. In addition to each Loan Party's other Obligations under this Agreement, each Loan Party agrees to, jointly and severally, defend, protect, indemnify and hold harmless the Agent and each Lender and all of their respective officers, directors, employees, attorneys, consultants and agents (collectively called the "INDEMNITEES") from and against any and all losses, damages, liabilities, obligations, penalties, fees, reasonable costs and expenses (including, without limitation, reasonable attorneys' fees, costs and expenses) incurred by such Indemnitees, whether prior to or from and after the Effective Date, whether direct, indirect or consequential, as a result of or arising from or relating to or in connection with any of the following: (i) the negotiation, preparation, execution or performance or enforcement of this Agreement, any other Loan Document or of any other document executed in connection with the transactions contemplated by this Agreement, (ii) the Agent's or any Lender's furnishing of funds to the Borrower under this Agreement or the other Loan Documents, including, without limitation, the management of the Term Loan, (iii) any matter relating to the financing transactions contemplated by this Agreement or the other Loan Documents or by any document executed in connection with the transactions contemplated by this Agreement or the other Loan Documents, or (iv) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto (collectively, the "INDEMNIFIED MATTERS"); PROVIDED, HOWEVER, that the Loan Parties shall not have any obligation to any Indemnitee under this subsection (a) for any Indemnified Matter caused by the gross negligence or willful misconduct of such Indemnitee, as determined by a final judgment of a court of competent jurisdiction. (b) ENVIRONMENTAL INDEMNITY. Without limiting Section 12.15(a) hereof, each Loan Party agrees to, jointly and severally, defend, indemnify, and hold harmless the Indemnitees against any and all Environmental Liabilities and all other claims, demands, penalties, fines, liability (including strict liability), losses, damages, costs and expenses (including without limitation, reasonable legal fees and expenses, consultant fees and laboratory fees), - 103 - arising out of (i) any Releases or threatened Releases (x) at any property presently or formerly owned or operated by any Loan Party or any Subsidiary of any Loan Party, or any predecessor in interest, or (y) of any Hazardous Materials generated and disposed of by any Loan Party or any Subsidiary of any Loan Party, or any predecessor in interest; (ii) any violations of Environmental Laws; (iii) any Environmental Action relating to any Loan Party or any Subsidiary of any Loan Party, or any predecessor in interest; (iv) any personal injury (including wrongful death) or property damage (real or personal) arising out of exposure to Hazardous Materials used, handled, generated, transported or disposed by any Loan Party or any Subsidiary of any Loan Party, or any predecessor in interest; and (v) any breach of any warranty or representation regarding environmental matters made by the Loan Parties in Section 6.01(f) or the breach of any covenant made by the Loan Parties in Section 7.01(l). Notwithstanding the foregoing, the Loan Parties shall not have any obligation to any Indemnitee under this subsection (b) regarding any potential environmental matter covered hereunder which is caused by the gross negligence or willful misconduct of such Indemnitee, as determined by a final judgment of a court of competent jurisdiction. (c) The indemnification for all of the foregoing losses, damages, fees, costs and expenses of the Indemnitees are chargeable against the Loan Account. To the extent that the undertaking to indemnify, pay and hold harmless set forth in this Section 12.15 may be unenforceable because it is violative of any law or public policy, each Loan Party shall, jointly and severally, contribute the maximum portion which it is permitted to pay and satisfy under applicable law, to the payment and satisfaction of all Indemnified Matters incurred by the Indemnitees. The indemnities set forth in this Section 12.15 shall survive the repayment of the Obligations and discharge of any Liens granted under the Loan Documents. Section 12.16 RECORDS. The unpaid principal of and interest on the Term Loan, the interest rate or rates applicable to such unpaid principal and interest, the duration of such applicability, the Commitments, and the accrued and unpaid fees payable pursuant to Section 2.06 hereof, including, without limitation, the Closing Fee, Loan Servicing Fee and the Anniversary Fee, shall at all times be ascertained from the records of the Agent, which shall be conclusive and binding absent manifest error. Section 12.17 BINDING EFFECT. This Agreement shall become effective when it shall have been executed by each Loan Party, the Agent and each Lender and when the conditions precedent set forth in Section 5.01 hereof have been satisfied or waived in writing by the Agent, and thereafter shall be binding upon and inure to the benefit of each Loan Party, the Agent and each Lender, and their respective successors and assigns, except that the Loan Parties shall not have the right to assign their rights hereunder or any interest herein without the prior written consent of each Lender, and any assignment by any Lender shall be governed by Section 12.07 hereof. Section 12.18 INTEREST. It is the intention of the parties hereto that the Agent and each Lender shall conform strictly to usury laws applicable to it. Accordingly, if the transactions contemplated hereby or by any other Loan Document would be usurious as to the Agent or any Lender under laws applicable to it (including the laws of the United States of America and the State of New York or any other jurisdiction whose laws may be mandatorily applicable to the Agent or such Lender notwithstanding the other provisions of this Agreement), - 104 - then, in that event, notwithstanding anything to the contrary in this Agreement or any other Loan Document or any agreement entered into in connection with or as security for the Obligations, it is agreed as follows: (i) the aggregate of all consideration which constitutes interest under law applicable to the Agent or any Lender that is contracted for, taken, reserved, charged or received by the Agent or such Lender under this Agreement or any other Loan Document or agreements or otherwise in connection with the Obligations shall under no circumstances exceed the maximum amount allowed by such applicable law, any excess shall be canceled automatically and if theretofore paid shall be credited by the Agent or such Lender on the principal amount of the Obligations (or, to the extent that the principal amount of the Obligations shall have been or would thereby be paid in full, refunded by the Agent or such Lender, as applicable, to the Borrower); and (ii) in the event that the maturity of the Obligations is accelerated by reason of any Event of Default under this Agreement or otherwise, or in the event of any required or permitted prepayment, then such consideration that constitutes interest under law applicable to the Agent or any Lender may never include more than the maximum amount allowed by such applicable law, and excess interest, if any, provided for in this Agreement or otherwise shall be canceled automatically by the Agent or such Lender, as applicable, as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited by the Agent or such Lender, as applicable, on the principal amount of the Obligations (or, to the extent that the principal amount of the Obligations shall have been or would thereby be paid in full, refunded by the Agent or such Lender to the Borrower). All sums paid or agreed to be paid to the Agent or any Lender for the use, forbearance or detention of sums due hereunder shall, to the extent permitted by law applicable to the Agent or such Lender, be amortized, prorated, allocated and spread throughout the full term of the Term Loan until payment in full so that the rate or amount of interest on account of the Term Loan hereunder does not exceed the maximum amount allowed by such applicable law. If at an time and from time to time (x) the amount of interest payable to the Agent or any Lender on any date shall be computed at the Highest Lawful Rate applicable to the Agent or such Lender pursuant to this Section 12.18 and (y) in respect of any subsequent interest computation period the amount of interest otherwise payable to the Agent or such Lender would be less than the amount of interest payable to the Agent or such Lender computed at the Highest Lawful Rate applicable to the Agent or such Lender, then the amount of interest payable to the Agent or such Lender in respect of such subsequent interest computation period shall continue to be computed at the Highest Lawful Rate applicable to the Agent or such Lender until the total amount of interest payable to the Agent or such Lender shall equal the total amount of interest which would have been payable to the Agent or such Lender if the total amount of interest had been computed without giving effect to this Section 12.18. For purposes of this Section 12.18, the term "applicable law" shall mean that law in effect from time to time and applicable to the loan transaction between the Borrower, on the one hand, and the Agent and the Lenders, on the other, that lawfully permits the charging and collection of the highest permissible, lawful non-usurious rate of interest on such loan transaction and this Agreement, including laws of the State of New York and, to the extent controlling, laws of the United States of America. The right to accelerate the maturity of the Obligations does not include the right to accelerate any interest that has not accrued as of the date of acceleration. - 105 - Section 12.19 CONFIDENTIALITY. The Agent and each Lender agrees (on behalf of itself and each of its affiliates, directors, officers, employees and representatives) to use reasonable precautions to keep confidential, in accordance with its customary procedures for handling confidential information of this nature and in accordance with safe and sound practices of comparable commercial finance companies, any non-public information supplied to it by the Loan Parties pursuant to this Agreement or the other Loan Documents which is identified in writing by the Loan Parties as being confidential at the time the same is delivered to such Person (and which at the time is not, and does not thereafter become, publicly available or available to such Person from another source not known to be subject to a confidentiality obligation to such Person not to disclose such information), PROVIDED that nothing herein shall limit the disclosure of any such information (i) to the extent required by statute, rule, regulation or judicial process, (ii) to counsel for the Agent or any Lender, (iii) to examiners, auditors, accountants or Securitization Parties, (iv) in connection with any litigation to which the Agent or any Lender is a party or (v) to any assignee or participant (or prospective assignee or participant) so long as such assignee or participant (or prospective assignee or participant) first agrees, in writing, to be bound by confidentiality provisions similar in substance to this Section 12.19. The Agent and each Lender agrees that, upon receipt of a request or identification of the requirement for disclosure pursuant to clause (iv) hereof, it will make reasonable efforts to keep the Loan Parties informed of such request or identification; PROVIDED that the each Loan Party acknowledges that the Agent and each Lender may make disclosure as required or requested by any Governmental Authority or representative thereof and that the Agent and each Lender may be subject to review by Securitization Parties or other regulatory agencies and may be required to provide to, or otherwise make available for review by, the representatives of such parties or agencies any such non-public information. Section 12.20 INTEGRATION. This Agreement, together with the other Loan Documents, reflects the entire understanding of the parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] - 106 - IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. BORROWER: --------- COLUMBUS MCKINNON CORPORATION By: /s/ Robert L. Montgomery -------------------------- Name: Robert L. Montgomery Title: Executive Vice President GUARANTORS: ----------- AUDUBON EUROPE S.A.R.L. By: /s/ Robert L. Montgomery -------------------------- Name: Robert L. Montgomery Title: Manager AUDUBON WEST, INC. By: /s/ Robert L. Montgomery -------------------------- Name: Robert L. Montgomery Title: Treasurer CRANE EQUIPMENT & SERVICE, INC. By: /s/ Robert L. Montgomery -------------------------- Name: Robert L. Montgomery Title: Treasurer LICO STEEL, INC. By: /s/ Robert L. Montgomery -------------------------- Name: Robert L. Montgomery Title: Treasurer YALE INDUSTRIAL PRODUCTS, INC. By: /s/ Robert L. Montgomery -------------------------- Name: Robert L. Montgomery Title: Treasurer AGENT AND LENDER: ---------------- REGIMENT CAPITAL III, L.P. By: Regiment Capital Management, L.L.C., its General Partner By: Regiment Capital Advisors, L.L.C., its Manager By: /s/ Richard T. Miller --------------------- Name: Richard T. Miller Title: Vice President LENDER: ------- ABLECO FINANCE LLC By: /s/ Kevin Genda --------------- Name: Kevin Genda Title: Vice President EX-10 5 regimentcan.txt REGIMENT CANADIAN CREDIT AGREEMENT FINANCING AGREEMENT DATED AS OF NOVEMBER 21, 2002 BY AND AMONG COLUMBUS MCKINNON LIMITED, LARCO INDUSTRIAL SERVICES LTD. AS BORROWERS, THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY HERETO, AS LENDERS, AND REGIMENT CAPITAL III, L.P., AS AGENT TABLE OF CONTENTS Page ARTICLE I DEFINITIONS; CERTAIN TERMS..........................................1 SECTION 1.01 DEFINITIONS...............................................1 SECTION 1.02 TERMS GENERALLY..........................................20 SECTION 1.03 ACCOUNTING AND OTHER TERMS...............................20 SECTION 1.04 TIME REFERENCES..........................................21 ARTICLE II THE LOANS.........................................................21 SECTION 2.01 TERM LOAN COMMITMENTS....................................21 SECTION 2.02 MAKING THE TERM LOAN.....................................21 SECTION 2.03 REPAYMENT OF THE TERM LOAN; EVIDENCE OF DEBT.............22 SECTION 2.04 INTEREST.................................................22 SECTION 2.05 REDUCTION OF THE TERM LOAN COMMITMENT; PREPAYMENT OF THE TERM LOAN................................................24 SECTION 2.06 FEES.....................................................24 SECTION 2.07 SECURITIZATION...........................................24 SECTION 2.08 TAXES....................................................25 ARTICLE III [INTENTIONALLY OMITTED]..........................................26 ARTICLE IV FEES, PAYMENTS AND OTHER COMPENSATION.............................26 SECTION 4.01 AUDIT AND COLLATERAL MONITORING FEES.....................26 SECTION 4.02 PAYMENTS; COMPUTATIONS AND STATEMENTS....................26 SECTION 4.03 SHARING OF PAYMENTS, ETC.................................27 SECTION 4.04 APPORTIONMENT OF PAYMENTS................................28 SECTION 4.05 INCREASED COSTS AND REDUCED RETURN.......................29 SECTION 4.06 JOINT AND SEVERAL LIABILITY OF THE BORROWERS.............30 ARTICLE V CONDITIONS TO THE TERM LOAN........................................31 SECTION 5.01 CONDITIONS PRECEDENT TO EFFECTIVENESS....................31 ARTICLE VI REPRESENTATIONS AND WARRANTIES....................................34 SECTION 6.01 REPRESENTATIONS AND WARRANTIES...........................34 ARTICLE VII COVENANTS OF THE LOAN PARTIES....................................45 SECTION 7.01 AFFIRMATIVE COVENANTS....................................45 SECTION 7.02 NEGATIVE COVENANTS.......................................52 ARTICLE VIII MANAGEMENT, COLLECTION AND STATUS OF ACCOUNTS RECEIVABLE AND OTHER COLLATERAL......................................................58 SECTION 8.01 MANAGEMENT OF COLLATERAL.................................58 SECTION 8.02 ACCOUNTS RECEIVABLE DOCUMENTATION........................60 SECTION 8.03 STATUS OF ACCOUNTS RECEIVABLE AND OTHER COLLATERAL.......60 SECTION 8.04 COLLATERAL CUSTODIAN.....................................61 SECTION 8.05 COMPLIANCE WITH WORKING CAPITAL LOAN AGREEMENT...........61 ARTICLE IX EVENTS OF DEFAULT.................................................62 SECTION 9.01 EVENTS OF DEFAULT........................................62 ARTICLE X AGENT..............................................................65 SECTION 10.01 APPOINTMENT..............................................65 SECTION 10.02 NATURE OF DUTIES.........................................66 SECTION 10.03 RIGHTS, EXCULPATION, ETC.................................67 SECTION 10.04 RELIANCE.................................................67 SECTION 10.05 INDEMNIFICATION..........................................68 SECTION 10.06 AGENT INDIVIDUALLY.......................................68 SECTION 10.07 SUCCESSOR AGENT..........................................68 SECTION 10.08 COLLATERAL MATTERS.......................................69 SECTION 10.09 AGENCY FOR PERFECTION....................................70 ARTICLE XI [INTENTIONALLY OMITTED]...........................................70 ARTICLE XII MISCELLANEOUS....................................................70 SECTION 12.01 NOTICES, ETC.............................................70 SECTION 12.02 AMENDMENTS, ETC..........................................72 SECTION 12.03 NO WAIVER; REMEDIES, ETC.................................72 SECTION 12.04 EXPENSES; TAXES; ATTORNEYS' FEES.........................72 SECTION 12.05 RIGHT OF SET-OFF.........................................73 SECTION 12.06 SEVERABILITY.............................................74 SECTION 12.07 ASSIGNMENTS AND PARTICIPATIONS...........................74 SECTION 12.08 COUNTERPARTS.............................................77 SECTION 12.09 GOVERNING LAW............................................77 SECTION 12.10 CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE................................................77 SECTION 12.11 WAIVER OF JURY TRIAL, ETC................................78 SECTION 12.12 CONSENT BY THE AGENT AND LENDERS.........................78 SECTION 12.13 NO PARTY DEEMED DRAFTER..................................78 SECTION 12.14 REINSTATEMENT; CERTAIN PAYMENTS..........................78 SECTION 12.15 INDEMNIFICATION..........................................79 SECTION 12.16 COLUMBUS MCKINNON AS AGENT FOR BORROWERS.................80 SECTION 12.17 RECORDS..................................................81 SECTION 12.18 BINDING EFFECT...........................................81 SECTION 12.19 INTEREST.................................................81 SECTION 12.20 CONFIDENTIALITY..........................................82 SECTION 12.21 INTEGRATION..............................................83 FINANCING AGREEMENT Financing Agreement, dated as of November 21, 2002, by and among Columbus McKinnon Limited, a Canadian corporation ("COLUMBUS MCKINNON"), Larco Industrial Services Ltd., an Ontario corporation ("LARCO" and together with Columbus McKinnon, each A "BORROWER" and collectively, the "BORROWERS"), the financial institutions from time to time party hereto (each a "LENDER" and collectively, the "LENDERS"), and Regiment Capital III, L.P., a limited partnership, as agent for the Lenders (in such capacity, THE "AGENT"). RECITALS Each of the Borrowers is a wholly-owned Subsidiary (as hereinafter defined) of Columbus McKinnon Corporation (the "PARENT"). The Borrowers have asked the Lenders to extend credit to the Borrowers consisting of a term loan in the aggregate principal amount of $10,000,000.00. The proceeds of the term loan shall be used to partially refinance the Existing Indebtedness (as hereinafter defined) under the Existing Credit Facility (as hereinafter defined), thereby constituting a partial replacement of the Existing Credit Facility, and to pay fees and expenses related to this Agreement. The Lenders are severally, and not jointly, willing to extend such credit to the Borrowers subject to the terms and conditions hereinafter set forth. In consideration of the premises and the covenants and agreements contained herein, the parties hereto agree as follows: ARTICLE I DEFINITIONS; CERTAIN TERMS Section 1.01 DEFINITIONS. As used in this Agreement, the following terms shall have the respective meanings indicated below, such meanings to be applicable equally to both the singular and plural forms of such terms: "ACCOUNT DEBTOR" means each debtor, customer or obligor in any way obligated on or in connection with any Account Receivable. "ACCOUNT RECEIVABLE" means, with respect to any Person, any and all rights of such Person to payment for goods sold and/or services rendered, including accounts, general intangibles and any and all such rights evidenced by chattel paper, instruments or documents, whether due or to become due and whether or not earned by performance, and whether now or hereafter acquired or arising in the future, and any proceeds arising therefrom or relating thereto. "ACTION" has the meaning specified therefor in Section 12.12. "ADDITIONAL MORTGAGES" has the meaning specified therefor in Section 7.01(l). "ADDITIONAL MORTGAGED PROPERTY" means any Real Property Asset that is now owned or leased, or hereinafter acquired or leased, by the Loan Parties, which the Agent determines to acquire a Debenture on following the Effective Date. "ADMINISTRATIVE BORROWER" has the meaning specified in Section 12.16. "AFFILIATE" means, with respect to a specified Person, another Person that Controls or is Controlled by or is under common Control with the Person specified. Notwithstanding anything herein to the contrary, in no event shall any Agent or any Lender be considered an "Affiliate" of any Loan Party. "AGENT" has the meaning specified therefor in the preamble hereto. "AGENT ADVANCES" has the meaning specified therefor in Section 10.08(a). "AGENT'S ACCOUNT" means an account at a bank designated by the Agent from time to time as the account into which the Loan Parties shall make all payments to the Agent for the benefit of the Agent and the Lenders under this Agreement and the other Loan Documents. "AGREEMENT" means this Financing Agreement, including all amendments, modifications and supplements and any exhibits or schedules to any of the foregoing, and shall refer to the Agreement as the same may be in effect at the time such reference becomes operative. "ANNIVERSARY FEE" has the meaning specified therefore in Section 2.06(b). "ANNIVERSARY FEE PERCENTAGE" means a percentage equal to (a) on the first anniversary of the Effective Date, 1.00%, (b) on the second anniversary of the Effective Date, 1.25%, (c) on the third anniversary of the Effective Date, 1.50%, and (d) on the fourth anniversary of the Effective Date, 1.75%. "APPLICABLE CANADIAN PENSION LAWS" means any law (statutory or common), rule, regulation, guideline, directive, order or notice of any Canadian federal or provincial (or other political subdivision thereof) Governmental Authority or any entity exercising executive, legislative, quasi-judicial, regulatory or administrative functions pertaining to, having jurisdiction over or affecting any pension plan or other employee benefit plan, including any Canadian Pension Plan or Canadian Plan. "APPLICABLE MARGIN" means, as of any date of determination, a percentage equal to (a) during the period of time from and after the Effective Date up to the date that is immediately prior to the first anniversary of the Effective Date, 0.00%, (b) during the period of time from and including the date that is the first anniversary of the Effective Date up to the date that is immediately prior to the second anniversary of the Effective Date, 0.50%, (c) during the period of time from and including the date that is the second anniversary of the Effective Date up to the date that is immediately prior to the third anniversary of the Effective Date, 1.00%, and (d) during the period of time from and including the date that is the third anniversary of the Effective Date up to and including the Final Maturity Date, 1.50%. - 2 - "ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered into by an assigning Lender and an assignee, and accepted by the Agent, in accordance with Section 12.07 hereof and in form and substance satisfactory to the Agent. "AUTHORIZED OFFICER" means, with respect to any Person, the chief executive officer, chief financial officer, president or executive vice president of such Person. "BANK" means JPMorgan Chase Bank, its successors or any other bank designated by the Agent to the Administrative Borrower from time to time. "BANKRUPTCY CODE" means the United States Bankruptcy Code (11 U.S.C.ss. 101, ET SEQ.), as amended, and any successor statute. "BASE INTEREST RATE" means the greater of (i) 11.50% per annum and (ii) the Reference Rate plus 5.00% per annum. "BOARD" means the Board of Governors of the Federal Reserve System of the United States. "BOARD OF DIRECTORS" means, with respect to any Person, the board of directors (or comparable managers) of such Person or any committee thereof duly authorized to act on behalf of the board. "BORROWER" and "BORROWERS" have the respective meanings specified therefor in the preamble hereto. "BORROWER SECURITY AGREEMENT" means each General Security Agreement made by a Borrower or the Parent in favor of the Agent, for the benefit of the Agent and the Lenders, substantially in the form of Exhibit A hereto, securing the Obligations. "BUSINESS DAY" means any day other than a Saturday, Sunday or other day on which commercial banks in New York City or Toronto are authorized or required to close. "CANADIAN DOLLAR," "CANADIAN DOLLARS" and the symbol "C$" each means lawful money of Canada. "CANADIAN PENSION PLANS" means each and every pension plan established by the Borrowers under Canadian federal or provincial law for the benefit of employees of any one of the Borrowers. "CANADIAN PENSION Regulator" means any Governmental Authority, tribunal, office, government agency or board or any other entity exercising executive, legislative, quasi-judicial, regulatory or administrative functions pertaining to, or relating to, any Applicable Canadian Pension Laws. "CANADIAN PLAN" means any employee benefit plan (other than a Canadian Pension Plan) established or maintained by, or for the benefit of the Borrowers for the benefit of its respective employees. - 3 - "CAPITAL EXPENDITURES" means, for any period, the sum for the Parent and its Subsidiaries, including the Borrowers (determined on a consolidated basis without duplication in accordance with GAAP), of the aggregate amount of expenditures made or liabilities incurred during such period (including the aggregate amount of Capital Lease Obligations incurred during such period) to acquire or construct fixed assets, plant and equipment (including renewals, improvements and replacements, but excluding repairs) computed in accordance with GAAP; PROVIDED that such term shall not include any such expenditures in connection with any replacement or repair of Property affected by a Casualty Event. "CAPITAL GUIDELINE" means any law, rule, regulation, policy, guideline or directive (whether or not having the force of law and whether or not the failure to comply therewith would be unlawful) of any central bank or Governmental Authority (i) regarding capital adequacy, capital ratios, capital requirements, the calculation of a bank's capital or similar matters, or (ii) affecting the amount of capital required to be obtained or maintained by any Lender or any Person controlling any Lender or the manner in which any Lender or any Person controlling any Lender allocates capital to any of its contingent liabilities (including letters of credit), advances, acceptances, commitments, assets or liabilities. "CAPITAL LEASE OBLIGATIONS" of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP. "CAPITAL STOCK" means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, and (ii) with respect to any Person that is not a corporation, any and all partnership, membership or other equity interests of such Person. "CASUALTY EVENT" means, with respect to any Property of any Person, any loss of or damage to, or any condemnation or other taking of, such Property for which such Person or any of its Subsidiaries receives insurance proceeds, or proceeds of a condemnation award or other compensation. "CLOSING FEE" has the meaning specified therefor in Section 2.06(a). "COLLATERAL" means all of the property and assets and all interests therein and proceeds thereof now owned or hereafter acquired by any Person upon which a Lien is granted or purported to be granted by such Person as security for all or any part of the Obligations. "COLLATERAL DOCUMENT" means any Pledge Agreement, any Borrower Security Agreement, any Intellectual Property Security Agreement, any Debenture, and any other instruments and documents, including without limitation Uniform Commercial Code financing statements and PPSA financing statements, any Landlord's Waiver and Consent, any PPSA estoppel letters, and the like, required to be executed or delivered pursuant to this Agreement or any Collateral Document. - 4 - "COMPLIANCE CERTIFICATE" has the meaning specified therefor in Section 7.01(a)(ii). "CONTINGENT OBLIGATION" means, with respect to any Person, any obligation 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, without limitation, (i) the direct or indirect guaranty, endorsement (other than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of a primary obligor, (ii) the obligation to make take-or-pay or similar payments, if required, regardless of nonperformance by any other party or parties to an agreement, (iii) 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 (1) for the purchase or payment of any such primary obligation or (2) 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, assets, 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 or (D) 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 any product warranties extended in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation with respect to which such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for which such Person may be liable pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability with respect thereto (assuming such Person is required to perform thereunder), as determined by such Person in good faith. "CONTROL" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "CONTROLLING" and "CONTROLLED" have meanings correlative thereto. A Person who owns or holds capital stock, beneficial interests or other securities representing five percent (5%) or more of the Total Voting Power of another Person shall be deemed, for purposes of this Agreement, to "control" such other Person. "COPYRIGHTS" means all copyrights, whether statutory or common law, owned by or assigned to the Loan Parties, and all exclusive and nonexclusive licenses to the Loan Parties from third parties or rights to use copyrights owned by such third parties, including, without limitation, the registrations, applications and licenses listed on Schedule 6.01(e) hereto, along with any and all (a) renewals and extensions thereof, (b) income, royalties, damages, claims and payments now and hereafter due and/or payable with respect thereto, including, without limitation, damages and payments for past, present or future infringements thereof, (c) rights to sue for past, present and future infringements thereof, and (d) foreign copyrights and any other rights corresponding thereto throughout the world. "DEBENTURE" means each debenture made by a Loan Party in favor of the Agent, for the benefit of the Agent and the Lenders, substantially in the form of Exhibit B hereto, securing the Obligations. - 5 - "DEFAULT" means an event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default. "DESIGNATED FINANCIAL OFFICER" means an individual holding one or more of the following offices with a Borrower or otherwise having executive responsibilities for financial matters and listed in Schedule 1.01(B) hereto: chief financial officer, principal accounting officer, treasurer, assistant treasurer or controller. "DISCLOSED MATTERS" means the actions, suits and proceedings and the environmental matters disclosed in Schedule 6.01(f) hereto. "DISPOSITION" means any transaction, or series of related transactions, pursuant to which any Person or any of its Subsidiaries sells, assigns, transfers or otherwise disposes of any property or assets (whether now owned or hereafter acquired) to any other Person, in each case, whether or not the consideration therefor consists of cash, securities or other assets owned by the acquiring Person, EXCLUDING any sales of Inventory in the ordinary course of business on ordinary business terms. "DOLLAR," "DOLLARS" and the symbol "$" each means lawful money of the United States of America. "EFFECTIVE DATE" means the date, on or before November 30, 2002, on which all of the conditions precedent set forth in Section 5.01 are satisfied or waived and the Term Loan is made. "ENVIRONMENTAL ACTIONS" means any complaint, summons, citation, notice, directive, order, claim, litigation, investigation, judicial or administrative proceeding, judgment, letter or other communication from any Person or Governmental Authority involving violations of Environmental Laws or Releases of Hazardous Materials (i) from any assets, properties or businesses owned or operated by any Loan Party or any predecessor in interest; (ii) from adjoining properties or businesses; or (iii) onto any facilities which received Hazardous Materials generated by any Loan Party or any predecessor in interest. "ENVIRONMENTAL LAWS" means all applicable federal, state, provincial, local and foreign laws, statutes, acts, ordinances, codes, rules, standards, orders-in-council, regulations, decrees, permits, licenses or other binding determinations of any Governmental Authority now or hereafter in effect, and in each case as amended or supplemented from time to time, and any applicable judicial, regulatory or administrative interpretation thereof, including any applicable judicial, regulatory or administrative order, consent decree, order or judgment, imposing liability or standards of conduct for or relating to the regulation and protection of human health, safety, the environment and natural resources (including ambient air, surface water, groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic species and vegetation) or imposing liability or standards of conduct for or relating to Hazardous Materials. "ENVIRONMENTAL LIABILITIES" means all liabilities, monetary obligations, Remedial Actions, losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts and consultants and costs of investigations and feasibility studies), fines, penalties, sanctions and - 6 - interest incurred as a result of any claim or demand by any Governmental Authority or any third party, and which relate to any environmental condition or a Release of Hazardous Materials from or onto (i) any property presently or formerly owned by any Loan Party or (ii) any facility which received Hazardous Materials generated by any Loan Party. "ENVIRONMENTAL LIEN" means any Lien in favor of any Governmental Authority for Environmental Liabilities. "EQUITY RIGHTS" means, with respect to any Person, any subscriptions, options, warrants, commitments, preemptive rights or agreements of any kind (including any stockholders' or voting trust agreements) for the issuance or sale of, or securities convertible into, any additional shares of Capital Stock of any class, or partnership or other ownership interests of any type in, such Person. