Exhibit 10.6

 

Execution Version

 

 

$210,000,000

 

CREDIT AGREEMENT

 

dated as of December 22, 2004,

 

by and among

 

TUESDAY MORNING, INC.,

as Borrower,

 

TUESDAY MORNING CORPORATION,

and

 

TMI HOLDINGS, INC.,

as the Parental Entities,

 

the Lenders referred to herein,

 

and

 

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent,

Swingline Lender and Issuing Lender,

 

WELLS FARGO BANK, N.A., and LASALLE BANK NATIONAL ASSOCIATION,

as Co-Syndication Agents,

 

U.S. BANK NATIONAL ASSOCIATION and SOVEREIGN BANK,

as Co-Documentation Agents,

 

WACHOVIA CAPITAL MARKETS, LLC,

as Co-Lead Arranger and Sole Book Manager,

 

WELLS FARGO BANK, N.A.,

as Co-Lead Arranger

 

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

ARTICLE I DEFINITIONS

 

SECTION 1.1

Definitions

 

SECTION 1.2

Other Definitions and Provisions

 

SECTION 1.3

Accounting Terms

 

SECTION 1.4

UCC Terms

 

SECTION 1.5

Rounding

 

SECTION 1.6

References to Agreement and Laws

 

SECTION 1.7 [a05-1757_1ex10d6.htm#Section1_7TimesOf_045132]

Times of Day [a05-1757_1ex10d6.htm#Section1_7TimesOf_045132]

 

SECTION 1.8 [a05-1757_1ex10d6.htm#Section1_8LetterOf_045134]

Letter of Credit Amounts [a05-1757_1ex10d6.htm#Section1_8LetterOf_045134]

 

 

 

 

ARTICLE II REVOLVING CREDIT FACILITY
[a05-1757_1ex10d6.htm#ArticleiiRevolvingCreditFacility_045136]

 

SECTION 2.1 [a05-1757_1ex10d6.htm#Section2_1RevolvingCredit_045139]

Revolving Credit Loans [a05-1757_1ex10d6.htm#Section2_1RevolvingCredit_045139]

 

SECTION 2.2 [a05-1757_1ex10d6.htm#Section2_2SwinglineLoans__045142]

Swingline Loans [a05-1757_1ex10d6.htm#Section2_2SwinglineLoans__045142]

 

SECTION 2.3 [a05-1757_1ex10d6.htm#Section2_3ProcedureForAd_045147]

Procedure for Advances of Revolving Credit Loans and Swingline Loans
[a05-1757_1ex10d6.htm#Section2_3ProcedureForAd_045147]

 

SECTION 2.4 [a05-1757_1ex10d6.htm#Section2_4RepaymentOfLo_045152]

Repayment of Loans [a05-1757_1ex10d6.htm#Section2_4RepaymentOfLo_045152]

 

SECTION 2.5 [a05-1757_1ex10d6.htm#Section2_5PermanentReduc_045157]

Permanent Reduction of the Revolving Credit Commitment
[a05-1757_1ex10d6.htm#Section2_5PermanentReduc_045157]

 

SECTION 2.6 [a05-1757_1ex10d6.htm#Section2_6TerminationOfR_045201]

Termination of Revolving Credit Facility
[a05-1757_1ex10d6.htm#Section2_6TerminationOfR_045201]

 

SECTION 2.7 [a05-1757_1ex10d6.htm#Section2_7OptionalIncrease_045203]

Optional Increase of Revolving Credit Commitment
[a05-1757_1ex10d6.htm#Section2_7OptionalIncrease_045203]

 

 

 

 

ARTICLE III LETTER OF CREDIT FACILITY
[a05-1757_1ex10d6.htm#ArticleiiiLetterOfCreditFacility_045210]

 

SECTION 3.1 [a05-1757_1ex10d6.htm#Section3_1LcCommi_045213]

L/C Commitment [a05-1757_1ex10d6.htm#Section3_1LcCommi_045213]

 

SECTION 3.2 [a05-1757_1ex10d6.htm#Section3_2ProcedureF_045216]

Procedure for Issuance of Letters of Credit
[a05-1757_1ex10d6.htm#Section3_2ProcedureF_045216]

 

SECTION 3.3 [a05-1757_1ex10d6.htm#Section3_3Commissio_045220]

Commissions and Other Charges [a05-1757_1ex10d6.htm#Section3_3Commissio_045220]

 

SECTION 3.4 [a05-1757_1ex10d6.htm#Section3_4LcPartici_045224]

L/C Participations [a05-1757_1ex10d6.htm#Section3_4LcPartici_045224]

 

SECTION 3.5 [a05-1757_1ex10d6.htm#Section3_5Reimburse_045230]

Reimbursement Obligation of the Borrower
[a05-1757_1ex10d6.htm#Section3_5Reimburse_045230]

 

SECTION 3.6 [a05-1757_1ex10d6.htm#Section3_6Obligation_045234]

Obligations Absolute [a05-1757_1ex10d6.htm#Section3_6Obligation_045234]

 

SECTION 3.7 [a05-1757_1ex10d6.htm#Section3_7EffectOfL_045237]

Effect of Letter of Credit Application
[a05-1757_1ex10d6.htm#Section3_7EffectOfL_045237]

 

 

 

 

ARTICLE IV GENERAL LOAN PROVISIONS
[a05-1757_1ex10d6.htm#ArticleivGeneralLoanProvisions_045239]

 

SECTION 4.1 [a05-1757_1ex10d6.htm#Section4_1Interest__045240]

Interest [a05-1757_1ex10d6.htm#Section4_1Interest__045240]

 

SECTION 4.2 [a05-1757_1ex10d6.htm#Section4_2NoticeAndMannerO_045248]

Notice and Manner of Conversion or Continuation of Loans
[a05-1757_1ex10d6.htm#Section4_2NoticeAndMannerO_045248]

 

SECTION 4.3 [a05-1757_1ex10d6.htm#Section4_3Fees__045252]

Fees [a05-1757_1ex10d6.htm#Section4_3Fees__045252]

 

SECTION 4.4 [a05-1757_1ex10d6.htm#Section4_4Manner_045256]

Manner of Payment [a05-1757_1ex10d6.htm#Section4_4Manner_045256]

 

SECTION 4.5 [a05-1757_1ex10d6.htm#Section4_5Evidenc_045300]

Evidence of Indebtedness [a05-1757_1ex10d6.htm#Section4_5Evidenc_045300]

 

SECTION 4.6 [a05-1757_1ex10d6.htm#Section4_6Adjustm_045305]

Adjustments [a05-1757_1ex10d6.htm#Section4_6Adjustm_045305]

 

SECTION 4.7 [a05-1757_1ex10d6.htm#Section4_7NatureO_045309]

Nature of Obligations of Lenders Regarding Extensions of Credit; Assumption by
the Administrative Agent [a05-1757_1ex10d6.htm#Section4_7NatureO_045309]

 

SECTION 4.8 [a05-1757_1ex10d6.htm#Section4_8Changed_045313]

Changed Circumstances [a05-1757_1ex10d6.htm#Section4_8Changed_045313]

 

SECTION 4.9 [a05-1757_1ex10d6.htm#Section4_9Indemnit_045319]

Indemnity [a05-1757_1ex10d6.htm#Section4_9Indemnit_045319]

 

SECTION 4.10 [a05-1757_1ex10d6.htm#Section4_10Increase_045322]

Increased Costs [a05-1757_1ex10d6.htm#Section4_10Increase_045322]

 

SECTION 4.11 [a05-1757_1ex10d6.htm#Section4_11Taxes__045329]

Taxes [a05-1757_1ex10d6.htm#Section4_11Taxes__045329]

 

SECTION 4.12 [a05-1757_1ex10d6.htm#Section4_12Mitiga_045338]

Mitigation Obligations; Replacement of Lenders
[a05-1757_1ex10d6.htm#Section4_12Mitiga_045338]

 

 

i

--------------------------------------------------------------------------------

 

SECTION 4.13 [a05-1757_1ex10d6.htm#Section4_13Securi_045344]

Security [a05-1757_1ex10d6.htm#Section4_13Securi_045344]

 

 

 

 

ARTICLE V CLOSING; CONDITIONS OF CLOSING AND BORROWING
[a05-1757_1ex10d6.htm#ArticlevClosingConditionsOfClosin_045346]

 

SECTION 5.1 [a05-1757_1ex10d6.htm#Section5_1Closin_045349]

Closing [a05-1757_1ex10d6.htm#Section5_1Closin_045349]

 

SECTION 5.2 [a05-1757_1ex10d6.htm#Section5_2ConditionsToC_045352]

Conditions to Closing and Initial Extensions of Credit
[a05-1757_1ex10d6.htm#Section5_2ConditionsToC_045352]

 

SECTION 5.3 [a05-1757_1ex10d6.htm#Section5_3ConditionsToA_045406]

Conditions to All Extensions of Credit
[a05-1757_1ex10d6.htm#Section5_3ConditionsToA_045406]

