Exhibit 10.1

 

 

 

CREDIT AGREEMENT

 

Dated as of December 5, 2011

 

among

 

DICK’S SPORTING GOODS, INC.,
as the Borrower

 

The Guarantors Named Herein

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent, Collateral Agent, L/C Issuer and Swing Line Lender,

 

and

 

The Other Lenders Party Hereto

 

PNC BANK, NATIONAL ASSOCIATION,
as Syndication Agent

 

BANK OF AMERICA, N.A., JPMORGAN CHASE BANK, N.A. and U.S. BANK NATIONAL
ASSOCIATION,

as Co-Documentation Agents

 

WELLS FARGO CAPITAL FINANCE, LLC and PNC CAPITAL MARKETS, LLC,
as Joint Lead Arrangers and Joint Book Managers

 

 

 

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TABLE OF CONTENTS

 

Section

Page

 

 

 

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

1

 

 

 

1.01

Defined Terms

1

1.02

Other Interpretive Provisions

42

1.03

Accounting Terms

43

1.04

Rounding

43

1.05

Times of Day

43

1.06

Letter of Credit Amounts

43

 

 

 

ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS

43

 

 

 

2.01

Committed Loans; Reserves

43

2.02

Borrowings, Conversions and Continuations of Committed Loans

44

2.03

Letters of Credit

46

2.04

Swing Line Loans

53

2.05

Prepayments

55

2.06

Termination or Reduction of Commitments

56

2.07

Repayment of Loans

57

2.08

Interest

57

2.09

Fees

57

2.10

Computation of Interest and Fees

58

2.11

Evidence of Debt

58

2.12

Payments Generally; Agent’s Clawback

58

2.13

Sharing of Payments by Lenders

60

2.14

Settlement Amongst Lenders

60

2.15

Increase in Commitments

61

 

 

 

ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY

62

 

 

 

3.01

Taxes

63

3.02

Illegality

65

3.03

Inability to Determine Rates

65

3.04

Increased Costs; Reserves on LIBO Rate Loans

65

3.05

Compensation for Losses

67

3.06

Mitigation Obligations; Replacement of Lenders

67

3.07

Survival

68

 

 

 

ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

68

 

 

 

4.01

Conditions of Initial Credit Extension

68

4.02

Conditions to all Credit Extensions

71

 

 

 

ARTICLE V REPRESENTATIONS AND WARRANTIES

71

 

 

 

5.01

Existence, Qualification and Power

72

5.02

Authorization; No Contravention

72

5.03

Governmental Authorization; Other Consents

72

5.04

Binding Effect

72

5.05

Financial Statements; No Material Adverse Effect

72

5.06

Litigation

73

5.07

No Default

73

 

(i)

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5.08

Ownership of Property; Liens

73

5.09

Environmental Compliance

74

5.10

Insurance

75

5.11

Taxes

75

5.12

ERISA Compliance

75

5.13

Subsidiaries; Equity Interests

76

5.14

Margin Regulations; Investment Company Act

76

5.15

Disclosure

76

5.16

Compliance with Laws

77

5.17

Intellectual Property; Licenses, Etc.

77

5.18

Labor Matters

77

5.19

Security Documents

77

5.20

Solvency

78

5.21

Deposit Accounts; Credit Card Arrangements

78

5.22

Brokers

78

5.23

Material Contracts

78

 

 

 

ARTICLE VI AFFIRMATIVE COVENANTS

78

 

 

 

6.01

Financial Statements

79

6.02

Certificates; Other Information

79

6.03

Notices

81

6.04

Payment of Obligations

82

6.05

Preservation of Existence, Etc.

82

6.06

Maintenance of Properties

82

6.07

Maintenance of Insurance

82

6.08

Compliance with Laws

84

6.09

Books and Records; Accountants

84

6.10

Inspection Rights

84

6.11

Use of Proceeds

85

6.12

Additional Loan Parties

85

6.13

Cash Management

85

6.14

Information Regarding the Collateral

87

6.15

Physical Inventories

87

6.16

Environmental Laws

87

6.17

Further Assurances

87

6.18

Compliance with Terms of Leaseholds

88

6.19

Material Contracts

88

 

 

 

ARTICLE VII NEGATIVE COVENANTS

88

 

 

 

7.01

Liens

88

7.02

Investments

88

7.03

Indebtedness; Disqualified Stock

88

7.04

Fundamental Changes

89

7.05

Dispositions

89

7.06

Restricted Payments

89

7.07

Prepayments of Indebtedness

90

7.08

Change in Nature of Business

90

7.09

Transactions with Affiliates

90

7.10

Burdensome Agreements

90

7.11

Use of Proceeds

91

7.12

Amendment of Material Documents

91

 

(ii)

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7.13

Fiscal Year

91

7.14

Deposit Accounts; Credit Card Processors

91

7.15

Minimum Adjusted Availability

91

 

 

 

ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES

91

 

 

 

8.01

Events of Default

91

8.02

Remedies Upon Event of Default

94

8.03

Application of Funds

94

 

 

 

ARTICLE IX THE AGENT

96

 

 

 

9.01

Appointment and Authority

96

9.02

Rights as a Lender

96

9.03

Exculpatory Provisions

96

9.04

Reliance by Agent

97

9.05

Delegation of Duties

97

9.06

Resignation of Agent

98

9.07

Non-Reliance on Agent and Other Lenders

98

9.08

No Other Duties, Etc.

98

9.09

Agent May File Proofs of Claim

99

9.10

Collateral and Guaranty Matters

99

9.11

Notice of Transfer

100

9.12

Reports and Financial Statements

100

9.13

Agency for Perfection

101

9.14

Indemnification of Agent

101

9.15

Relation among Lenders

101

9.16

Defaulting Lender

101

 

 

 

ARTICLE X MISCELLANEOUS

102

 

 

 

10.01

Amendments, Etc.

102

10.02

Notices; Effectiveness; Electronic Communications

104

10.03

No Waiver; Cumulative Remedies

106

10.04

Expenses; Indemnity; Damage Waiver

106

10.05

Payments Set Aside

107

10.06

Successors and Assigns

108

10.07

Treatment of Certain Information; Confidentiality

111

10.08

Right of Setoff

112

10.09

Interest Rate Limitation

112

10.10

Counterparts; Integration; Effectiveness

113

10.11

Survival

113

10.12

Severability

113

10.13

Replacement of Lenders

113

10.14

Governing Law; Jurisdiction; Etc.

114

10.15

Waiver of Jury Trial

115

10.16

No Advisory or Fiduciary Responsibility

115

10.17

USA PATRIOT Act Notice

116

10.18

Foreign Asset Control Regulations

116

10.19

Time of the Essence

116

10.20

Press Releases

116

10.21

Additional Waivers

117

10.22

No Strict Construction

118

10.23

Attachments

118

 

(iii)

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SIGNATURES

S-1

 

(iv)

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SCHEDULES

 

1.01

Guarantors

2.01

Commitments and Applicable Percentages

2.03

Existing Letters of Credit

5.01

Loan Parties Organizational Information

5.08(b)(1)

Owned Real Estate

5.08(b)(2)

Leased Real Estate

5.10

Insurance

5.13

Subsidiaries; Other Equity Investments

5.18

Collective Bargaining Agreements

5.21(a)

DDAs

5.21(b)

Credit Card Arrangements

5.23

Material Contracts

6.02

Financial and Collateral Reporting

7.01

Existing Liens

7.02

Existing Investments

7.03

Existing Indebtedness

10.02

Agent’s Office; Certain Addresses for Notices

 

 

EXHIBITS

 

 

Form of

 

 

A

Committed Loan Notice

B

Swing Line Loan Notice

C-1

Revolving Note

C-2

Swing Line Note

D

Compliance Certificate

E

Assignment and Assumption

F

Borrowing Base Certificate

G

Credit Card Notification

 

(v)

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CREDIT AGREEMENT

 

This CREDIT AGREEMENT (“Agreement”) is entered into as of December 5, 2011,
among

 

DICK’S SPORTING GOODS, INC., a Delaware corporation (the “Borrower”),

 

the Persons named on Schedule 1.01 hereto (collectively, the “Guarantors”),

 

each lender from time to time party hereto (collectively, the “Lenders” and
individually, a “Lender”),

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent, Collateral
Agent, L/C Issuer and Swing Line Lender,

 

PNC BANK, NATIONAL ASSOCIATION, as Syndication Agent, and

 

BANK OF AMERICA, N.A., JPMORGAN CHASE BANK, N.A. and U.S. BANK NATIONAL
ASSOCIATION, as Co-Documentation Agents.

 

The Borrower has requested that the Lenders provide a revolving credit facility,
and the Lenders have indicated their willingness to lend and the L/C Issuer has
indicated its willingness to issue Letters of Credit, in each case on the terms
and conditions set forth herein.

 

In consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:

 

ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS

 

1.01        Defined Terms.  As used in this Agreement, the following terms shall
have the meanings set forth below:

 

“Acceptable Document of Title” means, with respect to any Inventory, a tangible,
negotiable bill of lading or other Document (as defined in the UCC) that (a) is
issued by a common carrier which is not an Affiliate of the foreign vendor or
any Loan Party which is in actual possession of such Inventory, (b) is issued to
the order of a Loan Party or, if so requested by the Agent, to the order of the
Agent, (c) names the Agent as a notify party and bears a conspicuous notation on
its face of the Agent’s security interest therein, (d) is not subject to any
Lien (other than in favor of the Agent), and (e) is on terms otherwise
reasonably acceptable to the Agent.

 

“Accommodation Payment” shall have the meaning provided in Section 10.21(d).

 

“Account” means “accounts” as defined in the UCC, and also means a right to
payment of a monetary obligation, whether or not earned by performance, (a) for
property that has been or is to be sold, leased, licensed, assigned, or
otherwise disposed of, (b) for services rendered or to be rendered, or
(c) arising out of the use of a credit or charge card or information contained
on or for use with the card.

 

“ACH” means automated clearing house transfers.

 

“Acquisition” means, with respect to any Person (a) an Investment in, or a
purchase of, more than fifty percent (50%) of the Equity Interests of any other
Person, (b) a purchase or other acquisition of all or

 

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substantially all of the assets or properties of another Person or of any
business unit of another Person, or (c) any merger or consolidation of such
Person with any other Person or other transaction or series of related
transactions resulting in the acquisition of all or substantially all of the
assets, or more than fifty percent (50%) of the Equity Interests, of any Person,
in each case in any transaction or group of transactions which are part of a
common plan.

 

“Act” shall have the meaning provided in Section 10.17.

 

“Additional Commitment Lender” shall have the meaning provided in
Section 2.15(c).

 

“Adjusted Availability” means, as of any date of determination thereof by the
Agent, the result, if a positive number, of:

 

(a)           The Borrowing Base

 

Minus

 

(b)           The Total Outstandings.

 

“Adjusted LIBO Rate” means:

 

(a)           for any Interest Period with respect to any LIBO Borrowing, an
interest rate per annum (rounded upwards, if necessary, to the next 1/16 of one
percent) equal to (i) the LIBO Rate for such Interest Period multiplied by
(ii) the Statutory Reserve Rate; and

 

(b)           for any interest rate calculation with respect to any Base Rate
Loan, an interest rate per annum (rounded upwards, if necessary, to the next
1/100 of one percent) equal to (i) the LIBO Rate for an Interest Period
commencing on the date of such calculation and ending on the date that is thirty
(30) days thereafter multiplied by (ii) the Statutory Reserve Rate.

 

The Adjusted LIBO Rate will be adjusted automatically as of the effective date
of any change in the Statutory Reserve Rate.

 

“Adjustment Date” means the first day of each Fiscal Quarter, commencing
January 29, 2012.

 

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

 

“Affiliate” means, with respect to any Person, (i) another Person that directly,
or indirectly through one or more intermediaries, Controls or is Controlled by
or is under common Control with the Person specified, (ii) any director,
officer, managing member, partner, trustee, or beneficiary of that Person,
(iii) any other Person directly or indirectly holding 10% or more of any class
of the Equity Interests of that Person, and (iv) any other Person 10% or more of
any class of whose Equity Interests is held directly or indirectly by that
Person.

 

“Agent” means Wells Fargo in its capacity as Administrative Agent and Collateral
Agent under any of the Loan Documents, or any successor thereto.

 

“Agent Parties” shall have the meaning provided in Section 10.02(c).

 

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“Agent’s Office” means the Agent’s address and, as appropriate, account as set
forth on Schedule 10.02, or such other address or account as the Agent may from
time to time notify the Borrower and the Lenders.

 

“Aggregate Commitments” means the sum of the Commitments of all the Lenders.  As
of the Closing Date, the Aggregate Commitments are $500,000,000.

 

“Agreement” means this Credit Agreement.

 

“Allocable Amount” shall have the meaning provided in Section 10.21(d).

 

“Applicable Lenders” means the Required Lenders, the Required Supermajority
Lenders, all affected Lenders, or all Lenders, as the context may require.

 

“Applicable Margin” means:

 

(a)           From and after the Closing Date until the first Adjustment Date,
the percentages set forth in Level I of the pricing grid below; and

 

(b)           From and after the first Adjustment Date and on each Adjustment
Date thereafter, the Applicable Margin shall be determined from the following
pricing grid based upon the Average Daily Adjusted Availability as of the Fiscal
Quarter ended immediately preceding such Adjustment Date; provided, however,
that notwithstanding anything to the contrary set forth herein, upon the
occurrence and during the continuance of an Event of Default, the Agent may, and
at the direction of the Required Lenders shall, upon written notice to the
Borrower, increase the Applicable Margin to that set forth in Level II (even if
the Average Daily Adjusted Availability requirements for Level I have been met)
and interest shall accrue at the Default Rate; provided further if any Borrowing
Base Certificates are at any time restated or otherwise revised (including as a
result of an audit) or if the information set forth in any Borrowing Base
Certificates otherwise proves to be false or incorrect such that the Applicable
Margin would have been higher than was otherwise in effect during any period,
without constituting a waiver of any Default or Event of Default arising as a
result thereof, interest due under this Agreement shall be immediately
recalculated at such higher rate for any applicable periods and shall be due and
payable on demand.

 

Level

Average Daily
Adjusted
Availability

LIBOR
Margin

Base Rate
Margin

Commercial
Letter of Credit
Fee

Standby
Letter of
Credit Fee

 

 

 

 

 

 

I

Greater than or equal to $200,000,000

1.20%

0.20%

0.70%

1.20%

II

Less than $200,000,000

1.50%

0.50%

1.00%

1.50%

 

“Applicable Percentage” means with respect to any Lender at any time, the
percentage (carried out to the ninth decimal place) of the Aggregate Commitments
represented by such Lender’s

 

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Commitment at such time.  If the commitment of each Lender to make Loans and the
obligation of the L/C Issuer to make L/C Credit Extensions have been terminated
pursuant to Section 8.02 or if the Aggregate Commitments have expired, then the
Applicable Percentage of each Lender shall be determined based on the Applicable
Percentage of such Lender most recently in effect, giving effect to any
subsequent assignments.  The initial Applicable Percentage of each Lender is set
forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and
Assumption pursuant to which such Lender becomes a party hereto, as applicable.

 

“Appraised Value” means the appraised orderly liquidation value, net of costs
and expenses to be incurred in connection with any such liquidation, which value
is expressed as a percentage of Cost of Eligible Inventory as set forth in the
inventory stock ledger of the Borrower, which value shall be determined from
time to time by the most recent appraisal undertaken by an independent appraiser
engaged by the Agent.

 

“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender, (c) an entity or an Affiliate of an entity that
administers or manages a Lender or (d) the same investment advisor or an advisor
under common control with such Lender, Affiliate or advisor, as applicable.

 

“Arrangers” means Wells Fargo Capital Finance, LLC and PNC Capital Markets, LLC,
in their capacity as joint lead arrangers and joint book managers.

 

“Assignee Group” means two or more Eligible Assignees that are Affiliates of one
another or two or more Approved Funds managed by the same investment advisor.

 

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is
required by Section 10.06(b)), and accepted by the Agent, in substantially the
form of Exhibit E or any other form approved by the Agent.

 

“Attributable Indebtedness” means, on any date, (a) in respect of any Capital
Lease Obligation of any Person, the capitalized amount thereof that would appear
on a balance sheet of such Person prepared as of such date in accordance with
GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized
amount of the remaining lease or similar payments under the relevant lease or
other applicable agreement or instrument that would appear on a balance sheet of
such Person prepared as of such date in accordance with GAAP if such lease,
agreement or instrument were accounted for as a capital lease.

 

“Audited Financial Statements” means the audited Consolidated balance sheet of
the Borrower and its Subsidiaries for the fiscal year ended January 29, 2011,
and the related Consolidated statements of income or operations, Shareholders’
Equity and cash flows for such fiscal year of the Borrower and its Subsidiaries,
including the notes thereto.

 

“Auto-Extension Letter of Credit” shall have the meaning provided in
Section 2.03(b)(iii).

 

“Availability” means, as of any date of determination thereof by the Agent, the
result, if a positive number, of:

 

(a)           The Loan Cap

 

Minus

 

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(b)          The Total Outstandings.

 

“Availability Period” means the period from and including the Closing Date to
the earliest of (a) the Maturity Date, (b) the date of termination of the
Aggregate Commitments pursuant to Section 2.06, and (c) the date of termination
of the Commitment of each Lender to make Loans and of the obligation of the L/C
Issuer to make L/C Credit Extensions pursuant to Section 8.02.

 

“Availability Reserves” means, without duplication of any other Reserves or
items to the extent such items are otherwise addressed or excluded through
eligibility criteria or have been deducted in the calculation of Eligible
Inventory, Eligible GSI Receivables and Eligible Credit Card Receivables, as
applicable, as reported on the most recent Borrowing Base Certificate, such
reserves as the Agent from time to time determines in its Permitted Discretion
as being appropriate (a) to reflect the impediments to the Agent’s ability to
realize upon the Collateral, (b) to reflect claims and liabilities that the
Agent determines will need to be satisfied in connection with the realization
upon the Collateral, (c) to reflect criteria, events, conditions, contingencies
or risks which adversely affect any component of the Borrowing Base, or the
assets, business, financial performance or financial condition of any Loan
Party, or (d) to reflect that an Event of Default then exists.  Without limiting
the generality of the foregoing, Availability Reserves may include, in the
Agent’s Permitted Discretion, (but are not limited to) reserves based on:
(i) rent; (ii) customs duties, and other costs to release Inventory which is
being imported into the United States; (iii) outstanding Taxes and other
governmental charges, including, without limitation, ad valorem, real estate,
personal property, sales, claims of the PBGC and other Taxes which may have
priority over the interests of the Agent in the Collateral; (iv) salaries, wages
and benefits due to employees of any Loan Party; (v) Customer Credit
Liabilities; (vi) Customer Deposits; (vii) reserves for reasonably anticipated
changes in the Appraised Value of Eligible Inventory between appraisals;
(viii) warehousemen’s or bailee’s charges and other Permitted Encumbrances which
may have priority over the interests of the Agent in the Collateral;
(ix) amounts due to vendors on account of consigned goods; (x) Cash Management
Reserves; (xi) Bank Products Reserves and (xii) royalties payable in respect of
licensed merchandise.

 

“Average Daily Adjusted Availability” means the average daily Adjusted
Availability for the immediately preceding Fiscal Quarter.

 

“Bank Products” means any services or facilities provided to any Loan Party by
the Agent, any Lender or any of their respective Affiliates, including, without
limitation, on account of (a) Swap Contracts, (b) merchant services constituting
a line of credit and (c) supply chain finance services including, without
limitation, trade payable services and supplier accounts receivable purchases,
but excluding Cash Management Services.

 

“Bank Products Reserves” means such reserves as the Agent from time to time
determines in its Permitted Discretion as being appropriate to reflect the
liabilities and obligations of the Loan Parties with respect to Bank Products
then provided or outstanding.

 

“Base Rate” means, for any day, a fluctuating rate per annum equal to the
highest of (a) the Federal Funds Rate, as in effect from time to time, plus
one-half of one percent (0.50%), (b) the Adjusted LIBO Rate plus one percent
(1.00%), and (c) the rate of interest in effect for such day as publicly
announced from time to time by Wells Fargo as its “prime rate.”  The “prime
rate” is a rate set by Wells Fargo based upon various factors including Wells
Fargo’s 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 Wells
Fargo shall take effect at the opening of business on the day specified in the
public announcement of such change.

 

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“Base Rate Loan” means a Loan that bears interest based on the Base Rate.

 

“Blocked Account” shall have the meaning provided in Section 6.13(a)(ii).

 

“Blocked Account Agreement” means with respect to an account established by a
Loan Party, an agreement, in form and substance reasonably satisfactory to the
Agent, establishing control (as defined in the UCC) of such account by the Agent
and whereby the bank maintaining such account agrees, upon the occurrence and
during the continuance of a Cash Dominion Event, to comply only with the
instructions originated by the Agent without the further consent of any Loan
Party.

 

“Blocked Account Bank” means each bank with whom deposit accounts are maintained
in which any funds of any of the Loan Parties from one or more DDAs are
concentrated and with whom a Blocked Account Agreement has been, or is required
to be, executed in accordance with the terms hereof.

 

“Borrower” shall have the meaning provided in the introductory paragraph hereto.

 

“Borrower Materials” shall have the meaning provided in Section 6.02.

 

“Borrowing” means a Committed Borrowing or a Swing Line Borrowing, as the
context may require.

 

“Borrowing Base” means, at any time of calculation, an amount equal to:

 

(a)           the face amount of Eligible Credit Card Receivables multiplied by
90%;

 

plus

 

(b)           the face amount of Eligible GSI Receivables multiplied by 85%;

 

plus

 

(c)           (x) until receipt by the Agent of the initial Inventory appraisal
after the Closing Date, the Cost of Eligible Inventory, net of Inventory
Reserves, multiplied by 80%, and (y) after receipt by the Agent of the initial
Inventory appraisal after the Closing Date, the Cost of Eligible Inventory, net
of Inventory Reserves, multiplied by the product of 90% multiplied by the
Appraised Value of Eligible Inventory;

 

minus

 

(d)           the then amount of all Availability Reserves.

 

“Borrowing Base Certificate” means a certificate substantially in the form of
Exhibit F hereto (with such changes therein as may be required by the Agent to
reflect the components of and reserves against the Borrowing Base as provided
for hereunder from time to time), executed and certified as accurate and
complete by a Responsible Officer of the Borrower which shall include
appropriate exhibits, schedules, supporting documentation, and additional
reports as reasonably requested by the Agent.

 

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state where the Agent’s Office is located and, if such day
relates to any LIBO Rate Loan, means any such day on which dealings in Dollar
deposits are conducted by and between banks in the London interbank market.

 

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“Capital Expenditures” means, with respect to any Person for any period, (a) all
expenditures made (whether made in the form of cash or other property) or costs
incurred for the acquisition or improvement of fixed or capital assets of such
Person (excluding normal replacements and maintenance which are properly charged
to current operations), in each case that are set forth as capital expenditures
in a Consolidated statement of cash flows of such Person for such period, in
each case prepared in accordance with GAAP, and (b) Capital Lease Obligations
incurred by a Person during such period, but excluding (i) the purchase price of
Equipment that is purchased substantially contemporaneously with the trade-in of
existing Equipment to the extent that the gross amount of such purchase price is
reduced by the credit granted by the seller of such Equipment for the Equipment
being traded in at such time and (ii) Permitted Acquisitions.

 

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

 

“Cash Collateralize” shall have the meaning provided in Section 2.03(g). 
Derivatives of such term have corresponding meanings.

 

“Cash Dominion Event” means either (i) the occurrence and continuance of any
Specified Event of Default, or (ii) the failure of the Borrower to maintain
Availability of at least 15% of the Loan Cap for three (3) consecutive Business
Days.  For purposes of this Agreement, the occurrence of a Cash Dominion Event
shall be deemed continuing at the Agent’s option (i) so long as such Specified
Event of Default has not been waived, and/or (ii) if the Cash Dominion Event
arises as a result of the Borrower’s failure to achieve Availability as required
hereunder, until Availability has exceeded 15% of the Loan Cap for thirty (30)
consecutive days, in which case a Cash Dominion Event shall no longer be deemed
to be continuing for purposes of this Agreement; provided that a Cash Dominion
Event shall be deemed continuing (even if an Event of Default is no longer
continuing and/or Availability exceeds the required amount for thirty (30)
consecutive days) at all times if a Cash Dominion Event occurs at any time after
a Cash Dominion Event has occurred and been discontinued on two (2) occasions
during any twelve month period after the Closing Date.  The termination of a
Cash Dominion Event as provided herein shall in no way limit, waive or delay the
occurrence of a subsequent Cash Dominion Event in the event that the conditions
set forth in this definition again arise.

 

“Cash Management Reserves ” means such reserves as the Agent, from time to time,
determines in its Permitted Discretion as being appropriate to reflect the
reasonably anticipated liabilities and obligations of the Loan Parties with
respect to Cash Management Services then provided or outstanding.

 

“Cash Management Services” means any cash management services provided to any
Loan Party by the Agent or any Lender or any of their respective Affiliates,
including, without limitation: (a) ACH transactions, (b) controlled disbursement
services, treasury, depository, overdraft, and electronic funds transfer
services, (c) credit or debit cards, (d) credit card processing services, and
(e) purchase cards.

 

“CERCLA” means the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. § 9601 et seq.

 

“CERCLIS” means the Comprehensive Environmental Response, Compensation, and
Liability Information System maintained by the United States Environmental
Protection Agency.

 

“CFC” means a Person that is a controlled foreign corporation under Section 957
of the Code.

 

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“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority;
provided, however, for purposes of this Agreement, (i) the Dodd-Frank Wall
Street Reform and Consumer Protection Act and all requests, guidelines or
directives in connection therewith and (ii) all rules, guidelines or directives
promulgated by the Bank for International Settlements, the Basel Committee on
Banking Supervision (or any successor or similar authority) or the United States
or Canadian regulatory authorities, in each case pursuant to Basel III, are
deemed to have gone into effect and been adopted after the Closing Date.

 

“Change of Control” means an event or series of events by which:

 

(a)           any “person” or “group” (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any
employee benefit plan of such person or its subsidiaries, and any person or
entity acting in its capacity as trustee, agent or other fiduciary or
administrator of any such plan), in each case, other than the Permitted Holders,
becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934, except that a person or group shall be deemed
to have “beneficial ownership” of all securities that such person or group has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time (such right, an “option right”)), directly or
indirectly, of 33% or more of the total voting power to elect the members of the
board of directors or equivalent governing body of the Borrower on a
fully-diluted basis (and taking into account all such Equity Interests that such
“person” or “group” has the right to acquire pursuant to any option right); or

 

(b)           during any period of twenty-four (24) consecutive months, a
majority of the members of the board of directors or other equivalent governing
body of the Borrower cease to be composed of individuals (i) who were members of
that board or equivalent governing body on the first day of such period,
(ii) whose election or nomination to that board or equivalent governing body was
approved by individuals referred to in clause (i) above constituting at the time
of such election or nomination at least a majority of that board or equivalent
governing body or (iii) whose election or nomination to that board or other
equivalent governing body was approved by individuals referred to in clauses
(i) and (ii) above constituting at the time of such election or nomination at
least a majority of that board or equivalent governing body (excluding, in the
case of both clause (ii) and clause (iii), any individual whose initial
nomination for, or assumption of office as, a member of that board or equivalent
governing body occurs as a result of an actual or threatened solicitation of
proxies or consents for the election or removal of one or more directors by any
person or group other than a solicitation for the election of one or more
directors by or on behalf of the board of directors); or

 

(c)           any “change in control” or similar event as defined in any
document governing Material Indebtedness of any Loan Party; or

 

(d)           the Borrower fails at any time to own, directly or indirectly,
100% of the Equity Interests of each other Loan Party free and clear of all
Liens, except where such failure is as a result of a transaction permitted by
the Loan Documents.

 

“Closing Date” means the first date all the conditions precedent in Section 4.01
are satisfied or waived in accordance with Section 10.01.

 

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“Closing Date Material Adverse Effect” means a material adverse change in, or a
material adverse effect on, the operations, business, assets, properties,
liabilities (actual or contingent), or financial condition of the Borrower and
its Subsidiaries, taken as a whole.

 

“Co-Documentation Agents” means Bank of America, N.A., JPMorgan Chase Bank, N.A.
and U.S. Bank National Association.

 

“Code” means the Internal Revenue Code of 1986, as amended and in effect.

 

“Collateral” means any and all “Collateral” as defined in any applicable
Security Document and all other property that is or is intended under the terms
of the Security Documents to be subject to Liens in favor of the Agent.

 

“Collateral Access Agreement” means an agreement reasonably satisfactory in form
and substance to the Agent executed by (a) a bailee or other Person in
possession of Collateral, and (b) any landlord of Real Estate leased by any Loan
Party, pursuant to which such Person (i) acknowledges the Agent’s Lien on the
Collateral, (ii) releases or subordinates such Person’s Liens in the Collateral
held by such Person or located on such Real Estate, (iii) provides the Agent
with access to the Collateral held by such bailee or other Person or located in
or on such Real Estate, (iv) as to any landlord, provides the Agent with a
reasonable time to sell and dispose of the Collateral from such Real Estate, and
(v) makes such other agreements with the Agent as the Agent may reasonably
require related to the use and access of the Collateral.

 

“Commercial Letter of Credit” means any Letter of Credit issued for the purpose
of providing the primary payment mechanism in connection with the purchase of
any materials, goods or services by a Loan Party in the ordinary course of
business of such Loan Party.

 

“Commercial Letter of Credit Agreement” means the Commercial Letter of Credit
Agreement relating to the issuance of a Commercial Letter of Credit in the form
from time to time in use by the L/C Issuer.

 

“Commitment” means, as to each Lender, its obligation to (a) make Committed
Loans to the Borrower pursuant to Section 2.01, (b) purchase participations in
L/C Obligations, and (c) purchase participations in Swing Line Loans, in an
aggregate principal amount at any one time outstanding not to exceed the amount
set forth opposite such Lender’s name on Schedule 2.01 or in the Assignment and
Assumption pursuant to which such Lender becomes a party hereto, as applicable,
as such amount may be adjusted from time to time in accordance with this
Agreement.

 

“Commitment Increase” shall have the meaning provided in Section 2.15(a).

 

“Committed Borrowing” means a borrowing consisting of simultaneous Committed
Loans of the same Type and, in the case of LIBO Rate Loans, having the same
Interest Period made by each of the Lenders pursuant to Section 2.01.

 

“Committed Loan” shall have the meaning provided in Section 2.01.

 

“Committed Loan Notice” means a notice of (a) a Committed Borrowing, (b) a
conversion of Committed Loans from one Type to the other, or (c) a continuation
of LIBO Rate Loans, pursuant to 2.01(a), which, if in writing, shall be
substantially in the form of Exhibit A.

 

“Compliance Certificate” means a certificate substantially in the form of
Exhibit D.

 

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“Concentration Account” has the meaning provided in Section 6.13(c).

 

“Consent” means actual consent given by a Lender from whom such consent is
sought; or the passage of seven (7) Business Days from receipt of written notice
to a Lender from the Agent of a proposed course of action to be followed by the
Agent without such Lender’s giving the Agent written notice of that Lender’s
objection to such course of action.

 

“Consolidated” means, when used to modify a financial term, test, statement, or
report of a Person, the application or preparation of such term, test, statement
or report (as applicable) based upon the consolidation, in accordance with GAAP,
of the financial condition or operating results of such Person and its
Subsidiaries.

 

“Contractual Obligation” means, as to any Person, any provision of any
agreement, instrument or other undertaking to which such Person is a party or by
which it or any of its property is bound.

 

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

 

“Cost” means the lower of cost or market value of Inventory, based upon the Loan
Parties’ accounting practices, known to the Agent, which practices are in effect
on the Closing Date, with such changes as permitted by GAAP, as such calculated
cost is determined from invoices received by the Loan Parties, the Loan Parties’
purchase journals or the Loan Parties’ stock ledger.

 

“Credit Card Issuer” shall mean any person (other than the Borrower or other
Loan Party) who issues or whose members issue credit cards, including, without
limitation, MasterCard or VISA bank credit or debit cards or other bank credit
or debit cards issued through MasterCard International, Inc., Visa, U.S.A., Inc.
or Visa International and American Express, Discover, Diners Club, Carte
Blanche, General Electric Capital Corporation and other non-bank credit or debit
cards, including, without limitation, credit or debit cards issued by or through
American Express Travel Related Services Company, Inc.,  Novus Services, Inc.
and other issuers approved by the Agent.

 

“Credit Card Processor” shall mean any servicing or processing agent or any
factor or financial intermediary who facilitates, services, processes or manages
the credit authorization, billing transfer and/or payment procedures with
respect to any Loan Party’s sales transactions involving credit card or debit
card purchases by customers using credit cards or debit cards issued by any
Credit Card Issuer.

 

“Credit Card Notifications” shall have the meaning provided in
Section 6.13(a)(i).

 

“Credit Card Receivables” means each “Account” (as defined in the UCC) together
with all income, payments and proceeds thereof, owed by a Credit Card Issuer or
Credit Card Processor to a Loan Party resulting from charges by a customer of a
Loan Party on credit or debit cards issued by such issuer in connection with the
sale of goods by a Loan Party, or services performed by a Loan Party, in each
case in the ordinary course of its business.

 

“Credit Extensions” mean each of the following: (a) a Borrowing and (b) an L/C
Credit Extension.

 

“Credit Party” or “Credit Parties” means (a) individually, (i) each Lender and
its Affiliates, (ii) the Agent, (iii) each L/C Issuer, (iv) the Arrangers,
(v) each beneficiary of each indemnification obligation undertaken by any Loan
Party under any Loan Document, (vi) any other Person to whom

 

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Obligations under this Agreement and other Loan Documents are owing, and
(vii) the successors and permitted assigns of each of the foregoing, and
(b) collectively, all of the foregoing.

 

“Credit Party Expenses” means, without limitation, (a) all reasonable and
documented out-of-pocket expenses incurred by the Agent and its Affiliates, in
connection with this Agreement and the other Loan Documents, including without
limitation (i) the reasonable fees, charges and disbursements of (A) counsel for
the Agent, (B) outside consultants for the Agent, (C) appraisers, (D) commercial
finance examiners, and (E) all such reasonable and documented out-of-pocket
expenses incurred during any workout, restructuring or negotiations in respect
of the Obligations, (ii) in connection with (A) the syndication of the credit
facilities provided for herein, (B) the preparation, negotiation,
administration, management, execution and delivery of this Agreement and the
other Loan Documents or any amendments, modifications or waivers of the
provisions thereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (C) the enforcement or protection of its rights
in connection with this Agreement or the Loan Documents or efforts to preserve,
protect, collect, or enforce the Collateral or in connection with any proceeding
under any Debtor Relief Laws, or (D) any workout, restructuring or negotiations
in respect of any Obligations, and (b) with respect to the L/C Issuer and its
Affiliates, all reasonable and documented out-of-pocket expenses incurred in
connection with the issuance, amendment, renewal or extension of any Letter of
Credit or any demand for payment thereunder; and (c) all reasonable and
documented out-of-pocket expenses incurred by the Credit Parties who are not the
Agents, the L/C Issuer or any Affiliate of any of them, after the occurrence and
during the continuance of an Event of Default, provided that such Credit Parties
shall be entitled to reimbursement for no more than one counsel representing all
such Credit Parties (absent a conflict of interest in which case the Credit
Parties may engage and be reimbursed for additional counsel).

 

“Customer Credit Liabilities” means at any time, the aggregate remaining value
at such time of (a) outstanding gift certificates and gift cards of the Loan
Parties entitling the holder thereof to use all or a portion of the certificate
or gift card to pay all or a portion of the purchase price for any Inventory,
(b) outstanding merchandise credits of the Loan Parties, and (c) liabilities in
connection with frequent shopping programs of the Loan Parties.

 

“Customer Deposits” means at any time, the aggregate amount at such time of
(a) deposits made by customers with respect to the purchase of goods or the
performance of services and (b) layaway obligations of the Loan Parties.

 

“Customs Broker/Carrier Agreement” means an agreement in form and substance
reasonably satisfactory to the Agent among a Loan Party, a customs broker,
freight forwarder, consolidator or carrier, and the Agent, in which the customs
broker, freight forwarder, consolidator or carrier acknowledges that it has
control over and holds the documents evidencing ownership of the subject
Inventory for the benefit of the Agent and agrees, upon notice from the Agent,
to hold and dispose of the subject Inventory solely as directed by the Agent.

 

“DDA” means each checking, savings or other demand deposit account maintained by
any of the Loan Parties.  All funds in each DDA shall be conclusively presumed
to be Collateral and proceeds of Collateral and the Agent and the Lenders shall
have no duty to inquire as to the source of the amounts on deposit in any DDA.

 

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.

 

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“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would be an
Event of Default.

 

“Default Rate” means (a) when used with respect to Loans, an interest rate equal
to the interest rate (including the Applicable Margin) otherwise applicable to
such Loan plus two percent (2%) per annum, (b) when used with respect to Letter
of Credit Fees, a rate equal to the Applicable Margin for Standby Letters of
Credit or Commercial Letters of Credit, as applicable, plus two percent (2%) per
annum, and (c) with respect to all other Obligations, an interest rate equal to
the Base Rate, plus the then Applicable Margin, plus two percent (2%) per annum.

 

“Defaulting Lender” means any Lender that (a) has failed to fund any portion of
the Committed Loans, participations in L/C Obligations or participations in
Swing Line Loans required to be funded by it hereunder within one (1) Business
Day of the date required to be funded by it hereunder, (b) has otherwise failed
to pay over to the Agent or any other Lender any other amount required to be
paid by it hereunder within one (1) Business Day of the date when due, or
(c) has been deemed insolvent or become the subject of a bankruptcy or
insolvency proceeding.

 

“Deteriorating Lender” means any Defaulting Lender or any Lender as to which
(a) the Agent has a good faith belief that such Lender has defaulted in
fulfilling its obligations under one or more other syndicated credit facilities,
or (b) a Person that Controls such Lender has been deemed insolvent or become
the subject of a bankruptcy, insolvency or similar proceeding; provided that a
Lender shall not be a Deteriorating Lender solely by virtue of the ownership or
acquisition of any equity interest in that Lender or any direct or indirect
parent company thereof by a Governmental Authority.

 

“Dick’s Foundation” means The Dick’s Sporting Goods Foundation.

 

“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction and any sale,
transfer, license or other disposition of (whether in one transaction or in a
series of transactions) of any property (including, without limitation, any
Equity Interests of any Subsidiary of the Borrower)) by any Person (or the
granting of any option or other right to do any of the foregoing), including any
sale, assignment, transfer or other disposal, with or without recourse, of any
notes or accounts receivable or any rights and claims associated therewith.

 

“Disqualified Stock” means any Equity Interest that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
final date on which the Loans mature; provided, however, that (i) only the
portion of such Equity Interests which so matures or is mandatorily redeemable,
is so convertible or exchangeable or is so redeemable at the option of the
holder thereof prior to such date shall be deemed to be Disqualified Stock and
(ii) with respect to any Equity Interests issued to any employee or to any plan
for the benefit of employees of the Borrower or its Subsidiaries or by any such
plan to such employees, such Equity Interest shall not constitute Disqualified
Stock solely because it may be required to be repurchased by the Borrower or one
of its Subsidiaries in order to satisfy applicable statutory or regulatory
obligations or as a result of such employee’s termination, resignation, death or
disability and if any class of Equity Interest of such Person that by its terms
authorizes such Person to satisfy its obligations thereunder by delivery of an
Equity Interest that is not Disqualified Stock, such Equity Interests shall not
be deemed to be Disqualified Stock. Notwithstanding the preceding sentence, any
Equity Interest that would constitute Disqualified Stock solely because the
holders thereof have the right to require a Loan Party to repurchase such Equity
Interest upon the occurrence of a change of control or an asset sale shall not
constitute Disqualified Stock.  The amount of Disqualified Stock deemed to be

 

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outstanding at any time for purposes of this Agreement will be the maximum
amount that the Borrower and its Subsidiaries may become obligated to pay upon
maturity of, or pursuant to any mandatory redemption provisions of, such
Disqualified Stock or portion thereof, plus accrued dividends.

 

“Dollars” and “$” mean lawful money of the United States.

 

“Eligible Assignee” means (a) a Credit Party or any of its Affiliates; (b) a
bank, insurance company, or company engaged in the business of making commercial
loans, which Person, together with its Affiliates, has a combined capital and
surplus in excess of $500,000,000; (c) an Approved Fund; (d) any Person to whom
a Credit Party assigns its rights and obligations under this Agreement as part
of an assignment and transfer of such Credit Party’s rights in and to a material
portion of such Credit Party’s portfolio of asset based credit facilities, and
(e) any other Person (other than a natural Person) satisfying the requirements
of Section 10.06(b) hereof; provided that notwithstanding the foregoing,
“Eligible Assignee” shall not include a Loan Party or any of the Loan Parties’
Affiliates or Subsidiaries.

 

“Eligible Credit Card Receivables” means at the time of any determination
thereof, each Credit Card Receivable that satisfies the following criteria at
the time of creation and continues to meet the same at the time of such
determination: (i) has been earned by performance and represents the bona fide
amounts due to a Loan Party from a Credit Card Issuer or Credit Card Processor,
and in each case originated in the ordinary course of business of such Loan
Party, and (ii) is not ineligible for inclusion in the calculation of the
Borrowing Base pursuant to any of clauses (a) through (i) below.  Without
limiting the foregoing, to qualify as an Eligible Credit Card Receivable, an
Account shall indicate no Person other than a Loan Party as payee or remittance
party.  In determining the amount to be so included, the face amount of an
Account shall be reduced by, without duplication, to the extent not reflected in
such face amount, (i) the amount of all accrued and actual discounts, claims,
credits or credits pending, promotional program allowances, price adjustments,
finance charges or other allowances (including any amount that a Loan Party may
be obligated to rebate to a customer, a Credit Card Issuer or Credit Card
Processor pursuant to the terms of any agreement or understanding (written or
oral)) and (ii) the aggregate amount of all cash received in respect of such
Account but not yet applied by the Loan Parties to reduce the amount of such
Credit Card Receivable.  Any Credit Card Receivable included within any of the
following categories shall not constitute an Eligible Credit Card Receivable:

 

(a)                                  Credit Card Receivables which do not
constitute an “Account” (as defined in the UCC);

 

(b)                                 Credit Card Receivables that have been
outstanding for more than five (5) Business Days from the date of sale;

 

(c)                                  Credit Card Receivables (i) that are not
subject to a perfected first-priority security interest in favor of the Agent,
or (ii) with respect to which a Loan Party does not have good, valid and
marketable title thereto, free and clear of any Lien (other than Liens granted
to the Agent pursuant to the Security Documents and Permitted Encumbrances
arising by operation of Law);

 

(d)                                 Credit Card Receivables which are disputed,
are with recourse, or with respect to which a claim, counterclaim, offset or
chargeback has been asserted (to the extent of such claim, counterclaim, offset
or chargeback);

 

(e)                                  Credit Card Receivables as to which the
processor has the right under certain circumstances to require a Loan Party to
repurchase the Accounts from such credit card processor;

 

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(f)                                    Credit Card Receivables due from an
issuer or payment processor of the applicable credit card which is the subject
of any bankruptcy or insolvency proceedings;

 

(g)                                 Credit Card Receivables which are not a
valid, legally enforceable obligation of the applicable issuer with respect
thereto;

 

(h)                                 Credit Card Receivables which do not conform
to all representations and warranties in the Loan Documents relating to Credit
Card Receivables; or

 

(i)                                     Credit Card Receivables which the Agent
determines in its Permitted Discretion to be uncertain of collection.

 

“Eligible GSI Receivables” means at the time of any determination thereof, each
Account due to a Loan Party from GSI pursuant to the terms of the GSI E-Commerce
Agreement that satisfies the following criteria at the time of creation and
continues to meet the same at the time of such determination: (i) has been
earned by performance and represents the bona fide amounts due to a Loan Party
from GSI pursuant to the terms of the GSI E-Commerce Agreement, and in each case
originated in the ordinary course of business of such Loan Party, and (ii) is
not ineligible for inclusion in the calculation of the Borrowing Base pursuant
to any eligibility criteria set forth in clauses (a) through (k) below.  Without
limiting the foregoing, to qualify as an Eligible GSI Receivable, an Account
shall indicate no Person other than a Loan Party as payee or remittance party. 
In determining the amount to be so included, the face amount of an Account shall
be reduced by, without duplication, to the extent not reflected in such face
amount, (i) the amount of all accrued and actual discounts, claims, credits or
credits pending, promotional program allowances, price adjustments, finance
charges or other allowances (including any amount that a Loan Party may be
obligated to rebate to a customer or GSI pursuant to the terms of any agreement
or understanding (written or oral), including, without limitation, the GSI
E-Commerce Agreement) and (ii) the aggregate amount of all cash received in
respect of such Account but not yet applied by the Loan Parties to reduce the
amount of such Account.  Any Account included within any of the following
categories shall not constitute an Eligible GSI Receivable:

 

(a)                                  Accounts that have been outstanding for
more than ninety (90) days from the date of sale or more than sixty (60) days
past the due date;

 

(b)                                 all Accounts due from GSI if more than fifty
(50%) percent of the Accounts are deemed ineligible pursuant to clause
(a) above;

 

(c)                                  Accounts (i) that are not subject to a
perfected first-priority security interest in favor of the Agent, or (ii) with
respect to which a Loan Party does not have good, valid and marketable title
thereto, free and clear of any Lien (other than Liens granted to the Agent
pursuant to the Security Documents and Permitted Encumbrances arising by
operation of Law);

 

(d)                                 Accounts which are disputed or with respect
to which a claim, counterclaim, offset or chargeback has been asserted (other
than offsets and chargebacks for fees and expenses as set forth in the GSI
E-Commerce Agreement), but only to the extent of such dispute, counterclaim,
offset or chargeback;

 

(e)                                  Accounts which are not payable in Dollars;

 

(f)                                  Accounts for which all consents, approvals
or authorizations of, or registrations or declarations with any Governmental
Authority required to be obtained, effected or given in connection with the
performance of such Account by GSI or in connection with the enforcement of such
Account by the Agent have not been duly obtained, effected or given or are not
in full force and effect;

 

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(g)                                 Accounts owing at any time that GSI is the
subject of any bankruptcy or insolvency proceeding;

 

(h)                                 Accounts arising out of sales on a
bill-and-hold, guaranteed sale, sale-or-return, or sale on approval basis;

 

(i)                                     Accounts evidenced by a promissory note
or other instrument;

 

(j)                                     Accounts which constitute Credit Card
Receivables; or

 

(k)                                  Accounts which the Agent determines in its
Permitted Discretion to be uncertain of collection.

 

For clarity, it is understood and agreed that until the Agent has completed its
due diligence as provided above, such Accounts shall not be included in the
calculation of the Borrowing Base.  Upon the completion of such due diligence,
the form of the Borrowing Base Certificate shall be revised to include Eligible
GSI Receivables in a manner acceptable to the Agent and the Borrower.

 

“Eligible In-Transit Inventory” means, as of any date of determination thereof,
without duplication of other Eligible Inventory, In-Transit Inventory:

 

(a)                                  which has been shipped from a foreign
location for receipt by a Loan Party, but which has not yet been delivered to
such Loan Party, which In-Transit Inventory has been in transit for sixty (60)
days or less from the date of shipment of such Inventory;

 

(b)                                 for which the purchase order is in the name
of a Loan Party and title and risk of loss has passed to such Loan Party;

 

(c)                                  for which an Acceptable Document of Title
has been issued, and in each case as to which the Agent has control (as defined
in the UCC) over the documents of title which evidence ownership of the subject
Inventory (such as, if requested by the Agent, by the delivery of a Customs
Broker/Carrier Agreement);

 

(d)                                 which is insured to the reasonable
satisfaction of the Agent (including, without limitation, marine cargo
insurance);

 

(e)                                  for which payment of the purchase price has
been made by such Loan Party or the purchase price is supported by a Commercial
Letter of Credit;

 

(f)                                    which otherwise would constitute Eligible
Inventory; and

 

(g)                                 which meet such other eligibility criteria
as the Agent may establish in its Permitted Discretion after conducting its due
diligence with respect to such In-Transit Inventory;

 

provided that the Agent may, in its Permitted Discretion, exclude any particular
In-Transit Inventory from the definition of “Eligible In-Transit Inventory” in
the event the Agent determines in its Permitted Discretion that such In-Transit
Inventory is subject to any Person’s right of reclamation, repudiation,
stoppage in transit or any event has occurred or is reasonably anticipated by
the Agent to arise which may otherwise adversely impact the ability of the Agent
to realize upon such Inventory.  For clarity, it is understood and agreed that
until the Agent has completed its due diligence with respect to In-Transit
Inventory, such In-Transit Inventory shall not be included in the calculation of
the Borrowing

 

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Base.  Upon the completion of such due diligence, the form of the Borrowing Base
Certificate shall be revised to include Eligible In-Transit Inventory in a
manner acceptable to the Agent and the Borrower.