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, and regulations thereunder, in each case, as in effect from time to time. References to sections of ERISA shall be construed also to refer to any successor sections. "ERISA AFFILIATE" means any trade or business (whether or not incorporated) that, together with the Loan Parties, is treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of the Internal Revenue Code. Notwithstanding the foregoing, for purposes of any liability related to a Multiemployer Plan under Title IV of ERISA, the term "ERISA Affiliate" means any trade or business that, together with the Loan Parties, is treated as a single employer within the meaning of Section 4001(b) of ERISA. "ERISA EVENT" means (a) a "reportable event", as defined in Section 4043 of ERISA or the regulations issued thereunder for which the notice requirement has not been waived with respect to any Pension Plan, (b) the existence with respect to any Pension Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Internal Revenue Code or Section 302 of ERISA), whether or not waived, (c) the filing pursuant to Section 412(d) of the Internal Revenue Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Pension Plan, (d) the incurrence by any Loan Party or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Pension Plan, (e) the receipt by any Loan Party or any ERISA Affiliate from the PBGC or plan administrator of any notice relating to an intention to terminate any Pension Plan or Pension Plans or to appoint a trustee to administer any Pension Plan, or (f) the receipt by any Loan Party or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from any Loan Party or any ERISA Affiliate of any notice 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. "EVENT OF DEFAULT" means any of the events set forth in Section 9.01. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "EXISTING CREDIT FACILITY" means the Credit Agreement, dated as of March 31, 1998, among the Parent, the lenders named therein, and Fleet National Bank, as Agent. - 7 - "EXISTING INDEBTEDNESS" means (i) Indebtedness of the Loan Parties existing as of the Effective Date which is being refinanced in full with the proceeds of the US Term Loan and the Working Capital Loans on the Effective Date including Indebtedness under the Existing Credit Facility and (ii) Indebtedness of the Loan Parties existing as of the Effective Date which is permitted to remain outstanding after the Effective Date under Section 7.02(a) of the US Financing Agreement and is listed on Schedule 7.02(a) thereto. "FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate per annum equal to, for each day during such period, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it. "FIELD SURVEY AND AUDIT" means a field survey and audit of the Loan Parties and an appraisal of the Collateral performed by auditors, examiners and/or appraisers selected by the Agent, at the sole cost and expense of the Borrowers. "FINAL MATURITY DATE" means the date which is five years plus one day after the Effective Date, or such earlier date on which the Term Loan shall become due and payable in accordance with the terms of this Agreement and the other Loan Documents. "FINANCIAL STATEMENTS" means (i) the audited consolidated balance sheet of the Parent and its Subsidiaries for the Fiscal Years ended March 31, 2000, March 31, 2001 and March 31, 2002, and the related consolidated statement of operations, shareholders' equity and cash flows for the Fiscal Years then ended, and (ii) the unaudited consolidated balance sheet of the Parent and its Subsidiaries for the 6 months ended September 30, 2002, and the related consolidated statement of operations, shareholder's equity and cash flows for the 6 months then ended. "FISCAL YEAR" means the fiscal year of the Parent and its Subsidiaries ending on March 31st of each year. "GAAP" has the meaning set out in the US Financing Agreement. "GOVERNMENTAL AUTHORITY" means any nation or government, any federal, state, provincial, city, town, municipality, county, local or other political subdivision thereof or thereto and any department, commission, board, bureau, instrumentality, agency or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government in Canada or in the United States. "GUARANTOR" means each Person which guarantees, pursuant to Section 7.01(n) or otherwise, all or any part of the Obligations. "HAZARDOUS MATERIAL" means (a) any element, compound or chemical that is defined, listed or otherwise classified as a contaminant, pollutant, toxic pollutant, toxic or hazardous substance, extremely hazardous substance or - 8 - chemical, hazardous waste, special waste, or solid waste under Environmental Laws or that is likely to cause immediately, harm to or have an adverse effect on, the environment or risk to human health or safety, including, without limitation, any pollutant, contaminant, waste, hazardous waste, toxic substance or dangerous good which is defined or identified in any Environmental Law and which is present in the environment in such quantity or state that it contravenes any Environmental Law; (b) petroleum and its refined products; (c) polychlorinated biphenyls; (d) any substance exhibiting a hazardous waste characteristic, including, without limitation, corrosivity, ignitability, toxicity or reactivity as well as any radioactive or explosive materials; and (e) any raw materials, building components (including, without limitation, asbestos-containing materials) and manufactured products containing hazardous substances listed or classified as such under Environmental Laws. "HEDGING AGREEMENT" means any interest rate, foreign currency, commodity or equity swap, collar, cap, floor or forward rate agreement, or other agreement or arrangement designed to protect against fluctuations in interest rates or currency, commodity or equity values (including, without limitation, any option with respect to any of the foregoing and any combination of the foregoing agreements or arrangements), and any confirmation executed in connection with any such agreement or arrangement. "HIGHEST LAWFUL RATE" means, with respect to the Agent or any Lender, the maximum non-usurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the Obligations under laws applicable to the Agent or such Lender which are currently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum non-usurious interest rate than applicable laws now allow. "INDEBTEDNESS" means, with respect to any Person, without duplication, (i) all indebtedness of such Person for borrowed money; (ii) all obligations of such Person for the deferred purchase price of property or services (other than trade payables which are not for borrowed money) or other accounts payable (including accrued expenses and deferred taxes) incurred in the ordinary course of such Person's business and not outstanding for more than 90 days after the date such payable was created); (iii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments or upon which interest payments are customarily made; (iv) all reimbursement, payment or other obligations and liabilities of such Person created or arising under any conditional sales or other title retention agreement with respect to property used and/or acquired by such Person, even though the rights and remedies of the lessor, seller and/or lender thereunder may be limited to repossession or sale of such property; (v) all Capital Lease Obligations of such Person; (vi) all obligations and liabilities, contingent or otherwise, of such Person, in respect of letters of credit, acceptances and similar facilities; (vii) all obligations and liabilities, calculated on a basis satisfactory to the Agent and in accordance with accepted practice, of such Person under Hedging Agreements; (viii) all Contingent Obligations; (ix) liabilities incurred under Title IV of ERISA with respect to any plan (other than a Multiemployer Plan) covered by Title IV of ERISA and maintained for employees of such Person or any of its ERISA Affiliates; (x) liabilities incurred under Applicable Canadian Pension Laws with respect to Canadian Pension Plans; (xi) Withdrawal Liability incurred under ERISA by such Person or any of its ERISA Affiliates with respect to any Multiemployer Plan; (xii) Withdrawal Liability incurred under Applicable Canadian Pension Laws; and (xiii) all obligations referred to in clauses (i) - 9 - through (xii) of this definition of another Person secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) a Lien upon property owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness. The Indebtedness of any Person shall include the Indebtedness of any partnership of or joint venture in which such Person is a general partner or a joint venturer. "INDEMNIFIED MATTERS" has the meaning specified therefor in Section 12.15. "INDEMNITEES" has the meaning specified therefor in Section 12.15. "INSOLVENCY LAWS" means (i) the Bankruptcy Code, (ii) the Bankruptcy and Insolvency Act (Canada), (iii) the Companies' Creditors Arrangement Act (Canada), (iv) any successors to such statutes, and (v) any other applicable insolvency or other similar law of any jurisdiction including, without limitation, any law of any jurisdiction permitting a debtor to obtain a stay or a compromise of the claims of its creditors against it. "INSOLVENCY PROCEEDING" means any proceeding commenced by or against any Person under any provision of any Insolvency Laws or under any other bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, or extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief. "INTEREST EXPENSE" means, for any Person during any period, the sum, (determined on a consolidated basis without duplication in accordance with GAAP), of the following: (a) all interest in respect of Indebtedness accrued or paid during such period (whether or not actually paid during such period), PLUS (b) the net amounts payable (or MINUS the net amounts receivable) in respect of Hedging Agreements accrued during such period (whether or not actually paid or received during such period) excluding reimbursement of legal fees and other similar transaction costs and excluding payments required by reason of the early termination of Hedging Agreements in effect on the date hereof, PLUS (c) all fees, including letter of credit fees and expenses (but excluding reimbursement of legal fees), incurred hereunder and under the US Financing Agreement and the Working Capital Loan Agreement during such period. "INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as amended (or any successor statute thereto) and the regulations thereunder. "INVENTORY" means, with respect to any Person, all goods and merchandise of such Person, including, without limitation, all raw materials, work-in-process, packaging, supplies, materials and finished goods of every nature used or usable in connection with the shipping, storing, advertising or sale of such goods and merchandise, whether now owned or hereafter acquired, and all such other property the sale or other disposition of which would give rise to an Account Receivable or cash. "INVESTMENT" means, for any Person: (a) the acquisition (whether for cash, Property, services or securities or otherwise) of Capital Stock, bonds, notes, debentures, partnership, limited liability company or other ownership interests or other securities of any other Person or any agreement to make any such acquisition (including, without limitation, any "short sale" or any sale of - 10 - any securities at a time when such securities are not owned by the Person entering into such short sale); (b) the making of any deposit with, or advance, loan or other extension of credit to, any other Person (including the purchase of Property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such Person, but excluding any such advance, loan or extension of credit representing the purchase price of Inventory or supplies sold by such Person in the ordinary course of business, PROVIDED that in no event shall the term of any such Inventory or supply advance, loan or extension of credit exceed 180 days); or (c) the entering into of any Guaranty of, or other contingent obligation with respect to, Indebtedness or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person. "INTELLECTUAL PROPERTY SECURITY AGREEMENT" means an Intellectual Property Security Agreement made by a Loan Party in favor of the Agent, substantially in the form of Exhibit C hereto, securing the Obligations. "ITA" means the Income Tax Act (Canada), as the same may from time to time be in effect. "LANDLORD'S WAIVER AND CONSENT" means, with respect to any Leasehold Property, a letter, certificate or other instrument in writing from the lessor under the related Lease, in the form approved by the Agent in its sole discretion. "LEASE" means any lease of real property to which any Loan Party is a party as lessor or lessee. "LEASEHOLD PROPERTY" means any leasehold interest of any Loan Party as lessee under any Lease, other than any such leasehold interest designated from time to time by the Agent in its sole discretion as not being required to be included in the Collateral and not being of material importance to the business or operations of the Loan Parties. "LENDER" has the meaning specified therefor in the preamble hereto. "LIABILITIES" has the meaning specified therefor in Section 2.07. "LIEN" means any mortgage, deed of trust, pledge, lien (statutory or otherwise), security interest, charge or other encumbrance or security or preferential arrangement of any nature, including, without limitation, any conditional sale or title retention arrangement, any capital lease and any assignment, deposit arrangement or financing lease intended as, or having the effect of, security. "LOAN ACCOUNT" means an account maintained hereunder by the Agent on its books of account at the Payment Office and, with respect to the Borrowers, in which the Borrowers will be charged with the Term Loan made to, and all other Obligations incurred by, the Borrowers. "LOAN DOCUMENT" means this Agreement, any Collateral Document, any Intellectual Property Security Agreement or other document filed with the Canadian Intellectual Property Office, the Participation Agreement, and any - 11 - other agreement, instrument, and other document executed and delivered pursuant hereto or thereto or otherwise evidencing or securing the Term Loan or any other Obligation. "LOAN PARTY" means any Borrower or any Guarantor. "MATERIAL ADVERSE EFFECT" means a material adverse effect on any of (i) the operations, business, assets, properties, condition (financial or otherwise) or prospects of any Loan Party or the Loan Parties taken as a whole, (ii) the ability of any Loan Party to perform any of its obligations under any Loan Document to which it is a party, (iii) the legality, validity or enforceability of this Agreement or any other Loan Document, (iv) the rights and remedies of the Agent or any Lender under any Loan Document, or (v) the validity, perfection or priority of a Lien in favor of the Agent for the benefit of the Lenders on any of the Collateral with an aggregate fair market value in excess of $100,000. "MATERIAL INDEBTEDNESS" means Indebtedness (other than the Term Loan and US Term Loan), including, without limitation, obligations in respect of one or more Hedging Agreements, in an aggregate principal amount exceeding $1,000,000. For purposes of determining Material Indebtedness, the "principal amount" of the obligations of any Person in respect of a Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that such Person would be required to pay if such Hedging Agreement were terminated at such time. "MATERIAL LEASEHOLD PROPERTY" means a Leasehold Property reasonably determined by the Agent to be of material value as Collateral or of material importance to the operations of the Loan Parties and as to which the aggregate amount of all rents payable during any Fiscal Year exceeds $100,000. "MATERIAL OWNED PROPERTY" means any real property owned by any Loan Party that is reasonably determined by the Agent to be of material value as Collateral or of material importance to the operations of the Loan Parties. "MATERIAL RENTAL OBLIGATIONS" means obligations of the Loan Parties to pay rent under any one or more operating leases with respect to any real or personal property that is material to the business of the Loan Parties and as to which the aggregate amount of all rents payable during any Fiscal Year exceeds $100,000. "MOODY'S" means Moody's Investors Service, Inc. and any successor thereto. "MORTGAGED PROPERTY" means, at any time of determination, any and all real property owned or leased by the Loan Parties that are subject to a Debenture in favor of the Agent for the benefit of the Lenders and the Agent, including without limitation the Properties listed on Schedule 1.01(C). "MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which any Loan Party or any of its ERISA Affiliates has contributed to, or has been obligated to contribute, at any time during the preceding six (6) years. "NOTICE OF BORROWING" has the meaning specified therefor in Section 2.02(a). - 12 - "OBLIGATIONS" means all present and future indebtedness, obligations, and liabilities of each Loan Party to the Agent and the Lenders under the Loan Documents, whether or not the right of payment in respect of such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, equitable, secured, unsecured, and whether or not such claim is discharged, stayed or otherwise affected by any proceeding referred to in Section 9.01. Without limiting the generality of the foregoing, the Obligations of each Loan Party under the Loan Documents include (a) the obligation to pay principal, interest (including the Term Loan Accrued Interest Amount), charges, expenses, fees, attorneys' fees and disbursements, indemnities and other amounts payable by such Person under the Loan Documents, and (b) the obligation of such Person to reimburse any amount in respect of any of the foregoing that the Agent or any Lender (in its sole discretion) may elect to pay or advance on behalf of such Person. "PARENT" has the meaning specified therefor in the preamble hereto. "PARTICIPANT REGISTER" has the meaning specified therefor in Section 12.07(b)(v). "PARTICIPATION AGREEMENT" means the Master Risk Participation Agreement, dated as of the date hereof, by and among the Parent, the Borrowers, the Agent and the Lenders. "PATENTS" means all patents issued or assigned to and all patent applications made by the Loan Parties and, to the extent that the grant of a security interest does not cause a breach or termination thereof, all exclusive and nonexclusive licenses to the Loan Parties from third parties or rights to use patents owned by such third parties, including, without limitation, the patents, patent applications and licenses listed on Schedule 6.01(e) hereto, along with any and all (a) inventions and improvements described and claimed therein, (b) reissues, divisions, continuations, extensions and continuations-in-part thereof, (c) income, royalties, damages, claims and payments now and hereafter due and/or payable under and with respect thereto, including, without limitation, damages and payments for past or future infringements thereof, (d) rights to sue for past, present and future infringements thereof, and (e) any other rights corresponding thereto throughout the world. "PAYMENT OFFICE" means the Agent's office located at 70 Federal Street, 7th Floor, Boston, MA 02110, or at such other office or offices of the Agent as may be designated in writing from time to time by the Agent to the Administrative Borrower. "PBGC" means the Pension Benefit Guaranty Corporation or any successor thereto. "PENSION PLAN" means any Plan that is a defined benefit pension plan subject to the provisions of Title IV of ERISA or Section 412 of the Internal Revenue Code or Section 302 of ERISA, and in respect of which any Loan Party or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA. - 13 - "PERMITTED INVESTMENTS" means: (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America or Canada (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America or Canada), in each case maturing within one year from the date of acquisition thereof; (b) investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from Standard and Poor's or from Moody's; (c) investments in certificates of deposit, banker's acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof or which is a Schedule I bank under the Bank Act (Canada) and, in either case, which has a combined capital and surplus and undivided profits of not less than $250,000,000; (d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above; (e) advances, loans and extensions of credit to any director, officer or employee of the Loan Parties, if the aggregate outstanding amount of all such advances, loans and extensions of credit (excluding travel advances in the ordinary course of business) together with advances, loans and extensions of credit made by the Parent or any of its Subsidiaries to their directors, officers or employees under the US Financing Agreement does not at any time exceed $500,000; (f) investments in money market mutual funds that are rated AAA by Standard & Poor's; and (g) stocks, bonds, funds, covered call options, cash equivalents and cash included in the portfolio of Investments owned by CM Insurance Company, Inc. under the investment objective of "Aggressive Growth/Moderate Income" using the following asset guidelines: cash, 0% to 20%; bonds, 0% to 30%; stocks, 70% to 90%; other, 0% to 20%; in each case, invested at the discretion of Fleet Investment Advisors, Inc. and Gold-K Securities, Inc. "PERMITTED LIENS" has the meaning specified therefor in Section 7.02(b). "PERSON" means an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated organization, joint venture or other enterprise or entity or Governmental Authority. "PLAN" means any employee benefit plan within the meaning of Section 3(3) of ERISA in which any Loan Party or any ERISA Affiliate is an "employer" as defined in Section 3(5) of ERISA, or any employee benefit plan established and - 14 - maintained by, or for the benefit of such Loan Party for the benefit of its respective employees, including, but not limited to, any Pension Plan or Multiemployer Plan. "PLEDGE AGREEMENT" means a Pledge and Security Agreement made by a Loan Party in favor of the US Agent for the benefit of the US Lenders, substantially in the form of Exhibit B to the US Financing Agreement or otherwise acceptable to the Agent. "POST-DEFAULT RATE" means a rate of interest per annum equal to the rate of interest otherwise in effect from time to time pursuant to the terms of this Agreement plus 3%. "PPSA" means the Personal Property Security Act (Ontario) and the Regulations thereunder, as from time to time in effect, PROVIDED, HOWEVER, if attachment, perfection or priority of Agent's or Lenders' security interests in any Collateral are governed by the personal property security laws of any jurisdiction other than Ontario, "PPSA" shall means those personal property security laws in such other jurisdiction for the purposes of the provisions hereof relating to such attachment, perfection or priority and for the definitions related to such provisions. "PRO RATA SHARE" means, with respect to a Lender's obligation to make the Term Loan and receive payments of interest, fees, and principal with respect thereto, and all other matters (including, without limitation, the indemnification obligations arising under Section 10.05), the percentage obtained by dividing (i) such Lender's Term Loan Commitment, by (ii) the Total Term Loan Commitment, PROVIDED that if the Total Term Loan Commitment has been reduced to zero, the numerator shall be the aggregate unpaid principal amount of such Lender's portion of the Term Loan and the denominator shall be the aggregate unpaid principal amount of the Term Loan. "PROPERTY" means any interest of any kind in property or assets, whether real, personal or mixed, and whether tangible or intangible. "PROPRIETARY RIGHTS" has the meaning specified therefor in Section 6.01(e)(ii). "PTO" means the United States Patent and Trademark Office or any successor or substitute office in which filings are necessary or, in the opinion of the Agent, desirable in order to create or perfect Liens on any Patents or Trademarks. "RATING AGENCIES" has the meaning specified therefor in Section 2.07. "REAL PROPERTY ASSET" means, at any time of determination, any and all real property owned or leased by the Loan Parties. "REFERENCE BANK" means JPMorgan Chase Bank, its successors or any other commercial bank designated by the Agent to the Administrative Borrower from time to time. "REFERENCE RATE" means the rate of interest publicly announced by the Reference Bank in New York, New York from time to time as its reference rate, base rate or prime rate. The reference rate, base rate or prime rate is determined from time to time by the Reference Bank as a means of pricing some loans to its borrowers and neither is tied to any external rate of interest or index nor necessarily reflects the lowest rate of interest actually charged by - 15 - the Reference Bank to any particular class or category of customers. Each change in the Reference Rate shall be effective from and including the date such change is publicly announced as being effective. "REGISTER" has the meaning specified therefor in Section 12.07(b)(ii). "REGISTERED LOAN" has the meaning specified therefor in Section 12.07(b)(ii). "REGISTERED PROPRIETARY RIGHTS" has the meaning specified therefor in Section 6.01(e)(iii). "REGULATION T", "REGULATION U" and "REGULATION X" mean, respectively, Regulations T, U and X of the Board or any successor, as the same may be amended or supplemented from time to time. "RELEASE" means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, seeping, migrating, dumping or disposing of any Hazardous Material (including the abandonment or discarding of barrels, containers and other closed receptacles containing any Hazardous Material) into the indoor or outdoor environment, including, without limitation, the movement of Hazardous Materials through or in the ambient air, soil, surface or ground water, or property. "REMEDIAL ACTION" means all actions taken to (i) clean up, remove, remediate, contain, treat, monitor, assess, evaluate or in any other way address Hazardous Materials in the indoor or outdoor environment; (ii) prevent or minimize a Release or threatened Release of Hazardous Materials so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment; (iii) perform pre-remedial studies and investigations and post-remedial operation and maintenance activities; or (iv) perform any other actions authorized by 42 U.S.C. ss. 9601. "REQUIRED LENDERS" means Lenders whose Pro Rata Shares of the Term Loan aggregate at least 51%. "RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock of, or other equity interest in, any Loan Party now or hereafter outstanding, except a dividend payable solely in shares of stock or other equity interests, (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of stock of, or other equity interest in, any Loan Party now or hereafter outstanding, (iii) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of stock of, or other equity interest in, any Loan Party, (iv) any payment or prepayment of principal of, premium, if any, or interest on, or redemption purchase, retirement, defeasance (including economic or legal defeasance), sinking fund or similar payment with respect to the Senior Subordinated Notes and/or any intercompany Indebtedness owing by the Parent or any of its Subsidiaries, and (v) any payment made to any Affiliates of any Loan Party in respect of management, consulting or other similar services provided to any Loan Party. - 16 - "RESTRICTIVE AGREEMENTS" has the meaning specified therefor in Section 6.01(m)(ii). "SEC" means the Securities and Exchange Commission or any other similar or successor agency of the Federal government administering the Securities Act. "SECURITIES ACT" means the Securities Act of 1933, as amended, or any similar Federal statute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect from time to time. "SECURITIZATION" has the meaning specified therefor in Section 2.07. "SECURITIZATION PARTIES" has the meaning specified therefor in Section 2.07. "SENIOR SUBORDINATED NOTE DOCUMENTS" means the Senior Subordinated Note Indenture, the Senior Subordinated Notes and all other documents, instruments and agreements executed and delivered in connection with the Senior Subordinated Notes. "SENIOR SUBORDINATED NOTE INDENTURE" means the Columbus McKinnon Corporation Series A and Series B 8 1/2% Senior Subordinated Notes Due 2008 Indenture, dated as of March 31, 1998 (as supplemented by the Supplemental Indenture, dated as of March 31, 1998, the Second Supplemental Indenture, dated as of February 12, 1999, the Third Supplemental Indenture, dated as of March 1, 1999, the Fourth Supplemental Indenture, dated as of November 1, 1999, the Fifth Supplemental Indenture, dated as of April 4, 2002 and the Sixth Supplemental Indenture, dated as of August 5, 2002), between the Parent, as issuer, and State Street Bank and Trust Company, N.A., as trustee. "SENIOR SUBORDINATED NOTES" means the Parent's 8 1/2% senior subordinated notes due 2008 issued pursuant to the Senior Subordinated Note Indenture. "STANDARD & POOR'S" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto. "SUBSIDIARY" means, with respect to any Person at any date, any corporation, limited or general partnership, limited liability company, trust, estate, association, joint venture or other business entity (i) the accounts of which would be consolidated with those of such Person in such Person's consolidated financial statements if such financial statements were prepared in accordance with GAAP or (ii) of which more than 50% of (A) the outstanding Capital Stock having (in the absence of contingencies) ordinary voting power to elect a majority of the board of directors or other managing body of such Person, (B) in the case of a partnership or limited liability company, the interest in the capital or profits of such partnership or limited liability company or (C) in the case of a trust, estate, association, joint venture or other entity, the beneficial interest in such trust, estate, association or other entity business is, at the time of determination, owned or controlled directly or indirectly through one or more intermediaries, by such Person. - 17 - "SYNTHETIC LEASE" means, any lease of goods or other property, whether real or personal, which is treated as an operating lease under GAAP and as a loan or financing for U.S. income tax purposes. "TAXES" has the meaning specified therefor in Section 2.08(a). "TERM LOAN" means, collectively, the loans made by the Lenders to the Borrowers on the Effective Date pursuant to Section 2.01(a). "TERM LOAN COMMITMENT" means, with respect to each Lender, the commitment of such Lender to make the Term Loan to the Borrowers in the amount set forth in Schedule 1.01(A) hereto, as the same may be terminated or reduced from time to time in accordance with the terms of this Agreement. "TERM LOAN ACCRUED INTEREST AMOUNT" means, as at any date of determination, the amount of all interest with respect to the Term Loan that has been accrued and not paid