 

 

 

 

ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE BORROWER
[a05-1757_1ex10d6.htm#ArticleviRepresentationsAndWarran_045410]

 

SECTION 6.1 [a05-1757_1ex10d6.htm#Section6_1Representati_045413]

Representations and Warranties
[a05-1757_1ex10d6.htm#Section6_1Representati_045413]

 

SECTION 6.2 [a05-1757_1ex10d6.htm#Section6_2SurvivalOfRepresentatio_051710]

Survival of Representations and Warranties, Etc
[a05-1757_1ex10d6.htm#Section6_2SurvivalOfRepresentatio_051710]

 

 

 

 

ARTICLE VII FINANCIAL INFORMATION AND NOTICES
[a05-1757_1ex10d6.htm#ArticleviiFinancialInformationAnd_051713]

 

SECTION 7.1 [a05-1757_1ex10d6.htm#Section7_1FinancialStatementsAndP_051716]

Financial Statements and Projections
[a05-1757_1ex10d6.htm#Section7_1FinancialStatementsAndP_051716]

 

SECTION 7.2 [a05-1757_1ex10d6.htm#Section7_2OfficersComplianceCert_061210]

Officer’s Compliance Certificate
[a05-1757_1ex10d6.htm#Section7_2OfficersComplianceCert_061210]

 

SECTION 7.3 [a05-1757_1ex10d6.htm#Section7_3IntentionallyOmitted__051722]

Intentionally Omitted.
[a05-1757_1ex10d6.htm#Section7_3IntentionallyOmitted__051722]

 

SECTION 7.4 [a05-1757_1ex10d6.htm#Section7_4OtherReports__051723]

Other Reports [a05-1757_1ex10d6.htm#Section7_4OtherReports__051723]

 

SECTION 7.5 [a05-1757_1ex10d6.htm#Section7_5NoticeOfLitig_051824]

Notice of Litigation and Other Matters
[a05-1757_1ex10d6.htm#Section7_5NoticeOfLitig_051824]

 

SECTION 7.6 [a05-1757_1ex10d6.htm#Section7_6AccuracyOfInf_051833]

Accuracy of Information [a05-1757_1ex10d6.htm#Section7_6AccuracyOfInf_051833]

 

 

 

 

ARTICLE VIII AFFIRMATIVE COVENANTS
[a05-1757_1ex10d6.htm#ArticleviiiAffirmativeCovenants_051836]

 

SECTION 8.1 [a05-1757_1ex10d6.htm#Section8_1PreservationOfCorporate_051840]

Preservation of Corporate Existence and Related Matters
[a05-1757_1ex10d6.htm#Section8_1PreservationOfCorporate_051840]

 

SECTION 8.2 [a05-1757_1ex10d6.htm#Section8_2MaintenanceOfProperty__051843]

Maintenance of Property
[a05-1757_1ex10d6.htm#Section8_2MaintenanceOfProperty__051843]

 

SECTION 8.3 [a05-1757_1ex10d6.htm#Section8_3Insurance_051847]

Insurance [a05-1757_1ex10d6.htm#Section8_3Insurance_051847]

 

SECTION 8.4 [a05-1757_1ex10d6.htm#Section8_4Accounti_051850]

Accounting Methods and Financial Records
[a05-1757_1ex10d6.htm#Section8_4Accounti_051850]

 

SECTION 8.5 [a05-1757_1ex10d6.htm#Section8_5PaymentAnd_051852]

Payment and Performance of Obligations
[a05-1757_1ex10d6.htm#Section8_5PaymentAnd_051852]

 

SECTION 8.6 [a05-1757_1ex10d6.htm#Section8_6Compliance_051856]

Compliance With Laws and Approvals
[a05-1757_1ex10d6.htm#Section8_6Compliance_051856]

 

SECTION 8.7 [a05-1757_1ex10d6.htm#Section8_7Environmen_051858]

Environmental Laws [a05-1757_1ex10d6.htm#Section8_7Environmen_051858]

 

SECTION 8.8 [a05-1757_1ex10d6.htm#Section8_8Compliance_051904]

Compliance with ERISA [a05-1757_1ex10d6.htm#Section8_8Compliance_051904]

 

SECTION 8.9 [a05-1757_1ex10d6.htm#Section8_9Compliance_051908]

Compliance With Agreements [a05-1757_1ex10d6.htm#Section8_9Compliance_051908]

 

SECTION 8.10 [a05-1757_1ex10d6.htm#Section8_10VisitsAndI_051911]

Visits and Inspections [a05-1757_1ex10d6.htm#Section8_10VisitsAndI_051911]

 

SECTION 8.11 [a05-1757_1ex10d6.htm#Section8_11Additional_051913]

Additional Subsidiaries [a05-1757_1ex10d6.htm#Section8_11Additional_051913]

 

SECTION 8.12 [a05-1757_1ex10d6.htm#Section8_12UseOfProc_051917]

Use of Proceeds [a05-1757_1ex10d6.htm#Section8_12UseOfProc_051917]

 

SECTION 8.13 [a05-1757_1ex10d6.htm#Section8_13FurtherAss_051919]

Further Assurances [a05-1757_1ex10d6.htm#Section8_13FurtherAss_051919]

 

 

 

 

ARTICLE IX FINANCIAL COVENANTS
[a05-1757_1ex10d6.htm#ArticleixFinancialCovenants_051922]

 

SECTION 9.1 [a05-1757_1ex10d6.htm#Section9_1TotalLeverage_051926]

Total Leverage Ratio [a05-1757_1ex10d6.htm#Section9_1TotalLeverage_051926]

 

SECTION 9.2 [a05-1757_1ex10d6.htm#Section9_2FixedChargeC_051928]

Fixed Charge Coverage Ratio [a05-1757_1ex10d6.htm#Section9_2FixedChargeC_051928]

 

SECTION 9.3 [a05-1757_1ex10d6.htm#Section9_3InterestCovera_051931]

Interest Coverage Ratio [a05-1757_1ex10d6.htm#Section9_3InterestCovera_051931]

 

 

 

 

ARTICLE X NEGATIVE COVENANTS
[a05-1757_1ex10d6.htm#ArticlexNegativeCovenants_051934]

 

SECTION 10.1 [a05-1757_1ex10d6.htm#Section10_1LimitationsOnI_051943]

Limitations on Indebtedness
[a05-1757_1ex10d6.htm#Section10_1LimitationsOnI_051943]

 

SECTION 10.2 [a05-1757_1ex10d6.htm#Section10_2LimitationsOn_051951]

Limitations on Liens [a05-1757_1ex10d6.htm#Section10_2LimitationsOn_051951]

 

 

ii

--------------------------------------------------------------------------------

 

SECTION 10.3 [a05-1757_1ex10d6.htm#Section10_3LimitationsOn_051955]

Limitations on Loans, Advances, Investments and Acquisitions
[a05-1757_1ex10d6.htm#Section10_3LimitationsOn_051955]

 

SECTION 10.4 [a05-1757_1ex10d6.htm#Section10_4LimitationsOn_052002]

Limitations on Mergers and Liquidation
[a05-1757_1ex10d6.htm#Section10_4LimitationsOn_052002]

 

SECTION 10.5 [a05-1757_1ex10d6.htm#Section10_5LimitationsOn_052007]

Limitations on Sale of Assets
[a05-1757_1ex10d6.htm#Section10_5LimitationsOn_052007]

 

SECTION 10.6 [a05-1757_1ex10d6.htm#Section10_6LimitationsOn_052010]

Limitations on Dividends and Distributions
[a05-1757_1ex10d6.htm#Section10_6LimitationsOn_052010]

 

SECTION 10.7 [a05-1757_1ex10d6.htm#Section10_7LimitationsOn_052014]

Limitations on Exchange and Issuance of Capital Stock
[a05-1757_1ex10d6.htm#Section10_7LimitationsOn_052014]

 

SECTION 10.8 [a05-1757_1ex10d6.htm#Section10_8TransactionsW_052016]

Transactions with Affiliates.
[a05-1757_1ex10d6.htm#Section10_8TransactionsW_052016]

 

SECTION 10.9 [a05-1757_1ex10d6.htm#Section10_9CertainAccou_052018]

Certain Accounting Changes; Organizational Documents
[a05-1757_1ex10d6.htm#Section10_9CertainAccou_052018]

 

SECTION 10.10 [a05-1757_1ex10d6.htm#Section10_10AmendmentsPaymentsAnd_052022]

Amendments; Payments and Prepayments of Subordinated Indebtedness
[a05-1757_1ex10d6.htm#Section10_10AmendmentsPaymentsAnd_052022]

 

SECTION 10.11 [a05-1757_1ex10d6.htm#Section10_11RestrictiveAgreements_052024]

Restrictive Agreements
[a05-1757_1ex10d6.htm#Section10_11RestrictiveAgreements_052024]

 

SECTION 10.12 [a05-1757_1ex10d6.htm#Section10_12NatureOfBusin_052029]

