CREDIT AGREEMENT

Exhibit 4.3

EXECUTION VERSION

 

ABL CREDIT AGREEMENT

among

AFFINIA GROUP INTERMEDIATE HOLDINGS INC.,

AFFINIA GROUP INC.,

CERTAIN OF ITS SUBSIDIARIES FROM TIME TO TIME PARTY HERETO,

VARIOUS LENDERS

and

BANK OF AMERICA, N.A.,

as ADMINISTRATIVE AGENT

 

Dated as of August 13, 2009

 

BANC OF AMERICA SECURITIES LLC,

BARCLAYS CAPITAL

WELLS FARGO FOOTHILL, LLC,

J.P. MORGAN SECURITIES INC.,

and

DEUTSCHE BANK SECURITIES INC.,

as JOINT LEAD ARRANGERS and JOINT BOOK RUNNERS

 

BARCLAYS CAPITAL

and

WELLS FARGO FOOTHILL, LLC,

as CO-SYNDICATION AGENTS

 

JPMORGAN CHASE BANK, N.A.

and

DEUTSCHE BANK TRUST COMPANY AMERICAS,

as CO-DOCUMENTATION AGENTS

 

TABLE OF CONTENTS

 

 

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TABLE OF CONTENTS

(continued)

 

 

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TABLE OF CONTENTS

(continued)

 

 

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TABLE OF CONTENTS

(continued)

 

 

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TABLE OF CONTENTS

(continued)

 

 

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TABLE OF CONTENTS

(continued)

 

 

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TABLE OF CONTENTS

(continued)

SCHEDULES

 

 

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TABLE OF CONTENTS

(continued)

EXHIBITS

 

 

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ABL CREDIT AGREEMENT, dated as of August 13, 2009, among Affinia Group Intermediate Holdings Inc., a Delaware corporation (“ Holdings ”), Affinia Group Inc., a Delaware corporation (the “ Company ”), each other Wholly-Owned Domestic Subsidiary of Holdings set forth on the signature pages hereto (together with the Company and each other Domestic Subsidiary of Holdings that becomes a U.S. Borrower pursuant to Section 9.10 , collectively, the “ U.S. Borrowers ”), Affinia Canada Holdings Corp., a Canada Corporation (the “ Canadian Borrower ” and, together with the U.S. Borrowers, the “ Borrowers ”), each Wholly-Owned Domestic Subsidiary and each Wholly-Owned Canadian Subsidiary that from time to time guarantees any of the Obligations hereunder (together with Holdings, being the “ Guarantors ” and each a “ Guarantor ” and the Guarantors, together with the Borrowers being, collectively, the “ Credit Parties ” and each a “ Credit Party ”), the Lenders party hereto from time to time, and Bank of America, N.A., (in its individual capacity, “ Bank of America ”) and in its capacity as agent (in such capacity, the “ Administrative Agent ”). All capitalized terms used herein and defined in Section 1 are used herein as therein defined.

W   I   T   N   E   S   S   E   T   H  :

WHEREAS, the proceeds of Loans and the Revolving Loan Commitments hereunder will refinance, either in whole or in part, the borrowings and commitments under the Existing Credit Agreement and the Existing Receivables Securitization Facility;

WHEREAS, this Agreement constitutes the “ Credit Agreement ” under, and for all purposes of, the Existing Senior Subordinated Notes Indenture and therefore also constitutes “ Bank Indebtedness ” and “ Designated Senior Indebtedness ” thereunder; and

WHEREAS, in furtherance of the foregoing and subject to and upon the terms and conditions set forth herein, the Lead Arrangers have arranged, and the Lenders are willing to make available to the Borrowers, the senior secured revolving credit facility provided for herein;

NOW, THEREFORE, IT IS AGREED:

SECTION 1. Definitions and Accounting Terms

1.01 Defined Terms . As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“ ABL Priority Collateral ” shall mean the “ Revolving Facility First Lien Collateral ” under, and as defined in, the Intercreditor Agreement.

“ Account ” shall mean an “ account ” as such term is defined in Article 9 of the UCC and/or the PPSA, as applicable, and any and all supporting obligations in respect thereof.

“ Account Debtor ” shall mean each Person who is obligated on an Account.

“ Acquired Entity or Business ” shall mean either (a) the assets constituting a business, division or product line of any Person not already a Subsidiary of Holdings or (b) the Equity Interests of any Person not already a Subsidiary of Holdings, which Person shall, as a

result of the acquisition of such Equity Interests, become a Subsidiary of the Company (or shall be merged with and into the Company or a Subsidiary of the Company as permitted by Section 10.02 ) or become a Permitted Joint Venture.

“ Additional Mortgage ” shall have the meaning provided in Section 9.10(a) .

“ Additional Mortgaged Property ” shall have the meaning provided in Section 9.10(a) .

“ Additional Security Documents ” shall mean all mortgages, pledge agreements, security agreements, hypothecs and other security documents entered into from time to time pursuant to Section 9.10 , as each such document may be modified, supplemented or amended from time to time in accordance with the terms hereof and thereof.

“ Additional Senior Secured Notes ” shall mean any senior secured notes issued by the Company after the Effective Date in accordance with Section 10.04(p) and the Indebtedness represented thereby, provided that (a) such senior secured notes (i) shall be secured on terms on substantially the same terms as the Senior Secured Notes (or on terms more favorable from the Lenders’ and the Credit Parties’ perspective) as shall be any guaranties in respect thereof, and shall at all times be subject to the Intercreditor Agreement (or a similar agreement among the trustee for the holders of such notes, the Collateral Agent and the Credit Parties containing substantially similar provisions and otherwise in form and substance reasonably satisfactory to the Collateral Agent), (ii) shall not provide for guarantors, obligors or security in addition to those which apply to the Senior Secured Notes, (iii) shall not have a maturity date that is earlier than that of the Senior Secured Notes or provide for any amortization, sinking fund, redemption or other scheduled payments (other than (x) regularly scheduled interest payments and (y) asset sale and change of control redemptions on substantially the same (or less restrictive) terms than those which apply to the Senior Secured Notes) prior to the date that is the final maturity date of the Senior Secured Notes and (iv) shall be authorized under the Senior Secured Notes Documents and (b) all other terms (excluding interest rates and redemption premiums) of such senior secured notes shall not be less favorable to the Lenders in any material respect than those existing with respect to the Senior Secured Notes.

“ Additional Senior Secured Notes Documents ” shall mean all indentures, purchase agreements, notes, guaranties, instruments, agreements and other documents evidencing or governing any Additional Senior Secured Notes or providing for any guarantee or other right in respect thereof.

“ Additional Senior Subordinated Notes ” shall mean any senior subordinated notes issued by the Company after the Effective Date and the Indebtedness represented thereby, provided that (a) such senior subordinated notes (i) shall be unsecured (as shall be any guaranties in respect thereof), (ii) shall not provide for guarantors, obligors or security in addition to those which apply to the Existing Senior Subordinated Notes, (iii) shall not have a maturity date that is earlier than the date that is 180 days after the final maturity date of the Senior Secured Notes or any Additional Senior Secured Notes or provide for any amortization, sinking fund, redemption or other scheduled payments (other than (x) regularly scheduled interest payments and (y) asset sale and change of control redemptions on substantially the same (or less restrictive) terms than

 

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those which apply to the Existing Senior Subordinated Notes) prior to the date that is 180 days after the final maturity date of the Senior Secured Notes or any Additional Senior Secured Notes and (iv) shall be subordinated to the Obligations on terms not less favorable to the Lenders than the terms in respect of the Existing Senior Subordinated Notes (as in effect on the Effective Date) and (b) all other terms (excluding interest rates and redemption premiums) of such senior subordinated notes shall not be less favorable to the Lenders in any material respect than those existing with respect to the Existing Senior Subordinated Notes (as in effect on the Effective Date).

“ Additional Senior Subordinated Notes Documents ” shall mean all indentures, purchase agreements, notes, guaranties, instruments, agreements and other documents evidencing or governing any Additional Senior Subordinated Notes or providing for any guarantee or other right in respect thereof.

“ Administrative Agent ” shall mean Bank of America, in its capacity as Administrative Agent for the Lenders hereunder and under the other Credit Documents, and shall include any successor to the Administrative Agent appointed pursuant to Section 12.09 .

“ Affiliate ” shall mean, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by, or under direct or indirect common Control with, such Person; provided , however , (x) for purposes of Section 10.06 , the term “ Affiliate ” shall also include any Person that possesses, directly or indirectly, the power to vote 10% or more of the securities having ordinary voting power for the election of directors (or equivalent governing body) of such Person (excluding any Person that would otherwise be deemed an Affiliate of a Credit Party solely due to their ownership by the Sponsor) and (y) that none of the Administrative Agent, any Lender or any of their respective Affiliates shall be considered an Affiliate of Holdings or any Subsidiary thereof.

“ Affiliated Account Debtor ” shall mean, with respect to any Account Debtor, an Affiliate of such Account Debtor which is also an Account Debtor.

“ Agent Advance ” shall have the meaning provided in Section 2.01(e) .

“ Agents ” shall mean and include the Administrative Agent and the Collateral Agent.

“ Aggregate Canadian Borrower Exposure ” shall mean, at any time, the sum of the U.S. Dollar Equivalent of the aggregate principal amount of all Canadian Borrower Revolving Loans outstanding at such time.

“ Aggregate Consideration ” shall mean, with respect to any Permitted Acquisition, the sum (without duplication) of (a) the aggregate amount of all cash paid (or to be paid) by Holdings or any of its Subsidiaries in connection with such Permitted Acquisition (including, without limitation, payments of fees and costs and expenses in connection therewith) and all contingent cash purchase price, earn-out, non-compete and other similar obligations of Holdings or any of its Subsidiaries incurred and reasonably expected to be incurred in connection therewith (as determined in good faith by Holdings), (b) the aggregate principal amount of all Indebtedness assumed, incurred, refinanced and/or issued in connection with such Permitted

 

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Acquisition and (c) the Fair Market Value of all other consideration paid (or to be paid) in connection with such Permitted Acquisition (other than the Fair Market Value of any common Equity Interests of Holdings or any Equity Interests of Parent).

“ Aggregate Exposure ” shall mean, at any time, the sum of (a) the aggregate principal amount of all Revolving Loans then outstanding (for this purpose, using the U.S. Dollar Equivalent of amounts denominated in Canadian Dollars), (b) the aggregate amount of all Letter of Credit Outstandings at such time (exclusive of Letter of Credit Outstandings which are repaid with the proceeds of, and simultaneously with the incurrence of, the respective incurrence of Loans) and (c) the aggregate principal amount of all Swingline Loans then outstanding (exclusive of Swingline Loans which are repaid with the proceeds of, and simultaneously with the incurrence of, the respective incurrence of Revolving Loans).

“ Aggregate U.S. Borrower Exposure ” shall mean, at any time, the sum of (a) the aggregate principal amount of all U.S. Borrower Revolving Loans outstanding at such time, (b) the aggregate amount of all Letter of Credit Outstandings at such time (exclusive of Letter of Credit Outstandings which are repaid with the proceeds of, and simultaneously with the incurrence of, the respective incurrence of U.S. Borrower Revolving Loans) and (c) the aggregate principal amount of all Swingline Loans outstanding at such time (exclusive of Swingline Loans which are repaid with the proceeds of, and simultaneously with the incurrence of, the respective incurrence of U.S. Borrower Revolving Loans).

“ Agreement ” shall mean this Credit Agreement, as modified, supplemented, amended, restated (including any amendment and restatement hereof), extended or renewed from time to time.

“ Applicable Eligible Jurisdiction ” shall mean (i) in the case of Eligible U.S. Accounts, the United States and Canada, (ii) in the case of Eligible U.S. Inventory, the United States, and (iii) in the case of Eligible Canadian Accounts or Eligible Canadian Inventory, Canada.

“ Applicable Margin ” with respect to any Type of Revolving Loan, the margin set forth below, as determined by the Average Aggregate Availability for the then most recently ended Fiscal Quarter of the Borrowers:

 

 

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Until no earlier than February 1, 2010, margins shall be determined as if Level II were applicable. Thereafter, the margins shall be subject to increase or decrease upon receipt by the Administrative Agent pursuant to Section 9.02(c) of the Borrowing Base Certificate for the last month of any Fiscal Quarter (i.e., by the 15 ^th day following each of March 31, June 30, September 30 and December 31 of each Fiscal Year), which change shall be effective on the first day of the calendar month following receipt. If, by the first day of a month, the Borrowing Base Certificate due in the preceding month for the Fiscal Quarter then ended has not been delivered, then, at the option of the Administrative Agent or at the request of the Required Lenders, the margins shall be determined as if Level I were applicable, from such day until the last day of the calendar month following actual receipt of such financial statements and Compliance Certificate.

“ Applicable Permitted Investment Amount ” shall mean, (i) as used in reference to an Investment for which the Tier I Payment Conditions, but not the Tier II Payment Conditions, are satisfied, the Permitted Investment Amount specified in clause (a) of the definition of Permitted Investment Amount, (ii) as used in reference to an Investment for which the Tier II Payment Conditions are satisfied, the Permitted Investment Amount specified in clause (b) of the definition of Permitted Investment Amount, and (iii) as used in reference to an Investment for which neither the Tier I Payment Conditions or the Tier II Payment Conditions are satisfied, the Permitted Investment Amount specified in clause (c) of the definition of Permitted Investment Amount.

“ Applicable Seasonal Percentage ” shall mean, with respect to any determination made during the months of April, May, June, July or August, 60%, and with respect to any determination made at any other time, 70%.

“ Applicable Unused Line Fee Margin ” shall mean with respect to any Fiscal Quarter, (a) 0.75%, if the average aggregate daily outstanding principal amount (on a U.S. Dollar Equivalent basis) of all Revolving Loans (excluding, for clarity sake, any Swingline Loans) and the average aggregate daily Stated Amount of all outstanding Letters of Credit during such Fiscal Quarter is equal to or greater than 50% of the amount of the Total Revolving Loan Commitment, or (b) 1.00%, otherwise.

“ Assignment and Assumption Agreement ” shall mean an Assignment and Assumption Agreement substantially in the form of Exhibit J .

“ Authorized Officer ” shall mean, with respect to (a) delivering Notices of Borrowing, Notices of Conversion/Continuation and similar notices, any person that has been authorized by the board of directors of the respective Borrower to deliver such notices pursuant to this Agreement and that has appropriate evidence of incumbency and signatures on file with the Administrative Agent, the Swingline Lender or the respective Issuing Lender, (b) delivering financial information and officer’s certificates pursuant to this Agreement, the chief financial officer, the treasurer or the principal accounting officer of Holdings or the respective Borrower, as applicable, and (c) any other matter in connection with this Agreement or any other Credit Document, any officer (or a person or persons so designated by any two officers) of the respective Borrower.

 

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“ Available Currency ” shall mean (i) with respect to U.S. Borrower Revolving Loans and Swingline Loans, U.S. Dollars, and (ii) with respect to Canadian Borrower Revolving Loans, Canadian Dollars.

“ Average Aggregate Availability ” shall mean, for any period, the daily average Excess Availability during such period.

“ Bankruptcy Code ” shall have the meaning provided in Section 11.05 .

“ Base Rate ” shall mean, for any day, a per annum rate equal to the greater of (a) the Prime Rate for such day; (b) the Federal Funds Rate for such day, plus 0.50%; or (c) LIBOR for a 30 day interest period as determined on such day, plus 1.00%.

“ Base Rate Loan ” shall mean any U.S. Borrower Revolving Loan which bears interest at the Base Rate.

“ Board ” shall mean the Board of Governors of the Federal Reserve System of the United States.

“ Borrower ” and “ Borrowers ” shall have the meaning provided in the first paragraph of this Agreement.

“ Borrowing ” shall mean the borrowing of one Type of Revolving Loan from all the Lenders, or one Type of Swingline Loan from the Swingline Lender, in either case on a given date (or resulting from a conversion or conversions on such date) having in the case of Interest Period Loans the same Interest Period.

“ Borrowing Base ” shall mean the U.S. Borrowing Base, the Canadian Borrowing Base and/or the Total Borrowing Base, as the context may require.

“ Borrowing Base Certificate ” shall have the meaning provided in Section 9.02(c)(i) .

“ Business ” shall mean any corporation, unlimited liability corporation, limited liability company, unlimited liability company, partnership or other business entity (or the adjectival form thereof, where appropriate) or the equivalent of the foregoing in any foreign jurisdiction.

“ Business Day ” shall mean any day excluding Saturday, Sunday and any other day that is a legal holiday under the laws of the State of North Carolina or the State of New York or is a day on which banking institutions located in such state are closed; and when used with reference to (i) a LIBOR Loan, the term shall also exclude any day on which banks are not open for the transaction of banking business in London, United Kingdom and (ii) a Canadian Revolving Loan, shall also exclude a day on which banks in Toronto, Ontario, Canada are not open for the transaction of banking business.

“ CAM ” shall have the meaning provided in Section 16.01(a) .

 

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“ CAM Exchange ” shall have the meaning provided in Section 16.01(b) .

“ CAM Exchange Date ” shall have the meaning provided in Section 16.01(c) .

“ CAM Percentage ” shall have the meaning provided in Section 16.01(d) .