currently in accordance with Section 2.04(a). "TITLE INSURANCE POLICY" means a mortgagee's loan policy, in form and substance satisfactory to the Agent, together with all endorsements made from time to time thereto, issued by or on behalf of a title insurance company satisfactory to the Agent, insuring the Lien created by a Mortgage in an amount and on terms satisfactory to the Agent, delivered to the Agent. "TRADEMARKS" means all trademarks (including service marks), federal and state trademark registrations and applications made by the Loan Parties, common law trademarks and trade names owned by or assigned to the Loan Parties, all registrations and applications for the foregoing and all exclusive and nonexclusive licenses from third parties of the right to use trademarks of such third parties, including, without limitation, the registrations, applications, unregistered trademarks, service marks and licenses listed on Schedule 6.01(e) hereto, along with any and all (a) renewals thereof, (b) income, royalties, damages and payments now and hereafter due and/or payable with respect thereto, including, without limitation, damages, claims and payments for past or future infringements thereof, (c) rights to sue for past, present and future infringements thereof, and (d) foreign trademarks, trademark registrations, and trade name applications for any thereof and any other rights corresponding thereto throughout the world. "TOTAL TERM LOAN COMMITMENT" means the sum of the amounts of the Lenders' Term Loan Commitments. "TOTAL VOTING POWER" means, with respect to any Person, the total number of votes which holders of securities having the ordinary power to vote, in the absence of contingencies, are entitled to cast in the election of directors of such Person. "UCC FILING AUTHORIZATION LETTER" means a letter duly executed by each Loan Party authorizing the Agent to file appropriate financing statements on Form UCC-1 and/or in a form provided for in the PPSA without the signature of such Loan Party in such office or offices as may be necessary or, in the opinion of the Agent, desirable to perfect the security interests purported to be created by each Collateral Document. - 18 - "UNIFORM COMMERCIAL CODE" has the meaning specified therefor in Section 1.03. "US AGENT" means Regiment Capital III, L.P., in its capacity as agent to the US Lenders. "US BORROWERS" means the Parent and each Subsidiary of the Parent listed as a Guarantor under the US Financing Agreement. "US FINANCING AGREEMENT" means the Financing Agreement by and among the US Borrowers, the US Lenders and the US Agent. "US INTERCREDITOR AGREEMENT" means the Lien Subordination and Intercreditor Agreement by and among the Parent, the US Agent, the US Lenders, the Working Capital Agent and the Working Capital Lenders. "US LENDERS" means the financial institutions from time to time party to the US Financing Agreement. "US LOAN DOCUMENTS" means the US Financing Agreement and any other agreement, instrument and other document executed and delivered pursuant thereto or otherwise evidencing or securing the US Term Loan or any other obligation thereunder. "US TERM LOAN" means the term loan made by the US Lenders to the US Borrowers on the Effective Date pursuant to the US Financing Agreement in the aggregate principal amount of $60,000,000.00. "WITHDRAWAL LIABILITY" means 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. "WORKING CAPITAL AGENT" means Fleet Capital Corporation, as agent for the Working Capital Lenders under the Working Capital Loan Agreement. "WORKING CAPITAL AVAILABILITY" means "Domestic Excess Availability" as such term is defined in the Working Capital Loan Agreement as such agreement is in effect on the date hereof. "WORKING CAPITAL BORROWING BASE" means, collectively, the "Domestic Borrowing Base" and the "Canadian Borrowing Base" as each such term is defined in the Working Capital Loan Agreement as such agreement is in effect on the date hereof. "WORKING CAPITAL INDEBTEDNESS" means, collectively, the Indebtedness of the Parent owing to the Working Capital Agent and the Working Capital Lenders and (ii) the Indebtedness of the Borrowers owing to the Canadian Lender (as defined in the Working Capital Loan Agreement as in effect on the date hereof), in each case under the Working Capital Loan Agreement. - 19 - "WORKING CAPITAL LENDERS" means the lenders from time to time party to the Working Capital Loan Agreement. "WORKING CAPITAL LOAN AGREEMENT" means the amended and restated credit and security agreement, dated as of the date hereof, by and among the Parent, the Borrowers, the Guarantors (as such term is defined in the US Financing Agreement), the Working Capital Lenders and the Working Capital Agent. "WORKING CAPITAL LOAN DOCUMENTS" means, collectively, (i) the Working Capital Loan Agreement, and (ii) all other agreements, instruments, and other documents executed and delivered in connection therewith. "WORKING CAPITAL LOANS" means, collectively, the (i) Working Capital Revolving Loans and (ii) the Working Capital Term Loan. "WORKING CAPITAL REVOLVING LOANS" means the "Revolving Loan" (as defined in the Working Capital Loan Agreement as in effect on the date hereof). "WORKING CAPITAL TERM LOAN" means the "Term Loan" (as defined in the Working Capital Loan Agreement as in effect on the date hereof). Section 1.02 TERMS GENERALLY. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person's successors and assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any right or interest in or to assets and properties of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible. References in this Agreement to "determination" by the Agent include good faith estimates by the Agent (in the case of quantitative determinations) and good faith beliefs by the Agent (in the case of qualitative determinations). Section 1.03 ACCOUNTING AND OTHER TERMS. Unless otherwise expressly provided herein, each accounting term used herein shall have the meaning given it under GAAP applied on a basis consistent with those used in preparing the Financial Statements. All terms used in this - 20 - Agreement which are defined in Article 8 or Article 9 of the Uniform Commercial Code as in effect from time to time in the State of New York (the "UNIFORM COMMERCIAL CODE") and which are not otherwise defined herein shall have the same meanings herein as set forth therein, provided that terms used herein which are defined in the Uniform Commercial Code as in effect in the State of New York on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute except as the Agent may otherwise determine. Section 1.04 TIME REFERENCES. Unless otherwise indicated herein, all references to time of day refer to Eastern Standard Time or Eastern daylight saving time, as in effect in New York City on such day. For purposes of the computation of a period of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding"; PROVIDED, HOWEVER, that with respect to a computation of fees or interest payable to the Agent or any Lender, such period shall in any event consist of at least one full day. ARTICLE II THE LOANS Section 2.01 TERM LOAN COMMITMENTS. (a) Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Lender severally agrees to make the Term Loan to the Borrowers on the Effective Date, in an aggregate principal amount not to exceed the amount of such Lender's Term Loan Commitment. (b) Notwithstanding the foregoing, the aggregate principal amount of the Term Loan made on the Effective Date shall not exceed the Total Term Loan Commitment. Any principal amount of the Term Loan which is repaid or prepaid may not be reborrowed. Section 2.02 MAKING THE TERM LOAN. (a) The Administrative Borrower shall give the Agent prior telephonic notice (immediately confirmed in writing, substantially in the form of Exhibit D (a "NOTICE OF BORROWING")), not later than 12:00 noon (New York City time) on the date which is one (1) Business Day prior to the Effective Date. Such Notice of Borrowing shall be irrevocable and shall specify (i) the aggregate principal amount of the Term Loan, (ii) the use of the proceeds of the Term Loan, and (iii) the proposed borrowing date, which must be a Business Day. The Agent and the Lenders may act without liability upon the basis of written, telecopied or telephonic notice believed by the Agent in good faith to be from the Administrative Borrower (or from any Authorized Officer thereof designated in writing purportedly from the Administrative Borrower to the Agent). The Borrowers hereby waive the right to dispute the Agent's record of the terms of any such telephonic Notice of Borrowing. The Agent and each Lender shall be entitled to rely conclusively on any Authorized Officer's authority to request the Term Loan on behalf of the Borrowers until the Agent receives written notice to the contrary. The Agent and the Lenders shall have no duty to verify the authenticity of the signature appearing on any written Notice of Borrowing. - 21 - (b) The Term Loan shall be made by the Lenders simultaneously and proportionately to their Pro Rata Shares of the Total Term Loan Commitment, it being understood that no Lender shall be responsible for any default by any other Lender in that other Lender's obligations to make the Term Loan requested hereunder, nor shall the Term Loan Commitment of any Lender be increased or decreased as a result of the default by any other Lender in that other Lender's obligation to make the Term Loan requested hereunder, and each Lender shall be obligated to make the Term Loan required to be made by it by the terms of this Agreement regardless of the failure by any other Lender. Section 2.03 REPAYMENT OF THE TERM LOAN; EVIDENCE OF DEBT. (a) The outstanding principal of the Term Loan, together with any Term Loan Accrued Interest Amount (subject to Section 2.04(a)(ii)), shall be repaid in full on the Final Maturity Date. (b) 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 the Term Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (c) The Agent shall maintain accounts in which it shall record (i) the amount of the Term Loan made hereunder, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrowers to each Lender hereunder and (iii) the amount of any sum received by the Agent hereunder for the account of the Lenders and each Lender's share thereof. (d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be PRIMA FACIE evidence of the existence and amounts of the obligations recorded therein; PROVIDED that the failure of any Lender or the Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrowers to repay the Term Loan in accordance with the terms of this Agreement. (e) Any Lender may request that the Term Loan made by it be evidenced by a promissory note. In such event, the Borrowers shall 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 a form furnished by the Agent and reasonably acceptable to the Administrative Borrower. Thereafter, the Term Loan evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 12.07) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns). Section 2.04 INTEREST. (a) TERM LOAN. (i) The Term Loan shall bear interest on the principal amount thereof from time to time outstanding, from the date of the Term Loan until such principal amount becomes due, and on any Term Loan Accrued - 22 - Interest Amount from time to time outstanding, at a rate per annum equal to the sum of (A) the lesser of (1) the Base Interest Rate plus the Applicable Margin and (2) 15.0% PLUS (B) 1.25%; PROVIDED that, in the absence of a continuing Event of Default, that portion of such interest equal to 1.25% per annum shall, in the absence of an election by the Borrowers to pay such interest currently, be accrued as a Term Loan Accrued Interest Amount, PROVIDED, FURTHER, that, the Borrowers may, on or prior to the date that is 5 Business Days prior to due date thereof, elect to pay all accrued and unpaid interest under this Section 2.04(a)(i)(B) currently. (ii) Notwithstanding anything to the contrary contained in Section 2.04(a)(i), (A) in the event that the Borrowers repay in full in cash all Obligations (other than the Term Loan Accrued Interest Amount) under this Agreement and the other Loan Documents on or prior to the first anniversary of the Effective Date, the Borrowers shall not be required to repay any of the Term Loan Accrued Interest Amount and (B) in the event that the Borrowers repay in full in cash all Obligations (other than the Term Loan Accrued Interest Amount) under this Agreement and the other Loan Documents on or prior to the second anniversary of the Effective Date, the Borrowers shall not be required to repay 50% of the Term Loan Accrued Interest Amount. (b) DEFAULT INTEREST. To the extent permitted by law, upon the occurrence and during the continuance of an Event of Default, the principal of, and all accrued and unpaid interest on, the Term Loan, fees, indemnities, or any other Obligations of the Loan Parties under this Agreement and the other Loan Documents, shall bear interest, from the date such Event of Default occurred until the date such Event of Default is cured or waived in writing in accordance herewith, at a rate per annum equal at all times to the Post-Default Rate. (c) INTEREST PAYMENT. Interest on the Term Loan shall be payable monthly, in arrears, on the first day of each month, commencing on the first day of the month following the month in which the Term Loan is made and at maturity (whether upon demand, by acceleration or otherwise). Interest at the Post-Default Rate shall be payable on demand. The Borrowers hereby authorize the Agent to, and the Agent may, from time to time, charge the Loan Account pursuant to Section 4.02 with the amount of any interest payment due and payable hereunder. (d) GENERAL. All interest shall be computed on the basis of a year of 360 days for the actual number of days, including the first day but excluding the last day, elapsed. For purposes of disclosure pursuant to the Interest Act (Canada), the annual rates of interest or fees to which the rates of interest or fees provided in this Agreement or in the Loan Documents (and stated herein or therein, as applicable, to be computed on the basis of a 360 day year or any other period of time less than a calendar year) are equivalent are the rates so determined multiplied by the actual number. (e) MAXIMUM RATE. All obligations hereunder in respect of interest are subject to Section 12.19 hereof. - 23 - Section 2.05 REDUCTION OF THE TERM LOAN COMMITMENT; PREPAYMENT OF THE TERM LOAN. (a) REDUCTION OF THE TERM LOAN COMMITMENT. The Total Term Loan Commitment shall terminate at 5:00 p.m. (New York City time) on the Effective Date. (b) OPTIONAL PREPAYMENT. The Borrowers may, upon at least five (5) Business Days' prior written notice to the Agent, prepay without penalty or premium the principal of the Term Loan, in whole or in part. Each prepayment made pursuant to this clause (b) shall be accompanied by the payment of accrued interest to the date of such payment on the amount prepaid. Each such prepayment shall be applied against the remaining installments of principal due on the Term Loan in the inverse order of maturity. (c) INTEREST AND FEES. Any prepayment made pursuant to this Section 2.05(c) shall be accompanied by accrued interest on the principal amount being prepaid to the date of prepayment, and if such prepayment would reduce the outstanding principal amount of the Term Loan to zero, such prepayment shall be accompanied by the payment of all fees accrued to such date pursuant to Section 2.06. Section 2.06 FEES. (a) CLOSING FEE. On or prior to the Effective Date, the Borrowers shall pay to the Agent for the account of the Lenders, in accordance with their Pro Rata Shares, a non-refundable closing fee (the "CLOSING FEE") equal to $300,000.00, which shall be deemed fully earned when paid. (b) ANNIVERSARY FEE. The Borrowers shall pay to the Agent for the account of the Lenders, in accordance with their Pro Rata Shares, a non-refundable anniversary fee (the "ANNIVERSARY FEE") in an amount equal to the product of (i) Anniversary Fee Percentage MULTIPLIED BY (ii) the outstanding principal amount of the Term Loan, which shall be deemed fully earned when paid and which shall be payable on each anniversary of the Effective Date. Section 2.07 SECURITIZATION. The Loan Parties hereby acknowledge that the Lenders and their Affiliates may sell or securitize the Term Loan (A "SECURITIZATION") through the pledge of the Term Loan as collateral security for loans to the Lenders or their Affiliates or through the sale of the Term Loan or the issuance of direct or indirect interests in the Term Loan, which loans to the Lenders or their Affiliates or direct or indirect interests will be rated by Moody's, Standard & Poor's or one or more other rating agencies (the "RATING AGENCIES"). The Loan Parties shall cooperate with the Lenders and their Affiliates to effect the Securitization including, without limitation, by (a) amending this Agreement and the other Loan Documents, and executing such additional documents, as reasonably requested by the Lenders in connection with the Securitization, PROVIDED THAT (i) any such amendment or additional documentation does not impose material additional costs on the Loan Parties and (ii) any such amendment or additional documentation does not materially adversely affect the rights, or materially increase the obligations, of the Loan Parties under the Loan Documents or change or affect in a manner adverse to the Loan Parties the financial terms of the Term Loan, (b) providing such information as may be reasonably requested by the - 24 - Lenders in connection with the rating of the Term Loan or the Securitization, and (c) providing in connection with any rating of the Term Loan a certificate (i) agreeing to indemnify the Lenders and their Affiliates, any of the Rating Agencies, or any party providing credit support or otherwise participating in the Securitization (collectively, the "SECURITIZATION PARTIES") for any losses, claims, damages or liabilities (the "LIABILITIES") to which the Lenders, their Affiliates or such Securitization Parties may become subject insofar as the Liabilities arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Loan Document or in any writing delivered by or on behalf of any Loan Party to the Lenders in connection with any Loan Document or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein, or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and such indemnity shall survive any transfer by the Lenders or their successors or assigns of the Term Loan and (ii) agreeing to reimburse the Lenders and their Affiliates for any legal or other expenses reasonably incurred by such Persons in connection with defending the Liabilities. Section 2.08 TAXES. (a) All payments made by any Loan Party hereunder or under any other Loan Document shall be made without set-off, counterclaim, deduction or other defense. All such payments shall be made free and clear of and without deduction for any present or future income, franchise, sales, use, excise, stamp or other taxes, levies, imposts, deductions, charges, fees, withholdings, restrictions or conditions of any nature now or hereafter imposed, levied, collected, withheld or assessed by any jurisdiction (whether pursuant to United States or Canadian federal, state, provincial or local law or any foreign law) or by any political subdivision or taxing authority thereof or therein, and all interest, penalties or additional amounts, excluding taxes on the net income of any Lender or the Agent imposed by the jurisdiction in which such Lender or the Agent is organized or any political subdivision thereof or taxing authority thereof or any jurisdiction in which such Person's principal or applicable lending office is located or any political subdivision thereof or taxing authority thereof (such nonexcluded taxes, levies, imposts, deductions, charges, fees, withholdings, restrictions, conditions, interest, penalties and additional amounts being hereinafter collectively referred to as "TAXES"). If any Loan Party shall be required to deduct or to withhold any Taxes from or in respect of any amount payable hereunder or under any other Loan Document, (i) the amount so payable shall be increased so that after making all required deductions and withholdings (including Taxes on amounts payable pursuant to this sentence) the Lenders or the Agent, as the case may be, receive an amount equal to the sum they would have received had no such deduction or withholding been made, (ii) such Loan Party shall make such deduction or withholding, (iii) such Loan Party shall pay the full amount deducted or withheld to the relevant taxation authority in accordance with applicable law, and (iv) as promptly as possible thereafter, such Loan Party shall send the Lenders and the Agent an official receipt (or, if an - 25 - official receipt is not available, such other documentation as shall be satisfactory to the Lenders or the Agent, as the case may be) evidencing payment of the amount or amounts so deducted or withheld. In addition, each Loan Party agrees to pay any present or future taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery, performance, recordation or filing of, or otherwise with respect to, this Agreement or any other Loan Document other than the foregoing excluded taxes (hereinafter referred to as "OTHER TAXES"). (b) The Loan Parties hereby jointly and severally indemnify and agree to hold the Lenders and the Agent harmless from and against Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.08) paid by any Lender or the Agent and any liability (including penalties, interest and expenses for nonpayment, late payment or otherwise) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Such indemnification shall be paid within 10 days from the date on which any such Lender or the Agent makes written demand therefor, which demand shall identify in reasonable detail the nature and amount of such Taxes or Other Taxes. (c) If any Loan Party fails to perform any of its obligations under this Section 2.08, the Loan Parties shall indemnify the Lenders and the Agent for any taxes, interest or penalties that may become payable as a result of any such failure. The obligations of the Loan Parties under this Section 2.08 shall survive the termination of this Agreement and the payment of the Term Loan and all other amounts payable hereunder. ARTICLE III [INTENTIONALLY OMITTED] ARTICLE IV FEES, PAYMENTS AND OTHER COMPENSATION Section 4.01 AUDIT AND COLLATERAL MONITORING FEES. The Borrowers acknowledge that pursuant to Section 7.01(f), representatives of the Agent and the Lenders may visit any or all of the Loan Parties and/or conduct audits, inspections, valuations and/or field examinations of any or all of the Loan Parties. The Borrowers agree to pay (i) $1,500 per day per examiner plus the examiner's out-of-pocket costs and reasonable expenses incurred in connection with all such visits, audits, inspections, valuations and field examinations and (ii) the cost of all visits, audits, inspections, valuations and field examinations conducted by a third party on behalf of the Agent or the Lenders. Section 4.02 PAYMENTS; COMPUTATIONS AND STATEMENTS. (a) The Borrowers will make each payment under this Agreement not later than 12:00 noon (New York City time) on the day when due, in lawful money of the United States of America and in immediately available funds, to the Agent's Account. All payments received by the Agent after 12:00 noon (New York City time) on any Business Day will be credited to the Loan Account on the next succeeding Business Day. All payments shall be made by the Borrowers without - 26 - set-off, counterclaim, deduction or other defense to the Agent and the Lenders. After receipt, the Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal ratably to the Lenders in accordance with their Pro Rata Shares and like funds relating to the payment of any other amount payable to any Lender to such Lender, in each case to be applied in accordance with the terms of this Agreement, provided that the Agent will cause to be distributed all interest and fees received from or for the account of the Borrowers not less than once each month and in any event promptly after receipt thereof. The Lenders and the Borrowers hereby authorize the Agent to, and the Agent may, from time to time, charge the Loan Account of the Borrowers with any amount due and payable by the Borrowers under any Loan Document. For greater certainty, such amounts charged to the Loan Account will not constitute part of the principal amount of the Term Loan. Each of the Lenders and the Borrowers agree that the Agent shall have the right to make such charges whether or not any Default or Event of Default shall have occurred and be continuing. Any amount charged to the Loan Account of the Borrowers shall be deemed an Obligation of the Borrowers hereunder made by the Lenders to the Borrowers, funded by the Agent on behalf of the Lenders. The Lenders and the Borrowers confirm that any charges which the Agent may so make to the Loan Account of the Borrowers as herein provided will be made as an accommodation to the Borrowers and solely at the Agent's discretion. Whenever any payment to be made under any such Loan Document shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall in such case be included in the computation of interest or fees, as the case may be. All computations of fees shall be made by the Agent on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day) occurring in the period for which such fees are payable. Each determination by the Agent of an interest rate or fees hereunder shall be conclusive and binding for all purposes in the absence of manifest error. (b) The Agent shall provide the Administrative Borrower, promptly after the end of each calendar month, a summary statement (in the form from time to time used by the Agent) of the opening and closing daily balances in the Loan Account of the Borrowers during such month, the amounts and dates of all payments on account of the Term Loan during such month, the amount of interest accrued on the Term Loan during such month, and the amount and nature of any charges to the Loan Account made during such month on account of fees, commissions, expenses and other Obligations. All entries on any such statement shall be presumed to be correct and, 30 days after the same is sent, shall be final and conclusive absent manifest error. Section 4.03 SHARING OF PAYMENTS, ETC. If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of any Obligation in excess of its ratable share of payments on account of similar obligations obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in such similar obligations held by them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; PROVIDED, HOWEVER, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender's ratable share (according to the proportion - 27 - of (i) the amount of such Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender of any interest or other amount paid by the purchasing Lender in respect of the total amount so recovered). The Borrowers agree that any Lender so purchasing a participation from another Lender pursuant to this Section 4.03 may, to the fullest extent permitted by law, exercise all of its rights (including the Lender's right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrowers in the amount of such participation. Section 4.04 APPORTIONMENT OF PAYMENTS. Subject to Section 2.02 hereof and to any written agreement among the Agent and/or the Lenders: (a) all payments of principal and interest in respect of the Term Loan, all payments of fees (other than the fees set forth in Section 2.06 hereof and the audit and collateral monitoring fee provided for in Section 4.01) and all other payments in respect of any other Obligations, shall be allocated by the Agent among such of the Lenders as are entitled thereto, in proportion to their respective Pro Rata Shares or otherwise as provided herein or, in respect of payments not made on account of the Term Loan, as designated by the Person making payment when the payment is made. (b) After the occurrence and during the continuance of an Event of Default, the Agent may, and upon the direction of the Required Lenders shall, apply all payments in respect of any Obligations and all proceeds of the Collateral, subject to the provisions of this Agreement, (i) FIRST, to pay the Obligations in respect of any fees, expense reimbursements, indemnities and other amounts then due to the Agent until paid in full; (ii) SECOND, to pay interest due in respect of the Agent Advances until paid in full; (iii) THIRD, to pay principal of the Agent Advances until paid in full; (iv) FOURTH, ratably to pay the Obligations in respect of any fees and indemnities then due to the Lenders until paid in full; (v) FIFTH, ratably to pay interest due in respect of the Term Loan until paid in full; (vi) SIXTH, ratably to pay principal of the Term Loan until paid in full, and (vii) SEVENTH, to the ratable payment of all other Obligations then due and payable. (c) In each instance, so long as no Event of Default has occurred and is continuing, Section 4.04(b) shall not be deemed to apply to any payment by the Borrowers specified by the Borrowers to the Agent to be for the prepayment of all or part of the principal of the Term Loan in accordance with the terms and conditions of Section 2.05. (d) For purposes of Section 4.04(b), "paid in full" with respect to interest shall include interest accrued after the commencement of any Insolvency Proceeding irrespective of whether a claim for such interest is allowable in such Insolvency Proceeding. (e) In the event of a direct conflict between the priority provisions of this Section 4.04 and other provisions contained in any other Loan Document, it is the intention of the parties hereto that both such priority provisions in such documents shall be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any - 28 - actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 4.04 shall control and govern. Section 4.05 INCREASED COSTS AND REDUCED RETURN. (a) If any Lender or the Agent shall have determined that the adoption or implementation of, or any change in, any law, rule, treaty or regulation, or any policy, guideline or directive of, or any change in, the interpretation or administration thereof by, any court, central bank or other administrative or Governmental Authority, or compliance by any Lender or the Agent or any Person controlling any such Lender or the Agent with any directive of, or guideline from, any central bank or other Governmental Authority or the introduction of, or change in, any accounting principles applicable to any Lender or the Agent or any Person controlling any such Lender or the Agent (in each case, whether or not having the force of law), shall (i) subject any Lender or the Agent, or any Person controlling any such Lender or the Agent to any tax, duty or other charge with respect to this Agreement or the Term Loan made by such Lender or the Agent, or change the basis of taxation of payments to any Lender or the Agent or any Person controlling any such Lender or the Agent of any amounts payable hereunder (except for taxes on the overall net income of any Lender or the Agent or any Person controlling any such Lender or the Agent), (ii) impose, modify or deem applicable any reserve, special deposit or similar requirement against the Term Loan or against assets of or held by, or deposits with or for the account of, or credit extended by, any Lender or the Agent or any Person controlling any such Lender or the Agent or (iii) impose on any Lender or the Agent or any Person controlling any such Lender or the Agent any other condition regarding this Agreement or the Term Loan, and the result of any event referred to in clauses (i), (ii) or (iii) above shall be to increase the cost to any Lender or the Agent of making the Term Loan or agreeing to make the Term Loan, or to reduce any amount received or receivable by any Lender or the Agent hereunder, then, upon demand by any such Lender or the Agent, the Borrowers shall pay to such Lender or the Agent such additional amounts as will compensate such Lender or the Agent for such increased costs or reductions in amount. (b) If any Lender or the Agent shall have determined that any Capital Guideline or the adoption or implementation of, or any change in, any Capital Guideline by the Governmental Authority charged with the interpretation or administration thereof, or compliance by any Lender or the Agent or any Person controlling such Lender or the Agent with any Capital Guideline or with any request or directive of any such Governmental Authority with respect to any Capital Guideline, or the implementation of, or any change in, any applicable accounting principles (in each case, whether or not having the force of law), either (i) affects or would affect the amount of capital required or expected to be maintained by any Lender or the Agent or any Person controlling such Lender or the Agent, and any Lender or the Agent determines that the amount of such capital is increased as a direct or indirect consequence of the Term Loan or any Lender's or the Agent's or any such other controlling Person's other obligations hereunder, or (ii) has or would have the effect of reducing the rate of return on any Lender's or the Agent's or any such other controlling Person's capital to a level below that which such Lender or the Agent or such controlling Person could have achieved but for such circumstances as a consequence of the Term Loan or any agreement to make the Term Loan, or such Lender's or the Agent's