Nature of Business. [a05-1757_1ex10d6.htm#Section10_12NatureOfBusin_052029]

 

SECTION 10.13 [a05-1757_1ex10d6.htm#Section10_13ImpairmentOfS_052030]

Impairment of Security Interests
[a05-1757_1ex10d6.htm#Section10_13ImpairmentOfS_052030]

 

 

 

 

ARTICLE XI DEFAULT AND REMEDIES
[a05-1757_1ex10d6.htm#ArticlexiDefaultAndRemedies_052033]

 

SECTION 11.1 [a05-1757_1ex10d6.htm#Section11_1EventsOf_052036]

Events of Default [a05-1757_1ex10d6.htm#Section11_1EventsOf_052036]

 

SECTION 11.2 [a05-1757_1ex10d6.htm#Section11_2Remedies_052047]

Remedies [a05-1757_1ex10d6.htm#Section11_2Remedies_052047]

 

SECTION 11.3 [a05-1757_1ex10d6.htm#Section11_3RightsAndRemediesCumul_055245]

Rights and Remedies Cumulative; Non-Waiver; etc
[a05-1757_1ex10d6.htm#Section11_3RightsAndRemediesCumul_055245]

 

SECTION 11.4 [a05-1757_1ex10d6.htm#Section11_4CreditingOfPaymentsAnd_055248]

Crediting of Payments and Proceeds
[a05-1757_1ex10d6.htm#Section11_4CreditingOfPaymentsAnd_055248]

 

SECTION 11.5 [a05-1757_1ex10d6.htm#Section11_5AdministrativeAgentMay_055253]

Administrative Agent May File Proofs of Claim
[a05-1757_1ex10d6.htm#Section11_5AdministrativeAgentMay_055253]

 

 

 

 

ARTICLE XII THE ADMINISTRATIVE AGENT
[a05-1757_1ex10d6.htm#ArticlexiiTheAdministrativeAgent_055259]

 

SECTION 12.1 [a05-1757_1ex10d6.htm#Section12_1AppointmentAndAuthorit_055302]

Appointment and Authority
[a05-1757_1ex10d6.htm#Section12_1AppointmentAndAuthorit_055302]

 

SECTION 12.2 [a05-1757_1ex10d6.htm#Section12_2DelegationOfDuti_055307]

Delegation of Duties [a05-1757_1ex10d6.htm#Section12_2DelegationOfDuti_055307]

 

SECTION 12.3 [a05-1757_1ex10d6.htm#Section12_3ExculpatoryProvi_055308]

Exculpatory Provisions [a05-1757_1ex10d6.htm#Section12_3ExculpatoryProvi_055308]

 

SECTION 12.4 [a05-1757_1ex10d6.htm#Section12_4RelianceByTheA_055311]

Reliance by the Administrative Agent
[a05-1757_1ex10d6.htm#Section12_4RelianceByTheA_055311]

 

SECTION 12.5 [a05-1757_1ex10d6.htm#Section12_5NoticeOfDefault__055314]

Notice of Default [a05-1757_1ex10d6.htm#Section12_5NoticeOfDefault__055314]

 

SECTION 12.6 [a05-1757_1ex10d6.htm#Section12_6NonrelianceOn_055318]

Non-Reliance on the Administrative Agent and Other Lenders
[a05-1757_1ex10d6.htm#Section12_6NonrelianceOn_055318]

 

SECTION 12.7 [a05-1757_1ex10d6.htm#Section12_7Indemnification__055322]

Indemnification [a05-1757_1ex10d6.htm#Section12_7Indemnification__055322]

 

SECTION 12.8 [a05-1757_1ex10d6.htm#Section12_8TheAdministrat_055345]

The Administrative Agent in Its Individual Capacity
[a05-1757_1ex10d6.htm#Section12_8TheAdministrat_055345]

 

SECTION 12.9 [a05-1757_1ex10d6.htm#Section12_9ResignationOfT_055349]

Resignation of the Administrative Agent; Successor Administrative Agent
[a05-1757_1ex10d6.htm#Section12_9ResignationOfT_055349]

 

SECTION 12.10 [a05-1757_1ex10d6.htm#Section12_10CollateralAndG_055353]

Collateral and Guaranty Matters
[a05-1757_1ex10d6.htm#Section12_10CollateralAndG_055353]

 

SECTION 12.11 [a05-1757_1ex10d6.htm#Section12_11OtherAgentsA_055357]

Other Agents, Arrangers and Managers
[a05-1757_1ex10d6.htm#Section12_11OtherAgentsA_055357]

 

 

 

 

ARTICLE XIII MISCELLANEOUS
[a05-1757_1ex10d6.htm#ArticlexiiiMiscellaneous_055401]

 

SECTION 13.1 [a05-1757_1ex10d6.htm#Section13_1Notices__055402]

Notices [a05-1757_1ex10d6.htm#Section13_1Notices__055402]

 

SECTION 13.2 [a05-1757_1ex10d6.htm#Section13_2Amend_055409]

Amendments, Waivers and Consents [a05-1757_1ex10d6.htm#Section13_2Amend_055409]

 

SECTION 13.3 [a05-1757_1ex10d6.htm#Section13_3Expens_055415]

Expenses; Indemnity [a05-1757_1ex10d6.htm#Section13_3Expens_055415]

 

SECTION 13.4 [a05-1757_1ex10d6.htm#Section13_4Setoff__055420]

Set-off [a05-1757_1ex10d6.htm#Section13_4Setoff__055420]

 

SECTION 13.5 [a05-1757_1ex10d6.htm#Section13_5Govern_055424]

Governing Law [a05-1757_1ex10d6.htm#Section13_5Govern_055424]

 

SECTION 13.6 [a05-1757_1ex10d6.htm#Section13_6Jurisdic_055425]

Jurisdiction and Venue [a05-1757_1ex10d6.htm#Section13_6Jurisdic_055425]

 

SECTION 13.7 [a05-1757_1ex10d6.htm#Section13_7Waiver_055429]

Waiver of Jury Trial [a05-1757_1ex10d6.htm#Section13_7Waiver_055429]

 

SECTION 13.8 [a05-1757_1ex10d6.htm#Section13_8Revers_055431]

Reversal of Payments [a05-1757_1ex10d6.htm#Section13_8Revers_055431]

 

SECTION 13.9 [a05-1757_1ex10d6.htm#Section13_9Punitive_055438]

Punitive Damages [a05-1757_1ex10d6.htm#Section13_9Punitive_055438]

 

SECTION 13.10 [a05-1757_1ex10d6.htm#Section13_10Accoun_055440]

Accounting Matters [a05-1757_1ex10d6.htm#Section13_10Accoun_055440]

 

SECTION 13.11 [a05-1757_1ex10d6.htm#Section13_11SuccessorsAndAssignsP_055445]

Successors and Assigns; Participations
[a05-1757_1ex10d6.htm#Section13_11SuccessorsAndAssignsP_055445]

 

 

iii

--------------------------------------------------------------------------------

 

SECTION 13.12 [a05-1757_1ex10d6.htm#Section13_12Confidentialit_055456]

Confidentiality [a05-1757_1ex10d6.htm#Section13_12Confidentialit_055456]

 

SECTION 13.13 [a05-1757_1ex10d6.htm#Section13_13Performance_055459]

Performance of Duties [a05-1757_1ex10d6.htm#Section13_13Performance_055459]

 

SECTION 13.14 [a05-1757_1ex10d6.htm#Section13_14AllPowersC_055501]

All Powers Coupled with Interest
[a05-1757_1ex10d6.htm#Section13_14AllPowersC_055501]

 

SECTION 13.15 [a05-1757_1ex10d6.htm#Section13_15SurvivalOfIn_055503]

Survival of Indemnities [a05-1757_1ex10d6.htm#Section13_15SurvivalOfIn_055503]

 

SECTION 13.16 [a05-1757_1ex10d6.htm#Section13_16TitlesAndCa_055504]

Titles and Captions [a05-1757_1ex10d6.htm#Section13_16TitlesAndCa_055504]

 

SECTION 13.17 [a05-1757_1ex10d6.htm#Section13_17Severability_055507]

Severability of Provisions
[a05-1757_1ex10d6.htm#Section13_17Severability_055507]

 

SECTION 13.18 [a05-1757_1ex10d6.htm#Section13_18Counterpart_055509]

Counterparts [a05-1757_1ex10d6.htm#Section13_18Counterpart_055509]

 

SECTION 13.19 [a05-1757_1ex10d6.htm#Section13_19Integration__055510]

Integration [a05-1757_1ex10d6.htm#Section13_19Integration__055510]

 

SECTION 13.20 [a05-1757_1ex10d6.htm#Section13_20TermOfAg_055514]

Term of Agreement [a05-1757_1ex10d6.htm#Section13_20TermOfAg_055514]

 

SECTION 13.21 [a05-1757_1ex10d6.htm#Section13_21AdviceOfC_055516]