“ Canadian Accounts Concentration Reserve ” shall mean, on any date of determination, the aggregate sum for all Account Debtors (collectively with their Affiliated Account Debtors) in respect of the Eligible Canadian Accounts, of the amount by which (i) the total amount of each Account Debtor’s (collectively with its Affiliated Account Debtors’) Eligible Canadian Accounts exceed (ii) the Canadian Concentration Limit for such Account Debtor and its Affiliated Account Debtors, in each case, on such date of determination.

“ Canadian Accounts Formula Amount ” shall mean, on any date of determination, the product of (i) 85% and (ii) the difference of the Gross Canadian Formula Amount minus the Canadian Accounts Concentration Reserve on such date of determination.

“ Canadian Availability Reserve ” means, with respect to the Canadian Borrowing Base, the sum (without duplication) of (a) the Canadian Inventory Reserve; (b) the Canadian Rent Reserve; (c) the Canadian Qualified Secured Hedging Agreement Reserve; (d) the aggregate amount of liabilities secured by Liens upon ABL Priority Collateral that are senior to Administrative Agent’s Liens (but imposition of any such reserve shall not waive an Event of Default arising therefrom); (e) the Canadian Priority Payables Reserve; (f) the Canadian Qualified Secured Cash Management Agreement Reserve, and (g) such additional reserves, in such amounts and with respect to such matters, as Administrative Agent in its Permitted Discretion may elect to impose from time to time.

“ Canadian BA Rate ” shall mean, with respect to each Interest Period for a Canadian BA Rate Loan, the rate of interest per annum equal to the average rate applicable to Canadian Dollar Bankers’ Acceptances having an identical or comparable term as the proposed Canadian BA Rate Loan displayed and identified as such on the display referred to as the “CDOR Page” (or any display substituted therefor) of Reuter Monitor Money Rates Service as at approximately 10:00 a.m. Toronto time on such day (or, if such day is not a Business Day, as of 10:00 a.m. Toronto time on the immediately preceding Business Day), plus five (5) basis points, provided that if such rate does not appear on the CDOR Page at such time on such date, the rate for such date will be the annual discount rate (rounded upward to the nearest whole multiple of 1/100 of 1%) as of 10:00 a.m. Eastern time on such day at which a Canadian chartered bank listed on Schedule 1 of the Bank Act (Canada) as selected by Administrative Agent is then offering to purchase Canadian Dollar Bankers’ Acceptances accepted by it having such specified term (or a term as closely as possible comparable to such specified term), plus five (5) basis points; provided , however, that in no event shall the Canadian BA Rate be less than 1.50%.

“ Canadian BA Rate Loan ” means a Canadian Borrower Revolving Loan, or portion thereof, funded in Canadian Dollars and bearing interest calculated by reference to the Canadian BA Rate.

“ Canadian Borrower ” shall have the meaning provided in the first paragraph of this Agreement.

 

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“ Canadian Borrower Obligations ” shall mean all Obligations owing to the Administrative Agent, the Collateral Agent, any Issuing Lender or any Lender by the Canadian Borrower.

“ Canadian Borrower Revolving Loan ” shall have the meaning provided in Section 2.01(a) .

“ Canadian Borrower Revolving Note ” shall have the meaning provided in Section 2.05(a) .

“ Canadian Borrower’s U.S. Borrowing Base Usage ” shall mean, at any time, the amount by which the U.S. Dollar Equivalent of the Aggregate Canadian Borrower Exposure exceeds the Canadian Borrowing Base at such time.

“ Canadian Borrowing Base ” shall mean, as of any date of calculation, an amount equal to the lesser of (a) the Canadian Commitment, minus the Canadian Qualified Secured Hedging Agreement Reserve, minus the Canadian Qualified Secured Cash Management Agreement Reserve, minus the Canadian Priority Payables Reserve, minus the Canadian Rent Reserve, minus such additional reserves, in such amounts and with respect to such matters, as Administrative Agent in its Permitted Discretion may elect to impose from time to time; and (b) the sum of the U.S. Dollar Equivalent of the Canadian Accounts Formula Amount, plus the U.S. Dollar Equivalent of the Canadian Inventory Formula Amount, minus the Canadian Availability Reserve; provided , however, that if the ratio (expressed as a percentage) of the U.S. Dollar Equivalent of the Canadian Inventory Formula Amount to the Canadian Borrowing Base exceeds the Applicable Seasonal Percentage then in effect, the Canadian Inventory Amount shall be reduced to an amount such that such ratio equals such Applicable Seasonal Percentage. The Administrative Agent shall have the right (but no obligation) to review such computations in consultation with the Company and if, in its Permitted Discretion, such computations have not been calculated in accordance with the terms of this Agreement, the Administrative Agent shall have the right to correct any such errors in such manner it shall determine in its Permitted Discretion.

“ Canadian Collection Account ” shall mean each Canadian Deposit Account established at a Canadian Collection Bank subject to a Cash Management Control Agreement into which funds shall be transferred as provided in Section 5.03(c) .

“ Canadian Collection Bank ” shall have the meaning provided in Section 5.03(c) .

“ Canadian Commitment ” shall mean, (i) with respect to each Canadian Lender, its Canadian Commitment set forth on Schedule 1.01(a) (as such commitment may be increased or decreased from time to time pursuant to the terms of this Agreement, including by way of Assignment and Assumption Agreement) and (ii) with respect to all of the Canadian Lenders, $20,000,000, as the same may be increased or decreased from time to time in accordance with the terms of this Agreement.

“ Canadian Concentration Limit ” shall mean, with respect to any Account Debtor and its Affiliated Account Debtors in respect of the Eligible Canadian Accounts, 10% of the Gross Canadian Formula Amount at such time (or, in the case of those Account Debtors

 

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(collectively with their respective Affiliated Account Debtors) listed on Schedule 1.01(b) , to the extent exceeding 10%, the respective percentages set forth opposite the names of such Account Debtors on such Schedule 1.01(b) ) (such percentages as applied to a particular Account Debtor (and its Affiliated Account Debtors) being subject to reduction by the Administrative Agent, in its Permitted Discretion, if the creditworthiness of such Account Debtor (and its Affiliated Account Debtors) deteriorates or is otherwise unacceptable to the Administrative Agent); provided, however that at the request of the Company, and with the consent of the Supermajority Lenders, names may be added to Schedule 1.01(b) and/or corresponding concentration limits, subject to the provisions above in this definition, may be increased from time to time.

“ Canadian Credit Parties ” shall mean the Canadian Borrower and the Canadian Subsidiary Guarantors.

“ Canadian Deposit Account ” shall mean a demand, time, savings, passbook or like account established by a Canadian Credit Party with a bank, savings and loan association, credit union or like organization located in Canada.

“ Canadian Dilution Percentage ” shall mean, as of any date of determination, as to the Accounts owned by the Canadian Borrower and the Canadian Subsidiary Guarantors, the positive difference, if any of (i) a percentage, based upon the experience of the immediately prior twelve consecutive months, that is the result of dividing the U.S. Dollar amount (for this purpose, using the U.S. Dollar Equivalent of amounts not denominated in U.S. Dollars) of (a) aggregate Dilution with respect to such Persons’ Accounts during such period, by (b) such Persons’ aggregate billings with respect to their Accounts during such period, minus (ii) 5%. If the Canadian Dilution Percentage is less than or equal to zero, such percentage shall be deemed to be zero.

“ Canadian Dilution Reserve ” shall mean, as of any date of determination, the positive sum, if any, of (x) the product of the Canadian Dilution Percentage and the Value of the Eligible Canadian Accounts, in each case, as of such date, plus (y) the amount, if any, by which the difference between the Canadian Borrower’s and the Canadian Subsidiary Guarantor’s aggregate account receivables general lender reserve minus the aggregate Canadian Borrower’s and the Canadian Subsidiary Guarantors’ Dilutive Items, exceeded the Canadian Portion of $3,000,000 as of such date of determination.

“ Canadian Disbursement Account ” shall mean each Canadian Deposit Account maintained by a Canadian Credit Party for its general corporate purposes, including for the purpose of paying trade payables and other operating expenses (other than a disbursement account that is an Excluded Account).

“ Canadian Dollars ” and “ Cdn.$ ” shall mean freely transferable lawful money of Canada (expressed in Canadian dollars).

“ Canadian Dominion Account ” a special Canadian Deposit Account established by the Canadian Credit Parties at Bank of America or another commercial bank acceptable to the Administrative Agent, over which account the Administrative Agent has exclusive control for withdrawal purposes.

 

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“ Canadian Inventory Formula Amount ” means, on any date of determination for Eligible Canadian Inventory, the lesser of (i) 65% of the Value of the Eligible Canadian Inventory; and (ii) 85% of the sum of the Net Orderly Liquidation Value of the Eligible Canadian Inventory by category (i.e., work-in-process, raw materials and finished goods).

“ Canadian Inventory Reserve ” means reserves established by Administrative Agent in its Permitted Discretion to reflect factors that may negatively impact the Value of Inventory of the Canadian Borrower or any Canadian Subsidiary Guarantor, including change in salability, obsolescence, seasonality, theft, shrinkage, imbalance, change in composition or mix, markdowns and vendor chargebacks.

“ Canadian Lenders ” shall mean a Lender that has issued a Canadian Commitment (provided that such Person or an Affiliate of such Person also has a U.S. Commitment) and any other Person that shall acquire a Canadian Commitment ( provided that at such time such Person or an Affiliate of such Person has, or is acquiring, a U.S. Commitment pursuant to an Assignment and Assumption Agreement), other than any such Person that ceases to be a Canadian Lender pursuant to an Assignment and Assumption Agreement. Each Canadian Lender shall be a financial institution that is listed on Schedule I, II, or III of the Bank Act (Canada) or is not a foreign bank for purposes of the Bank Act (Canada), and if such financial institution is not resident in Canada and is not deemed to be resident in Canada for purposes of the Income Tax Act (Canada), that financial institution deals at arm’s length with Canadian Borrower for purposes of the Income Tax Act (Canada).

“ Canadian Pension Plan ” shall mean any plan (other than multi-employer pension plans) that is or is intended to be a “ registered pension plan ” as such term is defined in the Income Tax Act (Canada) and any other pension plan that is required to be registered under Canadian federal or provincial law that is sponsored, maintained or contributed to by any Canadian Credit Party, or under which any Canadian Credit Party has any liability whatsoever.

“ Canadian Pension Plan Event ” shall mean (a) either (i) the termination in whole or in part of a Canadian Pension Plan initiated by a Canadian Credit Party or a Subsidiary thereof or (ii) the cessation of participation of any Canadian Credit Party (or any Affiliate or other related party thereto with whom there is statutory joint and several liability under pension standards legislation) in any Canadian Pension Plan, including a multi-employer pension plan (within the meaning of applicable pension standards legislation), for any reason and which event gives rise to an obligation on such entity to make contributions in respect of any past service unfunded liability of such plan, (b) the receipt by any Canadian Credit Party or a Subsidiary thereof of a notice from a Governmental Authority (or a notice of intent to issue such a notice) to terminate in whole or in part any Canadian Pension Plan with a defined benefit provision revoking the registration of same or appointing a new administrator of such a plan, (c) receipt by any Canadian Credit Party of an order, direction or other communication from any Governmental Authority or a notice of an intent to issue such an order, direction or other communication requiring any Canadian Credit Party or any Subsidiary thereof to take or refrain from taking any action in respect of a Canadian Pension Plan, (d) the issuance of either any order (including an order to remit delinquent contributions to the PBGF) or charges which may give rise to the imposition of any fines or penalties to or in respect of any Canadian Pension Plan or the issuance of such fines or penalties, (e) the receipt of any notice from an administrator, a trustee or other

 

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funding agent or any other Person that any Canadian Credit Party or any of its Affiliates have failed to remit any contribution to a Canadian Pension Plan or a similar notice from a Governmental Authority relating to a failure to pay any fees or other amounts (including payments in respect of the PBGF), (f) the non-compliance by any Canadian Credit Party with any law applicable to the Canadian Pension Plans, and (g) the existence of a solvency deficiency with respect to any Canadian Pension Plan.

“ Canadian Pledge Agreement ” shall have the meaning set forth in Section 6.09 .

“ Canadian Portion ” shall mean, on any date of determination, the percentage determined by dividing the Canadian Commitment by the Total Revolving Loan Commitment, in each case, as of such date of determination.

“ Canadian Prime Rate ” shall mean, for any day, the sum of (i) the highest of (A) a fluctuating rate of interest per annum equal to the rate of interest in effect for such day as publicly announced from time to time by Bank of America, N.A. (acting through its Canada branch) as its “Prime Rate”, (B) the sum of 0.50% plus the Bank of Canada overnight rate, which is the rate of interest charged by the Bank of Canada on one-day loans to financial institutions, for such day, and (C) the sum of 1.00% plus the Canadian BA Rate for a 30 day Interest Period as determined on such day. The “Canadian Prime Rate” is a rate set by Bank of America, N.A. (acting through its Canada branch) based upon various factors including Bank of America, N.A.’s (acting through its Canada branch) costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by Bank of America, N.A. (acting through its Canada branch) shall take effect at the opening of business on the day specified in the public announcement of such change.

“ Canadian Prime Rate Loans ” shall mean each Canadian Borrower Revolving Loan during the period for which it bears interest at a rate determined by reference to the Canadian Prime Rate.

“ Canadian Priority Payables ” shall mean, at any time, with respect to the Canadian Borrowing Base:

(a) the amount past due and owing by the Canadian Borrower and the Canadian Subsidiary Guarantors, or the accrued amount for which the Canadian Borrower and the Canadian Subsidiary Guarantors have an obligation to remit to a Governmental Authority or other Person pursuant to any applicable law, rule or regulation, in respect of (i) pension fund obligations, (ii) employment insurance, (iii) goods and services taxes, sales taxes, employee income taxes and other Taxes payable or to be remitted or withheld, (iv) workers’ compensation, (v) vacation pay, (vi) wages and (vii) other like charges and demands; in each case in respect of which any Governmental Authority or other Person may claim a security interest, hypothec, prior claim, trust or other claim or Lien ranking or capable of ranking in priority to or pari passu with one or more of the Liens granted pursuant to the Security Documents; and

 

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(b) the aggregate amount of any other liabilities of the Canadian Borrower and the Canadian Subsidiary Guarantors (i) in respect of which a trust has been or may be imposed on Collateral of the Canadian Borrower or a Canadian Subsidiary Guarantor to provide for payment or (ii) which are secured by a security interest, hypothec, prior claim, pledge, charge, right, or claim or other Lien on any Collateral of the Canadian Borrower and the Canadian Subsidiary Guarantors, in each case pursuant to any applicable law, rule or regulation and which trust, security interest, hypothec, prior claim, pledge, charge, right, claim or other Lien ranks or is capable of ranking in priority to or pari passu with one or more of the Liens granted in the Security Documents.

“ Canadian Priority Payables Reserve ” shall mean, on any date of determination for the Canadian Borrowing Base, a reserve established from time to time by the Administrative Agent in its Permitted Discretion in such amount as the Administrative Agent may determine in respect of Canadian Priority Payables of the Canadian Borrowers.

“ Canadian Qualified Secured Cash Management Agreements ” shall mean each Qualified Cash Management Agreement between a Canadian Lender (or an Affiliate thereof) (as determined at the time such Cash Management Agreement is designated as a Qualified Secured Cash Management Agreement without regard as to whether such Person is currently a Canadian Lender or an Affiliate thereof) and a Canadian Credit Party.

“ Canadian Qualified Secured Cash Management Agreement Reserve ” shall mean a reserve to be established by the Administrative Agent from time to time in respect of the Canadian Qualified Secured Cash Management Agreements, which reserve shall be in an amount equal to the aggregate amount of all reserves agreed upon from time to time by the applicable Canadian Lender and the applicable Canadian Credit Party and notified in writing to the Administrative Agent by such Lender (or such Affiliate thereof) and the applicable Canadian Credit Party to be maintained with respect to such Canadian Qualified Secured Cash Management Agreements in accordance with Section 13.22 The determination as to whether any such reserve shall be established with respect to any such Canadian Qualified Secured Cash Management Agreement shall subject to the agreement between the applicable Canadian Credit Party and the applicable Canadian Lender (or Affiliate thereof) party to such agreement, but absence of any such reserve shall not impact the designation thereof as a Canadian Qualified Secured Cash Management Agreement.

“ Canadian Qualified Secured Hedging Agreement ” shall mean any Qualified Secured Hedging Agreement between a Canadian Lender (or an Affiliate thereof) (as determined at the time such Interest Rate Protection Agreement or Other Hedging Agreement is designated as a Qualified Secured Hedging Agreement without regard as to whether such Person is currently a Canadian Lender or an Affiliate thereof) in favor of a Canadian Credit Party.