or such other controlling Person's other obligations hereunder (in each case, taking into consideration, such Lender's or the Agent's or such other controlling - 29 - Person's policies with respect to capital adequacy), then, upon demand by any Lender or the Agent, the Borrowers shall pay to such Lender or the Agent from time to time such additional amounts as will compensate such Lender or the Agent for such cost of maintaining such increased capital or such reduction in the rate of return on such Lender's or the Agent's or such other controlling Person's capital. (c) All amounts payable under this Section 4.05 shall bear interest from the date that is 10 days after the date of demand by any Lender or the Agent until payment in full to such Lender or the Agent at the Reference Rate. A certificate of such Lender or the Agent claiming compensation under this Section 4.05, specifying the event herein above described and the nature of such event shall be submitted by such Lender or the Agent to the Administrative Borrower, setting forth the additional amount due and an explanation of the calculation thereof, and such Lender's or the Agent's reasons for invoking the provisions of this Section 4.05, and shall be final and conclusive absent manifest error. Section 4.06 JOINT AND SEVERAL LIABILITY OF THE BORROWERS. (a) Notwithstanding anything in this Agreement or any other Loan Document to the contrary, each of the Borrowers hereby accepts joint and several liability hereunder and under the other Loan Documents in consideration of the financial accommodations to be provided by the Agent and the Lenders under this Agreement and the other Loan Documents, for the mutual benefit, directly and indirectly, of each of the Borrowers and in consideration of the undertakings of the other Borrower to accept joint and several liability for the Obligations. Each of the Borrowers, jointly and severally, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Borrower, with respect to the payment and performance of all of the Obligations (including, without limitation, any Obligations arising under this Section 4.06), it being the intention of the parties hereto that all of the Obligations shall be the joint and several obligations of each of the Borrowers without preferences or distinction among them. If and to the extent that any of the Borrowers shall fail to make any payment with respect to any of the Obligations as and when due or to perform any of the Obligations in accordance with the terms thereof, then in each such event, the other Borrower will make such payment with respect to, or perform, such Obligation. Subject to the terms and conditions hereof, the Obligations of each of the Borrowers under the provisions of this Section 4.06 constitute the absolute and unconditional, full recourse Obligations of each of the Borrowers, enforceable against each such Person to the full extent of its properties and assets. (b) The provisions of this Section 4.06 are made for the benefit of the Agent, the Lenders and their successors and assigns, and may be enforced by them from time to time against any or all of the Borrowers as often as occasion therefor may arise and without requirement on the part of the Agent, the Lenders or such successors or assigns first to marshal any of its or their claims or to exercise any of its or their rights against any of the other Borrowers or to exhaust any remedies available to it or them against any of the other Borrowers or to resort to any other source or means of obtaining payment of any of the Obligations hereunder or to elect any other remedy. The provisions of this Section 4.06 shall remain in effect until all of the Obligations shall have been paid in full or otherwise fully satisfied. - 30 - (c) Each of the Borrowers hereby agrees that it will not enforce any of its rights of contribution or subrogation against the other Borrower with respect to any liability incurred by it hereunder or under any of the other Loan Documents, any payments made by it to the Agent or the Lenders with respect to any of the Obligations or any Collateral, until such time as all of the Obligations have been paid in full in cash. Any claim which any Borrower may have against the other Borrower with respect to any payments to the Agent or the Lenders hereunder or under any other Loan Documents are hereby expressly made subordinate and junior in right of payment, without limitation as to any increases in the Obligations arising hereunder or thereunder, to the prior payment in full in cash of the Obligations. ARTICLE V CONDITIONS TO THE TERM LOAN Section 5.01 CONDITIONS PRECEDENT TO EFFECTIVENESS. This Agreement shall become effective as of the Business Day (the "EFFECTIVE DATE") when each of the following conditions precedent shall have been satisfied in a manner satisfactory to the Agent: (a) PAYMENT OF FEES, ETC. The Borrowers shall have paid on or before the date of this Agreement all fees, costs, expenses and taxes then payable pursuant to Section 2.06 and Section 12.04. (b) REPRESENTATIONS AND WARRANTIES; NO EVENT OF DEFAULT. The following statements shall be true and correct: (i) the representations and warranties contained in ARTICLE VI and in each other Loan Document, certificate or other writing delivered to the Agent or any Lender pursuant hereto or thereto on or prior to the Effective Date are true and correct on and as of the Effective Date as though made on and as of such date and (ii) no Default or Event of Default shall have occurred and be continuing on the Effective Date or would result from this Agreement or the other Loan Documents becoming effective in accordance with its or their respective terms. (c) LEGALITY. The making of the Term Loan shall not contravene any law, rule or regulation applicable to the Agent or any Lender. (d) DELIVERY OF DOCUMENTS. The Agent shall have received on or before the Effective Date the following, each in form and substance satisfactory to the Agent and, unless indicated otherwise, dated the Effective Date: (i) a Borrower Security Agreement, duly executed by each Loan Party; (ii) a Debenture, duly executed by the applicable Loan Party; (iii) an Intellectual Property Security Agreement executed by each Loan Party and by any Affiliate of a Loan Party holding intellectual property rights in Canada; - 31 - (iv) a Pledge Agreement, duly executed by each Loan Party; (v) evidence of the recording of the Debenture in such office or offices as may be necessary or, in the opinion of the Agent, desirable to perfect the Lien over the Real Property Asset purported to be created thereby or to otherwise protect the rights of the Agent and the Lenders thereunder; (vi) a Title Insurance Policy with respect to each Debenture registered against Real Property Assets, dated as of the Effective Date; (vii) a survey of each Mortgaged Property, in form and substance satisfactory to the Agent, certified to the Agent and to the issuer of the relevant Title Insurance Policy; (viii) a copy of each letter issued by the applicable Governmental Authority, evidencing each Mortgaged Property's compliance with all applicable building codes, fire codes, other health and safety rules and regulations, parking, density and height requirements and other building and zoning laws; (ix) appropriate registration forms under the PPSA, each duly filed in such office or offices as may be necessary or, in the opinion of the Agent, desirable to perfect the security interests purported to be created by the Collateral Documents; (x) certified copies of all PPSA registrations recorded in the offices referred to in paragraph (ix) above, none of which, except as otherwise agreed in writing by the Agent, shall cover any of the Collateral and the results of searches for any tax Lien and judgment Lien filed against such Person or its property, which results, except as otherwise agreed to in writing by the Agent, shall not show any such Liens; (xi) the US Intercreditor Agreement, duly executed by the Working Capital Agent and the Working Capital Lenders, and acknowledged by the Loan Parties; (xii) a PPSA estoppel letter in respect of any Permitted Liens for which PPSA registrations have been filed listing a Loan Party as debtor; (xiii) a copy of the resolutions of each Loan Party, certified as of the Effective Date by an Authorized Officer thereof, authorizing (A) the borrowings hereunder and the transactions contemplated by the Loan Documents to which such Loan Party is or will be a party, (B) approval of share transfers pursuant to the Pledge Agreements, and (C) the execution, delivery and performance by such Loan Party of each Loan Document to which such Loan Party is or will be a party and the execution and delivery of the other documents to be delivered by such Person in connection herewith and therewith; (xiv) a certificate of an Authorized Officer of each Loan Party, certifying the names and true signatures of the representatives of such Loan Party authorized to sign each Loan Document to which such Loan Party is or will be a party and the other documents to be executed and delivered by - 32 - such Loan Party in connection herewith and therewith, together with evidence of the incumbency of such authorized officers; (xv) a certificate of status or similar certificate with respect to the jurisdiction in which each Loan Party is incorporated; (xvi) a copy of the articles and by-laws, limited liability company agreement, operating agreement, agreement of limited partnership or other organizational document of each Loan Party, together with all amendments thereto, certified as of the Effective Date by an Authorized Officer of such Loan Party; (xvii) an opinion from counsel to the Borrowers, Blake Cassels & Graydon LLP, in form and substance satisfactory to the Agent, as to such matters as the Agent may reasonably request; (xviii) a certificate of an Authorized Officer of each Loan Party, certifying as to the matters set forth in subsection (b) of this Section 5.01; (xix) a certificate of a Designated Financial Officer of each Loan Party, certifying as to the solvency of such Loan Party, which certificate shall be satisfactory in form and substance to the Agent; (xx) evidence of the insurance coverage required by Section 7.01(e) and the terms of each Debenture and such other insurance coverage with respect to the business and operations of the Loan Parties as the Agent may reasonably request, in each case, where requested by the Agent, with such endorsements as to the named insureds or loss payees thereunder as the Agent may request and providing that such policy may be terminated or canceled (by the insurer or the insured thereunder) only upon 30 days' prior written notice to the Agent and each such named insured or loss payee, together with evidence of the payment of all premiums due in respect thereof for such period as the Agent may request; (xxi) a certificate of an Authorized Officer of the Administrative Borrower, certifying the names and true signatures of the persons that are authorized to provide the Notice of Borrowing and all other notices under this Agreement and the other Loan Documents; (xxii) a Landlord's Waiver and Consent, executed by each landlord with respect to each Material Leasehold Property, together with a copy of the relevant Lease, and all amendments thereto, between the applicable Loan Party and the landlord party thereto; (xxiii) a satisfactory ASTM 1527-00 Phase I Environmental Site Assessment ("Phase I ESA") (and, if requested by the Agent based upon the results of such Phase I ESA, an ASTM 1527-00 Phase II Environmental Site Assessment) of each Mortgaged Property, in form and substance and by an independent firm satisfactory to the Agent; and - 33 - (xxiv) such other agreements, instruments, approvals, opinions and other documents, each satisfactory to the Agent in form and substance, as the Agent may reasonably request. (e) MATERIAL ADVERSE EFFECT. The Agent shall have determined, in its sole judgment, that no event or development shall have occurred since September 30, 2002 which could have a Material Adverse Effect. (f) WORKING CAPITAL FINANCING. On or prior to the Effective Date, the Agent shall have received evidence that the transactions contemplated by the US Financing Agreement and the Working Capital Loan Agreement shall have been consummated. (g) APPROVALS. All consents, authorizations and approvals of, and filings and registrations with, and all other actions in respect of, any Governmental Authority or other Person required in connection with the making of the Term Loan or the conduct of the Loan Parties' business shall have been obtained and shall be in full force and effect. (h) PROCEEDINGS; RECEIPT OF DOCUMENTS. All proceedings in connection with the making of the Term Loan and the other transactions contemplated by this Agreement and the other Loan Documents, and all documents incidental hereto and thereto, shall be satisfactory to the Agent and its counsel, and the Agent and such counsel shall have received all such information and such counterpart originals or certified or other copies of such documents as the Agent or such counsel may reasonably request. (i) MANAGEMENT REFERENCE CHECKS. The Agent shall have received satisfactory reference checks for, and shall have had an opportunity to meet with, key management of each Loan Party. (j) DUE DILIGENCE. The Agent shall have completed its business, legal and collateral due diligence with respect to each Loan Party and the results thereof shall be acceptable to the Agent, in its sole and absolute discretion. Without limiting the foregoing, the Agent shall have received a Field Survey and Audit, dated not earlier than 30 days prior to the Effective Date, and such Field Survey and Audit and the results thereof shall be acceptable to the Agent, in its sole and absolute discretion. ARTICLE VI REPRESENTATIONS AND WARRANTIES Section 6.01 REPRESENTATIONS AND WARRANTIES. Each Loan Party hereby represents and warrants to the Agent and the Lenders as follows: (a) ORGANIZATION; POWERS. Each of the Loan Parties has been duly formed or organized and is validly existing and in good standing under the laws of its jurisdiction of organization or formation. Each of the Loan Parties has all requisite power to own its property and authority to carry on its business as now conducted and as presently contemplated, and is qualified to do - 34 - business in, and is in good standing and duly authorized to do business in, every jurisdiction where such qualification is required, except where the failure to have such power or authority or to be so qualified or in good standing, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. (b) AUTHORIZATION; ENFORCEABILITY. The borrowing of the Term Loan and the grant of security interests pursuant to the Loan Documents are within the power and authority of each of the Loan Parties, as applicable and have been duly authorized by all necessary action on the part of the Loan Parties, as applicable. This Agreement and the other Loan Documents have been duly authorized, executed and delivered by the Loan Parties, as applicable, and constitute legal, valid and binding obligations of the Loan Parties, as applicable, enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. (c) GOVERNMENTAL APPROVALS; NO CONFLICTS. The borrowing of the Term Loan and the grant of the security interests pursuant to the Loan Documents (i) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority which has not been obtained, except as disclosed on Schedule 6.01(c), (ii) will not violate any applicable law, policy or regulation or the organizational documents of the Loan Parties or any order of any Governmental Authority, (iii) will not violate or result in a default under any material term of any indenture, agreement or other instrument binding upon the Loan Parties, or any of their assets, or give rise to a right thereunder to require any payment to be made by the Loan Parties, and (iv) except for the Liens created by the Loan Documents, will not result in the creation or imposition of any Lien on any asset of the Loan Parties. (d) FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE. (i) The Loan Parties have heretofore delivered to the Agent and the Lenders the following financial statements: (A) the consolidated balance sheets and statements of operations and cash flows of the Parent and its Subsidiaries, as of and for the Fiscal Years ended March 31, 2000, March 31, 2001, and March 31, 2002, audited and accompanied by an opinion of the Parent's independent public accountants; (B) the unaudited consolidated balance sheet and statements of operations and cash flows of the Parent and its Subsidiaries, as of and for the fiscal year-to-date period ended September 30, 2002, certified by a Designated Financial Officer of the Parent that such financial statements fairly present the financial condition of the Parent and its Subsidiaries as at such date and the results of the operations of the Parent and its Subsidiaries for the period ended on such date and that all such financial statements, including the related schedules and notes thereto have been prepared in all material respects in accordance with GAAP applied consistently throughout the periods involved, except as disclosed on Schedule 6.01(d); and - 35 - (C) the projected consolidated balance sheets, statements of operations and cash flows, for the Parent and its Subsidiaries for the Fiscal Years ended March 31, 2003 through March 31, 2007. Except as disclosed on Schedule 6.01(d), such financial statements (except for the projections) present fairly, in all material respects, the respective consolidated financial position and results of operations and cash flows of the respective entities as of such respective dates and for such periods in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in the case of such unaudited or pro forma statements. The projections were prepared by the Parent in good faith and were based on assumptions that were reasonable when made. (ii) Except as disclosed on Schedule 6.01(d), since September 30, 2002, there has been no material adverse change in the business, assets, operations or condition, financial or otherwise, of the Loan Parties from that set forth in the September 30, 2002 financial statements referred to in clause (B) of paragraph (i) above. (iii) None of the Loan Parties have on the date hereof any contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments in each case that are material, except as referred to or reflected or provided for in the financial statements described in this Section 6.01(d) or in Schedule 6.01(d) hereto, or as otherwise permitted pursuant to this Agreement. (e) PROPERTIES. (i) Each of the Loan Parties has good and marketable title to, or valid, subsisting and enforceable leasehold interests in, all Property material to its business. All machinery and equipment of each of the Loan Parties is in good operating condition and repair, and all necessary replacements of and repairs thereto have be made so as to preserve and maintain the value and operating efficiency of such machinery and equipment. (ii) Set forth on Schedule 6.01(e) hereto is a complete list of all Patents, Trademarks and Copyrights. The Loan Parties own, or are licensed to use, all Patents, Trademarks and Copyrights and other intellectual property material to their business (collectively, the "PROPRIETARY RIGHTS"), and to the knowledge of the Loan Parties, the use thereof by the Loan Parties does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. (iii) Schedule 6.01(e) clearly identifies all Patents, Trademarks and Copyrights that have been duly registered in, filed in or issued by the PTO or the United States Register of Copyrights or the Canadian Intellectual Property Office, as applicable (collectively, the "REGISTERED PROPRIETARY RIGHTS"). The Registered Proprietary Rights have been properly maintained and renewed in accordance with all applicable provisions of law and administrative regulations in the United States or Canada, as applicable. The Loan Parties have taken commercially reasonable steps to protect their Registered Proprietary Rights and to maintain the confidentiality of all Proprietary Rights that are not generally in the public domain. - 36 - (iv) As of the date hereof, Schedule 6.01(e) contains a true, accurate and complete list of (A) all Real Property Assets, whether owned or leased, and (B) all Leases, subleases or assignments of Leases (together with all amendments, modifications, supplements, renewals or extensions of any thereof) affecting each Leasehold Property, regardless of whether the Loan Parties are the landlord or tenant (whether directly or as an assignee or successor in interest) under such Lease, sublease or assignment. Except as specified in Schedule 6.01(e), each agreement listed in clause (B) of the immediately preceding sentence is in full force and effect and none of the Loan Parties has any knowledge of any default that has occurred and is continuing thereunder, and each such agreement constitutes the legal, valid and binding obligation of the Loan Parties, as applicable, enforceable against the Loan Parties, as applicable, in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally or by equitable principles. (f) LITIGATION AND ENVIRONMENTAL MATTERS. (i) Except as set forth on Schedule 6.01(f), there are no Environmental Actions of any kind by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Loan Parties, threatened against or affecting the Loan Parties that (A) if adversely determined, could have a Material Adverse Effect or (B) relates to this Agreement or any other Loan Document or any transaction contemplated hereby or thereby. (ii) The Loan Parties have taken all necessary steps to investigate the past and present condition and usage of the Real Property Assets and the operations conducted thereon and, based upon such diligent investigation, have determined, except as set forth on Schedule 6.01(f), that: (A) none of the Loan Parties or any operator of the Real Property Assets currently or formerly owned, leased or operated by the Loan Parties or any predecessor-in-interest or any operations thereon are in violation or alleged violation, in any material respect, of any Environmental Laws; (B) None of the Loan Parties have become subject to any Environmental Liabilities and do not know of any basis for any Environmental Liabilities which could reasonably be expected to result in excess of $200,000.00 individually or $4,000,000.00 in the aggregate; (C) None of the Loan Parties have received notice from any third party including, without limitation, any Governmental Authority, (1) that any one of them has been identified by a Governmental Authority as a potentially responsible party under Environmental Law; (2) that the Loan Parties or any predecessor-in-interest has generated, transported or disposed of any Hazardous Materials at any site at which a Governmental Authority has conducted or has ordered a party to conduct a Remedial Action, removal or other response action pursuant to any Environmental Law; or (3) that the Loan Parties are or shall be a named party to any Environmental Action arising out of any third party's incurrence of costs, expenses, losses or - 37 - damages of any kind whatsoever in connection with the Release of Hazardous Materials; (D) (1) no portion of the Real Property Assets currently or formerly owned, leased or operated by a Loan Party has been used for the generation, handling, processing, storage or disposal of Hazardous Materials except in accordance in all material respects with applicable Environmental Laws; and no underground tank or other underground storage receptacle for Hazardous Materials is located on any portion of the Real Property Assets currently or formerly owned, leased or operated by a Loan Party; (2) there have been no Releases or threatened Releases of Hazardous Materials on, upon, into or from the properties of a Loan Party, which Releases would have a material adverse effect on the value of any of the Real Property Assets or adjacent properties; (3) to the best knowledge of the Loan Parties, there have been no generation, storage, disposal or Releases on, upon, from or into any real property in the vicinity of any of the Real Property Assets which, through soil or groundwater contamination, may have come to be located on, and which would have a material adverse effect on the value of, any Real Property Asset; and (4) in addition, any Hazardous Materials that have been generated on any of the Real Property Assets currently or formerly owned, leased or operated by the Loan Parties or any predecessor-in-interest have been transported offsite only by carriers having an identification number issued by any Governmental Authority, treated or disposed of, to the knowledge of the Loan Parties only by treatment or disposal facilities maintaining valid permits as required under applicable Environmental Laws, which transporters and facilities have been and are, to the best knowledge of the Loan Parties operating in compliance in all material respects with such permits and applicable Environmental Laws; and (E) none of the Loan Parties or any of the Real Property Assets are subject to any applicable Environmental Law requiring the performance of Hazardous Material site assessments, or the removal or remediation of Hazardous Materials, or the giving of notice to any Governmental Authority or the recording or delivery to other Persons of an environmental disclosure document or statement by virtue of the transactions set forth herein and contemplated hereby, or as a condition to the recording of any Mortgage or to the effectiveness of any other transactions contemplated hereby. (iii) Since the date of this Agreement, there has been no change in the status of the Disclosed Matters that, individually or in the aggregate, has had, or materially increased the likelihood of having, a Material Adverse Effect. (g) COMPLIANCE WITH LAWS AND AGREEMENTS. Except as set forth on Schedule 6.01(g), each of the Loan Parties is in material compliance with all laws, decrees, judgments, licenses, rules, regulations, policies, permits, approvals and orders of any Governmental Authority applicable to it, its property or the operation of its business and all material terms of indentures, agreements and other instruments binding upon it or its property. (h) INVESTMENT AND HOLDING COMPANY STATUS. None of the Loan Parties is (i) an "investment company", or an "affiliated company" or a "principal underwriter" of an "investment company", as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended, (ii) a "holding company", or a "subsidiary company" of a "holding company", or an - 38 - "affiliate" of a "holding company", as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935, as amended or (iii) a "bank holding company" as defined in, or subject to regulation under, the Bank Holding Company Act of 1956, as amended. (i) TAXES. Except as set forth on Schedule 6.01(i), each of the Loan Parties has timely made, filed or caused to be filed all federal, state, provincial and local tax returns, declarations and reports required to have been filed or made and has paid or caused to be paid all taxes, assessments and other governmental charges required to have been paid by it, except (A) as of the Effective Date, taxes that are being contested in good faith by appropriate proceedings, so long as such contest operates to suspend the enforcement of compliance therewith, the collection thereof and/or the imposition of any penalty, fine or Lien with respect thereto, and for which the Loan Parties have set aside on books adequate reserves with respect thereto in accordance with GAAP, which reserves shall be acceptable to Agent and (B) after the Effective Date, as permitted by Section 7.01(d). There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and none of the officers of the Loan Parties know of any basis for any such claim. (j) ERISA; CANADIAN PLANS. Except as set forth on Schedule 6.01(j), none of the Loan Parties have any Pension Plans or Canadian Pension Plans. No ERISA Event has occurred or is reasonably expected to occur with respect to any Plan or Canadian Plan. None of the Loan Parties have a present intention to terminate any Pension Plan or Canadian Pension Plans (except in connection with the transactions described in Schedules 7.02(d)(ii) and 7.02(d)(iii)), with respect to which the Loan Parties would incur a cost of more than $100,000 to terminate such Plan or Canadian Plans, as applicable, including amounts required to be contributed to fund such Plan or Canadian Plan, as applicable, upon termination thereof and all costs and expenses associated therewith, including, without limitation, attorneys' and actuaries' fees and expenses in connection with such termination and reasonable expenses and settlement or judgment costs and attorneys' fees and expenses in connection with any litigation related to such termination. There are no pending, or to the best of the knowledge of the Loan Parties, threatened claims, actions, proceedings or lawsuits (other than for the claims in the normal course), asserted or instituted against (i) any Canadian Plan or Canadian Pension Plan or its assets; (ii) any fiduciary with respect to any Canadian Plan or Canadian Pension Plan. All Canadian Plans and Canadian Pension Plans applicable to the Loan Parties comply, in all material respects, with the provisions of Applicable Canadian Pension Laws. All necessary governmental approvals have been obtained in respect of the operation of any Canadian Plan or Canadian Pension Plan or any Loan Party. (k) DISCLOSURE. As of the Effective Date, the Loan Parties have disclosed to the Agent all material agreements, instruments and corporate or other restrictions to which the Loan Parties are subject after the Effective Date, and all other matters known to the Loan Parties, that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. The organizational structure of the Parent and its Subsidiaries is as set forth on Schedule 6.01(l). The information, reports, financial statements, exhibits and schedules furnished at or prior to the Effective Date in writing by or on behalf of the Loan Parties to the Agent in connection with the negotiation, preparation or delivery of this Agreement and the other Loan Documents or included herein or therein or delivered pursuant hereto or thereto, at the - 39 - Effective Date, when taken as a whole do not contain any untrue statement of material fact or omit to state any material fact necessary to make the statements herein or therein, in light of the circumstances under which they were made, not materially misleading. All written information furnished after the Effective Date by the Loan Parties to the Agent and/or the Lenders in connection with this Agreement and the other Loan Documents and the transactions contemplated hereby and thereby will be true, complete and accurate in every material respect, or (in the case of pro forma information and projections) prepared in good faith based on reasonable assumptions, on the date as of which such information is stated or certified. There is no fact known to the Loan Parties that could reasonably be expected to have a Material Adverse Effect that has not been disclosed herein, in the other Loan Documents or in a report, financial statement, exhibit, schedule, disclosure letter or other writing furnished to the Agent for use in connection with the transactions contemplated hereby or thereby. (l) CAPITALIZATION. As of the Effective Date, the capital structure and ownership of the Subsidiaries of the Parent are correctly described on Schedule 6.01(l). As of the Effective Date, the authorized, issued and outstanding Capital Stock of the Parent and each of its Subsidiaries consists of the Capital Stock described on Schedule 6.01(l), all of which is duly and validly issued and outstanding, fully paid and nonassessable. Except as set forth on Schedule 6.01(l), as of the Effective Date, (x) there are no outstanding Equity Rights with respect to the Parent or any of its Subsidiaries and, (y) there are no outstanding obligations of the Parent or any of its Subsidiaries to repurchase, redeem, or otherwise acquire any shares of Capital Stock of or other interest in the Parent or any of its Subsidiaries, nor are there any outstanding obligations of the Parent or any of its Subsidiaries to make payments to any Person, such as "phantom stock" payments, where the amount thereof is calculated with reference to the fair market value or equity value of the Parent or any of its Subsidiaries. (m) SUBSIDIARIES. (i) Set forth on Schedule 6.01(m) is a complete and correct list of all Subsidiaries of the Parent as of the date hereof, together with, for each such Subsidiary, (A) the jurisdiction of organization of such Subsidiary, (B) each Person holding ownership interests in such Subsidiary and (C) the nature of the ownership interests held by each such Person and the percentage of ownership of such Subsidiary represented by such ownership interests. Except as disclosed in Schedule 6.01(m), (x) the Parent and each Loan Party owns, free and clear of all Liens (other than Liens permitted hereunder), and has the unencumbered right to vote, all outstanding ownership interests in each Person shown to be held by it in Schedule 6.01(m), (y) all of the issued and outstanding Capital Stock of each such Person organized as a corporation is validly issued, fully paid and nonassessable and (z) there are no outstanding Equity Rights with respect to such Person. (ii) Except as set forth on Schedule 7.02(h), as of the date of this Agreement, none of the Loan