Advice of Counsel, No Strict Construction.
[a05-1757_1ex10d6.htm#Section13_21AdviceOfC_055516]

 

SECTION 13.22 [a05-1757_1ex10d6.htm#Section13_22Inconsisten_055518]

Inconsistencies with Other Documents; Independent Effect of Covenants
[a05-1757_1ex10d6.htm#Section13_22Inconsisten_055518]

 

 

iv

--------------------------------------------------------------------------------

 

EXHIBITS

 

Exhibit A-1 [a05-1757_1ex10d6.htm#ExhibitA1_061432]

 

-

 

Form of Revolving Credit Note [a05-1757_1ex10d6.htm#ExhibitA1_061432]

Exhibit A-2 [a05-1757_1ex10d6.htm#ExhibitA2_061446]

 

 

 

Form of Swingline Note [a05-1757_1ex10d6.htm#ExhibitA2_061446]

Exhibit B [a05-1757_1ex10d6.htm#ExhibitB_061500]

 

-

 

Form of Notice of Borrowing [a05-1757_1ex10d6.htm#ExhibitB_061500]

Exhibit C [a05-1757_1ex10d6.htm#ExhibitC_061504]

 

-

 

Form of Notice of Account Designation [a05-1757_1ex10d6.htm#ExhibitC_061504]

Exhibit D [a05-1757_1ex10d6.htm#ExhibitD_061506]

 

-

 

Form of Notice of Prepayment [a05-1757_1ex10d6.htm#ExhibitD_061506]

Exhibit E [a05-1757_1ex10d6.htm#ExhibitE_061510]

 

-

 

Form of Notice of Conversion/Continuation [a05-1757_1ex10d6.htm#ExhibitE_061510]

Exhibit F [a05-1757_1ex10d6.htm#ExhibitF_070422]

 

-

 

Form of Officer’s Compliance Certificate [a05-1757_1ex10d6.htm#ExhibitF_070422]

Exhibit G [a05-1757_1ex10d6.htm#ExhibitG_070438]

 

-

 

Form of Assignment and Assumption [a05-1757_1ex10d6.htm#ExhibitG_070438]

Exhibit H [a05-1757_1ex10d6.htm#ExhibitH_070446]

 

-

 

Form of Parental Entity Guaranty Agreement
[a05-1757_1ex10d6.htm#ExhibitH_070446]

Exhibit I [a05-1757_1ex10d6.htm#ExhibitI_070446]

 

 

 

Form of Subsidiary Guaranty Agreement [a05-1757_1ex10d6.htm#ExhibitI_070446]

Exhibit J [a05-1757_1ex10d6.htm#ExhibitJ_070450]

 

-

 

Form of Collateral Agreement [a05-1757_1ex10d6.htm#ExhibitJ_070450]

 

SCHEDULES

 

Schedule 5.2(c)(iii)

 

-

 

Schedule of Additional Lien Search Jurisdictions

Schedule 6.1(a)

 

-

 

Jurisdictions of Organization and Qualification

Schedule 6.1(b)

 

-

 

Subsidiaries and Capitalization

Schedule 6.1(i)

 

-

 

ERISA Plans

Schedule 6.1(l)

 

-

 

Material Contracts

Schedule 6.1(m)

 

-

 

Labor and Collective Bargaining Agreements

Schedule 6.1(t)

 

-

 

Indebtedness and Guaranty Obligations

Schedule 6.1(u)

 

-

 

Litigation

Schedule 10.2

 

-

 

Existing Liens

Schedule 10.3

 

-

 

Existing Loans, Advances and Investments

Schedule 10.8

 

-

 

Transactions with Affiliates

 

v

--------------------------------------------------------------------------------

 

CREDIT AGREEMENT, dated as of December 22, 2004, by and among TUESDAY MORNING,
INC., a Texas corporation (the “Borrower”), TUESDAY MORNING CORPORATION, a
Delaware corporation (the “Parent”), TMI HOLDINGS, INC., a Delaware corporation
(“Holdings”), the lenders who are or may become a party to this Agreement
(collectively, the “Lenders”), WACHOVIA BANK, NATIONAL ASSOCIATION, a national
banking association, as the administrative agent for the Lenders (the
“Administrative Agent”), WELLS FARGO BANK, N.A. and LASALLE BANK NATIONAL
ASSOCIATION, as Co-Syndication Agents, U.S. BANK NATIONAL ASSOCIATION and
SOVEREIGN BANK, as Co-Documentation Agents, WACHOVIA CAPITAL MARKETS, LLC as a
Co-Lead Arranger and Sole Book Manager, and WELLS FARGO BANK, N.A. as a Co-Lead
Arranger.

 

STATEMENT OF PURPOSE

 

The Borrower has requested, and the Lenders have agreed, to extend certain
credit facilities to the Borrower on the terms and conditions of this Agreement.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties hereto, such parties hereby
agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.1                          Definitions.  The following terms when used
in this Agreement shall have the meanings assigned to them below:

 

“Administrative Agent” means Wachovia in its capacity as Administrative Agent
hereunder, and any successor thereto appointed pursuant to Section 12.9.

 

“Administrative Agent’s Office” means the office of the Administrative Agent
specified in or determined in accordance with the provisions of Section 13.1(c).

 

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

 

“Affiliate” means, with respect to any Person, any other Person (other than with
respect to the Borrower or any Subsidiary thereof) which directly or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, such first Person or any Subsidiary thereof.  The term
“control” means (a) the power to vote ten percent (10%) or more of the
securities or other equity interests of a Person having ordinary voting power,
or (b) the possession, directly or indirectly, of any other power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise.

 

“Agreement” means this Credit Agreement, as amended, restated, supplemented or
otherwise modified from time to time.

 

--------------------------------------------------------------------------------

 

“Applicable Law” means all applicable provisions of constitutions, laws,
statutes, ordinances, rules, treaties, regulations, permits, licenses,
approvals, interpretations and orders of courts or Governmental Authorities and
all orders and decrees of all courts and arbitrators.

 

“Applicable Margin” means the corresponding percentages per annum as set forth
below:

 

Pricing
Level

 

Average Total Leverage Ratio

 

Commitment Fee

 

Revolving Credit Loans

LIBOR +

 

Base Rate +

I

 

Greater than or equal to 2.50 to 1.00

 

0.250%

 

1.500%

 

0.250%

II

 

Greater than or equal to 2.00 to 1.00, but less than 2.50 to 1.00

 

0.225%

 

1.250%

 

0.000%

III

 

Greater than or equal to 1.50 to 1.00, but less than 2.00 to 1.00

 

0.200%

 

1.000%

 

0.000%

IV

 

Greater than or equal to 1.00 to 1.00, but less than 1.50 to 1.00

 

0.175%

 

0.875%

 

0.000%

V

 

Less than 1.00 to 1.00

 

0.150%

 

0.750%

 

0.000%

 

The Applicable Margin shall be determined and adjusted quarterly on the date
(each a “Calculation Date”) five (5) Business Days after the date by which the
Borrower is required to provide an Officer’s Compliance Certificate pursuant to
Section 7.2 for the most recently ended fiscal quarter of the Borrower;
provided, however, that (a) the Applicable Margin shall be based on Pricing
Level V until the first Calculation Date occurring after the Closing Date and,
thereafter the Pricing Level shall be determined by reference to the Average
Total Leverage Ratio as of the last day of the most recently ended fiscal
quarter of the Borrower preceding the applicable Calculation Date, and (b) if
the Borrower fails to provide the Officer’s Compliance Certificate as required
by Section 7.2 (regardless of any applicable grace period that may be provided
in Section 11.1) for the most recently ended fiscal quarter of the Borrower
preceding the applicable Calculation Date, the Applicable Margin from such
Calculation Date shall be based on Pricing Level I until such time as an
appropriate Officer’s Compliance Certificate is provided, at which time the
Pricing Level shall be determined by reference to the Average Total Leverage
Ratio as of the last day of the most recently ended fiscal quarter of the
Borrower preceding such Calculation Date.  The Applicable Margin shall be
effective from one Calculation Date until the next Calculation Date.  Any
adjustment in the Applicable Margin shall be applicable to all Extensions of
Credit then existing or subsequently made or issued.

 

 “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 13.11), and accepted by the Administrative Agent, in
substantially the form of Exhibit G or any other form approved by the
Administrative Agent.

 

2

--------------------------------------------------------------------------------

 

“Attributable Indebtedness” means, on any date, (a) in respect of any Capital
Lease 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, the capitalized amount or principal
amount of the remaining lease payments under the relevant lease that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP if such lease were accounted for as a Capital Lease.

 

“Average Total Indebtedness” means, for any period, as determined on a
Consolidated basis, without duplication, for the Parent and its Subsidiaries in
accordance with GAAP, the Total Indebtedness as of each calendar month end
during such period divided by the number of months in the applicable period.

 

“Average Total Leverage Ratio” means, as of any fiscal quarter end, the ratio of
(a) Average Total Indebtedness for the period of twelve (12) consecutive months
ending on or immediately prior to such date to (b) EBITDA for the period of
twelve (12) consecutive months ending on or immediately prior to such date.