 

“Eligible Inventory” means, as of the date of determination thereof,
(i) Eligible In-Transit Inventory and (ii) items of Inventory of a Loan Party
that are finished goods, merchantable and readily saleable to the public in the
ordinary course of the a Loan Party’s business, in each case that, except as
otherwise agreed by the Agent, (A) complies with each of the representations and
warranties respecting Inventory made by the Loan Parties in the Loan Documents,
and (B) is not excluded as ineligible by virtue of one or more of the criteria
set forth below.  The following items of Inventory shall not be included in
Eligible Inventory:

 

(a)                                  Inventory that is not solely owned by a
Loan Party or a Loan Party does not have good and valid title thereto free and
clear of any Lien (other than Liens granted to the Agent pursuant to the
Security Documents and Permitted Encumbrances arising by operation of Law);

 

(b)                                 Inventory that is leased by or is on
consignment to a Loan Party or which is consigned by a Loan Party to a Person
which is not a Loan Party;

 

(c)                                  Inventory (other than In-Transit Inventory)
that is not located in the United States of America (excluding territories or
possessions of the United States);

 

(d)                                 Inventory (other than In-Transit Inventory)
that is not located at a location that is owned or leased by a Loan Party,
except (i) Inventory in transit between such owned or leased locations or
locations which meet the criteria set forth in clause (ii) below or an internet
fulfillment company that has delivered to the Agent a Collateral Access
Agreement, or (ii) to the extent that the Loan Parties have furnished the Agent
with (A) any UCC financing statements or other documents that the Agent may
determine to be necessary to perfect its security interest in such Inventory at
such location, and (B) a Collateral Access Agreement executed by the Person
owning any such location on terms reasonably acceptable to the Agent;

 

(e)                                  Inventory that is located in a warehouse or
other location maintained by any internet fulfillment company, unless such
internet fulfillment company has delivered to the Agent a Collateral Access
Agreement;

 

(f)                                    Inventory that is comprised of goods
which (i) are damaged, defective, “seconds,” or otherwise unmerchantable,
(ii) are to be returned to the vendor, (iii) are obsolete or slow moving, or
custom items, work-in-process, raw materials, or that constitute samples, spare
parts, promotional, marketing, labels, bags and other packaging and shipping
materials or supplies used or consumed in a Loan Party’s business, (iv) are
seasonal in nature and which have been packed away for sale in the subsequent
season, (v) are not in compliance with all standards imposed by any Governmental
Authority having regulatory authority over such Inventory, its use or sale, or
(vi) are bill and hold goods;

 

(g)                                 Inventory that is not subject to a perfected
first-priority security interest in favor of the Agent (other than, with respect
to In-Transit Inventory, statutory Liens in favor of carriers permitted under
clause (b) of the definition of “Permitted Encumbrances”);

 

(h)                                 Inventory that is not insured in compliance
with the provisions of Section 5.10 hereof;

 

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(i)                                     Inventory that has been sold but not yet
delivered or as to which a Loan Party has accepted a deposit;

 

(j)                                     Inventory that is subject to any
licensing, patent, royalty, trademark, trade name or copyright agreement with
any third party from which a Loan Party or any of its Subsidiaries has received
written notice of a dispute in respect of any such agreement and such dispute
relates to the use of such license by a Loan Party;

 

(k)                                  Inventory acquired in a Permitted
Acquisition or which is not of the type usually sold in the ordinary course of
the Loan Parties’ business, unless and until the Agent has completed or received
(A) an appraisal of such Inventory from an independent appraiser engaged by the
Agent and establishes an advance rate and Inventory Reserves (if applicable)
therefor, and otherwise agrees that such Inventory shall be deemed Eligible
Inventory, and (B) upon the reasonable request of the Agent, a commercial field
examination, all of the results of the foregoing to be reasonably satisfactory
to the Agent; or

 

(l)                                     Inventory deemed by the Agent in its
Permitted Discretion to be ineligible for inclusion in the calculation of the
Borrowing Base.

 

“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.

 

“Environmental Liability” means any liability, obligation, damage, loss, claim,
action, suit, judgment, order, fine, penalty, fee, expense, or cost, contingent
or otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of any Loan Party or any of their
respective Subsidiaries directly or indirectly resulting from or based upon
(a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal or presence of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.

 

“Equipment” shall have the meaning provided in the UCC.

 

“Equity Interests” means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or non-voting, and whether or not such shares,
warrants, options, rights or other interests are outstanding on any date of
determination.

 

“ERISA” means the Employee Retirement Income Security Act of 1974.

 

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“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with the Borrower within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

 

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer
Plan or notification that a Multiemployer Plan is in reorganization; (d) the
filing of a notice of intent to terminate, the treatment of a Plan amendment as
a termination under Sections 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan;
(e) an event or condition which constitutes grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under
Title IV of ERISA, other than for PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.

 

“Event of Default” shall have the meaning provided in Section 8.01.

 

“Excluded Lender” means any Person and any Affiliate of such Person that
directly competes on the whole with those businesses conducted by the Loan
Parties from time to time.

 

“Excluded Taxes” means, with respect to the Agent, any Lender, the L/C Issuer or
any other recipient of any payment to be made by or on account of any obligation
of the Loan Parties hereunder, (a) Taxes imposed on or measured by its overall
net income (however denominated), and franchise Taxes imposed on it (in lieu of
net income Taxes), by the jurisdiction (or any political subdivision thereof)
under the laws of which such recipient is organized or in which its principal
office is located or, in the case of any Lender, in which its applicable Lending
Office is located, (b) any branch profits Taxes imposed by the United States or
any similar Tax imposed by any other jurisdiction in which any Loan Party is
located, (c) in the case of a Foreign Lender (other than an assignee pursuant to
a request by the Borrower under Section 10.13), any withholding Tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
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 Loan Parties with respect to such withholding Tax
pursuant to Section 3.01(a), (d) Taxes attributable to such recipient’s failure
or inability to comply with Section 3.01(e), (e) any U.S. federal, state or
local backup withholding Tax, and (f) any U.S. federal withholding Tax imposed
under FATCA.

 

“Executive Order” shall have the meaning provided in Section 10.18.

 

“Existing Credit Agreement” means that certain Second Amended and Restated
Credit Agreement dated as of July 28, 2004 among the Borrower, the other loan
parties party thereto, General Electric Capital Corporation, as agent, and a
syndicate of lenders.

 

“Existing Letters of Credit” means the letters of credit issued by Wells Fargo
and set forth on Schedule 2.03 hereto.

 

“Extraordinary Receipt” means any cash received by or paid to or for the account
of any Person not in the ordinary course of business, including tax refunds,
pension plan reversions, proceeds of insurance (other than proceeds of business
interruption insurance to the extent such proceeds constitute

 

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compensation for lost earnings), condemnation awards (and payments in lieu
thereof), indemnity payments and any purchase price adjustments.

 

“Facility Guaranty” means the Guaranty made by the Guarantors in favor of the
Agent and the other Credit Parties, in form reasonably satisfactory to the
Agent.

 

“FATCA” means current Section 1471 through 1474 of the Code or any amended
version or successor provision that is substantively similar and, in each case,
any regulations promulgated thereunder and any interpretation and other guidance
issued in connection therewith.

 

“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Wells Fargo
on such day on such transactions as determined by the Agent.

 

“Fee Letter” means the letter agreement, dated as of October 7, 2011, among the
Borrower, the Agent and Wells Fargo Capital Finance, LLC.

 

“Fiscal Month” means any fiscal month of any Fiscal Year, which month shall
generally end on the Saturday closest to the end of each calendar month in
accordance with the fiscal accounting calendar of the Loan Parties.

 

“Fiscal Quarter” means any fiscal quarter of any Fiscal Year, which quarters
shall generally end on the Saturday closest to the end of each April, July,
October and January of such Fiscal Year in accordance with the fiscal accounting
calendar of the Loan Parties.

 

“Fiscal Year” means any period of twelve consecutive months ending on the
Saturday closest to the end of each January of any calendar year.

 

“Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than that in which the 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.

 

“Fronting Exposure” means, at any time there is a Defaulting Lender or a
Deteriorating Lender, (a) with respect to the L/C Issuer, such Defaulting
Lender’s or Deteriorating Lender’s Applicable Percentage of the outstanding L/C
Obligations to the extent that such Defaulting Lender’s or Deteriorating
Lender’s Applicable Percentage of such outstanding L/C Obligations has not been
reallocated pursuant to Section 9.16(c)  or Cash Collateralized pursuant to
Section 9.16(d), and (b) with respect to the Swing Line Lender, such Defaulting
Lender’s or Deteriorating Lender’s Applicable Percentage of Swing Line Loans to
the extent that such Defaulting Lender’s or Deteriorating Lender’s Applicable
Percentage of Swing Line Loans has not been reallocated pursuant to
Section 9.16(c) or Cash Collateralized pursuant to Section 9.16(d).

 

“FRB” means the Board of Governors of the Federal Reserve System of the United
States.

 

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“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.

 

“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

 

“Governmental Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supra-national bodies such as the European Union or the European Central Bank).

 

“GSI” means GSI Commerce Solutions, Inc., together with its successors and
assigns.

 

“GSI E-Commerce Agreement” means that certain Amended and Restated E-Commerce
Agreement, dated as of August 25, 2008, between GSI and the Borrower (as the
same may be amended, restated, supplemented or otherwise modified from time to
time).

 

“Guarantee” means, as to any Person, (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien).  The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, in respect of
which such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof.  The term “Guarantee” as a
verb has a corresponding meaning.

 

“Guarantor” shall have the meaning provided in the introductory paragraph hereto
and shall also mean each other Subsidiary of the Borrower that shall be required
to execute and deliver a Facility Guaranty pursuant to Section 6.12.

 

“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.

 

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“Honor Date” shall have the meaning provided in Section 2.03(c)(i).

 

“Increase Effective Date” shall have the meaning provided in Section 2.15(d).

 

“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

 

(a)           all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes, loan
agreements or other similar instruments;

 

(b)           the maximum amount of all direct or contingent obligations of such
Person arising under letters of credit (including standby and commercial),
bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

 

(c)           net obligations of such Person under any Swap Contract;

 

(d)           all obligations of such Person to pay the deferred purchase price
of property or services (other than trade accounts payable in the ordinary
course of business and, in each case, not past due for more than 90 days);

 

(e)           Indebtedness (excluding prepaid interest thereon) secured by a
Lien on property owned or being purchased by such Person (including indebtedness
arising under conditional sales or other title retention agreements), whether or
not such indebtedness shall have been assumed by such Person or is limited in
recourse;

 

(f)            all Attributable Indebtedness of such Person;

 

(g)           all mandatory obligations of such Person to purchase, redeem,
retire, defease or otherwise make any payment in cash in respect of any
Disqualified Stock in such Person or any other Person or any warrant, right or
option to acquire such Disqualified Stock, valued, in the case of a redeemable
preferred interest, at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends; and

 

(h)           all Guarantees of such Person in respect of any of the foregoing.

 

For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person.  The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date.

 

“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

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

 

“Information” shall have the meaning provided in Section 10.07.

 

“Intellectual Property” means all present and future:  trade secrets, know-how
and other proprietary information; trademarks, trademark applications, internet
domain names, service marks, trade dress, trade names, business names, designs,
logos, slogans (and all translations, adaptations, derivations and combinations
of the foregoing) indicia and other source and/or business identifiers, and all

 

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registrations or applications for registrations which have heretofore been or
may hereafter be issued thereon throughout the world; copyrights and copyright
applications; (including copyrights for computer programs) and all tangible and
intangible property embodying the copyrights, unpatented inventions (whether or
not patentable); patents and patent applications; industrial design applications
and registered industrial designs; license agreements related to any of the
foregoing and income therefrom; books, records, writings, computer tapes or
disks, flow diagrams, specification sheets, computer software, source codes,
object codes, executable code, data, databases and other physical
manifestations, embodiments or incorporations of any of the foregoing; all other
intellectual property; and all common law and other rights throughout the world
in and to all of the foregoing.

 

“Interest Payment Date” means, (a) as to any LIBO Rate Loan, the last day of
each Interest Period applicable to such Loan and the Maturity Date; provided,
however, that if any Interest Period for a LIBO Rate Loan exceeds three months,
the respective dates that fall every three months after the beginning of such
Interest Period shall also be Interest Payment Dates; and (b) as to any Base
Rate Loan (including a Swing Line Loan), the first day after the end of each
month and the Maturity Date.

 

“Interest Period” means, as to each LIBO Rate Loan, the period commencing on the
date such LIBO Rate Loan is disbursed or converted to or continued as a LIBO
Rate Loan and ending on the date one, two, three or six months thereafter, as
selected by the Borrower in its Committed Loan Notice provided that:

 

(i)            any Interest Period that would otherwise end on a day that is not
a Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Business Day;

 

(ii)           any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period;

 

(iii)          no Interest Period shall extend beyond the Maturity Date; and

 

(iv)          notwithstanding the provisions of clause (iii) no Interest Period
shall have a duration of less than one (1) month, and if any Interest Period
applicable to a LIBO Borrowing would be for a shorter period, such Interest
Period shall not be available hereunder.

 

For purposes hereof, the date of a Borrowing initially shall be the date on
which such Borrowing is made and thereafter shall be the effective date of the
most recent conversion or continuation of such Borrowing.

 

“Internal Control Event” means a material weakness in, or fraud that involves
management or other employees who have a significant role in, the Borrower’s
and/or its Subsidiaries’ internal controls over financial reporting, in each
case as described in the Securities Laws.

 

“In-Transit Inventory” means Inventory of a Loan Party which is in the
possession of a common carrier and is in transit from a foreign vendor of a Loan
Party from a location outside of the continental United States to a location of
a Loan Party that is within the continental United States.

 

“Inventory” shall have the meaning provided in the UCC, and shall also include,
without limitation, all: (a) goods which (i) are leased by a Person as lessor,
(ii) are held by a Person for sale or lease or to be furnished under a contract
of service, (iii) are furnished by a Person under a contract of service, or (iv)
consist of raw materials, work in process, or materials used or consumed in a
business; (b)

 

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goods of said description in transit; (c) goods of said description which are
returned, repossessed or rejected; and (d) packaging, advertising, and shipping
materials related to any of the foregoing.

 

“Inventory Reserves” means, without duplication of any other Reserve, such
reserves as may be established from time to time by the Agent in its Permitted
Discretion with respect to the determination of the saleability, at retail, of
the Eligible Inventory, which reflect such other factors as affect the market
value of the Eligible Inventory or which reflect claims and liabilities that the
Agent determines will need to be satisfied in connection with the realization
upon the Inventory. Without limiting the generality of the foregoing, Inventory
Reserves may, in the Agent’s Permitted Discretion, include (but are not limited
to) reserves based on:

 

(a)           obsolescence;

 

(b)           seasonality;

 

(c)           Shrink;

 

(d)           imbalance;

 

(e)           change in Inventory character;

 

(f)            change in Inventory composition;

 

(g)           change in Inventory mix;

 

(h)           mark-downs (both permanent and point of sale);

 

(i)            retail mark-ons and mark-ups inconsistent with prior period
practice and performance, industry standards, current business plans or
advertising calendar and planned advertising events; and

 

(j)            out-of-date and/or expired Inventory.

 

“Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition of Equity Interests of another Person, (b) a loan, advance or
capital contribution to, Guarantee or assumption of debt of, or purchase or
other acquisition of any other debt or interest in, another Person, (c) any
Acquisition, or (d) the purchase, acquisition or investment of or in any stocks,
bonds, mutual funds, notes, debentures or other securities, or any deposit
account, certificate of deposit or other investment of any kind.  For purposes
of covenant compliance, the amount of any Investment shall be the amount
actually invested, without adjustment for subsequent increases or decreases in
the value of such Investment.

 

“IRS” means the United States Internal Revenue Service.

 

“ISP” means, with respect to any Letter of Credit, the “International Standby
Practices 1998” published by the Institute of International Banking Law &
Practice (or such later version thereof as may be in effect at the time of
issuance).

 

“Issuer Documents” means with respect to any Letter of Credit, the Letter Credit
Application, the Standby Letter of Credit Agreement or Commercial Letter of
Credit Agreement, as applicable, and any

 

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other document, agreement and instrument entered into by the L/C Issuer and the
Borrower (or any Subsidiary) or in favor of the L/C Issuer and relating to any
such Letter of Credit.

 

“Joinder” means an agreement, in form reasonably satisfactory to the Agent
pursuant to which, among other things, a Person becomes a party to, and bound by
the terms of, this Agreement and/or the other Loan Documents in the same
capacity and to the same extent as either a Borrower or a Guarantor, as the
Agent may determine.

 

“Landlord Lien State” means such state(s) in which a landlord’s claim for rent
has priority over the Lien of the Agent in any of the Collateral.

 

 “Laws” means each international, foreign, Federal, state and local statute,
treaty, rule, guideline, regulation, ordinance, code and administrative or
judicial precedent or authority, including the interpretation or administration
thereof by any Governmental Authority charged with the enforcement,
interpretation or administration thereof, and each applicable administrative
order, directed duty, request, license, authorization and permit of, and
agreement with, any Governmental Authority, in each case whether or not having
the force of law.

 

“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the increase of the amount
thereof.

 

“L/C Issuer” means (a) Wells Fargo in its capacity as issuer of Letters of
Credit hereunder, or any successor issuer of Letters of Credit hereunder (which
successor may only be a Lender selected by the Agent in its reasonable
discretion) and (b) any other Lender selected by the Borrower and approved by
the Agent in its reasonable discretion.  The L/C Issuer may, in its discretion,
arrange for one or more Letters of Credit to be issued by Affiliates of the L/C
Issuer and/or for such Affiliate to act as an advising, transferring, confirming
and/or nominated bank in connection with the issuance or administration of any
such Letter of Credit, in which case the term “L/C Issuer” shall include any
such Affiliate with respect to Letters of Credit issued by such Affiliate.

 

“L/C Obligations” means, as at any date of determination, the aggregate undrawn
amount available to be drawn under all outstanding Letters of Credit.  For
purposes of computing the amounts available to be drawn under any Letter of
Credit, the amount of such Letter of Credit shall be determined in accordance
with Section 1.06.  For all purposes of this Agreement, if on any date of
determination a Letter of Credit has expired by its terms but any amount may
still be drawn thereunder by reason of the operation of any Rule under the ISP
or any article of UCP 600, such Letter of Credit shall be deemed to be
“outstanding” in the amount so remaining available to be drawn.

 

“Lease” means any written agreement, pursuant to which a Loan Party is entitled
to the use or occupancy of any space in a structure, land, improvements or
premises for any period of time.

 

“Lender” shall have the meaning provided in the introductory paragraph hereto
and, as the context requires, includes the Swing Line Lender.

 

“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify the Borrower and the
Agent.

 

“Letter of Credit” means each Standby Letter of Credit and each Commercial
Letter of Credit issued hereunder, and shall include the Existing Letters of
Credit.

 

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“Letter of Credit Application” means an application for the issuance or
amendment of a Letter of Credit in the form from time to time in use by the L/C
Issuer.

 

“Letter of Credit Expiration Date” means the day that is seven days prior to the
Maturity Date then in effect (or, if such day is not a Business Day, the next
preceding Business Day).

 

“Letter of Credit Fee” shall have the meaning provided in Section 2.03(i).

 

“Letter of Credit Sublimit” means an amount equal to $100,000,000.  The Letter
of Credit Sublimit is part of, and not in addition to, the Aggregate
Commitments.  A permanent reduction of the Aggregate Commitments shall not
require a corresponding pro rata reduction in the Letter of Credit Sublimit;
provided, however, that if the Aggregate Commitments are reduced to an amount
less than the Letter of Credit Sublimit, then the Letter of Credit Sublimit
shall be reduced to an amount equal to (or, at Borrower’s option, less than) the
Aggregate Commitments.

 

“LIBO Borrowing” means a Borrowing comprised of LIBO Loans.

 

“LIBO Rate” means for any Interest Period with respect to a LIBO Rate Loan, the
rate per annum equal to 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 the Agent from time to time)
at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, for Dollar deposits (for delivery on the
first day of such Interest Period) with a term equivalent to such Interest
Period.  If such rate is not available at such time for any reason, then the
“LIBO Rate” for such Interest Period shall be the rate per annum determined by
the Agent to be the rate at which deposits in Dollars for delivery on the first
day of such Interest Period in same day funds in the approximate amount of the
LIBO Rate Loan being made, continued or converted by Wells Fargo and with a term
equivalent to such Interest Period would be offered to Wells Fargo by major
banks in the London interbank eurodollar market in which Wells Fargo
participates at their request at approximately 11:00 a.m. (London time) two
Business Days prior to the commencement of such Interest Period.

 

“LIBO Rate Loan” means a Committed Loan that bears interest at a rate based on
the Adjusted LIBO Rate.

 

“Lien” means (a) any mortgage, deed of trust, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge, or
preference, priority or other security interest or preferential arrangement in
the nature of a security interest of any kind or nature whatsoever (including
any conditional sale, Capital Lease Obligation, Synthetic Lease Obligation, or
other title retention agreement, any easement, right of way or other encumbrance
on title to real property, and any financing lease having substantially the same
economic effect as any of the foregoing) and (b) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.

 

“Liquidation” means the exercise by the Agent of those rights and remedies
accorded to the Agent under the Loan Documents and applicable Law as a creditor
of the Loan Parties with respect to the realization on the Collateral, including
(after the occurrence and during the continuation of an Event of Default) the
conduct by the Loan Parties acting with the consent of the Agent, of any public,
private or “going out of business”, “store closing”, or other similarly themed
sale or other disposition of the Collateral for the purpose of liquidating the
Collateral.  Derivations of the word “Liquidation” (such as “Liquidate”) are
used with like meaning in this Agreement.

 

“Loan” means an extension of credit by a Lender to the Borrower under Article II
in the form of a Committed Loan or a Swing Line Loan.

 

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“Loan Account” shall have the meaning provided in Section 2.11(a).

 

“Loan Cap” means, at any time of determination, the lesser of (a) the Aggregate
Commitments and (b) the Borrowing Base.

 

“Loan Documents” means this Agreement, each Note, each Issuer Document, the Fee
Letter, all Borrowing Base Certificates, the Security Documents, the Facility
Guaranty, and any other instrument or agreement now or hereafter executed and
delivered in connection herewith.

 

“Loan Parties” means, collectively, the Borrower and each Guarantor.

 

 “Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual
or contingent) or financial condition of the Borrower and its Subsidiaries taken
as a whole; (b) a material impairment of the ability of the Loan Parties to
perform their obligations under any Loan Document; or (c) a material impairment
of the rights and remedies of the Agent or the Lenders under any Loan Document
or a material adverse effect upon the legality, validity, binding effect or
enforceability against the Loan Parties of any Loan Document.  In determining
whether any individual event would result in a Material Adverse Effect,
notwithstanding that such event in and of itself does not have such effect, a
Material Adverse Effect shall be deemed to have occurred if the cumulative
effect of such event and all other then existing events would result in a
Material Adverse Effect.

 

“Material Contract” means, with respect to any Person, each contract to which
such Person is a party material to the business, condition (financial or
otherwise), operations, performance, properties or prospects of such Person, the
termination of which would reasonably be expected to result in a Material
Adverse Effect.

 

“Material Indebtedness” means Indebtedness (other than the Obligations) of the
Loan Parties in an aggregate principal amount exceeding $75,000,000. For
purposes of determining the amount of Material Indebtedness at any time, the
amount of the obligations in respect of any Swap Contract at such time shall be
calculated at the Swap Termination Value thereof.

 

“Material Subsidiary” means, at any date of determination, each of the
Borrower’s Subsidiaries (a) whose Inventory is equal to or greater than 5.0% of
all Inventory of the Loan Parties or whose Accounts are equal to or greater than
5.0% of all Accounts of the Loan Parties, or (b) whose gross revenues were equal
to or greater than 5.0% of the Consolidated gross revenues of the Loan Parties,
in each case determined in accordance with GAAP; provided that if, at any time
and from time to time after the Closing Date, Subsidiaries that are not
Guarantors solely because they do not meet the thresholds set forth in
clauses (a) or (b) comprise in the aggregate more than 10.0% of the Loan
Parties’ total Inventory as of the end of the most recently ended Fiscal Quarter
of the Borrower, or more than 10.0% of the Loan Parties’ total Accounts as of
the end of the most recently ended Fiscal Quarter of the Borrower or more than
10.0% of the gross revenues as of the end of the most recently ended Fiscal
Quarter of the Borrower, then the Borrower shall comply with the provisions of
Section 6.12 hereof applicable to such Subsidiary.

 

“Maturity Date” means December 5, 2016.

 

“Maximum Rate” shall have the meaning provided in Section 10.09.

 

“Monthly Borrowing Base Delivery Event” means either (i) the occurrence and
continuance of any Event of Default other than a Specified Event of Default, or
(ii) the failure of the Borrower to maintain Availability at least equal to the
greater of (a) thirty percent (30%) of the Loan Cap, and (b)

 

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$125,000,000.  For purposes of this Agreement, the occurrence of a Monthly
Borrowing Base Delivery Event shall be deemed continuing at the Agent’s option
(i) so long as such Event of Default other than a Specified Event of Default
exists, and/or (ii) if the Monthly Borrowing Base Delivery Event arises as a
result of the Borrower’s failure to achieve Availability as required hereunder,
until Availability has exceeded the greater of (x) thirty percent (30%) of the
Loan Cap, and (y) $125,000,000 for thirty (30) consecutive calendar days, in
which case a Monthly Borrowing Base Delivery Event shall no longer be deemed to
be continuing for purposes of this Agreement.  The termination of a Monthly
Borrowing Base Delivery Event as provided herein shall in no way limit, waive or
delay the occurrence of a subsequent Monthly Borrowing Base Delivery Event in
the event that the conditions set forth in this definition again arise.

 

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

 

“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes
or is obligated to make contributions, or during the preceding five plan years,
has made or been obligated to make contributions.

 

“Net Proceeds” means (a) with respect to any Disposition by any Loan Party, or
any Extraordinary Receipt received or paid to the account of any Loan Party, the
excess, if any, of (i) the sum of cash and cash equivalents received in
connection with such transaction (including any cash or cash equivalents
received by way of deferred payment pursuant to, or by monetization of, a note
receivable or otherwise, but only as and when so received) over (ii) the sum of
(A) the principal amount of any Indebtedness that is secured by the applicable
asset by a Lien permitted hereunder which is senior to the Agent’s Lien on such
asset and that is required to be repaid (or to establish an escrow for the
future repayment thereof) in connection with such transaction (other than
Indebtedness under the Loan Documents), (B) the reasonable and customary
out-of-pocket expenses incurred by such Loan Party in connection with such
transaction (including, without limitation, appraisals, and brokerage, legal,
title and recording or transfer tax expenses and commissions) paid by any Loan
Party to third parties (other than Affiliates)) and (C) any funded escrow
account established by the Loan Parties to pay Federal, state and local income
or other Taxes estimated to be payable by any Loan Party as a result thereof
(provided that to the extent and at the time any such amounts are released from
such reserve and not applied to pay such Taxes, such amounts shall constitute
Net Proceeds); and

 

(b)           with respect to the sale or issuance of any Equity Interest by any
Loan Party, or the incurrence or issuance of any Indebtedness by any Loan Party,
the excess of (i) the sum of the cash and cash equivalents received in
connection with such transaction over (ii) the underwriting discounts and
commissions, and other reasonable and customary out-of-pocket expenses, incurred
by such Loan Party in connection therewith.

 

“Non-Consenting Lender” shall have the meaning provided in Section 10.01.

 

“Non-Extension Notice Date” shall have the meaning provided in Section
2.03(b)(iii).

 

“Note” means (a) a promissory note made by the Borrower in favor of a Lender
evidencing Committed Loans made by such Lender, substantially in the form of
Exhibit C-1, and (b) the Swing Line Note.

 

“NPL” means the National Priorities List under CERCLA.

 

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“Obligations” means (a) all advances to, and debts (including principal,
interest, fees, costs, and expenses), liabilities, obligations, covenants,
indemnities, and duties of, any Loan Party arising under any Loan Document or
otherwise with respect to any Loan or Letter of Credit (including payments in
respect of reimbursement of disbursements, interest thereon and obligations to
provide cash collateral therefor), whether direct or indirect (including those
acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising and including interest, fees, costs, expenses and
indemnities that accrue after the commencement by or against any Loan Party or
any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such
Person as the debtor in such proceeding, regardless of whether such interest,
fees, costs, expenses and indemnities are allowed claims in such proceeding, and
(b) any Other Liabilities.

 

“Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; (c) with respect to any
partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity, and (d) in each case, all shareholder or other
equity holder agreements, voting trusts and similar arrangements to which such
Person is a party or which is applicable to its Equity Interests and all other
arrangements relating to the Control or management of such Person.

 

“Other Liabilities” means any obligation on account of (a) any Cash Management
Services furnished to any of the Loan Parties or any of their Subsidiaries
and/or (b) any Bank Product furnished to any of the Loan Parties and/or any of
their Subsidiaries.

 

“Other Taxes” means all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any
payment made hereunder or under any other Loan Document or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.

 

“Outstanding Amount” means (i) with respect to Committed Loans and Swing Line
Loans on any date, the aggregate outstanding principal amount thereof after
giving effect to any borrowings and prepayments or repayments of Committed Loans
and Swing Line Loans, as the case may be, occurring on such date; and (ii) with
respect to any L/C Obligations on any date, the amount of such L/C Obligations
on such date after giving effect to any L/C Credit Extension occurring on such
date and any other changes in the aggregate amount of the L/C Obligations as of
such date.

 

“Overadvance” means a Credit Extension to the extent that, immediately after its
having been made, Availability is less than zero.

 

“Participant” shall have the meaning provided in Section 10.06(d).

 

“Participant Register” shall have the meaning provided in Section 10.06(d).

 

“Payment Conditions” means, at the time of determination with respect to any
specified transaction or payment, that (a) no Event of Default then exists or
would arise as a result of entering into such transaction or the making such
payment, and (b) immediately after giving effect to such transaction or payment,
Availability will be equal to or greater than twenty (20%) percent of the Loan
Cap. At any time when any Loans (but not, for the avoidance of doubt, L/C
Obligations) are outstanding, prior to

 

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undertaking any transaction or payment which is subject to the Payment
Conditions, as evidence of satisfaction of the condition contained in clause (b)
above, the Loan Parties shall deliver to the Agent a Borrowing Base Certificate
(i) updated with respect to the Collateral reported thereon as of the
immediately preceding Fiscal Month ending more than 15 days prior to such
transaction or payment (provided that, if a Weekly Borrowing Base Delivery Event
shall be continuing, such Borrowing Base Certificate shall be delivered as
required pursuant to Section 6.02(b) hereof) and (ii) prepared after giving
effect to such transaction or payment; provided that, if the aggregate
consideration for such transaction or payment is less than $25,000,000, the
foregoing evidence shall only be required to be provided at any time when
Availability is less than fifty (50%) percent of the Loan Cap; provided further
that nothing herein shall be deemed a waiver of the requirement under this
Agreement of compliance with clauses (a) and (b) above with respect to any
specified transaction or payment for which the Payment Conditions are required
to be satisfied, and the consummation of any such transaction or the making of
any such payment by the Loan Parties shall be deemed a representation and
warranty by the Loan Parties that such requirement has been met.

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

“PCAOB” means the Public Company Accounting Oversight Board.

 

“Pension Plan” means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by the Borrower or
any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes
or has an obligation to contribute, or in the case of a multiple employer or
other plan described in Section 4064(a) of ERISA, has made contributions at any
time during the immediately preceding five plan years.

 

“Permitted Acquisition” means any Acquisition in which the following conditions
are satisfied:

 

(a)           the Loan Parties shall have satisfied the Payment Conditions;

 

(b)           if proceeds of the Loans are used to pay all or a portion of the
consideration for such Acquisition, such Acquisition shall have been approved by
the Board of Directors of the Person (or similar governing body if such Person
is not a corporation) which is the subject of such Acquisition and such Person
shall not have announced that it will oppose such Acquisition or shall not have
commenced any action which alleges that such Acquisition shall violate
applicable Law; and

 

(c)           if proceeds of the Loans are used to pay all or a portion of the
consideration for such Acquisition, after giving effect to such Acquisition, the
Loan Parties, on a Consolidated basis, shall be Solvent.

 

“Permitted Discretion” means a determination made by the Agent in the exercise
of its reasonable credit judgment, exercised in good faith in accordance with
customary business practices for comparable asset-based lending transactions in
the retail industry.

 

“Permitted Disposition” means any of the following:

 

(a)           Dispositions of inventory in the ordinary course of business;

 

(b)           bulk sales or other dispositions of the Inventory of a Loan Party
not in the ordinary course of business in connection with Store closings, at
arm’s length, provided, that such

 

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Store closures and related Inventory dispositions shall not exceed (i) in any
Fiscal Year of the Borrower and its Subsidiaries, five (5%) percent of the
number of the Loan Parties’ Stores as of the beginning of such Fiscal Year (net
of new Store openings) and (ii) in the aggregate from and after the Closing
Date, ten (10%) percent of the number of the Loan Parties’ Stores in existence
as of the Closing Date (net of new Store openings), provided, that all sales of
Inventory which are included in any Store closing sales shall be in accordance
with liquidation agreements and with professional liquidators reasonably
acceptable to the Agent;

 

(c)           non-exclusive licenses of Intellectual Property of a Loan Party or
any of its Subsidiaries in the ordinary course of business;

 

(d)           licenses for the conduct of licensed departments within the Loan
Parties’ Stores in the ordinary course of business; provided that, if requested
by the Agent, the Agent shall have entered into an intercreditor agreement with
the Person operating such licensed department on terms and conditions reasonably
satisfactory to the Agent;

 

(e)           Dispositions of Equipment in the ordinary course of business that
is substantially worn, damaged, obsolete or, in the judgment of a Loan Party, no
longer useful or necessary in its business or that of any Subsidiary;

 

(f)            Dispositions among the Loan Parties or by any Subsidiary to a
Loan Party;

 

(g)           Dispositions by any Subsidiary which is not a Loan Party to
another Subsidiary that is not a Loan Party;

 

(h)           as long as no Event of Default then exists or would arise
therefrom, sales of Real Estate of any Loan Party or sales of any Person or
Persons created to hold such Real Estate or the Equity Interests in such Person
or Persons), including sale-leaseback transactions, synthetic lease transactions
or other similar transactions involving any such Real Estate pursuant to leases
on market terms, as long as, (A) such sale is made for fair market value, and
(B) in the case of any sale-leaseback transaction of a distribution center or
the chief executive office of the Borrower permitted hereunder, if requested by
the Agent, the Loan Parties shall use commercially reasonable efforts to cause
such purchaser or transferee to enter into a Collateral Access Agreement;

 

(i)            other Dispositions (other than of Collateral of the type included
in the Borrowing Base) of the Borrower and its Subsidiaries not to exceed
$25,000,000 during any Fiscal Year;

 

(j)            subject to the proviso set forth in the definition of “Permitted
Investments”, Dispositions of those Investments permitted by clauses (a), (b),
(c), (h) and (n) of the definition of “Permitted Investments”;

 

(k)           dissolution, liquidation or winding up of any Subsidiary of the
Borrower, provided that such dissolution, liquidation or winding up would not
reasonably be expected to result in a Material Adverse Effect; and provided
further that if any such Subsidiary is a Material Subsidiary, the assets of such
Subsidiary shall be transferred to a Loan Party in connection with any such
dissolution, liquidation or winding up; and

 

(l)            as long as the Payment Conditions are satisfied at the time of,
and after giving effect to, such Disposition, other Dispositions not otherwise
specifically described herein.

 

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“Permitted Encumbrances” means:

 

(a)           Liens imposed by law for Taxes that are not yet due or are being
contested in compliance with Section 6.04;

 

(b)           carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s
and other like Liens imposed by applicable Law, arising in the ordinary course
of business and securing obligations that are not overdue or are being contested
in compliance with Section 6.04;

 

(c)           pledges and deposits made in the ordinary course of business in
compliance with workers’ compensation, unemployment insurance and other social
security laws or regulations, other than any Lien imposed by ERISA;

 

(d)           deposits to secure the performance of bids, trade contracts and
leases (other than Indebtedness for borrowed money), statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;

 

(e)           Liens in respect of judgments that would not constitute an Event
of Default hereunder;

 

(f)            easements, covenants, conditions, restrictions, building code
laws, zoning restrictions, rights-of-way and similar encumbrances on real
property imposed by law or arising in the ordinary course of business that do
not secure any monetary obligations and do not materially detract from the value
of the affected property or materially interfere with the ordinary conduct of
business of a Loan Party and such other minor title defects or survey matters
that are disclosed by current surveys that, in each case, do not materially
interfere with the current use of the real property;

 

(g)           Liens existing on the Closing Date and listed on Schedule 7.01 and
any Permitted Refinancings thereof;

 

(h)           Liens on fixed or capital assets acquired by any Loan Party which
are permitted under clause (c) of the definition of Permitted Indebtedness so
long as (i) such Liens and the Indebtedness secured thereby are incurred prior
to or within one hundred and eighty (180) days after such acquisition, (ii) the
Indebtedness secured thereby does not exceed the cost of acquisition of such
fixed or capital assets and (iii) such Liens shall not extend to any other
property or assets of the Loan Parties;

 

(i)            Liens in favor of the Agent;

 

(j)            statutory Liens of landlords and lessors in respect of rent not
past due more than 15 days unless being contested in good faith pursuant to the
provisions of Section 6.04 hereof, and customary restrictions on subletting and
assignments thereof;

 

(k)           possessory Liens in favor of brokers and dealers arising in
connection with the acquisition or disposition of Investments owned as of the
Closing Date and Permitted Investments, provided that such liens (a) attach only
to such Investments and (b) secure only obligations incurred in the ordinary
course and arising in connection with the acquisition or disposition of such
Investments and not any obligation in connection with margin financing;

 

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(l)            Liens arising solely by virtue of any statutory or common law
provisions relating to banker’s liens, liens in favor of securities
intermediaries, rights of setoff or similar rights and remedies as to deposit
accounts or securities accounts or other funds maintained with depository
institutions or securities intermediaries;

 

(m)          Liens arising from precautionary UCC filings regarding “true”
operating leases or, to the extent permitted under the Loan Documents, the
consignment of goods to a Loan Party;

 

(n)           voluntary Liens on property (other than Inventory) in existence at
the time such property is acquired pursuant to a Permitted Acquisition or on
such property of a Subsidiary of a Loan Party in existence at the time such
Subsidiary is acquired pursuant to a Permitted Acquisition; provided, that such
Liens are not incurred in connection with or in anticipation of such Permitted
Acquisition and do not attach to any other assets of any Loan Party or any
Subsidiary;

 

(o)           Liens in favor of customs and revenues authorities imposed by
applicable Law arising in the ordinary course of business in connection with the
importation of goods and securing obligations that are being contested in good
faith by appropriate proceedings, (B) the applicable Loan Party or Subsidiary
has set aside on its books adequate reserves with respect thereto in accordance
with GAAP and (C) such contest effectively suspends collection of the contested
obligation and enforcement of any Lien securing such obligation;

 

(p)           Liens to secure Indebtedness permitted under clause (k) of the
definition of “Permitted Indebtedness”;

 

(q)           Liens to secure Indebtedness permitted under clause (f) of the
definition of “Permitted Indebtedness” so long as such Liens shall not extend to
any other property or assets of the Loan Parties;

 

(r)            Liens in favor of General Electric Capital Corporation on cash or
Cash Equivalents securing reimbursement obligations with respect to letters of
credit under the Existing Credit Agreement which remain outstanding after the
Closing Date;

 

(s)           Liens on cash or Cash Equivalents securing reimbursement
obligations with respect to other letters of credit entered into in the ordinary
course of business; provided that no such letters of credit shall be obtained
and no such Liens shall be granted unless such letters of credit cannot be
issued pursuant to the terms of this Agreement or the L/C Issuer refuses to
issue such letters of credit pursuant to Section 2.03 hereof; and provided
further that the aggregate stated amount of such letters of credit at any time
outstanding shall not exceed $50,000,000; and

 

(t)            other Liens with respect to obligations that do not in the
aggregate exceed $5,000,000 at any time outstanding.

 

“Permitted Holders” means any member of the Stack Family or any trust or similar
investment entity of which any of the foregoing Persons are trustees or similar
officers and/or that is for the benefit of any of the foregoing Persons.

 

“Permitted Indebtedness” means each of the following:

 

(a)           Indebtedness outstanding on the Closing Date and listed on
Schedule 7.03 and any Permitted Refinancing thereof;

 

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(b)           Indebtedness of any Loan Party to any other Loan Party;

 

(c)           purchase money Indebtedness of any Loan Party to finance the
acquisition of any personal property (other than Inventory, it being understood
that properly perfected consignment arrangements shall not be deemed violative
of this clause), including Capital Lease Obligations, and any Indebtedness
assumed in connection with the acquisition of any such assets or secured by a
Lien on any such assets prior to the acquisition thereof, and Permitted
Refinancings thereof, provided, however, that if reasonably requested by the
Agent, the Loan Parties shall use commercially reasonable efforts to cause the
holders of such Indebtedness to enter into a Collateral Access Agreement on
terms reasonably satisfactory to the Agent;

 

(d)           obligations (contingent or otherwise) of any Loan Party or any
Subsidiary thereof existing or arising under any Swap Contract, provided that
such obligations are (or were) entered into by such Person in the ordinary
course of business for the purpose of directly mitigating risks associated with
fluctuations in interest rates or foreign exchange rates, and not for purposes
of speculation or taking a “market view”;

 

(e)           contingent liabilities under surety bonds or similar instruments
incurred in the ordinary course of business in connection with the construction
or improvement of Stores;

 

(f)            Indebtedness incurred for the construction, development or
acquisition or improvement of, or to finance or to refinance, any Real Estate
owned or leased by any Loan Party (including therein any Indebtedness incurred
in connection with sale-leaseback transactions permitted hereunder and any
Synthetic Lease Obligations), provided that, if reasonably requested by the
Agent, the Loan Parties shall use commercially reasonable efforts to cause the
holders of such Indebtedness and the lessors under any sale-leaseback
transaction of a distribution center or the chief executive office of the
Borrower to enter into a Collateral Access Agreement;

 

(g)           Indebtedness with respect to the deferred purchase price for any
Permitted Acquisition, provided that such Indebtedness does not require the
payment in cash of principal (other than in respect of working capital
adjustments) prior to the Maturity Date, has a maturity which extends beyond the
Maturity Date, and is subordinated to the Obligations on terms reasonably
acceptable to the Agent;

 

(h)           Indebtedness of any Person that becomes a Subsidiary of a Loan
Party in a Permitted Acquisition, which Indebtedness is existing at the time
such Person becomes a Subsidiary of a Loan Party (other than Indebtedness
incurred solely in contemplation of such Person’s becoming a Subsidiary of a
Loan Party);

 

(i)            the Obligations (including, without limitation, the Other
Liabilities);

 

(j)            unsecured Indebtedness not otherwise specifically described
herein and any Permitted Refinancing thereof;

 

(k)           other secured Indebtedness not otherwise specifically described
herein in an aggregate principal amount not to exceed $2,000,000,000 at any time
outstanding and any Permitted Refinancing thereof, provided that, such
Indebtedness shall have a maturity which extends at least six (6) months beyond
the Maturity Date, and the holder of such Indebtedness shall enter into an
intercreditor agreement with the Agent on terms reasonably acceptable to the
Agent; and

 

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(l)            Guarantees of Indebtedness otherwise permitted under the
definition of “Permitted Indebtedness”.

 

“Permitted Investments” means each of the following:

 

(a)           readily marketable obligations issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof having maturities of not more than 360 days from the
date of acquisition thereof; provided that the full faith and credit of the
United States of America is pledged in support thereof;

 

(b)           commercial paper issued by any Person organized under the laws of
any state of the United States of America and rated at least “Prime-1” (or the
then equivalent grade) by Moody’s or at least “A-1” (or the then equivalent
grade) by S&P, in each case with maturities of not more than 360 days from the
date of acquisition thereof;

 

(c)           time deposits with, or insured certificates of deposit or bankers’
acceptances of, any commercial bank that (i) (A) is a Lender or (B) is organized
under the laws of the United States of America, any state thereof or the
District of Columbia or is the principal banking subsidiary of a bank holding
company organized under the laws of the United States of America, any state
thereof or the District of Columbia, and is a member of the Federal Reserve
System, (ii) issues (or the parent of which issues) commercial paper rated as
described in clause (b) of this definition and (iii) has combined capital and
surplus of at least $1,000,000,000, in each case with maturities of not more
than 360 days from the date of acquisition thereof;

 

(d)           fully collateralized repurchase agreements with a term of not more
than thirty (30) days for securities described in clause (a) above (without
regard to the limitation on maturity contained in such clause) and entered into
with a financial institution satisfying the criteria described in clause (c)
above or with any primary dealer and having a market value at the time that such
repurchase agreement is entered into of not less than 100% of the repurchase
obligation of such counterparty entity with whom such repurchase agreement has
been entered into;

 

(e)           Investments, classified in accordance with GAAP as current assets
of the Loan Parties, in any money market fund, mutual fund, or other investment
companies that are registered under the Investment Company Act of 1940, as
amended, which are administered by financial institutions that have the highest
rating obtainable from either Moody’s or S&P, and which invest solely in one or
more of the types of securities described in clauses (a) through (d) above;

 

(f)            Investments existing on the Closing Date, and set forth on
Schedule 7.02, but not any increase in the amount thereof or any other
modification of the terms thereof;

 

(g)           (i) Investments by any Loan Party and its Subsidiaries in their
respective Subsidiaries outstanding on the Closing Date, (ii) additional
Investments by any Loan Party and its Subsidiaries in Loan Parties (other than
the Borrower), (iii) additional Investments by Subsidiaries of the Loan Parties
that are not Loan Parties in other Subsidiaries that are not Loan Parties and
(iv) so long as the Payment Conditions are satisfied at the time of, and after
giving effect to, such Investment, additional Investments by the Loan Parties in
wholly-owned Subsidiaries that are not Loan Parties;

 

(h)           Investments consisting of extensions of credit in the nature of
accounts receivable or notes receivable arising from the grant of trade credit
in the ordinary course of

 

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business, and Investments received in satisfaction or partial satisfaction
thereof from financially troubled account debtors to the extent reasonably
necessary in order to prevent or limit loss;

 

(i)            Guarantees constituting Permitted Indebtedness;

 

(j)            Investments by any Loan Party in Swap Contracts permitted
hereunder;

 

(k)           Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers;

 

(l)            advances to officers, directors and employees of the Loan Parties
and Subsidiaries in the ordinary course of business in an amount not to exceed
$5,000,000 to any individual at any time or in an aggregate amount not to exceed
$20,000,000 at any time outstanding, for travel, entertainment, relocation and
analogous ordinary business purposes;

 

(m)          Investments constituting Permitted Acquisitions;

 

(n)           so long as the Payment Conditions are satisfied at the time of,
and after giving effect to, such Investment, additional Investments by the Loan
Parties in the Dick’s Foundation;

 

(o)           tax-exempt debt securities of municipalities (including state and
local governments and their agencies) and corporations rated not less than “A-2”
by Moody’s or at least “A” by S&P; and

 

(p)           so long as the Payment Conditions are satisfied at the time of,
and after giving effect to, such Investment, other Investments not otherwise
specifically described herein;

 

provided, however, that notwithstanding the foregoing, after the occurrence and
during the continuance of a Cash Dominion Event, no such Investments specified
in clauses (a) through (e) and clause (o) shall be permitted unless (i) either
(A) no Loans, or, if then required to be Cash Collateralized, Letters of Credit
are then outstanding, or (B) the Investment is a temporary Investment pending
expiration of an Interest Period for a LIBO Rate Loan, the proceeds of which
Investment will be applied to the Obligations after the expiration of such
Interest Period,  and (ii) such Investments shall be pledged to the Agent as
additional collateral for the Obligations pursuant to such agreements as may be
reasonably required by the Agent.

 

“Permitted Overadvance” means an Overadvance made by the Agent, in its
discretion, which:

 

(a)           is made to maintain, protect or preserve the Collateral and/or the
Credit Parties’ rights under the Loan Documents or which is otherwise for the
benefit of the Credit Parties; or

 

(b)           is made to enhance the likelihood of, or to maximize the amount
of, repayment of any Obligation;

 

(c)           is made to pay any other amount chargeable to any Loan Party
hereunder; and

 

(d)           together with all other Permitted Overadvances then outstanding,
shall not (i) exceed ten percent (10%) of the Borrowing Base at any time or (ii)
unless a Liquidation is occurring, remain outstanding for more than forty-five
(45) consecutive Business Days, unless in each case, the Required Lenders
otherwise agree;

 

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provided however, that the foregoing shall not (i) modify or abrogate any of the
provisions of Section 2.03 regarding the Lenders’ obligations with respect to
Letters of Credit or Section 2.04 regarding the Lenders’ obligations with
respect to Swing Line Loans, or (ii) result in any claim or liability against
the Agent (regardless of the amount of any Overadvance) for Unintentional
Overadvances and such Unintentional Overadvances shall not reduce the amount of
Permitted Overadvances allowed hereunder, and further provided that in no event
shall the Agent make an Overadvance, if after giving effect thereto, the
principal amount of the Credit Extensions would exceed the Aggregate Commitments
(as in effect prior to any termination of the Commitments pursuant to Section
2.06 hereof).