Parties are subject to any indenture, agreement, instrument or other arrangement containing any provision of the type described in Section 7.02(h) ("RESTRICTIVE AGREEMENTS"), other than any such provision the effect of which has been unconditionally, irrevocably and permanently waived. - 40 - (n) INDEBTEDNESS, LIENS AND AGREEMENTS. (i) Schedule 6.01(n) contains a complete and correct list, as of the Effective Date, of any Indebtedness or any extension of credit (or commitment for any extension of credit) to, or guarantee by, the Loan Parties in an amount in excess of $100,000, and the aggregate principal or face amount outstanding or that may become outstanding with respect thereto is correctly described on Schedule 6.01(n). (ii) Schedule 6.01(n) contains a complete and correct list, as of the Effective Date, of each Lien (other than the Liens in favor of the Agent) securing Indebtedness of any Person and covering any property of the Loan Parties and the aggregate Indebtedness secured (or which may be secured) by each such Lien and the Property covered by each such Lien is correctly described in the appropriate part of Schedule 6.01(n). (iii) Schedule 6.01(n) contains a complete and correct list, as of the Effective Date, of each contract and arrangement to which the Loan Parties are a party for which breach, nonperformance, cancellation or failure to renew would have a Material Adverse Effect other than purchase orders made in the ordinary course of business and subject to customary terms. (iv) To the extent requested by the Agent, true and complete copies of each agreement listed on Schedule 6.01(n) have been delivered to the Agent, together with all amendments, waivers and other modifications thereto. All such agreements are valid, subsisting, in full force and effect, are currently binding and will continue to be binding upon the Loan Parties that is a party thereto and, to the best knowledge of the Loan Parties, binding upon the other parties thereto in accordance with their terms. The Loan Parties are not in default under any such agreements, the occurrence of which could have a Material Adverse Effect. (o) FEDERAL RESERVE REGULATIONS. None of the Loan Parties are engaged principally or as one of its important activities in the business of extending credit for the purpose of purchasing or carrying margin stock (as defined in Regulation U of the Board). The making of the Term Loan hereunder, the use of the proceeds thereof as contemplated hereby, and the security arrangements contemplated by the Loan Documents, will not violate or be inconsistent with any of the provisions of Regulations T, U, or X of the Board. (p) SOLVENCY. As of the Effective Date and after giving effect to the Term Loan hereunder and the consummation of the transactions contemplated hereby and by the US Loan Documents and the Working Capital Loan Documents: (i) the aggregate value of all properties of the Parent and its Subsidiaries at their present fair saleable value on a going concern basis (i.e., the amount that may be realized within a reasonable time, considered to be six months to one year, either through collection or sale at the regular market value, conceiving the latter as the amount that could be obtained for such properties within such period by a capable and diligent businessman from an interested buyer who is willing to purchase under ordinary selling conditions), exceeds the amount of all the debts and liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) of the Parent and its Subsidiaries; - 41 - (ii) the Parent and its Subsidiaries will not, on a consolidated basis, have an unreasonably small amount of capital with which to conduct their business operations as heretofore conducted; and (iii) the Parent and its Subsidiaries will have, on a consolidated basis, sufficient cash flow to enable them to pay their debts as they mature. (q) FORCE MAJEURE. Since September 30, 2002, none of the business, properties and other assets of the Parent and its Subsidiaries is affected by any fire or other casualty, strike, lockout or other labor trouble, embargo, sabotage, confiscation, contamination, riot, civil disturbance, activity of armed forces or act of God that has or could reasonably be expected to have a Material Adverse Effect. (r) ACCOUNTS RECEIVABLE. Unless otherwise indicated to the Agent in writing: (i) Each Account Receivable is genuine and in all respects what it purports to be, and it is not evidenced by a judgment; (ii) Each Account Receivable arises out of a completed, bona fide sale and delivery of goods or rendition of services by a Loan Party in the ordinary course of its business and in accordance with the terms and conditions of all purchase orders, contracts or other documents relating thereto and forming a part of the contract between such Loan Party and the Account Debtor, and, in the case of goods, title to the goods has passed from the Loan Party to the Account Debtor; (iii) Each Account Receivable is for a liquidated amount maturing as stated in the duplicate invoice covering such sale or rendition of services, a copy of which has been furnished or is available to the Agent; (iv) Each Account Receivable, and the Agent's security interest therein, is not, and will not (by voluntary act or omission of the Loan Parties) be in the future, subject to any offset, Lien, deduction, defense, dispute, counterclaim or any other adverse condition except for disputes resulting in returned goods where the amount in controversy is deemed by the Agent to be immaterial, and each such Account Receivable is absolutely owing to one of the Loan Parties and is not contingent in any respect or for any reason; (v) No Loan Party has made any agreement with any Account Debtor for any extension, compromise, settlement or modification of any Account Receivable or any deduction therefrom, except discounts or allowances which are granted by the Loan Parties in the ordinary course of their businesses for prompt payment and which are reflected in the calculation of the net amount of each respective invoice related thereto and are reflected in the borrowing base certificates and collateral update certificates furnished to the Agent hereunder; (vi) To the best knowledge of the Loan Parties, the Account Debtor under each Account Receivable had the capacity to contract at the time any contract or other document giving rise to an Account Receivable was executed and such Account Debtor is not insolvent; and - 42 - (vii) To the best knowledge of the Loan Parties, there are no proceedings or actions which are threatened or pending against any Account Debtor which might result in any material adverse change in such Account Debtor's financial condition or the collectability of any Account Receivable. (s) LABOR AND EMPLOYMENT MATTERS. (i) Except as set forth on Schedule 6.01(s), (A) to the knowledge of the Loan Parties, no employee of the Loan Parties is represented by a labor union, no labor union has been certified or recognized as a representative of any such employee, and the Loan Parties do not have any obligation under any collective bargaining agreement or other agreement with any labor union or any obligation to recognize or deal with any labor union, and there are no such contracts or other agreements pertaining to or which determine the terms or conditions of employment of any employee of the Loan Parties; (B) to the knowledge of the Loan Parties, there are no pending or threatened representation campaigns, elections or proceedings; (C) the Loan Parties do not have knowledge of any strikes, slowdowns or work stoppages of any kind, or threats thereof, and no such activities occurred during the 24-month period preceding the Effective Date; (D) none of the Loan Parties have engaged in, admitted committing or been held to have committed any unfair labor practice; and (E) to the knowledge of the Loan Parties, there are no controversies or grievances between the Loan Parties and any of their employees or representatives thereof; in each case, which would have a Material Adverse Effect. (ii) Except as set forth on Schedule 6.01(s), the Loan Parties have at all times complied in all material respects, and are in material compliance with, all applicable laws, rules and regulations respecting employment, wages, hours, compensation, benefits, and payment and withholding of taxes in connection with employment. (iii) Except as set forth on Schedule 6.01(s), to the knowledge of the Loan Parties, the Loan Parties have at all times complied with, and are in compliance with, all applicable laws, rules and regulations respecting occupational health and safety, whether now existing or subsequently amended or enacted, including, without limitation, the Occupational Safety & Health Act of 1970, 29 U.S.C. Section 651 et seq. and the state analogies thereto, all as amended or superseded from time to time, and any common law doctrine relating to worker health and safety, except for noncompliance which could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. (t) BANK ACCOUNTS. Schedule 6.01(t) lists all banks and other financial institutions at which the Loan Parties maintain deposits and/or other accounts as of the Effective Date, and such Schedule correctly identifies the name and address of each depository, the name in which the account is held, a description of the purpose of the account, and the complete account number. (u) OBLIGATIONS AS SENIOR DEBT. The Obligations constitute Senior Debt (as defined in the Senior Subordinated Note Indenture) and Designated Senior Debt (as defined in the Senior Subordinated Note Indenture). As such, all of the Obligations (and the Agent and Lenders) are entitled to the benefits of each of the subordination and other provisions contained in the - 43 - Senior Subordinated Note Indenture which are available in respect of Senior Debt and Designated Senior Debt (and to the holders thereof), and each of such subordination and other provisions is in full force and effect and enforceable in accordance with its terms. (v) WORKING CAPITAL LOAN DOCUMENTS. The Loan Parties have heretofore furnished to the Agent true, complete and correct copies of each of the Working Capital Loan Documents (including schedules, exhibits and annexes thereto). The Working Capital Loan Documents have not been amended, supplemented or modified, and constitute the complete understanding among the parties thereto in respect of the matters and transactions covered thereby, except for amendments thereto delivered to the Agent prior to the Effective Date. Each of the Working Capital Loan Documents is in full force and effect, and the Loan Parties are not in default under any of such documents. (w) CERTAIN TRANSACTIONS. Except for arm's length transactions pursuant to which the Loan Parties make payments in the ordinary course of business upon terms no less favorable than the Loan Parties could obtain from third parties, none of the officers, directors, or employees of the Loan Parties are presently a party to any transaction with the Loan Parties (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Loan Parties, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner. (x) SEPARATE EXISTENCE. (i) All customary formalities regarding the corporate existence of each Loan Party have been at all times since its formation and will continue to be observed. (ii) Each Loan Party has at all times since its formation accurately maintained, and will continue to accurately maintain, its financial statements, accounting records and other organizational documents separate from those of any Affiliate of such Loan Party and any other Person. No Loan Party has at any time since its formation commingled, and will not commingle, its assets with those of any of its Affiliates or any other Person. Each Loan Party has at all times since its formation accurately maintained, and will continue to accurately maintain its own bank accounts and separate books of account. (iii) Each Loan Party has at all times since its formation paid, and will continue to pay, its own liabilities from its own separate assets. (iv) Each Loan Party has at all times since its formation identified itself, and will continue to identify itself, in all dealings with the public, under its own name and as a separate and distinct Person. No Loan Party has at any time since its formation identified itself, or will identify itself, as being a division or a part of any other Person other than another Loan Party. - 44 - (v) SCHEDULES. All of the information which is required to be scheduled to this Agreement is set forth on the Schedules attached hereto, is correct and accurate and does not omit to state any information material thereto. ARTICLE VII COVENANTS OF THE LOAN PARTIES Section 7.01 AFFIRMATIVE COVENANTS. So long as any principal of or interest on the Term Loan or any other Obligation (whether or not due) shall remain unpaid, each Loan Party covenants and agrees with the Agent and the Lenders that: (a) FINANCIAL STATEMENTS AND OTHER INFORMATION. The Loan Parties acknowledge that reporting requirements have been specified to be provided by the Parent under the terms of the US Financing Agreement. The Loan Parties acknowledge that they are obliged to provide such information as shall be required for the completion of such reports. The Agent agrees that it shall receive and rely upon copies of the reports provided by the Parent under the terms of the US Financing Agreement. In addition, the Administrative Borrower, on its own behalf and on behalf of the Loan Parties, will furnish to the Agent and each Lender: (i) simultaneously with the delivery of the financial statements of the Parent to the Agent under the US Financing Agreement, a certificate of a Designated Financial Officer of the Administrative Borrower, in form and in substance satisfactory to the Agent (such certificate, the "COMPLIANCE CERTIFICATE") stating that such Designated Financial Officer has reviewed the provisions of this Financing Agreement and the other Loan Documents and he/she has made or has caused to be made under his or her supervision a review of the condition and operations of the Loan Parties during the period covered by such financial statements with a view to determining whether the Loan Parties were in compliance with all of the provisions of this Financing Agreement and the Loan Documents at the times such compliance is required hereby and thereby, and that such review has not disclosed, and such Designated Financial Officer has no knowledge of, the existence during such period of an Event of Default or Default or, if an Event of Default or Default existed, describing the nature and period of existence thereof and the action which the Loan Parties propose to take or have taken with respect thereto; (ii) as soon as available and in any event no later than 1:00 p.m. (New York City time) on Wednesday of each week (or, if such day is not a Business Day, on the preceding Business Day) (or with such greater frequency as the Agent may reasonably request), a borrowing base certificate in the form delivered to the Working Capital Agent, with respect to the Collateral of each of the Loan Parties as of the close of business on the previous Friday (or, if such day is not a Business Day, on the preceding Business Day) (PROVIDED that Inventory and total Eligible Accounts (as defined in the Working Capital Loan Agreement) may be calculated as of the close of business on the last Business Day of the previous month), together with such other information relating to the Collateral as the Agent shall reasonably request, and accompanied by such supporting detail and documentation as the Agent shall reasonably request; - 45 - (iii) as soon as available and in any event within 30 days after the end of each month with respect to such month (or more frequently if requested by the Agent), (A) a collateral update certificate in the form delivered to the Working Capital Agent, (B) an accounts receivable/loan reconciliation report in the form delivered to the Working Capital Agent, (C) a summary of Inventory by type and location, (D) an accounts receivable aging report (which report shall contain amounts denominated in Dollars), and (E) such other information relating to the Collateral as the Agent shall reasonably request, in each case, accompanied by such supporting detail and documentation as the Agent shall reasonably request; (iv) as soon as available and in any event no later than 45 days after the last Business Day of each calendar quarter, a term loan borrowing base certificate in the form delivered to the Working Capital Agent, together with an updated list of eligible fixed assets and such other information relating to the term loan borrowing base collateral under the Working Capital Loan Agreement as the Agent shall reasonably request, and accompanied by such supporting detail and documentation as the Agent shall reasonably request; (v) as soon as available and in any event within 10 days after the end of each month (or more frequently if requested by the Agent), a rolling 13 week cash flow projection, of the Parent and its Subsidiaries in a form and in such details as is reasonably satisfactory to the Agent, updating the prior cash flow projection and, for prior periods ending up to one week prior to the date of the report, showing actual performance and any variances of actual performance from projected performance; (vi) promptly upon receipt thereof, copies of all management letters and accountants' letters received by the Loan Parties; (vii) promptly after submission to any Governmental Authority, all documents and information furnished to such Governmental Authority in connection with any investigation of any Loan Party other than routine inquiries by such Governmental Authority; (viii) as soon as possible and in any event within 5 days after execution, receipt or delivery thereof, copies of any material notices that any Loan Party executes or receives in connection with any Material Indebtedness (including, without limitation, the Senior Subordinated Notes and the Working Capital Indebtedness); (ix) as soon as possible and in any event within 5 days after execution, receipt or delivery thereof, copies of any material notices that any Loan Party executes or receives in connection with the sale or other Disposition of the Capital Stock of, or all or substantially all of the assets of, any Loan Party; (x) promptly after the sending or filing thereof, copies of all statements, reports and other information any Loan Party sends to any holders of its Indebtedness or its securities or files with the SEC or any Canadian or other national (domestic or foreign) securities exchange; (xi) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Loan Parties, or compliance with the terms of this Agreement, as the Agent or any Lender may reasonably request. - 46 - (b) NOTICES OF MATERIAL EVENTS. The Loan Parties will furnish to the Agent and each Lender prompt written notice of the following: (i) the occurrence of any Default hereunder or any default or event of default under any Working Capital Loan Document; (ii) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting any Loan Party or Affiliate (A) with respect to any claim in excess of $100,000 or (B) that, if adversely determined, could reasonably be expected to have a Material Adverse Effect; (iii) the occurrence of any ERISA Event related to a Plan or any similar event related to any Canadian Plan of any Loan Party or knowledge after due inquiry of any ERISA Event related to a Plan or any similar event related to any Canadian Plan of any other ERISA Affiliate that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in liability of the Loan Parties in an aggregate amount exceeding $100,000; (iv) any other development that has, or could reasonably be expected to have, a Material Adverse Effect. Each notice delivered under this Section 7.01(b) shall be accompanied by a statement of a Designated Financial Officer of the Administrative Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto. (c) EXISTENCE; CONDUCT OF BUSINESS. Each Loan Party shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business; PROVIDED that the foregoing shall not prohibit any merger, consolidation, liquidation, dissolution or any discontinuance or sale of such business permitted under Section 7.02(d). (d) PAYMENT OF OBLIGATIONS. Each Loan Party shall pay its obligations (including Tax liabilities) in an amount in excess of $100,000, before the same shall become delinquent or in default, except where (i) the validity or amount thereof is being contested in good faith by appropriate proceedings, so long as such contest operates to suspend the enforcement of compliance therewith, the collection thereof and/or the imposition of any penalty, fine or Lien with respect thereto, (ii) such Person has set aside on its books adequate reserves with respect thereto in accordance with GAAP, which reserves shall be acceptable to Agent. (e) MAINTENANCE OF PROPERTIES; INSURANCE. Each Loan Party shall (i) keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and (ii) maintain insurance, with financially sound and reputable insurance companies, as may be required by law and such other insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar - 47 - businesses operating in the same or similar locations, including, without limitation, business interruption and product liability insurance. Such insurance shall be in such minimum amounts that such Person will not be deemed a co-insurer under applicable insurance laws, regulations and policies and otherwise shall be in such amounts, contain such terms, be in such forms and be for such periods as may be reasonably satisfactory to the Agent. Without limiting the generality of the foregoing, Each Loan Party will maintain or cause to be maintained replacement value casualty insurance on the Collateral under such policies of insurance, in each case with such insurance companies, in such amounts, with such deductibles, and covering such terms and risks as are at all times satisfactory to the Agent in its commercially reasonable judgment. All general liability and other liability policies with respect to the Loan Parties shall name the Agent for the benefit of the Lenders as an additional insured thereunder as its interests may appear, and all business interruption and casualty insurance policy shall contain a loss payable clause or endorsement, satisfactory in form and substance to the Agent, that names the Agent for the benefit of the Lenders as the loss payee thereunder. All policies of insurance shall provide for at least 30 days prior written notice to the Agent of any modifications or cancellation of such policy. (f) BOOKS AND RECORDS; INSPECTION RIGHTS. Each Loan Party shall keep proper books of record and account in which entries are made of all dealings and transactions in relation to its business and activities which fairly record such transactions and activities. Each Loan Party shall permit any representatives designated by the Agent or any Lender to visit and inspect its properties, to examine and make extracts from its books and records, to conduct audits, physical counts, valuations, appraisals or examinations (whether by internal commercial finance examiners or independent auditors) of all Collateral and the Loan Parties, and to discuss its affairs, finances and condition with its officers and independent accountants at any reasonable times and as frequently as the Agent deems appropriate provided that, so long as no Default has occurred and is continuing, (i) all such visits shall be on reasonable prior notice, at reasonable times during regular business hours, and (ii) the Agent and the Lenders shall not conduct any such audit, valuation or appraisal, in each case, more than once each year. The Loan Parties shall, in accordance with Section 4.01, reimburse the Agent and the Lenders for all costs incurred in connection with such audits, physical counts, valuations, appraisals or examinations. Each of the Loan Parties authorizes the Agent and, if accompanied by the Agent, the Lenders to communicate directly with such Loan Party's independent certified public accountants and authorizes such accountants to disclose to the Agent and the Lenders any and all financial statements and other supporting financial documents and schedules including copies of any management letters with respect to the business, financial condition and other affairs of the Loan Parties. At the request of the Agent, each Loan Party shall deliver a letter addressed to such accountants instructing them to comply with the provisions of this Section 7.01(f). The Loan Parties, in consultation with the Agent, will arrange for a meeting to be held at least once every year (and after the occurrence and during the continuance of a Default, more frequently, if requested by the Agent or the Required Lenders) with the Lenders and the Agent hereunder at which the business and operations of the Loan Parties are discussed. The Loan Parties will permit environmental consultants selected by the Agent to visit the properties of the Loan Parties and perform examinations of the Real Property Assets of the Loan Parties at such times and with such frequencies as the Agent or any Lender shall reasonably request; PROVIDED that, so long as no Default has occurred and is continuing, the Agent and the Lenders shall not request that the Real Property Assets of the Loan Parties be examined - 48 - by environmental consultants more frequently than once every year commencing on the first anniversary of the Effective Date. The Loan Parties shall reimburse the Agent and the Lenders for all fees, costs and expenses charged by such environmental consultants for each such examination. (g) FISCAL YEAR. Each Loan Party shall maintain their current Fiscal Year and current method of determining the last day of the first three fiscal quarters in each Fiscal Year. (h) COMPLIANCE WITH LAWS. Each Loan Party shall comply in all material respects with (i) all permits, licenses and authorizations, including, without limitation, environmental permits, licenses and authorizations, issued by a Governmental Authority, (ii) all laws, rules, regulations and orders including, without limitation, Environmental Laws, of any Governmental Authority and (iii) all contractual obligations, in each case applicable to it or its property. (i) USE OF PROCEEDS. The proceeds of the Term Loan will be used only for (i) fees and expenses incurred in connection with the transactions contemplated by this Agreement, the US Financing Agreement and the Working Capital Loan Agreement, and (ii) for general corporate and working capital purposes of the Loan Parties. No part of the proceeds of the Term Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations T, U and X. (j) ERISA. The Loan Parties (i) will maintain, and cause each ERISA Affiliate to maintain, each Plan or Canadian Plan, as applicable, in material compliance with the provisions of such Plan or Canadian Plan, as applicable, and all applicable requirements of ERISA and of the Internal Revenue Code or of Applicable Canadian Pension Laws, as applicable, and with all applicable rulings and regulations issued under the provisions of ERISA and of the Internal Revenue Code or of Applicable Canadian Pension Laws, as applicable, and (ii) will not and, to the extent authorized, will not permit any of the ERISA Affiliates to (A) engage in any transaction with respect to any Plan or Canadian Plan, as applicable, which would subject any Loan Party to either a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Internal Revenue Code or Canadian Plan, as applicable, (B) fail to make full payment when due of all amounts which, under the provisions of any Plan or Canadian Plan, as applicable,, any Loan Party or any ERISA Affiliate is required to pay as contributions thereto, or permit to exist any accumulated funding deficiency (as such term is defined in Section 302 of ERISA and Section 412 of the Internal Revenue Code), whether or not waived, with respect to any Pension Plan or Canadian Pension Plan, as applicable, or (C) fail to make any payments to any Multiemployer Plan that any Loan Party or any of the ERISA Affiliates may be required to make under any agreement relating to such Multiemployer Plan or any law pertaining thereto. (k) ENVIRONMENTAL MATTERS; REPORTING AND ASSESSMENTS. (i) The Loan Parties will observe and comply in all material respects with all Environmental Laws and all permits and authorizations issued by any Governmental Authority under Governmental Law (collectively, "ENVIRONMENTAL PERMITS"). The Loan Parties will give the Agent prompt written notice of (A) any presence, Release or threat of Release of any Hazardous Materials at or from any Real Property Asset, (B) any actual or alleged violation as to any Environmental Law - 49 - or Environmental Permit by any Loan Party, (C) the commencement of any Environmental Action or Remedial Action or other communication to it or of which it has knowledge, or with the exercise of due diligence, should have had knowledge regarding the presence or suspected presence of any Hazardous Material at, on about, under, within or in connection with any Real Property Asset or any migration thereof from or to such Real Property Asset, (D) the discovery of any occurrence or condition on any real property adjoining or in the vicinity of any Real Property Asset that could cause such Real Property Asset or any part thereof to be subject to any restrictions on ownership, occupancy, transferability, or use, or subject the owner or any Person having any interest in such Real Property Asset to any liability, penalty, or disability under any Environmental Law, and (E) the receipt of any notice or discovery of any information regarding any actual, alleged, or potential Release, disposal or any other presence or existence of any Hazardous Material at, on, about, under, within, near or in connection with any Real Property Asset; in each case, which (x) would have a material adverse effect on any Environmental Permits held by any Loan Party, (y) will, or is likely to, have a Material Adverse Effect, or (z) will require a material expenditure by such Loan Party to cure such alleged problem or violation. (ii) The Agent may, from time to time, in its reasonable discretion, obtain one or more environmental assessments or audits of any Real Property Asset prepared by a hydrogeologist, an independent engineer or other qualified consultant or expert approved by the Agent to evaluate or confirm (A) whether any Hazardous Materials are present in the soil, sediment, air or water at such Real Property Asset and (B) whether the use and operation of such Real Property Asset complies with all Environmental Laws; PROVIDED that, so long as no Default has occurred and is continuing, the Agent shall not request any such environmental assessments or audits of any Real Property Asset more frequently than once every other year. Environmental assessments may include, without limitation, detailed visual inspections of such Real Property Asset, including any and all storage areas, storage tanks, drains, dry wells and leaching areas, and the taking of soil samples, surface water samples and ground water samples, as well as such other investigations or analyses as the Agent deems appropriate. All such environmental assessments shall be conducted and made at the sole expense of the Borrower. (l) MATTERS RELATING TO ADDITIONAL REAL PROPERTY COLLATERAL. (i) In the event that any Loan Party acquires any Material Owned Property after the Effective Date that the Agent determines is an Additional Mortgaged Property or in the event that the Agent determines that any Real Property Asset existing on the Effective Date has become an Additional Mortgaged Property after the Effective Date, the Administrative Borrower shall deliver to the Agent, as soon as practicable after the Agent has notified the Administrative Borrower that such Real Property Asset is an Additional Mortgaged Property, fully executed Debentures ("ADDITIONAL MORTGAGES"), in proper form for recording in all appropriate places in all applicable jurisdictions, encumbering the interest of the applicable Loan Party in such Additional Mortgaged Property, together with Title Insurance Policies or commitments therefor, and copies of all surveys, deeds, title exception documents, flood hazard certificates and other documents as the Agent may reasonably require, together with copies of all deeds with respect to such Additional Mortgaged Property. - 50 - (ii) In the event that any Loan Party enters into any Lease with respect to any Material Leasehold Property after the Effective Date, the Administrative Borrower shall deliver to the Agent copies of the Lease, and all amendments thereto, between the Loan Party and the landlord or tenant, together with a Landlord's Waiver and Consent with respect thereto and where required by the terms of any such Lease, the consent of the mortgagee, ground lessor or other party. (iii) If requested by the Agent, the Loan Parties shall permit an independent real estate appraiser satisfactory to the Agent, upon reasonable notice, to visit and inspect any Additional Mortgaged Property for the purpose of preparing an appraisal of such Additional Mortgaged Property satisfying the requirements of all applicable laws and regulations (in each case to the extent required under such laws and regulations as determined by the Agent in its sole discretion). (m) CASH DEPOSITS/BANK ACCOUNTS. The Loan Parties shall take all actions necessary to maintain, preserve and protect the rights and interests of the Agent with respect to all cash