 

“Base Rate” means, at any time, the higher of (a) the Prime Rate or (b) the
Federal Funds Rate plus 1/2 of 1%; each change in the Base Rate shall take
effect simultaneously with the corresponding change or changes in the Prime Rate
or the Federal Funds Rate.

 

“Base Rate Loan” means any Loan bearing interest at a rate based upon the Base
Rate as provided in Section 4.1(a).

 

“Borrower” has the meaning assigned thereto in the preamble hereto.

 

“Business Day” means (a) for all purposes other than as set forth in clause (b)
below, any day other than a Saturday, Sunday or legal holiday on which banks in
Charlotte, North Carolina, Dallas, Texas and New York, New York, are open for
the conduct of their commercial banking business, and (b) with respect to all
notices and determinations in connection with, and payments of principal and
interest on, any LIBOR Rate Loan, any day that is a Business Day described in
clause (a) and that is also a day for trading by and between banks in Dollar
deposits in the London interbank market.

 

“Calculation Date” has the meaning assigned thereto in the definition of
Applicable Margin.

 

“Capital Asset” means, with respect to the Credit Parties and their
Subsidiaries, any asset that should, in accordance with GAAP, be classified and
accounted for as a capital asset on a Consolidated balance sheet of the Credit
Parties and their Subsidiaries.

 

“Capital Expenditures” means with respect to the Credit Parties and their
Subsidiaries for any period, the aggregate cost of all Capital Assets acquired
by the Credit Parties and their Subsidiaries during such period, as determined
in accordance with GAAP but shall not include the reinvestment of insurance
proceeds received from any casualty event with respect to any loss or damage to
any Capital Asset in new or replacement Capital Assets.

 

3

--------------------------------------------------------------------------------

 

“Capital Lease” means any lease of any property by any Credit Party or any
Subsidiary thereof, as lessee, that should, in accordance with GAAP, be
classified and accounted for as a capital lease on a Consolidated balance sheet
of the Credit Parties and their Subsidiaries.

 

“Capital Stock” means (a) in the case of a corporation, capital stock, (b) in
the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of capital
stock, (c) in the case of a partnership, partnership interests (whether general
or limited), (d) in the case of a limited liability company, membership
interests and (e) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.

 

“Cash Interest Expense” means , with respect to the Credit Parties and their
Subsidiaries for any period, Interest Expense less amortization of financing
fees of the Credit Parties and their Subsidiaries, all determined for such
period on a Consolidated basis, without duplication, in accordance with GAAP.

 

“Change in Control” means any event or series of events in which (a) any person
or group of persons (within the meaning of Section 13(d) of the Securities
Exchange Act of 1934 as amended) other than Madison Dearborn Capital Partners
II, L.P., shall at any time own or obtain ownership or control in one or more
series of transactions of more than twenty percent (20%) of the Capital Stock or
twenty percent (20%) of the voting power of the Parent entitled to vote in the
election of members of the board of directors of the Parent, (b) during any
period of twelve (12) consecutive months, a majority of the members of the board
of directors of the Parent cease to be composed of individuals (i) who were
members of the board of directors on the first day of such period, (ii) whose
election or nomination to the board of directors was approved by individuals who
comprised a majority of the board of directors on the first day of such period
or (iii) whose election or nomination to the board of directors was approved by
(A) individuals who were members of the board of directors on the first day of
such period or (B) individuals whose election or nomination to the board of
directors was approved by a majority of the board of directors on the first day
of such period; provided that in each case such individuals constituted a
majority of the board of directors at the time of such election or nomination,
or (c) there shall have occurred under any indenture or other instrument
evidencing any Indebtedness in excess of $5,000,000 any “change in control” (as
defined in such indenture or other evidence of Indebtedness) obligating the
Parent to repurchase, redeem or repay all or any part of the Indebtedness or
Capital Stock provided for therein.

 

“Change in Law” means the occurrence, after the date of this Agreement (or in
the case of any assignment to an Eligible Assignee pursuant to Section 13.11,
the effective date of such assignment solely with respect to such new Eligible
Assignee), 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.

 

4

--------------------------------------------------------------------------------

 

“Closing Date” means the date of this Agreement or such later Business Day upon
which each condition described in Section 5.2 shall be satisfied or waived in
all respects in a manner acceptable to the Administrative Agent, in its sole
discretion.

 

“Code” means the Internal Revenue Code of 1986, and the rules and regulations
thereunder, each as amended or modified from time to time.

 

“Collateral” means the collateral security for the Obligations pledged or
granted pursuant to the Security Documents.

 

“Collateral Agreement” means the collateral agreement of even date executed by
the Credit Parties in favor of the Administrative Agent for the benefit of
itself and the Lenders, substantially in the form of Exhibit J, as amended,
restated, supplemented or otherwise modified from time to time.

 

“Commitment” means, as to any Lender, the sum of such Lender’s Revolving Credit
Commitment, as set forth in the Register, as the same may be increased, reduced
or modified at any time or from time to time pursuant to the terms hereof.

 

“Consolidated” means, when used with reference to financial statements or
financial statement items of the Parent and its Subsidiaries, such statements or
items on a consolidated basis in accordance with applicable principles of
consolidation under GAAP.

 

“Credit Facility” means, collectively, the Revolving Credit Facility, the
Swingline Facility and the L/C Facility.

 

“Credit Parties” means, collectively, the Borrower, the Parent, Holdings, and
the Subsidiary Guarantors.

 

“Default” means any of the events specified in Section 11.1 which with the
passage of time, the giving of notice or any other condition, would constitute
an Event of Default.

 

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

 

“Documentation Agent” has the meaning assigned thereto in the preamble hereto.

 

“Dollars” or “$” means, unless otherwise qualified, dollars in lawful currency
of the United States.

 

5

--------------------------------------------------------------------------------

 

“EBITDA” means, for any period, the sum of the following determined on a
Consolidated basis, without duplication, for the Credit Parties and their
Subsidiaries in accordance with GAAP:  (a) Net Income for such period plus (b)
the sum of the following to the extent deducted in determining Net Income: (i)
income and franchise taxes, (ii) Interest Expense, and (iii) amortization,
depreciation and other non-cash charges less (c) interest income and any
extraordinary gains.

 

“EBITDAR” means, for any period, the sum of the following determined on a
Consolidated basis, without duplication, for the Credit Parties and their
Subsidiaries in accordance with GAAP:  (a) Net Income for such period plus (b)
the sum of the following to the extent deducted in determining Net Income: (i)
income and franchise taxes, (ii) Interest Expense, (iii) Rental Expense and (iv)
amortization, depreciation and other non-cash charges less (c) interest income
and any extraordinary gains.

 

“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender or (c) any
other Person (other than a natural person) approved by (i) the Administrative
Agent, (ii) in the case of any assignment of a Revolving Credit Commitment, the
Swingline Lender and the Issuing Lender, and (iii) unless a Default or Event of
Default has occurred and is continuing, the Borrower (each such approval not to
be unreasonably withheld or delayed); provided that notwithstanding the
foregoing, “Eligible Assignee” shall not include the Parent, Holdings, the
Borrower, or any of the Parent’s Affiliates or Subsidiaries.

 

“Employee Benefit Plan” means any employee benefit plan within the meaning of
Section 3(3) of ERISA, other than a Multiemployer Plan, which (a) is maintained
for employees of the Borrower or any ERISA Affiliate or (b) with respect to
which the Borrower or any ERISA Affiliate may have any liability, contingent or
otherwise.

 

“Environmental Claims” means any and all administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, written accusations
delivered to any Credit Party or any Subsidiary thereof, written allegations
delivered to any Credit Party or any Subsidiary thereof, notices of
noncompliance or violation, investigations (other than internal reports prepared
by any Person in the ordinary course of business and not in response to any
third party action or request of any kind) or proceedings relating in any way to
any actual or alleged violation of or liability under any Environmental Law or
relating to any permit issued, or any approval given, under any such
Environmental Law, including any and all claims by Governmental Authorities for
enforcement, cleanup, removal, response, remedial or other actions or damages,
contribution, indemnification cost recovery, compensation or injunctive relief
resulting from Hazardous Materials or arising from alleged injury or threat of
injury to human health or the environment.

 

“Environmental Laws” means any and all federal, foreign, state, provincial and
local laws, statutes, ordinances, codes, rules, standards and regulations,
permits, licenses, approvals, interpretations and orders of courts or
Governmental Authorities, relating to the protection of human health or the
environment, including requirements pertaining to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation, handling,
reporting, licensing, permitting, investigation or remediation of Hazardous
Materials.

 

6

--------------------------------------------------------------------------------

 

“ERISA” means the Employee Retirement Income Security Act of 1974, and the rules
and regulations thereunder, each as amended or modified from time to time.

 

“ERISA Affiliate” means any Person who together with any Credit Party is treated
as a single employer within the meaning of Section 414(b), (c), (m) or (o) of
the Code or Section 4001(b) of ERISA.