 

“Permitted Refinancing” means, with respect to any Person, any Indebtedness
issued in exchange for, or the net proceeds of which are used to extend,
refinance, renew, replace, defease or refund (collectively, to “Refinance”), the
Indebtedness being Refinanced (or previous refinancings thereof constituting a
Permitted Refinancing); provided, that (a) the principal amount (or accreted
value, if applicable) of such Permitted Refinancing does not exceed the
principal amount (or accreted value, if applicable) of the Indebtedness so
Refinanced (plus unpaid accrued interest and premiums thereon and underwriting
discounts, defeasance costs, fees, commissions and expenses) unless such
additional amounts are permitted hereunder, (b) the weighted average life to
maturity of such Permitted Refinancing is greater than or equal to the weighted
average life to maturity of the Indebtedness being Refinanced (c) such Permitted
Refinancing shall not require any scheduled principal payments due prior to the
Maturity Date in excess of, or prior to, the scheduled principal payments due
prior to such Maturity Date for the Indebtedness being Refinanced, (d) if the
Indebtedness being Refinanced is subordinated in right of payment to the
Obligations under this Agreement, such Permitted Refinancing shall be
subordinated in right of payment to such Obligations on terms at least as
favorable to the Credit Parties as those contained in the documentation
governing the Indebtedness being Refinanced, (e) no Permitted Refinancing shall
have direct or indirect obligors who were not also obligors of the Indebtedness
being Refinanced, or greater guarantees or security, than the Indebtedness being
Refinanced, (f) such Permitted Refinancing shall be otherwise on terms not
materially less favorable to the Credit Parties than those contained in the
documentation governing the Indebtedness being Refinanced, including, without
limitation, with respect to financial and other covenants and events of default,
(g) the interest rate applicable to any such Permitted Refinancing shall not
exceed the then applicable market interest rate, and (h) at the time thereof, no
Event of Default shall have occurred and be continuing.

 

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

 

 “Plan” means any “employee benefit plan” (as such term is defined in Section
3(3) of ERISA) established by the Borrower or, with respect to any such plan
that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.

 

“Platform” shall have the meaning provided in Section 6.02.

 

“Public Lender” shall have the meaning provided in Section 6.02.

 

“Real Estate” means all Leases and all land, together with the buildings,
structures, parking areas, and other improvements thereon, now or hereafter
owned by any Loan Party, including all easements, rights-of-way, and similar
rights relating thereto and all leases, tenancies, and occupancies thereof.

 

 “Register” shall have the meaning provided in Section 10.06(c).

 

“Registered Public Accounting Firm” has the meaning specified by the Securities
Laws and shall be independent of the Borrower and its Subsidiaries as prescribed
by the Securities Laws.

 

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

 

“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.

 

“Reports” shall have the meaning provided in Section 9.12(b).

 

“Request for Credit Extension” means (a) with respect to a Borrowing, conversion
or continuation of Committed Loans, a Committed Loan Notice, (b) with respect to
an L/C Credit Extension, a Letter of Credit Application and, if required by the
L/C Issuer, a Standby Letter of Credit Agreement or Commercial Letter of Credit
Agreement, as applicable, and (c) with respect to a Swing Line Loan, a Swing
Line Loan Notice.

 

“Required Lenders” means, as of any date of determination, Lenders holding more
than 50% of the Aggregate Commitments or, if the commitment of each Lender to
make Loans and the obligation of the L/C Issuer to make L/C Credit Extensions
have been terminated pursuant to Section 8.02, Lenders holding in the aggregate
more than 50% of the Total Outstandings (with the aggregate amount of each
Lender’s risk participation and funded participation in L/C Obligations and
Swing Line Loans being deemed “held” by such Lender for purposes of this
definition); provided that the Commitment of, and the portion of the Total
Outstandings held or deemed held by, any Defaulting Lender or Deteriorating
Lender shall be excluded for purposes of making a determination of Required
Lenders.

 

“Required Supermajority Lenders” means, as of any date of determination, Lenders
holding more than 66 2/3% of the Aggregate Commitments or, if the commitment of
each Lender to make Loans and the obligation of the L/C Issuer to make L/C
Credit Extensions have been terminated pursuant to Section 8.02, Lenders holding
in the aggregate more than 66 2/3% of the Total Outstandings (with the aggregate
amount of each Lender’s risk participation and funded participation in L/C
Obligations and Swing Line Loans being deemed “held” by such Lender for purposes
of this definition); provided that the Commitment of, and the portion of the
Total Outstandings held or deemed held by, any Defaulting Lender or
Deteriorating Lender shall be excluded for purposes of making a determination of
Required Supermajority Lenders.

 

“Reserves” means all Inventory Reserves and Availability Reserves.

 

“Responsible Officer” means the chief executive officer, president, chief
financial officer, treasurer, assistant treasurer, chief accounting officer or
controller of a Loan Party or any of the other individuals designated in writing
to the Agent by an existing Responsible Officer of a Loan Party as an authorized
signatory of any certificate or other document to be delivered hereunder.  Any
document delivered hereunder that is signed by a Responsible Officer of a Loan
Party shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Loan Party and
such Responsible Officer shall be conclusively presumed to have acted on behalf
of such Loan Party.  Notwithstanding anything contained herein or in the other
Loan Documents, any Responsible Officer that is (A) criminally indicted or
convicted of a felony for fraud or dishonesty in connection with the Loan
Parties’ business or (B) charged by a Governmental Authority under any law that
would reasonably be expected to lead to forfeiture of any material portion of
Collateral shall not be permitted to sign any Borrowing Base Certificate or
Compliance Certificate unless otherwise agreed to by the Agent in its sole
discretion.

 

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity
Interest of any Person or any of its

 

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Subsidiaries, or any payment (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, defeasance, acquisition, cancellation or termination of
any such capital stock or other Equity Interest, or on account of any return of
capital to such Person’s stockholders, partners or members (or the equivalent of
any thereof), or any option, warrant or other right to acquire any such dividend
or other distribution or payment.  Without limiting the foregoing, “Restricted
Payments” with respect to any Person shall also include all payments made by
such Person with any proceeds of a dissolution or liquidation of such Person.

 

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

 

“Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002.

 

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

 

“Securities Laws” means the Securities Act of 1933, the Securities Exchange Act
of 1934, Sarbanes-Oxley, and the applicable accounting and auditing principles,
rules, standards and practices promulgated, approved or incorporated by the SEC
or the PCAOB.

 

“Security Agreement” means the Security Agreement dated as of the Closing Date
among the Loan Parties and the Agent.

 

“Security Documents” means the Security Agreement, the Blocked Account
Agreements, the Credit Card Notifications, and each other security agreement or
other instrument or document executed and delivered to the Agent pursuant to
this Agreement or any other Loan Document granting a Lien to secure any of the
Obligations.

 

“Settlement Date” has the meaning provided in Section 2.14(a).

 

“Shareholders’ Equity” means, as of any date of determination, consolidated
shareholders’ equity of the Borrower and its Subsidiaries as of that date
determined in accordance with GAAP.

 

“Shrink” means Inventory which has been lost, misplaced, stolen, or is otherwise
unaccounted for.

 

“Solvent” and “Solvency” means, with respect to any Person on a particular date,
that on such date (a) at fair valuation, all of the properties and assets of
such Person are greater than the sum of the debts, including contingent
liabilities, of such Person, (b) the present fair saleable value of the
properties and assets of such Person is not less than the amount that would be
required to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person is able to realize upon its
properties and assets and pay its debts and other liabilities, contingent
obligations and other commitments as they mature in the normal course of
business, (d) such Person does not intend to, and does not believe that it will,
incur debts beyond such Person’s ability to pay as such debts mature, and (e)
such Person is not engaged in a business or a transaction, and is not about to
engage in a business or transaction, for which such Person’s properties and
assets would constitute unreasonably small capital after giving due
consideration to the prevailing practices in the industry in which such Person
is engaged.  The amount of all guarantees at any time shall be computed as the
amount that, in light of all the facts and circumstances existing at the time,
can reasonably be expected to become an actual or matured liability.

 

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 “Specified Event of Default” means the occurrence of any Event of Default
described in any of Sections 8.01(a), 8.01(b), 8.01(d), 8.01(f), 8.01(j),
8.01(k), or 8.01(l).

 

“Stack Family” means Nancy and Richard Heichemer, Kim and Tim Myers, Donna and
Richard J. Stack, Edward W. Stack, Karin Lea Stack, Martin J. Stack, Stacey A.
Stack and Richard T. Stack. and/or any Class B Permitted Holder (as defined in
the Borrower’s Amended and Restated Certificate of Incorporation, as amended up
to the Closing Date).

 

“Standby Letter of Credit” means any Letter of Credit that is not a Commercial
Letter of Credit and that (a) is used in lieu or in support of performance
guaranties or performance, surety or similar bonds (excluding appeal bonds)
arising in the ordinary course of business, (b) is used in lieu or in support of
stay or appeal bonds, (c) supports the payment of insurance premiums for
reasonably necessary casualty insurance carried by any of the Loan Parties, or
(d) supports payment or performance for identified purchases or exchanges of
products or services in the ordinary course of business.

 

“Standby Letter of Credit Agreement” means the Standby Letter of Credit
Agreement relating to the issuance of a Standby Letter of Credit in the form
from time to time in use by the L/C Issuer.

 

“Stated Amount” means at any time the maximum amount for which a Letter of
Credit may be honored.

 

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

 

“Store” means any retail store (which may include any Real Estate, fixtures,
Equipment, Inventory and other property related thereto) operated, or to be
operated, by any Loan Party.

 

“Subordinated Indebtedness” means Indebtedness which is expressly subordinated
in right of payment to the prior payment in full of the Obligations and which is
in form and on terms approved in writing by the Agent.

 

“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
Equity Interests having ordinary voting power for the election of directors or
other governing body are at the time beneficially owned, or the management of
which is otherwise controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person.  Unless otherwise specified, all
references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a
Subsidiary or Subsidiaries of the Borrower.  Notwithstanding anything contained
herein, the Dick’s Foundation shall not be deemed to be a Subsidiary of any Loan
Party.

 

“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward

 

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foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions,
currency options, spot contracts, or any other similar transactions or any
combination of any of the foregoing (including any options to enter into any of
the foregoing), whether or not any such transaction is governed by or subject to
any master agreement, and (b) any and all transactions of any kind, and the
related confirmations, which are subject to the terms and conditions of, or
governed by, any form of master agreement published by the International Swaps
and Derivatives Association, Inc., any International Foreign Exchange Master
Agreement, or any other master agreement (any such master agreement, together
with any related schedules, a “Master Agreement”), including any such
obligations or liabilities under any Master Agreement.

 

“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Lender or any Affiliate of a
Lender).

 

“Swing Line Borrowing” means a borrowing of a Swing Line Loan pursuant to
Section 2.04.

 

“Swing Line Lender” means Wells Fargo, in its capacity as provider of Swing Line
Loans, or any successor swing line lender hereunder.

 

“Swing Line Loan” shall have the meaning provided in Section 2.04(a).

 

“Swing Line Loan Notice” means a notice of a Swing Line Borrowing pursuant to
Section 2.04(b), which, if in writing, shall be substantially in the form of
Exhibit B.

 

“Swing Line Note” means the promissory note of the Borrower substantially in the
form of Exhibit C-2, payable to the order of the Swing Line Lender, evidencing
the Swing Line Loans made by the Swing Line Lender.

 

“Swing Line Sublimit” means an amount equal to the lesser of (a) $50,000,000 and
(b) the Aggregate Commitments.  The Swing Line Sublimit is part of, and not in
addition to, the Aggregate Commitments.  A permanent reduction of the Aggregate
Commitments shall not require a corresponding pro rata reduction in the Swing
Line Sublimit; provided, however, that if the Aggregate Commitments are reduced
to an amount less than the Swing Line Sublimit, then the Swing Line Sublimit
shall be reduced to an amount equal to (or, at Borrower’s option, less than) the
Aggregate Commitments.

 

“Synthetic Lease Obligation” means the monetary obligation of a Person under (a)
a so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property (including sale and leaseback
transactions), in each case, creating obligations that do not appear on the
balance sheet of such Person but which, upon the application of any Debtor
Relief Laws to such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).

 

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

 

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“Termination Date” means the earliest to occur of (i) the Maturity Date,  (ii)
the date on which the maturity of the Obligations is accelerated (or deemed
accelerated) and the Commitments are irrevocably terminated (or deemed
terminated) in accordance with Article VIII, and (iii) the termination of the
Commitments in accordance with the provisions of Section 2.06(a) hereof.

 

“Total Outstandings” means the aggregate Outstanding Amount of all Loans and all
L/C Obligations.

 

“Trading with the Enemy Act” shall have the meaning provided in Section 10.18.

 

“Type” means, with respect to a Committed Loan, its character as a Base Rate
Loan or a LIBO Rate Loan.

 

“UCC” or “Uniform Commercial Code” means the Uniform Commercial Code as in
effect from time to time in the State of New York; provided, however, that if a
term is defined in Article 9 of the Uniform Commercial Code differently than in
another Article thereof, the term shall have the meaning set forth in Article 9;
provided further that, if by reason of mandatory provisions of law, perfection,
or the effect of perfection or non-perfection, of a security interest in any
Collateral or the availability of any remedy hereunder is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than New York,
“Uniform Commercial Code” means the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection or availability of such
remedy, as the case may be.

 

“UCP 600” means the rules of the Uniform Customs and Practice for Documentary
Credits, as most recently published by the International Chamber of Commerce and
in effect as of July 1, 2007 (or such later version thereof as may be in effect
at the time of issuance).

 

“UFCA” shall have the meaning provided in Section 10.21(d).

 

“UFTA” shall have the meaning provided in Section 10.21(d).

 

 “Unfunded Pension Liability” means the excess of a Pension Plan’s benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan’s assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.

 

“Unintentional Overadvance” means an Overadvance which, to the Agent’s
knowledge, did not constitute an Overadvance when made but which has become an
Overadvance resulting from changed circumstances beyond the control of the
Credit Parties, including, without limitation, a reduction in the Appraised
Value of property or assets included in the Borrowing Base or misrepresentation
by the Loan Parties.

 

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

 

“Weekly Borrowing Base Delivery Event” means either (i) the occurrence and
continuance of any Specified Event of Default, or (ii) the failure of the
Borrower to maintain Availability at least equal to the greater of (a) fifteen
percent (15%) of the Loan Cap, and (b) $50,000,000.  For purposes of this
Agreement, the occurrence of a Weekly Borrowing Base Delivery Event shall be
deemed continuing at the Agent’s option (i) so long as such Specified Event of
Default exists, and/or (ii) if the Weekly Borrowing Base Delivery Event arises
as a result of the Borrower’s failure to achieve Availability as required
hereunder, until Availability has exceeded the greater of (x) fifteen percent
(15%) of the Loan

 

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Cap, and (y) $50,000,000 for thirty (30) consecutive calendar days, in which
case a Weekly Borrowing Base Delivery Event shall no longer be deemed to be
continuing for purposes of this Agreement.  The termination of a Weekly
Borrowing Base Delivery Event as provided herein shall in no way limit, waive or
delay the occurrence of a subsequent Weekly Borrowing Base Delivery Event in the
event that the conditions set forth in this definition again arise.

 

“Wells Fargo” means Wells Fargo Bank, National Association and its successors.

 

1.02        Other Interpretive Provisions.  With reference to this Agreement and
each other Loan Document, unless otherwise specified herein or in such other
Loan Document:

 

(a)           The definitions of terms herein shall apply equally to the
singular and plural forms of the terms defined.  Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.  The words “include,” “includes” and “including” shall be deemed
to be followed by the phrase “without limitation.”  The word “will” shall be
construed to have the same meaning and effect as the word “shall.”  Unless the
context requires otherwise, (i) any definition of or reference to any agreement,
instrument or other document (including any Organization Document) shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein
or in any other Loan Document), (ii) any reference herein to any Person shall be
construed to include such Person’s successors and assigns, (iii) the words
“herein,” “hereof” and “hereunder,” and words of similar import when used in any
Loan Document, shall be construed to refer to such Loan Document in its entirety
and not to any particular provision thereof, (iv) all references in a Loan
Document to Articles, Sections, Exhibits and Schedules shall be construed to
refer to Articles and Sections of, and Exhibits and Schedules to, the Loan
Document in which such references appear, (v) any reference to any law shall
include all statutory and regulatory provisions consolidating, amending
replacing or interpreting such law and any reference to any law or regulation
shall, unless otherwise specified, refer to such law or regulation as amended,
modified or supplemented from time to time, and (vi) the words “asset” and
“property” shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.

 

(b)           In the computation of periods of time from a specified date to a
later specified date, the word “from” means “from and including;” the words “to”
and “until” each mean “to but excluding;” and the word “through” means “to and
including.”

 

(c)           Section headings herein and in the other Loan Documents are
included for convenience of reference only and shall not affect the
interpretation of this Agreement or any other Loan Document.

 

(d)           Any reference herein or in any other Loan Document to the
satisfaction, repayment, or payment in full of the Obligations shall mean the
repayment in Dollars in full in cash or immediately available funds (or, in the
case of contingent reimbursement obligations with respect to Letters of Credit
and Bank Products (other than Swap Contracts), providing Cash Collateralization)
of all of the Obligations (including the payment of any termination amount then
applicable (or which would or could become applicable as a result of the
repayment of the other Obligations) under Swap Contracts) other than (i)
unasserted contingent indemnification Obligations, (ii) any Obligations relating
to Bank Products (including Swap Contracts) that, at such time, are allowed by
the applicable Bank Product provider to remain outstanding without

 

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being required to be repaid or Cash Collateralized, and (iii) any Obligations
relating to Cash Management Services that, at such time, are allowed by the
applicable provider of such Cash Management Services to remain outstanding
without being required to be repaid.

 

1.03        Accounting Terms

 

(a)           Generally.  All accounting terms not specifically or completely
defined herein shall be construed in conformity with, and all financial data
(including financial ratios and other financial calculations) required to be
submitted pursuant to this Agreement shall be prepared in conformity with, GAAP
applied on a consistent basis, as in effect from time to time, applied in a
manner consistent with that used in preparing the Audited Financial Statements,
except as otherwise specifically prescribed herein.

 

(b)           Changes in GAAP.  If at any time any change in GAAP would affect
the computation of “Cost” as set forth in the definition thereof or any
financial ratio or requirement set forth in any Loan Document, and either the
Borrower or the Required Lenders shall so request, the Agent, the Lenders and
the Borrower shall negotiate in good faith to amend such ratio or requirement to
preserve the original intent thereof in light of such change in GAAP (subject to
the approval of the Required Lenders); provided that, until so amended, (i) such
ratio or requirement shall continue to be computed in accordance with GAAP prior
to such change therein and (ii) the Borrower shall provide to the Agent and the
Lenders financial statements and other documents required under this Agreement
or as reasonably requested hereunder setting forth a reconciliation between
calculations of such ratio or requirement made before and after giving effect to
such change in GAAP.

 

1.04        Rounding.  Any financial ratios required to be maintained by the
Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).

 

1.05        Times of Day.  Unless otherwise specified, all references herein to
times of day shall be references to Eastern time (daylight or standard, as
applicable).

 

1.06        Letter of Credit Amounts.  Unless otherwise specified, all
references herein to the amount of a Letter of Credit at any time shall be
deemed to be the Stated Amount of such Letter of Credit in effect at such time;
provided, however, that with respect to any Letter of Credit that, by its terms
of any Issuer Documents related thereto, provides for one or more automatic
increases in the Stated Amount thereof, the amount of such Letter of Credit
shall be deemed to be the maximum Stated Amount of such Letter of Credit after
giving effect to all such increases, whether or not such maximum Stated Amount
is in effect at such time.

 

ARTICLE II
THE COMMITMENTS AND CREDIT EXTENSIONS

 

2.01        Committed Loans; Reserves.  (a) Subject to the terms and conditions
set forth herein, each Lender severally agrees to make loans (each such loan, a
“Committed Loan”) to the Borrower from time to time, on any Business Day during
the Availability Period, in an aggregate amount not to exceed at any time
outstanding the lesser of (x) the amount of such Lender’s Commitment, and (y)
such Lender’s Applicable Percentage of the Borrowing Base; subject in each case
to the following limitations:

 

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(i)            after giving effect to any Committed Borrowing, the Total
Outstandings shall not exceed the Loan Cap,

 

(ii)           after giving effect to any Committed Borrowing, the aggregate
Outstanding Amount of the Committed Loans of any Lender, plus such Lender’s
Applicable Percentage of the Outstanding Amount of all L/C Obligations, plus
such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line
Loans shall not exceed such Lender’s Commitment, and

 

(iii)          the Outstanding Amount of all L/C Obligations shall not at any
time exceed the Letter of Credit Sublimit.

 

Within the limits of each Lender’s Commitment, and subject to the other terms
and conditions hereof, the Borrower may borrow under this Section 2.01, prepay
under Section 2.05, and reborrow under this Section 2.01.  Committed Loans may
be Base Rate Loans or LIBO Rate Loans, as further provided herein.

 

(b)           The Inventory Reserves and Availability Reserves as of the Closing
Date are set forth in the Borrowing Base Certificate delivered pursuant to
Section 4.01(c) hereof.

 

(c)           The Agent shall have the right, at any time and from time to time
after the Closing Date in its Permitted Discretion to establish, modify or
eliminate Reserves, and the Agent shall provide the Borrower with prompt written
notice of the same.

 

2.02        Borrowings, Conversions and Continuations of Committed Loans.

 

(a)           Committed Loans (other than Swing Line Loans) shall be either Base
Rate Loans or LIBO Loans as the Borrower may request subject to and in
accordance with this Section 2.02.  All Swing Line Loans shall be only Base Rate
Loans.  Subject to the other provisions of this Section 2.02, Committed
Borrowings of more than one Type may be incurred at the same time.

 

(b)           Each Committed Borrowing, each conversion of Committed Loans from
one Type to the other, and each continuation of LIBO Rate Loans shall be made
upon the Borrower’s irrevocable notice to the Agent, which may be given by
telephone.  Each such notice must be received by the Agent not later than 12:00
p.m. (i) three Business Days prior to the requested date of any Borrowing of,
conversion to or continuation of LIBO Rate Loans or of any conversion of LIBO
Rate Loans to Base Rate Loans, and (ii) on the requested date of any Borrowing
of Base Rate Loans (provided that until the Swing Line Sublimit has been
reached, all requested Borrowings of Base Rate Loans shall be for Swing Line
Loans; provided further that if the Swing Line Lender elects not to make a Swing
Line Loan under Section 2.04 hereof, such Borrowing shall, subject to the terms
and conditions set forth herein, automatically (and without the need for a
separate notice) be made as a Base Rate Loan by all Lenders). Each telephonic
notice by the Borrower pursuant to this Section 2.02(b) must be confirmed
promptly by delivery to the Agent of a written Committed Loan Notice,
appropriately completed and signed by a Responsible Officer of the Borrower. 
Each Borrowing of, conversion to or continuation of LIBO Rate Loans shall be in
a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess
thereof.  Except as provided in Sections 2.03(c) and 2.04(c), each Borrowing of
or conversion to Base Rate Loans shall be in a principal amount of $500,000 or a
whole multiple of $100,000 in excess thereof.  Each Committed Loan Notice
(whether telephonic or written) shall specify (i) whether the Borrower is
requesting a Committed Borrowing, a conversion of Committed Loans from one Type
to the other, or a continuation of LIBO Rate Loans, (ii) the requested date of
the Borrowing, conversion or continuation, as the case may be (which shall be a
Business Day), (iii) the principal amount of Committed Loans to be

 

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borrowed, converted or continued, (iv) the Type of Committed Loans to be
borrowed or to which existing Committed Loans are to be converted, and (v) if
applicable, the duration of the Interest Period with respect thereto.  If the
Borrower fails to specify a Type of Committed Loan in a Committed Loan Notice or
if the Borrower fails to give a timely notice requesting a conversion or
continuation, then the applicable Committed Loans shall be made as, or converted
to, Base Rate Loans.  Any such automatic conversion to Base Rate Loans shall be
effective as of the last day of the Interest Period then in effect with respect
to the applicable LIBO Rate Loans.  If the Borrower requests a Borrowing of,
conversion to, or continuation of LIBO Rate Loans in any such Committed Loan
Notice, but fails to specify an Interest Period, it will be deemed to have
specified an Interest Period of one month.  Notwithstanding anything to the
contrary herein, a Swing Line Loan may not be converted to a LIBO Rate Loan.

 

(c)           Following receipt of a Committed Loan Notice, the Agent shall
promptly notify each Lender of the amount of its Applicable Percentage of the
applicable Committed Loans, and if no timely notice of a conversion or
continuation is provided by the Borrower, the Agent shall notify each Lender of
the details of any automatic conversion to Base Rate Loans described in Section
2.02(b).  In the case of a Committed Borrowing, each Lender shall make the
amount of its Committed Loan available to the Agent in immediately available
funds at the Agent’s Office not later than 1:00 p.m. on the Business Day
specified in the applicable Committed Loan Notice.  Upon satisfaction of the
applicable conditions set forth in Section 4.02 (and, if such Borrowing is the
initial Credit Extension, Section 4.01), the Agent shall, absent extenuating
circumstances beyond the control of the Agent, make all funds so received
available to the Borrower in like funds by no later than 4:00 p.m. on the day of
receipt by the Agent either by (i) crediting the account of the Borrower on the
books of Wells Fargo with the amount of such funds or (ii) wire transfer of such
funds, in each case in accordance with instructions provided to (and reasonably
acceptable to) the Agent by the Borrower.

 

(d)           The Agent, without the request of the Borrower, may advance any
interest, fee or service charge (including direct wire fees), and (unless a Cash
Dominion Event has occurred and is continuing) upon prior notice to the
Borrower, Credit Party Expenses or other payments to which any Credit Party is
entitled from the Loan Parties pursuant hereto or any other Loan Document and
may charge the same to the Loan Account notwithstanding that an Overadvance may
result thereby.  The Agent shall advise the Borrower of any such advance or
charge promptly after the making thereof.  Such action on the part of the Agent
shall not constitute a waiver of the Agent’s rights and the Borrower’s
obligations under Section 2.05(c).  Any amount which is added to the principal
balance of the Loan Account as provided in this Section 2.02(d) shall bear
interest at the interest rate then and thereafter applicable to Base Rate Loans.

 

(e)           Except as otherwise provided herein, a LIBO Rate Loan may be
continued or converted only on the last day of an Interest Period for such LIBO
Rate Loan.  During the existence of a Default or an Event of Default, no Loans
may be requested as, converted to or continued as LIBO Rate Loans without the
Consent of the Required Lenders.

 

(f)            The Agent shall promptly notify the Borrower and the Lenders of
the interest rate applicable to any Interest Period for LIBO Rate Loans upon
determination of such interest rate.  At any time that Base Rate Loans are
outstanding, the Agent shall notify the Borrower and the Lenders of any change
in Wells Fargo’s prime rate used in determining the Base Rate promptly following
the public announcement of such change.

 

(g)           After giving effect to all Committed Borrowings, all conversions
of Committed Loans from one Type to the other, and all continuations of
Committed Loans as the same Type, there shall not be more than ten (10) Interest
Periods in effect with respect to LIBO Loans.

 

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(h)           The Agent, the Lenders, the Swing Line Lender and the L/C Issuer
shall have no obligation to make any Loan or to provide any Letter of Credit if
an Overadvance would result.  The Agent may, in its discretion, make Permitted
Overadvances without the consent of the Borrower, the Lenders, the Swing Line
Lender and the L/C Issuer and the Borrower and each Lender and L/C Issuer shall
be bound thereby.  Any Permitted Overadvance may constitute a Swing Line Loan. A
Permitted Overadvance is for the account of the Borrower and shall constitute a
Base Rate Loan and an Obligation and shall be repaid by the Borrower in
accordance with the provisions of Section 2.05(c).  The making of any such
Permitted Overadvance on any one occasion shall not obligate the Agent or any
Lender to make or permit any Permitted Overadvance on any other occasion or to
permit such Permitted Overadvances to remain outstanding. The making by the
Agent of a Permitted Overadvance shall not modify or abrogate any of the
provisions of Section 2.03 regarding the Lenders’ obligations to purchase
participations with respect to Letter of Credits or of Section 2.04 regarding
the Lenders’ obligations to purchase participations with respect to Swing Line
Loans.  The Agent shall have no liability for, and no Loan Party or Credit Party
shall have the right to, or shall, bring any claim of any kind whatsoever
against the Agent with respect to Unintentional Overadvances regardless of the
amount of any such Overadvance(s).

 

2.03        Letters of Credit.

 

(a)           The Letter of Credit Commitment.

 

(i)            Subject to the terms and conditions set forth herein, (A) the L/C
Issuer agrees, in reliance upon the agreements of the Lenders set forth in this
Section 2.03, (1) from time to time on any Business Day during the period from
the Closing Date until the Letter of Credit Expiration Date, to issue Letters of
Credit for the account of the Loan Parties, and to amend or extend Letters of
Credit previously issued by it, in accordance with Section 2.03(b) below, and
(2) to honor drawings under the Letters of Credit; and (B) the Lenders severally
agree to participate in Letters of Credit issued for the account of the Loan
Parties and any drawings thereunder; provided that after giving effect to any
L/C Credit Extension with respect to any Letter of Credit, (x) the Total
Outstandings shall not exceed Loan Cap, (y) the aggregate Outstanding Amount of
the Committed Loans of any Lender, plus such Lender’s Applicable Percentage of
the Outstanding Amount of all L/C Obligations, plus such Lender’s Applicable
Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed
such Lender’s Commitment, and (z) the Outstanding Amount of the L/C Obligations
shall not exceed the Letter of Credit Sublimit.  Each request by the Borrower
for the issuance or amendment of a Letter of Credit shall be deemed to be a
representation by the Borrower that the L/C Credit Extension so requested
complies with the conditions set forth in the proviso to the preceding
sentence.  Within the foregoing limits, and subject to the terms and conditions
hereof, the Borrower’s ability to obtain Letters of Credit shall be fully
revolving, and accordingly the Borrower may, during the foregoing period, obtain
Letters of Credit to replace Letters of Credit that have expired or that have
been drawn upon and reimbursed. All Existing Letters of Credit shall be deemed
to have been issued pursuant hereto, and from and after the Closing Date shall
be subject to and governed by the terms and conditions hereof.

 

(ii)           No Letter of Credit shall be issued if:

 

(A)          subject to Section 2.03(b)(iii), the expiry date of such requested
Standby Letter of Credit would occur more than twelve months after the date of
issuance or last extension, unless the Required Lenders have approved such
expiry date; or

 

(B)           subject to Section 2.03(b)(iii), the expiry date of such requested
Commercial Letter of Credit would occur more than 150 days after the date of
issuance or last extension, unless the Required Lenders have approved such
expiry date; or

 

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(C)           the expiry date of such requested Letter of Credit would occur
after the Letter of Credit Expiration Date, unless either such Letter of Credit
is Cash Collateralized on or prior to the date of issuance of such Letter of
Credit (or such later date as to which the Agent may agree) or all the Lenders
have approved such expiry date.

 

(iii)          No Letter of Credit shall be issued without the prior consent of
the Agent if:

 

(A)          any order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from
issuing such Letter of Credit, or any Law applicable to the L/C Issuer or any
request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or
request that the L/C Issuer refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular or shall impose upon the L/C
Issuer with respect to such Letter of Credit any restriction, reserve or capital
requirement (for which the L/C Issuer is not otherwise compensated hereunder)
not in effect on the Closing Date, or shall impose upon the L/C Issuer any
unreimbursed loss, cost or expense which was not applicable on the Closing Date
and which the L/C Issuer in good faith deems material to it;

 

(B)           the issuance of such Letter of Credit would violate one or more
policies of the L/C Issuer applicable to letters of credit generally;

 

(C)           except as otherwise agreed by the Agent and the L/C Issuer, such
Letter of Credit is in an initial Stated Amount less than $100,000; or

 

(D)          a default of any Lender’s obligations to fund under Section 2.03(c)
exists or any Lender is at such time a Defaulting Lender or Deteriorating Lender
hereunder, unless (i) after giving effect to the requested issuance, there would
exist no Fronting Exposure (in the good faith determination of the L/C Issuer
and the Agent) or (ii) the Agent or the L/C Issuer has entered into
arrangements, including the delivery of Cash Collateral, reasonably satisfactory
to the L/C Issuer (in its reasonable discretion) with the Borrower or such
Lender to eliminate the L/C Issuer’s actual or potential Fronting Exposure
(after giving effect to Section 9.16(c)) with respect to the Defaulting Lender
or the Deteriorating Lender, as applicable, arising from either the Letter of
Credit then proposed to be issued or any other L/C Obligations as to which such
L/C Issuer has actual or potential Fronting Exposure, as it may elect in its
sole discretion.

 

(iv)          The L/C Issuer shall not amend any Letter of Credit if (A) the L/C
Issuer would not be permitted at such time to issue such Letter of Credit in its
amended form under the terms hereof or (B) the beneficiary of such Letter of
Credit does not accept the proposed amendment to such Letter of Credit.

 

(v)           The L/C Issuer shall act on behalf of the Lenders with respect to
any Letters of Credit issued by it and the documents associated therewith, and
the L/C Issuer shall have all of the benefits and immunities (A) provided to the
Agent in Article IX with respect to any acts taken or omissions suffered by the
L/C Issuer in connection with Letters of Credit issued by it or proposed to be
issued by it and Issuer Documents pertaining to such Letters of Credit as fully
as if the term “Agent” as used in Article IX included the L/C Issuer with
respect to such acts or omissions, and (B) as additionally provided herein with
respect to the L/C Issuer.

 

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(b)           Procedures for Issuance and Amendment of Letters of Credit;
Auto-Extension Letters of Credit.

 

(i)            Each Letter of Credit shall be issued or amended, as the case may
be, upon the request of the Borrower delivered to the L/C Issuer (with a copy to
the Agent) in the form of a Letter of Credit Application, appropriately
completed and signed by a Responsible Officer of the Borrower.  Such Letter of
Credit Application must be received by the L/C Issuer and the Agent not later
than 12:00 p.m. at least two Business Days (or such other date and time as the
Agent and the L/C Issuer may agree in a particular instance in their sole
discretion) prior to the proposed issuance date or date of amendment, as the
case may be.  In the case of a request for an initial issuance of a Letter of
Credit, such Letter of Credit Application shall specify in form and detail
reasonably satisfactory to the Agent and the L/C Issuer: (A) the proposed
issuance date of the requested Letter of Credit (which shall be a Business Day);
(B) the amount thereof; (C) the expiry date thereof; (D) the name and address of
the beneficiary thereof; (E) the documents to be presented by such beneficiary
in case of any drawing thereunder; (F) the full text of any certificate to be
presented by such beneficiary in case of any drawing thereunder; and (G) such
other matters as the Agent or L/C Issuer may reasonably require.  In the case of
a request for an amendment of any outstanding Letter of Credit, such Letter of
Credit Application shall specify in form and detail reasonably satisfactory to
the Agent and the L/C Issuer (A) the Letter of Credit to be amended; (B) the
proposed date of amendment thereof (which shall be a Business Day); (C) the
nature of the proposed amendment; and (D) such other matters as the Agent or the
L/C Issuer may reasonably require.  Additionally, the Borrower shall furnish to
the L/C Issuer and the Agent such other documents and information pertaining to
such requested Letter of Credit issuance or amendment, and any Issuer Documents
(including, if requested by the L/C Issuer, a Standby Letter of Credit Agreement
or Commercial Letter of Credit Agreement, as applicable), as the L/C Issuer or
the Agent may reasonably require.

 

(ii)           Promptly after receipt of any Letter of Credit Application, the
L/C Issuer will confirm with the Agent (by telephone or in writing) that the
Agent has received a copy of such Letter of Credit Application from the Borrower
and, if not, the L/C Issuer will provide the Agent with a copy thereof.  Unless
the L/C Issuer has received written notice from any Lender, the Agent or any
Loan Party, at least one Business Day prior to the requested date of issuance or
amendment of the applicable Letter of Credit, that one or more applicable
conditions contained in Article IV shall not then be satisfied or unless the L/C
Issuer would not be permitted, or would have no obligation, at such time to
issue such Letter of Credit under the terms hereof (by reason of the provisions
of clause (ii) or (iii) of Section 2.03(a) or otherwise), then, subject to the
terms and conditions hereof, the L/C Issuer shall, on the requested date, issue
a Letter of Credit for the account of the applicable Loan Party or enter into
the applicable amendment, as the case may be, in each case in accordance with
the L/C Issuer’s usual and customary business practices.  Immediately upon the
issuance or amendment of each Letter of Credit, each Lender shall be deemed to
(without any further action), and hereby irrevocably and unconditionally agrees
to, purchase from the L/C Issuer, without recourse or warranty, a risk
participation in such Letter of Credit in an amount equal to the product of such
Lender’s Applicable Percentage times the Stated Amount of such Letter of
Credit.  Upon any change in the Commitments under this Agreement, it is hereby
agreed that with respect to all L/C Obligations, there shall be an automatic
adjustment to the participations hereby created to reflect the new Applicable
Percentages of the assigning and assignee Lenders.

 

(iii)          If the Borrower so requests in any applicable Letter of Credit
Application, the L/C Issuer may, in its sole and absolute discretion, agree to
issue a Standby Letter of Credit that has automatic extension provisions (each,
an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension
Letter of Credit must permit the L/C Issuer to prevent any such extension at
least once in each twelve-month period (commencing with the date of issuance of
such Standby Letter of Credit) by giving prior notice to the beneficiary thereof
not later than a day (the “Non-Extension Notice

 

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Date”) in each such twelve-month period to be agreed upon at the time such
Standby Letter of Credit is issued.  Unless otherwise directed by the Agent or
the L/C Issuer, the Borrower shall not be required to make a specific request to
the Agent or the L/C Issuer for any such extension.  Once an Auto-Extension
Letter of Credit has been issued, the Lenders shall be deemed to have authorized
(but may not require) the L/C Issuer to permit the extension of such Standby
Letter of Credit at any time to an expiry date not later than the Letter of
Credit Expiration Date; provided, however, that the Agent shall instruct the L/C
Issuer not to permit any such extension if (A) the L/C Issuer has determined
that it would not be permitted, or would have no obligation, at such time to
issue such Standby Letter of Credit in its revised form (as extended) under the
terms hereof (by reason of the provisions of clause (ii) or (iii) of Section
2.03(a) or otherwise), or (B) the L/C Issuer has received notice (which may be
by telephone or in writing) on or before the day that is five Business Days
before the Non-Extension Notice Date (1) from the Agent that the Required
Lenders have elected not to permit such extension or (2) from the Agent, any
Lender or the Borrower that one or more of the applicable conditions specified
in Section 4.02 is not then satisfied or waived, and in each such case directing
the L/C Issuer not to permit such extension.

 

(iv)          Promptly after its delivery of any Letter of Credit or any
amendment to a Letter of Credit to an advising bank with respect thereto or to
the beneficiary thereof, the L/C Issuer will also deliver to the Borrower and
the Agent a true and complete copy of such Letter of Credit or amendment.

 

(c)           Drawings and Reimbursements; Funding of Participations.

 

(i)            Upon receipt from the beneficiary of any Letter of Credit of any
notice of a drawing under such Letter of Credit, the L/C Issuer shall notify the
Borrower and the Agent thereof not less than two (2) Business Days prior to the
Honor Date; provided, however, that any failure to give or delay in giving such
notice shall not relieve the Borrower of its obligation to reimburse the L/C
Issuer and the Lenders with respect to any such payment.  On the date of any
payment by the L/C Issuer under a Letter of Credit (each such date, an “Honor
Date”), the Borrower shall be deemed to have requested a Committed Borrowing of
Base Rate Loans to be disbursed on the Honor Date in an amount equal to the
amount of such payment, without regard to the minimum and multiples specified in
Section 2.02(b) for the principal amount of Base Rate Loans, and without regard
to whether the conditions set forth in Section 4.02 have been met. Any notice
given by the L/C Issuer or the Agent pursuant to this Section 2.03(c)(i) may be
given by telephone if immediately confirmed in writing; provided that the lack
of such an immediate confirmation shall not affect the conclusiveness or binding
effect of such notice.

 

(ii)           Each Lender’s obligation to make Committed Loans to reimburse the
L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this
Section 2.03(c), shall be absolute and unconditional and shall not be affected
by any circumstance, including (A) any setoff, counterclaim, recoupment, defense
or other right which such Lender may have against the L/C Issuer, the Borrower
or any other Person for any reason whatsoever; (B) the occurrence or continuance
of a Default or Event of Default, or (C) any other occurrence, event or
condition, whether or not similar to any of the foregoing, and without regard to
whether the conditions set forth in Section 4.02 have been met.

 

(d)           Repayment of Participations.  If any payment received by the L/C
Issuer pursuant to Section 2.03(c)(i) is required to be returned under any of
the circumstances described in Section 10.05 (including pursuant to any
settlement entered into by the L/C Issuer in its discretion), each Lender shall
pay to the Agent for the account of the L/C Issuer its Applicable Percentage
thereof on demand of the Agent, plus interest thereon from the date of such
demand to the date such amount is returned by such Lender, at a rate per annum
equal to the Federal Funds Rate from time to time in effect.  The obligations of
the Lenders under this clause shall survive the payment in full of the
Obligations and the termination of this Agreement.

 

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(e)           Obligations Absolute.  Subject to Section 2.03(f) below, the
obligation of the Borrower to reimburse the L/C Issuer for each drawing under
each Letter of Credit shall be absolute, unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances, including the following:

 

(i)            any lack of validity or enforceability of such Letter of Credit,
this Agreement, or any other Loan Document;

 

(ii)           the existence of any claim, counterclaim, setoff, defense or
other right that the Borrower or any Subsidiary may have at any time against any
beneficiary or any transferee of such Letter of Credit (or any Person for whom
any such beneficiary or any such transferee may be acting), the L/C Issuer or
any other Person, whether in connection with this Agreement, the transactions
contemplated hereby or by such Letter of Credit or any agreement or instrument
relating thereto, or any unrelated transaction;

 

(iii)          any draft, demand, certificate or other document presented under
such Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect; or any loss or delay in the transmission or otherwise of any document
reasonably required in order to make a drawing under such Letter of Credit;

 

(iv)          any payment by the L/C Issuer under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of such Letter of Credit; or any payment made by the L/C Issuer under such
Letter of Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of such Letter of Credit, including any arising in connection with
any proceeding under any Debtor Relief Law;

 

(v)           any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including any other circumstance that might
otherwise constitute a defense available to, or a discharge of, the Borrower or
any of its Subsidiaries; or

 

(vi)          the fact that any Default or Event of Default shall have occurred
and be continuing.

 

The Borrower shall promptly examine a copy of each Letter of Credit and each
amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with the Borrower’s instructions or other irregularity, the
Borrower shall promptly notify the Agent and the L/C Issuer.  The Borrower shall
be conclusively deemed to have waived any such claim against the L/C Issuer and
its correspondents unless such notice is given as aforesaid.

 

(f)            Role of L/C Issuer.  Each Lender and the Borrower agree that, in
paying any drawing under a Letter of Credit, the L/C Issuer shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document.  None of the L/C Issuer,
the Agent, any of their respective Related Parties nor any correspondent,
participant or assignee of the L/C Issuer shall be liable to any Lender for (i)
any action taken or omitted in connection herewith at the request or with the
approval of the Lenders or the Required Lenders, as applicable; (ii) any action
taken or omitted in the absence of gross negligence, bad faith or willful
misconduct; (iii) any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication under or
relating to any Letter of Credit or any error in interpretation of technical
terms; or (iv) the due execution, effectiveness, validity or

 

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enforceability of any document or instrument related to any Letter of Credit or
Issuer Document.  The Borrower hereby assume all risks of the acts or omissions
of any beneficiary or transferee with respect to its use of any Letter of
Credit; provided, however, that this assumption is not intended to, and shall
not, preclude the Borrower’s pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement.  None
of the L/C Issuer, the Agent, any of their respective Related Parties nor any
correspondent, participant or assignee of the L/C Issuer shall be liable or
responsible for any of the matters described in clauses (i) through (v) of
Section 2.03(e) or for any action, neglect or omission under or in connection
with any Letter of Credit or Issuer Documents, including, without limitation,
the issuance or any amendment of any Letter of Credit, the failure to issue or
amend any Letter of Credit, or the honoring or dishonoring of any demand under
any Letter of Credit, and such action or neglect or omission will bind the
Borrower; provided, however, that anything in such clauses to the contrary
notwithstanding, the Borrower may have a claim against the L/C Issuer, and the
L/C Issuer may be liable to the Borrower, to the extent, but only to the extent,
of any direct, as opposed to consequential, exemplary or punitive damages
suffered by the Borrower which the Borrower proves were caused by the L/C
Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful
failure to pay under any Letter of Credit after the presentation to it by the
beneficiary of a sight draft and certificate(s) strictly complying with the
terms and conditions of a Letter of Credit; provided further, however, that any
claim against the L/C Issuer by the Borrower for any loss suffered or incurred
by the Borrower shall be reduced by an amount equal to the sum of (i) the amount
(if any) saved by the Borrower as a result of the breach or other wrongful
conduct that allegedly caused such loss, and (ii) the amount (if any) of the
loss that would have been avoided had the Borrower taken all reasonable steps to
mitigate such loss, including, without limitation, by enforcing their rights
against any beneficiary and, in case of a claim of wrongful dishonor, by
specifically and timely authorizing the L/C Issuer to cure such dishonor.  In
furtherance and not in limitation of the foregoing, the L/C Issuer may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary
(or the L/C Issuer may refuse to accept and make payment upon such documents if
such documents are not in strict compliance with the terms of such Letter of
Credit and may disregard any requirement in a Letter of Credit that notice of
dishonor be given in a particular manner and any requirement that presentation
be made at a particular place or by a particular time of day), and the L/C
Issuer shall not be responsible for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason. 
The L/C Issuer shall not be responsible for the wording of any Letter of Credit
(including, without limitation, any drawing conditions or any terms or
conditions that are ineffective, ambiguous, inconsistent, unduly complicated or
reasonably impossible to satisfy), notwithstanding any assistance the L/C Issuer
may provide to the Borrower with drafting or recommending text for any Letter of
Credit Application or with the structuring of any transaction related to any
Letter of Credit, and the Borrower hereby acknowledges and agrees that any such
assistance will not constitute legal or other advice by the L/C Issuer or any
representation or warranty by the L/C Issuer that any such wording or such
Letter of Credit will be effective.  Without limiting the foregoing, the L/C
Issuer may, as it deems appropriate, modify or alter and use in any Letter of
Credit the terminology contained on the Letter of Credit Application for such
Letter of Credit.

 

(g)           Cash Collateral.  Upon the request of the Agent, (i) if the L/C
Issuer has honored any full or partial drawing request under any Letter of
Credit and such drawing has resulted in an L/C Obligation that remains
outstanding, or (ii) if, as of the Letter of Credit Expiration Date, any L/C
Obligation for any reason remains outstanding, the Borrower shall, in each case,
immediately Cash Collateralize the then Outstanding Amount of all L/C
Obligations.  Sections 2.05 and 8.02(c) set forth certain additional
requirements to deliver Cash Collateral hereunder.  For purposes of this Section
2.03, Section 2.05 and Section 8.02(c), “Cash Collateralize” means to pledge and
deposit with or deliver to the Agent, for the benefit of the L/C Issuer and the
Lenders, as collateral for the L/C Obligations, cash or deposit account balances
in an amount equal to 103% of the Outstanding Amount of all L/C Obligations

 

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(other than L/C Obligations with respect to Letters of Credit denominated in a
currency other than Dollars, which L/C Obligations shall be Cash Collateralized
in an amount equal to 115% of the Outstanding Amount of such L/C Obligations),
pursuant to documentation in form and substance reasonably satisfactory to the
Agent and the L/C Issuer (which documents are hereby Consented to by the
Lenders).  The Borrower hereby grants to the Agent a security interest in all
such cash, deposit accounts and all balances therein and all proceeds of the
foregoing.  Cash collateral shall be maintained in blocked, non-interest bearing
deposit accounts at Wells Fargo, except that Permitted Investments of the type
listed in clauses (a) through (f) and (n) of the definition thereof may be made
at the request of the Borrower at the option and in the sole discretion of the
Agent (and at the Borrower’s risk and expense); interest or profits, if any, on
such investments shall accumulate in such account.  If at any time the Agent
determines that any funds held as Cash Collateral are subject to any right or
claim of any Person other than the Agent or that the total amount of such funds
is less than the aggregate Outstanding Amount of all L/C Obligations, the
Borrower will, forthwith upon demand by the Agent, pay to the Agent, as
additional funds to be deposited as Cash Collateral, an amount equal to the
excess of (x) such aggregate Outstanding Amount over (y) the total amount of
funds, if any, then held as Cash Collateral that the Agent determines to be free
and clear of any such right and claim.  Upon the drawing of any Letter of Credit
for which funds are on deposit as Cash Collateral, such funds shall be applied,
to the extent permitted under applicable Laws, to reimburse the L/C Issuer and,
to the extent not so applied, shall thereafter be applied to satisfy other
Obligations.  If at any time the Agent determines that Cash Collateral is
subject to any right or claim of any Person other than the Agent as herein
provided, or that the total amount of such Cash Collateral is less than the
applicable Fronting Exposure and other obligations secured thereby, the Borrower
or the relevant Defaulting Lender or Deteriorating Lender will, promptly upon
demand by the Agent, pay or provide to the Agent additional Cash Collateral in
an amount sufficient to eliminate such deficiency.

 

(h)           Applicability of ISP and UCP 600.  Unless otherwise expressly
agreed by the L/C Issuer and the Borrower when a Letter of Credit is issued
(including any such agreement applicable to an Existing Letter of Credit), (i)
the rules of the ISP and the UCP 600 shall apply to each Standby Letter of
Credit, and (ii) the rules of the UCP 600 shall apply to each Commercial Letter
of Credit.