“ Canadian Qualified Secured Hedging Agreement Reserve ” shall mean a reserve to be established by the Administrative Agent from time to time in respect of the Canadian Qualified Secured Hedging Agreements, which reserve shall be in the amount of the aggregate U.S. Dollar Equivalent marked to market exposure thereunder as calculated by the applicable Canadian Credit Party and the Lender or Affiliate of such Lender party to such Canadian Qualified Secured Hedging Agreement in accordance with GAAP (based on the valuation methodology agreed between the Company and the Lender or Affiliate of such Lender party to such Canadian Qualified Secured Hedging Agreements) at the time such Secured Hedging

 

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Agreement is designated as a Qualified Secured Hedging Agreement in accordance with Section 13.22 and/or as otherwise agreed as among such parties, in each case, to be notified to the Administrative Agent from time to time by written notice from the Lender (or such Affiliate) and the applicable Canadian Credit Party party to such agreement in accordance with Section 13.22 . The determination as to whether any such reserve shall be established with respect to any such Canadian Qualified Hedging Agreement shall subject to the agreement between the applicable Canadian Credit Party and the applicable Canadian Lender (or Affiliate thereof) party to such agreement, but absence of any such reserve shall not impact the designation thereof as a Canadian Qualified Secured Hedging Agreement.

“ Canadian Rent Reserve ” shall mean a reserve established by the Administrative Agent in respect of rent or warehouse payments required to be made by the Canadian Borrower or a Canadian Subsidiary Guarantor for each location at which Inventory of the Canadian Borrower or a Canadian Subsidiary Guarantor is located that is not subject to a Collateral Access Agreement equal to three times the monthly gross rent or warehouse payments for each such location, as adjusted from time to time by the Administrative Agent in its Permitted Discretion.

“ Canadian Revolving Commitment Termination Date ” shall mean the earlier to occur of (a) the U.S. Revolving Commitment Termination Date and (b) the termination or reduction to zero of the Canadian Commitment for any reason whatsoever, including pursuant to Section 11 .

“ Canadian Security Agreement ” shall have the meaning provided in Section 6.11(b) .

“ Canadian Subsidiaries Guarantee ” shall have the meaning provided in Section 6.08(b) .

“ Canadian Subsidiary ” of any Person shall mean any Subsidiary of such Person incorporated or organized or resident for the purposes of the Income Tax Act (Canada) in Canada or any province or territory thereof. Unless otherwise qualified, all references to a “ Canadian Subsidiary ” or to “ Canadian Subsidiaries ” in this Agreement shall refer to a Canadian Subsidiary or Canadian Subsidiaries of Holdings.

“ Canadian Subsidiary Guarantor ” shall mean each Canadian Subsidiary of Holdings (other than the Canadian Borrower), whether existing on the Effective Date or established, created or acquired after the Effective Date, unless and until such time as the respective Canadian Subsidiary is released from all of its obligations under the Canadian Subsidiaries Guarantee in accordance with the terms and provisions thereof.

“ Capital Expenditures ” shall mean, with respect to any Person, for any period, all expenditures by such Person which should be capitalized in accordance with GAAP, including the principal portion of Capitalized Lease Obligations.

“ Capitalized Lease Obligations ” shall mean, with respect to any Person, all rental obligations of such Person which, under GAAP, are or will be required to be capitalized on the books of such Person, in each case taken at the amount thereof accounted for as indebtedness in accordance with such principles.

 

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“ Cash Collateral ” shall mean cash, and any interest or other income earned thereon, that is delivered to Administrative Agent to Cash Collateralize any Obligations.

“ Cash Collateralize ” shall mean the delivery of cash to Administrative Agent, as security for the payment of Obligations, in an amount equal to, with respect to Letter of Credit Outstandings, 105% of the aggregate Letter of Credit Outstandings. “ Cash Collateralization ” has a correlative meaning.

“ Cash Equivalents ” shall mean, as to any Person, (a) securities issued or directly and fully guaranteed or insured by the United States (or, with respect to a Canadian Credit Party, Canada) or any agency or instrumentality thereof ( provided that the full faith and credit of the United States or Canada is pledged in support thereof) having maturities of not more than one year from the date of acquisition, (b) marketable direct obligations issued by any state of the United States (or, with respect to a Canadian Credit Party, any province or territory of Canada) or any political subdivision of any such state, province or territory or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, then equivalent ratings from another nationally recognized service), (c) US Dollar-denominated (and with respect to (1) a Canadian Subsidiary, Canadian Dollar-denominated, and (2) a Foreign Subsidiary, denominated in any freely-convertible currency) time deposits, certificates of deposit and bankers acceptances maturing within 180 days from the date of acquisition thereof and issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any Lender or any commercial bank organized under the laws of the United States of America (or, with respect to a Canadian Subsidiary, Canada, or with respect to a Foreign Subsidiary, the laws of any other country recognized by the United States) or any state, province or territory thereof that has a combined capital and surplus and undivided profits of not less than $500,000,000 (or the relevant foreign currency equivalent thereof) and whose long-term debt, or whose parent holding company’s long term debt, is rated A (or such similar equivalent rating or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act), (d) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (a) above entered into with any bank meeting the qualifications specified in clause (c) above, (e) commercial paper issued by any Person incorporated in the United States rated at least A-1 or the equivalent thereof by S&P or at least P 1 or the equivalent thereof by Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, then equivalent ratings from another nationally recognized service) and in each case maturing not more than 270 days after the date of acquisition by such Person, and (f) investments in money market funds substantially all of whose assets are comprised of securities of the types described in clauses (a) through (e) above.

“ Cash Management Agreement ” shall mean any agreement to provide (i) cash management services, including treasury, depository, overdraft, credit or debt card, electronic funds transfer and other cash management arrangements, (ii) commercial credit card and merchant card services, or (iii) other banking products or services as may be requested by any Credit Party or Subsidiary, other than Letters of Credit.

 

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“ Cash Management Control Agreement ” shall mean a “ control agreement ” in form and substance reasonably acceptable to the Administrative Agent and containing terms regarding the treatment of all cash and other amounts on deposit in (or credited to) the respective Deposit Account (other than Excluded Accounts) governed by such Cash Management Control Agreement consistent with the requirements of Section 5.03 .

“ CERCLA ” shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as the same has been amended and may hereafter be amended from time to time, 42 U.S.C. § 9601 et seq .

“ Change of Control ” shall mean (i) prior to the consummation of an IPO, the Permitted Holders shall at any time and for any reason fail to own and control, beneficially and of record, at least a majority of Parent’s Voting Equity Interests, (ii) from and after the consummation of an IPO, (x) the Permitted Holders shall at any time and for any reason fail to own and control, beneficially and of record, at least 35% of the Voting Equity Interests of the Parent, or (y) any “ person ” or “ group ” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than the Permitted Holders, is or shall become the “ beneficial owner ” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of 35% or more on a fully diluted basis of the Voting Equity Interests of the Parent; provided that, in the case of this clause (y), the Permitted Holders own directly or indirectly, beneficially or of record, a smaller percentage of such voting interests, (iii) the Board of Directors of Parent shall cease to consist of a majority of Continuing Directors, (iv) the Parent shall cease to directly own 100% of the Equity Interests of Holdings, (v) Holdings shall cease to directly or indirectly own and control 100% of the Equity Interests of the Company, or (vi) notwithstanding the foregoing, a “ change of control ” or similar event shall occur as provided in any Senior Secured Notes Document, any Additional Senior Secured Notes Documents, any Existing Senior Subordinated Notes Document, any Additional Senior Subordinated Notes Document, the Parent PIK Note or any Preferred Equity of Parent (or the documentation governing the same).

“ Chattel Paper ” shall mean “ chattel paper ” (as such term is defined in Article 9 of the UCC and in the PPSA, as applicable).

“ Chief Executive Office ” shall mean, with respect to any Person, the location from which such Person manages the main part of its business operations or other affairs.

“ Claims ” shall have the meaning provided in the definition of “ Environmental Claims ”.

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

“ Collateral ” shall mean all property (whether real or personal) with respect to which any security interests or hypothecations have been granted (or purported to be granted) pursuant to any Security Document, including, without limitation, all cash and Cash Equivalents delivered as collateral pursuant to Section 5.02 or 11 .

 

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“ Collateral Access Agreement ” shall mean an agreement setting forth the rights of the Collateral Agent with respect to Collateral located on any leased Real Property or Collateral held, handled or processed by a warehouseman, processor, shipper, customs broker or freight forwarder, repairman, mechanic, consignee or bailee, in each case, in form and substance reasonably satisfactory to the Administrative Agent.

“ Collateral Agent ” shall mean the Administrative Agent in its capacity as collateral agent for the Secured Parties pursuant to the Security Documents, and shall include any successor to the Collateral Agent as provided in Section 12.09 .

“ Collection Accounts ” shall mean, collectively, the U.S. Collection Accounts and the Canadian Collection Accounts.

“ Commingled Inventory ” shall mean Inventory of any Borrower or Canadian Subsidiary Guarantor that is commingled (whether pursuant to a consignment, a toll manufacturing agreement or otherwise) with Inventory of another Person (other than another Borrower or Canadian Subsidiary Guarantor organized under the same jurisdiction of such Borrower or Canadian Subsidiary Guarantor) at a location owned or leased by a Borrower or a Canadian Subsidiary Guarantor to the extent that such Inventory of such Borrower or Canadian Subsidiary Guarantor is not readily identifiable.

“ Commitment Increase ” shall have the meaning provided in Section 2.14(a) .

“ Commitment Increase Effective Date ” shall have the meaning provided in Section 2.14(c) .

“ Company ” shall have the meaning provided in the first paragraph of this Agreement.

“ Compliance Certificate ” shall mean a certificate substantially in the form of Exhibit I .

“ Consolidated EBITDA ” shall mean, for any period, Consolidated Net Income for such period plus (a) without duplication and to the extent deducted in determining such Consolidated Net Income for such period, the sum of (i) consolidated cash interest expense of Holdings and its Subsidiaries for such period, (ii) consolidated income tax expense of Holdings and its Subsidiaries for such period (including any income tax expense of Parent for such period to the extent Holdings or any of its Subsidiaries has made payment in accordance with the terms hereof to or for the account of Parent in respect thereof), (iii) depreciation and amortization expense of Holdings and its Subsidiaries for such period, (iv) any non-cash charges, losses or expenses of Holdings and its Subsidiaries for such period (but excluding any non-cash charge, loss or expense in respect of an item that was included in Consolidated Net Income in a prior period and any non-cash charge, loss or expense that relates to the write-down or write-off of inventory, other than any write-down or write-off of inventory as a result of purchase accounting adjustments in respect of any Permitted Acquisition).

 

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“ Consolidated Fixed Charge Coverage Ratio ” shall mean, for any period, the ratio of (a) Consolidated EBITDA for such period, minus the aggregate amount of all Capital Expenditures made by Holdings and its Subsidiaries during such period (other than Capital Expenditures to the extent financed with insurance proceeds or asset sale proceeds reinvested pursuant to Sections 10.02(b), (d)(1) or (h)  (in each of the foregoing cases, only to the extent not constituting Proceeds of ABL Priority Collateral) or Indebtedness (other than Revolving Loans or Swingline Loans)) to (b) the sum of (1) the scheduled principal amount of all amortization payments on all Indebtedness of Holdings and its Subsidiaries for such period (including the principal component of all Capitalized Lease Obligations) as determined on the first day of such period (or, with respect to a given issue of Indebtedness incurred thereafter, on the date of the incurrence thereof) plus (2) consolidated cash interest expense for Holdings and its Subsidiaries for such period plus (3) the amount of all cash payments (including, without duplication, Dividends pursuant to Sections 10.03(a)(iv) or 10.03(a)(vi) , made by Holdings and its Subsidiaries in respect of income taxes or income tax liabilities during such period (excluding taxes related to asset sales not in the ordinary course of business) plus (4) without duplication of any amounts included in clause (b)(3) above, the aggregate amount of all cash Dividends paid by Holdings for such period plus (5) to the extent paid directly by Holdings or any of its Subsidiaries and not deducted from the calculation of Consolidated Net Income, the amount of any management fees, banking fees, compensation and other similar amounts paid to the Sponsor during such period.

“ Consolidated Net Income ” shall mean, for any period, the net income or loss of Holdings and its Subsidiaries for such period determined in accordance with GAAP as set forth on the consolidated financial statements of Holdings and its Subsidiaries for such period (after deduction for non-controlling interests other than to the extent of cash Dividends received during such period by Holdings and its Subsidiaries in respect of such interests during such period), excluding extraordinary non-cash gains and losses and, less the amount of any cash payments in such period in respect of non-cash charges expensed in any earlier period.

“ Contingent Obligation ” shall mean, as to any Person, any obligation of such Person as a result of such Person being a general partner of any other Person, unless the underlying obligation is expressly made non-recourse as to such general partner, and 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, any obligation of such Person, whether or not contingent, (a) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation 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 endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made and (b) the maximum amount for which

 

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such guaranteeing Person may be liable pursuant to the terms of the instrument embodying such Contingent Obligation (without giving effect to any rights to indemnification, contribution or subrogation), unless such primary obligation and the maximum amount for which such guaranteeing Person may be liable are not stated or determinable, in which case the amount of such Contingent Obligation shall be the maximum liability in respect thereof (assuming such Person is required to perform thereunder).

“ Continuing Directors ” shall mean the directors of Parent on the Effective Date and each other director if such director’s nomination for election to the board of directors of Parent is recommended by a majority of the then Continuing Directors or nominated or appointed by the Permitted Holders.

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

“ Core Canadian Concentration Account ” shall have the meaning provided in Section 5.03(d) .

“ Core Concentration Accounts ” shall mean the Core Canadian Concentration Account and the Core U.S. Concentration Account.

“ Core U.S. Concentration Account ” shall have the meaning provided in Section 5.03(d) .

“ Credit Account ” shall have the meaning provided in Section 5.03(g) .

“ Credit Documents ” shall mean this Agreement, each Subsidiaries Guaranty, the Fee Letters, each U.S./Local Law Pledge Agreement, each Security Document, the Intercreditor Agreement, each Note, each Joinder Agreement, each Mortgage, each Additional Mortgage, each other Additional Security Document and each other instrument, document or agreement hereafter designated in a writing signed by the Company as being a Credit Document.

“ Credit Event ” shall mean the making of any Loan or the issuance or, in the case of the Existing Letters of Credit, the deemed issuance of any Letter of Credit hereunder.

“ Credit Party ” shall mean Holdings, the Borrowers and the Subsidiary Guarantors.

“ Customer Drafts ” shall have the meaning set forth on Schedule 1.01(c) .

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

“ Default Rate ” shall have the meaning provided in Section 2.08(e) .

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

 

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“ Deposit Accounts ” shall mean U.S. Deposit Accounts and Canadian Deposit Accounts.

“ Designated Obligations ” shall have the meaning provided in Section 16.01(e) .

“ Dilution ” shall mean bad debt write-downs, discounts, advertising allowances, credits, rebates, returns and other dilutive items.

“ Dilutive Items ” shall mean with respect to the Canadian Dilution Reserve or the U.S. Dilution Reserve, the sum as it relates to the Canadian Borrowing Base or the U.S. Borrowing Base, as applicable, of the aggregate sum of the amounts attributable to the following specified dilutive items relating to (i) clause (x) of the respective Canadian Dilution Reserve or the U.S. Dilution Reserve, as applicable, (ii) 5% of the Eligible Accounts relating to such Borrowing Base, (iii) rebate payments, (iv) chargebacks, (v) aged credits and (vi) accruals per reconciliation used to calculate such Borrowing Bases as identified in the Report to Bank of America, N.A. Regarding Affinia Group Inc., prepared by FTI Consulting, Inc. and dated June 19, 2009.

“ Disbursement Accounts ” shall mean, collectively, the U.S. Disbursement Accounts and the Canadian Disbursement Accounts.

“ Dividend ” shall mean, with respect to any Person, that such Person has declared or paid a dividend, distribution, payment or returned any equity capital to its stockholders, partners or members or authorized or made any other distribution, payment or delivery of property (other than common Equity Interests of such Person) or cash to its stockholders, partners or members in their capacity as such, or redeemed, retired, purchased or otherwise acquired (including in sinking funds or similar accounts for such purpose) directly or indirectly, for a consideration any shares of any class of its capital stock or any other Equity Interests outstanding on or after the Effective Date (or any options or warrants issued by such Person with respect to its capital stock or other Equity Interests), or set aside any funds (including in sinking funds or similar accounts for such purpose) for any of the foregoing purposes.

“ Documentation Agents ” shall mean JPMorgan Chase Bank, N.A. and Deutsche Bank Trust Company Americas, in their capacities as Co-Documentation Agents in respect of the credit facilities hereunder, and any successors thereto.

“ Documents ” shall mean, collectively, (a) the Credit Documents and (b) the Senior Secured Notes Documents.

“ Domestic Subsidiary ” of any Person shall mean any Subsidiary of such Person incorporated or organized in the United States or any State thereof or the District of Columbia. Unless otherwise qualified, all references to a “ Domestic Subsidiary ” or to “ Domestic Subsidiaries ” in this Agreement shall refer to a Domestic Subsidiary or Domestic Subsidiaries of Holdings.

“ Dominion Period ” shall mean any period (i) commencing on the date on which either (x) an Event of Default has occurred and is continuing or (y) the Excess Availability is less than or equal to the Dominion Threshold and (ii) ending on the first date thereafter on which (x) no Event of Default exists and (y) the Excess Availability has been greater than the Dominion Threshold at all times for 60 consecutive days.

 

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“ Dominion Threshold ” means the greater of (a) 20% of the Total Revolving Loan Commitment and (b) $63,000,000.

“ Effective Date ” shall have the meaning provided in Section 13.10 .