deposits of the Loan Parties and all other proceeds of Collateral and shall not, without the Agent's prior written consent, open any deposit or other bank account, or instruct any Account Debtor to make payment to any account other than to an established dominion account, lockbox account or other controlled account under the Working Capital Agent's control; PROVIDED that so long as no Default or Event of Default shall have occurred and be continuing, the Loan Parties shall be permitted to maintain (i) payroll accounts and other accounts not subject to the Working Capital Agent's control so long as the aggregate amount of funds on deposit in all such payroll accounts does not materially exceed estimated payroll for the next payroll period, and (ii) local bank accounts not subject to the Working Capital Agent's control so long as (x) the aggregate amount of funds on deposit in all such local bank accounts does not exceed $500,000, and (y) the aggregate amount of funds on deposit in any such local bank account does not exceed $50,000. (n) NEW GUARANTORS. The Loan Parties will cause each Subsidiary created, acquired or otherwise existing on or after the Effective Date to immediately become a Guarantor and a Loan Party hereunder and shall execute and deliver, and cause such Subsidiary to execute and deliver, to the Agent, for the benefit of the Agent and the Lenders, all such Loan Documents and other documents, and take all such actions, and cause such Subsidiary to take all such actions, as may be required by the Agent in connection therewith. (o) PUNCTUAL PAYMENT. The Loan Parties will duly and punctually pay or cause to be paid the principal and interest on the Term Loan, all fees and expenses, and all other Obligations under this Agreement and the other Loan Documents to which any Loan Party is a party, all in accordance with the terms of this Agreement and such other Loan Documents. (p) CHANGE IN COLLATERAL; COLLATERAL RECORDS. The Loan Parties will (i) give the Agent not less than 30 days' prior written notice of any change in the location of any Collateral, other than to locations set forth on Schedule 7.01(p) and with respect to which the Agent has filed financing statements and otherwise fully perfected its Liens thereon, (ii) advise the Agent promptly, in sufficient detail, of any material adverse change relating to the type, quantity or quality of the Collateral or the Lien granted thereon and (iii) as soon as reasonably possible but in any event, not later than seven - 51 - Business Days following the Agent's request, or if the Agent shall reasonably determine that exigent circumstances exist, such earlier date as the Agent shall specify, execute and deliver to the Agent for the benefit of the Lenders from time to time, solely for the Agent's convenience in maintaining a record of Collateral, such written statements and schedules as the Agent may reasonably require, designating, identifying or describing the Collateral. (q) CANADIAN PENSION PLANS. Each Loan Party shall make all contributions required to be made by it under any Canadian Pension Plan or Canadian Plan and immediately give notice to the Agent of any material change to, or default under, any such Canadian Pension Plan or Canadian Plan or Applicable Canadian Pension Laws or of any action or proceeding commenced or threatened in respect of such Canadian Pension Plan or Canadian Plan under Applicable Canadian Pension Laws, whether by a Canadian Pension Regulator, or otherwise. (r) FURTHER ASSURANCES. The Loan Parties will take such action and execute, acknowledge and deliver, at their sole cost and expense, such agreements, instruments or other documents as the Agent may require from time to time in order (i) to carry out more effectively the purposes of this Agreement and the other Loan Documents, (ii) to subject to valid and perfected Liens any of the Collateral or any other property of any Loan Party, (iii) to establish and maintain the validity and effectiveness of any of the Loan Documents and the validity, perfection and priority of the Liens intended to be created thereby, and (iv) to better assure, convey, grant, assign, transfer and confirm unto the Agent and each Lender the rights now or hereafter intended to be granted to it under this Agreement or any other Loan Document. (s) MOTOR VEHICLE COLLATERAL. The Loan Parties will, within 90 days of the Effective Date, take such actions as may be necessary to cause the Agent's Lien on each titled motor vehicle (the fair market value of which is greater than $5,000) of the Loan Parties to be noted on all certificates of title with respect to such vehicle, including, without limitation, filing applications for new certificates of title with respect thereto. Section 7.02 NEGATIVE COVENANTS. So long as any principal of or interest on the Term Loan or any other Obligation (whether or not due) shall remain unpaid, each Loan Party covenants and agrees with the Agent and the Lenders that: (a) INDEBTEDNESS. The Loan Parties will not create, incur, assume or permit to exist any Indebtedness, except: (i) Indebtedness created hereunder and under the US Financing Agreement; (ii) Existing Indebtedness on the Effective Date which is set forth in Schedule 7.02(a) and has been designated on such schedule as Indebtedness that will remain outstanding following the funding of the Term Loan, and any extension, renewal, refunding or replacement of any such Indebtedness; PROVIDED, HOWEVER, that (A) such extension, renewal, refunding or replacement is pursuant to terms that are not less favorable to the Loan Parties - 52 - and the Lenders than the terms of the Indebtedness being extended, renewed, refunded or replaced and (B) after giving effect to such extension, renewal, refunding or replacement, the amount of such Indebtedness is not greater than the amount of Indebtedness outstanding immediately prior to such extension, renewal, refunding or replacement; (iii) Intercompany loans among the Parent and its Subsidiaries which are Guarantors (as such term is defined under the US Financing Agreement); PROVIDED, that (A) the Investment corresponding to such Indebtedness is permitted pursuant Section 7.02(e) hereof, (B) such intercompany loan is evidenced by a promissory note, (C) such promissory note is pledged to the Working Capital Agent and the Agent, and (D) there are no restrictions whatsoever on the ability of the applicable Loan Party to repay such loan; (iv) Guaranties permitted under Section 7.02(c); and (v) Working Capital Indebtedness of the Loan Parties in an aggregate principal amount not to exceed at any time the lesser of (A) $7,000,000 and (B) 100% of the Canadian Borrowing Base (as defined in the Working Capital Loan Agreement as in effect on the date hereof), provided, that Working Capital Indebtedness other than in respect of the Canadian Letter of Credit (as defined in the Working Capital Loan Agreement as in effect on the date hereof) shall not exceed at any time outstanding the sum of (x) the lesser of (I) $7,000,000 and (II) 100% of the Canadian Borrowing Base (as defined in the Working Capital Loan Agreement as in effect on the date hereof) and (y) the outstanding principal amount of the term loan under the Working Capital Loan Agreement as reduced from time to time by the scheduled principal payments and prepayments of such term loan as set forth in the Working Capital Loan Agreement as in effect on the date hereof, PROVIDED, FURTHER, that the Working Capital Agent, the Working Capital Lenders and the Loan Parties shall have executed and delivered to the Agent the US Intercreditor Agreement; and the extension of maturity, replacement, refinancing or modification of the terms thereof, provided that such extension, replacement, refinancing or modification (x) is pursuant to terms that are not less favorable to the Loan Parties and the Lenders than the terms of the Working Capital Indebtedness being so extended, replaced, refinanced or modified, and (y) is subject to the US Intercreditor Agreement or a similar intercreditor agreement, in form and substance satisfactory to the Agent and the Lenders, having substantially the same terms and conditions as the US Intercreditor Agreement. (b) LIENS. The Loan Parties will not create, incur, assume or permit to exist any Lien on any Property or asset now owned or hereafter acquired by it, file or suffer to exist under the Uniform Commercial Code, PPSA or any similar law or statute of any jurisdiction, a financing statement (or the equivalent thereof) that names any Loan Party as debtor, to sign or suffer to exist any security agreement authorizing any secured party thereunder to file such financing statement (or the equivalent thereof), or assign or sell any income or revenues (including Accounts Receivable) or rights in respect of any thereof, except (the following being called "PERMITTED LIENS"): (i) Liens created under the Loan Documents and the US Loan Documents; - 53 - (ii) any Lien on any property or asset of any Loan Party existing on the Effective Date and set forth in Schedule 7.02(b) (excluding, however, following the making of the Term Loan hereunder, the Liens in favor of any Person other than the Agent securing Indebtedness not designated on said schedule as Indebtedness to remain outstanding following the funding of the Term Loan), but not the extension of coverage thereof to other property or the extension of maturity, refinancing or other modification of the terms thereof or the increase of the Indebtedness secured thereby; (iii) Liens imposed by any Governmental Authority for Taxes, assessments or charges in respect of obligations not yet delinquent or in the case of Taxes and assessments on Properties other than Mortgaged Properties not exceeding $250,000 in the aggregate more than 90 days overdue which are being contested in good faith and by appropriate proceedings, so long as such contest operates to suspend the enforcement of compliance with and/or collection thereof, and so long as adequate reserves with respect thereto are maintained on the books of the applicable Loan Party in accordance with GAAP and which reserves shall be acceptable to the Agent; (iv) landlords', carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens on Properties other than Mortgaged Properties, and vendors' Liens imposed by statute or common law not securing the repayment of Indebtedness, arising in the ordinary course of business which are not overdue for a period of more than 60 days or which are being contested in good faith and by appropriate proceedings promptly initiated and diligently conducted, and a reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made therefor, and so long as such contest operates to suspend the enforcement of compliance with and/or collection thereof, and Liens securing judgments (including, without limitation, pre-judgment attachments) the existence of which do not result in an Event of Default; (v) pledges or deposits under worker's compensation, unemployment insurance and other social security legislation and pledges or deposits to secure the performance of bids, tenders, trade contracts (other than for borrowed money), leases (other than capital leases), utility purchase obligations, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (vi) encumbrances on any Real Property Asset other than a Mortgaged Property consisting of easements, rights-of-way, zoning restrictions, easements, licenses, restrictions and other similar encumbrances incurred in the ordinary course of business, restrictions on the use of Property or minor imperfections in title thereto which, in the aggregate, are not material in amount, and which do not, in the aggregate, materially detract from the value of such Real Property Asset or materially interfere with the ordinary conduct of the business of any Loan Party; (vii) Liens consisting of bankers' liens and rights of setoff, in each case, arising by operation of law, and Liens on documents presented in letter of credit drawings; - 54 - (viii) the replacement, extension or renewal of any Lien permitted by clauses (ii) and (vii) of this Section 7.02(b) upon or in the same property theretofore subject thereto in connection with the replacement, extension or renewal (without increase in the amount or any change in any direct or contingent obligor) of the Indebtedness secured thereby; and (ix) the Liens granted under the Working Capital Loan Documents to secure the Working Capital Indebtedness permitted pursuant to Section 7.02(a)(v), provided that, the Working Capital Agent, the Working Capital Lenders and the Loan Parties shall have executed and delivered to the Agent the US Intercreditor Agreement. (c) CONTINGENT LIABILITIES. The Loan Parties will not guarantee the Indebtedness or other obligations of any Person, or guarantee the payment of dividends or other distributions upon the stock of, or the earnings of, any Person, except: (i) endorsements of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; (ii) guarantees and letters of credit in effect on the date hereof which are disclosed in Schedule 7.02(a), and any replacements thereof in amounts not exceeding such guarantees; (iii) obligations in respect of letters of credit issued under the Working Capital Loan Agreement; and (iv) guarantees issued pursuant to this Agreement and the Working Capital Loan Agreement. (d) FUNDAMENTAL CHANGES; ASSET SALES. (i) The Loan Parties will not enter into any transaction of merger or consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), except that any Loan Party may, so long as no Default or Event of Default shall have occurred or be continuing or result therefrom, be merged or combined with or into the Parent or any other Loan Party, PROVIDED that if such merger involves the Parent or a Guarantor (as such term is defined under the US Financing Agreement), (x) the Parent or a Guarantor (as such term is defined under the US Financing Agreement) shall be the surviving entity and (y) no Change of Control (as such term is defined under the US Financing Agreement) shall result therefrom. The Loan Parties will not form any Subsidiary without the prior written consent of the Agent. The Loan Parties will not acquire any business or property from, or Capital Stock of, or other equity interests in, or be a party to any acquisition of, any Person except for purchases of property to be used in the ordinary course of business, Investments permitted under Section 7.02(e) and Capital Expenditures. (ii) The Loan Parties will not convey, sell, lease, transfer or otherwise dispose (including any Disposition) of, in one transaction or a series of transactions, any part of their business or property, whether now owned or hereafter acquired (including, without limitation, receivables and leasehold interests), except: - 55 - (A) obsolete property (including leasehold interests), tools or equipment no longer used or useful in their business, or worn out or in need of replacement and that are replaced with assets of reasonably equivalent value or utility or which are otherwise productive or useful in the conduct of such Loan Party's business; (B) any Inventory or other property sold or disposed of in the ordinary course of business and on ordinary business terms; (C) sales of property from a Loan Party to another Loan Party permitted pursuant to Section 7.02(g); or (D) sales of a Loan Party permitted under sections 7.02(d)(ii)(D) and (E) of the US Financing Agreement; (iii) Notwithstanding anything to the contrary contained in this Section 7.02(d), so long as no Default or Event of Default shall have occurred or be continuing or would result therefrom, the Loan Parties shall be permitted to consummate the transactions described on Schedule 7.02(d)(iii). (e) INVESTMENTS; HEDGING AGREEMENTS. (i) The Loan Parties will not, and will not permit any of their Subsidiaries to, make or permit to remain outstanding any Investment, except: (A) Investments consisting of guarantees permitted by Section 7.02(c); (B) Investments by the Loan Parties in the Parent or any Guarantor (as such term is defined under the US Financing Agreement); (C) Investments existing on the Effective Date and described on Schedule 7.02(e); (D) Permitted Investments; and (E) Checking and deposit accounts with banks used in the ordinary course of business. (ii) The Loan Parties will not enter into any Hedging Agreement, other than Hedging Agreements entered into in the ordinary course of business with the prior written consent of the Agent to hedge or mitigate risks to which the Loan Parties are exposed in the conduct of their business or the management of their liabilities. (f) RESTRICTED JUNIOR PAYMENTS. The Loan Parties will not declare or make any Restricted Junior Payment at any time, other than: (i) payments of dividends or management fees by a Loan Party to the Parent or another wholly-owned Subsidiary of the Parent; - 56 - (ii) payments of dividends and distributions payable solely in common stock of such Person; and (iii) payment on intercompany loans permitted by Section 7.02(a)(iii). (g) TRANSACTIONS WITH AFFILIATES. Except as expressly permitted by this Agreement, the Loan Parties will not directly or indirectly (i) make any Investment in an Affiliate; (ii) transfer, sell, lease, assign or otherwise dispose of any property to an Affiliate; (iii) merge into or consolidate with an Affiliate, or purchase or acquire property from an Affiliate; or (iv) enter into any other transaction directly or indirectly with or for the benefit of an Affiliate (including, without limitation, guarantees and assumptions of obligations of an Affiliate); PROVIDED that: (A) any Affiliate who is an individual may serve as a director, officer, employee or consultant of any Loan Party, receive reasonable compensation for his or her services in such capacity and benefit from Permitted Investments to the extent specified in clause (e) of the definition thereof; (B) the Loan Parties may engage in and continue the transactions with or for the benefit of Affiliates which are described in Schedule 7.02(g) or are referred to in Sections 7.02(e) or 7.02(f) (but only to the extent specified in such Sections); and (C) the Loan Parties may engage in transactions with Affiliates in the ordinary course of business on terms which are no less favorable to the Loan Parties than those likely to be obtained in an arms' length transaction between a Loan Party and a non-affiliated third party. (h) RESTRICTIVE AGREEMENTS; RESTRICTIONS ON NEGATIVE PLEDGES AND UPSTREAM LIMITATION. The Loan Parties will not directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement (other than this Agreement, the US Financing Agreement and the Working Capital Loan Agreement) that prohibits, restricts or imposes any condition upon (i) the ability of any such Person to create, incur or permit to exist any Lien upon any of its property or assets, or (ii) the ability of such Person to pay dividends or other distributions with respect to any shares of its Capital Stock or other equity interests or to make or repay loans or advances to any other Person or to guarantee the Indebtedness of any other Person; PROVIDED that (A) the foregoing shall not apply to restrictions and conditions imposed by law, (B) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 7.02(h) (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition), (C) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of stock or assets of a Subsidiary pending such sale, provided such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, (D) clause (i) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness, and (E) clause (i) of the foregoing shall not - 57 - apply to customary provisions in leases and other contracts (excluding license agreements) restricting the assignment thereof. (i) SALE-LEASEBACK TRANSACTIONS. No Loan Party will directly or indirectly, enter into any arrangements with any Person whereby such Person shall sell or transfer (or request another Person to purchase) any property, real, personal or mixed, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property from any Person. (j) LINES OF BUSINESS. The Loan Parties will not engage to any substantial extent in any line or lines of business activity other than (i) the types of businesses engaged in by them as of the Effective Date and businesses substantially related thereto, and (ii) such other lines of business as may be consented to by the Agent and the Required Lenders. (k) OTHER INDEBTEDNESS. The Loan Parties will not purchase, redeem, retire or otherwise acquire for value, or set apart any money for a sinking, defeasance or other analogous fund for the purchase, redemption, retirement or other acquisition of, or make any voluntary payment or prepayment of the principal of or interest on, or any other amount owing in respect of any Senior Subordinated Notes, except to the extent permitted by Section 7.02(f). (l) MODIFICATIONS OF CERTAIN DOCUMENTS. The Loan Parties will not consent to any modification of or supplement to any of the provisions of any documents or agreements evidencing or governing the Working Capital Loans or any other Existing Indebtedness. ARTICLE VIII MANAGEMENT, COLLECTION AND STATUS OF ACCOUNTS RECEIVABLE AND OTHER COLLATERAL Section 8.01 MANAGEMENT OF COLLATERAL. (a) The Agent (and all Persons designated by the Agent for such purpose) may, at any time and from time to time after the occurrence and during the continuance of an Event of Default, whether before or after notification to any Account Debtor and whether before or after the maturity of any of the Obligations, (i) enforce collection of any Accounts Receivable or contract rights of the Loan Parties by suit or otherwise; (ii) exercise all of the rights and remedies of the Loan Parties with respect to proceedings brought to collect any Accounts Receivable; (iii) surrender, release or exchange all or any part of any Accounts Receivable of the Loan Parties, or compromise or extend or renew for any period (whether or not longer than the original period) any Indebtedness thereunder; (iv) sell or assign any Account Receivable of the Loan Parties upon such terms, for such amount and at such time or times as the Agent deems advisable; (v) prepare, file and sign the names of the Loan Parties on any proof of claim in bankruptcy or other similar document against any Account Debtor indebted on an Account Receivable of the Loan Parties; and (vi) do all other acts and things which are necessary, in the Agent's sole discretion, to fulfill the Obligations of the Loan Parties under this Agreement and to allow the Agent to collect the Accounts Receivable. In addition to any other provision hereof or in any of the other Loan Documents, the Agent may at any time on or - 58 - after the occurrence of an Event of Default, at the sole expense of the Loan Parties, notify any parties obligated on any of the Accounts Receivable of the Loan Parties to make payment directly to the Agent of any amounts due or to become due thereunder. (b) Each Loan Party hereby appoints the Agent or its designee on behalf of the Agent as the Loan Parties' attorney-in-fact with power exercisable during the continuance of an Event of Default to endorse any Loan Party's name upon any notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Accounts Receivable, to sign any Loan Party's name on any invoice or bill of lading relating to any of the Accounts Receivable, drafts against Account Debtors with respect to Accounts Receivable, assignments and verifications of Accounts Receivable and notices to Account Debtors with respect to Accounts Receivable, to send verification of Accounts Receivable, and to notify the Postal Service authorities to change the address for delivery of mail addressed to any Loan Party to such address as the Agent may designate and to do all other acts and things necessary to carry out this Agreement. All acts of said attorney or designee are hereby ratified and approved, and said attorney or designee shall not be liable for any acts of omission or commission (other than acts of omission or commission constituting gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction), or for any error of judgment or mistake of fact or law; this power being coupled with an interest is irrevocable until the Term Loan and the other Obligations under the Loan Documents are paid in full and all of the Loan Documents are terminated. (c) Nothing herein contained shall be construed to constitute the Agent as agent of any Loan Party for any purpose whatsoever, and the Agent shall not be responsible or liable for any shortage, discrepancy, damage, loss or destruction of any part of the Collateral wherever the same may be located and regardless of the cause thereof (other than from acts of omission or commission constituting gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction). The Agent shall not, under any circumstance or in any event whatsoever, have any liability for any error or omission or delay of any kind occurring in the settlement, collection or payment of any of the Accounts Receivable or any instrument received in payment thereof or for any damage resulting therefrom (other than acts of omission or commission constituting gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction). The Agent, by anything herein or in any assignment or otherwise, does not assume any of the obligations under any contract or agreement assigned to the Agent and shall not be responsible in any way for the performance by any Loan Party of any of the terms and conditions thereof. (d) If any Account Receivable includes a charge for any tax payable to any Governmental Authority, the Agent is hereby authorized (but in no event obligated) in its discretion to pay the amount thereof to the proper taxing authority for the Loan Parties' account and to charge the Loan Parties therefor. The Loan Parties shall notify the Agent if any Account Receivable includes any taxes due to any such Governmental Authority and, in the absence of such notice, the Agent shall have the right to retain the full proceeds of such Account Receivable and shall not be liable for any taxes that may be due by reason of the sale and delivery creating such Account Receivable. - 59 - (e) Notwithstanding any other terms set forth in the Loan Documents, the rights and remedies of the Agent and the Lenders herein provided, and the obligations of the Loan Parties set forth herein, are cumulative of, may be exercised singly or concurrently with, and are not exclusive of, any other rights, remedies or obligations set forth in any other Loan Document or as provided by law. Section 8.02 ACCOUNTS RECEIVABLE DOCUMENTATION. The Loan Parties will at such intervals as the Agent may require, execute and deliver confirmatory written assignments of the Accounts Receivable to the Agent and furnish such further schedules and/or information as the Agent may require relating to the Accounts Receivable, including, without limitation, sales invoices or the equivalent, credit memos issued, remittance advices, reports and copies of deposit slips and copies of original shipping or delivery receipts for all merchandise sold. In addition, the Loan Parties shall notify the Agent of any non-compliance in respect of the representations, warranties and covenants contained in Section 8.03. The items to be provided under this Section 8.02 are to be in form reasonably satisfactory to the Agent and are to be executed and delivered to the Agent from time to time solely for its convenience in maintaining records of the Collateral. The Loan Parties' failure to give any of such items to the Agent shall not affect, terminate, modify or otherwise limit the Agent's Lien on the Collateral. The Loan Parties shall not re-date any invoice or sale or make sales on extended dating beyond that customary in the Loan Parties' industry, and shall not re-bill any Accounts Receivable without promptly disclosing the same to the Agent and providing the Agent with a copy of such re-billing, identifying the same as such. If the Loan Parties become aware of anything materially detrimental to any of the Loan Parties' customers' credit, the Loan Parties will promptly advise the Agent thereof. Section 8.03 STATUS OF ACCOUNTS RECEIVABLE AND OTHER COLLATERAL. With respect to Collateral of any Loan Party at the time the Collateral becomes subject to the Agent's Lien, each Loan Party covenants, represents and warrants: (a) such Loan Party shall be the sole owner, free and clear of all Liens (except for the Liens granted in the favor of the Agent for the benefit of the Lenders and Permitted Liens), and shall be fully authorized to sell, transfer, pledge and/or grant a security interest in each and every item of said Collateral; (b) each Account Receivable shall be a good and valid account representing an undisputed bona fide indebtedness incurred or an amount indisputably owed by the Account Debtor therein named, for a fixed sum as set forth in the invoice relating thereto with respect to an absolute sale and delivery upon the specified terms of goods sold or services rendered by such Loan Party; (c) no Account Receivable shall be subject to any defense, offset, counterclaim, discount or allowance except as may be stated in the invoice relating thereto, discounts and allowances as may be customary in such Loan Party's business and as otherwise disclosed to the Agent, and each Account Receivable will be paid when due; (d) none of the transactions underlying or giving rise to any Account Receivable shall violate any applicable state or federal laws or regulations, and all documents relating thereto shall be legally sufficient under such laws or regulations and shall be legally enforceable in accordance with their terms; (e) no agreement under which any deduction or offset of any kind, other than normal trade discounts, may be granted or shall have been made by such Loan Party at or before the time such Account Receivable is created; (f) all agreements, instruments and other documents relating to any - 60 - Account Receivable shall be true and correct and in all material respects what they purport to be; (g) all signatures and endorsements that appear on all material agreements, instruments and other documents relating to any Account Receivable shall be genuine and all signatories and endorsers shall have full capacity to contract; (h) such Loan Party shall maintain books and records pertaining to said Collateral in such detail, form and scope as the Agent shall reasonably require; (i) such Loan Party shall immediately notify the Agent if any Account Receivable arises out of contracts with any Governmental Authority, and will execute any instruments and take any steps required by the Agent in order that all monies due or to become due under any such contract shall be assigned to the Agent and notice thereof given to such Governmental Authority under the Federal Assignment of Claims Act or any similar state or local law; (j) such Loan Party will, immediately upon learning thereof, report to the Agent any material loss or destruction of, or substantial damage to, any of the Collateral, and any other matters affecting the value, enforceability or collectibility of any of the Collateral; (k) if any amount payable under or in connection with any Account Receivable is evidenced by a promissory note or other instrument, such promissory note or instrument shall be immediately pledged, endorsed, assigned and delivered to the Agent for the benefit of the Lenders as additional Collateral; (l) such Loan Party shall not re-date any invoice or sale or make sales on extended dating beyond that which is customary in the ordinary course of its business and in the industry; (m) such Loan Party shall conduct a physical count of its Inventory at such intervals as the Agent may reasonably request and such Loan Party shall promptly supply the Agent with a copy of such count accompanied by a report of the value (based on the lower of cost (on a first in first out basis) and market value) of such Inventory; and (n) such Loan Party is not and shall not be entitled to pledge the Agent's or any Lender's credit on any purchases or for any purpose whatsoever. Section 8.04 COLLATERAL CUSTODIAN. Upon the occurrence and during the continuance of any Default or Event of Default, the Agent may at any time and from time to time employ and maintain on the premises of any Loan Party a custodian selected by the Agent who shall have full authority to do all acts necessary to protect the Agent's and the Lenders' interests. Each Loan Party hereby agrees to, and to cause its Subsidiaries to, cooperate with any such custodian and to do whatever the Agent may reasonably request to preserve the Collateral. All costs and expenses incurred by the Agent by reason of the employment of the custodian shall be the responsibility of the Borrowers and charged to the Loan Account. Section 8.05 COMPLIANCE WITH WORKING CAPITAL LOAN AGREEMENT. The Loan Parties shall comply with the cash management provisions of the Working Capital Loan Agreement (or any successor or replacement agreement acceptable to the Agent), PROVIDED that, if the Working Capital Loan Agreement shall have been terminated and the Loan Parties shall not have entered into a successor or replacement agreement acceptable to the Agent, then the Loan Parties shall enter into control agreements, lockbox agreements and other similar agreements in form and substance reasonably satisfactory to the Agent. - 61 - ARTICLE IX EVENTS OF DEFAULT Section 9.01 EVENTS OF DEFAULT. If any of the following Events of Default shall occur and be continuing: (a) the Loan Parties shall fail to pay to the Agent or the Lenders, any principal of