 

(i)            Letter of Credit Fees.  The Borrower shall pay to the Agent for
the account of each Lender in accordance with its Applicable Percentage a Letter
of Credit fee (the “Letter of Credit Fee”) for each Letter of Credit equal to
the Applicable Margin times the daily Stated Amount under each such Letter of
Credit (whether or not such maximum amount is then in effect under such Letter
of Credit).  For purposes of computing the daily amount available to be drawn
under any Letter of Credit, the amount of the Letter of Credit shall be
determined in accordance with Section 1.06.  Letter of Credit Fees shall be (i)
due and payable on the first day after the end of each month commencing with the
first such date to occur after the issuance of such Letter of Credit, on the
Letter of Credit Expiration Date and thereafter on demand, and (ii) computed on
a monthly basis in arrears.  If there is any change in the Applicable Margin
during any quarter, the daily amount available to be drawn under of each Letter
of Credit shall be computed and multiplied by the Applicable Margin separately
for each period during such quarter that such Applicable Margin was in effect. 
Notwithstanding anything to the contrary contained herein, while any Event of
Default exists, all Letter of Credit Fees shall accrue at the Default Rate as
provided in Section 2.12(b) hereof.

 

(j)            Documentary and Processing Charges Payable to L/C Issuer.  In
addition to the Letter of Credit Fees payable under Section 2.03(i) hereof, the
Borrower shall pay directly to the L/C Issuer, for its own account, the
customary issuance, presentation, amendment and other processing fees, and other
standard costs and charges, including fronting fees, of the L/C Issuer relating
to letters of credit as from time to time in effect.  Such customary fees and
standard costs and charges are due and payable on demand and are nonrefundable.

 

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(k)                                  Conflict with Issuer Documents.  In the
event of any conflict between the terms hereof and the terms of any Issuer
Document, the terms hereof shall control.

 

2.04                        Swing Line Loans.

 

(a)                                  The Swing Line.  Subject to the terms and
conditions set forth herein, the Swing Line Lender may, in reliance upon the
agreements of the other Lenders set forth in this Section 2.04, make loans (each
such loan, a “Swing Line Loan”) to the Borrower from time to time on any
Business Day during the Availability Period in an aggregate amount not to exceed
at any time outstanding the amount of the Swing Line Sublimit, notwithstanding
the fact that such Swing Line Loans, when aggregated with the Applicable
Percentage of the Outstanding Amount of Committed Loans and L/C Obligations of
the Lender acting as Swing Line Lender, may exceed the amount of such Lender’s
Commitment; provided, however, that after giving effect to any Swing Line Loan,
(i) the Total Outstandings shall not exceed Loan Cap, and (ii) the aggregate
Outstanding Amount of the Committed Loans of any Lender at such time, plus such
Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations
at such time, plus such Lender’s Applicable Percentage of the Outstanding Amount
of all Swing Line Loans at such time shall not exceed such Lender’s Commitment,
and provided, further, that the Borrower shall not use the proceeds of any Swing
Line Loan to refinance any outstanding Swing Line Loan, and provided, further,
that the Swing Line Lender shall not be obligated to make any Swing Line Loan at
any time when any Lender is at such time a Defaulting Lender or Deteriorating
Lender hereunder, unless (i) there would exist no Fronting Exposure (in the good
faith determination of the Swing Line Lender and the Agent) or (ii) the Swing
Line Lender has entered into satisfactory arrangements with the Borrower or such
Lender to eliminate the Swing Line Lender’s risk with respect to such Lender. 
Within the foregoing limits, and subject to the other terms and conditions
hereof, the Borrower may borrow under this Section 2.04, prepay under
Section 2.05, and reborrow under this Section 2.04.  Each Swing Line Loan shall
bear interest only at a rate based on the Base Rate.  Immediately upon the
making of a Swing Line Loan, each Lender shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a
risk participation in such Swing Line Loan in an amount equal to the product of
such Lender’s Applicable Percentage multiplied by the amount of such Swing Line
Loan.  The Swing Line Lender shall have all of the benefits and immunities
(A) provided to the Agent in Article IX with respect to any acts taken or
omissions suffered by the Swing Line Lender in connection with Swing Line Loans
made by it or proposed to be made by it as if the term “Agent” as used in
Article IX included the Swing Line Lender with respect to such acts or
omissions, and (B) as additionally provided herein with respect to the Swing
Line Lender.

 

(b)                                 Borrowing Procedures.  Each Swing Line
Borrowing shall be made upon the Borrower’s irrevocable notice to the Swing Line
Lender and the Agent, which may be given by telephone. Each such notice must be
received by the Swing Line Lender and the Agent not later than 1:00 p.m. on the
requested borrowing date, and shall specify (i) the amount to be borrowed, which
shall be a minimum of $100,000, and (ii) the requested borrowing date, which
shall be a Business Day.  Each such telephonic notice must be confirmed promptly
by delivery to the Swing Line Lender and the Agent of a written Swing Line Loan
Notice, appropriately completed and signed by a Responsible Officer of the
Borrower.  Promptly after receipt by the Swing Line Lender of any telephonic
Swing Line Loan Notice, the Swing Line Lender will confirm with the Agent (by
telephone or in writing) that the Agent has also received such Swing Line Loan
Notice and, if not, the Swing Line Lender will notify the Agent (by telephone or
in writing) of the contents thereof.  Unless the Swing Line Lender has received
notice (by telephone or in writing) from the Agent at the request of the
Required Lenders prior to 2:00 p.m. on the date of the proposed Swing Line
Borrowing (A) directing the Swing Line Lender not to make such Swing Line Loan
as a result of the limitations set forth in the proviso to the first sentence of
Section 2.04(a), or (B) that one or more of the applicable conditions specified
in Article IV is not then satisfied, then, subject to the terms and conditions
hereof, the Swing Line Lender may, not later than 3:00 p.m. on the borrowing
date

 

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specified in such Swing Line Loan Notice, make the amount of its Swing Line Loan
available to the Borrower at its office by crediting the account of the Borrower
on the books of the Swing Line Lender in immediately available funds.

 

(c)                                  Refinancing of Swing Line Loans.

 

(i)                                     The Swing Line Lender at any time in its
sole and absolute discretion may request, on behalf of the Borrower (which
hereby irrevocably authorize the Swing Line Lender to so request on its behalf),
that each Lender make a Base Rate Loan in an amount equal to such Lender’s
Applicable Percentage of the amount of Swing Line Loans then outstanding.  Such
request shall be made in writing (which written request shall be deemed to be a
Committed Loan Notice for purposes hereof) and in accordance with the
requirements of Section 2.02, without regard to the minimum and multiples
specified therein for the principal amount of Base Rate Loans, but subject to
the unutilized portion of the Loan Cap and the conditions set forth in
Section 4.02.  The Swing Line Lender shall furnish the Borrower with a copy of
the applicable Committed Loan Notice promptly after delivering such notice to
the Agent.  Each Lender shall make an amount equal to its Applicable Percentage
of the amount specified in such Committed Loan Notice available to the Agent in
immediately available funds for the account of the Swing Line Lender at the
Agent’s Office not later than 1:00 p.m. on the day specified in such Committed
Loan Notice, whereupon, subject to Section 2.04(c)(ii), each Lender that so
makes funds available shall be deemed to have made a Base Rate Loan to the
Borrower in such amount.  The Agent shall remit the funds so received to the
Swing Line Lender.

 

(ii)                                  If for any reason any Swing Line Loan
cannot be refinanced by such a Committed Borrowing in accordance with
Section 2.04(c)(i), the request for Base Rate Loans submitted by the Swing Line
Lender as set forth herein shall be deemed to be a request by the Swing Line
Lender that each of the Lenders fund its risk participation in the relevant
Swing Line Loan and each Lender’s payment to the Agent for the account of the
Swing Line Lender pursuant to Section 2.04(c)(i) shall be deemed payment in
respect of such participation.

 

(iii)                               If any Lender fails to make available to the
Agent for the account of the Swing Line Lender any amount required to be paid by
such Lender pursuant to the foregoing provisions of this Section 2.04(c) by the
time specified in Section 2.04(c)(i), the Swing Line Lender shall be entitled to
recover from such Lender (acting through the Agent), on demand, such amount with
interest thereon for the period from the date such payment is required to the
date on which such payment is immediately available to the Swing Line Lender at
a rate per annum equal to the greater of the Federal Funds Rate and a rate
determined by the Swing Line Lender in accordance with banking industry rules on
interbank compensation plus any administrative, processing or similar fees
customarily charged by the Swing Line Lender in connection with the foregoing. 
If such Lender pays such amount (with interest and fees as aforesaid), the
amount so paid shall constitute such Lender’s Committed Loan included in the
relevant Committed Borrowing or funded participation in the relevant Swing Line
Loan, as the case may be.   A certificate of the Swing Line Lender submitted to
any Lender (through the Agent) with respect to any amounts owing under this
clause (iii) shall be conclusive absent manifest error.

 

(iv)                              Each Lender’s obligation to make Committed
Loans or to purchase and fund risk participations in Swing Line Loans pursuant
to this Section 2.04(c) shall be absolute and unconditional and shall not be
affected by any circumstance, including (A) any setoff, counterclaim,
recoupment, defense or other right which such Lender may have against the Swing
Line Lender, the Borrower or any other Person for any reason whatsoever, (B) the
occurrence or continuance of a Default or an Event of Default, or (C) any other
occurrence, event or condition, whether or not similar to any of the foregoing;
provided, however, that each Lender’s obligation to make Committed Loans
pursuant to this Section 2.04(c) is subject to the conditions set forth in
Section 4.02.  No such funding of risk

 

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participations shall relieve or otherwise impair the obligation of the Borrower
to repay Swing Line Loans, together with interest as provided herein.

 

(d)                                 Repayment of Participations.

 

(i)                                     At any time after any Lender has
purchased and funded a risk participation in a Swing Line Loan, if the Swing
Line Lender receives any payment on account of such Swing Line Loan, the Swing
Line Lender will distribute to such Lender its Applicable Percentage of such
payment (appropriately adjusted, in the case of interest payments, to reflect
the period of time during which such Lender’s risk participation was funded) in
the same funds as those received by the Swing Line Lender.

 

(ii)                                  If any payment received by the Swing Line
Lender in respect of principal or interest on any Swing Line Loan is required to
be returned by the Swing Line Lender under any of the circumstances described in
Section 10.05 (including pursuant to any settlement entered into by the Swing
Line Lender in its discretion), each Lender shall pay to the Swing Line Lender
its Applicable Percentage thereof on demand of the Agent, plus interest thereon
from the date of such demand to the date such amount is returned, at a rate per
annum equal to the Federal Funds Rate.  The Agent will make such demand upon the
request of the Swing Line Lender.  The obligations of the Lenders under this
clause shall survive the payment in full of the Obligations and the termination
of this Agreement.

 

(e)                                  Interest for Account of Swing Line Lender. 
The Swing Line Lender shall be responsible for invoicing the Borrower for
interest on the Swing Line Loans.  Until each Lender funds its Base Rate Loan or
risk participation pursuant to this Section 2.04 to refinance such Lender’s
Applicable Percentage of any Swing Line Loan, interest in respect of such
Applicable Percentage shall be solely for the account of the Swing Line Lender.

 

(f)                                    Payments Directly to Swing Line Lender. 
The Borrower shall make all payments of principal and interest in respect of the
Swing Line Loans directly to the Swing Line Lender.

 

2.05                        Prepayments.

 

(a)                                  The Borrower may, upon irrevocable notice
from the Borrower to the Agent, at any time or from time to time voluntarily
prepay Committed Loans in whole or in part without premium or penalty; provided
that (i) such notice must be received by the Agent not later than 12:00 p.m.
(A) three Business Days prior to any date of prepayment of LIBO Rate Loans and
(B) on the date of prepayment of Base Rate Loans; (ii) any prepayment of LIBO
Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of
$1,000,000 in excess thereof; and (iii) any prepayment of Base Rate Loans shall
be in a principal amount of $500,000 or a whole multiple of $100,000 in excess
thereof or, in each case, if less, the entire principal amount thereof then
outstanding.  Each such notice shall specify the date and amount of such
prepayment and the Type(s) of Loans to be prepaid and, if LIBO Rate Loans, the
Interest Period(s) of such Loans.  The Agent will promptly notify each Lender of
its receipt of each such notice, and of the amount of such Lender’s Applicable
Percentage of such prepayment.  If such notice is given by the Borrower, the
Borrower shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein.  Any prepayment
of a LIBO Rate Loan shall be accompanied by all accrued interest on the amount
prepaid, together with any additional amounts required pursuant to
Section 3.05.  Each such prepayment shall be applied to the Committed Loans of
the Lenders in accordance with their respective Applicable Percentages.

 

(b)                                 The Borrower may, upon irrevocable notice
from the Borrower to the Swing Line Lender (with a copy to the Agent), at any
time or from time to time, voluntarily prepay Swing Line Loans

 

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in whole or in part without premium or penalty; provided that (i) such notice
must be received by the Swing Line Lender and the Agent not later than 1:00 p.m.
on the date of the prepayment, and (ii) any such prepayment shall be in a
minimum principal amount of $100,000.  Each such notice shall specify the date
and amount of such prepayment.  If such notice is given by the Borrower, the
Borrower shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein.

 

(c)                                  If for any reason the Total Outstandings at
any time exceed the Loan Cap as then in effect, the Borrower shall promptly (and
in any event, within one (1) Business Day) prepay Loans, Swing Line Loans and/or
Cash Collateralize the L/C Obligations in an aggregate amount equal to such
excess; provided, however, that the Borrower shall not be required to Cash
Collateralize the L/C Obligations pursuant to this Section 2.05(c) unless after
the prepayment in full of the Loans, the Total Outstandings exceed the Loan Cap
as then in effect.

 

(d)                                 The Borrower shall prepay the Loans and, if
an Event of Default has occurred and is continuing, Cash Collateralize the L/C
Obligations in accordance with the provisions of Section 6.13 hereof.

 

(e)                                  Notwithstanding anything contained herein
to the contrary, prepayments made pursuant to Section 2.05(a), (b), (c) and
(d) shall not reduce the Aggregate Commitments, the Letter of Credit Sublimit or
the Swing Line Sublimit.  Prepayments made pursuant to Section 2.05(c) and
(d) above, first, shall be applied to the Swing Line Loans, second, shall be
applied ratably to the outstanding Committed Loans, third, shall be used to Cash
Collateralize the remaining L/C Obligations, if applicable; and, fourth, the
amount remaining, if any, after the prepayment in full of all Swing Line Loans
and Committed Loans outstanding at such time and the Cash Collateralization of
the remaining L/C Obligations in full (if applicable) may be retained by the
Borrower for use in the ordinary course of its business.  Upon the drawing of
any Letter of Credit that has been Cash Collateralized, the funds held as Cash
Collateral shall be applied (without any further action by or notice to or from
the Borrower or any other Loan Party) to reimburse the L/C Issuer or the
Lenders, as applicable.

 

2.06                        Termination or Reduction of Commitments.

 

(a)                                  The Borrower may, upon irrevocable notice
from the Borrower to the Agent, terminate the Aggregate Commitments, the Letter
of Credit Sublimit or the Swing Line Sublimit or from time to time permanently
reduce the Aggregate Commitments, the Letter of Credit Sublimit or the Swing
Line Sublimit; provided that (i) any such notice shall be received by the Agent
not later than 12:00 p.m. five (5) Business Days prior to the date of
termination or reduction, (ii) any such partial reduction shall be in an
aggregate amount of $5,000,000 or any whole multiple of $1,000,000 in excess
thereof, (iii) the Borrower shall not terminate or reduce (A) the Aggregate
Commitments if, after giving effect thereto and to any concurrent prepayments
hereunder, the Total Outstandings would exceed the Aggregate Commitments,
(B) the Letter of Credit Sublimit if, after giving effect thereto, the
Outstanding Amount of L/C Obligations not fully Cash Collateralized hereunder
would exceed the Letter of Credit Sublimit, and (C) the Swing Line Sublimit if,
after giving effect thereto, and to any concurrent payments hereunder, the
Outstanding Amount of Swing Line Loans hereunder would exceed the Swing Line
Sublimit.  Notwithstanding the foregoing, the Borrower may rescind or postpone
any notice of termination of the Aggregate Commitments if such termination would
have resulted from a refinancing of the credit facility established under the
Loan Documents, which refinancing shall not be consummated or otherwise shall be
delayed.

 

(b)                                 If, after giving effect to any reduction of
the Aggregate Commitments, the Letter of Credit Sublimit or the Swing Line
Sublimit exceeds the amount of the Aggregate Commitments, such

 

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Letter of Credit Sublimit or Swing Line Sublimit shall be automatically reduced
by the amount of such excess.

 

(c)                                  The Agent will promptly notify the Lenders
of any termination or reduction of the Letter of Credit Sublimit, Swing Line
Sublimit or the Aggregate Commitments under this Section 2.06.  Upon any
reduction of the Aggregate Commitments, the Commitment of each Lender shall be
reduced by such Lender’s Applicable Percentage of such reduction amount.  All
fees (including, without limitation, commitment fees and Letter of Credit Fees)
and interest in respect of the Aggregate Commitments accrued until the effective
date of any termination of the Aggregate Commitments shall be paid on the
effective date of such termination.

 

2.07                        Repayment of Loans.

 

(a)                                  The Borrower shall repay to the Lenders on
the Termination Date the aggregate principal amount of Committed Loans
outstanding on such date.

 

(b)                                 To the extent not previously paid, the
Borrower shall repay the outstanding balance of the Swing Line Loans on the
Termination Date.

 

2.08                        Interest.

 

(a)                                  Subject to the provisions of
Section 2.08(b) below, (i) each LIBO Rate Loan shall bear interest on the
outstanding principal amount thereof for each Interest Period at a rate per
annum equal to the Adjusted LIBO Rate for such Interest Period plus the
Applicable Margin; (ii) each Base Rate Loan shall bear interest on the
outstanding principal amount thereof from the applicable borrowing date at a
rate per annum equal to the Base Rate plus the Applicable Margin; and (iii) each
Swing Line Loan shall bear interest on the outstanding principal amount thereof
from the applicable borrowing date at a rate per annum equal to the Base Rate
plus the Applicable Margin.

 

(b)                                 If any Event of Default exists, upon the
written direction of the Required Lenders, the Agent shall notify the Borrower
in writing that all outstanding Obligations shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the Default Rate and
thereafter such Obligations shall bear interest at the Default Rate to the
fullest extent permitted by applicable Laws.

 

(c)                                  Accrued and unpaid interest on past due
amounts (including interest on past due interest) shall be due and payable upon
demand.

 

(d)                                 Interest on each Loan shall be due and
payable in arrears on each Interest Payment Date applicable thereto and at such
other times as may be specified herein.  Interest hereunder shall be due and
payable in accordance with the terms hereof before and after judgment, and
before and after the commencement of any proceeding under any Debtor Relief Law.

 

2.09                        Fees.  In addition to certain fees described in
subsections (i) and (j) of Section 2.03:

 

(a)                                  Commitment Fee.  The Borrower shall pay to
the Agent for the account of each Lender in accordance with its Applicable
Percentage, a commitment fee equal to 0.20% per annum multiplied by the actual
daily amount by which the Aggregate Commitments exceed the Total Outstandings. 
The commitment fee shall accrue at all times during the Availability Period,
including at any time during which one or more of the conditions in Article IV
is not met, and shall be due and payable monthly in arrears on the first day
after the end of each month, commencing with the first such

 

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date to occur after the Closing Date, and on the last day of the Availability
Period.  The commitment fee shall be calculated monthly in arrears.

 

(b)                                 Other Fees.  The Borrower shall pay to Wells
Fargo Capital Finance, LLC and the Agent for their own respective accounts fees
in the amounts and at the times specified in the Fee Letter.  Such fees shall be
fully earned when paid and shall not be refundable for any reason whatsoever.

 

2.10                        Computation of Interest and Fees.  All computations
of fees and interest shall be made on the basis of a 360-day year and actual
days elapsed, except that interest computed by reference to the Base Rate at
times when the Base Rate is determined based on Wells Fargo’s prime rate shall
be computed on the basis of a year of 365 or 366 days, as applicable, and actual
days elapsed.  Interest shall accrue on each Loan for the day on which the Loan
is made, and shall not accrue on a Loan, or any portion thereof, for the day on
which the Loan or such portion is paid, provided that any Loan that is repaid on
the same day on which it is made shall, subject to Section 2.12(a), bear
interest for one day.  Each determination by the Agent of an interest rate or
fee hereunder shall be conclusive and binding for all purposes, absent manifest
error.

 

2.11                        Evidence of Debt.

 

(a)                                  The Credit Extensions made by each Lender
shall be evidenced by one or more accounts or records maintained by the Agent
(the “Loan Account”) in the ordinary course of business.  In addition, each
Lender may record in such Lender’s internal records, an appropriate notation
evidencing the date and amount of each Loan from such Lender, each payment and
prepayment of principal of any such Loan, and each payment of interest, fees and
other amounts due in connection with the Obligations due to such Lender.  The
accounts or records maintained by the Agent (including the Register maintained
pursuant to Section 10.06(c)) and each Lender shall be conclusive absent
manifest error of the amount of the Credit Extensions made by the Lenders to the
Borrower and the interest and payments thereon.  Any failure to so record or any
error in doing so shall not, however, limit or otherwise affect the obligation
of the Borrower hereunder to pay any amount owing with respect to the
Obligations.  In the event of any conflict between the accounts and records
maintained by any Lender and the accounts and records of the Agent (including
the Register maintained pursuant to Section 10.06(c)) in respect of such
matters, such accounts and records of the Agent shall control in the absence of
manifest error.  Upon the request of any Lender made through the Agent, the
Borrower shall execute and deliver to such Lender (through the Agent) a Note,
which shall evidence such Lender’s Loans in addition to such accounts or
records.  Each Lender may attach schedules to its Note and endorse thereon the
date, Type (if applicable), amount and maturity of its Loans and payments with
respect thereto.  Upon receipt of an affidavit of a Lender as to the loss,
theft, destruction or mutilation of such Lender’s Note and upon cancellation of
such Note, the Borrower will issue, in lieu thereof, a replacement Note in favor
of such Lender, in the same principal amount thereof and otherwise of like
tenor.

 

(b)                                 In addition to the accounts and records
referred to in Section 2.11(a), each Lender and the Agent shall maintain in
accordance with its usual practice accounts or records evidencing the purchases
and sales by such Lender of participations in Letters of Credit and Swing Line
Loans.  In the event of any conflict between the accounts and records maintained
by the Agent (including the Register maintained pursuant to Section 10.06(c))
and such accounts and records of any Lender in respect of such matters, such
accounts and records of the Agent shall control in the absence of manifest
error.

 

2.12                        Payments Generally; Agent’s Clawback.

 

(a)                                  General.  All payments to be made by the
Borrower shall be made without condition or deduction for any counterclaim,
defense, recoupment or setoff.  Except as otherwise

 

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expressly provided herein, all payments by the Borrower hereunder shall be made
to the Agent, for the account of the respective Lenders to which such payment is
owed, at the Agent’s Office in Dollars and in immediately available funds not
later than 2:00 p.m. on the date specified herein.  The Agent will promptly
distribute to each Lender its Applicable Percentage (or other applicable share
as provided herein) of such payment in like funds as received by wire transfer
to such Lender’s Lending Office.  All payments received by the Agent after
2:00 p.m., at the option of the Agent, shall be deemed received on the next
succeeding Business Day and any applicable interest or fee shall continue to
accrue.  If any payment to be made by the Borrower shall come due on a day other
than a Business Day, payment shall be made on the next following Business Day,
and such extension of time shall be reflected in computing interest or fees, as
the case may be.

 

(b)                                 (i)                                    
Funding by Lenders; Presumption by Agent.  Unless the Agent shall have received
notice from a Lender prior to the proposed date of any Borrowing of LIBO Rate
Loans (or in the case of any Borrowing of Base Rate Loans, prior to 12:00 noon
on the date of such Borrowing) that such Lender will not make available to the
Agent such Lender’s share of such Borrowing, the Agent may assume that such
Lender has made such share available on such date in accordance with
Section 2.02 (or in the case of a Borrowing of Base Rate Loans, that such Lender
has made such share available in accordance with and at the time required by
Section 2.02) and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount.  In such event, if a Lender has not in fact
made its share of the applicable Committed Borrowing available to the Agent,
then the applicable Lender and the Borrower severally agree to pay to the Agent
forthwith on demand such corresponding amount in immediately available funds
with interest thereon, for each day from and including the date such amount is
made available to the Borrower to but excluding the date of payment to the
Agent, at (A) in the case of a payment to be made by such Lender, the greater of
the Federal Funds Rate and a rate determined by the Agent in accordance with
banking industry rules on interbank compensation plus any administrative
processing or similar fees customarily charged by the Agent in connection with
the foregoing, and (B) in the case of a payment to be made by the Borrower, the
interest rate applicable to Base Rate Loans.  If the Borrower and such Lender
shall pay such interest to the Agent for the same or an overlapping period, the
Agent shall promptly remit to the Borrower the amount of such interest paid by
the Borrower for such period.  If such Lender pays its share of the applicable
Committed Borrowing to the Agent, then the amount so paid shall constitute such
Lender’s Committed Loan included in such Committed Borrowing.  Any payment by
the Borrower shall be without prejudice to any claim the Borrower may have
against a Lender that shall have failed to make such payment to the Agent.

 

(ii)                                  Payments by Borrower; Presumptions by
Agent.  Unless the Agent shall have received notice from the Borrower prior to
the time at which any payment is due to the Agent for the account of the Lenders
or the L/C Issuer hereunder that the Borrower will not make such payment, the
Agent may assume that the Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders or the L/C Issuer, as the case may be, the amount due.  In such event,
if the Borrower has not in fact made such payment, then each of the Lenders or
the L/C Issuer, as the case may be, severally agrees to repay to the Agent
forthwith on demand the amount so distributed to such Lender or the L/C Issuer,
in immediately available funds with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Agent, at the greater of the Federal Funds Rate and a rate
determined by the Agent in accordance with banking industry rules on interbank
compensation.

 

A notice of the Agent to any Lender or the Borrower with respect to any amount
owing under this subsection (b) shall be conclusive, absent manifest error.

 

(c)                                  Failure to Satisfy Conditions Precedent. 
If any Lender makes available to the Agent funds for any Loan to be made by such
Lender as provided in the foregoing provisions of this

 

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Article II, and such funds are not made available to the Borrower by the Agent
because the conditions to the applicable Credit Extension set forth in
Article IV are not satisfied or waived in accordance with the terms hereof
(subject to the provisions of the last paragraph of Section 4.02 hereof), the
Agent shall return such funds (in like funds as received from such Lender) to
such Lender, without interest.

 

(d)                                 Obligations of Lenders Several.  The
obligations of the Lenders hereunder to make Committed Loans, to fund
participations in Letters of Credit and Swing Line Loans and to make payments
hereunder are several and not joint.  The failure of any Lender to make any
Committed Loan, to fund any such participation or to make any payment hereunder
on any date required hereunder shall not relieve any other Lender of its
corresponding obligation to do so on such date, and no Lender shall be
responsible for the failure of any other Lender to so make its Committed Loan,
to purchase its participation or to make its payment hereunder.

 

(e)                                  Funding Source.  Nothing herein shall be
deemed to obligate any Lender to obtain the funds for any Loan in any particular
place or manner or to constitute a representation by any Lender that it has
obtained or will obtain the funds for any Loan in any particular place or
manner.

 

2.13                        Sharing of Payments by Lenders.  If any Credit Party
shall, by exercising any right of setoff or counterclaim or otherwise, obtain
payment in respect of any principal of, interest on, or other amounts with
respect to, any of the Obligations resulting in such Lender’s receiving payment
of a proportion of the aggregate amount of such Obligations greater than its pro
rata share thereof as provided herein (including as in contravention of the
priorities of payment set forth in Section 8.03), then the Credit Party
receiving such greater proportion shall (a) notify the Agent of such fact, and
(b) purchase (for cash at face value) participations in the Obligations of the
other Credit Parties, or make such other adjustments as shall be equitable, so
that the benefit of all such payments shall be shared by the Credit Parties
ratably and in the priorities set forth in Section 8.03, provided that:

 

(i)                                     if any such participations or
subparticipations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations or subparticipations shall be
rescinded and the purchase price restored to the extent of such recovery,
without interest; and

 

(ii)                                  the provisions of this Section shall not
be construed to apply to (x) any payment made by the Loan Parties pursuant to
and in accordance with the express terms of this Agreement or (y) any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Committed Loans or subparticipations in L/C
Obligations or Swing Line Loans to any assignee or participant, other than to
the Borrower or any Subsidiary thereof (as to which the provisions of this
Section shall apply).

 

Each Loan Party consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against such
Loan Party rights of setoff and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of such Loan Party in the
amount of such participation.

 

2.14                        Settlement Amongst Lenders

 

(a)                                  The amount of each Lender’s Applicable
Percentage of outstanding Loans (including outstanding Swing Line Loans, shall
be computed weekly (or more frequently in the Agent’s discretion) and shall be
adjusted upward or downward based on all Loans (including Swing Line Loans) and
repayments of Loans (including Swing Line Loans)  received by the Agent as of
3:00 p.m. on the first Business Day (such date, the “Settlement Date”) following
the end of the period specified by the Agent.

 

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(b)                                 The Agent shall deliver to each of the
Lenders promptly after a Settlement Date a summary statement of the amount of
outstanding Committed Loans and Swing Line Loans for the period and the amount
of repayments received for the period.  As reflected on the summary statement,
(i) the Agent shall transfer to each Lender its Applicable Percentage of
repayments, and (ii) each Lender shall transfer to the Agent (as provided below)
or the Agent shall transfer to each Lender, such amounts as are necessary to
insure that, after giving effect to all such transfers, the amount of Committed
Loans made by each Lender shall be equal to such Lender’s Applicable Percentage
of all Committed Loans outstanding as of such Settlement Date.  If the summary
statement requires transfers to be made to the Agent by the Lenders and is
received prior to 1:00 p.m. on a Business Day, such transfers shall be made in
immediately available funds no later than 3:00 p.m. that day; and, if received
after 1:00 p.m., then no later than 3:00 p.m. on the next Business Day. The
obligation of each Lender to transfer such funds is irrevocable, unconditional
and without recourse to or warranty by the Agent.  If and to the extent any
Lender shall not have so made its transfer to the Agent, such Lender agrees to
pay to the Agent, forthwith on demand such amount, together with interest
thereon, for each day from such date until the date such amount is paid to the
Agent, equal to the greater of the Federal Funds Rate and a rate determined by
the Agent in accordance with banking industry rules on interbank compensation
plus any administrative, processing, or similar fees customarily charged by the
Agent in connection with the foregoing.

 

2.15                        Increase in Commitments.

 

(a)                                  Request for Increase.  Provided no Default
or Event of Default then exists or would arise therefrom, upon notice to the
Agent (which shall promptly notify the Lenders), the Borrower may from time to
time, request an increase in the Aggregate Commitments by an amount (for all
such requests) not exceeding $250,000,000 (each such increase, a “Commitment
Increase”); provided that (i) any such request for an increase shall be in a
minimum amount of $25,000,000, (ii) the Borrower may make a maximum of three
such requests, and (iii) the amount of the Aggregate Commitments shall not
exceed $750,000,000 at any time.  The initial Commitment Increases requested in
the aggregate amount of up to $50,000,000 shall be provided by Wells Fargo.  Any
Commitment Increase requests in excess of $50,000,000 in the aggregate shall be
offered to all Lenders (and to other Eligible Assignees, if necessary) in
accordance with the provisions of Sections 2.15(b) and 2.15(c) hereof.

 

(b)                                 Lender Elections to Increase.  At the time
of sending notice to the Agent for any Commitment Increase in excess of
$50,000,000 in the aggregate, the Borrower (in consultation with the Agent)
shall specify the time period within which each Lender is requested to respond
(which shall in no event be less than ten Business Days from the date of
delivery of such notice to the Lenders).  Each Lender shall notify the Agent
within such time period whether or not it agrees to increase its Commitment and,
if so, whether by an amount equal to, greater than, or less than its Applicable
Percentage of such requested increase.  Any Lender not responding within such
time period shall be deemed to have declined to increase its Commitment.

 

(c)                                  Notification by Agent; Additional Lenders. 
The Agent shall notify the Borrower and each Lender of the Lenders’ responses to
each request made hereunder.  To achieve the full amount of a requested increase
and subject to the approval of the Agent, the L/C Issuer and the Swing Line
Lender (which approvals shall not be unreasonably withheld or delayed), to the
extent that the existing Lenders decline to increase their Commitments, or
decline to increase their Commitments to the amount requested by the Borrower,
the Agent, in consultation with the Borrower, will use its reasonable efforts to
arrange for other Eligible Assignees to become a Lender hereunder (each such
additional Lender, an “Additional Commitment Lender”) and to issue commitments
in an amount equal to the amount of the increase in the Aggregate Commitments
requested by the Borrower and not accepted by the existing Lenders (and the

 

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Borrower may also invite additional Eligible Assignees to become Lenders),
provided, however, that without the consent of the Agent, at no time shall the
Commitment of any Additional Commitment Lender be less than $5,000,000.

 

(d)                                 Effective Date and Allocations.  If the
Aggregate Commitments are increased in accordance with this Section, the Agent,
in consultation with the Borrower, shall determine the effective date (each, an
“Increase Effective Date”) and, with respect to any Commitment Increases in
excess of $50,000,000 in the aggregate, the final allocation of such increase. 
The Agent shall promptly notify the Borrower and the Lenders of the final
allocation, to the extent applicable, of such increase and the Increase
Effective Date and on the Increase Effective Date (i) the Aggregate Commitments
under, and for all purposes of, this Agreement shall be increased by the
aggregate amount of such Commitment Increases, and (ii) Schedule 2.01 shall be
deemed modified, without further action, to reflect the revised Commitments and
Applicable Percentages of the Lenders.

 

(e)                                  Conditions to Effectiveness of Commitment
Increase.  As a condition precedent to such Commitment Increase, (i) the
Borrower shall deliver to the Agent a certificate of each Loan Party dated as of
the Increase Effective Date signed by a Responsible Officer of the Borrower
(A) certifying and attaching the resolutions adopted by such Loan Party
approving or consenting to such Commitment Increase, and (B) in the case of the
Borrower, certifying that, before and after giving effect to such Commitment
Increase, (1) the representations and warranties contained in Article V and the
other Loan Documents are true and correct in all material respects on and as of
the applicable Increase Effective Date, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they are true and correct in all material respects as of such earlier date,
and in the case of any representation and warranty qualified by materiality,
they shall be true and correct in all respects, and except that for purposes of
this Section 2.15, the representations and warranties contained in subsections
(a) and (b) of Section 5.05 shall be deemed to refer to the most recent
statements furnished pursuant to clauses (a) and (b), respectively, of
Section 6.01, and (2) no Default or Event of Default exists or would arise
therefrom, (ii) the Borrower, the Agent, and any Additional Commitment Lender
shall have executed and delivered a joinder to the Loan Documents in such form
as the Agent shall reasonably require; (iii) the Borrower shall have paid such
fees and other compensation to the Additional Commitment Lenders as the Borrower
and such Additional Commitment Lenders shall agree; (iv) the Borrower shall have
paid such arrangement fees to the Agent as the Borrower and the Agent may agree;
(v) if requested by the Agent, the Borrower shall deliver to the Agent and the
Lenders an opinion or opinions, in form and substance reasonably satisfactory to
the Agent, from counsel to the Borrower reasonably satisfactory to the Agent and
dated such date; (vi) the Borrower and the Additional Commitment Lender shall
have delivered such other instruments, documents and agreements as the Agent may
reasonably have requested; and (vii) no Default or Event of Default exists.  The
Outstanding Amount of Loans and the participations of the Lenders in L/C
Obligations and Swing Line Loans outstanding on the Increase Effective Date
shall be deemed automatically adjusted hereunder to the extent necessary to keep
the outstanding Committed Loans and any such participations ratable with any
revised Applicable Percentages arising from any nonratable increase in the
Commitments under this Section.

 

(f)                                    Conflicting Provisions.  This
Section shall supersede any provisions in Sections 2.13 or 10.01 to the
contrary.

 

ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY

 

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3.01        Taxes.

 

(a)           Payments Free of Taxes.  Any and all payments by or on account of
any obligation of the Borrower hereunder or under any other Loan Document shall
be made free and clear of and without reduction or withholding for any
Indemnified Taxes or Other Taxes, provided that if the Borrower shall be
required by applicable law to deduct any Indemnified Taxes (including any Other
Taxes) from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Agent, Lender or
L/C Issuer, as the case may be, receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall make
such deductions and (iii) the Borrower shall timely pay the full amount deducted
to the relevant Governmental Authority in accordance with applicable law.

 

(b)           Payment of Other Taxes by the Borrower.  Without limiting the
provisions of subsection (a) above, the Borrower shall timely pay any Other
Taxes to the relevant Governmental Authority in accordance with applicable law.

 

(c)           Indemnification by the Loan Parties.  The Loan Parties shall
indemnify the Agent, each Lender and the L/C Issuer, within 10 days after demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) paid by the Agent, such Lender or the L/C
Issuer, as the case may be, and any penalties, interest and reasonable expenses
(other than those penalties, interest and expenses incurred as a result of the
gross negligence or willful misconduct of the Agent, such Lender or L/C Issuer)
arising therefrom or with respect thereto, whether or not such Indemnified Taxes
or Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority.  A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender or the L/C Issuer (with a copy
to the Agent), or by the Agent on its own behalf or on behalf of a the Agent, a
Lender or the L/C Issuer, shall be conclusive absent manifest error.

 

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

 

(e)           Status of Lenders.  Any Foreign Lender or L/C Issuer that is
entitled to an exemption from or reduction of withholding tax under the law of
the jurisdiction in which the Borrower is resident for tax purposes, or any
treaty to which such jurisdiction is a party, with respect to payments hereunder
or under any other Loan Document shall deliver to the Borrower (with a copy to
the Agent), at the time or times prescribed by applicable law or reasonably
requested by the Borrower or the Agent, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate of withholding. Such delivery
shall be provided on the Closing Date and on or before such documentation
expires or becomes obsolete or after the occurrence of an event requiring a
change in the documentation most recently delivered.  In addition, any Lender or
L/C Issuer, if requested by the Borrower or the Agent, shall deliver such other
documentation prescribed by applicable law or reasonably requested by the
Borrower or the Agent as will enable the Borrower or the Agent to determine
whether or not such Lender or L/C Issuer is subject to backup withholding or
information reporting requirements.

 

Without limiting the generality of the foregoing, in the event that the Borrower
is resident for tax purposes in the United States, any Lender or L/C Issuer
shall deliver to the Borrower and the Agent (in

 

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such number of copies as shall be requested by the recipient) on or prior to the
date on which such Lender or L/C Issuer becomes a Lender or L/C Issuer under
this Agreement (and from time to time thereafter upon the request of the 
Borrower or the Agent, but only if such Lender or L/C Issuer is legally entitled
to do so), whichever of the following is applicable:

 

(i)            duly completed copies of Internal Revenue Service Form W-9;

 

(ii)           duly completed copies of Internal Revenue Service Form W-8BEN
claiming eligibility for benefits of an income tax treaty to which the United
States is a party;

 

(iii)          duly completed copies of Internal Revenue Service Form W-8ECI;

 

(iv)          duly completed copies of Internal Revenue Service Form W-8IMY,
together with any other required supporting information, forms or documentation;

 

(v)           in the case of a Foreign Lender claiming the benefits of the
exemption for portfolio interest under section 881(c) of the Code, (x) a
certificate to the effect that such Foreign Lender is not (A) a “bank” within
the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder”
of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a
“controlled foreign corporation” described in section 881(c)(3)(C) of the Code
and (y) duly completed copies of  Internal Revenue Service Form W-8BEN; or

 

(vi)          any other form prescribed by applicable law as a basis for
claiming exemption from or a reduction in United States Federal withholding tax
duly completed together with such supplementary documentation as may be
prescribed by applicable law to permit the Borrower to determine the withholding
or deduction required to be made.

 

If a payment made to a Lender or L/C Issuer under any Loan Document would be
subject to U.S. federal withholding Tax imposed by FATCA if such Lender or L/C
Issuer were to fail to comply with the applicable reporting requirements of
FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as
applicable), such Lender or L/C Issuer shall deliver to the Borrower and the
Agent at the time or times prescribed by law and at such time or times
reasonably requested by the Borrower or the Agent such documentation prescribed
by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the
Code) and such additional documentation reasonably requested by the Borrower or
the Agent as may be necessary for the Borrower and the Agent to comply with
their obligations under FATCA and to determine that such Lender or L/C Issuer
has complied with such Lender’s or L/C Issuer’s obligations under FATCA or to
determine the amount to deduct and withhold from such payment.  Solely for
purposes of this paragraph, “FATCA” shall include any amendments made to FATCA
after the date of this Agreement.

 

Each Lender and L/C Issuer agrees that if any form or certification it
previously delivered expires or becomes obsolete or inaccurate in any respect,
it shall update such form or certification or promptly notify the Borrower and
the Agent in writing of its legal inability to do so.

 

(f)            Treatment of Certain Refunds.  If the Agent, any Lender or the
L/C Issuer determines, in its reasonable discretion exercised in good faith,
that it has received a refund of any Taxes or Other Taxes as to which it has
been indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section, it shall pay to the Borrower an
amount equal to such refund (but only to the extent of indemnity payments made,
or additional amounts paid, by the Borrower  under this Section with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Agent, such Lender or the L/C Issuer, as the case may be, and
without

 

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interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund), provided that the Borrower, upon the request of
the Agent, such Lender or the L/C Issuer, agree to repay the amount paid over to
the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Agent, such Lender or the L/C Issuer in
the event the Agent, such Lender or the L/C Issuer is required to repay such
refund to such Governmental Authority.  This subsection shall not be construed
to require the Agent, any Lender or the L/C Issuer to make available its tax
returns (or any other information relating to its taxes that it deems
confidential) to the Borrower or any other Person.

 

3.02        Illegality.  If any Lender determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund LIBO
Rate Loans, or to determine or charge interest rates based upon the LIBO Rate,
or any Governmental Authority has imposed material restrictions on the authority
of such Lender to purchase or sell, or to take deposits of, Dollars in the
London interbank market, then, on notice thereof by such Lender to the Borrower
through the Agent, any obligation of such Lender to make or continue LIBO Rate
Loans or to convert Base Rate Loans to LIBO Rate Loans shall be suspended until
such Lender notifies the Agent and the Borrower that the circumstances giving
rise to such determination no longer exist.  Upon receipt of such notice, the
Borrower shall, upon demand from such Lender (with a copy to the Agent), prepay
or, if applicable, convert all LIBO Rate Loans of such Lender to Base Rate
Loans, either on the last day of the Interest Period therefor, if such Lender
may lawfully continue to maintain such LIBO Rate Loans to such day, or
immediately, if such Lender may not lawfully continue to maintain such LIBO Rate
Loans.  Upon any such prepayment or conversion, the Borrower shall also pay
accrued interest on the amount so prepaid or converted.

 

3.03        Inability to Determine Rates.  If the Required Lenders determine
that for any reason in connection with any request for a LIBO Rate Loan or a
conversion to or continuation thereof that (a) Dollar deposits are not being
offered to banks in the London interbank market for the applicable amount and
Interest Period of such LIBO Rate Loan, (b) adequate and reasonable means do not
exist for determining the LIBO Rate for any requested Interest Period with
respect to a proposed LIBO Rate Loan, or (c) the LIBO Rate for any requested
Interest Period with respect to a proposed LIBO Rate Loan does not adequately
and fairly reflect the cost to such Lenders of funding such Loan, the Agent will
promptly so notify the Borrower and each Lender.  Thereafter, the obligation of
the Lenders to make or maintain LIBO Rate Loans shall be suspended until the
Agent (upon the instruction of the Required Lenders) revokes such notice.  Upon
receipt of such notice, the Borrower may revoke any pending request for a
Borrowing of, conversion to or continuation of LIBO Rate Loans or, failing that,
will be deemed to have converted such request into a request for a Committed
Borrowing of Base Rate Loans in the amount specified therein.

 

3.04        Increased Costs; Reserves on LIBO Rate Loans.

 

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

 

(i)            impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by,
any Lender (except any reserve requirement reflected in the LIBO Rate) or the
L/C Issuer;

 

(ii)           subject any Lender or the L/C Issuer to any tax of any kind
whatsoever with respect to this Agreement, any Letter of Credit, any
participation in a Letter of Credit or any LIBO Rate Loan made by it, or change
the basis of taxation of payments to such Lender or the L/C Issuer in respect
thereof (except for Indemnified Taxes or Other Taxes covered by Section

 

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3.01 and the imposition of, or any change in the rate of, any Excluded Tax
payable by such Lender or the L/C Issuer); or

 

(iii)          impose on any Lender or the L/C Issuer or the London interbank
market any other condition, cost or expense affecting this Agreement or LIBO
Loans made by such Lender or any Letter of Credit or participation therein;

 

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any LIBO Rate Loan (or of maintaining its
obligation to make any such Loan), or to increase the cost to such Lender or the
L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or
of maintaining its obligation to participate in or to issue any Letter of
Credit), or to reduce the amount of any sum received or receivable by such
Lender or the L/C Issuer hereunder (whether of principal, interest or any other
amount) then, upon request of such Lender or the L/C Issuer, the Borrower will
pay to such Lender or the L/C Issuer, as the case may be, such additional amount
or amounts as will compensate such Lender or the L/C Issuer, as the case may be,
for such additional costs incurred or reduction suffered.

 

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

 

(c)           Certificates for Reimbursement.  A certificate of a Lender or the
L/C Issuer setting forth the amount or amounts necessary to compensate such
Lender or the L/C Issuer or its holding company, as the case may be, as
specified in subsection (a) or (b) of this Section and delivered to the Borrower
shall be conclusive absent manifest error; provided that such amount shall be
consistent with return metrics applied in determining amounts that such Lender
or L/C Issuer has required other similarly situated borrowers or obligors to pay
with respect to such increased costs or reduced returns.  The Borrower shall pay
such Lender or the L/C Issuer, as the case may be, the amount shown as due on
any such certificate within 10 days after receipt thereof.

 

(d)           Delay in Requests.  Failure or delay on the part of any Lender or
the L/C Issuer to demand compensation pursuant to the foregoing provisions of
this Section shall not constitute a waiver of such Lender’s or the L/C Issuer’s
right to demand such compensation, provided that the Borrower shall not be
required to compensate a Lender or the L/C Issuer pursuant to the foregoing
provisions of this Section for any increased costs incurred or reductions
suffered more than nine months prior to the date that such Lender or the L/C
Issuer, as the case may be, notifies the Borrower of the Change in Law giving
rise to such increased costs or reductions and of such Lender’s or the L/C
Issuer’s intention to claim compensation therefor (except that, if the Change in
Law giving rise to such increased costs or reductions is retroactive, then the
nine-month period referred to above shall be extended to include the period of
retroactive effect thereof).

 

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(e)           Reserves on LIBO Rate Loans.  The Borrower shall pay to each
Lender, as long as such Lender shall be required to maintain reserves with
respect to liabilities or assets consisting of or including Eurocurrency funds
or deposits (currently known as Eurocurrency liabilities), additional interest
on the unpaid principal amount of each LIBO Rate Loan equal to the actual costs
of such reserves allocated to such Loan by such Lender (as determined by such
Lender in good faith, which determination shall be conclusive), which shall be
due and payable on each date on which interest is payable on such Loan, provided
the Borrower shall have received at least 10 days’ prior notice (with a copy to
the Agent) of such additional interest from such Lender.  If a Lender fails to
give notice 10 days prior to the relevant Interest Payment Date, such additional
interest shall be due and payable 10 days from receipt of such notice.

 

3.05        Compensation for Losses.  Upon demand of any Lender (with a copy to
the Agent) from time to time, the Borrower shall promptly compensate such Lender
for and hold such Lender harmless from any loss, cost or expense incurred by it
as a result of:

 

(a)           any continuation, conversion, payment or prepayment of any Loan
other than a Base Rate Loan on a day other than the last day of the Interest
Period for such Loan (whether voluntary, mandatory, automatic, by reason of
acceleration, or otherwise);

 

(b)           any failure by the Borrower (for a reason other than the failure
of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan
other than a Base Rate Loan on the date or in the amount notified by the
Borrower; or

 

(c)           any assignment of a LIBO Rate Loan on a day other than the last
day of the Interest Period therefor as a result of a request by the Borrower
pursuant to Section 10.13;

 

including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were
obtained.  The Borrower shall also pay any customary administrative fees charged
by such Lender in connection with the foregoing.

 

For purposes of calculating amounts payable by the Borrower to the Lenders under
this Section 3.05, each Lender shall be deemed to have funded each LIBO Rate
Loan made by it at the LIBO Rate for such Loan by a matching deposit or other
borrowing in the London interbank market for a comparable amount and for a
comparable period, whether or not such LIBO Rate Loan was in fact so funded.

 

3.06        Mitigation Obligations; Replacement of Lenders.

 

(a)           Designation of a Different Lending Office.  If any Lender requests
compensation under Section 3.04, or the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 3.01, or if any Lender gives a notice pursuant to
Section 3.02, then such Lender shall use reasonable efforts to designate a
different Lending Office for funding or booking its Loans hereunder or to assign
its rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04,
as the case may be, in the future, or eliminate the need for the notice pursuant
to Section 3.02, as applicable, and (ii) in each case, would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender.  The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.

 

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(b)           Replacement of Lenders.  If any Lender requests compensation under
Section 3.04, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 3.01, the Borrower may replace such Lender in accordance with
Section 10.13.