“ Eligible Accounts ” shall mean those Accounts owned and originated by one of the U.S. Borrowers, the Canadian Borrower or a Canadian Subsidiary Guarantor in the ordinary course of their business, that arise out of their bona fide sale of goods (other than promotional products) or rendition of services substantially in accordance with the provisions of any purchase order, contract or other document relating thereto, that comply in all material respects with each of the representations and warranties respecting Eligible Accounts made in the Credit Documents, and that are not excluded as ineligible by virtue of one or more of the excluding criteria set forth below; provided , however , that, subject to Section 13.12(a)(v) , such criteria may be revised from time to time by the Administrative Agent in its Permitted Discretion. The Administrative Agent shall have the right to establish, modify or eliminate reserves against Eligible Accounts from time to time in its Permitted Discretion. In determining the amount to be included, Eligible Accounts shall be calculated net of customer deposits, unapplied cash, bonding subrogation rights to the extent not cash collateralized, any and all returns, rebates, discounts (which may, at the Administrative Agent’s option, be calculated on shortest terms), credits and allowances or accrued and unpaid Taxes (including sales, excise or other taxes) of any nature at any time issued, owing, claimed by Account Debtors, granted, outstanding or payable in connection with such Accounts at such time (such net amount being the “ Value ” of such Eligible Account). All percentage or dollar limitations set forth below shall apply on an aggregate basis as among all Accounts whether owing to the U.S. Borrowers, the Canadian Borrower or the Canadian Guarantors. Eligible Accounts shall not include the following:

(a) Accounts which are not owned by a U.S. Borrower, the Canadian Borrower or a Canadian Subsidiary Guarantor free and clear of all Liens and rights of any other Person, except the First Priority Lien in favor of the Collateral Agent on behalf of the Secured Parties and (so long as the Intercreditor Agreement remains in effect with respect thereto) the junior Lien in favor of the Noteholder Collateral Agent on behalf of the Senior Secured Noteholders;

(b) Accounts which are described on Schedule 1.01(c) ;

(c) Accounts owed by an Account Debtor (or its Affiliated Account Debtors) where 25% or more of the total amount of all Accounts owed by that Account Debtor (and its Affiliated Account Debtors) are deemed ineligible hereunder;

(d) Accounts with respect to which the Account Debtor is (i) an Affiliate of Holdings, (ii) a Permitted Joint Venture or (iii) an employee, director or agent of Holdings or any Affiliate of Holdings;

(e) Accounts arising in a transaction wherein goods are placed on consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale on approval, a bill and hold, or any other terms by reason of which the payment by an Account Debtor may be conditional;

 

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(f) Accounts that are not payable in U.S. Dollars or in Canadian Dollars;

(g) Accounts with respect to which the Account Debtor is a non Governmental Authority unless: (i) the Account Debtor either (A) maintains its Chief Executive Office in an Applicable Eligible Jurisdiction, or (B) is organized under the laws of an Applicable Eligible Jurisdiction, or any state, territory, province or subdivision thereof; or (ii) the Account is supported by an irrevocable letter of credit satisfactory to the Administrative Agent, in its Permitted Discretion (as to form, substance, and issuer or domestic confirming bank), that has been delivered to the Administrative Agent and is directly drawable by the Administrative Agent;

(h) Accounts with respect to which the Account Debtor is the government of any foreign country or sovereign state, or of any state, province, municipality, or other political subdivision thereof, or of any department, agency, public corporation, or other instrumentality thereof, unless (except in the case of Accounts in which the Account Debtor is the Canadian government or any province, municipality or other political subdivision thereof or of any department, agency, public corporation or other instrumentality thereof (subject to item (j) below) (or any province thereof)) the Account is supported by an irrevocable letter of credit reasonably satisfactory to the Administrative Agent, in its Permitted Discretion (as to form, substance, and issuer or domestic confirming bank), that has been delivered to the Administrative Agent and is directly drawable by the Administrative Agent;

(i) Accounts with respect to which the Account Debtor is the federal government of the United States or any department, agency or instrumentality of the United States (exclusive, however, of Accounts with respect to which a U.S. Borrower has complied, to the reasonable satisfaction of the Administrative Agent, with the Assignment of Claims Act, 31 USC § 3727);

(j) Accounts with respect to which the Account Debtor is the federal government of Canada or any Crown corporation, department, agency or instrumentality of Canada (exclusive, however, of Accounts with respect to which the Canadian Borrower or a Canadian Subsidiary Guarantor, as applicable, has complied, to the satisfaction of the Administrative Agent, with the Financial Administration Act (Canada));

(k) Accounts with respect to which the Account Debtor is a creditor of Holdings or any Subsidiary of Holdings or has or has asserted a right of setoff or chargeback, or has disputed its obligation to pay all or any portion of the Account, to the extent (including, without limitation, with respect to rebates, including cash rebates) of such creditor claim so owing by such Account Debtor, right of setoff, chargeback or dispute;

(l) Accounts of any Account Debtors any of whose Accounts or Customer Drafts are included in a Permitted Customer Program;

(m) Accounts with respect to which the Account Debtor is subject to an Insolvency Proceeding, has gone out of business, or as to which any U.S. Borrower, Canadian Borrower or Canadian Subsidiary Guarantor, as applicable, has received notice of an insolvency proceeding or a material impairment of the financial condition of such Account Debtor;

 

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(n) Accounts that are not subject to a valid and perfected First Priority Lien in favor of the Collateral Agent pursuant to the relevant Security Document;

(o) Accounts with respect to which (i) the goods giving rise to such Account have not been shipped (or have been shipped other than FOB (seller’s location)) and billed to the Account Debtor or (ii) the services giving rise to such Account have not been performed and billed to the Account Debtor;

(p) Accounts that represent the right to receive progress payments or other advance billings that are due prior to the completion of performance by a U.S. Borrower, the Canadian Borrower or a Canadian Subsidiary Guarantor, as applicable, of the subject contract for goods or services;

(q) Accounts with respect to which any return, rejection or repossession of any of the merchandise giving rise to such Account has occurred, but only to the extent of the value of the goods returned, rejected or repossessed;

(r) Accounts with respect to which the sale to the respective Account Debtor is “ cash on delivery ”;

(s) Accounts that are evidenced by an Instrument or Chattel Paper, or has been reduced to judgment unless the Collateral Agent has a First Priority security interest in such Instrument or Chattel Paper and originals of such Instrument or Chattel Paper have been delivered to the Collateral Agent (or other agent designated pursuant to the Intercreditor Agreement) and are duly endorsed to the Agent;

(t) Accounts with respect to which the applicable U.S. Borrower, Canadian Borrower or Canadian Subsidiary Guarantor has made any agreement with any Account Debtor (i) for any deduction therefrom, except for (x) volume discounts and discounts or allowances for prompt payment, all of which discounts or allowances are reflected in the calculation of the face value of each respective invoice related thereto and (y) returns, rebates or credits reflected in the calculation of the face value of each such invoice (in each case, only to the extent of such discount, allowance, return, rebate or credit) or (ii) for any adjustment, extension, compromise or settlement thereof, except for adjustments, extensions, compromises and settlements made in the ordinary course of business (and not related to the creditworthiness of the Account Debtor);

(u) Accounts that have not been invoiced or which are not for a sum certain;

(v) Accounts for which credit insurance has been requested and denied;

(w) Accounts that are not payable to a U.S. Borrower, the Canadian Borrower or a Canadian Subsidiary Guarantor;

 

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(x) (A) with respect to Accounts of the U.S. Borrowers, Accounts with respect to which the agreements evidencing such Accounts are not governed by the laws of any state of the United States or the District of Columbia and (B) with respect to Accounts of the Canadian Borrower or a Canadian Subsidiary Guarantor, Accounts with respect to which the agreements evidencing such Accounts are not governed by the laws of Canada, any state of the United States or the District of Columbia, or the laws of such other jurisdictions acceptable to the Administrative Agent in its Permitted Discretion;

(y) Accounts to the extent representing service charges or late fees; or

(z) Accounts that are otherwise unacceptable to the Administrative Agent in its Permitted Discretion.

“ Eligible Canadian Accounts ” shall mean the Eligible Accounts owned by the Canadian Borrower or a Canadian Subsidiary Guarantor.

“ Eligible Canadian Inventory ” shall mean the Eligible Inventory owned by the Canadian Borrower or a Canadian Subsidiary Guarantor.

“ Eligible In-Transit Inventory ” shall mean the in-transit Inventory owned by one of the U.S. Borrowers, the Canadian Borrower or a Canadian Subsidiary Guarantor which would otherwise constitute Eligible Inventory but for the fact that it is in-transit; provided , that Eligible In-Transit Inventory shall not include any in-transit Inventory of a Borrower or a Canadian Subsidiary Guarantor that:

(a) is subject to a negotiable document, unless such document shows Collateral Agent (or, with the consent of Administrative Agent, the applicable Credit Party) as consignee, and which document is in the possession of Collateral Agent or such other Person as Administrative Agent shall approve;

(b) is not fully insured in accordance with the terms of this Agreement;

(c) has not been identified in the applicable sales contract;

(d) title thereto has not passed to the applicable Borrower or Canadian Subsidiary Guarantor;

(e) is sold by a vendor that has a right to reclaim, divert shipment of, repossess, stop delivery, claim any reservation of title or otherwise assert Lien rights against such Inventory, or with respect to whom any Borrower or Canadian Subsidiary Guarantor is in default of any obligations;

(f) is not subject to purchase orders and other sale documentation satisfactory to Administrative Agent;

(g) is shipped by a common carrier that is affiliated with the vendor; or

(h) is not being handled by a customs broker, freight-forwarder or other handler that has delivered a Collateral Access Agreement.

 

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“ Eligible Inventory ” shall mean all of the Inventory owned by one of the U.S. Borrowers, the Canadian Borrower or a Canadian Subsidiary Guarantor and reflected in the most recent Borrowing Base Certificate delivered by the Company to the Administrative Agent, except any Inventory to which any of the exclusionary criteria set forth below applies. The Administrative Agent shall have the right to establish, modify or eliminate reserves against Eligible Inventory from time to time in its Permitted Discretion. In addition, subject to Section 13.12(a)(v) , the Administrative Agent shall have the right, from time to time, to adjust any of the criteria set forth below and to establish new criteria with respect to Eligible Inventory, in its Permitted Discretion. Eligible Inventory shall not include any Inventory of a Borrower that:

(a) is not owned by a U.S. Borrowers the Canadian Borrower or a Canadian Subsidiary Guarantor free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the applicable Borrower’s or Canadian Subsidiary Guarantor’s performance with respect to that Inventory), except the First Priority Lien in favor of the Collateral Agent on behalf of the Secured Parties, the junior Lien in favor of the Noteholder Collateral Agent on behalf of the Senior Secured Noteholders (so long as the Intercreditor Agreement remains in effect with respect thereto) and Permitted Liens in favor of landlords, bailees and freight carriers and forwarders to the extent permitted in the provisions of this Agreement and the Collateral Access Agreements;

(b) (i) is located with a vendor, a customer of a Credit Party or its Affiliates or outside processor or on a property owned or leased by any of the foregoing, (ii) is not located on premises owned, leased or rented by a Credit Party unless in the case of leased or rented premises, either (x) a Collateral Access Agreement has been delivered to the Administrative Agent or (y) a Rent Reserve reasonably satisfactory to the Administrative Agent has been established with respect thereto, or (iii) is stored with a bailee at a leased location, unless, either (x) a Collateral Access Agreement has been delivered to the Administrative Agent, or (y) a Rent Reserve reasonably satisfactory to the Administrative Agent has been established with respect thereto, or (iv) is stored with a bailee or warehouseman, unless, either (x) a Collateral Access Agreement has been received by the Administrative Agent or (y) a Rent Reserve reasonably satisfactory to the Administrative Agent has been established with respect thereto, or (v) is located at an owned location subject to a mortgage or other security interest in favor of a creditor other than the Collateral Agent or the Noteholder Collateral Agent unless a Collateral Access Agreement has been delivered to the Administrative Agent;

(c) it is not reflected in the details of a current perpetual inventory report;

(d) is in transit, except for (i) up to 5% of the aggregate Value of all Inventory owned by the Borrowers and the Canadian Subsidiary Guarantors that is in transit between locations owned or leased by one or more Borrowers or Canadian Subsidiary Guarantors ( provided that the Security Condition with respect to such Inventory is at all times satisfied) and (ii) up to $10,000,000 of Eligible In-Transit Inventory on the water or which is located in an Applicable Eligible Jurisdiction, may, in each case, be deemed Eligible Inventory hereunder to the extent it otherwise satisfies the eligibility criteria hereunder.

 

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(e) is covered by a negotiable document of title or warehouse receipt unless all actions have been taken to create and perfect a First Priority Lien in favor of the Collateral Agent in such document of title or warehouse receipt and the Inventory covered thereby, including, without limitation, the delivery to the Collateral Agent or an agent thereof of such document of title and warehouse receipt with all necessary endorsements;

(f) it is not saleable condition as new Inventory or is excess, obsolete, unsaleable, seconds, defective, damaged or unfit for sale;

(g) consists of goods that are non-conforming, scrap, slow moving, restrictive or custom items, or goods that constitute spare parts, packaging and shipping materials, promotional products, supplies used or consumed in a Borrower’s business or bill and hold goods;

(h) consists of any gross profit mark-up in connection with the sale and distribution thereof to any division of any Borrower or Canadian Subsidiary Guarantor or to any Affiliate of such Borrower or Canadian Subsidiary Guarantor;

(i) it is held on or delivered on consignment;

(j) it consists of goods that have been returned or rejected by the buyer which are not resaleable as new;

(k) it is subject to a down payment or security deposit;

(l) is not of a type held for sale in the ordinary course of any Borrower’s or Canadian Subsidiary Guarantor’s business;

(m) is not subject to a First Priority Lien in favor of the Collateral Agent on behalf of the Secured Parties;

(n) breaches in any material respect any of the representations, warranties or covenants pertaining to Inventory set forth in the Credit Documents;

(o) does not conform in any material respect to all standards imposed by any governmental agency, division or department thereof which has regulatory authority over such goods or the use or sale thereof;

(p) is Commingled Inventory;

(q) except for Eligible Inventory in transit on the water as described in clause (d)(ii) above, is located outside of an Applicable Eligible Jurisdiction;

(r) is subject to a license agreement, a private label agreement or other similar arrangement with a third party which, in the Administrative Agent’s determination, restricts the ability of the Administrative Agent or the Collateral Agent to exercise its rights under the Credit Documents with respect to such Inventory unless such third party has entered into an agreement in form and substance reasonably satisfactory to the Administrative Agent permitting the

 

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Administrative Agent or the Collateral Agent to exercise its rights with respect to such Inventory or the Administrative Agent has otherwise agreed to allow such Inventory to be eligible in the Administrative Agent’s Permitted Discretion;

(s) is not covered by casualty insurance as required by the terms of this Agreement;

(t) consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available;

(u) (A) the value of which on the Perpetual Inventory is reduced by any ledger reserve or (B) any capitalized variance to standard cost is maintained with respect thereto, but in each case, only to the extent of such reserve or variance which is in effect with respect thereto;

(v) consists of cores inventory;

(w) is located in a location in which the Value of all Inventory at such location is less than $100,000;

(x) the manufacturing or distribution of which was not in material compliance with applicable law, including the FLSA; or

(y) is otherwise unacceptable to the Administrative Agent in its Permitted Discretion.

“ Eligible Transferee ” shall mean and include a commercial bank, an insurance company, a finance company, a financial institution, any fund that invests in loans or any other “ accredited investor ” (as defined in Regulation D of the Securities Act), but in any event excluding individuals and Holdings and its Subsidiaries and Affiliates and, in the event of a transfer of Canadian Borrower Revolving Loans, any transferee that would not qualify as a “Canadian Lender” as hereinabove defined.

“ Eligible U.S. Accounts ” shall mean the Eligible Accounts owned by the U.S. Borrowers.

“ Eligible U.S. Inventory ” shall mean the Eligible Inventory owned by the U.S. Borrowers.

“ Environmental Claims ” shall mean any and all administrative, regulatory or judicial actions, suits, demands, demand letters, directives, claims, liens, notices of noncompliance or violation, investigations or proceedings under or relating to any Environmental Law or any permit issued, or any approval given, under any such Environmental Law (hereafter, “ Claims ”), including, without limitation, (a) any and all Claims by Governmental Authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and (b) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief in connection with alleged injury or threat of injury to health, safety or the environment due to the presence of Hazardous Materials.

 

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“ Environmental Law ” shall mean any federal, state, provincial, foreign or local statute, law, rule, regulation, ordinance, code and rule of common law now or hereafter in effect (including legally binding agreements with any Governmental Authority) and in each case as amended, and any legally binding judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, relating to the environment, employee health and safety or Hazardous Materials, including, without limitation, CERCLA; the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq. ; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq. ; the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq. ; the Clean Air Act, 42 U.S.C. § 7401 et seq. ; the Safe Drinking Water Act, 42 U.S.C. § 3803 et seq. ; the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq. ; the Emergency Planning and the Community Right-to-Know Act of 1986, 42 U.S.C. § 11001 et seq. ; the Hazardous Material Transportation Act, 49 U.S.C. § 1801 et seq. ; the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq. ; and any state and local or foreign counterparts or equivalents, in each case as amended from time to time.