or interest on the Term Loan or any other Obligation of the Loan Parties to the Agent or the Lenders when the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof, by acceleration of such due or prepayment date, or otherwise; (b) any representation or warranty made or deemed made by or on behalf of any Loan Party in connection with this Agreement, any of the other Loan Documents or any amendment or modification hereof or thereof, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement, any of the other Loan Documents or any amendment or modification hereof or thereof, shall prove to have been incorrect in any material respect when made or deemed made; (c) the Loan Parties (i) shall fail to observe or perform any covenant, condition or agreement contained in Sections 7.01(a), 7.01(b), 7.01(c), 7.01(e), 7.01(f), 7.01(g), 7.01(h), 7.01(i), 7.01(j), 7.01(k), 7.01(m), 7.01(n), 7.01(o), 7.01(p), 7.01(q), or in Section 7.02; (ii) shall fail to observe or perform any other covenant, condition or agreement contained in Sections 7.01(d), 7.01(l), 7.01(r) or 7.01(s) and such failure described in this clause (ii) shall continue unremedied for a period of 10 days after the earlier of (x) the date on which any officer of any Loan Party knows or should have known of such failure or (y) the date any Loan Party receives notice thereof from the Agent; or (iii) shall fail to observe or perform any covenant or agreement contained in any Borrower Security Agreement or other Collateral Document to which it is a party beyond the applicable notice or cure period; (d) the Loan Parties shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in clauses (a), (b) or (c) of this Section 9.01) or any other Loan Document, and such failure shall continue unremedied for a period of 20 days after the earlier of (x) the date on which any officer of any Loan Party knows or should have known of such failure or (y) any Loan Party receives notice thereof from the Agent; (e) any Loan Party shall fail to make any payment (whether of principal, interest or otherwise and regardless of amount) in respect of any Material Indebtedness or any Material Rental Obligation, when and as the same shall become due and payable, after giving effect to any grace period with respect thereto; (f) any event or condition occurs that results in (i) (A) any Material Indebtedness of the Loan Parties becoming due prior to its scheduled maturity, (B) that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause such Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance - 62 - thereof, prior to its scheduled maturity, or (C) requires the Loan Parties to offer to repay, repurchase, redeem, or defease such Material Indebtedness, or (ii) the Lease with respect to any Material Rental Obligation of the Loan Parties being terminated prior to its scheduled expiration date or that enables or permits (with or without the giving of notice, the lapse of time or both) the counterparty to such Lease to cause such Lease to be terminated prior to its scheduled expiration date; (g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of any Loan Party or its debts, or of a substantial part of its assets, under any Insolvency Law or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for and Loan Party or for a substantial part of its assets, and, in any such case, 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 Loan Party shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Insolvency Law or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (g) of this Section 9.01, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing; (i) any Loan Party shall become unable, admit in writing or fail generally to pay its debts as they become due; (j) a final judgment or judgments for the payment of money (x) in excess of $1,000,000 in the aggregate (exclusive of judgment amounts fully covered by insurance where the insurer has admitted liability in respect of such judgment) or (y) in excess of $1,000,000 in the aggregate (regardless of insurance coverage), shall be rendered by one or more courts, administrative tribunals or other bodies having jurisdiction over a Loan Party and the same shall not be discharged (or provision shall not be made for such discharge), bonded, or a stay of execution thereof shall not be procured, within 60 days from the date of entry thereof and the such Loan Party shall not, within said period of 60 days, or such longer period during which execution of the same shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal; (k) an ERISA Event shall have occurred that, when taken together with all other ERISA Events that have occurred, could reasonably be expected to have a Material Adverse Effect; (l) any Loan Party shall be liable for any Environmental Liabilities payment of which could reasonably be expected to have a Material Adverse Effect; - 63 - (m) any Loan Document shall at any time for any reason (other than pursuant to the express terms thereof) cease to be valid and binding on or enforceable against any Loan Party intended to be a party thereto, or the validity or enforceability thereof shall be contested by any party thereto, or a proceeding shall be commenced by any Loan Party or any Governmental Authority having jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof, or any Loan Party shall deny in writing that it has any liability or obligation purported to be created under any Loan Document (in each case, an "UNENFORCEABILITY EVENT"); or (ii) any Unenforceability Event shall occur with respect to one or more provisions of any Loan Document if such event could reasonably be expected to have a Material Adverse Effect; (n) any Borrower Security Agreement, any Pledge Agreement, any Mortgage or any other security document, after delivery thereof pursuant hereto, shall for any reason fail or cease to create a valid and perfected and, except to the extent permitted by the terms hereof or thereof and subject to the US Intercreditor Agreement, first priority Lien in favor of the Agent for the benefit of the Lenders on any Collateral with a fair market value in excess of $100,000 purported to be covered thereby; (o) any bank at which any deposit account, blocked account, or lockbox account of any Loan Party is maintained shall fail to comply with any of the terms of any deposit account agreement, blocked account agreement, control Agreement or similar agreement in respect of such account to which such bank is a party or any securities intermediary, commodity intermediary or other financial institution at any time in custody, control or possession of any investment property of any Loan Party shall fail to comply with any of the terms of any investment property control agreement in respect of such property to which such Person is a party if such failure could reasonably be expected to have a Material Adverse Effect; (p) any Loan Party is enjoined, restrained or in any way prevented by the order of any court or any Governmental Authority from conducting all or any material part of its business for more than 15 days; (q) any cessation of a substantial part of the business of any Loan Party for a period which materially and adversely affects the ability of such Person to continue its business on a profitable basis; (r) the loss, suspension or revocation of, or failure to renew, any license or permit now held or hereafter acquired by any Loan Party, if such loss, suspension, revocation or failure to renew could reasonably be expected to have a Material Adverse Effect; (s) the indictment, or the threatened indictment of any Loan Party under any criminal statute, or commencement or threatened commencement of criminal or civil proceedings against any Loan Party, pursuant to which statute or proceedings the penalties or remedies sought or available include forfeiture to any Governmental Authority of any material portion of the property of such Person; - 64 - (t) there shall occur any loss theft, damage or destruction of any Collateral not fully covered (subject to such reasonable deductibles as the Agent shall have approved) by insurance which has or could reasonably be expected to have a Material Adverse Effect; (u) there shall occur an event or development that has had a material adverse effect on (i) the businesses, operations, properties, condition, financial or otherwise, that impairs the Loan Parties from performing their obligations under the Loan Documents, or (ii) the validity or enforceability of any of the Loan Documents or the rights and remedies of the Agent and the Lenders thereunder; (v) an "Event of Default" shall have occurred under the US Financing Agreement or the Working Capital Loan Agreement; then, and in any such event, the Agent may, and shall at the request of the Required Lenders, by notice to the Administrative Borrower, (i) declare all or any portion of the Term Loan then outstanding to be due and payable, whereupon all or such portion of the aggregate principal of the Term Loan, all accrued and unpaid interest thereon, all fees and all other amounts payable under this Agreement and the other Loan Documents shall become due and payable immediately, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by each Loan Party and (ii) exercise any and all of its other rights and remedies under applicable law, hereunder and under the other Loan Documents; PROVIDED, HOWEVER, that upon the occurrence of any Event of Default described in subsection (g), (h) or (i) of this Section 9.01, without any notice to any Loan Party or any other Person or any act by the Agent or any Lender, the Term Loan, together with all accrued and unpaid interest thereon, all fees and all other amounts due under this Agreement and the other Loan Documents shall become due and payable automatically and immediately, without presentment, demand, protest or notice of any kind, all of which are expressly waived by each Loan Party. ARTICLE X AGENT Section 10.01 APPOINTMENT. Each Lender hereby irrevocably appoints and authorizes the Agent to perform the duties of the Agent as set forth in this Agreement including: (i) to receive on behalf of each Lender any payment of principal of or interest on the Term Loan outstanding hereunder and all other amounts accrued hereunder for the account of the Lenders and paid to the Agent, and, subject to Section 2.02 of this Agreement, to distribute promptly to each Lender its Pro Rata Share of all payments so received; (ii) to distribute to each Lender copies of all material notices and agreements received by the Agent and not required to be delivered to each Lender pursuant to the terms of this Agreement, provided that the Agent shall not have any liability to the Lenders for the Agent's inadvertent failure to distribute any such notices or agreements to the Lenders; (iii) to maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Obligations, the Term Loan, and related matters and to maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Collateral and related matters; (iv) to execute or file any and all financing or similar statements or notices, - 65 - amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to this Agreement or any other Loan Document; (v) to make the Term Loan and Agent Advances, for the Agent or on behalf of the applicable Lenders as provided in this Agreement or any other Loan Document; (vi) to perform, exercise, and enforce any and all other rights and remedies of the Lenders with respect to the Loan Parties, the Obligations, or otherwise related to any of same to the extent reasonably incidental to the exercise by the Agent of the rights and remedies specifically authorized to be exercised by the Agent by the terms of this Agreement or any other Loan Document; (vii) to incur and pay such fees necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to this Agreement or any other Loan Document; and (viii) subject to Section 10.03 of this Agreement, to take such action as the Agent deems appropriate on its behalf to administer the Term Loan and the Loan Documents and to exercise such other powers delegated to the Agent by the terms hereof or the other Loan Documents (including, without limitation, the power to give or to refuse to give notices, waivers, consents, approvals and instructions and the power to make or to refuse to make determinations and calculations) together with such powers as are reasonably incidental thereto to carry out the purposes hereof and thereof. As to any matters not expressly provided for by this Agreement and the other Loan Documents (including, without limitation, enforcement or collection of the Term Loan), the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions of the Required Lenders shall be binding upon all Lenders. Section 10.02 NATURE OF DUTIES. The Agent shall have no duties or responsibilities except those expressly set forth in this Agreement or in the other Loan Documents. The duties of the Agent shall be mechanical and administrative in nature. The Agent shall not have by reason of this Agreement or any other Loan Document a fiduciary relationship in respect of any Lender. Nothing in this Agreement or any other Loan Document, express or implied, is intended to or shall be construed to impose upon the Agent any obligations in respect of this Agreement or any other Loan Document except as expressly set forth herein or therein. Each Lender shall make its own independent investigation of the financial condition and affairs of the Loan Parties in connection with the making and the continuance of the Term Loan hereunder and shall make its own appraisal of the creditworthiness of the Loan Parties and the value of the Collateral, and the Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into their possession before the Term Loan hereunder or at any time or times thereafter, provided that, upon the reasonable request of a Lender, the Agent shall provide to such Lender any documents or reports delivered to the Agent by the Loan Parties pursuant to the terms of this Agreement or any other Loan Document. If the Agent seeks the consent or approval of the Required Lenders to the taking or refraining from taking any action hereunder, the Agent shall send notice thereof to each Lender. The Agent shall promptly notify each Lender any time that the Required Lenders have instructed the Agent to act or refrain from acting pursuant hereto. - 66 - Section 10.03 RIGHTS, EXCULPATION, ETC. The Agent and its directors, officers, agents or employees shall not be liable for any action taken or omitted to be taken by them under or in connection with this Agreement or the other Loan Documents, except for their own gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction. Without limiting the generality of the foregoing, the Agent (i) may treat the payee of the Term Loan as the owner thereof until the Agent receives written notice of the assignment or transfer thereof, pursuant to Section 12.07 hereof, signed by such payee and in form satisfactory to the Agent; (ii) may consult with legal counsel (including, without limitation, counsel to the Agent or counsel to the Loan Parties), independent public accountants, and other experts selected by any of them and shall not be liable for any action taken or omitted to be taken in good faith by any of them in accordance with the advice of such counsel or experts; (iii) make no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, certificates, warranties or representations made in or in connection with this Agreement or the other Loan Documents; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or the other Loan Documents on the part of any Person, the existence or possible existence of any Default or Event of Default, or to inspect the Collateral or other property (including, without limitation, the books and records) of any Person; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; and (vi) shall not be deemed to have made any representation or warranty regarding the existence, value or collectibility of the Collateral, the existence, priority or perfection of the Agent's Lien thereon, or any certificate prepared by any Loan Party in connection therewith, nor shall the Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral. The Agent shall not be liable for any apportionment or distribution of payments made in good faith pursuant to Section 4.04, and if any such apportionment or distribution is subsequently determined to have been made in error the sole recourse of any Lender to whom payment was due but not made, shall be to recover from other Lenders any payment in excess of the amount which they are determined to be entitled. The Agent may at any time request instructions from the Lenders with respect to any actions or approvals which by the terms of this Agreement or of any of the other Loan Documents the Agent is permitted or required to take or to grant, and if such instructions are promptly requested, the Agent shall be absolutely entitled to refrain from taking any action or to withhold any approval under any of the Loan Documents until it shall have received such instructions from the Required Lenders. Without limiting the foregoing, no Lender shall have any right of action whatsoever against the Agent as a result of the Agent acting or refraining from acting under this Agreement or any of the other Loan Documents in accordance with the instructions of the Required Lenders. Section 10.04 RELIANCE. The Agent shall be entitled to rely upon any written notices, statements, certificates, orders or other documents or any telephone message believed by it in good faith to be genuine and correct and to have been signed, sent or made by the proper Person, and with respect to all matters pertaining to this Agreement or any of the other Loan Documents and its duties hereunder or thereunder, upon advice of counsel selected by it. - 67 - Section 10.05 INDEMNIFICATION. To the extent that the Agent is not reimbursed and indemnified by any Loan Party, the Lenders will reimburse and indemnify the Agent from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, advances or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of this Agreement or any of the other Loan Documents or any action taken or omitted by the Agent under this Agreement or any of the other Loan Documents, in proportion to each Lender's Pro Rata Share, including, without limitation, advances and disbursements made pursuant to Section 10.08; PROVIDED, HOWEVER, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, advances or disbursements for which there has been a final judicial determination that such liability resulted from the Agent's gross negligence or willful misconduct. The obligations of the Lenders under this Section 10.05 shall survive the payment in full of the Term Loan and the termination of this Agreement. Section 10.06 AGENT INDIVIDUALLY. With respect to its Pro Rata Share of the Total Term Loan Commitment hereunder and the Term Loan made by it, the Agent shall have and may exercise the same rights and powers hereunder and is subject to the same obligations and liabilities as and to the extent set forth herein for any other Lender. The terms "Lenders" or "Required Lenders" or any similar terms shall, unless the context clearly otherwise indicates, include the Agent in its individual capacity as a Lender or one of the Required Lenders. The Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of banking, trust or other business with any Borrower as if it were not acting as the Agent pursuant hereto without any duty to account to the other Lenders. Section 10.07 SUCCESSOR AGENT. (a) The Agent may resign from the performance of all its functions and duties hereunder and under the other Loan Documents at any time by giving at least 30 Business Days' prior written notice to the Administrative Borrower and each Lender. Such resignation shall take effect upon the acceptance by a successor Agent of appointment pursuant to clauses (b) and (c) below or as otherwise provided below. (b) Upon any such notice of resignation, the Required Lenders shall appoint a successor Agent. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the Agent, and the Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents. After the Agent's resignation hereunder as the Agent, the provisions of this ARTICLE X shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Agent under this Agreement and the other Loan Documents. (c) If a successor Agent shall not have been so appointed within said 30 Business Day period, the Agent shall then appoint a successor - 68 - Agent who shall serve as the Agent until such time, if any, as the Required Lenders appoint a successor Agent as provided above. Section 10.08 COLLATERAL MATTERS. (a) The Agent may from time to time make such disbursements and advances ("AGENT ADVANCES") which the Agent, in its sole discretion, deems necessary or desirable to preserve, protect, prepare for sale or lease or dispose of the Collateral or any portion thereof, to enhance the likelihood or maximize the amount of repayment by the Borrowers of the Term Loan and the other Obligations or to pay any other amount chargeable to the Borrowers pursuant to the terms of this Agreement, including, without limitation, costs, fees and expenses as described in Section 12.04. The Agent Advances shall be repayable on demand, shall bear interest at the rate per annum set forth in Section 2.04 and shall be secured by the Collateral. The Agent Advances shall constitute Obligations hereunder which may be charged to the Loan Account in accordance with Section 4.02. The Agent shall notify each Lender and the Administrative Borrower in writing of each such Agent Advance, which notice shall include a description of the purpose of such Agent Advance. Without limitation to its obligations pursuant to Section 10.05, each Lender agrees that it shall make available to the Agent, upon the Agent's demand, in Dollars in immediately available funds, the amount equal to such Lender's Pro Rata Share of each such Agent Advance. If such funds are not made available to the Agent by such Lender, the Agent shall be entitled to recover such funds on demand from such Lender, together with interest thereon for each day from the date such payment was due until the date such amount is paid to the Agent, at the Federal Funds Rate for 3 Business Days and thereafter at the Reference Rate. (b) The Lenders hereby irrevocably authorize the Agent, at its option and in its discretion, to release any Lien granted to or held by the Agent upon any Collateral upon payment and satisfaction of the Term Loan and all other Obligations which have matured and which the Agent has been notified in writing are then due and payable; or constituting property being sold or disposed of in compliance with the terms of this Agreement and the other Loan Documents; or constituting property in which the Loan Parties owned no interest at the time the Lien was granted or at any time thereafter; or if approved, authorized or ratified in writing by the Lenders. Upon request by the Agent at any time, the Lenders will confirm in writing the Agent's authority to release particular types or items of Collateral pursuant to this Section 10.08(b). (c) Without in any manner limiting the Agent's authority to act without any specific or further authorization or consent by the Lenders (as set forth in Section 10.08(b)), each Lender agrees to confirm in writing, upon request by the Agent, the authority to release Collateral conferred upon the Agent under Section 10.08(b). Upon receipt by the Agent of confirmation from the Lenders of its authority to release any particular item or types of Collateral, and upon prior written request by any Loan Party, the Agent shall (and is hereby irrevocably authorized by the Lenders to) execute such documents as may be necessary to evidence the release of the Liens granted to the Agent for the benefit of the Lenders upon such Collateral; PROVIDED, HOWEVER, that (i) the Agent shall not be required to execute any such document on terms which, in the Agent's opinion, would expose the Agent to liability or create any obligations or entail any consequence other than the release of such Liens without recourse - 69 - or warranty, and (ii) such release shall not in any manner discharge, affect or impair the Obligations or any Lien upon (or obligations of any Loan Party in respect of) all interests in the Collateral retained by any Loan Party. (d) The Agent shall have no obligation whatsoever to any Lender to assure that the Collateral exists or is owned by the Loan Parties or is cared for, protected or insured or has been encumbered or that the Lien granted to the Agent pursuant to this Agreement or any other Loan Document has been properly or sufficiently or lawfully created, perfected, protected or enforced or is entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to the Agent in this Section 10.08 or in any other Loan Document, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, the Agent may act in any manner it may deem appropriate, in its sole discretion, given the Agent's own interest in the Collateral as one of the Lenders and that the Agent shall have no duty or liability whatsoever to any other Lender, except as otherwise provided herein. Section 10.09 AGENCY FOR PERFECTION. The Agent and each Lender hereby appoints the Agent and each other Lender as agent and bailee for the purpose of perfecting the security interests in and liens upon the Collateral in assets which, in accordance with Article 9 of the Uniform Commercial Code or applicable provisions of the PPSA, can be perfected only by possession or control (or where the security interest of a secured party with possession or control has priority over the security interest of another secured party) and the Agent and each Lender hereby acknowledges that it holds possession of or otherwise controls any such Collateral for the benefit of the Agent and the Lenders as secured party. Should any Lender obtain possession or control of any such Collateral, such Lender shall notify the Agent thereof, and, promptly upon the Agent's request therefor shall deliver such Collateral to the Agent or in accordance with the Agent's instructions. Each Loan Party by its execution and delivery of this Agreement hereby consents to the foregoing. ARTICLE XI [INTENTIONALLY OMITTED] ARTICLE XII MISCELLANEOUS Section 12.01 NOTICES, ETC. All notices and other communications provided for hereunder shall be in writing and shall be mailed, telecopied or delivered, if to any Loan Party, at the following address: Columbus McKinnon Corporation 140 John James Audubon Parkway Amherst, NY 14228 Attention: Robert L. Montgomery, Jr. Telephone: 716-689-5405 Telecopier: 716-689-5598 - 70 - with a copy to: Blake Cassels & Graydon, LLP Commerce Court West Toronto, Ontario, M5L 1A9 Attention: Simon Finch Telephone: 416-863-2159 Telecopier: 416-863-2653 if to the Agent, to it at the following address: Regiment Capital III, L.P. 70 Federal Street, 7th Floor Boston, Massachusetts 02110 Attention: Richard T. Miller Telephone: 617-488-1617 Telecopier: 617-488-1668 with a copy to: Wildeboer Rand Thomson Apps & Dellelce, LLP 1 First Canadian Place, Suite 810 Toronto, Ontario, M5X 1A9 Attention: Rory Cattanach Telephone: 416-361-3121 Telecopier: 416-361-1790 and Schulte Roth & Zabel LLP 919 Third Avenue New York, New York 10022 Attention: Frederic L. Ragucci Telephone: 212-756-2409 Telecopier: 212-593-5955 or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties complying as to delivery with the terms of this Section 12.01. All such notices and other communications shall be effective, (i) if mailed, when received or 3 days after deposited in the mails, whichever occurs first, (ii) if telecopied, when transmitted and confirmation received, or (iii) if delivered, upon delivery, except that notices to the Agent pursuant to ARTICLE II shall not be effective until received by the Agent. - 71 - Section 12.02 AMENDMENTS, ETC. No amendment or waiver of any provision of this Agreement, and no consent to any departure by any Loan Party therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders or by the Agent with the consent of the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given, PROVIDED, HOWEVER, that no amendment, waiver or consent shall (i) reduce the principal of, or interest on, the Term Loan payable to any Lender, reduce the amount of any fee payable for the account of any Lender, or postpone or extend any date fixed for any payment of principal of, or interest or fees on, the Term Loan, in each case without the written consent of any Lender affected thereby, (ii) increase the Total Term Loan Commitment without the written consent of each Lender, (iii) change the percentage of the Term Loan Commitments or of the aggregate unpaid principal amount of the Term Loan that is required for the Lenders or any of them to take any action hereunder, (iv) amend the definition of "Required Lenders" or "Pro Rata Share", (v) release all or a substantial portion of the Collateral (except as otherwise provided in this Agreement and the other Loan Documents), subordinate any Lien granted in favor of the Agent for the benefit of the Lenders, or release any Borrower or any Guarantor, or (vi) amend, modify or waive Section 4.04 or this Section 12.02 of this Agreement, in each case, without the written consent of each Lender. Notwithstanding the foregoing, no amendment, waiver or consent shall, unless in writing and signed by the Agent, affect the rights or duties of the Agent (but not in its capacity as a Lender) under this Agreement or the other Loan Documents. Section 12.03 NO WAIVER; REMEDIES, ETC. No failure on the part of the Agent or any Lender to exercise, and no delay in exercising, any right hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right under any Loan Document preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies of the Agent and the Lenders provided herein and in the other Loan Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law. The rights of the Agent and the Lenders under any Loan Document against any party thereto are not conditional or contingent on any attempt by the Agent and the Lenders to exercise any of their rights under any other Loan Document against such party or against any other Person. Section 12.04 EXPENSES; TAXES; ATTORNEYS' FEES. The Borrowers will pay on demand, all costs and expenses incurred by or on behalf of the Agent and each Lender, regardless of whether the transactions contemplated hereby are consummated, including, without limitation, reasonable fees, costs, client charges and expenses of counsel for the Agent and each Lender, accounting, due diligence, periodic field audits, physical counts, valuations, investigations, searches and filings, monitoring of assets, appraisals of Collateral, title searches and reviewing environmental assessments, miscellaneous disbursements, examination, travel, lodging and meals, arising from or relating to: (a) the negotiation, preparation, execution, delivery, performance and administration of this Agreement and the other Loan Documents (including, without limitation, the preparation of any additional Loan Documents pursuant to Sections 7.01(l) and 7.01(n), or the review of any of the - 72 - agreements, instruments and documents referred to in Sections 7.01(f) and 7.01(k)), (b) any requested amendments, waivers or consents to this Agreement or the other Loan Documents whether or not such documents become effective or are given, (c) the preservation and protection of any of the Lenders' rights under this Agreement or the other Loan Documents, (d) the defense of any claim or action asserted or brought against the Agent or any Lender by any Person that arises from or relates to this Agreement, any other Loan Document, the Agent's or the Lenders' claims against any Loan Party, or any and all matters in connection therewith, (e) the commencement or defense of, or intervention in, any court proceeding arising from or related to this Agreement or any other Loan Document, (f) the filing of any petition, complaint, answer, motion or other pleading by the Agent or any Lender, or the taking of any action in respect of the Collateral or other security, in connection with this Agreement or any other Loan Document, (g) the protection, collection, lease, sale, taking possession of or liquidation of, any Collateral or other security in connection with this Agreement or any other Loan Document, (h) any attempt to enforce any Lien or security interest in any Collateral or other security in connection with this Agreement or any other Loan Document, (i) any attempt to collect from any Loan Party, (j) all liabilities and costs arising from or in connection with the past, present or future operations of any Loan Party involving any damage to real or personal property or natural resources or harm or injury alleged to have resulted from any Release of Hazardous Materials on, upon or into such property, (k) any Environmental Liabilities incurred in connection with the investigation, removal, cleanup and/or remediation of any Hazardous Materials present or arising out of the operations of any facility of any Loan Party, (l) any Environmental Liabilities incurred in connection with any Environmental Lien, or (m) the receipt by the Agent or any Lender of any advice from professionals with respect to any of the foregoing. Without limitation of the foregoing or any other provision of any Loan Document: (x) the Borrowers agree to pay all stamp, document, transfer, recording or filing taxes or fees and similar impositions now or hereafter determined by the Agent or any Lender to be payable in connection with this Agreement or any other Loan Document, and the Borrowers agree to save the Agent and each Lender harmless from and against any and all present or future claims, liabilities or losses with respect to or resulting from any omission to pay or delay in paying any such taxes, fees or impositions, (y) the Borrowers agree to pay all broker fees that may become due in connection with the transactions contemplated by this Agreement and the other Loan Documents, and (z) if the Borrowers fail to perform any covenant or agreement contained herein or in any other Loan Document, the Agent may itself perform or cause performance of such covenant or agreement, and the expenses of the Agent incurred in connection therewith shall be reimbursed on demand by the Borrowers. Section 12.05 RIGHT OF SET-OFF. Upon the occurrence and during the continuance of any Event of Default, the Agent or any Lender may, and is hereby authorized to, at any time and from time to time, without notice to any Loan Party (any such notice being expressly waived by the Loan Parties) and to the fullest extent permitted by law, set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other Indebtedness at any time owing by the Agent or such Lender to or for the credit or the account of any Loan Party against any and all obligations of the Loan Parties either now or hereafter existing under any Loan Document, irrespective of whether or not the Agent or such Lender shall have made any demand hereunder or thereunder and although such obligations may - 73 - be contingent or unmatured. The Agent and each Lender agrees to notify such Loan Party promptly after any such set-off and application made by the Agent or such Lender provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Agent and the Lenders under this Section 12.05 are in addition to the other rights and remedies (including other rights of set-off) which the Agent and the Lenders may have under this Agreement or any other Loan Documents of law or otherwise. Section 12.06 SEVERABILITY. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. Section 12.07 ASSIGNMENTS AND PARTICIPATIONS. (a) This Agreement and the other Loan Documents shall be binding upon and inure to the benefit of each Loan Party and the Agent and each Lender and their respective successors and assigns; PROVIDED, HOWEVER, that none of the Loan Parties may assign or transfer any of its rights hereunder without the prior written consent of each Lender and any such assignment without the Lenders' prior written consent shall be null and void. (b) Each Lender may, with the written consent of the Agent, assign to one or more other lenders or other entities all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Term Loan); PROVIDED, HOWEVER, that (i) such assignment is in an amount which is at least $5,000,000 or a multiple of $1,000,000 in excess thereof (or the remainder of such Lender's Term Loan) (except such minimum amount shall not apply to an assignment by a Lender to an Affiliate of such Lender or a fund or account managed by such Lender or an Affiliate of such Lender or its investment manager), (ii) the parties to each such assignment shall execute and deliver to the Agent, for its acceptance, an Assignment and Acceptance, together with any promissory note subject to such assignment and such parties shall deliver to the Agent a processing and recordation fee of $5,000 (except the payment of such fee shall not be required in connection with an assignment by a Lender to an Affiliate of such Lender or a fund or account managed by such Lender or an Affiliate of such Lender or its investment manager) and (iii) no written consent of the Agent shall be required in connection with any assignment by a Lender to an Affiliate of such Lender or a fund or account managed by such Lender or an Affiliate of such Lender or its investment manager. Upon such execution, delivery and acceptance, from and after the effective date specified in each Assignment and Acceptance, which effective date shall be at least 3 Business Days after the delivery thereof to the Agent (or such shorter period as shall be agreed to by the Agent and the parties to such assignment), (A) the assignee thereunder shall become a "Lender" hereunder and, in addition to the rights and obligations hereunder held by it immediately prior to such effective date, have the rights and obligations hereunder that have been assigned to it pursuant to such Assignment and Acceptance and (B) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion - 74 - of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto). The Agent shall provide the Administrative Borrower with notice of each assignment by a Lender which requires the Agent's consent pursuant to this Section 12.07(b) promptly after the effectiveness of such assignment. (i) By executing and delivering an Assignment and Acceptance, the assigning Lender and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (A) other than as provided in such Assignment and Acceptance, the assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any other Loan Document or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document furnished pursuant hereto; (B) the assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Loan Party or any of its Subsidiaries or the performance or observance by any Loan Party of any of its obligations under this Agreement or any other Loan Document furnished pursuant hereto; (C) such assignee confirms that it has received a copy of this Agreement and the other Loan Documents, together with such other documents and information it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (D) such assignee will, independently and without reliance upon the assigning Lender, the Agent or any Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents; (E) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and the other Loan Documents as are delegated to the Agent by the terms hereof and thereof, together with such powers as are reasonably incidental hereto and thereto; and (F) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement and the other Loan Documents are required to be performed by it as a Lender. (ii) The Agent shall, on behalf of the Borrowers, maintain, or cause to be maintained at the Payment Office, a copy of each Assignment and Acceptance delivered to and accepted by it and a register (the "REGISTER") for the recordation of the names and addresses of the Lenders and the principal amount of the Term Loan (the "REGISTERED LOANS") from time to time. The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrowers, the Agent and the Lenders shall treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrowers and any Lender at any reasonable time and from time to time upon reasonable prior notice. In the case of any assignment pursuant to Section 12.07(b)(iii), the assigning Lender shall maintain a comparable register on behalf of the Borrower. (iii) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an assignee, together with any promissory notes subject to such assignment, the Agent shall, if the Agent consents to such assignment and if such Assignment and Acceptance has been completed (i) accept such Assignment and Acceptance and (ii) record the information contained therein in the Register. - 75 - (iv) A Registered Loan (and the registered note, if any, evidencing the same) may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register (and each registered note shall expressly so provide). Any assignment or sale of all or part of such Registered Loan (and the registered note, if any, evidencing the same) may be effected only by registration of such assignment or sale on the Register, together with the surrender of the registered note, if any, evidencing the same duly endorsed by (or accompanied by a written instrument of assignment or sale duly executed by) the holder of such registered note, whereupon, at the request of the designated assignee(s) or transferee(s), one or more new registered notes in the same aggregate principal amount shall be issued to the designated assignee(s) or transferee(s). Prior to the registration of assignment or sale of any Registered Loan (and the registered note, if any, evidencing the same), the Agent shall treat the Person in whose name such Registered Loan (and the registered note, if any, evidencing the same) is registered as the owner thereof for the purpose of receiving all payments thereon and for all other purposes, notwithstanding notice to the contrary. (v) In the event that any Lender sells participations in a Registered Loan, such Lender shall maintain a register on which it enters the name of all participants in the Registered Loans held by it (the "PARTICIPANT REGISTER"). A Registered Loan (and the registered note, if any, evidencing the same) may be participated in whole or in part only by registration of such participation on the Participant Register (and each registered note shall expressly so provide). Any participation of such Registered Loan (and the registered note, if any, evidencing the same) may be effected only by the registration of such participation on the Participant Register. (vi) Any foreign Person who purchases or is assigned or participates in any portion of such Registered Loan shall provide the Agent and the Lender with a completed Internal Revenue Service Form W-8BEN (Certificate of Foreign Status) or a substantially similar form for such purchaser, participant or any other affiliate who is a holder of beneficial interests in the Registered Loan. (c) Each Lender may sell participations to one or more banks or other entities in or to all or a portion of its rights and obligations under this Agreement and the other Loan Documents (including, without limitation, all or a portion of its Term Loan); provided, that (i) such Lender's obligations under this Agreement (including without limitation, its Commitments hereunder) and the other Loan Documents shall remain unchanged; (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and the Borrowers, the Agent 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 and the other Loan Documents; and (iii) a participant shall not be entitled to require such Lender to take or omit to take any action hereunder except (A) action directly effecting an extension of the maturity dates or decrease in the principal amount of the Term Loan, (B) action directly effecting an extension of the due dates or a decrease in the rate of interest payable on the Term Loan or the fees payable under this Agreement, or (C) actions directly effecting a release of all or a substantial portion of the Collateral or any Loan Party (except as set forth in Section 10.08 of this Agreement or any other Loan Document). The Loan Parties agree that each participant shall be entitled to the benefits of Section 2.08 and Section 4.05 of this Agreement with respect to its participation in any portion of the Term Loan as if it was a Lender. - 76 - Section 12.08 COUNTERPARTS. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Agreement by telecopier shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telecopier also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each other Loan Document MUTATIS MUTANDIS. Section 12.09 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK. Section 12.10 CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK OR OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH LOAN PARTY HEREBY IRREVOCABLY ACCEPTS IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH LOAN PARTY HEREBY IRREVOCABLY APPOINTS THE SECRETARY OF STATE OF THE STATE OF NEW YORK AS ITS AGENT FOR SERVICE OF PROCESS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING AND FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS AND IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE ADMINISTRATIVE BORROWER AT ITS ADDRESS FOR NOTICES AS SET FORTH IN SECTION 12.01 AND TO THE SECRETARY OF STATE OF THE STATE OF NEW YORK, SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT AND THE LENDERS TO SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY LOAN PARTY IN ANY OTHER JURISDICTION. EACH LOAN PARTY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR LAYING OF VENUE OF ANY SUCH LITIGATION - 77 - BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY LOAN PARTY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH LOAN PARTY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. Section 12.11 WAIVER OF JURY TRIAL, ETC. EACH LOAN PARTY, THE AGENT AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION THEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION, PROCEEDINGS OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH LOAN PARTY CERTIFIES THAT NO OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF THE AGENT OR ANY LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT OR ANY LENDER WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS. EACH LOAN PARTY HEREBY ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS ENTERING INTO THIS AGREEMENT. Section 12.12 CONSENT BY THE AGENT AND LENDERS. Except as otherwise expressly set forth herein to the contrary, if the consent, approval, satisfaction, determination, judgment, acceptance or similar action (an "ACTION") of the Agent or any Lender shall be permitted or required pursuant to any provision hereof or any provision of any other agreement to which any Loan Party is a party and to which the Agent or any Lender has succeeded thereto, such Action shall be required to be in writing and may be withheld or denied by the Agent or such Lender, in its sole discretion, with or without any reason, and without being subject to question or challenge on the grounds that such Action was not taken in good faith. Section 12.13 NO PARTY DEEMED DRAFTER. Each of the parties hereto agrees that no party hereto shall be deemed to be the drafter of this Agreement. Section 12.14 REINSTATEMENT; CERTAIN PAYMENTS. If any claim is ever made upon the Agent or any Lender for repayment or recovery of any amount or amounts received by the Agent or such Lender in - 78 - payment or on account of any of the Obligations, the Agent or such Lender shall give prompt notice of such claim to each other Lender and the Borrower, and if the Agent or such Lender repays all or part of such amount by reason of (i) any judgment, decree or order of any court or administrative body having jurisdiction over the Agent or such Lender or any of its property, or (ii) any good faith settlement or compromise of any such claim effected by the Agent or such Lender with any such claimant, then and in such event each Loan Party agrees that (A) any such judgment, decree, order, settlement or compromise shall be binding upon it notwithstanding the cancellation of any Indebtedness hereunder or under the other Loan Documents or the termination of this Agreement or the other Loan Documents, and (B) it shall be and remain liable to the Agent or such Lender hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by the Agent or such Lender. Section 12.15 INDEMNIFICATION. (a) GENERAL INDEMNITY. In addition to each Loan Party's other Obligations under this Agreement, each Loan Party agrees to, jointly and severally, defend, protect, indemnify and hold harmless the Agent and each Lender and all of their respective officers, directors, employees, attorneys, consultants and agents (collectively called the "INDEMNITEES") from and against any and all losses, damages, liabilities, obligations, penalties, fees, reasonable costs and expenses (including, without limitation, reasonable attorneys' fees, costs and expenses) incurred by such Indemnitees, whether prior to or from and after the Effective Date, whether direct, indirect or consequential, as a result of or arising from or relating to or in connection with any of the following: (i) the negotiation, preparation, execution or performance or enforcement of this Agreement, any other Loan Document or of any other document executed in connection with the transactions contemplated by this Agreement, (ii) the Agent's or any Lender's furnishing of funds to the Borrowers under this Agreement or the other Loan Documents, including, without limitation, the management of the Term Loan, (iii) any matter relating to the financing transactions contemplated by this Agreement or the other Loan Documents or by any document executed in connection with the transactions contemplated by this Agreement or the other Loan Documents, or (iv) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto (collectively, the "INDEMNIFIED MATTERS"); PROVIDED, HOWEVER, that the Loan Parties shall not have any obligation to any Indemnitee under this subsection (a) for any Indemnified Matter caused by the gross negligence or willful misconduct of such Indemnitee, as determined by a final judgment of a court of competent jurisdiction. (b) ENVIRONMENTAL INDEMNITY. Without limiting Section 12.15(a) hereof, each Loan Party agrees to, jointly and severally, defend, indemnify, and hold harmless the Indemnitees against any and all Environmental Liabilities and all other claims, demands, penalties, fines, liability (including strict liability), losses, damages, costs and expenses (including without limitation, reasonable legal fees and expenses, consultant fees and laboratory fees), arising out of (i) any Releases or threatened Releases (x) at any property presently or formerly owned or operated by any Loan Party or any Subsidiary of any Loan Party, or any predecessor in interest, or (y) of any Hazardous Materials generated and disposed of by any Loan Party or any Subsidiary of any Loan Party, or any predecessor in interest; (ii) any violations of Environmental Laws; (iii) any Environmental Action relating to any Loan Party or any Subsidiary of any Loan Party, or any predecessor in interest; (iv) any personal - 79 - injury (including wrongful death) or property damage (real or personal) arising out of exposure to Hazardous Materials used, handled, generated, transported or disposed by any Loan Party or any Subsidiary of any Loan Party, or any predecessor in interest; and (v) any breach of any warranty or representation regarding environmental matters made by the Loan Parties in Section 6.01(f) or the breach of any covenant made by the Loan Parties in Section 7.01(k). Notwithstanding the foregoing, the Loan Parties shall not have any obligation to any Indemnitee under this subsection (b) regarding any potential environmental matter covered hereunder which is caused by the gross negligence or willful misconduct of such Indemnitee, as determined by a final judgment of a court of competent jurisdiction. (c) The indemnification for all of the foregoing losses, damages, fees, costs and expenses of the Indemnitees are chargeable against the Loan Account. To the extent that the undertaking to indemnify, pay and hold harmless set forth in this Section 12.15 may be unenforceable because it is violative of any law or public policy, each Loan Party shall, jointly and severally, contribute the maximum portion which it is permitted to pay and satisfy under applicable law, to the payment and satisfaction of all Indemnified Matters incurred by the Indemnitees. The indemnities set forth in this Section 12.15 shall survive the repayment of the Obligations and discharge of any Liens granted under the Loan Documents. Section 12.16 COLUMBUS MCKINNON AS AGENT FOR BORROWERS. Each Borrower hereby irrevocably appoints Columbus McKinnon as the borrowing agent and attorney-in-fact for the Borrowers (the "ADMINISTRATIVE BORROWER") which appointment shall remain in full force and effect unless and until the Agent shall have received prior written notice signed by all of the Borrowers that such appointment has been revoked and that another Borrower has been appointed Administrative Borrower. Each Borrower hereby irrevocably appoints and authorizes the Administrative Borrower (i) to provide to the Agent and receive from the Agent all notices with respect to Term Loan obtained for the benefit of any Borrower and all other notices and instructions under this Agreement and (ii) to take such action as the Administrative Borrower deems appropriate on its behalf to obtain the Term Loan and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of this Agreement. It is understood that the handling of the Loan Account and Collateral of the Borrowers in a combined fashion, as more fully set forth herein, is done solely as an accommodation to the Borrowers in order to utilize the collective borrowing powers of the Borrowers in the most efficient and economical manner and at their request, and that neither the Agent nor the Lenders shall incur liability to the Borrowers as a result hereof. Each of the Borrowers expects to derive benefit, directly or indirectly, from the handling of the Loan Account and the Collateral in a combined fashion since the successful operation of each Borrower is dependent on the continued successful performance of the integrated group. To induce the Agent and the Lenders to do so, and in consideration thereof, each of the Borrowers hereby jointly and severally agrees to indemnify the Indemnitees and hold the Indemnitees harmless against any and all liability, expense, loss or claim of damage or injury, made against such Indemnitee by any of the Borrowers or by any third party whosoever, arising from or incurred by reason of (a) the handling of the Loan Account and Collateral of the Borrowers as herein provided, (b) the Agent and the Lenders relying on any instructions of - 80 - the Administrative Borrower, or (c) any other action taken by the Agent or any Lender hereunder or under the other Loan Documents. Section 12.17 RECORDS. The unpaid principal of and interest on the Term Loan, the interest rate or rates applicable to such unpaid principal and interest, the duration of such applicability, the Commitments, and the accrued and unpaid fees payable pursuant to Section 2.06 hereof, including, without limitation, the Closing Fee, shall at all times be ascertained from the records of the Agent, which shall be conclusive and binding absent manifest error. Section 12.18 BINDING EFFECT. This Agreement shall become effective when it shall have been executed by each Loan Party, the Agent and each Lender and when the conditions precedent set forth in Section 5.01 hereof have been satisfied or waived in writing by the Agent, and thereafter shall be binding upon and inure to the benefit of each Loan Party, the Agent and each Lender, and their respective successors and assigns, except that the Loan Parties shall not have the right to assign their rights hereunder or any interest herein without the prior written consent of each Lender, and any assignment by any Lender shall be governed by Section 12.07 hereof. Section 12.19 INTEREST. It is the intention of the parties hereto that the Agent and each Lender shall conform strictly to usury laws applicable to it. Accordingly, if the transactions contemplated hereby or by any other Loan Document would be usurious as to the Agent or any Lender under laws applicable to it (including the laws of the United States of America, the State of New York, Canada, the Province of Ontario or any other jurisdiction whose laws may be mandatorily applicable to the Agent or such Lender notwithstanding the other provisions of this Agreement, including, to the extent mandatorily applicable, the Criminal Code (Canada)), then, in that event, notwithstanding anything to the contrary in this Agreement or any other Loan Document or any agreement entered into in connection with or as security for the Obligations, it is agreed as follows: (i) the aggregate of all consideration which constitutes interest under law applicable to the Agent or any Lender that is contracted for, taken, reserved, charged or received by the Agent or such Lender under this Agreement or any other Loan Document or agreements or otherwise in connection with the Obligations shall under no circumstances exceed the maximum amount allowed by such applicable law, any excess shall be canceled automatically and if theretofore paid shall be credited by the Agent or such Lender on the principal amount of the Obligations (or, to the extent that the principal amount of the Obligations shall have been or would thereby be paid in full, refunded by the Agent or such Lender, as applicable, to the Borrowers); and (ii) in the event that the maturity of the Obligations is accelerated by reason of any Event of Default under this Agreement or otherwise, or in the event of any required or permitted prepayment, then such consideration that constitutes interest under law applicable to the Agent or any Lender may never include more than the maximum amount allowed by such applicable law, and excess interest, if any, provided for in this Agreement or otherwise shall be canceled automatically by the Agent or such Lender, as applicable, as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited by the Agent or such - 81 - Lender, as applicable, on the principal amount of the Obligations (or, to the extent that the principal amount of the Obligations shall have been or would thereby be paid in full, refunded by the Agent or such Lender to the Borrower). All sums paid or agreed to be paid to the Agent or any Lender for the use, forbearance or detention of sums due hereunder shall, to the extent permitted by law applicable to the Agent or such Lender, be amortized, prorated, allocated and spread throughout the full term of the Term Loan until payment in full so that the rate or amount of interest on account of the Term Loan hereunder does not exceed the maximum amount allowed by such applicable law. If at an time and from time to time (x) the amount of interest payable to the Agent or any Lender on any date shall be computed at the Highest Lawful Rate applicable to the Agent or such Lender pursuant to this Section 12.19 and (y) in respect of any subsequent interest computation period the amount of interest otherwise payable to the Agent or such Lender would be less than the amount of interest payable to the Agent or such Lender computed at the Highest Lawful Rate applicable to the Agent or such Lender, then the amount of interest payable to the Agent or such Lender in respect of such subsequent interest computation period shall continue to be computed at the Highest Lawful Rate applicable to the Agent or such Lender until the total amount of interest payable to the Agent or such Lender shall equal the total amount of interest which would have been payable to the Agent or such Lender if the total amount of interest had been computed without giving effect to this Section 12.19. For purposes of this Section 12.19, the term "applicable law" shall mean that law in effect from time to time and applicable to the loan transaction between the Borrower, on the one hand, and the Agent and the Lenders, on the other, that lawfully permits the charging and collection of the highest permissible, lawful non-usurious rate of interest on such loan transaction and this Agreement, including laws of the State of New York and, to the extent controlling, laws of the United States of America, laws of Canada and the Province of Ontario, including, to the extent controlling, the Criminal Code (Canada). The right to accelerate the maturity of the Obligations does not include the right to accelerate any interest that has not accrued as of the date of acceleration. Section 12.20 CONFIDENTIALITY. The Agent and each Lender agrees (on behalf of itself and each of its affiliates, directors, officers, employees and representatives) to use reasonable precautions to keep confidential, in accordance with its customary procedures for handling confidential information of this nature and in accordance with safe and sound practices of comparable commercial finance companies, any non-public information supplied to it by the Loan Parties pursuant to this Agreement or the other Loan Documents which is identified in writing by the Loan Parties as being confidential at the time the same is delivered to such Person (and which at the time is not, and does not thereafter become, publicly available or available to such Person from another source not known to be subject to a confidentiality obligation to such Person not to disclose such information), PROVIDED that nothing herein shall limit the disclosure of any such information (i) to the extent required by statute, rule, regulation or judicial process, (ii) to counsel for the Agent or any Lender, (iii) to examiners, auditors, accountants or Securitization Parties, (iv) in connection with any litigation to which the Agent or any Lender is a party or (v) to any assignee or participant (or prospective assignee or participant) so long as such assignee or participant (or prospective assignee or participant) first agrees, in writing, to be bound by confidentiality provisions similar in - 82 - substance to this Section 12.20. The Agent and each Lender agrees that, upon receipt of a request or identification of the requirement for disclosure pursuant to clause (iv) hereof, it will make reasonable efforts to keep the Loan Parties informed of such request or identification; PROVIDED that the each Loan Party acknowledges that the Agent and each Lender may make disclosure as required or requested by any Governmental Authority or representative thereof and that the Agent and each Lender may be subject to review by Securitization Parties or other regulatory agencies and may be required to provide to, or otherwise make available for review by, the representatives of such parties or agencies any such non-public information. Section 12.21 INTEGRATION. This Agreement, together with the other Loan Documents, reflects the entire understanding of the parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] - 83 - IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. BORROWERS: ---------- COLUMBUS MCKINNON LIMITED By: /s/ Robert L. Montgomery --------------------------- Name: Robert L. Montgomery Title: Assistant Treasurer LARCO INDUSTRIAL SERVICES LTD. By: /s/ Robert L. Montgomery --------------------------- Name: Robert L. Montgomery Title: Treasurer AGENT AND LENDER: ----------------- REGIMENT CAPITAL III, L.P. By: Regiment Capital Management, L.L.C., its General Partner By: Regiment Capital Advisors, L.L.C., its manager By: /s/ Richard T. Miller --------------------- Name: Richard T. Miller Title: Vice President LENDER: ------- ABLECO FINANCE LLC By: /s/ Kevin Genda ------------------ Name: Kevin Genda Title: Vice President EX-99 6 newcapr.txt NEW CREDIT AGREEMENT PRESS RELEASE NEWS RELEASE CONTACT: Robert L. Montgomery, Jr. Executive Vice President and Chief Financial Officer Columbus McKinnon Corporation 716-689-5405 COLUMBUS MCKINNON CORPORATION ANNOUNCES REFINANCING OF CREDIT FACILITY AMHERST, N.Y., November 27, 2002 -- Columbus McKinnon Corporation (Nasdaq: CMCO), today announced the refinancing of its existing senior secured $150 million credit facility with a new $100 million senior secured credit facility and a new $70 million senior second secured term loan executed in a private transaction. The new credit facility matures on March 31, 2007. A portion of the senior second secured term loan matures in May 2007 and the remaining balance in November 2007. Fleet Securities, Inc. arranged the senior credit facility and placed the senior second secured term loan. Timothy T. Tevens, President and Chief Executive Officer, said, "The refinancing of our existing credit facility, which was going to mature in March 2003, has stabilized our capital structure and extended the maturity of our senior debt by approximately four years while providing continued liquidity to fund our working capital needs. This transaction reduces our financial risk and provides us with the time and flexibility to manage our business through this difficult economic environment. It also allows us to continue to focus on additional facility rationalizations and implementing lean manufacturing which will further reduce costs and support accelerated debt repayment." The senior secured credit facility is comprised of a $67 million revolver and $33 million term loan, which amortizes quarterly over seven years starting on March 31, 2003. The senior second secured term loan has no scheduled amortization and is prepayable at the company's option without penalty. The new credit agreements will be filed with the Company's current report on Form 8-K to be filed today with the Securities and Exchange Commission. Columbus McKinnon is a leading worldwide designer and manufacturer of material handling products, systems and services which efficiently and ergonomically move, lift, position or secure material. Key products include hoists, cranes, chain and forged attachments. The Company is focused on commercial and industrial applications that require the safety and quality provided by its superior design and engineering know-how. Comprehensive information on Columbus McKinnon is available on its web site at HTTP://WWW.CMWORKS.COM -more- This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements concerning future revenue and earnings, involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including general economic and business conditions, conditions affecting the industries served by the Company and its subsidiaries, conditions affecting the Company's customers and suppliers, competitor responses to the Company's products and services, the overall market acceptance of such products and services, the Company's ability to renegotiate its senior debt, and other factors disclosed in the Company's periodic reports filed with the Securities and Exchange Commission. The Company assumes no obligation to update the forward-looking information contained in this release. -----END PRIVACY-ENHANCED MESSAGE-----