 

3.07        Survival.  Each party’s obligations under this Article III shall
survive termination of the Aggregate Commitments and repayment of all other
Obligations hereunder.

 

ARTICLE IV
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

 

4.01        Conditions of Initial Credit Extension.  The obligation of the L/C
Issuer and each Lender to make its initial Credit Extension hereunder is subject
to satisfaction of the following conditions precedent:

 

(a)           The Agent’s receipt of the following, each of which shall be
originals, telecopies or other electronic image scan transmission (e.g., “pdf”
or “tif “ via e-mail) (followed promptly by originals) unless otherwise
specified, each properly executed by a Responsible Officer of the signing Loan
Party or the Lenders, as applicable, each dated the Closing Date (or, in the
case of certificates of governmental officials, a recent date before the Closing
Date) and each in form and substance reasonably satisfactory to the Agent:

 

(i)            executed counterparts of this Agreement sufficient in number for
distribution to the Agent, each Lender and the Borrower;

 

(ii)           a Note executed by the Borrower in favor of each Lender
requesting a Note;

 

(iii)          such certificates of resolutions or other action, incumbency
certificates and/or other certificates of Responsible Officers of each Loan
Party as the Agent may require evidencing (A) the authority of each Loan Party
to enter into this Agreement and the other Loan Documents to which such Loan
Party is a party or is to become a party and (B) the identity, authority and
capacity of each Responsible Officer thereof authorized to act as a Responsible
Officer in connection with this Agreement and the other Loan Documents to which
such Loan Party is a party or is to become a party;

 

(iv)          copies of each Loan Party’s Organization Documents and such other
documents and certifications as the Agent may reasonably require to evidence
that each Loan Party is duly organized or formed, and that each Loan Party is
validly existing, in good standing and qualified to engage in business in each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification, except to the extent that
failure to so qualify in such jurisdiction would not reasonably be expected to
have a Material Adverse Effect;

 

(v)           a favorable opinion of Jones Day, counsel to the Loan Parties, and
of certain local counsel to the Loan Parties, in each case, addressed to the
Agent and each Lender, as to such matters concerning the Loan Parties and the
Loan Documents as the Agent may reasonably request;

 

(vi)          a certificate signed by a Responsible Officer of the Borrower
certifying (A) that the conditions specified in Sections 4.02(a) and (b) have
been satisfied, (B) that

 

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there has been no event or circumstance since the date of the Audited Financial
Statements that has had or would be reasonably expected to have, either
individually or in the aggregate, a Closing Date Material Adverse Effect, (C) to
the Solvency of the Loan Parties, taken as a whole, as of the Closing Date after
giving effect to the transactions contemplated hereby, and (D) either that
(1) no consents, licenses or approvals are required in connection with the
execution, delivery and performance by such Loan Party and the validity against
such Loan Party of the Loan Documents to which it is a party, or (2) that all
such consents, licenses and approvals have been obtained and are in full force
and effect;

 

(vii)         evidence that all insurance required to be maintained pursuant to
the Loan Documents and all endorsements in favor of the Agent required under the
Loan Documents have been obtained and are in effect;

 

(viii)        a payoff letter from the agent for the lenders under the Existing
Credit Agreement reasonably satisfactory in form and substance to the Agent
evidencing that the Existing Credit Agreement has been or concurrently with the
Closing Date is being terminated, all obligations thereunder are being paid in
full, and all Liens securing obligations under the Existing Credit Agreement
have been or concurrently with the Closing Date are being released;

 

(ix)           the Security Documents, each duly executed by the applicable Loan
Parties;

 

(x)            all other Loan Documents, each duly executed by the applicable
Loan Parties;

 

(xi)           a written report regarding the results of a commercial finance
examination of the Loan Parties, which shall be reasonably satisfactory to the
Agent;

 

(xii)          results of searches or other evidence reasonably satisfactory to
the Agent (in each case dated as of a date reasonably satisfactory to the Agent)
indicating the absence of Liens on the assets of the Loan Parties, except for
Permitted Encumbrances and Liens for which termination statements and releases
or subordination agreements reasonably satisfactory to the Agent are being
tendered concurrently with such extension of credit or other arrangements
reasonably satisfactory to the Agent for the delivery of such termination
statements and releases have been made;

 

(xiii)       (A)           all documents and instruments, including Uniform
Commercial Code financing statements, required by law or reasonably requested by
the Agent to be filed, registered or recorded to create or perfect the first
priority Liens intended to be created under the Loan Documents and all such
documents and instruments shall have been, or concurrently with the Closing Date
are, so filed, registered or recorded to the reasonable satisfaction of the
Agent, (B) the Credit Card Notifications and Blocked Account Agreements required
pursuant to Section 6.13 hereof, (C) control agreements with respect to the Loan
Parties’ securities and investment accounts, and (D) Collateral Access
Agreements as requested by the Agent (which requests shall be limited to
(i) distribution centers, warehouses and locations in any Landlord Lien State
and (ii) locations maintained by any internet fulfillment company in which the
Borrower’s inventory may be maintained, provided that, if, after exercising
commercially reasonable efforts, the Borrower is unable to obtain Collateral
Access Agreements with respect to (x) 

 

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any retail location, then the Agent shall apply an Availability Reserve in the
amount of two (2) months’ rent for such location, and (y) locations maintained
by any internet fulfillment company, then any Inventory maintained at such
locations shall not be Eligible Inventory); and

 

(xiv)        such other assurances, certificates, documents, consents or
opinions as the Agent reasonably may require.

 

(b)           After giving effect to (i) any Loans funded on the Closing Date,
(ii) any charges to the Loan Account made in connection with the establishment
of the credit facility contemplated hereby and (iii) all Letters of Credit to be
issued at, or immediately subsequent to, such establishment, Availability shall
be not less than $400,000,000.

 

(c)           The Agent shall have received a Borrowing Base Certificate dated
the Closing Date, relating to the month ended on October 29, 2011, and executed
by a Responsible Officer of the Borrower.

 

(d)           There shall not have occurred since January 29, 2011 (a) any event
or condition that has had or would be reasonably expected, either individually
or in the aggregate, to have a Closing Date Material Adverse Effect or (b) any
action, suit, investigation or proceeding pending or, to the knowledge of the
Borrower, threatened in any court or before any arbitrator or governmental
authority that would reasonably be expected to have a Closing Date Material
Adverse Effect.  All of the written information (including the projections
delivered to the Agent pursuant to Section 4.01(e) below) furnished to the Agent
shall be complete and correct in all material respects and no changes or
developments shall have occurred, and no new or additional information, shall
have been received or discovered by the Agent regarding the Loan Parties or
their respective Subsidiaries or the transactions contemplated hereby after
July 30, 2011 that, individually or in the aggregate, would reasonably be
expected to have a Closing Date Material Adverse Effect.

 

(e)           The Agent shall have received and be satisfied with (a) detailed
financial projections, including, in each case, a Consolidated income statement,
balance sheet, statement of cash flow, Availability analysis and business
assumptions for the Borrower and its Subsidiaries, on an annual basis for each
fiscal year through the Maturity Date, and (b) such other information (financial
or otherwise) reasonably requested by the Agent.

 

(f)            The consummation of the transactions contemplated hereby shall
not violate any applicable Law applicable to the Loan Parties or any
Organization Document of the Loan Parties.

 

(g)           All fees required to be paid to the Agent or the Arrangers on or
before the Closing Date shall have been paid in full, and all fees required to
be paid to the Lenders on or before the Closing Date shall have been paid in
full.

 

(h)           The Borrower shall have paid all fees, charges and disbursements
of counsel to the Agent to the extent required and invoiced prior to or on the
Closing Date.

 

(i)            The Agent and the Lenders shall have received all documentation
and other information required by regulatory authorities under applicable “know
your customer” and anti-money laundering rules and regulations, including
without limitation the Act.

 

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Without limiting the generality of the provisions of Section 9.04, for purposes
of determining compliance with the conditions specified in this Section 4.01,
each Lender that has signed this Agreement shall be deemed to have Consented to,
approved or accepted or to be satisfied with, each document or other matter
required thereunder to be Consented to or approved by or acceptable or
satisfactory to a Lender unless the Agent shall have received notice from such
Lender prior to the proposed Closing Date specifying its objection thereto.

 

4.02        Conditions to all Credit Extensions.  The obligation of each Lender
to honor any Request for Credit Extension (other than a Committed Loan Notice
requesting only a conversion of Committed Loans to the other Type, or a
continuation of LIBO Rate Loans) and each L/C Issuer to issue each Letter of
Credit is subject to the following conditions precedent:

 

(a)           The representations and warranties of each other Loan Party
contained in Article V or in any other Loan Document, or which are contained in
any document furnished at any time under or in connection herewith or therewith,
shall be true and correct in all material respects on and as of the date of such
Credit Extension, except (i) to the extent that such representations and
warranties specifically refer to an earlier date, in which case they shall be
true and correct in all material respects as of such earlier date, (ii) in the
case of any representation and warranty qualified by materiality, they shall be
true and correct in all respects, and (iii) for purposes of this Section 4.02,
the representations and warranties contained in subsections (a) and (b) of
Section 5.05 shall be deemed to refer to the most recent statements furnished
pursuant to clauses (a) and (b), respectively, of Section 6.01.

 

(b)           No Default or Event of Default shall exist, or would result
immediately after giving effect to such proposed Credit Extension or the
application of the proceeds thereof.

 

(c)           The Agent and, if applicable, the L/C Issuer or the Swing Line
Lender shall have received a Request for Credit Extension in accordance with the
requirements hereof.

 

(d)           Immediately after giving effect to the Credit Extension requested
to be made on any such date and the use of proceeds thereof, Availability shall
be greater than zero.

 

Each Request for Credit Extension (other than a Committed Loan Notice requesting
only a conversion of Committed Loans to the other Type or a continuation of LIBO
Rate Loans) submitted by the Borrower shall be deemed to be a representation and
warranty by the Borrower that the conditions specified in Sections 4.02(a) and
(b) have been satisfied on and as of the date of the applicable Credit
Extension.  The conditions set forth in this Section 4.02 are for the sole
benefit of the Credit Parties but until the Required Lenders otherwise direct
the Agent to cease making Loans and issuing Letters of Credit, the Lenders will
fund their Applicable Percentage of all Loans and participate in all Swing Line
Loans and Letters of Credit whenever made or issued, which are requested by the
Borrower and which, notwithstanding the failure of the Loan Parties  to comply
with the provisions of this Article IV, agreed to by the Agent, provided,
however, the making of any such Loans or the issuance of any Letters of Credit
shall not be deemed a modification or waiver by any Credit Party of the
provisions of this Article IV on any future occasion or a waiver of any rights
or the Credit Parties as a result of any such failure to comply.

 

ARTICLE V
REPRESENTATIONS AND WARRANTIES

 

To induce the Credit Parties to enter into this Agreement and to make Loans and
to issue Letters of Credit hereunder, each Loan Party represents and warrants to
the Agent and the other Credit Parties that:

 

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5.01        Existence, Qualification and Power.  Each Loan Party (a) is a
corporation, limited liability company, partnership or limited partnership, duly
incorporated, organized or formed, validly existing and, where applicable, in
good standing under the Laws of the jurisdiction of its incorporation,
organization, or formation (b) has all requisite power and authority and all
requisite governmental licenses, permits, authorizations, consents and approvals
to (i) own or lease its assets and carry on its business and (ii) execute,
deliver and perform its obligations under the Loan Documents to which it is a
party, and (c) is duly qualified and is licensed and, where applicable, in good
standing under the Laws of each jurisdiction where its ownership, lease or
operation of properties or the conduct of its business requires such
qualification or license; except in each case referred to in clause (b)(i) or
(c), to the extent that failure to do so would not reasonably be expected to
have a Material Adverse Effect.  Schedule 5.01 annexed hereto sets forth, as of
the Closing Date, each Loan Party’s name as it appears in official filings in
its state of incorporation or organization, its state of incorporation or
organization, organization type, organization number, if any, issued by its
state of incorporation or organization, and its federal employer identification
number.

 

5.02        Authorization; No Contravention.  The execution, delivery and
performance by each Loan Party of each Loan Document to which such Person is or
is to be a party, has been duly authorized by all necessary corporate or other
organizational action, and does not and will not (a) contravene the terms of any
of such Person’s Organization Documents; (b) conflict with or result in any
breach, termination, or contravention of, or constitute a default under, or
require any payment to be made under (i) any Material Contract or any Material
Indebtedness to which such Person is a party or affecting such Person or the
properties of such Person or any of its Subsidiaries or (ii) any material order,
injunction, writ or decree of any Governmental Authority or any material
arbitral award to which such Person or its property is subject; (c) result in or
require the creation of any Lien upon any asset of any Loan Party (other than
Liens in favor of the Agent under the Security Documents); or (d) violate any
Law.

 

5.03        Governmental Authorization; Other Consents.  No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, any Loan Party of this Agreement or any other Loan Document, except for
(a) the perfection or maintenance of the Liens created under the Security
Documents (including the first priority nature thereof) or (b) such as have been
obtained or made and are in full force and effect.

 

5.04        Binding Effect.  This Agreement has been, and each other Loan
Document, when delivered, will have been, duly executed and delivered by each
Loan Party that is party thereto.  This Agreement constitutes, and each other
Loan Document when so delivered will constitute, a legal, valid and binding
obligation of such Loan Party, enforceable against each Loan Party that is party
thereto in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’ rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.

 

5.05        Financial Statements; No Material Adverse Effect.

 

(a)           The Audited Financial Statements (i) were prepared in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein, and (ii) fairly present in all material
respects the financial condition of the Borrower and its Subsidiaries as of the
date thereof and their results of operations for the period covered thereby in
accordance with GAAP consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein.

 

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(b)           The unaudited Consolidated balance sheet of the Borrower and its
Subsidiaries dated July 30, 2011, and the related Consolidated statements of
income or operations, Shareholders’ Equity and cash flows for the Fiscal Quarter
ended on that date (i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein, and (ii) fairly present in all material respects the financial
condition of the Borrower and its Subsidiaries as of the date thereof and their
results of operations for the period covered thereby, subject, in the case of
clauses (i) and (ii), to the absence of footnotes and to normal year-end audit
adjustments.

 

(c)           Since the date of the Audited Financial Statements, there has been
no event or circumstance, either individually or in the aggregate, that has had
or would reasonably be expected to have a Material Adverse Effect.

 

(d)           To the knowledge of the Borrower, no Internal Control Event exists
or has occurred since the date of the Audited Financial Statements that has
resulted in or would reasonably be expected to result in a misstatement in any
material respect, (i) in any financial information delivered or to be delivered
to the Agent or the Lenders, (ii) of the Borrowing Base, (iii) of covenant
compliance calculations provided hereunder or (iv) of the assets, liabilities,
financial condition or results of operations of the Borrower and its
Subsidiaries on a Consolidated basis.

 

(e)           The Consolidated forecasted balance sheet and statements of income
and cash flows of the Borrower and its Subsidiaries delivered pursuant to
Section 6.01(d) were prepared in good faith on the basis of the assumptions
which, in the reasonable belief of the Borrower, were fair in light of the
conditions existing at the time of delivery of such forecasts, and represented,
at the time of delivery, the Loan Parties’ best estimate of its future financial
performance, it being understood that forecasts are estimates and such forecasts
are not facts, and that actual results may differ materially from such
forecasts.

 

5.06        Litigation.  There are no actions, suits, proceedings, claims or
disputes pending or, to the knowledge of the Loan Parties, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, by or against any Loan Party or any of its Subsidiaries or against
any of its properties or revenues that (a) purport to affect or pertain to this
Agreement or any other Loan Document, or any of the transactions contemplated
hereby, or (b) either individually or in the aggregate, if determined adversely,
would reasonably be expected to have a Material Adverse Effect.

 

5.07        No Default.  No Loan Party or any Subsidiary is in default under or
with respect to, or party to, any Material Contract.  No Default or Event of
Default has occurred and is continuing or would result from the consummation of
the transactions contemplated by this Agreement or any other Loan Document.

 

5.08        Ownership of Property; Liens

 

(a)           Each of the Loan Parties and each Subsidiary thereof has good
record and marketable title in fee simple to or valid leasehold interests
(subject to Permitted Encumbrances) in, all Real Estate necessary or used in the
ordinary conduct of its business, except for such defects in title as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.  Each of the Loan Parties and each Subsidiary has (subject to
Permitted Encumbrances) good and marketable title to, valid leasehold interests
in, or valid licenses to use all personal property and assets material to the
ordinary conduct of its business.

 

(b)           Schedule 5.08(b)(1) sets forth the address as of the Closing Date
(including street address, county and state) of all Real Estate that is owned by
the Loan Parties, together with a list of the

 

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holders of any mortgage or other Lien thereon.  Each Loan Party has good,
marketable and insurable fee simple title to the Real Estate owned by such Loan
Party, free and clear of all Liens, other than Permitted Encumbrances.  Schedule
5.08(b)(2) sets forth, as of the Closing Date, the address (including street
address, county and state) of all Leases of the Loan Parties, together with a
list of the lessor and its contact information with respect to each such Lease.
As of the Closing Date, each of such Leases is in full force and effect and the
Loan Parties are not in default of the terms thereof.

 

(c)           The property of each Loan Party and each of its Subsidiaries is
subject to no Liens, other than Permitted Encumbrances.

 

(d)           The Loan Parties hold no Investments other than Permitted
Investments.

 

(e)           The Loan Parties are not obligated with respect to any
Indebtedness other than Permitted Indebtedness.

 

5.09        Environmental Compliance

 

(a)           Except to the extent a Material Adverse Effect would not
reasonably be expected to result therefrom:

 

(i)            No Loan Party or any Subsidiary thereof (A) has failed to comply
with any Environmental Law or to obtain, maintain or comply with any permit,
license or other approval required under any Environmental Law, (B) has become
subject to any Environmental Liability, (C) has received notice of any claim
with respect to any Environmental Liability or (D) knows of any basis for any
Environmental Liability, except, in each case, as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(i)            None of the properties currently or formerly owned or operated by
any Loan Party or any Subsidiary thereof is listed or proposed for listing on
the NPL or on the CERCLIS or any analogous foreign, state or local list or is
adjacent to any such property; there are no and never have been any underground
or above-ground storage tanks or any surface impoundments, septic tanks, pits,
sumps or lagoons in which Hazardous Materials are being or have been treated,
stored or disposed on any property currently owned or operated by any Loan Party
or any Subsidiary thereof or, to the knowledge of the Loan Parties, on any
property formerly owned or operated by any Loan Party or Subsidiary thereof; to
the knowledge of the Loan Parties, there is no asbestos or asbestos-containing
material on any property currently owned or operated by any Loan Party or
Subsidiary thereof in violation of any Environmental Law; and Hazardous
Materials have not been released, discharged or disposed of on any property
currently or formerly owned or operated by any Loan Party or any Subsidiary
thereof in violation of any Environmental Law.

 

(b)           No Loan Party or any Subsidiary thereof is undertaking, and no
Loan Party or any Subsidiary thereof has completed, either individually or
together with other potentially responsible parties, any investigation or
assessment or remedial or response action relating to any actual or threatened
release, discharge or disposal of Hazardous Materials at any site, location or
operation, either voluntarily or pursuant to the order of any Governmental
Authority or the requirements of any Environmental Law; and, to the knowledge of
the Loan Parties, all Hazardous Materials generated, used, treated, handled or
stored at, or transported to or from, any property currently or formerly owned
or operated by any Loan Party or any Subsidiary thereof

 

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have been disposed of in a manner not reasonably expected to result in material
liability to any Loan Party or any Subsidiary thereof.

 

5.10        Insurance.  The properties of the Loan Parties and their
Subsidiaries are insured with financially sound and reputable insurance
companies which are not Affiliates of the Loan Parties, in such amounts, with
such deductibles and covering such risks (including, without limitation,
workmen’s compensation, public liability, business interruption, property damage
and directors and officers liability insurance) as are customarily carried by
companies engaged in similar businesses and owning similar properties in
localities where the Loan Parties or the applicable Subsidiary operates. 
Schedule 5.10 sets forth a description of all insurance maintained by or on
behalf of the Loan Parties as of the Closing Date. As of the Closing Date, each
insurance policy listed on Schedule 5.10 is in full force and effect and all
premiums in respect thereof that are due and payable have been paid.

 

5.11        Taxes.  The Loan Parties and their Subsidiaries have filed all
Federal, state and other material tax returns and reports required to be filed,
and have paid all Federal, state and other material taxes, assessments, fees and
other governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable, except, in each case, (i)  those
which are being contested in good faith by appropriate proceedings being
diligently conducted, for which adequate reserves have been provided in
accordance with GAAP, as to which Taxes no Lien has been filed and which contest
effectively suspends the collection of the contested obligation and the
enforcement of any Lien securing such obligation, or (ii) to the extent that the
failure to do so would not reasonably be expected to result in a Material
Adverse Effect.  To the knowledge of the Loan Parties, there is no proposed tax
assessment against any Loan Party or any Subsidiary that would, if made, have a
Material Adverse Effect.  No Loan Party or any Subsidiary thereof is a party to
any tax sharing agreement.

 

5.12        ERISA Compliance.

 

(a)           Each Plan is in compliance with the applicable provisions of
ERISA, the Code and other Federal or state Laws, except where the failure to do
so would not reasonably be expected to have a Material Adverse Effect.  Each
Plan that is intended to qualify under Section 401(a) of the Code has received a
favorable determination letter from the IRS or an application for such a letter
is currently being processed by the IRS with respect thereto and, to the best
knowledge of the Borrower, nothing has occurred which would prevent, or cause
the loss of, such qualification.  The Loan Parties and each ERISA Affiliate have
made all required contributions to each Plan subject to Section 412 of the Code,
and no application for a funding waiver or an extension of any amortization
period pursuant to Section 412 of the Code has been made with respect to any
Plan.  No Lien imposed under the Code or ERISA exists or is likely to arise on
account of any Plan.

 

(b)           There are no pending or, to the best knowledge of the Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan that would reasonably be expected to have a Material
Adverse Effect.  There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
would reasonably be expected to result in a Material Adverse Effect.

 

(c)           Except as would not reasonably be expected to result in a Material
Adverse Effect, (i) no ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
any Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA);
(iv) neither any Loan Party nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such liability)
under

 

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Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and
(v) neither any Loan Party nor any ERISA Affiliate has engaged in a transaction
that could be subject to Sections 4069 or 4212(c) of ERISA.

 

5.13        Subsidiaries; Equity Interests.

 

As of the Closing Date, the Loan Parties have no Subsidiaries other than those
specifically disclosed in Part (a) of Schedule 5.13, which Schedule sets forth
the legal name, jurisdiction of incorporation or formation and authorized Equity
Interests of each such Subsidiary.  As of the Closing Date, all of the
outstanding Equity Interests in such Subsidiaries have been validly issued, are
fully paid and non-assessable (to the extent such concepts are applicable) and
are owned by a Loan Party (or a Subsidiary of a Loan Party) in the amounts
specified on Part (a) of Schedule 5.13 free and clear of all Liens except for
Permitted Encumbrances.  Except as set forth in Schedule 5.13, as of the Closing
Date, there are no outstanding rights to purchase any Equity Interests in any
Subsidiary.  As of the Closing Date, the Loan Parties have no equity investments
in any other corporation or entity other than those specifically disclosed in
Part(b) of Schedule 5.13.  As of the Closing Date all of the outstanding Equity
Interests in the Loan Parties have been validly issued, and are fully paid and
non-assessable (to the extent such concepts are applicable) and are owned in the
amounts specified on Part (c) of Schedule 5.13 free and clear of all Liens other
than Permitted Encumbrances arising by operation of Law.  As of the Closing
Date, the copies of the Organization Documents of each Loan Party and each
amendment thereto provided pursuant to Section 4.01 are true and correct copies
of each such document, each of which is valid and in full force and effect.

 

5.14        Margin Regulations; Investment Company Act.

 

(a)           No Loan Party is engaged or will be engaged, principally or as one
of its important activities, in the business of purchasing or carrying margin
stock (within the meaning of Regulation U issued by the FRB), or extending
credit for the purpose of purchasing or carrying margin stock.  None of the
proceeds of the Credit Extensions shall be used directly or indirectly for the
purpose of purchasing or carrying any margin stock, for the purpose of reducing
or retiring any Indebtedness that was originally incurred to purchase or carry
any margin stock or for any other purpose that might cause any of the Credit
Extensions to be considered a “purpose credit” within the meaning of Regulations
T, U, or X issued by the FRB.

 

(b)           None of the Loan Parties, any Person Controlling any Loan Party,
or any Subsidiary is or is required to be registered as an “investment company”
under the Investment Company Act of 1940.

 

5.15        Disclosure.  Each Loan Party has disclosed to the Agent and the
Lenders all agreements, instruments and corporate or other restrictions to which
it or any of its Subsidiaries is subject, and all other matters known to it,
that, individually or in the aggregate, would reasonably be expected to result
in a Material Adverse Effect.  No report, financial statement, certificate or
other information furnished in writing by or on behalf of any Loan Party to the
Agent or any Lender in connection with the transactions contemplated hereby and
the negotiation of this Agreement or delivered hereunder or under any other Loan
Document (in each case, as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with
respect to projected financial information, the Loan Parties represent only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time.

 

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5.16        Compliance with Laws.  Each of the Loan Parties and each Subsidiary
is in compliance in all material respects with the requirements of all Laws and
all orders, writs, injunctions and decrees applicable to it or to its
properties, except in such instances in which (a) such requirement of Law or
order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply
therewith, either individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.

 

5.17        Intellectual Property; Licenses, Etc.  The Loan Parties and their
Subsidiaries own, or possess the right to use, all of the Intellectual Property,
licenses, permits and other authorizations that are reasonably necessary for the
operation of their respective businesses, except where the failure to do so
would not reasonably be expected to have a Material Adverse Effect. To the
knowledge of the Loan Parties, the use by the Loan Parties of such Intellectual
Property, licenses and permits does not conflict with the rights of any other
Person.  No claim or litigation regarding any of the foregoing is pending or, to
the knowledge of the Borrower, threatened, which, either individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.

 

5.18        Labor Matters.

 

Except to the extent a Material Adverse Effect would not reasonably be expected
to result therefrom, there are no strikes, lockouts, slowdowns or other material
labor disputes against any Loan Party or any Subsidiary thereof pending or, to
the knowledge of any Loan Party, threatened. The hours worked by and payments
made to employees of the Loan Parties comply with the Fair Labor Standards Act
and any other applicable federal, state, local or foreign Law dealing with such
matters except to the extent that any such violation would not reasonably be
expected to have a Material Adverse Effect. No Loan Party or any of its
Subsidiaries has incurred any liability or obligation under the Worker
Adjustment and Retraining Act or similar state Law except to the extent that any
such liability or obligations would not reasonably be expected to have a
Material Adverse Effect.  All payments due from any Loan Party and its
Subsidiaries, or for which any claim may be made against any Loan Party or any
of its Subsidiaries, on account of wages and employee health and welfare
insurance and other benefits, have been paid or properly accrued in accordance
with GAAP as a liability on the books of such Loan Party. Except as set forth on
Schedule 5.18, as of the Closing Date, no Loan Party or any Subsidiary is a
party to or bound by any collective bargaining agreement, management agreement,
employment agreement, bonus, restricted stock, stock option, or stock
appreciation plan or agreement or any similar plan, agreement or arrangement.
There are no representation proceedings pending or, to any Loan Party’s
knowledge, threatened to be filed with the National Labor Relations Board, and
no labor organization or group of employees of any Loan Party or any Subsidiary
has made a pending demand for recognition. Except to the extent a Material
Adverse Effect would not reasonably be expected to result therefrom, there are
no complaints, unfair labor practice charges, grievances, arbitrations, unfair
employment practices charges or any other claims or complaints against any Loan
Party or any Subsidiary pending or, to the knowledge of any Loan Party,
threatened to be filed with any Governmental Authority or arbitrator based on,
arising out of, in connection with, or otherwise relating to the employment or
termination of employment of any employee of any Loan Party or any of its
Subsidiaries. The consummation of the transactions contemplated by the Loan
Documents will not give rise to any right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which any Loan Party or any of its Subsidiaries is bound.

 

5.19        Security Documents.

 

The Security Agreement creates in favor of the Agent, for the benefit of the
Credit Parties, a legal, valid, continuing and enforceable security interest in
the Collateral (as defined in the Security Agreement), the enforceability of
which is subject to applicable bankruptcy, insolvency, reorganization,

 

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moratorium or other laws affecting creditors’ rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law.  The financing statements, releases and other filings are
in appropriate form and have been or will be filed in the offices specified in
Schedule II of the Security Agreement.  Upon such filings and/or the obtaining
of “control,” (as defined in the UCC) the Agent will have a perfected Lien on,
and security interest in, to and under all right, title and interest of the
grantors thereunder in all Collateral that may be perfected by filing, recording
or registering a financing statement or analogous document (including without
limitation the proceeds of such Collateral subject to the limitations relating
to such proceeds in the UCC) or by obtaining control, under the UCC (in effect
on the date this representation is made) in each case prior and superior in
right to any other Person, other than Permitted Encumbrances having priority
over the Lien of the Agent under applicable Law.

 

5.20        Solvency

 

After giving effect to the transactions contemplated by this Agreement, and
before and after giving effect to each Credit Extension, the Loan Parties, on a
Consolidated basis, are Solvent. No transfer of property has been or will be
made by any Loan Party and no obligation has been or will be incurred by any
Loan Party in connection with the transactions contemplated by this Agreement or
the other Loan Documents with the intent to hinder, delay, or defraud either
present or future creditors of any Loan Party.

 

5.21        Deposit Accounts; Credit Card Arrangements.

 

(a)           Annexed hereto as Schedule 5.21(a) is a list of all DDAs
maintained by the Loan Parties as of the Closing Date, which Schedule includes,
with respect to each DDA (i) the name and address of the depository; (ii) the
account number(s) maintained with such depository; (iii) a contact person at
such depository, and (iv) the identification of each Blocked Account Bank.

 

(b)           Annexed hereto as Schedule 5.21(b) is a list describing all
arrangements as of the Closing Date to which any Loan Party is a party with
respect to the processing and/or payment to such Loan Party of the proceeds of
any credit card charges and debit card charges for sales made by such Loan
Party.

 

5.22        Brokers.  No broker or finder brought about the obtaining, making or
closing of the Loans or transactions contemplated by the Loan Documents, and no
Loan  Party or Affiliate thereof has any obligation to any Person in respect of
any finder’s or brokerage fees in connection therewith.

 

5.23        Material Contracts.  Schedule 5.23 sets forth all Material Contracts
to which any Loan Party is a party or is bound as of the Closing Date.  The Loan
Parties have filed true, correct and complete copies of such Material Contracts
with the SEC or have provided a copy thereof to the Agent.  The Loan Parties are
not in breach or in default in any material respect of or under any Material
Contract and have not received any notice of the intention of any other party
thereto to terminate any Material Contract.

 

ARTICLE VI
AFFIRMATIVE COVENANTS

 

So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied (other than contingent
indemnification obligations for which a claim has not been asserted) , or any
Letter of Credit shall remain outstanding, the Loan Parties shall, and shall
(except in the case of the covenants set forth in Sections 6.01, 6.02, and 6.03)
cause each Subsidiary to:

 

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6.01        Financial Statements.  Deliver to the Agent, in form and detail
satisfactory to the Agent:

 

(a)           within 90 days after the end of each Fiscal Year of the Borrower,
a Consolidated balance sheet of the Borrower and its Subsidiaries as at the end
of such Fiscal Year, and the related Consolidated statements of income or
operations, Shareholders’ Equity and cash flows for such Fiscal Year, setting
forth in each case in comparative form the figures for the previous Fiscal Year,
all in reasonable detail and prepared in accordance with GAAP, audited and
accompanied by a report and an opinion of a Registered Public Accounting Firm of
nationally recognized standing reasonably acceptable to the Agent, which report
and opinion shall be prepared in accordance with generally accepted auditing
standards and shall not be subject to any “going concern” or like qualification
or exception or any qualification or exception as to the scope of such audit;

 

(b)           within 45 days after the end of each of the Fiscal Quarters of
each Fiscal Year of the, a Consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such Fiscal Quarter, and the related Consolidated
statements of income or operations, Shareholders’ Equity and cash flows for such
Fiscal Quarter and for the portion of the Borrower’s Fiscal Year then ended,
setting forth in each case in comparative form the figures for (A) such period
set forth in the projections delivered pursuant to Section 6.01(d) hereof,
(B) the corresponding Fiscal Quarter of the previous Fiscal Year and (C) the
corresponding portion of the previous Fiscal Year, all in reasonable detail,
certified by a Responsible Officer of the Borrower as fairly presenting in all
material respects the financial condition, results of operations, Shareholders’
Equity and cash flows of the Borrower and its Subsidiaries as of the end of such
Fiscal Quarter in accordance with GAAP, subject only to normal year-end audit
adjustments and the absence of footnotes;

 

(c)           if Availability is at any time less than the greater of
(i) $50,000,000 and (ii) fifteen (15%) percent of the Loan Cap, then within 30
days after the end of each of the Fiscal Months of each Fiscal Year of the
Borrower, a Consolidated balance sheet of the Borrower and its Subsidiaries as
at the end of such Fiscal Month, and the related Consolidated statements of
income or operations, Shareholders’ Equity and cash flows for such Fiscal Month,
and for the portion of the Borrower’s Fiscal Year then ended, setting forth in
each case in comparative form the figures for (A) such period set forth in the
projections delivered pursuant to Section 6.01(d) hereof, (B) the corresponding
Fiscal Month of the previous Fiscal Year and (C) the corresponding portion of
the previous fiscal year, all in reasonable detail, certified by a Responsible
Officer of the Borrower as fairly presenting in all material respects the
financial condition, results of operations, Shareholders’ Equity and cash flows
of the Borrower and its Subsidiaries as of the end of such Fiscal Month in
accordance with GAAP, subject only to normal year-end audit adjustments and the
absence of footnotes;

 

(d)           within 30 days after the end of each Fiscal Year of the Borrower,
forecasts prepared by management of the Borrower, in form reasonably
satisfactory to the Agent, of Consolidated balance sheets and statements of
income or operations and cash flows of the Borrower and its Subsidiaries, and an
Availability analysis, in each case on a monthly basis for the immediately
following Fiscal Year (including the Fiscal Year in which the Maturity Date
occurs), and as soon as available, any significant revisions to such forecast
with respect to such Fiscal Year.

 

6.02        Certificates; Other Information.  Deliver to the Agent, in form and
detail reasonably satisfactory to the Agent:

 

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(a)           concurrently with the delivery of the financial statements
referred to in Sections 6.01(a) and (b) and (c) (if applicable), a duly
completed Compliance Certificate signed by a Responsible Officer of the
Borrower, and in the event of any change in generally accepted accounting
principles used in the preparation of such financial statements, the Borrower
shall also provide a statement of reconciliation conforming such financial
statements to GAAP and (ii) a copy of management’s discussion and analysis with
respect to such financial statements;

 

(b)           on the 15th  day of each Fiscal Quarter (or, if such day is not a
Business Day, on the next succeeding Business Day), a Borrowing Base Certificate
showing the Borrowing Base as of the close of business as of the last day of the
immediately preceding Fiscal Quarter (provided that the Appraised Value
percentage applied to the Eligible Inventory set forth in each Borrowing Base
Certificate shall be the percentage set forth in the most recent appraisal
obtained by the Agent pursuant to Section 6.10 hereof for the applicable monthly
periods in which such Borrowing Base Certificate is delivered), each Borrowing
Base Certificate to be certified as complete and correct by a Responsible
Officer of the Borrower; provided that at any time that a Monthly Borrowing Base
Delivery Event has occurred and is continuing, such Borrowing Base Certificate
shall be delivered on the 15th  day of each Fiscal Month (or, if such day is not
a Business Day, on the next succeeding Business Day), as of the close of
business as of the last day of the immediately preceding Fiscal Month; provided
further that at any time that a Weekly Borrowing Base Delivery Event has
occurred and is continuing, such Borrowing Base Certificate shall be delivered
on Tuesday of each week (or, if Tuesday is not a Business Day, on the next
succeeding Business Day), as of the close of business on the immediately
preceding Saturday;

 

(c)           promptly after the same are available, copies of each annual
report, proxy or financial statement or other report or communication sent to
the stockholders of the Loan Parties, and copies of all annual, regular,
periodic and special reports and registration statements which any Loan Party
may file or be required to file with the SEC under Section 13 or 15(d) of the
Securities Exchange Act of 1934 or with any national securities exchange, and in
any case not otherwise required to be delivered to the Agent pursuant hereto;
provided that, to the extent that the Loan Parties are legally able to do so,
the Loan Parties shall endeavor to provide the Agent with prior notice of any
change in the Borrower’s chief executive officer, chief financial officer or
chief operating officer, and of the discharge by any Loan Party of its present
Registered Public Accounting Firm or any withdrawal or resignation by such
Registered Public Accounting Firm, in each case before such information is filed
with the SEC;

 

(d)           the financial and collateral reports described on Schedule 6.02
hereto, at the times set forth in such Schedule;

 

(e)           within 30 days after the end of each Fiscal Year of the Loan
Parties, a report summarizing the insurance coverage (specifying type, amount
and carrier) in effect for each Loan Party and its Subsidiaries and containing
such additional information as the Agent, or any Lender through the Agent, may
reasonably specify;

 

(f)            promptly, and in any event within five Business Days after
receipt thereof by any Loan Party or any Subsidiary thereof, copies of each
notice or other correspondence received from any Governmental Authority
(including, without limitation, the SEC (or comparable agency in any applicable
non-U.S. jurisdiction)) concerning any proceeding with, or investigation or
possible investigation or other inquiry by such Governmental Authority regarding
financial or other operational results of any Loan Party or any Subsidiary
thereof or any other matter which, if adversely determined, would reasonably be
expected to have a Material Adverse Effect; and

 

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(g)           promptly, such additional information regarding the business
affairs, financial condition or operations of any Loan Party or any Subsidiary,
or compliance with the terms of the Loan Documents, as the Agent or any Lender
may from time to time reasonably request.

 

Documents required to be delivered pursuant to Section 6.01(a), (b), or (c) or
Section 6.02(c) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which the
Borrower posts such documents, or provides a link thereto on the Borrower’s
website on the Internet at the website address listed on Schedule 10.02; or
(ii) on which such documents are posted on the Borrower’s behalf on an Internet
or intranet website, if any, to which each Lender and the Agent have access
(whether a commercial, third-party website or whether sponsored by the Agent);
provided that: (i) the Borrower shall deliver paper copies of such documents to
the Agent or any Lender that requests the Borrower to deliver such paper copies
until a written request to cease delivering paper copies is given by the Agent
or such Lender and (ii) the Borrower shall notify the Agent and each Lender (by
telecopier or electronic mail) of the posting of any such documents and provide
to the Agent by electronic mail electronic versions (i.e., soft copies) of such
documents.  Notwithstanding anything contained herein, in every instance the
Borrower shall be required to provide paper copies of the Compliance
Certificates required by Section 6.02(b) to the Agent.  The Agent shall have no
obligation to request the delivery or to maintain copies of the documents
referred to above, and in any event shall have no responsibility to monitor
compliance by the Loan Parties with any such request for delivery, and each
Lender shall be solely responsible for requesting delivery to it or maintaining
its copies of such documents.

 

The Loan Parties hereby acknowledge that (a) the Agent and/or the Arrangers will
make available to the Lenders and the L/C Issuer materials and/or information
provided by or on behalf of the Loan Parties hereunder (collectively, “Borrower
Materials”) by posting the Borrower Materials on IntraLinks or another similar
electronic system (the “Platform”) and (b) certain of the Lenders may be
“public-side” Lenders (i.e., Lenders that do not wish to receive material
non-public information with respect to the Loan Parties or their securities)
(each, a “Public Lender”).  The Loan Parties hereby agree that they will use
commercially reasonable efforts to identify that portion of the Borrower
Materials that may be distributed to the Public Lenders and that (w) all such
Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at
a minimum, shall mean that the word “PUBLIC” shall appear prominently on the
first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Loan Parties
shall be deemed to have authorized the Agent, the Arrangers, the L/C Issuer and
the Lenders to treat such Borrower Materials as not containing any material
non-public information (although it may be sensitive and proprietary) with
respect to the Loan Parties or their securities for purposes of United States
Federal and state securities laws (provided, however, that to the extent such
Borrower Materials constitute Information, they shall be treated as set forth in
Section 10.07); (y) all Borrower Materials marked “PUBLIC” are permitted to be
made available through a portion of the Platform designated “Public Investor”;
and (z) the Agent and the Arrangers shall be entitled to treat any Borrower
Materials that are not marked “PUBLIC” as being suitable only for posting on a
portion of the Platform not designated “Public Investor.”

 

6.03        Notices.  Promptly notify the Agent upon any Responsible Officer
obtaining knowledge of:

 

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

 

(b)           of any matter that has resulted or would reasonably be expected to
result in a Material Adverse Effect;

 

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(c)           of any dispute, litigation, investigation, proceeding or
suspension between any Loan Party or any Subsidiary thereof and any Governmental
Authority or the commencement of, or any material development in, any litigation
or proceeding affecting any Loan Party or any Subsidiary thereof, including
pursuant to any applicable Environmental Laws, in each case if adversely
determined, would reasonably be expected to have a Material Adverse Effect; or

 

(d)           of the occurrence of any ERISA Event that would reasonably be
expected to have a Material Adverse Effect.

 

Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower has taken and proposes
to take with respect thereto.  Each notice pursuant to Section 6.03(a) shall
describe with particularity any and all provisions of this Agreement and any
other Loan Document that have been breached.

 

6.04        Payment of Obligations.  Pay and discharge as the same shall become
due and payable, all its obligations and liabilities, including (a) all tax
liabilities, assessments and governmental charges or levies upon it or its
properties or assets, (b) all lawful claims (including, without limitation,
claims of landlords, warehousemen, customs brokers, freight forwarders,
consolidators and carriers) which, if unpaid, would by law become a Lien upon
its property; and (c) all Indebtedness that, if not paid, would constitute an
Event of Default under Section 8.01(e), as and when due and payable, but subject
to any grace periods and subordination provisions contained in any instrument or
agreement evidencing such Indebtedness, except, in each case, where the validity
or amount thereof is being contested in good faith by appropriate proceedings
and either (x) (i) such Loan Party has set aside on its books adequate reserves
with respect thereto in accordance with GAAP, (ii) such contest effectively
suspends collection of the contested obligation and enforcement of any Lien
securing such obligation, and (iii) no Lien has been filed with respect thereto
or (y) the failure to make payment pending such contest would not reasonably be
expected to result in a Material Adverse Effect. Nothing contained herein shall
be deemed to limit the rights of the Agent with respect to determining Reserves
pursuant to this Agreement.

 

6.05        Preservation of Existence, Etc.

 

(a) Preserve, renew and maintain in full force and effect its legal existence
and good standing under the Laws of the jurisdiction of its organization or
formation except in a transaction permitted by Section 7.04 or 7.05; (b) take
all reasonable action to maintain all rights, privileges, permits, licenses and
franchises necessary or desirable in the normal conduct of its business, except
to the extent that failure to do so would not reasonably be expected to have a
Material Adverse Effect; and (c) preserve or renew all of its Intellectual
Property, except to the extent such Intellectual Property is no longer used or
useful in the conduct of the business of the Loan Parties or the failure to do
so would not reasonably be expected to have a Material Adverse Effect.

 

6.06        Maintenance of Properties

 

(a) Maintain, preserve and protect all of its material properties and Equipment
necessary in the operation of its business in good working order and condition,
ordinary wear and tear excepted; and (b) make all necessary repairs thereto and
renewals and replacements thereof except, in each case, where the failure to do
so would not reasonably be expected to have a Material Adverse Effect.

 

6.07        Maintenance of Insurance.

 

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(a)           Maintain with financially sound and reputable insurance companies
reasonably acceptable to the Agent in its Permitted Discretion and not
Affiliates of the Loan Parties, insurance with respect to its properties and
business against loss or damage of the kinds customarily insured against by
Persons engaged in the same or similar business and operating in the same or
similar locations or as is required by applicable Law, of such types and in such
amounts (after giving effect to any self-insurance programs) as are customarily
carried under similar circumstances by such other Persons and as are reasonably
acceptable to the Agent in its Permitted Discretion.

 

(b)           Maintain for themselves and their Subsidiaries, a Directors and
Officers insurance policy, and a “Blanket Crime” policy including employee
dishonesty, forgery or alteration, theft, disappearance and destruction, robbery
and safe burglary, property, and computer fraud coverage with responsible
companies in such amounts as are customarily carried by business entities
engaged in similar businesses similarly situated, and will upon the reasonable
request by the Agent furnish the Agent certificates evidencing renewal of each
such policy.

 

(c)           Cause fire and extended coverage policies maintained with respect
to any Collateral to be endorsed or otherwise amended to include (i) a lenders’
loss payable clause (regarding personal property), in form and substance
reasonably  satisfactory to the Agent, which endorsements or amendments shall
provide that the insurer shall pay all Net Proceeds otherwise payable to the
Loan Parties under the policies directly to the Agent, (ii) a provision to the
effect that none of the Loan Parties, Credit Parties or any other Person shall
be a co-insurer and (iii) such other customary provisions as the Agent may
reasonably require from time to time to protect the interests of the Credit
Parties.  Notwithstanding the foregoing, so long as no Cash Dominion Event shall
have occurred and be continuing, the Agent shall release any such proceeds
received under clause (i) above to the Loan Parties.

 

(d)           Cause commercial general liability policies to be endorsed to name
the Agent as an additional insured.

 

(e)           Cause business interruption policies to name the Agent as a loss
payee and to be endorsed or amended to include (i) a provision that, from and
after the Closing Date, after the occurrence and during the continuance of a
Cash Dominion Event, the insurer shall pay all proceeds otherwise payable to the
Loan Parties under the policies directly to the Agent, (ii) a provision to the
effect that none of the Loan Parties, the Agent or any other party shall be a
co-insurer and (iii) such other provisions as the Agent may reasonably require
from time to time to protect the interests of the Credit Parties.

 

(f)            Cause each such policy referred to in this Section 6.07 to also
provide that it shall not be canceled, modified or not renewed (i) by reason of
nonpayment of premium except upon not less than ten (10) days’ prior written
notice thereof by the insurer to the Agent (giving the Agent the right to cure
defaults in the payment of premiums) or (ii) for any other reason except upon
not less than thirty (30) days’ prior written notice thereof by the insurer to
the Agent.

 

(g)           Deliver to the Agent, prior to the cancellation, modification or
non-renewal of any such policy of insurance, a copy of a renewal or replacement
policy (or other evidence of renewal of a policy previously delivered to the
Agent, including an insurance binder) together with evidence reasonably
satisfactory to the Agent of either payment of the premium therefor or that such
premium is being financed.

 

None of the Credit Parties, or their agents or employees shall be liable for any
loss or damage insured by the insurance policies required to be maintained under
this Section 6.07.  Each Loan Party shall look solely to its insurance companies
or any other parties other than the Credit Parties for the recovery of such loss
or damage and such insurance companies shall have no rights of subrogation
against

 

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any Credit Party or its agents or employees.  If, however, the insurance
policies do not provide waiver of subrogation rights against such parties, as
required above, then the Loan Parties hereby agree, to the extent permitted by
law, to waive their right of recovery, if any, against the Credit Parties and
their agents and employees.  The designation of any form, type or amount of
insurance coverage by any Credit Party under this Section 6.07 shall in no event
be deemed a representation, warranty or advice by such Credit Party that such
insurance is adequate for the purposes of the business of the Loan Parties or
the protection of their properties.

 

6.08        Compliance with Laws.  Comply in all material respects with the
requirements of all Laws and all orders, writs, injunctions and decrees binding
on and applicable to it or to its business or property, except in such instances
in which (a)(i) such requirement of Law or order, writ, injunction or decree is
being contested in good faith by appropriate proceedings diligently conducted
and (ii) with respect to which adequate reserves have been set aside and
maintained by the Loan Parties in accordance with GAAP; and (iii) such contest
effectively suspends enforcement of the contested Laws, or (b) the failure to
comply therewith would not reasonably be expected to have a Material Adverse
Effect.

 

6.09        Books and Records; Accountants

 

(a)           Maintain proper books of record and account, in which full, true
and correct entries in conformity with GAAP in all material respects
consistently applied shall be made of all financial transactions and matters
involving the assets and business of the Loan Parties or such Subsidiary, as the
case may be; and (ii) maintain such books of record and account in material
conformity with all applicable requirements of any Governmental Authority having
regulatory jurisdiction over the Loan Parties or such Subsidiary, as the case
may be.

 

(b)           At all times retain a Registered Public Accounting Firm which is
are reasonably satisfactory to the Agent (it being agreed that Deloitte & Touche
LLP is satisfactory to the Agent) and shall, subject to Section 6.10, instruct
such Registered Public Accounting Firm to cooperate with, and be available to,
the Agent or its representatives to discuss the Loan Parties’ financial
performance, financial condition, operating results, controls, and such other
matters, within the scope of the retention of such Registered Public Accounting
Firm, as may be raised by the Agent (it being agreed that the Borrower has the
right to be present at all such discussions).