“ Environmental Liability ” shall mean liabilities, obligations, damages, claims, actions, suits, judgments, orders, fines, penalties, fees, expenses and costs (including administrative oversight costs, natural resource damages and medical monitoring, investigation or remediation costs), whether contingent or otherwise, arising out of or relating to (a) compliance or noncompliance with 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 Release or threatened Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“ Equity Interests ” of any Person shall mean any and all shares, interests, rights to purchase, warrants, options, participation or other equivalents of or interest in (however designated, including phantom stock, stock appreciation rights or other similar securities, rights or interests therein) equity of such Person, including any common stock, preferred stock, any limited or general partnership interest, unlimited liability company member interest and any limited liability company membership interest.

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

“ ERISA Affiliate ” shall mean any trade or business (whether or not incorporated) that together with Holdings or a Subsidiary of Holdings is treated as a “ single employer ” within the meaning of Section 414(b) or (c) of the Code, and for the purpose of Sections 302 and 4007 of ERISA and/or Section 412 and 4971 of the Code, within the meaning of Section 414(b), (c), (m) or (o) of the Code.

“ ERISA Event ” shall mean (a) any Reportable Event with respect to a Plan, (b) failure with respect to any Plan to have satisfied the minimum funding standard for any plan year under Section 412 of the Code or Section 302 of ERISA, whether or not waived, or a

 

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determination that any Plan is, or is reasonably expected to be, in at-risk status within the meaning of Section 430 of the Code or Section 303 of ERISA, (c) the filing pursuant to Section 412 of the Code or Section 303(d) of ERISA (or Section 302(c) of ERISA for plan years beginning after 2007) of an application for a waiver of the minimum funding standard or an extension of any amortization period with respect to any Plan, (d) the incurrence by Holdings or any ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan or Multiemployer Plan, (e) the receipt by Holdings or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan under Section 4042 of ERISA, (f) the incurrence by Holdings or any ERISA Affiliates of any liability under Title IV of ERISA with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan, (g) the receipt by Holdings or ERISA Affiliate thereof of any notice, or the receipt by any Multiemployer Plan from Holdings or any ERISA Affiliate of any notice, concerning the imposition of withdrawal liability under Title IV of ERISA or a determination that a Multiemployer Plan is, or is reasonably expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA or the receipt by Holdings or any ERISA Affiliate of any notice that a Multiemployer Plan is in endangered or critical status under Section 432 of the Code or Section 305 of ERISA or (h) the engaging in a non-exempt prohibited transaction within the meaning of Section 4975 of the Code or Section 406 of ERISA.

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

“ Excess Availability ” shall mean, as of any date of determination, the remainder of (i) the Total Borrowing Base at such time minus (ii) the Aggregate Exposure at such time.

“ Excluded Accounts ” shall mean all of the following Deposit Accounts: (w) disbursement accounts established solely for the payment of medical and dental expenses in connection with health insurance programs for employees of Holdings and its Subsidiaries, (x) petty cash accounts established (or otherwise maintained) (i) by any U.S. Credit Party that do not have cash balances at any time exceeding $1,000,000 in the aggregate for all such petty cash accounts of the U.S. Credit Parties, and (ii) by any Canadian Credit Party that do not have cash balances at any time exceeding the U.S. Dollar Equivalent of $500,000 in the aggregate for all such petty cash accounts of the Canadian Credit Parties, (y) payroll tax accounts established at Toronto-Dominion Bank at which no balances in excess of Cdn.$100,000 are maintained other than immediately prior to payroll tax disbursements to be funded therefrom, and (z) any accounts maintained at banks or other financial institutions located outside of the United States or Canada that do not have cash balances, in the aggregate, in excess of €500,000.

“ Excluded Taxes ” shall mean, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of any Borrower hereunder, (a) Taxes imposed on or measured by its net income (however denominated) and franchise Taxes imposed on or measured by its gross or net income or receipts, in each case by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal offices is located or, in the case of any Lender, in which its applicable lending office is located or as a result of a present or former connection between the Administrative Agent, such Lender or other recipient, as applicable, and the jurisdiction imposing such Tax or any political subdivision or taxing authority thereof or

 

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therein, (b) any branch profits Taxes imposed by the United States or any similar Tax imposed by any other jurisdiction in which any Borrower is located, (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by a Borrower under Section 2.13 or 13.04(b) ), any withholding Tax that is imposed on amounts payable to such Foreign Lender at the time such Lender becomes a party hereto (or designates a new lending office), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding pursuant to Section 5.04(a) and (d) any withholding Tax that is attributable to a Foreign Lender’s failure to comply with Section 5.04(d) .

“ Exchange Act ” shall mean the United States Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder.

“ Existing Credit Agreement ” shall mean the Credit Agreement, dated as of November 30, 2004, among Holdings, the Company, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, Goldman Sachs Credit Partners L.P. and Credit Suisse First Boston, as co-syndication agents, and Deutsche Bank AG, Cayman Islands Branch and UBS Securities LLC, as co-documentation agents (as in effect on the Effective Date).

“ Existing Indebtedness ” shall have the meaning provided in Section 10.04(b) .

“ Existing Joint Venture ” shall mean those joint ventures in respect of which the Company or any Subsidiary thereof holds an Equity Interest on the Effective Date, as set forth on Schedule 1.01(d) .

“ Existing Letters of Credit ” shall have the meaning provided in Section 3.01(a)(B) .

“ Existing Receivables Securitization Facility ” shall mean the Receivables Purchase Agreement, dated as of November 30, 2004, among Affinia Receivables LLC, a Delaware limited liability company, Affinia Group Inc., a Delaware corporation, as initial servicer, the financial institutions party thereto, Park Avenue Receivables Company LLC, and JPMorgan Chase Bank, N.A., as agent.

“ Existing Senior Subordinated Notes ” shall mean the Company’s 9.0% senior subordinated notes due 2014 issued pursuant to the Existing Senior Subordinated Notes Indenture.

“ Existing Senior Subordinated Notes Documents ” shall mean the Existing Senior Subordinated Notes Indenture, the Existing Senior Subordinated Notes and each other document or agreement relating to the issuance of the Existing Senior Subordinated Notes.

“ Existing Senior Subordinated Notes Indenture ” shall mean the Indenture, dated as of November 30, 2004, among the Company, as issuer, Holdings and the U.S. Subsidiary Guarantors party thereto as guarantors and Wilmington Trust Company, as trustee thereunder, as in effect on the Effective Date and as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.

 

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“ Extraordinary Expenses ” shall mean expenses (described in Section 13.01(a) ) incurred during the existence of a Default or Event of Default or during the pendency of an Insolvency Proceeding.

“ Facility Termination Date ” shall mean the earlier of (i) the Final Maturity Date or (ii) the U.S. Revolving Commitment Termination Date.

“ Fair Market Value ” shall mean, with respect to any asset (including any Equity Interests of any Person), the price at which a willing buyer, not an Affiliate of the seller, and a willing seller who does not have to sell, would agree to purchase and sell such asset, as determined in good faith by Holdings or the Subsidiary of Holdings selling or transferring such asset.

“ Federal Funds Rate ” shall mean, for any period, (a) the weighted average of interest rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on the applicable Business Day (or on the preceding Business Day, if the applicable day is not a Business Day), as published by the Federal Reserve Bank of New York on the next Business Day; or (b) if no such rate is published on the next Business Day, the average rate (rounded up, if necessary, to the nearest 1/8 of 1%) charged to Bank of America on the applicable day on such transactions, as determined by Administrative Agent.

“ Fee Letters ” shall mean (i) the amended and restated fee letter agreement dated as of the Effective Date between Administrative Agent and the Borrowers and (ii) that certain fee letter agreement dated as of July 29, 2009 among the Company and the Lead Arranger.

“ Fees ” shall mean all amounts payable pursuant to or referred to in Section 4.01 , including those due and payable under the Fee Letters.

“ FEMA ” shall mean the Federal Emergency Management Agency.

“ Final Maturity Date ” shall mean August 13, 2013.

“ First Priority ” shall mean, with respect to any Lien purported to be created on any Collateral pursuant to any Security Document, that such Lien is prior in right to any other Lien thereon, other than any Permitted Liens (excluding Permitted Liens as described in clause (y) of Section 10.01(d) ) applicable to such Collateral which as a matter of law (and giving effect to any actions taken pursuant to the last paragraph of Section 10.01 ) have priority over the respective Liens on such Collateral created pursuant to the relevant Security Document.

“ Fiscal Quarter ” shall mean each fiscal quarter of a Fiscal Year.

“ Fiscal Year ” shall mean the fiscal year of Holdings and its Subsidiaries for accounting and tax purposes, ending on December 31 of each year.

“ FLSA ” shall mean the Fair Labor Standards Act of 1938.

 

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“ Foreign Lender ” shall mean any Lender that is organized under the laws of a jurisdiction other than in which the applicable Borrower is resident for Tax purposes. For purposes of this definition, the United States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

“ Foreign Pension Plan ” shall mean any plan, trust, insurance contract, fund (including, without limitation, any superannuation fund) or other similar program established or maintained outside the United States by Holdings or any one or more of its Subsidiaries primarily for the benefit of employees or other service providers of Holdings or such Subsidiaries residing outside the United States, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the Code, other than a Canadian Pension Plan.

“ Foreign Subsidiary ” shall mean, as to any Person, any Subsidiary of such Person that is not a Domestic Subsidiary of such Person.

“ GAAP ” shall mean generally accepted accounting principles in the United States as in effect from time to time, subject (to the extent provided therein) to Section 13.07(a) .

“ General Claims ” shall mean all liabilities, obligations, losses, damages, penalties, judgments, proceedings, interest, costs and expenses of any kind (including remedial response costs, reasonable attorneys’ fees and Extraordinary Expenses) at any time (including after full payment of the Obligations, resignation or replacement of Administrative Agent, or replacement of any Lender) incurred by or asserted against any indemnitee hereunder in any way relating to (a) any Loans, Letters of Credit, Credit Documents, or the use thereof or transactions relating thereto, (b) any action taken or omitted to be taken by any indemnitee hereunder in connection with any Credit Documents, (c) the existence or perfection of any Liens, or realization upon any Collateral, (d) exercise of any rights or remedies under any Credit Documents or applicable law, or (e) failure by any Credit Party to perform or observe any terms of any Credit Document, in each case including all costs and expenses relating to any investigation, litigation, arbitration or other proceeding (including an Insolvency Proceeding or appellate proceedings), whether or not the applicable indemnitee is a party thereto.

“ Governmental Authority ” shall mean the government of the United States, Canada, any other nation or any political subdivision thereof, whether state, provincial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“ Gross Canadian Formula Amount ” shall mean, on any date of determination, the Value of the Eligible Canadian Accounts on such date of determination minus the Canadian Dilution Reserve on such date.

“ Gross U.S. Formula Amount ” shall mean, on any date of determination, the Value of the Eligible U.S. Accounts on such date of determination minus the U.S. Dilution Reserve on such date.

 

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“ Guaranteed Creditors ” shall mean and include each of the Administrative Agent, the Collateral Agent, the Issuing Lenders, the Lenders and each party (other than any Credit Party) in its capacity as a party to a Qualified Secured Hedging Agreement or a Qualified Secured Cash Management Agreement.

“ Guaranteed Party ” shall mean each Credit Party and each other Subsidiary of Holdings party to any Secured Hedging Agreement or Secured Cash Management Agreement.

“ Guarantor ” shall mean each of Holdings, each Borrower in its capacity as a Guarantor under a Subsidiaries Guaranty and each Subsidiary Guarantor.

“ Guaranty ” shall mean and include each of the Holdings Guaranty, the U.S. Subsidiaries Guaranty and the Canadian Subsidiaries Guarantee.

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

“ Hedging Agreement ” shall mean any Interest Rate Protection Agreement or Other Hedging Agreement.

“ Holdings ” shall have the meaning provided in the first paragraph of this Agreement.

“ Holdings Guaranty ” shall mean the guaranty by Holdings under Section 15 .

“ Immaterial Subsidiary ” shall mean, solely for the purposes of determining whether a Default or Event of Default has occurred under Section 11.05 , any Subsidiary affected by any event or circumstance referred to in such Section to the extent that such Subsidiary did not, as of the last day of the Test Period ending on the last day of the Fiscal Quarter of Holdings most recently ended prior to such date of determination, have assets with a value equal to more than 5% of the consolidated total value of the assets of Holdings and the Subsidiaries or revenue equal to more than 5% of the total revenues of Holdings and the Subsidiaries as of such date, provided that if more than one such Subsidiary is so affected, then only those such Subsidiaries (when combined with any other such Subsidiary) having aggregate assets with a value of not more than 10% of the consolidated total assets of Holdings and the Subsidiaries or aggregate revenues of not more than 10% of the total revenues of Holdings and the Subsidiaries shall be deemed to be Immaterial Subsidiaries excluded from the operation of Section 11.05 .

 

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“ Indebtedness ” shall mean, as to any Person, without duplication, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services, (b) the maximum amount available to be drawn or paid under all letters of credit, bankers’ acceptances, bank guaranties, surety and appeal bonds and similar obligations issued for the account of such Person and all unpaid drawings and unreimbursed payments in respect of such letters of credit, bankers’ acceptances, bank guaranties, surety and appeal bonds and similar obligations, (c) all indebtedness of the types described in clause (a), (b), (d), (e), (f), (g), (h), (i) or (j) of this definition secured by any Lien on any property owned by such Person, whether or not such indebtedness has been assumed by such Person ( provided that, if the Person has not assumed or otherwise become liable in respect of such indebtedness, such indebtedness shall be deemed to be in an amount equal to the Fair Market Value of the property to which such Lien relates), (d) all Capitalized Lease Obligations of such Person, (e) all Contingent Obligations of such Person, (f) all obligations under any Interest Rate Protection Agreement, any Other Hedging Agreement or under any similar type of agreement, (g) all Off-Balance Sheet Liabilities of such Person, (h) all obligations of such Person upon which interest charges are customarily paid, and (i) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is directly liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. Notwithstanding the foregoing, Indebtedness shall not include trade payables not more than 90 days past due (unless such trade payables are being contested in good faith and proper reserves have been established and maintained), accrued expenses and deferred Tax and other credits incurred by any Person in accordance with customary practices and in the ordinary course of business of such Person.

“ Indemnified Taxes ” shall mean Taxes other than (i) Excluded Taxes and (ii) Other Taxes.

“ Individual Canadian Exposure ” of any Canadian Lender shall mean, at any time, the U.S. Dollar Equivalent of the aggregate principal amount of all Canadian Borrower Revolving Loans made by such Lender and then outstanding.

“ Individual U.S. Exposure ” of any U.S. Lender shall mean, at any time, the sum of (a) the aggregate principal amount of all U.S. Borrower Revolving Loans made by such Lender and then outstanding, (b) such Lender’s RL Percentage in the aggregate principal amount of all Swingline Loans then outstanding and (c) such Lender’s RL Percentage in the aggregate amount of all Letter of Credit Outstandings at such time.

“ Initial Bank Parties ” shall mean, collectively, the Agents, the Lead Arrangers, the Documentation Agents, the Syndication Agents and the Initial Lenders.

“ Initial Lenders ” shall mean Bank of America, N.A.; Bank of America, N.A. (acting through its Canada branch); Barclays Bank PLC; Wells Fargo Foothill, LLC; JPMorgan Chase Bank, N.A.; and Deutsche Bank Trust Company Americas.

“ Insolvency Proceeding ” shall mean any proceeding commenced by or against any Person under any provision of the Bankruptcy Code, the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada) or under any state, provincial or foreign bankruptcy or insolvency law, general assignments for the benefit of creditors, a general moratorium on payment of debt or proceedings seeking reorganization, arrangement, liquidation, receivership, conservatorship or other similar relief.

 

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“ Intellectual Property ” shall have the meaning provided in the Security Agreements.

“ Intellectual Property Claim ” shall mean any written claim or assertion that a Credit Party’s or any Subsidiary of a Credit Party’s ownership, use, marketing, sale or distribution of any Inventory, Equipment, Intellectual Property or other property violates another Person’s Intellectual Property.

“ Intercompany Loans ” shall have the meaning provided in Section 10.05(h) .

“ Intercompany Note ” shall mean a promissory note evidencing Intercompany Loans, duly executed and delivered substantially in the form of Exhibit K (or such other form as shall be reasonably satisfactory to the Administrative Agent), with blanks completed in conformity herewith.

“ Intercreditor Agreement ” shall have the meaning provided in Section 6.10 .

“ Interest Determination Date ” shall mean, with respect to any Interest Period Loan, the second Business Day prior to the commencement of any Interest Period relating to such Interest Period Loan.

“ Interest Period ” shall have the meaning provided in Section 2.09 .

“ Interest Period Loan ” shall mean a LIBOR Loan or a Canadian BA Rate Loan.

“ Interest Rate Protection Agreement ” shall mean any interest rate swap agreement, interest rate cap agreement, interest collar agreement, interest rate hedging agreement or other similar agreement or arrangement.

“ Internal Management Reports ” shall have the meaning provided in Section 8.05(a)(ii) .