 

“Eurodollar Reserve Percentage” means, for any day, the percentage (expressed as
a decimal and rounded upwards, if necessary, to the next higher 1/100th of 1%)
which is in effect for such day as prescribed by the Board of Governors of the
Federal Reserve system (or any successor) for determining the maximum reserve
requirement (including any basic, supplemental or emergency reserves) in respect
of eurocurrency liabilities or any similar category of liabilities for a member
bank of the Federal Reserve System in New York City.

 

“Event of Default” means any of the events specified in Section 11.1; provided
that any requirement for passage of time, giving of notice, or any other
condition, has been satisfied.

 

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender,
the Issuing Lender or any other recipient of any payment to be made by or on
account of any obligation of the Borrower 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 the Borrower is located and (c) in the case of a
Foreign Lender (other than an assignee pursuant to a request by the Borrower
under Section 4.12(b)), 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) or is attributable to such Foreign Lender’s
failure or inability (other than as a result of a Change in Law) to comply with
Section 4.11(e), except to the extent that such Foreign Lender (or its assignor,
if any) was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the Borrower with respect to
such withholding tax pursuant to Section 4.11(a).

 

“Existing Facility” means that certain credit facility of the Parent established
pursuant to the Credit Agreement dated as of September 27, 2002 by and among the
Parent, as borrower, the guarantors party thereto, the Revolving Credit Lenders
(as such term is defined therein) and Fleet National Bank (now Bank of America,
N.A. as successor in interest), as administrative agent (as amended, restated,
supplemented or otherwise modified prior to the date hereof).

 

“Extensions of Credit” means, as to any Lender at any time, (a) an amount equal
to the sum of (i) the aggregate principal amount of all Revolving Credit Loans
made by such Lender then outstanding, (ii) such Lender’s Revolving Credit
Commitment Percentage of the L/C Obligations then outstanding and (iii) such
Lender’s Revolving Credit Commitment Percentage

 

7

--------------------------------------------------------------------------------

 

of the Swingline Loans then outstanding, or (b) the making of any Loan or
participation in any Letter of Credit by such Lender, as the context requires.

 

“FDIC” means the Federal Deposit Insurance Corporation, or any successor
thereto.

 

“Federal Funds Rate” means, the rate per annum (rounded upwards, if necessary,
to the next higher 1/100th of 1%) representing the daily effective federal funds
rate as quoted by the Administrative Agent and confirmed in Federal Reserve
Board Statistical Release H.15 (519) or any successor or substitute publication
selected by the Administrative Agent.  If, for any reason, such rate is not
available, then “Federal Funds Rate” shall mean a daily rate which is
determined, in the opinion of the Administrative Agent, to be the rate at which
federal funds are being offered for sale in the national federal funds market at
9:00 a.m. (Charlotte time).  Rates for weekends or holidays shall be the same as
the rate for the most immediately preceding Business Day.

 

“Fee Letter” means the separate fee letter agreement executed by the Parent, the
Borrower and the Administrative Agent and/or certain of its affiliates dated
November 15, 2004.

 

“Fiscal Year” means the fiscal year of the Credit Parties and their Subsidiaries
ending on December 31, except as otherwise permitted under Section 10.9(a).

 

“Fixed Charges” means, for any period, the sum of the following determined on a
Consolidated basis, without duplication, for the Credit Parties and their
Subsidiaries in accordance with GAAP: (a) Cash Interest Expense, (b) scheduled
principal payments with respect to long-term Indebtedness, and (c) Rental
Expense.

 

“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.

 

“GAAP” means generally accepted accounting principles, as recognized by the
American Institute of Certified Public Accountants and the Financial Accounting
Standards Board, consistently applied and maintained on a consistent basis for
the Credit Parties and their Subsidiaries throughout the period indicated and
(subject to Section 10.9(a) and Section 13.10) consistent with the prior
financial practice of the Credit Parties and their Subsidiaries.

 

“Governmental Approvals” means all authorizations, consents, approvals, permits,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.

 

“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).

 

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“Guarantors” means the collective reference to the Parental Entities and the
Subsidiary Guarantors.

 

“Guaranty Obligation” means, with respect to the Credit Parties and their
Subsidiaries, without duplication, any obligation, contingent or otherwise, of
any such Person pursuant to which such Person has directly or indirectly
guaranteed any Indebtedness or other obligation of any other Person and, without
limiting the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of any such Person (a) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Indebtedness or other
obligation (whether arising by virtue of partnership arrangements, by agreement
to keep well, to purchase assets, goods, securities or services, to take-or-pay,
or to maintain financial statement condition or otherwise) or (b) entered into
for the purpose of assuring in any other manner the obligee of such Indebtedness
or other obligation of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part); provided, that the term Guaranty
Obligation shall not include endorsements for collection or deposit in the
ordinary course of business.

 

“Hazardous Materials” means any substances or materials (a) which are or become
defined as hazardous wastes, hazardous substances, pollutants, contaminants,
chemical substances or mixtures or toxic substances under any Environmental Law,
(b) which are toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise harmful to human health or the environment
and are or become regulated by any Governmental Authority, (c) the presence of
which require investigation or remediation under any Environmental Law or common
law, (d) the discharge or emission or release of which requires a permit or
license under any Environmental Law or other Governmental Approval, (e) which
are deemed by any Governmental Authority or pursuant to any common law doctrine
to constitute a nuisance or a trespass which pose a health or safety hazard to
Persons or neighboring properties or (f) which contain asbestos, polychlorinated
biphenyls, urea formaldehyde foam insulation, petroleum hydrocarbons, petroleum
derived substances or waste, crude oil, nuclear fuel, natural gas or synthetic
gas.

 

“Hedging Agreement” means any agreement with respect to any Interest Rate
Contract, forward rate agreement, forward foreign exchange agreement, currency
swap agreement, cross-currency rate swap agreement, currency option agreement or
other agreement or arrangement designed to alter the risks of any Person arising
from fluctuations in interest rates or currency values, all as amended,
restated, supplemented or otherwise modified from time to time.

 

“Hedging Obligations” means all existing or future payment and other obligations
owing by the Borrower under any Hedging Agreement (which such Hedging Agreement
is permitted hereunder) with any Person that is a Lender or an Affiliate of a
Lender at the time such Hedging Agreement is executed.

 

“Holdings” has the meaning assigned thereto in the preamble hereto.

 

“Indebtedness” means, with respect to the Credit Parties and their Subsidiaries
at any date and without duplication, the sum of the following calculated in
accordance with GAAP:

 

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(a)                                  all liabilities, obligations and
indebtedness for borrowed money including, but not limited to, obligations
evidenced by bonds, debentures, notes or other similar instruments of any such
Person;

 

(b)                                 all obligations to pay the deferred purchase
price of property or services of any such Person (including all obligations
under non-competition, earn-out or similar agreements), except trade payables
and accrued expenses arising in the ordinary course of business not more than
one hundred and eighty (180) days past due;

 

(c)                                  the Attributable Indebtedness of such
Person with respect to such Person’s obligations in respect of Capital Leases
and Synthetic Leases (regardless of whether accounted for as indebtedness under
GAAP);

 

(d)                                 all Indebtedness of any other Person secured
by a Lien on any asset owned or being purchased by a Credit Party or Subsidiary
thereof (including indebtedness arising under conditional sales or other title
retention agreements), whether or not such indebtedness shall have been assumed
by such Credit Party or Subsidiary thereof or is limited in recourse;

 

(e)                                  all Guaranty Obligations of any such
Person;

 

(f)                                    all obligations, contingent or otherwise,
of any such Person relative to the face amount of letters of credit, whether or
not drawn, including any Reimbursement Obligation, and banker’s acceptances
issued for the account of any such Person;

 

(g)                                 all obligations of any such Person to
redeem, repurchase, exchange, defease or otherwise make payments in respect of
Capital Stock of such Person;

 

(h)                                 all net obligations incurred by any such
Person pursuant to Hedging Agreements; and

 

(i)                                     the outstanding attributed principal
amount under any asset securitization program.

 

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
Hedging Agreement on any date shall be deemed to be the Termination Value
thereof as of such date.

 

“Indemnified Taxes” means Taxes and Other Taxes other than Excluded Taxes.

 

“Interest Expense” means, with respect to the Credit Parties and their
Subsidiaries for any period, the gross interest expense (including, without
limitation, interest expense attributable to Capital Leases,  amortization of
financing fees and all net payment obligations pursuant to Hedging Agreements
but excluding the effects of any changes in fair value with respect to any

 

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Hedging Agreements) of the Credit Parties and their Subsidiaries, all determined
for such period on a Consolidated basis, without duplication, in accordance with
GAAP.

 

“Interest Period” has the meaning assigned thereto in Section 4.1(b).