 

6.10        Inspection Rights

 

(a)           Permit representatives and, subject to the provisions of Section
10.07 hereof, independent contractors of the Agent, to visit and inspect any of
its properties and to discuss its affairs, finances and accounts with its
directors, officers, and Registered Public Accounting Firm (at which the
Borrower has the right to be present), all at the expense of the Loan Parties
and at such reasonable times during normal business hours, upon reasonable
advance notice to the Borrower, and permit any Lender (at the sole cost and
expense of such Lender) to participate in any such visit, inspection or
discussion; provided, however, that when a Default or Event of Default exists
the Agent (or any of its representatives or independent contractors) may do any
of the foregoing at the expense of the Loan Parties at any time during normal
business hours and without advance notice.

 

(b)           Upon the request of the Agent after reasonable prior notice and
subject to the following sentence of this Section 6.10(b), permit the Agent or
professionals (including investment bankers, consultants, accountants, and
lawyers) retained by the Agent to conduct commercial finance examinations of (i)
the Borrower’s practices in the computation of the Borrowing Base and (ii) the
assets included in the Borrowing Base and related financial information such as,
but not limited to, sales, gross margins, payables, accruals and reserves.  The
Agent (A) shall conduct, if the Total Outstandings

 

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hereunder at any time exceed $150,000,000, one (1) commercial finance
examination in any twelve month period, at the Borrower’s expense, provided
that, in the event that (x) Availability is at any time less than twenty-five
(25%) percent of the Loan Cap, the Agent may conduct up to two (2) commercial
finance examinations in any 12 month period, at the Borrower’s expense, (B) may
conduct one (1) additional commercial finance examination at the expense of the
Agent during the term hereof; provided, however, that notwithstanding anything
in the foregoing clauses (A) or (B), in no event shall there be more than two
(2) commercial finance examinations in any 12 month period unless the provisions
of clause (C) are then applicable, and (C) additional commercial finance
examinations if an Event of Default has occurred and is continuing, at the
expense of the Borrower.

 

(c)           Upon the request of the Agent after reasonable prior notice and
subject to the following sentence of this Section 6.10(c), permit the Agent or
professionals (including appraisers) retained by the Agent to conduct appraisals
of the Collateral, including, without limitation, the assets included in the
Borrowing Base.  The Agent (A) shall conduct if the Total Outstandings hereunder
at any time exceed $150,000,000, one (1) inventory appraisal in any twelve month
period, at the Borrower’s expense, provided that, in the event that (x)
Availability is at any time less than twenty-five (25%) percent of the Loan Cap,
the Agent may conduct up to two (2) inventory appraisals in any 12 month period,
at the Borrower’s expense, (B) may conduct one (1) additional inventory
appraisal at the expense of the Agent during the term hereof; provided, however,
that notwithstanding anything in the foregoing clauses (A) or (B), in no event
shall there be more than two (2) inventory appraisals in any 12 month period
unless the provisions of clause (C) are then applicable, and (C) additional
inventory appraisals if an Event of Default has occurred and is continuing, at
the expense of the Borrower.

 

6.11        Use of Proceeds.  Use the proceeds of the Credit Extensions (a) to
repay the outstanding Indebtedness under the Existing Credit Agreement, (b) to
finance working capital of the Loan Parties, including the purchase of Inventory
and Equipment, (c) to finance Capital Expenditures of the Loan Parties, (d) to
pay transaction fees and expenses, and (e) for general corporate purposes of the
Loan Parties, in each case to the extent not prohibited under applicable Law and
the Loan Documents.

 

6.12        Additional Loan Parties.  Notify the Agent at the time that any
Person becomes a Material Subsidiary, and in each case promptly thereafter (and
in any event within thirty (30) days or such longer period as the Agent may
agree), cause any such Person which is not a CFC, to (i) become a Loan Party by
executing and delivering to the Agent a Joinder to this Agreement or a Joinder
to the Facility Guaranty or such other documents as the Agent shall deem
reasonably necessary for such purpose, (ii) grant a Lien to the Agent on such
Person’s assets of the same type that constitute Collateral to secure the
Obligations, and (iii) deliver to the Agent documents of the types referred to
in clauses (iii) and (iv) of Section 4.01(a) and favorable opinions of counsel
to such Person (which shall cover, among other things, the legality, validity,
binding effect and enforceability of the documentation referred to above), in
each case in form, content and scope reasonably satisfactory to the Agent.  In
no event shall compliance with this Section 6.12 waive or be deemed a waiver or
Consent to any transaction giving rise to the need to comply with this Section
6.12 if such transaction was not otherwise expressly permitted by this Agreement
or constitute or be deemed to constitute, with respect to any Subsidiary, an
approval of such Person as a Loan Party or permit the inclusion of any acquired
assets in the computation of the Borrowing Base.

 

6.13        Cash Management.

 

(a)           On or prior to the Closing Date:

 

(i)            deliver to the Agent copies of notifications (each, a “Credit
Card Notification”) substantially in the form attached hereto as Exhibit G which
have been executed on

 

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behalf of such Loan Party and delivered to such Loan Party’s credit card
clearinghouses and processors listed on Schedule 5.21(b); and

 

(ii)           enter into a Blocked Account Agreement reasonably satisfactory in
form and substance to the Agent with each Blocked Account Bank (collectively,
the “Blocked Accounts”).

 

(b)           The Loan Parties shall ACH or wire transfer no less frequently
than daily (and whether or not there are then any outstanding Obligations) to a
Blocked Account all amounts on deposit in each DDA and all payments due from
credit card processors.

 

(c)           Each Blocked Account Agreement shall require upon notice from
Agent (which notice shall be delivered only after the occurrence and during the
continuance of a Cash Dominion Event) the ACH or wire transfer no less
frequently than daily (and whether or not there are then any outstanding
Obligations) to the concentration account maintained by the Agent at Wells Fargo
(the “Concentration Account”), of all cash receipts and collections received by
each Loan Party from all sources, including, without limitation, the following:

 

(i)            all available cash receipts from the sale of Inventory and other
assets constituting Collateral;

 

(ii)           all proceeds of collections of Accounts;

 

(iii)          all Net Proceeds (whether or not constituting Collateral), and
all other cash payments received by a Loan Party from any Person or from any
source or on account of any Disposition or other transaction or event;

 

(iv)          the then contents of each DDA (net of any minimum balance, not to
exceed $10,000, as may be required to be kept in the subject DDA by the
depository institution at which such DDA is maintained);

 

(v)           the then entire ledger balance of each Blocked Account (net of any
minimum balance, not to exceed $10,000 as may be required to be kept in the
subject Blocked Account by the Blocked Account Bank); and

 

(vi)          the proceeds of all credit card charges.

 

(d)           The Concentration Account shall at all times be under the sole
dominion and control of the Agent.  The Loan Parties hereby acknowledge and
agree that (i) the Loan Parties have no right of withdrawal from the
Concentration Account, (ii) the funds on deposit in the Concentration Account
shall at all times be collateral security for all of the Obligations and (iii)
the funds on deposit in the Concentration Account shall be applied to the
Obligations as provided in this Agreement.  After the occurrence and during the
continuance of a Cash Dominion Event, in the event that, notwithstanding the
provisions of this Section 6.13, any Loan Party receives or otherwise has
dominion and control of any such cash receipts or collections, such receipts and
collections shall be held in trust by such Loan Party for the Agent, shall not
be commingled with any of such Loan Party’s other funds or deposited in any
account of such Loan Party and shall, not later than the Business Day after
receipt thereof, be deposited into the Concentration Account or dealt with in
such other fashion as such Loan Party may be instructed by the Agent.

 

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(e)           Upon the request of the Agent, the Loan Parties shall cause bank
statements and/or other reports to be delivered to the Agent not less often than
monthly, accurately setting forth all amounts deposited in each Blocked Account
to ensure the proper transfer of funds as set forth above.

 

6.14        Information Regarding the Collateral.

 

Furnish to the Agent at least fifteen (15) days prior written notice of any
change in: (i) any Loan Party’s name or in any trade name used to identify it in
the conduct of its business or in the ownership of its properties; (ii) any Loan
Party’s organizational structure or jurisdiction of incorporation or formation;
or (iii) any Loan Party’s Federal Taxpayer Identification Number or
organizational identification number assigned to it by its state of
organization. The Loan Parties agree not to effect or permit any change referred
to in the preceding sentence unless all filings have been made under the UCC or
otherwise that are required in order for the Agent to continue at all times
following such change to have a valid, legal and perfected first priority
security interest (subject to Permitted Encumbrances having priority over the
Lien of the Agent pursuant to applicable Law) in all the Collateral for its own
benefit and the benefit of the other Credit Parties.

 

6.15        Physical Inventories.

 

(a)           Cause not less than one physical inventory of substantially all of
the inventory of the Borrower and the other Loan Parties to be undertaken, at
the expense of the Loan Parties, in each twelve (12) month period and periodic
cycle counts, in each case consistent with past practices, conducted by such
inventory takers as are reasonably satisfactory to the Agent and following such
methodology as is consistent with the methodology used in the immediately
preceding inventory or as otherwise may be reasonably satisfactory to the Agent.
The Agent, at the expense of the Loan Parties, may participate in and/or observe
each scheduled physical count of Inventory which is undertaken on behalf of any
Loan Party.   The Borrower, within thirty (30) days following the completion of
such inventory, shall, upon the reasonable request of the Agent, (i) provide the
Agent with a reconciliation of the results of such inventory (as well as of any
other physical inventory or cycle counts undertaken by a Loan Party) and (ii)
post such results to the Loan Parties’ stock ledgers and general ledgers, as
applicable.

 

(b)           Permit the Agent, in its reasonable discretion, if any Event of
Default exists, to cause additional such inventories to be taken as the Agent
determines (each, at the expense of the Loan Parties).

 

6.16        Environmental Laws.

 

Except where the failure to do so would not reasonably be expected to have a
Material Adverse Effect: (a) conduct its operations and keep and maintain its
Real Estate in material compliance with all Environmental Laws; (b) obtain and
renew all environmental permits necessary for its operations and properties; and
(c) implement any and all investigation, remediation, removal and response
actions that are appropriate or necessary to maintain the value and
marketability of the Real Estate or to otherwise comply with Environmental Laws
pertaining to the presence, generation, treatment, storage, use, disposal,
transportation or release of any Hazardous Materials on, at, in, under, above,
to, from or about any of its Real Estate, provided, however, that neither a Loan
Party nor any of its Subsidiaries shall be required to undertake any such
cleanup, removal, remedial or other action to the extent that its obligation to
do so is being contested in good faith and by proper proceedings and adequate
reserves have been set aside and are being maintained by the Loan Parties with
respect to such circumstances in accordance with GAAP.

 

6.17        Further Assurances.

 

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(a)           Execute any and all further documents, financing statements,
agreements and instruments, and take all such further actions (including the
filing and recording of financing statements and other documents), that may be
required under any applicable Law, or which the Agent may reasonably request, to
effectuate the transactions contemplated by the Loan Documents or to grant,
preserve, protect or perfect the Liens created or intended to be created by the
Security Documents or the validity or priority of any such Lien, all at the
expense of the Loan Parties. The Loan Parties also agree to provide to the
Agent, from time to time upon request, evidence reasonably satisfactory to the
Agents as to the perfection and priority of the Liens created or intended to be
created by the Security Documents.

 

(b)           Cause each Subsidiary which is not a Loan Party hereunder to
deliver agreements reasonably satisfactory to the Agent granting the Agent the
right and license to use the assets and properties of such Subsidiary, including
all Intellectual Property, equipment and fixtures owned by such Subsidiary, in
connection with any Liquidation of the Collateral.

 

6.18        Compliance with Terms of Leaseholds

 

Except as otherwise expressly permitted hereunder, (a) make all payments and
otherwise perform all obligations in respect of all Leases to which any Loan
Party or any of its Subsidiaries is a party, keep such Leases in full force and
effect, (b) not allow such Leases to lapse or be terminated or any rights to
renew such Leases to be forfeited or cancelled, in each case, except in the
ordinary course of business, consistent with past practices, (c) notify the
Agent of any default by any party with respect to such Leases and cooperate with
the Agent in all respects to cure any such default, and (d) cause each of its
Subsidiaries to do the foregoing, except, in the case of any of clauses (a)
through (d) above, where the failure to do so, either individually or in the
aggregate, would not be reasonably likely to have a Material Adverse Effect.

 

6.19        Material Contracts.  (a) Perform and observe all the terms and
provisions of each Material Contract to be performed or observed by it, (b)
maintain each such Material Contract in full force and effect except to the
extent such Material Contract is no longer used or useful in the conduct of the
business of the Loan Parties in the ordinary course of business, consistent with
past practices, (c) enforce each such Material Contract in accordance with its
terms, and  (d) cause each of its Subsidiaries to do the foregoing, except, in
any case, where the failure to do so, either individually or in the aggregate,
could not be reasonably likely to have a Material Adverse Effect.

 

ARTICLE VII
NEGATIVE COVENANTS

 

So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding (other than contingent indemnification obligations for
which a claim has not been asserted), no Loan Party shall, nor shall it permit
any Subsidiary to, directly or indirectly:

 

7.01        Liens.  Create, incur, assume or suffer to exist any Lien upon any
of its property, assets or revenues, whether now owned or hereafter acquired,
other than Permitted Encumbrances.

 

7.02        Investments.  Make any Investments, except Permitted Investments.

 

7.03        Indebtedness; Disqualified Stock

 

(a) Create, incur, assume, guarantee, suffer to exist or otherwise become or
remain liable with respect to, any Indebtedness, except Permitted Indebtedness,
(b) issue Disqualified Stock, or (c)

 

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issue and sell any other Equity Interests if a Change of Control or other Event
of Default would result therefrom.

 

7.04        Fundamental Changes.  Merge, dissolve, liquidate, consolidate with
or into another Person, (or agree to do any of the foregoing), except that:

 

(a)           any Subsidiary which is not a Loan Party may merge or consolidate
with (i) a Loan Party, provided that the Loan Party shall be the continuing or
surviving Person, or (ii) any one or more other Subsidiaries which are not Loan
Parties, provided that when any wholly-owned Subsidiary is merging or
consolidating with another Subsidiary, a wholly-owned Subsidiary shall be the
continuing or surviving Person;

 

(b)           any Subsidiary which is a Loan Party may merge or consolidate into
any Subsidiary which is a Loan Party or into the Borrower, provided that in any
merger or consolidation involving the Borrower, the Borrower shall be the
continuing or surviving Person;

 

(c)           in connection with a Permitted Acquisition, any Subsidiary of a
Loan Party may merge with or into or consolidate with any other Person or permit
any other Person to merge with or into or consolidate with it; provided that (i)
the Person surviving such merger or consolidation shall be a wholly-owned
Subsidiary of a Loan Party and, if applicable, such Person shall become a Loan
Party in accordance with the provisions of Section 6.12 hereof, and (ii) in the
case of any such merger or consolidation to which any Loan Party is a party,
such Loan Party is the surviving Person;

 

(d)           any Permitted Disposition described in clause (k) thereof; and

 

(e)           any CFC that is not a Loan Party may merge into any CFC that is
not a Loan Party.

 

7.05        Dispositions.  Make any Disposition or enter into any agreement to
make any Disposition, except Permitted Dispositions.

 

7.06        Restricted Payments.  Declare or make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
except that:

 

(a)           each Subsidiary of a Loan Party may make Restricted Payments to
any Loan Party;

 

(b)           the Loan Parties and each Subsidiary may declare and make dividend
payments or other distributions payable solely in the common stock or other
common Equity Interests of such Person;

 

(c)           if the Payment Conditions are satisfied, the Borrower may
purchase, redeem or otherwise acquire Equity Interests issued by it; and

 

(d)           if the Payments Conditions are satisfied, the Borrower may declare
or pay cash dividends to its stockholders;

 

provided however, that clauses (c) and (d) shall not operate to prevent the
purchase, redemption or acquisition of Equity Interests issued by the Borrower
or the making of dividends

 

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declared by the Borrower within ninety (90) days of such declaration, if at the
declaration date the Payment Conditions were satisfied.

 

7.07        Prepayments of Indebtedness.  Prepay, redeem, purchase, defease or
otherwise satisfy prior to the scheduled maturity thereof in any manner any
Indebtedness, or make any payment in violation of any subordination terms of any
Subordinated Indebtedness, except (a) as long as no Default or Event of Default
then exists, regularly scheduled or mandatory repayments, repurchases,
redemptions or defeasances of (i) Permitted Indebtedness (other than
Subordinated Indebtedness), and (ii) Subordinated Indebtedness in accordance
with the subordination terms thereof or the applicable subordination agreement
relating thereto, (b) voluntary prepayments, repurchases, redemptions or
defeasances of (i) Permitted Indebtedness (but excluding on account of any
Subordinated Indebtedness) as long as the Payment Conditions are satisfied, and
(ii) Subordinated Indebtedness in accordance with the subordination terms
thereof or the applicable subordination agreement relating thereto, and as long
as the Payment Conditions are satisfied, and (c) Permitted Refinancings of any
such Indebtedness.

 

7.08        Change in Nature of Business

 

Engage in any business or activity if as a result the general nature of the
business of the Loan Parties and their Subsidiaries, taken as a whole, would be
changed in any material respect from the general nature of the business engaged
in by them, taken as a whole, as of the date hereof; provided, however, that the
foregoing shall not prevent the acquisition or investment by the Loan Parties
and their Subsidiaries of, or the development or entry into, any line of
business that is related, incidental or complementary to the business in which
they, taken as a whole, are engaged on the date hereof.

 

7.09        Transactions with Affiliates.  Enter into, renew, extend or be a
party to any transaction of any kind with any Affiliate of any Loan Party,
whether or not in the ordinary course of business, other than on fair and
reasonable terms taken as a whole no less favorable to the Loan Parties or such
Subsidiary as would be obtainable by the Loan Parties or such Subsidiary at the
time in a comparable arm’s length transaction with a Person other than an
Affiliate, provided that the foregoing restriction shall not apply to (a) a
transaction between or among the Loan Parties, (b) advances for commissions,
travel and other similar purposes in the ordinary course of business to
directors, officers and employees, (c) the issuance of Equity Interests in the
Borrower to any officer, director, employee or consultant of the Borrower or any
of its Subsidiaries, (d) the payment of reasonable fees and out-of-pocket costs
to directors, and compensation and employee benefit arrangements paid to, and
indemnities provided for the benefit of, directors, officers or employees of the
Borrower or any of its Subsidiaries, (e) a transaction between the Borrower or
any of its Subsidiaries with the Dick’s Foundation to the extent permitted
hereunder, (f) any transaction permitted under Section 7.06, (g) any transaction
on fair and reasonable terms taken as a whole no less favorable to the Loan
Parties or such Subsidiary as would be obtainable by the Loan Parties or such
Subsidiary at the time in a comparable arm’s length transaction which is
permitted by the Related Party Policy and Procedures of the Borrower as in
effect on the Closing Date and as amended, restated, supplemented or otherwise
modified by the Board of Directors of the Borrower in good faith and (h) as long
as no Change of Control results therefrom, any issuances of securities of the
Borrower (other than Disqualified Stock and other Equity Interests not permitted
hereunder) or other payments, awards or grants in cash, securities or otherwise
pursuant to, or the funding of, employment agreements, stock options and stock
ownership plans (in each case in respect of Equity Interests in the Borrower) of
the Borrower or any of its Subsidiaries.

 

7.10        Burdensome Agreements.  Enter into or permit to exist any
Contractual Obligation (other than this Agreement or any other Loan Document)
that (a) limits the ability (i) of any Subsidiary to make Restricted Payments or
other distributions to any Loan Party or to otherwise transfer property to or
invest in a Loan Party, (ii) of any Subsidiary to Guarantee the Obligations,
(iii) of any Subsidiary to make

 

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or repay loans to a Loan Party, or (iv) of the Loan Parties or any Subsidiary to
create, incur, assume or suffer to exist Liens on property of such Person in
favor of the Agent; provided, however, that this clause (iv) shall not prohibit
any negative pledge incurred or provided in favor of any holder of Indebtedness
permitted under clauses (c), (f) or (k) of the definition of Permitted
Indebtedness solely to the extent any such negative pledge relates to the
property financed by or the subject of such Indebtedness; or (b) requires the
grant of a Lien to secure an obligation of such Person if a Lien is granted to
secure another obligation of such Person.

 

7.11        Use of Proceeds.  Use the proceeds of any Credit Extension, whether
directly or indirectly, and whether immediately, incidentally or ultimately, (a)
to purchase or carry margin stock (within the meaning of Regulation U of the
FRB) or to extend credit to others for the purpose of purchasing or carrying
margin stock or to refund Indebtedness originally incurred for such purpose; or
(b) for purposes prohibited under this Agreement.

 

7.12        Amendment of Material Documents.

 

Amend, modify or waive any of a Loan Party’s rights under (a) its Organization
Documents in a manner materially adverse to the Credit Parties, or (b) any
Material Contract or Material Indebtedness (other than on account of any
Permitted Refinancing thereof), in each case to the extent that such amendment,
modification or waiver would result in a Default or Event of Default under any
of the Loan Documents or otherwise would be reasonably likely to have a Material
Adverse Effect.

 

7.13        Fiscal Year.

 

Change the Fiscal Year of any Loan Party, or the accounting policies or
reporting practices of the Loan Parties, except as permitted by GAAP.

 

7.14        Deposit Accounts; Credit Card Processors.

 

Open new Blocked Accounts unless the Loan Parties shall have delivered to the
Agent appropriate Blocked Account Agreements consistent with the provisions of
Section 6.13 and otherwise reasonably satisfactory to the Agent.  No Loan Party
shall maintain any bank accounts or any agreements with Credit Card Issuers or
Credit Card Processors other than the ones contemplated in this Agreement.

 

7.15        Minimum Adjusted Availability.

 

Permit Adjusted Availability at any time to be less than seven and one-half
(7.5%) percent of the Borrowing Base.

 

ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES

 

8.01        Events of Default.  Any of the following shall constitute an Event
of Default:

 

(a)           Non-Payment.  The Borrower or any other Loan Party fails to pay
when and as required to be paid herein, (i) any amount of principal of any Loan
or any L/C Obligation, or deposit any funds as Cash Collateral in respect of L/C
Obligations, or (ii) any interest on any Loan or on any L/C Obligation, or any
fee within two (2) Business Days after the date when due hereunder, or (iii) any
other amount payable hereunder or under any other Loan Document within five (5)
Business Days after the date when due hereunder; or

 

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(b)           Specific Covenants.  Any Loan Party fails to perform or observe
any term, covenant or agreement contained in any of Section 6.01, 6.02, 6.03,
6.05, 6.07, 6.10, 6.11, 6.12, 6.13 or 6.14 or Article VII; or

 

(c)           Other Defaults.  Any Loan Party fails to perform or observe any
other covenant or agreement (not specified in subsection (a) or (b) above)
contained in any Loan Document on its part to be performed or observed and such
failure continues for 30 days after the earlier of (i) the Borrower’s obtaining
knowledge of such default and (ii) notice by the Agent; or

 

(d)           Representations and Warranties.  Any representation, warranty,
certification or statement of fact made or deemed made by or on behalf of any
Loan Party herein, in any other Loan Document, or in any document delivered in
connection herewith or therewith (including, without limitation, any Borrowing
Base Certificate) shall be incorrect or misleading in any material respect when
made or deemed made; or

 

(e)           Cross-Default.  (i) Any Loan Party or any Subsidiary thereof
(A) fails to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) in respect of any Material
Indebtedness, or (B) fails to observe or perform any other agreement or
condition relating to any such Material Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event occurs, the effect of which default or other event is to cause, or to
permit the holder or holders of such Material Indebtedness or the beneficiary or
beneficiaries of any Guarantee thereof (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause, with the giving of
notice if required, such Indebtedness to be demanded or to become due or to be
repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an
offer to repurchase, prepay, defease or redeem such Indebtedness to be made,
prior to its stated maturity, or such Guarantee to become payable or cash
collateral in respect thereof to be demanded; or (ii) there occurs under any
Swap Contract an Early Termination Date (as defined in such Swap Contract)
resulting from (A) any event of default under such Swap Contract as to which a
Loan Party or any Subsidiary thereof is the Defaulting Party (as defined in such
Swap Contract) or (B) any Termination Event (as so defined) under such Swap
Contract as to which a Loan Party or any Subsidiary thereof is an Affected Party
(as so defined) and, in either event, the Swap Termination Value owed by the
Loan Party or such Subsidiary as a result thereof is greater than $75,000,000;
or

 

(f)            Insolvency Proceedings, Etc.  Any Loan Party or any of its
Subsidiaries institutes or consents to the institution of any proceeding under
any Debtor Relief Law, or makes an assignment for the benefit of creditors; or
applies for or consents to the appointment of any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer for it or for all or
any material part of its property; or a proceeding shall be commenced or a
petition filed, without the application or consent of such Person, seeking or
requesting the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed and the appointment
continues undischarged, undismissed or unstayed for 60 calendar days or an order
or decree approving or ordering any of the foregoing shall be entered; or any
proceeding under any Debtor Relief Law relating to any such Person or to all or
any material part of its property is instituted without the consent of such
Person and continues undismissed or unstayed for 60 calendar days, or an order
for relief is entered in any such proceeding; or

 

(g)           Inability to Pay Debts; Attachment.  (i) Any Loan Party or any
Subsidiary thereof becomes unable or admits in writing its inability or fails
generally to pay its debts as they become due in the ordinary course of
business, or (ii) any writ or warrant of attachment or execution or

 

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similar process is issued or levied against all or any material part of the
property of any such Person and is not released, vacated or fully bonded within
30 days after its issuance or levy; or

 

(h)           Judgments.  There is entered against any Loan Party or any
Subsidiary thereof (i) one or more judgments or orders for the payment of money
in an aggregate amount (as to all such judgments and orders) exceeding
$75,000,000 (to the extent not covered by independent third-party insurance as
to which the insurer is rated at least “A” by A.M. Best Company, has been
notified of the potential claim and does not dispute coverage), or (ii) any one
or more non-monetary judgments that have, or would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect and, in either
case, (A) enforcement proceedings are commenced by any creditor upon such
judgment or order, or (B) there is a period of 30 consecutive days during which
a stay of enforcement of such judgment or order, by reason of a pending appeal
or otherwise, is not in effect; or

 

(i)            ERISA.  (i) An ERISA Event occurs with respect to a Pension Plan
or Multiemployer Plan which has resulted or would reasonably be expected to
result in liability of any Loan Party under Title IV of ERISA to the Pension
Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of
$25,000,000  or which would reasonably likely result in a Material Adverse
Effect, or (ii) a Loan Party or any ERISA Affiliate fails to pay when due, after
the expiration of any applicable grace period, any installment payment with
respect to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount in excess of $25,000,000  or which
would reasonably likely result in a Material Adverse Effect; or

 

(j)            Invalidity of Loan Documents.  (i)  Any provision of any Loan
Document, at any time after its execution and delivery and for any reason (other
than as a result of the gross negligence or willful misconduct of the Agent or
indefeasible payment in full of the Obligations), ceases to be in full force and
effect; or any Loan Party or any other Person contests in any manner the
validity or enforceability of any provision of any Loan Document; or any Loan
Party denies that it has any or further liability or obligation under any
provision of any Loan Document, or purports to revoke, terminate or rescind any
provision of any Loan Document or seeks to avoid, limit or otherwise adversely
affect any Lien purported to be created under any Security Document; or (ii) any
Lien purported to be created under any Security Document shall cease to be, or
shall be asserted by any Loan Party or any other Person not to be, a valid and
perfected Lien on a material portion of the Collateral, with the priority
required by the applicable Security Document (other than as a result of the
gross negligence or willful misconduct of the Agent); or

 

(k)           Change of Control.  There occurs any Change of Control; or

 

(l)            Cessation of Business.  Except as otherwise expressly permitted
hereunder, the Loan Parties, taken as a whole, shall take any action to
permanently suspend all or substantially all operations, liquidate all or
substantially all of their assets or Store locations, or employ an agent or
other third party to conduct a program of closings, liquidations or
“Going-Out-Of-Business” sales of all or substantially all of their business; or

 

(m)          Subordination.  (i)  The subordination provisions of the documents
evidencing or governing any Subordinated Indebtedness (the “Subordinated
Provisions”) shall, in whole or in part, terminate, cease to be effective or
cease to be legally valid, binding and enforceable against any holder of the
applicable Subordinated Indebtedness; or (ii) any Loan Party shall, directly or
indirectly, disavow or contest in any manner (A) the effectiveness, validity or
enforceability of

 

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any of the Subordination Provisions, (B) that the Subordination Provisions exist
for the benefit of the Credit Parties, or (C) that all payments of principal of
or premium and interest on the applicable Subordinated Indebtedness, or realized
from the liquidation of any property of any Loan Party, shall be subject to any
of the Subordination Provisions.

 

8.02        Remedies Upon Event of Default.  If any Event of Default occurs and
is continuing, the Agent may, or, at the request of the Required Lenders shall,
take any or all of the following actions:

 

(a)           declare the Commitments of each Lender to make Loans and any
obligation of the L/C Issuer to make L/C Credit Extensions to be terminated,
whereupon such Commitments and obligations shall be terminated;

 

(b)           declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other Obligations to be immediately
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived by the Loan Parties;

 

(c)           require that the Loan Parties Cash Collateralize the L/C
Obligations; and

 

(d)           whether or not the maturity of the Obligations shall have been
accelerated pursuant hereto, proceed to protect, enforce and exercise all rights
and remedies of the Credit Parties under this Agreement, any of the other Loan
Documents or applicable Law, including, but not limited to, by suit in equity,
action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Agreement and the
other Loan Documents or any instrument pursuant to which the Obligations are
evidenced, and, if such amount shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any other legal or
equitable right of the Credit Parties;

 

provided, however, that upon the occurrence of any Event of Default with respect
to any Loan Party or any Subsidiary thereof under Section 8.01(f), the
obligation of each Lender to make Loans and any obligation of the L/C Issuer to
make L/C Credit Extensions shall automatically terminate, the unpaid principal
amount of all outstanding Loans and all interest and other amounts as aforesaid
shall automatically become due and payable, and the obligation of the Loan
Parties to Cash Collateralize the L/C Obligations as aforesaid shall
automatically become effective, in each case without further act of the Agent or
any Lender.

 

No remedy herein is intended to be exclusive of any other remedy and each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or any other provision of Law.

 

8.03        Application of Funds.  After the exercise of remedies provided for
in Section 8.02 (or after the Loans have automatically become immediately due
and payable and the L/C Obligations have automatically been required to be Cash
Collateralized as set forth in the proviso to Section 8.02), any amounts
received on account of the Obligations shall be applied by the Agent in the
following order:

 

First, to payment of that portion of the Obligations (excluding the Other
Liabilities) constituting fees, indemnities, Credit Party Expenses and other
amounts (including fees, charges and disbursements of counsel to the Agent and
amounts payable under Article III) payable to the Agent;

 

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Second, to payment of that portion of the Obligations (excluding the Other
Liabilities) constituting indemnities, Credit Party Expenses, and other amounts
(other than principal, interest and fees) payable to the Lenders and the L/C
Issuer (including Credit Party Expenses to the respective Lenders and the L/C
Issuer and amounts payable under Article III), ratably among them in proportion
to the amounts described in this clause Second payable to them;

 

Third, to the extent not previously reimbursed by the Lenders, to payment to the
Agent of that portion of the Obligations constituting principal and accrued and
unpaid interest on any Permitted Overadvances;

 

Fourth, to the extent that Swing Line Loans have not been refinanced by a
Committed Loan, payment to the Swing Line Lender of that portion of the
Obligations constituting accrued and unpaid interest on the Swing Line Loans;

 

Fifth, to the extent that Swing Line Loans have not been refinanced by a
Committed Loan, to payment to the Swing Line Lender of that portion of the
Obligations constituting unpaid principal of the Swing Line Loans;

 

Sixth, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Committed Loans and other Obligations, and fees
(including Letter of Credit Fees), ratably among the Lenders and the L/C Issuer
in proportion to the respective amounts described in this clause Sixth payable
to them;

 

Seventh, to payment of that portion of the Obligations constituting unpaid
principal of the Committed Loans, ratably among the Lenders in proportion to the
respective amounts described in this clause Seventh held by them;

 

Eighth, to the Agent for the account of the L/C Issuer, to Cash Collateralize
that portion of L/C Obligations comprised of the aggregate undrawn amount of
Letters of Credit;

 

Ninth, to payment of all other Obligations (including without limitation the
cash collateralization of unliquidated indemnification obligations as provided
in Section 10.04(b), but excluding any Other Liabilities), ratably among the
Credit Parties in proportion to the respective amounts described in this clause
Ninth held by them;

 

Tenth, to payment of that portion of the Obligations arising from Swap Contracts
for which the Agent has established an Availability Reserve hereunder, ratably
among the Credit Parties in proportion to the respective amounts described in
this clause Tenth held by them;

 

Eleventh, to payment of that portion of the Obligations arising from Cash
Management Services hereunder, ratably among the Credit Parties in proportion to
the respective amounts described in this clause Eleventh held by them;

 

Twelfth, to payment of that portion of the Obligations arising from Swap
Contracts for which the Agent has not established an Availability Reserve
hereunder, ratably among the Credit Parties in proportion to the respective
amounts described in this clause Twelfth held by them;

 

Thirteenth, to payment of all other Obligations arising from Bank Products,
ratably among the Credit Parties in proportion to the respective amounts
described in this clause Thirteenth held by them; and

 

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Last, the balance, if any, after all of the Obligations have been indefeasibly
paid in full, to the Loan Parties or as otherwise required by Law.

 

Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause Eighth above shall be
applied to satisfy drawings under such Letters of Credit as they occur.  If any
amount remains on deposit as Cash Collateral after all Letters of Credit have
either been fully drawn or expired, such remaining amount shall be applied to
the other Obligations, if any, in the order set forth above.

 

ARTICLE IX
THE AGENT

 

9.01        Appointment and Authority.

 

Each of the Lenders and the Swing Line Lender hereby irrevocably appoints Wells
Fargo to act on its behalf as the administrative agent and collateral agent
hereunder and under the other Loan Documents and authorizes the Agent to take
such actions on its behalf and to exercise such powers as are delegated to the
Agent by the terms hereof or thereof (including, without limitation, acquiring,
holding and enforcing any and all Liens on Collateral granted by any of the Loan
Parties to secure any of the Obligations), together with such actions and powers
as are reasonably incidental thereto.  The provisions of this Article are solely
for the benefit of the Agent, the Lenders and the L/C Issuer, and no Loan Party
or any Subsidiary thereof shall have rights as a third party beneficiary of any
of such provisions.

 

9.02        Rights as a Lender.  The Person serving as the Agent hereunder shall
have the same rights and powers in its capacity as a Lender as any other Lender
and may exercise the same as though they were not the Agent and the term
“Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the
context otherwise requires, include the Person serving as the Agent hereunder in
its individual capacity.  Such Person and its Affiliates may accept deposits
from, lend money to, act as the financial advisor or in any other advisory
capacity for and generally engage in any kind of business with the Loan Parties
or any Subsidiary or other Affiliate thereof as if such Person were not the
hereunder and without any duty to account therefor to the Lenders.

 

9.03        Exculpatory Provisions.  The Agent shall not have any duties or
obligations except those expressly set forth herein and in the other Loan
Documents.  Without limiting the generality of the foregoing, the Agent:

 

(a)           shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default or Event of Default has occurred and is
continuing;

 

(b)           shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby or by the other Loan Documents that the Agent is
required to exercise as directed in writing by the Required Lenders (or such
other number or percentage of the Lenders as shall be expressly provided for
herein or in the other Loan Documents), provided that the Agent shall not be
required to take any action that, in its opinion or the opinion of its counsel,
may expose the Agent to liability or that is contrary to any Loan Document or
applicable law; and

 

(c)           shall not, except as expressly set forth herein and in the other
Loan Documents, have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Loan Parties or any of its
Affiliates that is communicated to or obtained by the Person serving as the
Agent or any of its Affiliates in any capacity.

 

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The Agent shall not be liable for any action taken or not taken by it (i) with
the Consent or at the request of the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary, or as the Agent shall believe
in good faith shall be necessary, under the circumstances as provided in
Sections 10.01 and 8.02) or (ii) in the absence of its own gross negligence or
willful misconduct as determined by a final and non-appealable judgment of a
court of competent jurisdiction.

 

The Agent shall not be deemed to have knowledge of any Default or Event of
Default unless and until notice describing such Default or Event of Default is
given to the Agent by the Loan Parties, a Lender or the L/C Issuer. Upon the
occurrence of a Default or Event of Default, the Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably directed
by the Applicable Lenders.  Unless and until the Agent shall have received such
direction, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to any such Default or Event of
Default as it shall deem advisable in the best interest of the Credit Parties. 
In no event shall the Agent be required to comply with any such directions to
the extent that the Agent believes that its compliance with such directions
would be unlawful.

 

The Agent shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection with
this Agreement or any other Loan Document, (ii) the contents of any certificate,
report or other document delivered hereunder or thereunder or in connection
herewith or therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein or therein
or the occurrence of any Default or Event of Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document or the creation,
perfection or priority of any Lien purported to be created by the Security
Documents, (v) the value or the sufficiency of any Collateral, or (vi) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to the
Agent.

 

9.04        Reliance by Agent.

 

The Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument,
document or other writing (including, but not limited to, any electronic
message, Internet or intranet website posting or other distribution) believed by
it to be genuine and to have been signed, sent or otherwise authenticated by the
proper Person.  The Agent also may rely upon any statement made to it orally or
by telephone and believed by it to have been made by the proper Person, and
shall not incur any liability for relying thereon.  In determining compliance
with any condition hereunder to the making of a Loan, or the issuance of a
Letter of Credit, that by its terms must be fulfilled to the satisfaction of a
Lender or the L/C Issuer, the Agent may presume that such condition is
satisfactory to such Lender or the L/C Issuer unless the Agent shall have
received written notice to the contrary from such Lender or the L/C Issuer prior
to the making of such Loan or the issuance of such Letter of Credit.  The Agent
may consult with legal counsel (who may be counsel for any Loan Party),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts.

 

9.05        Delegation of Duties.  The Agent may perform any and all of its
duties and exercise its rights and powers hereunder or under any other Loan
Document by or through any one or more sub-agents appointed by the Agent.  The
Agent and any such sub-agent may perform any and all of its duties and exercise
its rights and powers by or through their respective Related Parties.  The
exculpatory provisions of this Article shall apply to any such sub-agent and to
the Related Parties of the Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as the Agent.

 

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9.06        Resignation of Agent.  The Agent may at any time give written notice
of its resignation to the Lenders and the Borrower.  Upon receipt of any such
notice of resignation, the Required Lenders shall have the right, with the
written consent of the Borrower (which consent shall not be unreasonably
withheld, delayed or conditioned), so long as no Event of Default exists, to
appoint a successor, which shall be a bank with an office in the United States,
or an Affiliate of any such bank with an office in the United States.  If no
such successor shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring Agent gives
notice of its resignation, then the retiring Agent may on behalf of the Lenders
and the L/C Issuer, appoint a successor Agent meeting the qualifications set
forth above; provided that if the Agent shall notify the Borrower and the
Lenders that no qualifying Person has accepted such appointment, then such
resignation shall nonetheless become effective in accordance with such notice
and (1) the retiring Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents (except that in the case of any
Collateral held by the Agent on behalf of the Lenders or the L/C Issuer under
any of the Loan Documents, the retiring Agent shall continue to hold such
collateral security until such time as a successor Agent is appointed) and
(2) all payments, communications and determinations provided to be made by, to
or through the Agent shall instead be made by or to each Lender and the L/C
Issuer directly, until such time as the Required Lenders appoint a successor
Agent as provided for above in this Section.  Upon the acceptance of a
successor’s appointment as Agent hereunder, such successor shall succeed to and
become vested with all of the rights, powers, privileges and duties of the
retiring (or retired) Agent, and the retiring Agent shall be discharged from all
of its duties and obligations hereunder or under the other Loan Documents (if
not already discharged therefrom as provided above in this Section).  The fees
payable by the Borrower to a successor Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor.  After the retiring Agent’s resignation hereunder and under the other
Loan Documents, the provisions of this Article and Section 10.04 shall continue
in effect for the benefit of such retiring Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while the retiring Agent was acting as Agent hereunder.

 

Any resignation by Wells Fargo as Agent pursuant to this Section shall also
constitute its resignation as Swing Line Lender and the resignation of Wells
Fargo as L/C Issuer.  Upon the acceptance of a successor’s appointment as Agent
hereunder, (a) such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring L/C Issuer and Swing Line
Lender, (b) the retiring L/C Issuer and Swing Line Lender shall be discharged
from all of their respective duties and obligations hereunder or under the other
Loan Documents, and (c) the successor L/C Issuer shall issue letters of credit
in substitution for the Letters of Credit, if any, outstanding at the time of
such succession or make other arrangements reasonably satisfactory to the
retiring L/C Issuer to effectively assume the obligations of the retiring L/C
Issuer with respect to such Letters of Credit.

 

9.07        Non-Reliance on Agent and Other Lenders.  Each Lender and the L/C
Issuer acknowledges that it has, independently and without reliance upon the
Agent or any other Lender or any of their Related Parties and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement.  Each Lender and the L/C
Issuer also acknowledges that it will, independently and without reliance upon
the Agent or any other Lender or any of their Related Parties and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document or any related agreement or any
document furnished hereunder or thereunder.  Except as provided in Section 9.12,
the Agent shall not have any duty or responsibility to provide any Credit Party
with any other credit or other information concerning the affairs, financial
condition or business of any Loan Party that may come into the possession of the
Agent.

 

9.08        No Other Duties, Etc.  Anything herein to the contrary
notwithstanding, none of the Arrangers, Syndication Agent or the
Co-Documentation Agents listed on the cover page hereof shall have

 

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any powers, duties or responsibilities under this Agreement or any of the other
Loan Documents, except in its capacity as the Agent, a Lender or the L/C Issuer
hereunder.

 

9.09        Agent May File Proofs of Claim.  In case of the pendency of any
proceeding under any Debtor Relief Law or any other judicial proceeding relative
to any Loan Party, the Agent (irrespective of whether the principal of any Loan
or L/C Obligation shall then be due and payable as herein expressed or by
declaration or otherwise and irrespective of whether the Agent shall have made
any demand on the Loan Parties) shall be entitled and empowered, by intervention
in such proceeding or otherwise

 

(a)           to file and prove a claim for the whole amount of the principal
and interest owing and unpaid in respect of the Loans, L/C Obligations and all
other Obligations that are owing and unpaid and to file such other documents as
may be necessary or advisable in order to have the claims of the Lenders, the
L/C Issuer, the Agent and the other Credit Parties (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Lenders,
the L/C Issuer, the Agent, such Credit Parties and their respective agents and
counsel and all other amounts due the Lenders, the L/C Issuer the Agent and such
Credit Parties under Sections 2.03(i), 2.03(j), 2.09 and 10.04) allowed in such
judicial proceeding; and

 

(b)           to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender and the L/C Issuer to make such payments to the Agent and, if the
Agent shall consent to the making of such payments directly to the Lenders and
the L/C Issuer, to pay to the Agent any amount due for the reasonable
compensation, expenses, disbursements and advances of the Agent and its agents
and counsel, and any other amounts due the Agent under Sections 2.09 and 10.04.

 

Nothing contained herein shall be deemed to authorize the Agent to authorize or
consent to or accept or adopt on behalf of any Lender or the L/C Issuer any plan
of reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or the L/C Issuer or to authorize the
Agent to vote in respect of the claim of any Lender or the L/C Issuer in any
such proceeding.

 

9.10        Collateral and Guaranty Matters.  The Credit Parties irrevocably
authorize the Agent, at its option and in its reasonable discretion,

 

(a)           to release any Lien on any property granted to or held by the
Agent under any Loan Document (i) upon termination of the Aggregate Commitments
and payment in full of all Obligations (other than contingent indemnification
obligations for which no claim has been asserted) and the expiration,
termination or Cash Collateralization of all Letters of Credit, (ii) that is
Disposed of or to be Disposed of as part of or in connection with any Permitted
Disposition, or (iii) if approved, authorized or ratified in writing by the
Applicable Lenders in accordance with Section 10.01;

 

(b)           to subordinate any Lien on any property granted to or held by the
Agent under any Loan Document to the holder of any Lien on such property that is
permitted by clause (h) of the definition of Permitted Encumbrances; and

 

(c)           to release any Guarantor from its obligations under the Facility
Guaranty if such Person ceases to be a Subsidiary as a result of a transaction
permitted hereunder.

 

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Upon request by the Agent at any time, the Applicable Lenders will confirm in
writing the Agent’s authority to release or subordinate its interest in
particular types or items of property, or to release any Guarantor from its
obligations under the Facility Guaranty pursuant to this Section 9.10.  In each
case as specified in this Section 9.10, the Agent will, at the Loan Parties’
expense, execute and deliver to the applicable Loan Party such documents as such
Loan Party may reasonably request to evidence the release of such item of
Collateral from the assignment and security interest granted under the Security
Documents or to subordinate its interest in such item, or to release such
Guarantor from its obligations under the Facility Guaranty, in each case in
accordance with the terms of the Loan Documents and this Section 9.10.

 

9.11        Notice of Transfer.

 

The Agent may deem and treat a Lender party to this Agreement as the owner of
such Lender’s portion of the Obligations for all purposes, unless and until, and
except to the extent, an Assignment and Acceptance shall have become effective
as set forth in Section 10.06.

 

9.12        Reports and Financial Statements.

 

By signing this Agreement, each Lender:

 

(a)           agrees to furnish the Agent after the occurrence and during the
continuance of a Cash Dominion Event (and thereafter at such frequency as the
Agent may reasonably request) with a summary of all Other Liabilities due or to
become due to such Lender. In connection with any distributions to be made
hereunder, the Agent shall be entitled to assume that no amounts are due to any
Lender on account of Other Liabilities unless the Agent has received written
notice thereof from such Lender, and if such notice is received, the Agent shall
be entitled to assume that the only amounts due to such Lender on account of
Other Liabilities is the amount set forth in such notice;

 

(b)           is deemed to have requested that the Agent furnish such Lender,
promptly after they become available, copies of all Borrowing Base Certificates
and financial statements required to be delivered by the Borrower hereunder and
all commercial finance examinations and appraisals of the Collateral received by
the Agent (collectively, the “Reports”);

 

(c)           expressly agrees and acknowledges that the Agent makes no
representation or warranty as to the accuracy of the Reports, and shall not be
liable for any information contained in any Report;

 

(d)           expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent or any other party
performing any audit or examination will inspect only specific information
regarding the Loan Parties and will rely significantly upon the Loan Parties’
books and records, as well as on representations of the Loan Parties’ personnel;

 

(e)           agrees to keep all Reports confidential in accordance with the
provisions of Section 10.07 hereof; and

 

(f)            without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold the Agent and any
such other Lender preparing a Report harmless from any action the indemnifying
Lender may take or conclusion the indemnifying Lender may reach or draw from any
Report in connection with any Credit Extensions that the indemnifying Lender has
made or may make to the Borrower, or the indemnifying Lender’s

 

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participation in, or the indemnifying Lender’s purchase of, a Loan or Loans; and
(ii) to pay and protect, and indemnify, defend, and hold the Agent and any such
other Lender preparing a Report harmless from and against, the claims, actions,
proceedings, damages, costs, expenses, and other amounts (including attorney
costs) incurred by the Agent and any such other Lender preparing a Report as the
direct or indirect result of any third parties who might obtain all or part of
any Report through the indemnifying Lender.

 

9.13        Agency for Perfection.

 

Each Lender hereby appoints each other Lender as agent for the purpose of
perfecting Liens for the benefit of the Agent and the Lenders, in assets which,
in accordance with Article 9 of the UCC or any other applicable Law of the
United States can be perfected only by possession or control.  Should any Lender
(other than the Agent) obtain possession or control of any such Collateral, such
Lender shall notify the Agent thereof, and, promptly upon the Agent’s request
therefor shall deliver such Collateral to the Agent or otherwise deal with such
Collateral in accordance with the Agent’s instructions.

 

9.14        Indemnification of Agent.  Without limiting the obligations of the
Loan Parties hereunder, the Lenders shall indemnify the Agent, the L/C Issuer
and any Related Party, as the case may be, to the extent not reimbursed by the
Loan Parties, ratably according to their Applicable Percentages, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by, or asserted against the
Agent, the L/C Issuer and their Related Parties in any way relating to or
arising out of this Agreement or any other Loan Document or any action taken or
omitted to be taken by the Agent, the L/C Issuer and their Related Parties in
connection therewith; provided, that no Lender shall be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent’s,
the L/C Issuer’s and their Related Parties’ gross negligence or willful
misconduct as determined by a final and nonappealable judgment of a court of
competent jurisdiction.

 

9.15        Relation among Lenders.  The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Agent) authorized to act
for, any other Lender.

 

9.16        Defaulting Lender.

 

(a)           If for any reason any Lender shall become a Defaulting Lender,
then, in addition to the rights and remedies that may be available to the other
Credit Parties, the Loan Parties or any other party at law or in equity, and not
at limitation thereof, (i) such Defaulting Lender’s right to participate in the
administration of, or decision-making rights related to, the Obligations, this
Agreement or the other Loan Documents shall be suspended during the pendency of
such failure or refusal, and (ii) a Defaulting Lender shall be deemed to have
assigned any and all payments due to it from the Loan Parties, whether on
account of outstanding Loans, interest, fees or otherwise, to the remaining
non-Defaulting Lenders for application to, and reduction of, their proportionate
shares of all outstanding Obligations, and (iii) at the option of the Agent, any
amount payable to such Defaulting Lender hereunder (whether on account of
principal, interest, fees or otherwise) shall, in lieu of being distributed to
such Defaulting Lender, be retained by the Agent as cash collateral for future
funding obligations of the Defaulting Lender in respect of any Loan or existing
or future participating interest in any Swing Line Loan or Letter of Credit. 
The Defaulting Lender’s decision-making and participation rights and rights to
payments as set forth in clauses (i), (ii) and (iii) hereinabove shall be
restored only upon the payment by the Defaulting Lender of its Applicable
Percentage of any Obligations, any participation obligation, or expenses as to
which it is

 

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delinquent, together with interest thereon at the rate set forth in
Section 2.08(b) hereof from the date when originally due until the date upon
which any such amounts are actually paid.