“ Inventory ” shall mean “ inventory ” as such term is defined in Article 9 of the UCC and/or in the PPSA, as applicable.

“ Investments ” shall have the meaning provided in Section 10.05 .

“ IPO ” means an underwritten public offering of the Parent’s common stock pursuant to an effective registration statement filed with the Securities and Exchange Commission under the Securities Act of 1933; provided that (i) there are sales pursuant to such registration statement of shares of such common stock for a net aggregate offering price of not less than $250,000,000 and (ii) such common stock is listed on a national securities exchange.

 

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“ Issuing Lender ” shall mean each of (i) Bank of America (except as otherwise provided in Section 12.09 ) and any other Lender reasonably acceptable to the Administrative Agent and Holdings which agrees to issue Letters of Credit hereunder and (ii) with respect to the Existing Letters of Credit, JPMorgan Chase Bank, N.A. Any Issuing Lender may, in its discretion, arrange for one or more Letters of Credit to be issued by one or more Affiliates of such Issuing Lender (and such Affiliate shall be deemed to be an “ Issuing Lender ” for all purposes of the Credit Documents).

“ Joinder Agreement ” shall mean a Joinder Agreement substantially in the form of Exhibit M (appropriately completed).

“ Judgment Currency ” shall have the meaning provided in Section 13.21 .

“ Judgment Currency Conversion Date ” shall have the meaning provided in Section 13.21 .

“ LC Reserve ” means the aggregate of all Letter of Credit Outstandings, other than (a) those that are fully Cash Collateralized; and (b) if no Default or Event of Default exists, those constituting charges owing to the Issuing Lender.

“ Lead Arrangers ” shall mean Banc of America Securities LLC, Barclays Capital, the investment banking division of Barclays Bank PLC; Wells Fargo Foothill, LLC; J.P. Morgan Securities Inc.; and Deutsche Bank Securities Inc., in their capacities as Joint Lead Arrangers and Joint Book Runners in respect of the credit facilities hereunder, and any successors thereto.

“ Leaseholds ” of any Person shall mean all the right, title and interest of such Person as lessee or licensee in, to and under leases or licenses of land, improvements and/or fixtures.

“ Lender ” shall mean each financial institution listed on Schedule 1.01(a) , as well as any Person that becomes a “ Lender ” hereunder pursuant to Section 2.13 or 13.04(b) .

“ Lender Default ” shall mean (a) the failure of a Lender to make available its portion of any Borrowing (including any Mandatory Borrowing), unless, with respect to Revolving Loans only, pursuant to a good-faith dispute) or to fund its portion of any unreimbursed payment under Section 3.04(d), (b) a Lender having notified in writing the Company and/or the Administrative Agent that such Lender does not intend to comply with its obligations under Section 2.01(a) (unless pursuant to a good-faith dispute) or (c) , Section 2.04 or Section 3 or (c) a Lender has become the subject of an Insolvency Proceeding or is Controlled by a Person who has become the subject of an Insolvency Proceeding; provided that a Lender Default shall not be deemed to have occurred solely by virtue of the ownership or acquisition of any equity interest in any Lender or parent company thereof by a governmental authority or an instrumentality thereof.

“ Letter of Credit ” shall have the meaning provided in Section 3.01(a) .

“ Letter of Credit Fee ” shall have the meaning provided in Section 4.01(b) .

 

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“ Letter of Credit Outstandings ” shall mean, at any time, the sum of (a) the Stated Amount of all outstanding Letters of Credit at such time and (b) the aggregate amount of all Unpaid Drawings in respect of all Letters of Credit at such time.

“ Letter of Credit Request ” shall have the meaning provided in Section 3.03(a) .

“ LIBOR ” shall mean, for any Interest Period with respect to a LIBOR Loan for any U.S. Borrower, the per annum rate of interest (rounded up, if necessary, to the nearest 1/8th of 1%), determined by Administrative Agent at approximately 11:00 a.m. (London time) two Business Days prior to commencement of such Interest Period, for a term comparable to such Interest Period, equal to (a) the British Bankers Association LIBOR Rate (“ BBA LIBOR ”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by Administrative Agent); or (b) if BBA LIBOR is not available for any reason, the interest rate at which Dollar deposits in the approximate amount of the LIBOR Loan would be offered by Bank of America’s London branch to major banks in the London interbank Eurodollar market. If the Board imposes a Reserve Percentage with respect to LIBOR deposits, then LIBOR shall be the foregoing rate, divided by 1 minus the Reserve Percentage; provided , however, that in no event shall LIBOR be less than 1.50%.

“ LIBOR Loan ” shall mean a Loan that bears interest based on LIBOR.

“ Lien ” shall mean any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), reservation, easement, right-of-way, covenant, restriction or other similar security agreement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement, any financing or similar statement or notice filed under the UCC, PPSA or any other similar recording or notice statute, and any lease having substantially the same effect as any of the foregoing).

“ Loan ” shall mean each Revolving Loan and, solely as it relates to the U.S. Borrowers, each Swingline Loan.

“ Long-Dated ” shall have the meaning set forth on Schedule 1.01(c) .

“ Mandatory Borrowing ” shall have the meaning provided in Section 2.01(c) .

“ Margin Stock ” shall have the meaning provided in Regulation U.

“ Material Adverse Effect ” shall mean a material adverse effect on (a) the property, assets, business results of operations, liabilities or condition (financial or otherwise) of Holdings and its Subsidiaries taken as a whole, (b) the rights or remedies of the Lenders, the Administrative Agent or the Collateral Agent hereunder or under any other Credit Document, (c) the ability of the Credit Parties (taken as a whole) to perform their respective payment obligations to the Lenders, the Administrative Agent or the Collateral Agent hereunder or under any other Credit Document or (d) a material portion of the Collateral.

 

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“ Material Leasehold ” shall mean any facility or location in which a Credit Party has a Leasehold interest and at which (i) with respect to any single location, the Value of Inventory and Equipment exceeds $500,000, (ii) with respect to any single location, the Value of Inventory and Equipment is less than or equal to $500,000 and, when such Value is aggregated with the Value of Inventory and Equipment at all other locations in which a Credit Party has a Leasehold interest at which the Value of Inventory and Equipment is less than or equal to $500,000 for which no Collateral Access Agreement is in place, exceeds $2,000,000 or (iii) any centralized location where books and records relating to the Accounts are located.

“ Maximum Letter of Credit Amount ” shall have the meaning provided in Section 3.02(a) .

“ Maximum Swingline Amount ” shall mean $30,000,000.

“ Minimum Borrowing Amount ” shall mean (a) for Base Rate Loans (other than Swingline Loans) and Canadian Prime Rate Loans, $500,000 and minimum increments of $100,000 in excess thereof and (b) for Interest Period Loans, $1,000,000 and minimum increments of $100,000 in excess thereof.

“ Monthly Reporting Period ” shall mean the period commencing with the calendar month immediately preceding any calendar month during which Excess Availability falls below the greater of (x) $63,000,000 or (y) 20% of the Total Revolving Loan Commitment (such month during which such Excess Availability was below such amount being the “ Subject Month ”) and continuing until (and including) the second complete consecutive calendar month occurring after the Subject Month for which Excess Availability was at all times above the foregoing amounts and for which months (including such second consecutive month) the Credit Parties shall have delivered all monthly financial statements and monthly management reports required to be delivered to the Administrative Agent pursuant to Sections 9.01 and 9.02 .

“ Moody’s ” shall mean Moody’s Investors Service, Inc.

“ Mortgage ” shall mean a mortgage, collateral/charge mortgage, debenture, immovable hypothec, deed of trust, deed to secure debt or similar security instrument in form and substance reasonably satisfactory to the Administrative Agent.

“ Mortgage Policy ” shall mean a Lender’s title insurance policy (Form 1992 or its equivalent if such form is not available in the relevant jurisdiction).

“ Mortgaged Property ” shall mean, with respect to any individual Real Property owned by Holdings or the Credit Parties (i) Real Property with a building insured value in excess of $5,000,000, (ii) Real Property with a building insured value equal to or less than $5,000,000 and located within the same county and State as Real Property encumbered (or required to be encumbered) pursuant to the foregoing clause (i), and (iii) other Real Property owned by Holdings or any of the Credit Parties which is or is required to be encumbered by a mortgage or similar security interest pursuant to the Senior Secured Notes Documents or the Additional Senior Secured Notes Documents.

“ Multiemployer Plan ” shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which contributions are, or within the immediately preceding five-year period, have been made (or have been required to have been made) by Holdings or a Subsidiary of Holdings or an ERISA Affiliate.

 

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“ NAIC ” shall mean the National Association of Insurance Commissioners.

“ Net Orderly Liquidation Value ” shall mean the “ net orderly liquidation value ” determined separately for raw materials, work-in-process and finished goods Inventory by an unaffiliated valuation company acceptable to the Administrative Agent after performance of an inventory valuation to be done at the Administrative Agent’s request and the Borrowers’ expense, less the amount estimated by such valuation company for marshalling, reconditioning, carrying, and sales expenses designated to maximize the resale value of such Inventory on an “as is” basis and assuming that the time required to dispose of such Inventory is customary with respect to such Inventory and expressed as a percentage of the net book value of such raw materials, work-in-process and finished goods Inventory.

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

“ Non-Wholly-Owned Subsidiary ” shall mean, as to any Person, each Subsidiary of such Person which is not a Wholly-Owned Subsidiary of such Person.

“ Note ” shall mean each U.S. Borrower Revolving Note, the Canadian Borrower Revolving Note and the U.S. Borrower Swingline Note, and “ Notes ” shall mean all of them collectively.

“ Noteholder Collateral Agent ” shall mean Wilmington Trust Company, in its capacity as noteholder collateral agent under the Senior Secured Notes Documents, and its successors and assigns in such capacity.

“ Notice of Borrowing ” shall have the meaning provided in Section 2.03(a) .

“ Notice of Conversion/Continuation ” shall have the meaning provided in Section 2.06 .

“ Notice Office ” shall mean (i) for credit notices, the office of the Administrative Agent located at Bank of America Business Capital, 2600 West Big Beaver Road, Troy, Michigan 48084, Facsimile: 248-822-5809, and (ii) for operational notices, the office of the Administrative Agent located at Bank of America, Credit Services Rep III, 20975 Swenson Drive Suite 200, Waukesha, Wisconsin 53186, Facsimile: 312-453-6426; provided that in the case of all Borrowings of Canadian Borrower Revolving Loans, a copy of such notice also shall be delivered simultaneously to Bank of America, 200 Front Street West, Suite 2700, Toronto, Ontario M5V 3L2; or (in either case) such other office or person as the Administrative Agent may hereafter designate in writing as such to the other parties hereto.

“ Obligation Currency ” shall have the meaning provided in Section 13.21 .

 

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“ Obligations ” shall mean all (a) principal of and premium, if any, on the Loans, (b) Letter of Credit Outstandings and other fees, expenses and other obligations of Credit Parties with respect to Letters of Credit, (c) interest, expenses, fees (including the Fees) and other sums payable by Credit Parties under Credit Documents, (d) obligations of Credit Parties under any indemnity for General Claims, (e) Extraordinary Expenses, (f) all Indebtedness, obligations and liabilities of any kind owing by any Credit Party under any Qualified Secured Cash Management Agreements and/or Qualified Secured Hedging Agreements and (g) other Indebtedness, obligations, liabilities or other amount of any kind owing by Credit Parties pursuant to the Credit Documents, any Qualified Secured Cash Management Agreements or Qualified Secured Hedging Agreements, in each case, whether now existing or hereafter arising, whether evidenced by a note or other writing, whether allowed in any Insolvency Proceeding, whether arising from an extension of credit, issuance of a letter of credit, acceptance, loan, guaranty, indemnification or otherwise, and whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, or joint or several.

“ Off-Balance Sheet Liabilities ” of any Person shall mean (a) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (b) any liability of such Person under any sale-leaseback transactions that does not create a liability on the balance sheet of such Person (other than an operating lease), (c) any obligation under a Synthetic Lease, asset securitization or other similar transaction or (d) any obligation arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheet of such Person.

“ Other Hedging Agreements ” shall mean any foreign exchange contracts, currency swap agreements, commodity agreements or other similar agreements, or arrangements designed to protect against fluctuations in currency values or commodity prices.

“ Other Taxes ” shall mean any and all present or future recording, stamp, documentary, excise, transfer, sales, property or similar Taxes, charges or levies arising from any payment made under any Credit Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Credit Document.

“ Overadvance ” shall mean, with respect to the U.S. Borrowers, the amount by which the Aggregate U.S. Borrower Exposure exceeds U.S. Borrowing Base, and with respect to the Canadian Borrowers, the amount by which the U.S. Dollar Equivalent of the Aggregate Canadian Borrower Exposure exceeds the Canadian Borrowing Base at such time.

“ Overadvance Loan ” shall mean Revolving Loans described in Section 2.01(f) .

“ Parent ” shall mean Affinia Group Holdings Inc., a Delaware corporation.

“ Parent PIK Note ” shall mean that certain Seller Subordinated Note due November 30, 2019 in the face amount of $74,500,000 made by Affinia Group Holdings Inc. in favor of Dana Corporation.

“ Participant ” shall have the meaning provided in Section 3.04(a) .

“ Patriot Act ” shall have the meaning provided in Section 13.18 .

 

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“ Payment Office ” shall mean (i) except as provided in clause (ii) below, the office of the Administrative Agent located at Bank of America, Credit Services Rep III, 20975 Swenson Drive Suite 200, Waukesha, Wisconsin 53186, Facsimile: 312-453-6426 and (ii) in the case of all payments with respect to Canadian Borrower Revolving Loans, the office of the Administrative Agent located at Bank of America, 200 Front Street West, Suite 2700, Toronto, Ontario M5V 3L2, or (in either case) such other office as the Administrative Agent may hereafter designate in writing as such to the other parties hereto.

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

“ PBGF ” shall mean the Pension Benefits Guarantee Fund of Ontario.

“ Perfection Certificate ” shall mean a certificate in the form of Exhibit P or any other form approved by the Administrative Agent, as the same may be supplemented from time to time by a Perfection Certificate Supplement or otherwise.

“ Perfection Certificate Supplement ” shall mean a Perfection Certificate supplement in form and substance reasonably satisfactory to the Administrative Agent.

“ Permitted Acquisition ” shall mean the acquisition of an Acquired Entity or Business by the Company or any Subsidiary of the Company, including by means of acquisition, merger, consolidation, amalgamation or otherwise; provided that:

(i) at the time of such acquisition, either the Tier I Payment Conditions or the Tier II Payment Conditions shall be satisfied both before and after giving effect to such acquisition and the consideration paid or to be paid by the Company or any such Subsidiary consists solely of cash (including proceeds of Loans), any Equity Interests of Parent, the issuance or incurrence of Indebtedness otherwise permitted by Section 10.04 and the assumption/acquisition of any Indebtedness (calculated at face value) which is permitted to remain outstanding in accordance with the requirements of Section 10.04 , and the Aggregate Consideration for which shall not exceed the Applicable Permitted Investment Amount as then in effect;

(ii) such Acquired Entity or Business to be acquired pursuant to the respective Permitted Acquisition is in a business permitted by Section 10.11 ;

(iii) such acquisition was not preceded by, or consummated pursuant to, a hostile offer (including a proxy contest);

(iv) all transactions related to such acquisition are consummated in accordance with applicable laws;

(v) Holdings shall have given to the Administrative Agent and the Lenders at least ten (10) Business Days’ prior written notice of any Permitted Acquisition (or such shorter period of time as may be reasonably acceptable to the Administrative Agent in any given case), which notice shall describe in reasonable detail the principal terms and conditions of such Permitted Acquisition;

 

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(vi) all representations and warranties contained herein and in the other Credit Documents shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date of such Permitted Acquisition (both before and after giving effect thereto), unless stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date;

(vii) with respect to all assets acquired by any Credit Party in connection therewith, the Security Condition shall have been met, including without limitation, in the case of any Permitted Acquisition involving the creation or acquisition of a Subsidiary, or the acquisition of capital stock or other Equity Interest of any Person, the capital stock or other Equity Interests thereof created or acquired in connection with such Permitted Acquisition, to the extent owned by a Credit Party (or a Person that will become a Credit Party as a result of such Permitted Acquisition), shall be pledged and delivered for the benefit of the Secured Parties pursuant to (and to the extent required by) the applicable Security Documents;

(viii) Holdings will cause each Subsidiary which is formed to effect, or is acquired pursuant to, a Permitted Acquisition to comply with, and to execute and deliver all of the documentation as and to the extent required by, Section 9.10 , to the reasonable satisfaction of the Administrative Agent; and

(ix) the consummation of each Permitted Acquisition shall be deemed to be a representation and warranty by Holdings and the other Credit Parties that the certifications required to be made pursuant to this definition have been satisfied and are true and correct and that all conditions thereto have been satisfied and that same is permitted in accordance with the terms of this Agreement, which representation and warranty shall be deemed to be a representation and warranty for all purposes hereunder, including, without limitation, Sections 8 and 11 .

“ Permitted Customer Program ” shall have the meaning set forth on Schedule 1.01(c) .