 

“Interest Rate Contract” means any interest rate swap agreement, interest rate
cap agreement, interest rate floor agreement, interest rate collar agreement,
interest rate option or any other agreement regarding the hedging of interest
rate risk exposure executed in connection with hedging the interest rate
exposure of any Person and any confirming letter executed pursuant to such
agreement, all as amended, restated, supplemented or otherwise modified from
time to time.

 

“ISP98” means the International Standby Practices (1998 Revision, effective
January 1, 1999), International Chamber of Commerce Publication No. 590.

 

“Issuing Lender” means Wachovia, in its capacity as issuer of any Letter of
Credit under this Agreement, or any successor thereto.

 

“L/C Commitment” means the lesser of (a) Twenty Five Million Dollars
($25,000,000) and (b) the Revolving Credit Commitment.

 

“L/C Facility” means the letter of credit facility established pursuant to
Article III.

 

“L/C Obligations” means at any time, an amount equal to the sum of (a) the
aggregate undrawn and unexpired amount of the then outstanding Letters of Credit
and (b) the aggregate amount of drawings under Letters of Credit which have not
then been reimbursed pursuant to Section 3.5.

 

“L/C Participants” means the collective reference to all the Lenders other than
the Issuing Lender.

 

“Lender” means each Person executing this Agreement as a Lender (including the
Issuing Lender and the Swingline Lender unless the context otherwise requires)
set forth on the signature pages hereto and each Person that hereafter becomes a
party to this Agreement as a Lender pursuant to Section 13.11.

 

“Lending Office” means, with respect to any Lender, the office of such Lender
maintaining such Lender’s Revolving Credit Commitment Percentage of the
Extensions of Credit.

 

“Letter of Credit Application” means an application, in the form specified by
the Issuing Lender from time to time, requesting the Issuing Lender to issue a
Letter of Credit.

 

“Letters of Credit” means the collective reference to the standby and commercial
letters of credit issued pursuant to Section 3.1.

 

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“LIBOR” means the rate of interest per annum determined on the basis of the rate
for deposits in Dollars in minimum amounts of at least $5,000,000 for a period
equal to the applicable Interest Period which appears on the Telerate Page 3750
at approximately 11:00 a.m. (London time) two (2) Business Days prior to the
first day of the applicable Interest Period (rounded upward, if necessary, to
the nearest 1/100th of 1%).  If, for any reason, such rate does not appear on
Telerate Page 3750, then “LIBOR” shall be determined by the Administrative Agent
to be the arithmetic average of the rate per annum at which deposits in Dollars
in minimum amounts of at least $5,000,000 would be offered by first class banks
in the London interbank market to the Administrative Agent at approximately
11:00 a.m. (London time) two (2) Business Days prior to the first day of the
applicable Interest Period for a period equal to such Interest Period.  Each
calculation by the Administrative Agent of LIBOR shall be conclusive and binding
for all purposes, absent manifest error.

 

“LIBOR Rate” means a rate per annum (rounded upwards, if necessary, to the next
higher 1/100th of 1%) determined by the Administrative Agent pursuant to the
following formula:

 

LIBOR Rate =

LIBOR

 

1.00-Eurodollar Reserve Percentage

 

“LIBOR Rate Loan” means any Loan bearing interest at a rate based upon the LIBOR
Rate as provided in Section 4.1(a).

 

“Lien” means, with respect to any asset, any mortgage, leasehold mortgage, lien,
pledge, charge, security interest, hypothecation or encumbrance of any kind in
respect of such asset.  For the purposes of this Agreement, a Person shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
Capital Lease or other title retention agreement relating to such asset.

 

“Loan Documents” means, collectively, this Agreement, each Note, the Letter of
Credit Applications, the Parental Entity Guaranty Agreement, the Subsidiary
Guaranty Agreement,  the Security Documents, and each other document,
instrument, certificate and agreement executed and delivered by any Credit Party
or Subsidiary thereof in connection with this Agreement or otherwise referred to
herein or contemplated hereby (excluding any Hedging Agreement and excluding
Material Contracts), all as may be amended, restated, supplemented or otherwise
modified from time to time.

 

“Loans” means the collective reference to the Revolving Credit Loans and the
Swingline Loans and “Loan” means any of such Loans.

 

“Material Adverse Effect” means, with respect to the Credit Parties and their
Subsidiaries, a material adverse effect on (a) the properties, business,
operations or condition (financial or otherwise) of such entities, taken as a
whole, (b) the ability of any such Person to perform its obligations under the
Loan Documents to which it is a party or (c) the legality, validity, binding
effect or enforceability against any Credit Party or Subsidiary thereof of any
Loan Document to which it is a party.

 

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“Material Contract” means (a) any contract or other agreement, written or oral,
of the Credit Parties and their Subsidiaries involving monetary liability of or
to any such Person in an amount in excess of $10,000,000 per annum, or (b) any
other contract or agreement, written or oral, of any Credit Party or any
Subsidiary thereof the failure to comply with which could reasonably be expected
to have a Material Adverse Effect.

 

“Multiemployer Plan” means a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate
contributes or with respect to which the Borrower or an ERISA Affiliate may have
any liability, contingent or otherwise.

 

“Net Income” means, with respect to the Credit Parties and their Subsidiaries,
for any period of determination, the net income (or loss) of the Credit Parties
and their Subsidiaries for such period, determined on a Consolidated basis in
accordance with GAAP; provided that there shall be excluded from Net Income (a)
the net income (or loss) of any Person (other than a Subsidiary which shall be
subject to clause (c) below), in which any Credit Party or any Subsidiary
thereof has a joint interest with a third party, except to the extent such net
income is actually paid to a Credit Party or any Subsidiary thereof by dividend
or other distribution during such period, (b) the net income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of such Person or is
merged into or consolidated with such Person or any of its Subsidiaries or that
Person’s assets are acquired by such Person or any of its Subsidiaries except to
the extent included pursuant to the foregoing clause (a), (c) the net income (if
positive) of any Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary to any Credit Party or any
Subsidiary thereof of such net income (i) is not at the time permitted by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute rule or governmental regulation applicable to such
Subsidiary or (ii) would be subject to any taxes payable on such dividends or
distributions.

 

“Note” means a Revolving Credit Note or a Swingline Note.

 

“Notice of Account Designation” has the meaning assigned thereto in
Section 2.3(b).

 

“Notice of Borrowing” has the meaning assigned thereto in Section 2.3(a).

 

“Notice of Conversion/Continuation” has the meaning assigned thereto in
Section 4.2.

 

“Notice of Prepayment” has the meaning assigned thereto in Section 2.4(c).

 

“Obligations” means, in each case, whether now in existence or hereafter
arising: (a) the principal of and interest on (including interest accruing after
the filing of any bankruptcy or similar petition) the Loans, (b) the L/C
Obligations, (c) all Hedging Obligations and (d) all other fees and commissions
(including attorneys’ fees), charges, indebtedness, loans, liabilities,
financial accommodations, obligations, covenants and duties owing by any Credit
Party or any Subsidiary thereof to the Lenders or the Administrative Agent, in
each case under any Loan Document or otherwise, with respect to any Loan or
Letter of Credit of every kind, nature and description, direct or indirect,
absolute or contingent, due or to become due, contractual or tortious,
liquidated or unliquidated, and whether or not evidenced by any note.

 

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“Officer’s Compliance Certificate” means a certificate of the chief financial
officer, vice president-finance or the treasurer of each of the Parent and the
Borrower substantially in the form of Exhibit F.

 

“Operating Lease” means, as to any Person as determined in accordance with GAAP,
any lease of property (whether real, personal or mixed) by such Person as lessee
which is not a Capital Lease.

 

“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.  For avoidance of doubt, the term “Other Taxes” does not
include Excluded Taxes.

 

“Parent” has the meaning assigned thereto in the preamble hereto.

 

“Parental Entities” means the collective reference to the Parent and Holdings.

 

“Parental Entity Guaranty Agreement” means the unconditional guaranty agreement
of even date executed by the Parental Entities in favor of the Administrative
Agent for the ratable benefit of itself and the Lenders, substantially in the
form of Exhibit H, as amended, restated, supplemented or otherwise modified from
time to time.

 

“Participant” has the meaning assigned thereto in Section 13.11(d).

 

“PBGC” means the Pension Benefit Guaranty Corporation or any successor agency.

 

“Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan,
which is subject to the provisions of Title IV of ERISA or Section 412 of the
Code and which (a) is maintained for the employees of any Credit Party or any
ERISA Affiliates or (b) with respect to which the Borrower or any of its ERISA
Affiliates may have any liability, contingent or otherwise.

 

“Permitted Acquisition” has the meaning assigned thereto in Section 10.3(c).

 

“Permitted Liens” means the Liens permitted pursuant to Section 10.2.

 

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

 

“Prime Rate” means, at any time, the rate of interest per annum publicly
announced from time to time by Wachovia as its prime rate.  Each change in the
Prime Rate shall be effective as of the opening of business on the day such
change in such prime rate occurs.  The parties hereto acknowledge that the rate
announced publicly by Wachovia as its prime rate is an index or base rate and
shall not necessarily be its lowest or best rate charged to its customers or
other banks.