 

(b)           The non-Defaulting Lenders shall also have the right, but not the
obligation, in their respective, sole and absolute discretion, to cause the
termination and assignment, without any further action by the Defaulting Lender
for no cash consideration (pro rata, based on the respective Commitments of
those Lenders electing to exercise such right), of the Defaulting Lender’s
Commitment to fund future Loans.  Upon any such purchase of the Applicable
Percentage of any Defaulting Lender, the Defaulting Lender’s share in future
Credit Extensions and its rights under the Loan Documents with respect thereto
shall terminate on the date of purchase, and the Defaulting Lender shall
promptly execute all documents reasonably requested to surrender and transfer
such interest, including, if so requested, an Assignment and Acceptance.

 

(c)           During any period in which there is a Defaulting Lender or a
Deteriorating Lender, for purposes of computing the amount of the obligation of
each non-Defaulting Lender and each non-Deteriorating Lender to acquire,
refinance or fund participations in Letters of Credit or Swing Line Loans
pursuant to Sections 2.03 and 2.04, the “Applicable Percentage” of each
non-Defaulting Lender and each non-Deteriorating Lender shall be computed
without giving effect to the Commitment of any Defaulting Lender or
Deteriorating Lender, as applicable; provided that (i) each such reallocation
shall be given effect only if, at the date the applicable Lender becomes a
Defaulting Lender or a Deteriorating Lender, no Default or Event of Default
exists; and (ii) the aggregate obligation of each non-Defaulting Lender and each
non-Deteriorating Lender to acquire, refinance or fund participations in Letters
of Credit and Swing Line Loans shall not exceed the positive difference, if any,
of (1) the Commitment of that non-Defaulting Lender or non-Deteriorating Lender,
as applicable, minus (2) the aggregate Outstanding Amount of the Loans
(including any Overadvances) and participations in Letters of Credit and Swing
Line Loans of that Lender.

 

(d)           At any time that there shall exist a Defaulting Lender or a
Deteriorating Lender, promptly (and in any event within one (1) Business Day)
upon the request of the Agent, the L/C Issuer or the Swing Line Lender, the
Borrower shall deliver to the Agent Cash Collateral in an amount sufficient to
cover all Fronting Exposure (after giving effect to Section 9.16(c) and any Cash
Collateral provided by the Defaulting Lender or Deteriorating Lender, as
applicable.

 

(e)           Each Defaulting Lender shall indemnify the Agent and each
non-Defaulting Lender from and against any and all loss, damage or expenses,
including but not limited to reasonable attorneys’ fees and funds advanced by
the Agent or by any non-Defaulting Lender, on account of a Defaulting Lender’s
failure to timely fund its Applicable Percentage of a Loan or to otherwise
perform its obligations under the Loan Documents.

 

ARTICLE X
MISCELLANEOUS

 

10.01      Amendments, Etc.  No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no Consent to any departure by any
Loan Party therefrom, shall be effective unless in writing signed by the Agent,
with the Consent of the Required Lenders, and the Borrower or the applicable
Loan Party, as the case may be, and acknowledged by the Agent, and each such
waiver or Consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such amendment,
waiver or consent shall:

 

(a)           increase the Commitment of any Lender (or reinstate any Commitment
terminated pursuant to Section 8.02) without the written Consent of such Lender;

 

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(b)           as to any Lender, postpone any date fixed by this Agreement or any
other Loan Document for (i) any scheduled payment (including the Maturity Date)
or mandatory prepayment of principal, interest, fees or other amounts due
hereunder or under any of the other Loan Documents without the written Consent
of such Lender entitled to such payment, or (ii) any scheduled or mandatory
reduction of the Aggregate Commitments hereunder or under any other Loan
Document without the written Consent of such Lender;

 

(c)           as to any Lender, reduce the principal of, or the rate of interest
specified herein on, any Loan held by such lender, or (subject to clause (iv) of
the second proviso to this Section 10.01) any fees or other amounts payable
hereunder or under any other Loan Document to or for the account of such Lender,
without the written Consent of each Lender entitled to such amount; provided,
however, that only the Consent of the Required Lenders shall be necessary to
amend the definition of “Default Rate” or to waive any obligation of the
Borrower to pay interest or Letter of Credit Fees at the Default Rate;

 

(d)           as to any Lender, change Section 2.13 or Section 8.03 in a manner
that would alter the pro rata sharing of payments required thereby without the
written Consent of such Lender;

 

(e)           change any provision of this Section or the definition of
“Required Lenders”, “Required Supermajority Lenders” or any other provision
hereof specifying the number or percentage of Lenders required to amend, waive
or otherwise modify any rights hereunder or make any determination or grant any
consent hereunder, without the written Consent of each Lender;

 

(f)            except as expressly permitted hereunder or under any other Loan
Document, release, or limit the liability of, any Loan Party without the written
Consent of each Lender;

 

(g)           except for Permitted Dispositions, release all or substantially
all of the Collateral from the Liens of the Security Documents without the
written Consent of each Lender;

 

(h)           except as provided in Section 2.15, increase the Aggregate
Commitments without the written Consent of each Lender;

 

(i)            increase any advance rate percentage set forth in the definition
of “Borrowing Base” without the written Consent of each Lender; or otherwise
change the definition of the term “Borrowing Base” or any component definition
thereof if as a result thereof the amounts available to be borrowed by the
Borrower would be increased without the written Consent of the Required
Supermajority Lenders (other than, for the avoidance of doubt, as a result of
changes to the Appraised Value of the Eligible Inventory pursuant to the most
recent appraisal obtained by the Agent), provided that the foregoing shall not
limit the discretion of the Agent to change, establish or eliminate any
Reserves;

 

(j)            modify the definition of Permitted Overadvance so as to increase
the amount thereof or, except as provided in such definition, the time period
for which a Permitted Overadvance may remain outstanding without the written
Consent of each Lender; and

 

(k)           except as expressly permitted herein or in any other Loan
Document, subordinate the Obligations hereunder or the Liens granted hereunder
or under the other Loan Documents, to any other Indebtedness or Lien, as the
case may be without the written Consent of each Lender;

 

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and, provided further, that (i) no amendment, waiver or Consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above,
affect the rights or duties of the L/C Issuer under this Agreement or any Issuer
Document relating to any Letter of Credit issued or to be issued by it; (ii) no
amendment, waiver or Consent shall, unless in writing and signed by the Swing
Line Lender in addition to the Lenders required above, affect the rights or
duties of the Swing Line Lender under this Agreement; (iii) no amendment, waiver
or Consent shall, unless in writing and signed by the Agent in addition to the
Lenders required above, affect the rights or duties of the Agent under this
Agreement or any other Loan Document; and (iv) the Fee Letter may be amended, or
rights or privileges thereunder waived, in a writing executed only by the
parties thereto.  Notwithstanding anything to the contrary herein, no
Deteriorating Lender or Defaulting Lender shall have any right to approve or
disapprove any amendment, waiver or Consent hereunder, except that the
Commitment of such Lender may not be increased or extended without the consent
of such Lender.

 

(b)           Notwithstanding anything to the contrary in this Agreement or any
other Loan Document, (x) no provider or holder of any Bank Products or Cash
Management Services shall have any voting or approval rights hereunder (or be
deemed a Lender) solely by virtue of its status as the provider or holder of
such agreements or products or the Obligations owing thereunder, nor shall the
consent of any such provider or holder be required (other than in their
capacities as Lenders, to the extent applicable) for any matter hereunder or
under any of the other Loan Documents, including as to any matter relating to
the Collateral or the release of Collateral or any Loan Party, and (y) any Loan
Document may be amended and waived with the consent of the Agent at the request
of the Borrower without the need to obtain the consent of any other Lender if
such amendment or waiver is delivered in order (i) to comply with local Law or
advice of local counsel, (ii) to cure ambiguities or defects or (iii) to cause
any Loan Document to be consistent with this Agreement and the other Loan
Documents.

 

If any Lender does not Consent (a “Non-Consenting Lender”) to a proposed
amendment, waiver, consent or release with respect to any Loan Document that
requires the Consent of each Lender and that has been approved by the Required
Lenders, the Borrower may replace such Non-Consenting Lender in accordance with
Section 10.13; provided that such amendment, waiver, consent or release can be
effected as a result of the assignment contemplated by such Section (together
with all other such assignments required by the Borrower to be made pursuant to
this paragraph).

 

10.02      Notices; Effectiveness; Electronic Communications.

 

(a)           Notices Generally.  Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in subsection (b) below), all notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopier as
follows, and all notices and other communications expressly permitted hereunder
to be given by telephone shall be made to the applicable telephone number, as
follows:

 

(i)            if to the Loan Parties, the Agent, the L/C Issuer or the Swing
Line Lender, to the address, telecopier number, electronic mail address or
telephone number specified for such Person on Schedule 10.02; and

 

(ii)           if to any other Lender, to the address, telecopier number,
electronic mail address or telephone number specified in its Administrative
Questionnaire.

 

Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to

 

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have been given at the opening of business on the next Business Day for the
recipient).  Notices delivered through electronic communications to the extent
provided in subsection (b) below, shall be effective as provided in such
subsection (b).

 

(b)           Electronic Communications.  Notices and other communications to
the Loan Parties, the Lenders and the L/C Issuer hereunder may be delivered or
furnished by electronic communication (including e-mail and Internet or intranet
websites) pursuant to procedures approved by the Agent, provided that the
foregoing shall not apply to notices to any Lender or the L/C Issuer pursuant to
Article II if such Lender or the L/C Issuer, as applicable, has notified the
Agent that it is incapable of receiving notices under such Article by electronic
communication.  The Agent may, in its discretion, agree to accept notices and
other communications to it hereunder by electronic communications pursuant to
procedures approved by it, provided that approval of such procedures may be
limited to particular notices or communications.

 

Unless the Agent otherwise prescribes, (i) notices and other communications sent
to an e-mail address shall be deemed received upon the sender’s receipt of an
acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written
acknowledgement), provided that if such notice or other communication is not
sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next Business Day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

 

(c)           The Platform.  THE PLATFORM IS PROVIDED “AS IS” AND “AS
AVAILABLE.”  THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR
COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND
EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER
MATERIALS.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING
ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE
DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR
THE PLATFORM.  In no event shall the Agent or any of its Related Parties
(collectively, the “Agent Parties”) have any liability to any Loan Party, any
Lender, the L/C Issuer or any other Person for losses, claims, damages,
liabilities or expenses of any kind (whether in tort, contract or otherwise)
arising out of the Loan Parties’ or the Agent’s transmission of Borrower
Materials through the Internet, except to the extent that such losses, claims,
damages, liabilities or expenses are determined by a court of competent
jurisdiction by a final and nonappealable judgment to have resulted from the
gross negligence or willful misconduct of such Agent Party; provided, however,
that in no event shall any Agent Party have any liability to any Loan Party, any
Lender, the L/C Issuer or any other Person for indirect, special, incidental,
consequential or punitive damages (as opposed to direct or actual damages).

 

(d)           Change of Address, Etc.  Each of the Loan Parties, the Agent, the
L/C Issuer and the Swing Line Lender may change its address, telecopier or
telephone number for notices and other communications hereunder by notice to the
other parties hereto.  Each other Lender may change its address, telecopier or
telephone number for notices and other communications hereunder by notice to the
Borrower, the Agent, the L/C Issuer and the Swing Line Lender.  In addition,
each Lender agrees to notify the Agent from time to time to ensure that the
Agent has on record (i) an effective address, contact name, telephone number,
telecopier number and electronic mail address to which notices and other
communications may be sent and (ii) accurate wire instructions for such Lender.

 

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(e)           Reliance by Agent, L/C Issuer and Lenders.  The Agent, the L/C
Issuer and the Lenders shall be entitled to rely and act upon any notices
(including telephonic Committed Loan Notices and Swing Line Loan Notices)
purportedly given by or on behalf of the Loan Parties even if (i) such notices
were not made in a manner specified herein, were incomplete or were not preceded
or followed by any other form of notice specified herein, or (ii) the terms
thereof, as understood by the recipient, varied from any confirmation thereof. 
The Loan Parties shall indemnify the Agent, the L/C Issuer, each Lender and the
Related Parties of each of them from all losses, costs, expenses and liabilities
resulting from the reliance by such Person on each notice purportedly given by
or on behalf of the Loan Parties.  All telephonic notices to and other
telephonic communications with the Agent may be recorded by the Agent, and each
of the parties hereto hereby consents to such recording.

 

10.03      No Waiver; Cumulative Remedies.  No failure by any Credit Party to
exercise, and no delay by any such Person in exercising, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder or
under any other Loan Document preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.  The rights,
remedies, powers and privileges provided herein and in the other Loan Documents
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.  Without limiting the generality of the foregoing, the making
of a Loan or issuance of a Letter of Credit shall not be construed as a waiver
of any Default or Event of Default, regardless of whether any Credit Party may
have had notice or knowledge of such Default or Event of Default at the time.

 

10.04      Expenses; Indemnity; Damage Waiver.

 

(a)           Costs and Expenses.  The Borrower shall pay all Credit Party
Expenses.

 

(b)           Indemnification by the Loan Parties.  The Loan Parties shall
indemnify the Agent (and any sub-agent thereof), each other Credit Party, and
each Related Party of any of the foregoing Persons (each such Person being
called an “Indemnitee”) against, and hold each Indemnitee harmless (on an after
tax basis) from, any and all losses, claims, causes of action, damages,
liabilities, settlement payments, costs, and related expenses (including the
reasonable and documented fees, charges and disbursements of any counsel for any
Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by
any third party or by any Loan Party arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto of their respective obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby, or, in the case of the Agent (and any sub-agents thereof) and their
Related Parties only, the administration of this Agreement and the other Loan
Documents, (ii) any Loan or Letter of Credit or the use or proposed use of the
proceeds therefrom (including any refusal by the L/C Issuer to honor a demand
for payment under a Letter of Credit if the documents presented in connection
with such demand do not strictly comply with the terms of such Letter of Credit,
any bank advising or confirming a Letter of Credit or any other nominated person
with respect to a Letter of Credit seeking to be reimbursed or indemnified or
compensated, and any third party seeking to enforce the rights of an Borrower,
beneficiary, nominated person, transferee, assignee of Letter of Credit
proceeds, or holder of an instrument or document related to any Letter of
Credit), (iii) any actual or alleged presence or release of Hazardous Materials
on or from any property owned or operated by any Loan Party or any of its
Subsidiaries, or any Environmental Liability related in any way to any Loan
Party or any of its Subsidiaries, (iv) any claims of, or amounts paid by any
Credit Party to, a Blocked Account Bank or other Person which has entered into a
control agreement with any Credit Party hereunder, or (v) any actual or
prospective claim, litigation, investigation or

 

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proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory, whether brought by a third party or by any Loan Party or any
of the Loan Parties’ directors, shareholders or creditors, and regardless of
whether any Indemnitee is a party thereto, in all cases, whether or not caused
by or arising, in whole or in part, out of the comparative, contributory or sole
negligence of the Indemnitee; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses (x) are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee or (y) result from a claim
brought by any Loan Party against an Indemnitee for breach in bad faith of such
Indemnitee’s obligations hereunder or under any other Loan Document, if the
Borrower or such Loan Party has obtained a final and nonappealable judgment in
its favor on such claim as determined by a court of competent jurisdiction. 
This Section 10.04(b) shall not apply with respect to Taxes, which shall be
governed exclusively by Section 3.01.

 

(c)           Reimbursement by Lenders.  Without limiting their obligations
under Section 9.14 hereof, to the extent that the Loan Parties for any reason
fail to indefeasibly pay any amount required under subsection (a) or (b) of this
Section to be paid by it, each Lender severally agrees to pay to the Agents (or
any such sub-agent), the L/C Issuer or such Related Party, as the case may be,
such Lender’s Applicable Percentage (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such unpaid
amount, provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or
asserted against the Agents (or any such sub-agent) or the L/C Issuer in its
capacity as such, or against any Related Party of any of the foregoing acting
for the Agents (or any such sub-agent) or L/C Issuer in connection with such
capacity.  The obligations of the Lenders under this subsection (c) are subject
to the provisions of Section 2.12(d).

 

(d)           Waiver of Consequential Damages, Etc.  To the fullest extent
permitted by applicable Law, the Loan Parties shall not assert, and hereby
waive, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement, any other Loan Document or any agreement or instrument contemplated
hereby, the transactions contemplated hereby or thereby, any Loan or Letter of
Credit or the use of the proceeds thereof.  No Indemnitee shall be liable for
any damages arising from the use by unintended recipients of any information or
other materials distributed to such unintended recipients by such Indemnitee
through telecommunications, electronic or other information transmission systems
in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby other than for direct or actual
damages resulting from the gross negligence or willful misconduct of such
Indemnitee as determined by a final and nonappealable judgment of a court of
competent jurisdiction.

 

(e)           Payments.  All amounts due under this Section shall be payable on
demand therefor.

 

(f)            Survival.  The agreements in this Section shall survive the
resignation of any Agent and the L/C Issuer, the assignment of any Commitment or
Loan by any Lender, the replacement of any Lender, the termination of the
Aggregate Commitments and the repayment, satisfaction or discharge of all the
other Obligations.

 

10.05      Payments Set Aside.  To the extent that any payment by or on behalf
of the Loan Parties is made to any Credit Party, or any Credit Party exercises
its right of setoff, and such payment or the proceeds of such setoff or any part
thereof is subsequently invalidated, declared to be fraudulent or

 

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preferential, set aside or required (including pursuant to any settlement
entered into by such Credit Party in its discretion) to be repaid to a trustee,
receiver or any other party, in connection with any proceeding under any Debtor
Relief Law or otherwise, then (a) to the extent of such recovery, the obligation
or part thereof originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been made or such
setoff had not occurred, and (b) each Lender and the L/C Issuer severally agrees
to pay to the Agent upon demand its Applicable Percentage (without duplication)
of any amount so recovered from or repaid by the Agent, plus interest thereon
from the date of such demand to the date such payment is made at a rate per
annum equal to the Federal Funds Rate from time to time in effect.  The
obligations of the Lenders and the L/C Issuer under clause (b) of the preceding
sentence shall survive the payment in full of the Obligations and the
termination of this Agreement.

 

10.06      Successors and Assigns.

 

(a)           Successors and Assigns Generally.  The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that no
Loan Party may assign or otherwise transfer any of its rights or obligations
hereunder or under any other Loan Document without the prior written Consent of
the Agent and each Lender and no Lender may assign or otherwise transfer any of
its rights or obligations hereunder except (i) to an Eligible Assignee in
accordance with the provisions of Section 10.06(b), (ii) by way of participation
in accordance with the provisions of subsection Section 10.06(d), or (iii) by
way of pledge or assignment of a security interest subject to the restrictions
of Section 10.06(f) (and any other attempted assignment or transfer by any party
hereto shall be null and void).  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby, Participants
to the extent provided in subsection (d) of this Section and, to the extent
expressly contemplated hereby, the Related Parties of each of the Credit
Parties) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

 

(b)           Assignments by Lenders.  Any Lender may at any time assign to one
or more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment(s) and the Loans
(including for purposes of this Section 10.06(b), participations in L/C
Obligations and in Swing Line Loans) at the time owing to it); provided that any
such assignment shall be subject to the following conditions:

 

(i)            Minimum Amounts

 

(A)          in the case of an assignment of the entire remaining amount of the
assigning Lender’s Commitment and the Loans at the time owing to it or in the
case of an assignment to a Lender or an Affiliate of a Lender or an Approved
Fund with respect to a Lender, no minimum amount need be assigned; and

 

(B)           in any case not described in subsection (b)(i)(A) of this Section,
the aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the Commitment is not then in effect, the
principal outstanding balance of the Loans of the assigning Lender subject to
each such assignment, determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Agent or, if “Trade Date” is
specified in the Assignment and Assumption, as of the Trade Date, shall not be
less than $5,000,000 unless each of the Agent and, so long as no Event of
Default has occurred and is continuing, the Borrower otherwise consents (each
such consent not to be unreasonably withheld or delayed); provided, however,
that concurrent assignments to members of an Assignee Group and concurrent
assignments from members of an Assignee Group to a single Eligible

 

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Assignee (or to an Eligible Assignee and members of its Assignee Group) will be
treated as a single assignment for purposes of determining whether such minimum
amount has been met;

 

(ii)           Proportionate Amounts.  Each partial assignment shall be made as
an assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loans or the Commitment
assigned, except that this clause (ii) shall not apply to the Swing Line
Lender’s rights and obligations in respect of Swing Line Loans;

 

(iii)          Required Consents.  No consent shall be required for any
assignment except to the extent required by subsection (b)(i)(B) of this
Section and, in addition:

 

(A)          the consent of the Borrower (such consent not to be unreasonably
withheld or delayed) shall be required unless (1) an Event of Default has
occurred and is continuing at the time of such assignment or (2) such assignment
is to a Lender, an Affiliate of a Lender or an Approved Fund; and

 

(B)           the consent of the Agent (such consent not to be unreasonably
withheld or delayed) shall be required for assignments in respect of any
Commitment if such assignment is to a Person that is not a Lender, an Affiliate
of such Lender or an Approved Fund with respect to such Lender.

 

(iv)          Assignment and Assumption.  The parties to each assignment shall
execute and deliver to the Agent an Assignment and Assumption, together with a
processing and recordation fee of $3,500 and any forms required pursuant to
Section 3.01 hereof, provided, however, that the Agent may, in its sole
discretion, elect to waive such processing and recordation fee in the case of
any assignment. The assignee, if it shall not be a Lender, shall deliver to the
Agent an Administrative Questionnaire.

 

Subject to acceptance and recording thereof by the Agent pursuant to subsection
(c) of this Section, from and after the effective date specified in each
Assignment and Assumption, the Eligible Assignee thereunder shall be a party to
this Agreement and, to the extent of the interest assigned by such Assignment
and Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 3.01 (subject to the requirements of
Section 3.01), 3.04, 3.05, and 10.04 with respect to facts and circumstances
occurring prior to the effective date of such assignment.  Upon request, the
Borrower (at its expense) shall execute and deliver a Note to the assignee
Lender.  Any assignment or transfer by a Lender of rights or obligations under
this Agreement that does not comply with this subsection shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with Section 10.06(d). No assignment shall
be effective for purposes of this Agreement unless it has been recorded in the
Register as provided in Section 10.06(c).

 

(c)           Register.  The Agent, acting solely for this purpose as an agent
of the Borrower, shall maintain at the Agent’s Office a copy of each Assignment
and Assumption delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitments of, and principal amounts of
(and stated interest on) the Loans and L/C Obligations owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”).  The entries in
the Register shall be conclusive, absent manifest error, and the Loan Parties,
the Agent and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all

 

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purposes of this Agreement, notwithstanding notice to the contrary.  The
Register shall be available for inspection by the Borrower and any Lender at any
reasonable time and from time to time upon reasonable prior notice.

 

(d)           Participations.  Any Lender may at any time, without the consent
of, or notice to, the Loan Parties or the Agent, sell participations to any
Person (other than a natural person, an Excluded Lender or the Loan Parties or
any of the Loan Parties’ Affiliates or Subsidiaries) (each, a “Participant”) in
all or a portion of such Lender’s rights and/or obligations under this Agreement
(including all or a portion of its Commitment and/or the Loans (including such
Lender’s participations in L/C Obligations and/or Swing Line Loans) owing to
it); provided that (i) such Lender’s obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii) the Loan
Parties, the Agent, the Lenders and the L/C Issuer shall continue to deal solely
and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.  Any Participant shall agree in writing to
comply with all confidentiality obligations set forth in Section 10.07 as if
such Participant was a Lender hereunder.

 

Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification described in the first proviso to
Section 10.01 that affects such Participant.  Subject to subsection (e) of this
Section, the Loan Parties agree that each Participant shall be entitled to the
benefits of Sections 3.01 (subject to the requirements of Section 3.01), 3.04
and 3.05 to the same extent as if it were a Lender and had acquired its interest
by assignment pursuant to Section 10.06(b).  To the extent permitted by law,
each Participant also shall be entitled to the benefits of Section 10.08 as
though it were a Lender, provided such Participant agrees to be subject to
Section 2.13 as though it were a Lender.

 

Each Lender that sells a participation, acting solely for this purpose as an
agent of the Borrower, shall maintain at one of its offices a register for the
recordation of the names and addresses of each Participant and the principal
amounts of, and stated interest on, each participant’s interest in the Loans or
other obligations under this Agreement (the “Participant Register”); provided
that no Lender shall have any obligation to disclose all or any portion of the
Participant Register to the Borrower, the Agent or any other Person (including
the identity of any Participant or any information relating to a Participant’s
interest in the Commitments, Loans or other Obligations) except to the extent
the Borrower determines, in its reasonable discretion, that disclosure is
necessary to establish that such Commitments, Loans or other Obligations are in
registered form under Section 5f.103-1(c) of the United States Treasury
Regulations.  The entries in the Participant Register shall be conclusive,
absent manifest error, and such Lender may treat each Person whose name is
recorded in the Participant Register pursuant to the terms hereof as the owner
of such participation for all purposes of this Agreement, notwithstanding notice
to the contrary.

 

(e)           Limitations upon Participant Rights.  A Participant shall not be
entitled to receive any greater payment under Section 3.01 or 3.04 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent.  A
Participant shall not be entitled to the benefits of Section 3.01 unless the
Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Loan Parties, to comply with
Section 3.01(e) as though it were a Lender.

 

(f)            Certain Pledges.  Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement
(including under its Note, if any) to secure

 

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obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

 

(g)           Electronic Execution of Assignments.  The words “execution,”
“signed,” “signature,” and words of like import in any Assignment and Assumption
shall be deemed to include electronic signatures or the keeping of records in
electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act.

 

(h)           Resignation as L/C Issuer or Swing Line Lender after Assignment. 
Notwithstanding anything to the contrary contained herein, if at any time Wells
Fargo assigns all of its Commitment and Loans pursuant to subsection (b) above,
Wells Fargo may, (i) upon 30 days’ notice to the Borrower and the Lenders,
resign as L/C Issuer and/or (ii) upon 30 days’ notice to the Borrower, Wells
Fargo may resign as Swing Line Lender.  In the event of any such resignation as
L/C Issuer or Swing Line Lender, the Borrower shall be entitled to appoint from
among the Lenders a successor L/C Issuer or Swing Line Lender hereunder;
provided, however, that no failure by the Borrower to appoint any such successor
shall affect the resignation of Wells Fargo as L/C Issuer or Swing Line Lender,
as the case may be.  If Wells Fargo resigns as L/C Issuer, it shall retain all
the rights, powers, privileges and duties of the L/C Issuer hereunder with
respect to all Letters of Credit outstanding as of the effective date of its
resignation as L/C Issuer and all L/C Obligations with respect thereto
(including the right to require the Lenders to make Base Rate Loans pursuant to
Section 2.03(c)).  If Wells Fargo resigns as Swing Line Lender, it shall retain
all the rights of the Swing Line Lender provided for hereunder with respect to
Swing Line Loans made by it and outstanding as of the effective date of such
resignation, including the right to require the Lenders to make Base Rate Loans
or fund risk participations in outstanding Swing Line Loans pursuant to
Section 2.04(c).  Upon the appointment of a successor L/C Issuer and/or Swing
Line Lender, (a) such successor shall succeed to and become vested with all of
the rights, powers, privileges and duties of the retiring L/C Issuer or Swing
Line Lender, as the case may be, and (b) the successor L/C Issuer shall issue
letters of credit in substitution for the Letters of Credit, if any, outstanding
at the time of such succession or make other arrangements satisfactory to Wells
Fargo to effectively assume the obligations of Wells Fargo with respect to such
Letters of Credit.

 

(i)            No Assignment to Excluded Lender, Defaulting Lender or Natural
Person.  Notwithstanding anything contained herein, no assignment shall be made
to any Excluded Lender, Defaulting Lender or a natural person.

 

10.07      Treatment of Certain Information; Confidentiality.  Each of the
Credit Parties agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to attorneys for
and other advisors, accountants, auditors, and consultants to such Credit Party
on a “need to know” basis, provided that any such Person shall have agreed to
receive such Information subject to the terms of this Section 10.07, (b) to
Affiliates of such Credit Party, provided that any such Affiliate shall have
agreed to receive such Information subject to the terms of this Section 10.07
(except to the extent any such Affiliate is an Excluded Lender), (c) as may be
required by regulatory authorities so long as such authorities are informed of
the confidential nature of such Information, (d) as may be required by statute,
judicial or administrative order, rule or regulation, provided that prior to any
such disclosure under this clause (d), to the extent that the disclosing party
may do so under applicable law, the disclosing party agrees to provide the
Borrower with notice thereof and, if requested by the Borrower, such disclosing
party agrees to cooperate with the Borrower, at the Borrower’s sole expense, in

 

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obtaining a protective order to limit or restrict such disclosure, (e) as may be
agreed to in advance by the Borrower, (f) as requested or required by any
governmental authority pursuant to subpoena or other legal process, provided
that prior to any disclosure pursuant to this clause (f) the disclosing party
agrees to provide the Borrower with prior notice thereof, (g) as to any
Information that is or becomes generally available to the public (other than as
a result of prohibited disclosure by a Credit Party), (h) in connection with the
syndication of the Loans or any proposed assignment or grant of a participation
therein, provided that any such proposed Lender, assignee or participant shall
have agreed in writing to receive such information subject to this Section 10.07
(except to the extent any such Person is an Excluded Lender) and (i) as may be
necessary in connection with the exercise of any remedies hereunder or under any
other Loan Document or any action or proceeding relating to this Agreement or
any other Loan Document or the enforcement of rights hereunder or thereunder.

 

For purposes of this Section, “Information” means all information received from
the Loan Parties or any Subsidiary thereof relating to the Loan Parties or any
Subsidiary thereof or their respective businesses, other than any such
information that is available to any Credit Party on a non-confidential basis
prior to disclosure by the Loan Parties or any Subsidiary thereof.  Any Person
required to maintain the confidentiality of Information as provided in this
Section shall be considered to have complied with its obligation to do so if
such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.

 

Each of the Credit Parties acknowledges that (a) the Information may include
material non-public information concerning the Loan Parties or a Subsidiary, as
the case may be, (b) it has developed compliance procedures regarding the use of
material non-public information and (c) it will handle such material non-public
information in accordance with applicable Law, including Federal and state
securities Laws.

 

10.08      Right of Setoff.  If an Event of Default shall have occurred and be
continuing, each Lender, the L/C Issuer and each of their respective Affiliates
is hereby authorized at any time and from time to time, after obtaining the
prior written consent of the Agent or the Required Lenders, to the fullest
extent permitted by applicable law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final, in whatever currency)
or other property at any time held and other obligations (in whatever currency)
at any time owing by such Lender, the L/C Issuer or any such Affiliate to or for
the credit or the account of the Borrower or any other Loan Party against any
and all of the Obligations now or hereafter existing under this Agreement or any
other Loan Document to such Lender or the L/C Issuer, regardless of the adequacy
of the Collateral, and irrespective of whether or not such Lender or the L/C
Issuer shall have made any demand under this Agreement or any other Loan
Document and although such obligations of the Borrower or such Loan Party may be
contingent or unmatured or are owed to a branch or office of such Lender or the
L/C Issuer different from the branch or office holding such deposit or obligated
on such indebtedness.  The rights of each Lender, the L/C Issuer and their
respective Affiliates under this Section are in addition to other rights and
remedies (including other rights of setoff) that such Lender, the L/C Issuer or
their respective Affiliates may have.  Each Lender and the L/C Issuer agrees to
notify the Borrower and the Agent promptly after any such setoff and
application, provided that the failure to give such notice shall not affect the
validity of such setoff and application.

 

10.09      Interest Rate Limitation.  Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the “Maximum Rate”).  If the Agent or any Lender
shall receive interest in an amount that exceeds the Maximum Rate, the excess
interest shall be applied to the principal of the Loans or, if it exceeds such
unpaid principal, refunded to the Borrower.  In determining whether the interest
contracted for, charged, or received by the Agent or a Lender exceeds the
Maximum Rate, such Person may, to the extent permitted by applicable Law, (a)

 

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characterize any payment that is not principal as an expense, fee, or premium
rather than interest, (b) exclude voluntary prepayments and the effects thereof,
and (c) amortize, prorate, allocate, and spread in equal or unequal parts the
total amount of interest throughout the contemplated term of the Obligations
hereunder.

 

10.10      Counterparts; Integration; Effectiveness.  This Agreement may be
executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract.  This Agreement and the other
Loan Documents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof.  Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Agent and when the Agent shall have received
counterparts hereof that, when taken together, bear the signatures of each of
the other parties hereto.  Delivery of an executed counterpart of a signature
page of this Agreement by telecopy, pdf or other electronic transmission shall
be as effective as delivery of a manually executed counterpart of this
Agreement.

 

10.11      Survival.  All representations and warranties made hereunder and in
any other Loan Document or other document delivered pursuant hereto or thereto
or in connection herewith or therewith shall survive the execution and delivery
hereof and thereof.  Such representations and warranties have been or will be
relied upon by the Credit Parties, regardless of any investigation made by any
Credit Party or on their behalf and notwithstanding that any Credit Party may
have had notice or knowledge of any Default or Event of Default at the time of
any Credit Extension, and shall continue in full force and effect as long as any
Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any
Letter of Credit shall remain outstanding.  Further, the provisions of Sections
3.01, 3.04, 3.05 and 10.04 and Article IX shall survive and remain in full force
and effect regardless of the repayment of the Obligations, the expiration or
termination of the Letters of Credit and the Commitments or the termination of
this Agreement or any provision hereof.  In connection with the termination of
this Agreement and the release and termination of the security interests in the
Collateral, the Agent may require such indemnities and collateral security as
they shall reasonably deem necessary or appropriate to protect the Credit
Parties against (x) loss on account of credits previously applied to the
Obligations that may subsequently be reversed or revoked, (y) any obligations
that may thereafter arise with respect to the Other Liabilities and (z) any
Obligations that may thereafter arise under Section 10.04.

 

10.12      Severability.  If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions.  The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

10.13      Replacement of Lenders.  If any Lender requests compensation under
Section 3.04, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 3.01, or if any Lender is a Deteriorating Lender or a Defaulting Lender
or a Non-Consenting Lender, then the Borrower may, at its sole expense and
effort, upon notice to such Lender and the Agent, require such Lender to assign
and delegate, without recourse (in accordance with and subject to the
restrictions contained in, and consents required by, Section 10.06), all of its
interests, rights and obligations under this Agreement and the related Loan
Documents to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment), provided that:

 

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(a)           the Borrower shall have paid to the Agent the assignment fee
specified in Section 10.06(b);

 

(b)           such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder and under the other Loan Documents
(including any amounts under Section 3.05) from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts);

 

(c)           in the case of any such assignment resulting from a claim for
compensation under Section 3.04 or payments required to be made pursuant to
Section 3.01, such assignment will result in a reduction in such compensation or
payments thereafter; and

 

(d)           such assignment does not conflict with applicable Laws.

 

A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.

 

10.14      Governing Law; Jurisdiction; Etc.

 

(a)           GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
THE CONFLICTS OF LAWS PRINCIPLES THEREOF, BUT INCLUDING SECTION 5-1401 OF THE
NEW YORK GENERAL OBLIGATIONS LAW.

 

(b)           SUBMISSION TO JURISDICTION.  EACH PARTY HERETO IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, SUBJECT TO THE LAST SENTENCE HEREOF, FOR ITSELF AND ITS
PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE
SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH PARTY
HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT, SUBJECT TO THE LAST SENTENCE
HEREOF, ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING SHALL BE HEARD
AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH PARTY HERETO AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW.  NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS AGREEMENT OR IN
ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT ANY CREDIT PARTY
MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THE EXERCISE OF
THE CREDIT PARTIES OF THEIR RIGHTS AND REMEDIES WITH RESPECT TO THE COLLATERAL
AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(c)           WAIVER OF VENUE.  EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF

 

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VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS
SECTION.  EACH OF THE LOAN PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM
TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(d)           SERVICE OF PROCESS.  EACH PARTY HERETO IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02.  NOTHING
IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

10.15      Waiver of Jury Trial.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

10.16      No Advisory or Fiduciary Responsibility.  In connection with all
aspects of each transaction contemplated hereby, the Loan Parties each
acknowledge and agree that: (i) the credit facility provided for hereunder and
any related arranging or other services in connection therewith (including in
connection with any amendment, waiver or other modification hereof or of any
other Loan Document) are an arm’s-length commercial transaction between the Loan
Parties, on the one hand, and the Credit Parties, on the other hand, and each of
the Loan Parties is capable of evaluating and understanding and understands and
accepts the terms, risks and conditions of the transactions contemplated hereby
and by the other Loan Documents (including any amendment, waiver or other
modification hereof or thereof); (ii) in connection with the process leading to
such transaction, the each Credit Party is and has been acting solely as a
principal and is not the financial advisor, agent or fiduciary, for the Loan
Parties or any of their respective Affiliates, stockholders, creditors or
employees or any other Person; (iii) none of the Credit Parties has assumed or
will assume an advisory, agency or fiduciary responsibility in favor of the Loan
Parties with respect to any of the transactions contemplated hereby or the
process leading thereto, including with respect to any amendment, waiver or
other modification hereof or of any other Loan Document (irrespective of whether
any of the Credit Parties has advised or is currently advising any Loan Party or
any of its Affiliates on other matters) and none of the Credit Parties has any
obligation to any Loan Party or any of its Affiliates with respect to the
transactions contemplated hereby except those obligations expressly set forth
herein and in the other Loan Documents; (iv) the Credit Parties and their
respective Affiliates may be engaged in a broad range of transactions that
involve interests that differ from those of the Loan Parties and their
respective Affiliates, and none of the Credit Parties has any obligation to
disclose any of such interests by virtue of any advisory, agency or fiduciary
relationship; and (v) the Credit Parties have not provided and will not provide
any legal, accounting, regulatory or tax advice with respect to any of the
transactions contemplated hereby (including any amendment, waiver or other
modification hereof or of any other Loan Document) and each of the Loan Parties
has consulted its own legal, accounting, regulatory and tax advisors to the
extent it has deemed appropriate.  Each of the Loan Parties hereby waives and
releases, to the fullest extent permitted by law, any claims that it may

 

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have against each of the Credit Parties with respect to any breach or alleged
breach of agency or fiduciary duty.

 

10.17      USA PATRIOT Act Notice.  Each Lender that is subject to the Act (as
hereinafter defined) and the Agent (for itself and not on behalf of any Lender)
hereby notifies the Loan Parties that pursuant to the requirements of the USA
Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
(the “Act”), it is required to obtain, verify and record information that
identifies each Loan Party, which information includes the name and address of
each Loan Party and other information that will allow such Lender or the Agent,
as applicable, to identify each Loan Party in accordance with the Act. Each Loan
Party is in compliance, in all material respects, with the Patriot Act.  No part
of the proceeds of the Loans will be used by the Loan Parties, directly or
indirectly, for any payments to any governmental official or employee, political
party, official of a political party, candidate for political office, or anyone
else acting in an official capacity, in order to obtain, retain or direct
business or obtain any improper advantage, in violation of the United States
Foreign Corrupt Practices Act of 1977, as amended.

 

10.18      Foreign Asset Control Regulations.  Neither of the advance of the
Loans nor the use of the proceeds of any thereof will violate the Trading With
the Enemy Act (50 U.S.C. § 1 et seq., as amended) (the “Trading With the Enemy
Act”) or any of the foreign assets control regulations of the United States
Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) (the “Foreign
Assets Control Regulations”) or any enabling legislation or executive order
relating thereto (which for the avoidance of doubt shall include, but shall not
be limited to (a) Executive Order 13224 of September 21, 2001 Blocking Property
and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or
Support Terrorism (66 Fed. Reg. 49079 (2001)) (the “Executive Order”) and
(b) the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56)). 
Furthermore, none of the Borrower or its Affiliates (a) is or will become a
“blocked person” as described in the Executive Order, the Trading With the Enemy
Act or the Foreign Assets Control Regulations or (b) engages or will engage in
any dealings or transactions, or be otherwise associated, with any such “blocked
person” or in any manner violative of any such order.

 

10.19      Time of the Essence.  Time is of the essence of the Loan Documents.

 

10.20      Press Releases.

 

(a)           Each Credit Party executing this Agreement agrees that neither it
nor its Affiliates will in the future issue any press releases or other public
disclosure using the name of the Agent or its Affiliates or referring to this
Agreement or the other Loan Documents without at least two (2) Business Days’
prior notice to the Agent and without the prior written consent of the Agent
unless (and only to the extent that) such Credit Party or Affiliate is required
to do so under applicable Law and then, in any event, such Credit Party or
Affiliate will consult with the Agent before issuing such press release or other
public disclosure.

 

(b)           Each Loan Party consents to the publication by the Agent or any
Lender of advertising material, including any “tombstone” or comparable
advertising, on its website or in other marketing materials of Agent, relating
to the financing transactions contemplated by this Agreement using any Loan
Party’s name, product photographs, logo, trademark or other insignia.  The Agent
or such Lender shall provide a draft reasonably in advance of any advertising
material to the Borrower for review and comment prior to the publication
thereof.  The Agent reserves the right to provide to industry trade
organizations and loan syndication and pricing reporting services information
necessary and customary for inclusion in league table measurements.

 

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10.21                 Additional Waivers.

 

(a)                                  The Obligations are the joint and several
obligation of each Loan Party. To the fullest extent permitted by Applicable
Law, the obligations of each Loan Party shall not be affected by (i) the failure
of any Credit Party to assert any claim or demand or to enforce or exercise any
right or remedy against any other Loan Party under the provisions of this
Agreement, any other Loan Document or otherwise, (ii) any rescission, waiver,
amendment or modification of, or any release from any of the terms or provisions
of, this Agreement or any other Loan Document, or (iii) the failure to perfect
any security interest in, or the release of, any of the Collateral or other
security held by or on behalf of the Agent or any other Credit Party.

 

(b)                                 The obligations of each Loan Party  shall
not be subject to any reduction, limitation, impairment or termination for any
reason (other than the indefeasible payment in full in cash of the Obligations
after the termination of the Commitments), including any claim of waiver,
release, surrender, alteration or compromise of any of the Obligations, and
shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of any of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Loan Party hereunder shall
not be discharged or impaired or otherwise affected by the failure of the Agent
or any other Credit Party to assert any claim or demand or to enforce any remedy
under this Agreement, any other Loan Document or any other agreement, by any
waiver or modification of any provision of any thereof, any default, failure or
delay, willful or otherwise, in the performance of any of the Obligations, or by
any other act or omission that may or might in any manner or to any extent vary
the risk of any Loan Party or that would otherwise operate as a discharge of any
Loan Party as a matter of law or equity (other than the indefeasible payment in
full in cash of all the Obligations after the termination of the Commitments).

 

(c)                                  To the fullest extent permitted by
applicable Law, each Loan Party waives any defense based on or arising out of
any defense of any other Loan Party or the unenforceability of the Obligations
or any part thereof from any cause, or the cessation from any cause of the
liability of any other Loan Party, other than the indefeasible payment in full
in cash of all the Obligations and the termination of the Commitments. The Agent
and the other Credit Parties may, at their election, foreclose on any security
held by one or more of them by one or more judicial or non-judicial sales,
accept an assignment of any such security in lieu of foreclosure, compromise or
adjust any part of the Obligations, make any other accommodation with any other
Loan Party, or exercise any other right or remedy available to them against any
other Loan Party, without affecting or impairing in any way the liability of any
Loan Party hereunder except to the extent that all the Obligations have been
indefeasibly paid in full in cash and the Commitments have been terminated. 
Each Loan Party waives any defense arising out of any such election even though
such election operates, pursuant to applicable Law, to impair or to extinguish
any right of reimbursement or subrogation or other right or remedy of such Loan
Party against any other Loan Party, as the case may be, or any security.

 

(d)                                 Upon payment by any Loan Party of any
Obligations, all rights of such Loan Party against any other Loan Party arising
as a result thereof by way of right of subrogation, contribution, reimbursement,
indemnity or otherwise shall in all respects be subordinate and junior in right
of payment to the prior indefeasible payment in full in cash of all the
Obligations and the termination of the Commitments. In addition, any
indebtedness of any Loan Party now or hereafter held by any other Loan Party is
hereby subordinated in right of payment to the prior indefeasible payment in
full of the Obligations and no Loan Party will demand, sue for or otherwise
attempt to collect any such indebtedness.  If any amount shall erroneously be
paid to any Loan Party on account of (i) such subrogation, contribution,
reimbursement, indemnity or similar right or (ii) any such indebtedness of any
Loan Party, such amount shall be held in trust for the benefit of the Credit
Parties and shall forthwith be

 

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paid to the Agent to be credited against the payment of the Obligations, whether
matured or unmatured, in accordance with the terms of this Agreement and the
other Loan Documents.  Subject to the foregoing, to the extent that any Loan
Party shall, under this Agreement as a joint and several obligor, repay any of
the Obligations constituting Loans made hereunder or other Obligations incurred
directly and primarily by another Loan Party (an “Accommodation Payment”), then
the Loan Party making such Accommodation Payment shall be entitled to
contribution and indemnification from, and be reimbursed by, each of the other
Loan Parties in an amount, for each of such other Loan Party, equal to a
fraction of such Accommodation Payment, the numerator of which fraction is such
other Loan Party’s Allocable Amount and the denominator of which is the sum of
the Allocable Amounts of all of the Loan Parties.  As of any date of
determination, the “Allocable Amount” of each Loan Party shall be equal to the
maximum amount of liability for Accommodation Payments which could be asserted
against such Loan Party hereunder without (a) rendering such Loan Party
“insolvent” within the meaning of Section 101 (31) of the Bankruptcy Code,
Section 2 of the Uniform Fraudulent Transfer Act (“UFTA”) or Section 2 of the
Uniform Fraudulent Conveyance Act (“UFCA”), (b) leaving such Loan Party with
unreasonably small capital or assets, within the meaning of Section 548 of the
Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the UFCA, or (c) leaving
such Loan Party unable to pay its debts as they become due within the meaning of
Section 548 of the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the
UFCA.

 

10.22                 No Strict Construction.

 

The parties hereto have participated jointly in the negotiation and drafting of
this Agreement.  In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any provisions of this
Agreement.

 

10.23                 Attachments.

 

The exhibits, schedules and annexes attached to this Agreement are incorporated
herein and shall be considered a part of this Agreement for the purposes stated
herein, except that in the event of any conflict between any of the provisions
of such exhibits and the provisions of this Agreement, the provisions of this
Agreement shall prevail.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the date first above
written.

 

 

 

 

BORROWER:

 

 

 

 

 

DICK’S SPORTING GOODS, INC.

 

 

 

 

 

By:

     /s/ Timothy E. Kullman

 

Name: Timothy E. Kullman

 

Title:    Executive Vice President – Finance,
Administration and Chief Financial
Officer

 

 

 

 

 

 

 

GUARANTORS:

 

 

 

 

 

AMERICAN SPORTS LICENSING, INC.

 

 

 

 

 

By:

      /s/ Timothy E. Kullman

 

Name: Timothy E. Kullman

 

Title:    President

 

 

 

 

 

DSG OF VIRGINIA, LLC

 

 

 

 

 

By:

     /s/ Joseph R. Oliver

 

Name: Joseph R. Oliver

 

Title:    President

 

 

 

 

 

GALYAN’S TRADING COMPANY, LLC

 

  By: Dick’s Sporting Goods, Inc., its sole member

 

 

 

 

 

 

By:

      /s/ Timothy E. Kullman

 

 

Name: Timothy E. Kullman

 

 

Title:    Executive Vice President –
Finance, Administration and
Chief Financial Officer

 

--------------------------------------------------------------------------------

 

 

GOLF GALAXY, LLC

 

  By: Dick’s Sporting Goods, Inc., its sole member

 

 

 

 

 

 

 

 

By:

      /s/ Timothy E. Kullman

 

 

Name: Timothy E. Kullman

 

 

Title:    Executive Vice President –
Finance, Administration and
Chief Financial Officer

 

 

 

 

 

 

 

CHICK’S SPORTING GOODS, LLC

 

  By: Dick’s Sporting Goods, Inc., its sole member

 

 

 

 

 

 

By:

      /s/ Timothy E. Kullman

 

 

Name: Timothy E. Kullman

 

 

Title:   Executive Vice President –
Finance, Administration and
Chief Financial Officer

 

 

 

 

 

 

 

GALYAN’S OF VIRGINIA, INC.

 

 

 

 

 

By:

      /s/ Timothy E. Kullman

 

Name: Timothy E. Kullman

 

Title:    Secretary and Treasurer

 

 

 

 

 

 

 

GALYAN’S NEVADA, INC.

 

 

 

 

 

By:

      /s/ Timothy E. Kullman

 

Name: Timothy E. Kullman

 

Title:    Secretary and Treasurer

 

 

 

 

 

 

 

GOLF GALAXY GOLFWORKS, INC.