“ Permitted Discretion ” shall mean a determination made in good faith and in the exercise of commercial reasonable business judgment (from the perspective of a secured asset-based lender). The burden of establishing lack of good faith hereunder shall be on the Company. Unless a Default or an Event of Default has occurred and is continuing, the Administrative Agent shall not, in the exercise of its Permitted Discretion, impose additional restrictions (or eliminate any restrictions it has imposed) to the standards of eligibility set forth in the respective definitions of “Eligible Accounts” and “Eligible Inventory”, including reserves with respect to sums that the Borrowers are or will be required to pay (such as sales, excise or similar taxes, assessments, insurance premiums, or, in the case of leased assets, rents or other amounts payable under such leases) and have not yet paid, unless the Administrative Agent shall have provided the Company at least three Business Days’ prior written notice of any such establishment or increase in reserves or imposition of additional restrictions to such standards of eligibility.

 

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“ Permitted Encumbrances ” shall mean, with respect to any Mortgaged Property, such exceptions to title as are set forth in the Mortgage Policy delivered with respect thereto, which exceptions are acceptable to the Administrative Agent in its reasonable discretion.

“ Permitted Holders ” shall mean (i) the Sponsor and any Affiliate of the Sponsor that is neither an operating company nor a company Controlled by an operating company and (ii) any general partner of any of the foregoing.

“ Permitted Investment Amount ” shall mean, as it relates to any Investment (i) constituting Intercompany Loans from Credit Parties to non-Credit Parties or from U.S. Credit Parties to Canadian Credit Parties under and pursuant to Section 10.05(h) , (ii) constituting capital contributions by Credit Parties to non-Credit Parties or U.S. Credit Parties to Canadian Credit Parties under and pursuant to Section 10.05(i)(v) , (iii) constituting Permitted Acquisitions under and pursuant to Section 10.05(l) or (iv) constituting any other Investment under and pursuant to Section 10.05(q) (each, a “ Subject Investment ”), (a) so long as the Tier I Payment Conditions (but not the Tier II Payment Conditions) are and will be satisfied both before and after giving effect to such Subject Investment, any amount which, when aggregated with all Subject Investments made after the Effective Date pursuant to this clause (a), would not exceed $50,000,000 at any time outstanding (i.e., net of return of capital, but without giving effect to any write-downs or write-offs thereof), (b) so long as the Tier II Payment Conditions are and will be satisfied both before and after giving effect to such Subject Investment, any amount less than the amount at which the Tier II Payment Conditions would cease to be satisfied (and such Subject Investments pursuant to this clause (b) shall not be deemed to reduce the amounts permitted to be invested pursuant to clause (a) immediately above), and (c) if neither the Tier I Payment Conditions nor the Tier II Payment Conditions would be satisfied both before and after the making of any such Subject Investment, $0. If at any time the Tier II Payment Conditions are satisfied prior to the making of any such proposed Subject Investment, but the amount of any such proposed Subject Investment would exceed the Permitted Investment Amount set forth in clause (b) above, but would not exceed the aggregate amount of such Subject Investment permitted to made at such time pursuant to clauses (a) and (b) above, such Subject Investment shall be deemed to be two Subject Investments (the first under clause (b) to the extent of the Permitted Investment Amount in respect thereof and the second under clause (a) to the extent of the Permitted Investment Amount in respect thereof) for purposes of determining its compliance with the Permitted Investment Amount with respect thereto. Reductions in the outstanding amount of any such split Subject Investment (i.e., as a result of return of capital) shall be applied pro rata to that portion of such Subject Investment allocated under the Tier I Payment Condition pursuant to clause (a) above and to that portion of such Subject Investment allocated under the Tier II Payment Condition pursuant to clause (b) above based on the proportion that each such portion originally bore to the total amount of such Subject Investment.

“ Permitted Joint Venture ” shall mean any joint venture (a) in which the Company or any Subsidiary thereof holds an Equity Interest that represents 50% or less of the ordinary voting power and aggregate equity value represented by the issued and outstanding Equity Interests in such joint venture and (b) that is engaged in a business permitted under Section 10.11(a) , including the Existing Joint Ventures.

“ Permitted Liens ” shall have the meaning provided in Section 10.01 .

 

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“ Permitted Quinton Hazell Joint Venture ” shall mean, in connection with a Quinton Hazell Disposition, the transfer or disposition of the assets of the Quinton Hazell operations or the Credit Parties’ Equity Interests in the Subsidiaries conducting the Quinton Hazell operations, in each case, to a Non-Wholly-Owned Subsidiary or Permitted Joint Venture in exchange for an Equity Interest in such Non-Wholly-Owned Subsidiary or Permitted Joint Venture; provided that in connection with such transfer, no other or additional assets or cash of Holdings or its Subsidiaries may be contributed or paid to such Non-Wholly-Owned Subsidiary or Permitted Joint Venture for Holding’s or its Subsidiaries’ Equity Interest therein (unless such additional contribution or payment independently satisfies Section 10.05 ), and with respect to any such Equity Interests or other proceeds of such transfer or disposition received by any Credit Party in any such entity, the Security Condition shall be satisfied immediately upon such receipt.

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

“ Plan ” shall mean any pension plan as defined in Section 3(2) of ERISA, other than a Multiemployer Plan, which is 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 Holdings or an ERISA Affiliate is (or if such plan were terminated would under Section 4062 or Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA, but for greater certainty does not include a Canadian Pension Plan or a Foreign Pension Plan.

“ PPSA ” shall mean the Personal Property Security Act (Ontario); provided that, if perfection or the effect of perfection or non-perfection or the priority of any security interest in any Collateral is governed by a Personal Property Security Act as in effect in a Canadian jurisdiction other than Ontario, or the Civil Code of Quebec, “ PPSA ” means the Personal Property Security Act as in effect from time to time in such other jurisdiction or the Civil Code of Quebec, as applicable, for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.

“ Preferred Equity ”, as applied to the Equity Interests of any Person, shall mean Equity Interests of such Person (other than common Equity Interests of such Person) of any class or classes (however designed) that ranks prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to shares of Equity Interests of any other class of such Person.

“ Prime Rate ” shall mean the rate of interest announced by Bank of America from time to time as its prime rate. Such rate is set by Bank of America on the basis of various factors, including its costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such announced rate. Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

“ Pro Forma Basis ” means, with respect to any transaction or Investment hereunder the permissibility of which is dependent on the satisfaction of either the Tier I Payment Conditions or the Tier II Payment Conditions, the elements of such Tier I Payment Conditions or Tier II Payment Conditions which are expressly stated to be calculated on a pro

 

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forma basis shall be calculated giving effect to such transaction or Investment as if such transaction or Investment happened on the first day of the test period applicable thereto (i.e., in the case of the calculation of the Consolidated Fixed Charge Coverage Ratio, the first day of the Test Period most recently ended as of the last day of the month preceding such proposed transaction or Investment, in the case of Excess Availability, as of the date of such proposed transaction or Investment, and in the case of Average Aggregate Availability, the first day of the 90 day period immediately preceding the date of such proposed transaction or Investment), including, (i) the incurrence of any Indebtedness or payment of any underwriter, arranger, broker, investment banking, distribution or other similar fees by Holdings or any of its Subsidiaries in connection with any such transaction or Investment and the scheduled amortizations and interest expense relating thereto, (ii) any repayment or redemption of other Indebtedness of Holdings or any of its Subsidiaries in connection with any such transaction or Investment, (iii) the issuance of any Dividend by Holdings or any of its Subsidiaries in connection with any such transaction or Investment and (iv) in making any determination of Consolidated Fixed Charge Coverage Ratio in connection with any Permitted Acquisition, pro forma effect shall be given to such Permitted Acquisition as if same had occurred on the first day of such Test Period taking into account factually supportable and identifiable cost savings and expenses which would otherwise be accounted for as an adjustment pursuant to Article 11 of Regulation S-X under the Securities Act, as if such cost savings or expenses were realized on the first day of such Test Period. In calculating interest expense on Indebtedness incurred under clause (i) of the next preceding sentence, such Indebtedness shall be deemed to have borne interest at (A) the rate applicable thereto, in the case of fixed rate Indebtedness or (B) the average of three month LIBO rate which would have been applicable thereto during the respective period when the Indebtedness was outstanding, in the case of floating rate Indebtedness, except that (x) interest expense with respect to any Indebtedness for periods while the same was actually outstanding during the relevant Test Period shall be calculated using the actual rates applicable thereto while the same was actually outstanding and (y) the rates of floating rate Indebtedness shall take into account any Interest Rate Protection Agreement applicable to such Indebtedness.

“ Proceeds of Crime Act ” shall mean the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), as amended from time to time, and including all regulations thereunder.

“ Projections ” shall mean the projections dated July 16, 2009, and that were prepared by or on behalf of Holdings in connection with this Agreement and delivered to the Administrative Agent and the Lenders prior to the Effective Date.

“ Qualified Secured Cash Management Agreements ” shall mean each Cash Management Agreement entered into by Holdings or one of its Subsidiaries with any Lender or any affiliate thereof (even if such Lender subsequently ceases to be a Lender under this Agreement for any reason) so long as such Cash Management Agreement is designated as a Qualified Secured Cash Management Agreement pursuant to Section 13.22 .

“ Qualified Secured Hedging Agreements ” shall mean each Interest Rate Protection Agreement and/or Other Hedging Agreement entered into by Holdings or one of its Subsidiaries with any Lender or any affiliate thereof (even if such Lender subsequently ceases to be a Lender under this Agreement for any reason) so long as such Interest Rate Protection Agreement and/or Other Hedging Agreement is designated as a Qualified Secured Hedging Agreement pursuant to Section 13.22 .

 

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“ Quinton Hazell Disposition ” shall mean the sale, transfer or other disposition (including by way of merger, consolidation, sale of capital stock or sale of assets) of all or substantially all of the Quinton Hazell operations of the Company and its Subsidiaries, including any such sale, transfer or disposition in connection with the creation of a Permitted Joint Venture engaged in such operations, but only to the extent constituting a Permitted Quinton Hazell Joint Venture.

“ Real Property ” of any Person shall mean all the right, title and interest of such Person in and to land, improvements and fixtures, including Leaseholds.

“ Refinancing ” shall mean the refinancing transactions described in Section 6.06 .

“ Register ” shall have the meaning provided in Section 13.15 .

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

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

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

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

“ Reinvestment Condition ” shall mean, (i) with respect to the net cash proceeds from any sale, casualty, condemnation or other taking (whether by eminent domain or otherwise) or other disposition of any assets which do not constitute ABL Priority Collateral, that such net cash proceeds are reinvested in the business of Holdings or a Subsidiary or otherwise applied within 365 days of the earlier of (a) the receipt thereof and (b) the date required to be reinvested or otherwise applied, in accordance with the terms of the Existing Senior Subordinated Notes Indenture, any Additional Senior Subordinated Notes Documents, the Senior Secured Notes or any Additional Senior Secured Notes, in each case, in such a manner that no such amounts shall be required to be used to redeem any Existing Senior Subordinated Notes or Additional Senior Subordinated Notes in accordance with the terms of the Existing Senior Subordinated Notes Documents or any Additional Senior Subordinated Notes Documents, except to the extent such redemption would be permitted by Section 10.03(b) or pursuant to a refinancing of the Existing Senior Subordinated Notes or any Additional Senior Subordinated Notes permitted pursuant to Section 10.04(b) or 10.04(p) of this Agreement, and (ii) with respect to the net cash proceeds from any sale, casualty, condemnation or other taking (whether by eminent domain or otherwise) or other disposition of any ABL Priority Collateral, that such net cash proceeds are used or applied in a manner consistent with the terms and conditions hereof.

 

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“ Release ” shall mean a release as defined in CERCLA or under any other similar applicable Environmental Law.

“ Rent Reserve ” means either a Canadian Rent Reserve or a U.S. Rent Reserve.

“ Replaced Lender ” shall have the meaning provided in Section 2.13 .

“ Replacement Lender ” shall have the meaning provided in Section 2.13 .

“ Reportable Event ” shall mean an event described in Section 4043(c) of ERISA with respect to a Plan other than those events as to which the 30-day notice period is waived.

“ Required Lenders ” shall mean, at any time, Non-Defaulting Lenders the sum of whose outstanding Revolving Loan Commitments at such time (or, after the termination thereof, their outstanding Individual U.S. Exposures and/or Individual Canadian Exposures, as applicable) represents at least a majority of the sum of the Revolving Loan Commitments (or, after the termination thereof, the outstanding Individual U.S. Exposures and/or Individual Canadian Exposures, as applicable) of all Non-Defaulting Lenders in effect at such time.

“ Reserve Percentage ” shall mean the reserve percentage (expressed as a decimal, rounded up to the nearest 1/8th of 1%) applicable to member banks under regulations issued from time to time by the Board for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”).

“ Revolver Facilities ” shall have the meaning provided in Section 16.01(f) .

“ Revolving Loan ” shall have the meaning provided in Section 2.01(a) , but shall not include Swingline Loans.

“ Revolving Loan Commitment ” shall mean, for each Lender, the sum of the amounts set forth opposite such Lender’s name in Schedule 1.01(a) directly below the columns entitled “ U.S. Commitment ” and “ Canadian Commitment ”, as same may be (x) reduced from time to time or terminated pursuant to Sections 4.02 , 4.03 and/or 11 , as applicable, (y) adjusted from time to time as a result of assignments to or from such Lender pursuant to Section 2.13 or 13.04(b) , or (z) increased from time to time pursuant to Section 2.14 .

“ RL Percentage ” shall mean:

(a) when used with respect to the U.S. Lenders with respect to the U.S. Commitment (or the Loans thereunder), the Swingline Loans or the Letters of Credit (or any participations therein), the RL Percentage of any such U.S. Lender shall be equal to a fraction (expressed as a percentage), the numerator of which is the U.S. Commitment of such U.S. Lender and the denominator of which is the U.S. Commitment of all Lenders at such time, provided that if the RL Percentage of any U.S. Lender is to be determined after the U.S. Commitment has been terminated, then the RL Percentages of such U.S. Lender shall be determined immediately prior (and without giving effect) to such termination (but giving effect to subsequent assignments effected in accordance with the relevant requirements of this Agreement);

 

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(b) when used with respect to the Canadian Lenders with respect to the Canadian Commitment (or the Loans thereunder), the RL Percentage of any such Canadian Lender shall be equal to a fraction (expressed as a percentage), the numerator of which is the Canadian Commitment of each Canadian Lender and the denominator of which is the Canadian Commitments of all Lenders at such time, provided that if the RL Percentage of any Canadian Lender is to be determined after the Canadian Commitment has been terminated, then the RL Percentages of such Canadian Lender shall be determined immediately prior (and without giving effect) to such termination (but giving effect to subsequent assignments effected in accordance with the relevant requirements of this Agreement); and

(c) when used with respect to the Lenders in aggregate with respect to the Total Revolving Loan Commitment, the RL Percentage of any Lender shall be equal to a fraction (expressed as a percentage), the numerator of which is the aggregate of the Canadian Commitments and U.S. Commitments of such Lender and the denominator of which is the Total Revolving Loan Commitment at such time, provided that if such RL Percentage of any such Lender is to be determined after the Canadian Revolving Commitment Termination Date or the Facility Termination Date, then the RL Percentages of such Canadian Lender shall be determined using the terminated Commitments as in effect immediately prior (and without giving effect) to such termination (but giving effect to subsequent assignments effected in accordance with the relevant requirements of this Agreement).

“ S&P ” shall mean Standard & Poor’s Ratings Services, a division of McGraw-Hill, Inc.

“ SEC ” shall have the meaning provided in Section 9.01(h) .

“ Second Priority ” shall mean, with respect to any Lien purported to be created on any Collateral pursuant to the Security Documents, that such Lien is First Priority other than with respect to Liens permitted pursuant to clause (y) of Section 10.01(d) on non-ABL Priority Collateral owned by the U.S. Credit Parties created by or pursuant to the Senior Secured Notes Documents and having priority over the Obligations pursuant to the Intercreditor Agreement.

“ Secured Parties ” shall have the meaning assigned that term in the respective Security Documents.

“ Securities Act ” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“ Security Agreements ” shall mean the U.S. Security Agreement and the Canadian Security Agreement.

“ Security Condition ” shall mean, with respect to any property owned or acquired by a Credit Party, the condition that immediately, in the case of ABL Priority Collateral, or promptly as required pursuant hereto and to the Security Documents, in the case of other Collateral, upon the effectiveness of such ownership or acquisition, (i) such property shall

 

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constitute “Collateral” and shall be subject to a valid and continuing security interest in favor of the Collateral Agent, in each case, to the extent required hereby and by the Security Documents, (ii) to the extent required hereby and by the Security Documents, such property shall be subject to a perfected First Priority Lien (in the case of the ABL Priority Collateral) or perfected Second Priority Lien (in the case of non-ABL Priority Collateral) of the Collateral Agent for the benefit of the Secured Parties, provided, with respect to property received by a Credit Party in exchange or replacement for other Collateral, the priority of the Collateral Agent’s security interest in such replacement or exchange Collateral shall be the same as the priority of the Collateral Agent’s security interest in such Collateral being so exchanged or replaced, (iii) all filings necessary or desirable to perfect the liens and the security interest intended to be granted to the Collateral Agent pursuant to the Security Documents shall have been made and are effective, (iv) in the case of notes, instruments, Chattel Paper or investment property or other similar negotiable property, to the extent required by the Security Documents, such property shall be delivered to the Collateral Agent (or the Noteholder Collateral Agent, as applicable in accordance with the terms of the Intercreditor Agreement), duly endorsed, together with all necessary transfer powers duly executed, and (v) all other steps shall have been taken to the Administrative Agent’s reasonable satisfaction to assure the effectiveness and priority of the Liens as referred to immediately above.