 

 

 

 

 

By:

      /s/ Joseph R. Oliver

 

Name: Joseph R. Oliver

 

Title:    Vice President

 

--------------------------------------------------------------------------------

 

 

WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Agent, as L/C Issuer, as a
Lender and Swing Line Lender

 

 

 

 

 

By:

        /s/ Joseph Burt

 

Name:  Joseph Burt

 

Title:    Director

 

--------------------------------------------------------------------------------

 

 

PNC BANK, NATIONAL ASSOCIATION as
Syndication Agent and as a Lender

 

 

 

 

 

By:

       /s/ James M. Steffy

 

Name:  James M. Steffy

 

Its Authorized Signatory

 

--------------------------------------------------------------------------------

 

 

JPMORGAN CHASE BANK, N.A., as a
Lender

 

 

 

 

 

By:

       /s/ Thomas G. Williams

 

Name:  Thomas G. Williams

 

Its Authorized Signatory

 

--------------------------------------------------------------------------------

 

 

BANK OF AMERICA, N.A., as a Lender

 

 

 

 

 

By:

       /s/ Roger Malouf

 

Name:  Roger Malouf

 

Its Authorized Signatory

 

--------------------------------------------------------------------------------

 

 

U.S. BANK NATIONAL ASSOCIATION, as
a Lender

 

 

 

 

 

By:

       /s/ Matthew Kasper

 

Name:  Matthew Kasper

 

Its Authorized Signatory

 

--------------------------------------------------------------------------------

 

 

RBS CITIZENS BUSINESS CAPITAL, A
DIVISION OF RBS CITIZENS, N.A., as a
Lender

 

 

 

 

 

By:

       /s/ David S. Vith

 

Name:  David S. Vith

 

Its Authorized Signatory

 

--------------------------------------------------------------------------------

 

 

HSBC BANK USA, N.A., as a Lender

 

 

 

 

 

By:

       /s/ Darren Pinsker

 

Name:  Darren Pinsker, SVP

 

Its Authorized Signatory

 

--------------------------------------------------------------------------------

 

 

FIRST COMMONWEALTH BANK, as a
Lender

 

 

 

 

 

By:

       /s/ Brian J. Sohocki

 

Name:  Brian J. Sohocki

 

Its Authorized Signatory

 

--------------------------------------------------------------------------------

 

 

Schedule 1.01

Guarantors

 

American Sports Licensing, Inc.

 

DSG of Virginia, LLC

 

Galyan’s Trading Company, LLC

 

Golf Galaxy, LLC

 

Chick’s Sporting Goods, LLC

 

Galyan’s of Virginia, Inc.

 

Galyan’s Nevada, Inc.

 

Golf Galaxy GolfWorks, Inc.

 

--------------------------------------------------------------------------------

 

Schedule 2.01

Commitments and Applicable Percentages

 

Lender

Commitment

Applicable Percentage

Wells Fargo Bank, National Association

$150,000,000.00

30.000000000%

PNC Bank, National Association

$100,000,000.00

20.000000000%

JPMorgan Chase Bank, N.A.

$60,000,000.00

12.000000000%

Bank of America, N.A.

$60,000,000.00

12.000000000%

U.S. Bank National Association

$60,000,000.00

12.000000000%

RBS Citizens Business Capital, a division of RBS Citizens, N.A.

$35,000,000.00

7.000000000%

HSBC Bank USA, N.A.

$25,000,000.00

5.000000000%

First Commonwealth Bank

$10,000,000.00

2.000000000%

TOTAL

$500,000,000.00

100.000000000%

 

--------------------------------------------------------------------------------

 

Schedule 2.03

Existing Letters of Credit

 

LC No#

LC AMOUNT

BENEFICIARY

NZS652930

$35,000.00

The Traveler’s Indemnity Company

NZS653305

$10,829,000.00

Federal Insurance

NZS662179

$8,141,226.91

Commonwealth of Pennsylvania

 

--------------------------------------------------------------------------------

 

Schedule 5.01

Loan Parties Organizational Information

 

 

Loan Party

Jurisdiction of
Organization

Organizational
Type

Organizational
Number

FEIN

Dick’s Sporting Goods, Inc.

Delaware

Corporation

2687873

16-1241537

American Sports Licensing, Inc.

Delaware

Corporation

2486427

51-0365127

DSG of Virginia, LLC

Virginia

Limited Liability Company

S124406-2

N/A

Galyan’s Trading Company, LLC

Indiana

Limited Liability Company

198203-016

35-1529720

Golf Galaxy, LLC

Minnesota

Limited Liability Company

3932353-4

41-1831724

Chick’s Sporting Goods, LLC

California

Limited Liability Company

201021110071

95-2705123

Galyan’s of Virginia, Inc.

Virginia

Corporation

0588809-4

38-3667837

Galyan’s Nevada, Inc.

Nevada

Corporation

C20397-2000

88-0466822

Golf Galaxy GolfWorks, Inc.

Ohio

Corporation

1600571

42-1696512

 

--------------------------------------------------------------------------------

 

Schedule 5.08(b)(1)

Owned Real Estate

 

 

Owner

Location

Mortgage or Lien Holder

Dick’s Sporting Goods, Inc.

Northwest corner of Cotton Lane and Minnezona Avenue Goodyear, AZ 85395

None.

Golf Galaxy Golf Works, Inc.

Jones Road Granville, OH 43023

None.

 

--------------------------------------------------------------------------------

 

Schedule 5.08(b)(2)

Leased Real Estate

 

 

Address

Landlord

Landlord Contact Information

345 Court St.

Pittsburgh, PA 15108

Allegheny County

Horizon DSG Associates, LP

378 Southpointe Blvd., Suite 410, Canonsburg, PA 15317

 

 

 

3909 North Commerce Drive

East Point, GA 30344

Fulton County

Duke Realty Limited Partnership

c/o Duke Realty Corporation

Attn.: Atlanta Market – V.P., Asset Mgmt. & Customer Service

3950 Shackleford Road, Suite 300

Duluth, GA 30096

159 Painter Road,

Smithton, PA 15479

Westmoreland County

Lippmann & Lippman, L.P., and Martin Lippman and Donnabeth Lippman

71 Stuart Shores Road

Standish, ME 04084

655 South Perry Road

Plainfield, IN 46168

Hendricks County

CP Gal Plainfield, LLC

c/o W. P. Carey & Co. LLC,

50 Rockefeller Plaza, Second Floor,

New York, NY 10020

 

 

List of store leases set forth in Section I.B. of the Information Certificate
dated as of the Closing Date.

 

--------------------------------------------------------------------------------

 

 

Schedule 5.10

Insurance

 

Insurance summary set forth in Section V. of the Information Certificate dated
as of the Closing Date.

 

--------------------------------------------------------------------------------

 

Schedule 5.13

Subsidiaries; Other Equity Investments

 

(a)                             Subsidiaries

 

Loan Party

Subsidiaries

Jurisdiction

Authorized Equity
Interests

Dick’s Sporting Goods, Inc.

American Sports Licensing, Inc.

Delaware

3,000 shares of common stock

 

DSG of Virginia, LLC

Virginia

N/A

 

Galyan’s Trading Company, LLC

Indiana

N/A

 

Golf Galaxy, LLC

Minnesota

N/A

 

Chick’s Sporting Goods, LLC

California

N/A

 

Dick’s Sporting Goods International, Limited

Hong Kong

10,000 shares

 

 

 

 

Golf Galaxy, LLC

Golf Galaxy GolfWorks, Inc.

Ohio

100 shares of common stock

 

Criterion Golf Technology, Inc.

Canada

Unlimited

 

 

 

 

Galyan’s Trading Company, LLC

Galyan’s of Virginia, Inc.

Virginia

100 shares of common stock

 

Galyan’s Nevada, Inc.

Nevada

100 shares of common stock

 

 

(b)                            Other Equity Interests

 

Other Investments set forth in Section II.A. of the Information Certificate
dated as of the Closing Date.

 

--------------------------------------------------------------------------------

 

Schedule 5.18

Collective Bargaining Agreements, etc.

 

None.

 

--------------------------------------------------------------------------------

 

Schedule 5.21(a)

DDAs

 

See Section II.C. of the Information Certificate dated as of the Closing Date.

 

--------------------------------------------------------------------------------

 

Schedule 5.21(b)

Credit Card Arrangements

 

(a)                                 Private Label and Co-Brand Consumer Credit
Card Program Agreement, dated as of June 25, 2010, by and between Dick’s
Sporting Goods, Inc. and GE Money Bank, as amended from time to time.

 

(b)                                Merchant Services Bankcard Agreement, dated
as of January 22, 2002, by and among First Data Services, LLC, Wells Fargo Bank,
N.A., and Dick’s Clothing & Sporting Goods, Inc. (“Dick’s Sporting Goods”), as
amended from time to time.

 

(c)                                 Merchant Services Agreement, dated as of
October 16, 1991, by and between DFS Services LLC and Dick’s Sporting
Goods, Inc., as amended and replaced from time to time.

 

(d)                                Agreement for American Express Card
Acceptance, dated as of April 4, 2001, by and between Dick’s Clothing and
Sporting Goods and American Express Travel Related Services Company, Inc., as
amended from time to time.

 

(e)                                 Amended and Restated E-Commerce Agreement,
dated as of August 25, 2008, by and between GSI Commerce Solutions, Inc., a
Pennsylvania corporation, and Dick’s Sporting Goods, Inc., as amended from time
to time.

 

(f)                                   Merchant Services Agreement, dated as of
April 14, 1997, by and between DFS Services LLC and Golf Galaxy, Inc., as
amended and replaced from time to time.

 

(g)                                Merchant Services Bankcard Agreement, dated
on or about January 22, 2002, by and among Dick’s Clothing & Sporting Goods, The
Chase Manhattan Bank and Chase Merchant Services L.L.C., as amended from time to
time.

 

--------------------------------------------------------------------------------

 

Schedule 5.23

Material Contracts

 

None.

 

--------------------------------------------------------------------------------

 

Schedule 6.02

Collateral Reporting

 

In addition to the other materials and information required to be provided
pursuant to the terms of the Credit Agreement, the Loan Parties shall provide
the Agent, upon the Agent’s request therefor, concurrently with the delivery of
the Borrowing Base Certificate pursuant to Section 6.02(b) of the Credit
Agreement, the following (each in such form and detail as the Agent from time to
time may specify):

 

Supporting source documents for the Collateral balances and deductions for
Reserves and ineligible categories of Inventory and Accounts, in each case with
respect to the Eligible Inventory (including Eligible In-Transit Inventory, if
applicable), Eligible Credit Card Receivables and Eligible GSI Receivables (if
applicable) reported on the Borrowing Base Certificate delivered in accordance
with the Credit Agreement.

 

Inventory summary report by type of Inventory and by Store, distribution center
or other location.

 

Statement of reconciliation of the Inventory stock ledger to the general ledger.

 

Such other information as the Agent may from time to time reasonably request.

 

--------------------------------------------------------------------------------

 

Schedule 7.01

Existing Liens

 

None.

 

--------------------------------------------------------------------------------

 

Schedule 7.02

Existing Investments

 

See clause (b) of Schedule 5.13.

 

--------------------------------------------------------------------------------

 

Schedule 7.03

Existing Indebtedness

 

None.

 

--------------------------------------------------------------------------------

 

Schedule 10.02

Agent’s Office; Certain Addresses for Notices

 

Agent’s Office:

 

Wells Fargo Bank, National Association

One Boston Place, 18th Floor

Boston, Massachusetts 02108

Attention:           Joseph Burt

Telephone:         (617) 854-7279

Facsimile:           (866) 617-3988

E-mail:                joseph.burt@wellsfargo.com

 

Certain Addresses for Notices:

 

If to any Loan Party:

 

Dick’s Sporting Goods, Inc.

345 Court Street

Coraopolis, Pennsylvania 15108

Attention: VP Strategic Planning & Treasury

Telephone: (724) 273-3400

Facsimile:   (724) 227-1928

 

with a copy to:

 

Dick’s Sporting Goods, Inc.

345 Court Street

Coraopolis, Pennsylvania 15108

Attention: General Counsel

Telephone: (724) 273-3400

Facsimile:   (724) 227-1928

 

 

Website:  www.dickssportinggoods.com

 

--------------------------------------------------------------------------------

 

If to the Agent or the L/C Issuer:

 

Wells Fargo Bank, National Association

One Boston Place, 18th Floor

Boston, Massachusetts 02108

Attention:           Joseph Burt

Telephone:         (617) 854-7279

Facsimile:           (866) 617-3988

E-mail:                joseph.burt@wellsfargo.com

 

with a copy to:

 

Riemer & Braunstein LLP

Three Center Plaza

Boston, Massachusetts 02108

Attention:         David S. Berman

Telephone:  (617) 523-9000

Facsimile:         (617) 880-3456

E-mail:              dberman@riemerlaw.com

 

--------------------------------------------------------------------------------

 

 

EXHIBIT A

 

FORM OF COMMITTED LOAN NOTICE

 

Date:  ___________, _____

To:                              Wells Fargo Bank, National Association, as
Agent

 

Ladies and Gentlemen:

 

Reference is made to the Credit Agreement, dated as of December 5, 2011 (as
amended, modified, supplemented or restated hereafter, the “ Credit Agreement”),
by and among (i) Dick’s Sporting Goods, Inc., a Delaware corporation (the
“Borrower”), (ii) the Guarantors party thereto from time to time, (iii) Wells
Fargo Bank, National Association, as administrative agent and collateral agent
for its own benefit and the benefit of the other Credit Parties referred to
therein (in such capacities, the “Agent”), (iv) Wells Fargo Bank, National
Association, as L/C Issuer, and (v) the lenders from time to time party thereto
(individually, a “Lender” and, collectively, the “Lenders”).  All capitalized
terms used herein and not otherwise defined shall have the same meaning herein
as in the Credit Agreement.

 

1.                                      The Borrower hereby requests [a
Borrowing][a conversion of Committed Loans from one Type to the other][a
continuation of LIBO Rate Loans]1:

 

(a)                                  On                                    (a
Business Day)2

 

(b)                                  In the amount of $_____________________3

 

(c)                                  Comprised of [Base Rate][LIBO Rate]Loans
(Type of Committed Loan)4

 

(d)                                  For LIBO Rate Loans:  with an Interest
Period of ____ months5

 

 

--------------------------------------------------------------------------------

1   A Borrowing must be a borrowing consisting of simultaneous Loans of the same
Type and, in the case of LIBO Rate Loans, must have the same Interest Period.

 

2   Each notice of a Borrowing must be received by the Agent not later than
12:00 noon (i) three (3) Business Days prior to the requested date of any
Borrowing of LIBO Rate Loans, and (ii) on the requested date of any Borrowing of
Base Rate Loans.

 

3   Each Borrowing, conversion to, or continuation of LIBO Rate Loans must be in
a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess
thereof.  Each Borrowing, conversion to, or continuation of Base Rate Loans must
be in a principal amount of $500,000 or a whole multiple of $100,000 in excess
thereof.

 

4   Committed Loans may be either Base Rate Loans or LIBO Rate Loans.  If the
Type of Committed Loan is not specified, then the applicable Committed Loans
will be made as Base Rate Loans.

 

5   The Borrower may request a Borrowing of LIBO Rate Loans with an Interest
Period of one, two, three or six months.  If no election of Interest Period is
specified, then the Borrower will be deemed to have specified an Interest Period
of one month.

 

--------------------------------------------------------------------------------

 

The Borrower hereby represents and warrants (for itself and on behalf of the
other Borrowers) that (a) the Borrowing requested herein complies with
Section 2.02 of the Credit Agreement and (b) the conditions specified in
Section 4.02 of the Credit Agreement have been satisfied or waived on and as of
the date specified in Item 1(a) above.

 

 

[signature page follows]

 

--------------------------------------------------------------------------------

 

Dated as of the date above first written.

 

 

 

 

DICK’S SPORTING GOODS, INC., as Borrower

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

--------------------------------------------------------------------------------

 

EXHIBIT B

 

FORM OF SWING LINE LOAN NOTICE

 

Date:  ___________, _____

 

To:                              Wells Fargo Bank, National Association, as
Swing Line Lender
Wells Fargo Bank, National Association, as Agent

 

Ladies and Gentlemen:

 

Reference is made to the Credit Agreement, dated as of December 5, 2011 (as
amended, modified, supplemented or restated hereafter, the “Credit Agreement”),
by and among (i) Dick’s Sporting Goods, Inc., a Delaware corporation (the
“Borrower”), (ii) the Guarantors party thereto from time to time, (iii) Wells
Fargo Bank, National Association, as administrative agent and collateral agent
for its own benefit and the benefit of the other Credit Parties referred to
therein (in such capacities, the “Agent”), (iv) Wells Fargo Bank, National
Association, as L/C Issuer, and (v) the lenders from time to time party thereto
(individually, a “Lender” and, collectively, the “Lenders”).  All capitalized
terms used herein and not otherwise defined shall have the same meaning herein
as in the Credit Agreement.

 

The Borrower hereby requests a Swing Line Borrowing:

 

 

1.

On ___________________________________________ (a Business Day)6

 

 

 

 

2.

In the amount of $________________________7

 

 

 

The Swing Line Borrowing requested herein complies with the provisions of
Section 2.04 of the Credit Agreement.

 

 

DICK’S SPORTING GOODS, INC., as Borrower

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

6              Each notice of a Swing Line Borrowing must be received by the
Swing Line Lender and the Agent not later than 1:00 p.m. on the requested date
of any Swing Line Borrowing.

 

7              Each Swing Line Borrowing must be in a minimum amount of
$100,000.

 

--------------------------------------------------------------------------------

 

EXHIBIT C-1

 

FORM OF REVOLVING NOTE

 

 

REVOLVING NOTE

 

 

$_________________________

_________________, 2011

 

 

 

FOR VALUE RECEIVED, Dick’s Sporting Goods, Inc., a Delaware corporation (the
“Borrower”), promises to pay to the order of _____________________ (hereinafter,
with any subsequent holders, the “Lender”), c/o Wells Fargo Bank, National
Association, One Boston Place, 18th Floor, Boston, Massachusetts 02108, the
principal sum of ___________________ DOLLARS ($______________), or, if less, the
aggregate unpaid principal balance of Committed Loans made by the Lender to or
for the account of the Borrower pursuant to the Credit Agreement, dated as of
December 5, 2011 (as amended, modified, supplemented or restated and in effect
from time to time, the “Credit Agreement”), by and among (i) the Borrower,
(ii) the Guarantors party thereto from time to time, (iii) Wells Fargo Bank,
National Association, as administrative agent and collateral agent for its own
benefit and the benefit of the other Credit Parties referred to therein (in such
capacities, the “Agent”), (iv) Wells Fargo Bank, National Association, as L/C
Issuer, and (v) the lenders from time to time party thereto (individually, a
“Lender” and, collectively, the “Lenders”), with interest at the rate and
payable in the manner stated therein.

 

This “Revolving Note” is a “Note” to which reference is made in the Credit
Agreement and is subject to all terms and provisions thereof.  The principal of,
and interest on, this Note shall be payable at the times, in the manner, and in
the amounts as provided in the Credit Agreement and shall be subject to
prepayment and acceleration as provided therein.  Capitalized terms used herein
and not defined herein shall have the meanings assigned to such terms in the
Credit Agreement.

 

No delay or omission by the Agent or the Lender in exercising or enforcing any
of the Agent’s or the Lender’s powers, rights, privileges, remedies, or
discretions hereunder shall operate as a waiver thereof on that occasion nor on
any other occasion.  No waiver of any Event of Default shall operate as a waiver
of any other Event of Default, nor as a continuing waiver of any such Event of
Default.

 

The Borrower, and each endorser and guarantor of this Note, waives presentment,
demand, notice, and protest, and also waives any delay on the part of the holder
hereof.  The Borrower assents to any extension or other indulgence (including,
without limitation, the release or substitution of Collateral) permitted by the
Agent and/or the Lender with respect to this Note and/or any Collateral or any
extension or other indulgence with respect to any other liability or any
collateral given to secure any other liability of the Borrower or any other
Person obligated on account of this Note.

 

This Note shall be binding upon the Borrower, and each endorser and guarantor
hereof, and upon their respective successors, assigns, and representatives, and
shall inure to the benefit of the Lender and its successors, endorsees, and
assigns.

 

--------------------------------------------------------------------------------

 

The liabilities of the Borrower, and of any endorser or guarantor of this Note,
are joint and several, provided, however, the release by the Agent or the Lender
of any one or more such Persons shall not release any other Person obligated on
account of this Note.  Each reference in this Note to the Borrower, any
endorser, and any guarantor, is to such Person individually and also to all such
Persons jointly.

 

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW PRINCIPLES
THEREOF, BUT INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

 

THE BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS
PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE
SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR ANY OTHER LOAN
DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE BORROWER
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT
OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. 
THE BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL
BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT
OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS NOTE OR IN ANY OTHER
LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE AGENT OR THE LENDER MAY OTHERWISE
HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS NOTE OR ANY OTHER LOAN
DOCUMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.

 

THE BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS NOTE OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO ABOVE.  THE
BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT.

 

The Borrower makes the following waiver knowingly, voluntarily, and
intentionally, and understands that the Agent and the Lender, in the
establishment and maintenance of their respective relationship with the Borrower
contemplated by this Note, are each relying thereon.  THE BORROWER, EACH
GUARANTOR, ENDORSER AND SURETY, AND THE LENDER, BY ITS ACCEPTANCE HEREOF, HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS NOTE OR ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR
ANY OTHER THEORY).  THE BORROWER (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER

 

--------------------------------------------------------------------------------

 

PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT THE AGENT AND THE LENDER HAVE BEEN INDUCED TO
ENTER INTO THE CREDIT AGREEMENT AND THIS NOTE BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS HEREIN.

 

[SIGNATURE PAGES FOLLOW]

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed as of
the date set forth above.

 

 

BORROWER:

 

 

 

DICK’S SPORTING GOODS, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT C-2

 

FORM OF SWING LINE NOTE

 

 

SWING LINE NOTE

 

 

$50,000,000.00

_______________, ____

 

 

 

FOR VALUE RECEIVED, Dick’s Sporting Goods, Inc., a Delaware corporation (the
“Borrower”), promises to pay to the order of WELLS FARGO BANK, NATIONAL
ASSOCIATION (hereinafter, with any subsequent holders, the “Swing Line Lender”),
having offices at One Boston Place, 18th Floor, Boston, Massachusetts 02108, the
principal sum of FIFTY MILLION DOLLARS ($50,000,000.00), or, if less, the
aggregate unpaid principal balance of Swing Line Loans made by the Swing Line
Lender to or for the account of the Borrower pursuant to the Credit Agreement,
dated as of December 5, 2011 (as amended, modified, supplemented or restated and
in effect from time to time, the “Credit Agreement”), by and among (i) the
Borrower, (ii) the guarantors party thereto from time to time, (iii) Wells Fargo
Bank, National Association, as administrative agent and collateral agent for its
own benefit and the benefit of the other Credit Parties referred to therein (in
such capacities, the “Agent”), (iv) Wells Fargo Bank, National Association, as
L/C Issuer, and (v) the lenders from time to time party thereto (individually, a
“Lender” and, collectively, the “Lenders”), with interest at the rate and
payable in the manner stated therein.

 

This is a “Swing Line Note” to which reference is made in the Credit Agreement
and is subject to all terms and provisions thereof.  The principal of, and
interest on, this Swing Line Note shall be payable at the times, in the manner,
and in the amounts as provided in the Credit Agreement and shall be subject to
prepayment and acceleration as provided therein.  Capitalized terms used herein
and not defined herein shall have the meanings assigned to such terms in the
Credit Agreement.

 

No delay or omission by the Agent or the Swing Line Lender in exercising or
enforcing any of the Agent’s or the Swing Line Lender’s powers, rights,
privileges, remedies, or discretions hereunder shall operate as a waiver thereof
on that occasion nor on any other occasion.  No waiver of any Event of Default
shall operate as a waiver of any other Event of Default, nor as a continuing
waiver of any such Event of Default.

 

The Borrower, and each endorser and guarantor of this Swing Line Note, waives
presentment, demand, notice, and protest, and also waives any delay on the part
of the holder hereof.  The Borrower assents to any extension or other indulgence
(including, without limitation, the release or substitution of Collateral)
permitted by the Agent and/or the Lender with respect to this Swing Line Note
and/or any Collateral or any extension or other indulgence with respect to any
other liability or any collateral given to secure any other liability of the
Borrower or any other Person obligated on account of this Swing Line Note.

 

This Swing Line Note shall be binding upon the Borrower, and each endorser and
guarantor hereof, and upon their respective successors, assigns, and
representatives, and shall inure to the benefit of the Swing Line Lender and its
successors, endorsees, and assigns.

 

--------------------------------------------------------------------------------

 

The liabilities of the Borrower, and of any endorser or guarantor of this Swing
Line Note, are joint and several, provided, however, the release by the Agent or
the Swing Line Lender of any one or more such Persons shall not release any
other Person obligated on account of this Swing Line Note.  Each reference in
this Swing Line Note to the Borrower, any endorser, and any guarantor, is to
such Person individually and also to all such Persons jointly.

 

THIS SWING LINE NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW
PRINCIPLES THEREOF, BUT INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW.

 

THE BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS
PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE
SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SWING LINE NOTE OR ANY
OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE
BORROWER IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF
ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE
COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL
COURT.  THE BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS
SWING LINE NOTE OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE
AGENT OR THE SWING LINE LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS SWING LINE NOTE OR ANY OTHER LOAN DOCUMENT AGAINST
THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

THE BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS SWING LINE NOTE OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO ABOVE. 
THE BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT.

 

The Borrower makes the following waiver knowingly, voluntarily, and
intentionally, and understands that the Agent and the Swing Line Lender, in the
establishment and maintenance of their respective relationship with the Borrower
contemplated by this Swing Line Note, are each relying thereon.  THE BORROWER,
EACH GUARANTOR, ENDORSER AND SURETY, AND THE SWING LINE LENDER, BY ITS
ACCEPTANCE HEREOF, HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS SWING LINE NOTE OR ANY
OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  THEBORROWER (A) CERTIFIES THAT NO

 

--------------------------------------------------------------------------------

 

REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT THE AGENT AND THE
SWING LINE LENDER HAVE BEEN INDUCED TO ENTER INTO THE CREDIT AGREEMENT AND THIS
SWING LINE NOTE BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
HEREIN.

 

[SIGNATURE PAGES FOLLOW]

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Borrower has caused this Swing Line Note to be duly
executed as of the date set forth above.

 

 

BORROWER:

 

 

 

DICK’S SPORTING GOODS, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT D

 

FORM OF COMPLIANCE CERTIFICATE

 

To:          Wells Fargo Bank, National Association Date:  _____________________

One Boston Place, 18th Floor

Boston, Massachusetts 02108

Attention:  Joseph Burt

 

Re:          Credit Agreement, dated as of December 5, 2011 (as amended,
modified, supplemented or restated hereafter, the “Credit Agreement”), by and
among (i) Dick’s Sporting Goods, Inc., a Delaware corporation (the “Borrower”),
(ii) the Guarantors party thereto from time to time, (iii) Wells Fargo Bank,
National Association, as administrative agent and collateral agent for its own
benefit and the benefit of the other Credit Parties referred to therein (in such
capacities, (the “Agent”), (iv) Wells Fargo Bank, National Association, as L/C
Issuer, and (v) the lenders from time to time party thereto (individually, a
“Lender” and, collectively, the “Lenders”).  All capitalized terms used herein
and not otherwise defined shall have the same meaning herein as in the Credit
Agreement.

 

The undersigned, a duly authorized and acting Responsible Officer of the
Borrower and not in his or her individual capacity, hereby certifies to you as
of the date hereof the following:

 

2.                                      No Default.

 

(a)                                  To the knowledge of the undersigned
Responsible Officer, except as set forth in Appendix I as of the date hereof, no
Default or Event of Default has occurred and is continuing.

 

(b)                                  If a Default or Event of Default has
occurred and is continuing, the Borrower proposes to take action as set forth in
Appendix I with respect to such Default or Event of Default.

 

3.                                      No Breach, Tax Lien, Casualty, Failure
to Pay Rent.  To the knowledge of the undersigned Responsible Officer, except as
set forth on Appendix II as of the date hereof:

 

(a)                                  no breach or non-performance of, or default
under, a Material Contract or with respect to Material Indebtedness of any Loan
Party or any Subsidiary thereof exists;

 

(b)                                  no Lien for unpaid Taxes against any Loan
Party in excess of $500,000 has been filed;

 

(c)                                  there is no casualty or other insured
damage to any material portion of the Collateral or commencement of any action
or proceeding for the taking of any interest in a material portion of the
Collateral under power of eminent domain or by condemnation or similar
proceeding, nor is any material portion of the Collateral damaged or destroyed;
and

 

--------------------------------------------------------------------------------

 

(d)                                  there has been no failure by any Loan Party
to pay rent at (i) any distribution centers or warehouses; or (ii) five (5%) or
more of such Loan Party’s locations or (ii) any of such Loan Party’s locations
if such failure continues for more than ten (10) days following the day on which
such rent first came due and such failure would be reasonably likely to result
in a Material Adverse Effect.

 

4.                                      Financial Calculations.  Attached hereto
as Appendix III are reasonably detailed calculations necessary to determine the
Adjusted Availability.

 

5.                                      No Material Accounting Changes, Etc. 
The financial statements furnished to the Agent for the [Fiscal Month][Fiscal
Quarter][Fiscal Year] ending [_____] were prepared in accordance with GAAP
consistently applied and fairly present in all material respects the financial
condition of the Borrower and its Subsidiaries on a consolidated basis at the
close of, and the results of the Borrower’s operations and cash flows for, the
period(s) covered, subject to, with respect to the [monthly] [quarterly]
financial statements, normal year-end audit adjustments and the absence of
footnotes. Attached hereto as Appendix IV is a copy of management’s discussion
and analysis with respect to such financial statements.  [In the event of any
change in generally accepted accounting principles used in the preparation of
such financial statements:  Attached hereto as Appendix V is a statement of
reconciliation conforming such financial statements to GAAP.]

 

6.                                      [Information Regarding the Collateral. 
Attached hereto as Appendix VI is a notice of any change in the location of any
Loan Party’s chief executive office, its principal place of business, and any
office in which it maintains books or records relating to Collateral owned by it
(other than any Store location).]8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

8  This Appendix VI is to be included each Fiscal Quarter.

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, I have executed this certificate as of the date first
written above.

 

 

 

DICK’S SPORTING GOODS, INC.

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

APPENDIX I

 

If a Default or Event of Default exists as of the date hereof, the following
describes the nature of the Default or Event of Default in reasonable detail and
the steps being taken or contemplated by the Borrower to be taken on account
thereof.

 

--------------------------------------------------------------------------------

 

APPENDIX II

 

--------------------------------------------------------------------------------

 

APPENDIX III

 

Calculation of Adjusted Availability

 

 

ADJUSTED AVAILABILITY:

 

A. The Borrowing Base

$_____________

 

B. The Total Outstandings

$_____________

 

 

C. Line A minus Line B

$_____________

 

 

Adjusted Availability: (Line C):

$___________

 

 

Covenant:  No Loan Party shall, nor shall it permit any Subsidiary to, directly
or indirectly, permit Adjusted Availability at any time to be less than seven
and one-half percent (7.5%) of the Borrowing Base.

 

In compliance with covenant?

Yes

 

 

No

 

 

 

--------------------------------------------------------------------------------

 

APPENDIX IV

 

MD&A

 

[see attached]

 

--------------------------------------------------------------------------------

 

APPENDIX V

 

 

Statement of Reconciliation

 

[see attached]

 

--------------------------------------------------------------------------------

 

APPENDIX VI

 

Information Regarding the Collateral (Quarterly)

 

--------------------------------------------------------------------------------

 

EXHIBIT E

 

FORM OF ASSIGNMENT AND ASSUMPTION

 

Reference is made to the Credit Agreement dated as of December 5, 2011 (as
amended, modified, supplemented or restated hereafter, the “ Credit Agreement”),
by and among (i) Dick’s Sporting Goods, Inc., a Delaware corporation (the
“Borrower”), (ii) the Guarantors party thereto from time to time, (iii) Wells
Fargo Bank, National Association, as administrative agent and collateral agent
for its own benefit and the benefit of the other Credit Parties referred to
therein (in such capacities, the “Agent”), (iv) Wells Fargo Bank, National
Association, as L/C Issuer, and (v) the lenders from time to time party thereto
(individually, a “Lender” and, collectively, the “Lenders”).  All capitalized
terms used herein and not otherwise defined shall have the same meaning herein
as in the Credit Agreement.

 

______________________________ (the “Assignor”) and ___________________ (the
“Assignee”) agree as follows:

 

7.                                      The Assignor hereby sells and assigns to
the Assignee, and the Assignee hereby purchases and assumes from the Assignor,
that interest in and to the Assignor’s rights and obligations as a Lender under
the Credit Agreement as of the date hereof (including, without limitation, such
interest in each of the Assignor’s outstanding Commitments, if any, and the
Loans (and related Obligations) owing to it) specified in Section 1 of Schedule
I hereto.  After giving effect to such sale and assignment, the Assignor’s and
the Assignee’s Commitments and the amount of the Loans owing to the Assignor and
the Assignee and the amount of Letters of Credit participated in by the Assignor
and the Assignee will be as set forth in Section 2 of Schedule I hereto.

 

8.                                      The Assignor: (a) represents and
warrants that it is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any Liens
and that it is legally authorized to enter into this Assignment and Assumption;
(b) makes no representation or warranty and assumes no responsibility with
respect to (i) any statements, warranties or representations made in, or in
connection with, the Credit Agreement or any other Loan Document or any other
instrument or document furnished pursuant thereto, or (ii) the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Credit Agreement or any other Loan Document or any other instrument or document
furnished pursuant thereto; (c) makes no representation or warranty and assumes
no responsibility with respect to the financial condition of any Loan Party or
the performance or observance by any Loan Party of any of their respective
obligations under the Credit Agreement or any other Loan Document or any other
instrument or document furnished pursuant thereto; and (d) confirms, in the case
of an Assignee who is not a Lender, an Affiliate of a Lender, or an Approved
Fund, the aggregate amount of the Commitment (which for this purpose includes
Loans outstanding thereunder) or, if the Commitment is not then in effect, the
principal outstanding balance of the Loans of the Assignor subject to this
Assignment and Assumption, is not less than $____________, or, if less, the
entire remaining amount of the Assignor’s Commitment

 

--------------------------------------------------------------------------------

 

and the Loans at any time owing to it, unless each of the Agent, the L/C Issuer
and the Swing Line Lender and, so long as no Event of Default has occurred and
is continuing, the Borrower otherwise consent (each such consent not to be
unreasonably withheld or delayed).

 

9.                                      The Assignee: (a) confirms that it has
received a copy of the Credit Agreement, together with copies of the financial
statements referred to in Section 6.01 thereof and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption; (b) agrees that it will,
independently and without reliance upon the Agent, the Assignor or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement; (c) appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; (d) agrees that it will perform in
accordance with their terms all of the obligations which, by the terms of the
Credit Agreement, are required to be performed by it as a Lender; (e) specifies
as its lending office (and address for notices) the office set forth beneath its
name on the signature pages hereof; (f) agrees that, if the Assignee is a
Foreign Lender entitled to an exemption from, or reduction of, withholding tax
under the law of the jurisdiction in which the applicable Loan Party is resident
for tax purposes, it shall deliver to the Loan Parties and the Agent (in such
number of copies as shall be requested by the recipient) whichever of the
following is applicable: (i) duly completed copies of Internal Revenue Service
Form W-8BEN claiming eligibility for benefits of an income tax treaty to which
the United States is a party, (ii) duly completed copies of Internal Revenue
Service Form W-8ECI, (iii) in the case of a Foreign Lender claiming the benefits
of the exemption for portfolio interest under section 881(c) of the Code, (A) a
certificate to the effect that such Foreign Lender is not (1) a “bank” within
the meaning of section 881(c)(3)(A) of the Code, (2) a “10 percent shareholder”
of the Loan Parties within the meaning of section 881(c)(3)(B) of the Code, or
(3) a “controlled foreign corporation” described in section 881(c)(3)(C) of the
Code and (B) duly completed copies of  Internal Revenue Service Form W-8BEN, or
(iv) any other form prescribed by applicable Law as a basis for claiming
exemption from, or a reduction in, United States Federal withholding tax, duly
completed, together with such supplementary documentation as may be prescribed
by applicable Law to permit the Borrower to determine the withholding or
deduction required to be made; (g) any forms and supporting documents required
by Section 10.06(b)(iv) of the Credit Agreement; (h) represents and warrants
that it is not an Excluded Lender, Defaulting Lender or a natural person; and
(i) represents and warrants that it is an Eligible Assignee.

 

10.                               Following the execution of this Assignment and
Assumption by the Assignor and the Assignee, it will be delivered, together with
a processing and recordation fee in the amount required as set forth in
Section 10.06 of the Credit Agreement, to the Agent for acceptance and recording
by the Agent.  The effective date of this Assignment and Assumption shall be the
date of acceptance thereof by the Agent, unless otherwise specified on Schedule
I hereto (the “Effective Date”).

 

--------------------------------------------------------------------------------

 

11.                               Upon such acceptance and recording by the
Agent and, to the extent required by Section 10.06(b)(iii) of the Credit
Agreement, consent by the Agent and the Borrower, as applicable (such consent
not to be unreasonably withheld or delayed), from and after the Effective Date,
(a) the Assignee shall be a party to the Credit Agreement and, to the extent of
the interest assigned by this Assignment and Assumption, shall have the rights
and obligations of a Lender under the Credit Agreement, and (b) the Assignor
shall, to the extent of the interest assigned by this Assignment and Assumption,
be released from its obligations under the Credit Agreement.

 

12.                               Upon such acceptance and recording by the
Agent, from and after the Effective Date, the Agent shall make all payments
under the Credit Agreement in respect of the interest assigned hereby
(including, without limitation, all payments of principal, interest and fees
with respect thereto) to the Assignee.  The Assignor and Assignee shall make all
appropriate adjustments in payments under the Credit Agreement for periods prior
to the Effective Date directly between themselves.

 

13.                               This Assignment and Assumption shall be
governed by, and be construed in accordance with, the laws of the State of New
York, without regard to conflicts of laws principles thereof, but including
Section 5-1401 of the New York General Obligations Law.

 

[SIGNATURE PAGE FOLLOWS]

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Assumption to be executed by their respective officers thereunto duly
authorized, as of the date first above written.

 

 

[ASSIGNOR]

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

[ASSIGNEE]

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

Lending Office (and address for notices):

 

 

 

[Address]

 

 

 

 

Accepted this

 

day

 

of

 

,

 

:

 

 

 

WELL FARGO BANK, NATIONAL ASSOCIATION,

 

as Agent

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

Acknowledged and, to the extent required by Section 10.06(b)(iii) of the Credit
Agreement, consented to, this _____ day of _____________, _______:

 

AGENT:

 

WELL FARGO BANK, NATIONAL ASSOCIATION

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

Acknowledged and, to the extent required by Section 10.06(b)(iii) of the Credit
Agreement, consented to, this _____ day of _____________, _______:

 

BORROWER:

 

DICK’S SPORTING GOODS, INC.

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

Schedule I

 

Section 1.              Percentage/Amount of Commitments/Loans/Letters of Credit
Assigned by Assignor to Assignee.

 

Applicable Percentage assigned by Assignor:

 

                   _______%

 

 

 

Commitment assigned by Assignor:

 

$__________________

 

 

 

Aggregate Outstanding Principal Amount of

 

 

Loans assigned by Assignor:

 

$__________________

 

 

 

Aggregate Participations assigned by Assignor in L/C Obligations:

 

$__________________

 

Section 2.              Percentage/Amount of Commitments/Loans/Letters of Credit
Held by Assignor and Assignee after giving effect to Assignment and Assumption.

 

Assignor’s Applicable Percentage

 

                   _______%

 

 

 

Assignee’s Applicable Percentage:

 

                   _______%

 

 

 

Assignor’s Commitment:

 

$__________________

 

 

 

Assignee’s Commitment:

 

$__________________

 

 

 

Aggregate Outstanding Principal Amount of

 

 

Loans Owing to Assignor:

 

$__________________

 

 

 

Aggregate Outstanding Principal Amount of

 

 

Loans Owing to Assignee:

 

$__________________

 

 

 

Aggregate Participations by Assignor in L/C Obligations:

 

$__________________

 

 

 

Aggregate Participations by Assignee in L/C Obligations:

 

$__________________

 

Section 3.  Effective Date

 

Effective Date:

 

                                     ,                  

 

--------------------------------------------------------------------------------

 

EXHIBIT F

 

FORM OF BORROWING BASE CERTIFICATE

 

[See attached.]

 

--------------------------------------------------------------------------------

 

Dick’s Sporting Goods Incorporated

As of Date:

 

 

 

 

Borrowing Base Certificate 

Certificate #

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Card Receivables

 

 

 

 

 

Credit Card Accounts Receivable

As of:

1/0/1900

 

 $

-

 

 

 

Less Ineligible Credit Card A/R

 

 $

-

 

 

 

Eligible Credit Card Accounts Receivable

 

 $

-

 

 

 

Credit Card Advance Rate

 

90.0

%

 

 

Total Credit Card Receivables Availability

 

 $

-

 

 A

 

 

 

 

 

 

 

INVENTORY

 

At Cost

 

 

 

Beginning Stock Ledger Inventory Balance

As of:

9/30/2011

 

 $

-

 

 

 

 

 

 

 

 

 

ADD:

Purchases

 

-

 

 

 

 

Freight & Duty

 

-

 

 

 

 

Other Adjustments (explain)

 

-

 

 

 

 

 

 

 

 

 

 

LESS:

Cost of Sales

 

-

 

 

 

 

Markdowns At Cost

 

-

 

 

 

 

Price Adjustments

 

-

 

 

 

 

Physical Adjustments (Shrink From Physical Inventories)

 

-

 

 

 

 

Return to Vendor

 

-

 

 

 

 

Other Adjustments (explain)

 

-

 

 

 

 

 

 

 

 

 

 

Ending Inventory per Stock Ledger

As of:

1/0/1900

 

-

 

 B

 

 

 

 

 

 

 

Less Ineligibles / Inventory Reserves:

 

 

 

 

 

 

Shrink

 

-

 

 

 

 

DC Shrink Accrual

 

-

 

 

 

 

Total Est. Obsolete (includes Retail < Cost)

 

-

 

 

 

 

Damaged/Defective

 

-

 

 

 

 

Claim Consolidation

 

-

 

 

 

 

Closed Store Inventory

 

-

 

 

 

 

Marketing Load

 

-

 

 

 

 

Marketing Promo Inventory

 

-

 

 

 

 

Absorbed Freight & Discounts

 

-

 

 

 

 

In-Transit Inventory

 

-

 

 

 

 

Display Items/Packing Materials

 

-

 

 

 

 

Other:  _________

 

-

 

 

 

Total Ineligibles:

 

-

 

 C

 

 

 

 

 

 

 

Total Eligible Inventory (B - C)

 

-

 

 D

 

 

 

 

 

 

 

Inventory Availability 

 

 

 

 

 

(i) 80% of Cost of Eligible Inventory (prior to receipt of initial appraisal)

 

-

 

 

 

(ii) 90% of NOLV of Eligible Inventory (after receipt of initial appraisal)

 

 

 

 

 

 

NOLV

0.0%

90% NOLV

0.0%

-

 

 

 

 

 

 

 

 

 

Total Inventory Availability

 

 $

-

 

 E

 

 

 

 

 

 

 

Gross Borrowing Base Availability (A+E)

 

 $

-

 

 F

 

 

 

 

 

 

 

Less: Availability Reserves

As of:

1/0/1900

 

 

 

 

 

 

Lease Payment Reserve

 

-

 

 

 

Frequent Shopper Reserve (50% x )

 

-

 

 

 

Special Order Deposits (100%)

 

-

 

 

 

Gift Card Liability Reserve (50% x )

 

-

 

 

 

Other:______

 

-

 

 

 

Total Availability Reserves

 

 $

-

 

 G

 

 

 

 

 

 

 

Net Borrowing Base Uncapped Availability (F-G)

 

 $

-

 

 

 

 

 

 

 

 

 

Net Borrowing Base Capped Availability (Capped at $500,000,000)

 

 $

-

 

 H

 

 

 

 

 

 

 

AVAILABILITY CALCULATION

 

 $

-

 

 

 

 

 

 

 

 

 

Beginning Principal Balance

As of:

1/0/1900

 

 

-

 

 

 

ADD: Advances through

12/5/2011

 

 

-

 

 

 

ADD: Fees charged through

12/5/2011

 

 

-

 

 

 

ADD: Adjustments through

12/5/2011

 

 

-

 

 

 

LESS: Payments through

12/5/2011

 

 

-

 

 

 

 

 

 

 

 

 

 

 

Ending principal balance prior to advance request

 

 

 

 $

-

 

 I

 

 

 

 

 

 

 

 

 

ADVANCE REQUEST

 

 

 

-

 

 J

 

 

 

 

 

 

 

 

 

Ending Principal Balance (I+J)

 

 

 

 $

-

 

 

 

 

 

 

 

 

 

 

 

ADD: Standby Letters of Credit

As of:

12/5/2011

 

 

-

 

 

 

ADD: Commercial Letters of Credit

12/5/2011

 

 

-

 

 

 

 

 

 

 

 

 

Total Outstandings

 

 $

-

 

 K

 

 

 

 

 

 

 

NET AVAILABILITY AFTER TODAY’S REQUEST / PAY DOWN (H-K)

 

 $

-

 

 

 

 

 

 

 

 

 

 

The undersigned, a Responsible Officer of Dick’s Sporting Goods, Inc. (the
“Borrower”), represents and warrants that (a) the information set forth
above and in the supporting documentation provided herewith is true and correct
and has been prepared in accordance with the requirements of the Credit
Agreement dated as of December 5, 2011 (as amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”) among the
Borrower, Wells Fargo Bank, National Association, as lender (in such capacity,
the “Lender”) and Wells Fargo Bank, National Association, as L/C Issuer, (b) no
“Default” or “Event of Default” (as such terms are defined in the Credit
Agreement) is presently in existence and (c) all accounts payable and Taxes are
being paid on a timely basis.

 

 

Responsible Officer

 

 

 

 

 

Timothy Kullman, CFO

 

 

or

 

 

 

 

 

 

 

Joe Oliver, Senior Vice President, Chief Accounting Officer

 

 

--------------------------------------------------------------------------------

 

EXHIBIT G

 

FORM OF CREDIT CARD NOTIFICATION

 

PREPARE ON BORROWER LETTERHEAD - ONE FOR EACH PROCESSOR

 

__________, ____

 

To:          [Name and Address of Credit Card Processor] (The “Processor”)

 

Re:          [___________] (the “Company”)

Merchant Account Number: ____________

Dear Sir/Madam:

 

Under various agreements by and among the Company, certain affiliates of the
Company, Wells Fargo Bank, National Association, a national banking association
with offices at One Boston Place, 18th Floor, Boston, Massachusetts 02108, as
administrative agent and collateral agent (in such capacities, the “Agent”) for
a syndicate of lenders and other credit parties (the “Credit Parties”) party to
a Credit Agreement dated as of December 5, 2011 (as amended, modified or
supplemented from time to time, the “Credit Agreement”), the Company has granted
to the Agent, for its own benefit and the benefit of the other Credit Parties, a
security interest in and to certain of the Company’s assets, including, without
limitation, all amounts due or to become due from the Processor to the Company.

 

Under such agreements, the Company is obligated to deliver (or cause to be
delivered) all proceeds of the Company’s accounts, accounts receivable, and
inventory to certain deposit accounts under the control of the Agent.  Such
proceeds include all payments with respect to credit card charges (the
“Charges”) submitted by the Company to the Processor for processing and the
amounts which the Processor owes to the Company on account thereof (the “Credit
Card Proceeds”).

 

1.             Until the Processor receives written notification from an officer
of the Agent to the contrary, all amounts as may become due from time to time
from the Processor to the Company shall continue to be transferred only as
follows:

 

(a)           By ACH, Depository Transfer Check, or Electronic Depository
Transfer to:

 

Wachovia Bank, a division of Wells Fargo Bank, National Association

 

--------------------------------------------------------------------------------

 

ABA # 121-000-248

Account No. 2000006157599

Re:  Dick’s Sporting Goods, Inc.

or

 

(b)           As the Processor may be instructed from time to time in writing by
an officer of the Agent.

 

2.             Upon request of the Agent, a copy of each periodic statement
provided by the Processor to the Company should be provided to the Agent at the
following address (which address may be changed upon seven (7) days’ written
notice given to the Processor by the Agent):

 

Wells Fargo Bank, National Association

One Boston Place, 18th Floor

Boston, Massachusetts 02108

Attention: Joseph Burt

Re:          Dick’s Sporting Goods, Inc.

 

3.             The Processor shall be fully protected in acting on any order or
direction by the Agent respecting the Charges and the Credit Card Proceeds
without making any inquiry whatsoever as to the Agent’s right or authority to
give such order or direction or as to the application of any payment made
pursuant thereto.

 

This letter may be amended only by the written agreement of the Processor, the
Company, and an officer of the Agent and may be terminated solely by written
notice signed by an officer of the Agent.

 

--------------------------------------------------------------------------------

 

 

Very truly yours,

 

 

 

[_________________], as the Company

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

cc:

Wells Fargo Bank, National Association

 

 

--------------------------------------------------------------------------------