“ Security Documents ” shall mean and include each of the Security Agreements, each of the U.S./Local Law Pledge Agreements, the Canadian Pledge Agreement, the Intellectual Property Security Agreements (as defined in the Security Agreements), each Mortgage, and, after the execution and delivery thereof, each Additional Mortgage, any Cash Management Control Agreement and each Additional Security Document and any other document or agreement pursuant to which Holdings or any of its Subsidiaries grants or continues a security interest in favor of the Collateral Agent for the benefit of the Secured Parties.

“ Senior Secured Noteholders ” shall mean the holders of the Senior Secured Notes.

“ Senior Secured Notes ” shall mean the Company’s 10.75% Senior Secured Notes due 2016, issued pursuant to the Senior Secured Note Indenture, as in effect on the Effective Date and as the same may be amended, modified and/or supplemented from time to time in accordance with the terms hereof and thereof. In addition, all references herein to the Senior Secured Notes shall be deemed to mean and include any Additional Senior Secured Notes to the extent issued in accordance with and for the purposes set forth in Section 10.04(p) hereof.

“ Senior Secured Notes Asset Sales Proceeds Account ” shall mean the “ Asset Sales Proceeds Account ” as defined in the Intercreditor Agreement.

“ Senior Secured Notes Documents ” shall mean the Senior Secured Notes, the Senior Secured Notes Indenture, the Senior Secured Notes Security Documents and all other documents executed and delivered with respect to the Senior Secured Notes or Senior Secured Notes Indenture, as in effect on the Effective Date and as the same may be amended, modified and/or supplemented from time to time in accordance with the terms hereof and thereof. In addition, all references herein to the Senior Secured Notes Documents shall be deemed to mean and include any Additional Senior Secured Notes Documents to the extent entered into in connection with the issuance of the Additional Senior Secured Notes in accordance with the terms of this Agreement.

 

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“ Senior Secured Notes Indenture ” shall mean the Indenture, dated as of August 13, 2009, among Holdings, the Company, the U.S. Subsidiary Guarantors and Wilmington Trust Company, as trustee, as in effect on the Effective Date and as thereafter amended, modified and/or supplemented from time to time in accordance with the terms hereof and thereof.

“ Senior Secured Notes Priority Collateral ” shall mean the “ Noteholder First Lien Collateral ” under, and as defined in, the Intercreditor Agreement.

“ Senior Secured Notes Security Documents ” shall mean the “ Security Documents ” as defined in the Senior Secured Notes Indenture.

“ Settlement Date ” shall have the meaning provided in Section 2.04(b)(i) .

“ Sponsor ” shall mean The Cypress Group L.L.C.

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

“ Subordinated Debt ” shall mean the Existing Senior Subordinated Notes, any Additional Senior Subordinated Notes and any other Indebtedness incurred by an Obligor that is expressly subordinate and junior in right of payment to full payment of all Obligations, and is on terms (including maturity, interest, fees, repayment, covenants and subordination), in each case, satisfactory to the Administrative Agent.

“ Subsidiaries Guaranties ” shall mean the U.S. Subsidiaries Guaranty and the Canadian Subsidiaries Guarantee, and “Subsidiaries Guaranty” shall mean any one of them.

“ Subsidiary ” shall mean, as to any Person, (a) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person and/or one or more Subsidiaries of such Person or (b) any partnership, limited liability company, association, joint venture or other entity in which such Person and/or one or more Subsidiaries of such Person has more than a 50% equity interest at the time. Unless otherwise qualified, all references to a “ Subsidiary ” or to “ Subsidiaries ” in this Agreement shall refer to a Subsidiary or Subsidiaries of Holdings.

“ Subsidiary Guarantors ” shall mean the U.S. Subsidiary Guarantors and the Canadian Subsidiary Guarantors.

“ Supermajority Lenders ” shall mean, at any time, Non-Defaulting Lenders the sum of whose outstanding Revolving Loan Commitments at such time (or, after the termination thereof, their outstanding Individual U.S. Exposures and/or Individual Canadian Exposures, as

 

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applicable) represents at least 80% of the sum of the Revolving Loan Commitments (or, after the termination thereof, the outstanding Individual U.S. Exposures and/or Individual Canadian Exposures, as applicable) of all Non-Defaulting Lenders in effect at such time.

“ Swingline Expiry Date ” shall mean the earlier of (a) that date which is five Business Days prior to the Final Maturity Date and (b) the Facility Termination Date.

“ Swingline Lender ” shall mean the Administrative Agent, in its capacity as Swingline Lender hereunder.

“ Swingline Loan ” shall have the meaning provided in Section 2.01(b) .

“ Syndication Agents ” shall mean Barclays Capital and Wells Fargo Foothill, LLC, in their capacities as Co-Syndication Agents in respect of the credit facilities hereunder, and any successors thereto.

“ Synthetic Lease ” shall mean a lease transaction under which the parties intend that (a) the lease will be treated as an “ operating lease ” by the lessee and (b) the lessee will be entitled to various tax and other benefits ordinarily available to owners (as opposed to lessees) of like property.

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

“ Test Period ” shall mean, for the purpose of calculating the Consolidated Fixed Charge Coverage Ratio for any purpose, each period of twelve consecutive calendar months of Holdings then last ended, in each case taken as one accounting period and, for any other purpose, each period of four consecutive Fiscal Quarters of Holdings then last ended, in each case, taken as one accounting period.

“ Tier I Payment Conditions ” shall mean that each of the following conditions are satisfied both at the time of each action or proposed action and after giving effect thereto: (i) no Default or Event of Default shall have occurred and be continuing or would result therefrom, (ii) Excess Availability (on the date of such action or proposed action) and Average Aggregate Availability (for the 90-day period ending on the date of such action or proposed action, or such shorter period of time that shall have elapsed from and after the Effective Date until the date of such action or proposed action (but not less than 30 days)), in each case, calculated on a Pro Forma Basis as if such action or proposed action had occurred on the first day of such measurement period, shall exceed the greater of (x) $78,750,000 and (y) 25% of the Total Revolving Loan Commitment as then in effect, (iii) Holdings shall be in compliance with a Consolidated Fixed Charge Coverage Ratio of not less than 1.10:1.00 for the Test Period ending as of the last day of the immediately preceding calendar month calculated, other than with respect to prepayments of Indebtedness pursuant to Section 10.03(b) , on a Pro Forma Basis as if such action or proposed action had occurred on the first day of such Test Period, (iv) in the case of Permitted Acquisitions, Dividends and other distributions, Investments or other payments, such Permitted Acquisitions, Dividends and other distributions, Investments or other payments would be permitted under the Senior Secured Notes Documents, the Existing Senior

 

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Subordinated Notes Documents and any Additional Senior Subordinated Notes Documents, and (v) not less than ten (10) days prior to such action or proposed action, Holdings shall have delivered to the Administrative Agent a certificate of an Authorized Officer of Holdings certifying as to compliance with preceding clauses (i) through (iv) and demonstrating (in reasonable detail) the calculations required by preceding clauses (ii) and (iii), which certificate shall be recertified to the Administrative Agent by an Authorized Officer of Holdings on and as of the date of the proposed transaction.

“ Tier II Payment Conditions ” shall mean that each of the following conditions are satisfied both at the time of each action or proposed action and after giving effect thereto: (i) no Default or Event of Default shall have occurred and be continuing or would result therefrom, (ii) Excess Availability (on the date of such action or proposed action) and Average Aggregate Availability (for the 90-day period ending on the date of such action or proposed action, or such shorter period of time that shall have elapsed from and after the Effective Date until the date of such action or proposed action (but not less than 30 days)), in each case, calculated on a Pro Forma Basis as if such action or proposed action had occurred on the first day of such measurement period, shall exceed the greater of (x) $110,250,000 and (y) 35% of the Total Revolving Loan Commitment as then in effect, (iii) Holdings shall be in compliance with a Consolidated Fixed Charge Coverage Ratio of not less than 1.10:1.00 for the Test Period ending as of the last day of the immediately preceding calendar month calculated, other than with respect to prepayments of Indebtedness pursuant to Section 10.03(b) , on a Pro Forma Basis as if such action or proposed action had occurred on the first day of such Test Period, (iv) in the case of Permitted Acquisitions, Dividends and other distributions, Investments or other payments, such Permitted Acquisitions, Dividends and other distributions, Investments or other payments would be permitted under the Senior Secured Notes Documents, the Existing Senior Subordinated Notes Documents and any Additional Senior Subordinated Notes Documents, and (v) not less than ten (10) days prior to such action or proposed action, Holdings shall have delivered to the Administrative Agent a certificate of an Authorized Officer of Holdings certifying as to compliance with preceding clauses (i) through (iv) and demonstrating (in reasonable detail) the calculations required by preceding clauses (ii) and (iii), which certificate shall be recertified to the Administrative Agent by an Authorized Officer of Holdings on and as of the date of the proposed transaction.

“ Total Borrowing Base ” shall mean, as of any date of determination, the sum of the U.S. Borrowing Base and the Canadian Borrowing Base.

“ Total Revolving Loan Commitment ” shall mean, at any time, the sum of all Revolving Loan Commitments of the Lenders at such time.

“ Total Unutilized Canadian Revolving Loan Commitment ” shall mean, at any time, an amount equal to the remainder of (a) the Canadian Commitment in effect at such time less (b) the Aggregate Canadian Borrower Exposure at such time.

“ Total Unutilized U.S. Revolving Loan Commitment ” shall mean, at any time, an amount equal to the remainder of (a) the U.S. Commitment in effect at such time less (b) the Aggregate U.S. Borrower Exposure at such time.

 

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“ Transaction ” shall mean, collectively, (a) the consummation of the Refinancing, (b) the execution, delivery and performance by each Credit Party of the Senior Secured Notes Documents to which it is a party, the issuance of the Senior Secured Notes and the use of proceeds thereof, (c) the execution, delivery and performance by each Credit Party of the Credit Documents to which it is a party, the incurrence of Loans on the Effective Date and the use of proceeds thereof and (d) the payment of all fees and expenses in connection with the foregoing.

“ Trigger Period ” means, with respect to Section 10.07 the period (a) commencing on the day that an Event of Default occurs or Excess Availability is less than the greater of (i) 15% of the Total Revolving Loan Commitments at such time and (ii) $47,250,000 (the “ Threshold Amount ”) at any time; and (b) continuing thereafter until no Event of Default has existed and Excess Availability has been greater than the Threshold Amount at all times for 60 consecutive days.

“ Type ” shall mean the type of Loan determined with regard to the interest option applicable thereto, i.e. , whether a Base Rate Loan, a LIBOR Loan, a Canadian Prime Rate Loan or a Canadian BA Rate Loan.

“ UCC ” shall mean the Uniform Commercial Code as from time to time in effect in the relevant jurisdiction.

“ Unfunded Current Liability ” of any Plan shall mean the excess of the Plan’s benefit liabilities under Section 4001(a)(16) of ERISA over the fair market value of that Plan’s assets, determined as of the beginning of the most recent plan year in accordance with the assumptions used for funding the Plan pursuant to Sections 412 and 430 of the Code for the plan year.

“ Unfunded Pension Liability ” shall mean, at a point in time at which an actuarial valuation is effective, the excess of a Canadian Pension Plan’s benefit liabilities, over the current value of that Canadian Pension Plan’s assets, determined in accordance with the assumptions used for funding the Canadian Pension Plan pursuant to applicable laws for the applicable plan year and includes any unfunded liability or solvency deficiency as determined for the purposes of the Pension Benefits Act (Ontario).

“ United States ” and “ U.S. ” shall each mean the United States of America.

“ Unpaid Drawing ” shall have the meaning provided in Section 3.05(a) .

“ U.S. Account Concentration Reserve ” shall mean, on any date of determination, the aggregate sum for all Account Debtors (collectively with their Affiliated Account Debtors) in respect of the Eligible U.S. Accounts, of the amount by which (i) the total amount of each Account Debtor’s (collectively with its Affiliated Account Debtors’) Eligible U.S. Accounts exceeds (ii) the U.S. Concentration Limit for such Account Debtor and its Affiliated Account Debtors, in each case, on such date of determination.

“ U.S. Accounts Formula Amount ” means on any date of determination, the product of (i) 85% and (ii) the difference of the Gross U.S. Formula Amount minus the U.S. Account Concentration Reserve on such date of determination.

 

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“ U.S. Availability Reserve ” means, with respect to the U.S. Borrowing Base, the sum (without duplication) of (a) the U.S. Inventory Reserve; (b) the U.S. Rent Reserve; (c) the LC Reserve; (d) the U.S. Qualified Secured Hedging Agreement Reserve; (e) the aggregate amount of liabilities secured by Liens upon ABL Priority Collateral that are senior to Administrative Agent’s Liens (but imposition of any such reserve shall not waive an Event of Default arising therefrom); (f) the Canadian Borrower’s U.S. Borrowing Base Usage; (g) the U.S. Qualified Secured Cash Management Agreement Reserve; and (h) such additional reserves, in such amounts and with respect to such matters, as Administrative Agent in its Permitted Discretion may elect to impose from time to time.

“ U.S. Borrower Obligations ” shall mean all Obligations owing to the Administrative Agent, the Collateral Agent, any Issuing Lender or any Lender by any U.S. Borrower, including as guarantors of the Canadian Borrower Obligations under the U.S. Subsidiaries Guaranty.

“ U.S. Borrower Revolving Loans ” shall have the meaning set forth in Section 2.01(a) .

“ U.S. Borrower Revolving Note ” shall have the meaning provided in Section 2.05(a) .

“ U.S. Borrower Swingline Note ” shall have the meaning provided in Section 2.05(a) .

“ U.S. Borrowers ” shall have the meaning provided in the first paragraph of this Agreement.

“ U.S. Borrowing Base ” shall mean, as of any date of calculation, an amount equal to the lesser of (a) the aggregate amount of U.S. Commitment, minus the LC Reserve, minus the U.S. Qualified Secured Hedging Agreement Reserve, minus the U.S. Qualified Secured Cash Management Agreement Reserve, minus the Canadian Borrower’s U.S. Borrowing Base Usage, minus the U.S. Rent Reserve, minus such additional reserves, in such amounts and with respect to such matters, as Administrative Agent in its Permitted Discretion may elect to impose from time to time; and (b) the sum of the U.S. Accounts Formula Amount, plus the U.S. Inventory Formula Amount, minus the U.S. Availability Reserve; provided , however, that if the ratio (expressed as a percentage) of the U.S. Inventory Formula Amount to the U.S. Borrowing Base exceeds the Applicable Seasonal Percentage then in effect, the U.S. Inventory Formula Amount shall be reduced to an amount such that such ratio equals such Applicable Seasonal Percentage. The Administrative Agent shall have the right (but no obligation) to review such computations in consultation with the Company and if, in its Permitted Discretion, such computations have not been calculated in accordance with the terms of this Agreement, the Administrative Agent shall have the right to correct any such errors in such manner it shall determine in its Permitted Discretion.

“ U.S. Collection Account ” shall mean each U.S. Deposit Account established at a U.S. Collection Bank subject to a Cash Management Control Agreement into which funds shall be transferred as provided in Section 5.03(b) .

 

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“ U.S. Collection Bank ” shall have the meaning provided in Section 5.03(b) .

“ U.S. Commitment ” shall mean (i) with respect to each U.S. Lender, its U.S. Commitment set forth on Schedule 1.01(a) (as such commitment may be increased or decreased from time to time pursuant to the terms of this Agreement, including by way of Assignment and Assumption Agreement) and (ii) with respect to all of the U.S. Lenders, $295,000,000, as the same may be increased or decreased from time to time pursuant to the terms of this Agreement.

“ U.S. Concentration Limit ” shall mean, with respect to any Account Debtor and its Affiliated Account Debtors in respect of the Eligible U.S. Accounts, 10% of the Gross U.S. Formula Amount at such time (or, in the case of those Account Debtors (collectively with their respective Affiliated Account Debtors) listed on Schedule 1.01(b) , to the extent exceeding 10%, the respective percentages set forth opposite the names of such Account Debtors on such Schedule 1.01(b) ) (such percentages as applied to a particular Account Debtor (and its Affiliated Account Debtors) being subject to reduction by the Administrative Agent, in its Permitted Discretion, if the creditworthiness of such Account Debtor (and its Affiliated Account Debtors) deteriorates or is otherwise unacceptable to the Administrative Agent); provided, however that at the request of the Company, and with the consent of the Supermajority Lenders, names may be added to Schedule 1.01(b) and/or corresponding concentration limits, subject to the provisions above in this definition, may be increased from time to time.

“ U.S. Credit Parties ” shall mean Holdings, the U.S. Borrowers and the U.S. Subsidiary Guarantors.

“ U.S. Deposit Account ” shall mean a demand, time, savings, passbook or like account established by a U.S. Credit Party with a bank, savings and loan association, credit union or like organization located in the United States or a state thereof or the District of Columbia.

“ <