 

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“Register” has the meaning assigned thereto in Section 13.11(c).

 

“Reimbursement Obligation” means the obligation of the Borrower to reimburse the
Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters of
Credit.

 

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

 

“Rental Expense” means, with respect to the Credit Parties and their
Subsidiaries for any period, the aggregate fixed amounts expensed with respect
to Operating Leases (excluding personal or mixed property), paid or to be
incurred under all leases of real property, net of sublease income, of the
Credit Parties and their Subsidiaries for such period, determined on a
Consolidated basis in accordance with GAAP.

 

“Required Lenders” means, at any date, any combination of Lenders whose
Commitments aggregate greater than fifty percent (50%) of the Revolving Credit
Commitment or, if the Credit Facility has been terminated pursuant to
Section 11.2(a), any combination of Lenders holding greater than fifty percent
(50%) of the aggregate Extensions of Credit; provided that the Commitment of,
and the portion of the Extensions of Credit, as applicable, held or deemed held
by, any Defaulting Lender shall be excluded for purposes of making a
determination of Required Lenders.

 

“Responsible Officer” means the chief executive officer, president, chief
financial officer, vice president-finance, treasurer or assistant treasurer of a
Credit Party or any other officer of a Credit Party reasonably acceptable to the
Administrative Agent.  Any document delivered hereunder that is signed by a
Responsible Officer of a Credit Party shall be conclusively presumed to have
been authorized by all necessary corporate, partnership and/or other action on
the part of such Credit Party and such Responsible Officer shall be conclusively
presumed to have acted on behalf of such Credit Party.

 

“Revolving Credit Commitment” means (a) as to any Lender, the obligation of such
Lender to make Revolving Credit Loans to the account of the Borrower hereunder
in an aggregate principal amount at any time outstanding not to exceed the
amount set forth opposite such Lender’s name on the Register, as such amount may
be reduced or modified at any time or from time to time pursuant to the terms
hereof and (b) as to all Lenders, the aggregate commitment of all Lenders to
make Revolving Credit Loans, as such amount may be reduced at any time or from
time to time pursuant to the terms hereof.  The Revolving Credit Commitment of
all Lenders on the Closing Date shall be Two Hundred Ten Million Dollars
($210,000,000).

 

“Revolving Credit Commitment Percentage” means, as to any Lender at any time,
the ratio of (a) the amount of the Revolving Credit Commitment of such Lender to
(b) the Revolving Credit Commitments of all Lenders.

 

“Revolving Credit Facility” means the revolving credit facility established
pursuant to Article II.

 

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“Revolving Credit Loans” means any revolving loan made to the Borrower pursuant
to Section 2.1, and all such revolving loans collectively as the context
requires.

 

“Revolving Credit Maturity Date” means the earliest to occur of (a) 
December 22, 2009 (b) the date of termination by the Borrower pursuant to
Section 2.5, or (c) the date of termination by the Administrative Agent on
behalf of the Lenders pursuant to Section 11.2(a).

 

“Revolving Credit Note” means a promissory note made by the Borrower in favor of
a Lender evidencing the Revolving Credit Loans made by such Lender,
substantially in the form of Exhibit A-1 hereto, and any amendments, supplements
and modifications thereto, any substitutes therefor, and any replacements,
restatements, renewals or extension thereof, in whole or in part.

 

“Security Documents” means the collective reference to the Collateral Agreement
and each other written agreement or other writing required pursuant to this
Agreement or any other Loan Document pursuant to which any Credit Party purports
to pledge or grant a security interest in any property or assets securing the
Obligations or any such Person purports to guaranty the payment and/or
performance of the Obligations, in each case, as amended, restated, supplemented
or otherwise modified from time to time.

 

“Solvent” means, as to the Credit Parties and their Subsidiaries on a particular
date, that any such Person (a) has capital sufficient to carry on its business
and transactions and all business and transactions in which it is about to
engage and is able to pay its debts as they mature, (b) has assets having a
value, both at fair valuation and at present fair saleable value, greater than
the amount required to pay its probable liabilities (including contingencies),
and (c) does not believe that it will incur debts or liabilities beyond its
ability to pay such debts or liabilities as they mature.

 

“Subordinated Indebtedness” means the collective reference to any Indebtedness
of any Credit Party or any Subsidiary thereof subordinated in right and time of
payment to the Obligations and containing such other terms and conditions, in
each case as are satisfactory to the Required Lenders.

 

“Subsidiary” means as to any Person, any corporation, partnership, limited
liability company or other entity of which more than fifty percent (50%) of the
outstanding Capital Stock having ordinary voting power to elect a majority of
the board of directors or other managers of such corporation, partnership,
limited liability company or other entity is at the time owned by or the
management is otherwise controlled, directly or indirectly, by such Person
(irrespective of whether, at the time, Capital Stock of any other class or
classes of such corporation, partnership, limited liability company or other
entity shall have or might have voting power by reason of the happening of any
contingency).  Unless otherwise qualified references to “Subsidiary” or
“Subsidiaries” herein shall refer to those of the Parent.

 

“Subsidiary Guarantors” means each Subsidiary of the Parent in existence on the
Closing Date or which becomes a party to a Subsidiary Guaranty Agreement
pursuant to Section 8.11.

 

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“Subsidiary Guaranty Agreement” means the unconditional guaranty agreement of
even date executed by the Subsidiary Guarantors in favor of the Administrative
Agent for the ratable benefit of itself and the Lenders, substantially in the
form of Exhibit I, as amended, restated, supplemented or otherwise modified from
time to time.

 

“Swingline Commitment” means the lesser of (a) Ten Million Dollars ($10,000,000)
and (b) the Revolving Credit Commitment.

 

“Swingline Facility” means the swingline facility established pursuant to
Section 2.2.

 

“Swingline Lender” means Wachovia in its capacity as swingline lender hereunder.

 

“Swingline Loan” means any swingline loan made by the Swingline Lender to the
Borrower pursuant to Section 2.2, and all such swingline loans collectively as
the context requires.

 

“Swingline Note” means a promissory note made by the Borrower in favor of the
Swingline Lender, substantially in the form of Exhibit A-2 hereto, and any
amendments, supplements and modifications thereto, any substitutes therefor, and
any replacements, restatements, renewals or extension thereof, in whole or in
part.

 

“Swingline Termination Date” means the first to occur of (a) the resignation of
Wachovia as Administrative Agent in accordance with Section 12.9 and (b) the
Revolving Credit Maturity Date.

 

“Syndication Agent” has the meaning assigned thereto in the preamble hereto.

 

“Synthetic Lease” means any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product where such
transaction is considered borrowed money indebtedness for tax purposes but is
classified as an Operating Lease in accordance with GAAP.

 

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental
Authority, whether calculated on a separate or consolidated, unitary or combined
basis or otherwise, including any interest, additions to tax or penalties
applicable thereto.

 

“Termination Event” means except for any such event or condition that could not
reasonably be expected to have a Material Adverse Effect: (a) a “Reportable
Event” described in Section 4043(c) of ERISA for which the notice requirement
has not been waived by the PBGC, or (b) the withdrawal of any Credit Party or
any ERISA Affiliate from a Pension Plan during a plan year in which it was a
“substantial employer” as defined in Section 4001(a)(2) of ERISA, or (c) the
termination of a Pension Plan in a distress termination under Section 4041(c) of
ERISA, the filing of a notice of intent to terminate a Pension Plan in a
distress termination under Section 4041(c) of ERISA or the treatment of a
Pension Plan amendment as a termination, under Section 4041 of ERISA, if the
plan assets are not sufficient to pay all plan liabilities, or (d) the
institution of proceedings to terminate, or the appointment of a trustee with
respect to, any Pension Plan by

 

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the PBGC, or (e) any other event or condition which would constitute grounds
under Section 4042(a) of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan, or (f) the imposition of a Lien
pursuant to Section 412 of the Code or Section 302 of ERISA, or (g) the partial
or complete withdrawal of any Credit Party of any ERISA Affiliate from a
Multiemployer Plan if withdrawal liability is asserted by such plan, or (h) any
event or condition which results in the reorganization or insolvency of a
Multiemployer Plan under Sections 4241 or 4245 of ERISA, or (i) any event or
condition which results in the termination of a Multiemployer Plan under
Section 4041A of ERISA or the institution by PBGC of proceedings to terminate a
Multiemployer Plan under Section 4042 of ERISA.

 

“Termination Value” means, in respect of any one or more Hedging Agreements,
after taking into account the effect of any legally enforceable netting
agreement relating to such Hedging Agreements, (a) for any date on or after the
date such Hedging Agreements 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 Hedging Agreements, as determined based upon
one or more mid-market or other readily available quotations provided by any
recognized dealer in such Hedging Agreements (which may include a Lender or any
Affiliate of a Lender).

 

“Total Indebtedness” means, as of any date of determination with respect to the
Credit Parties and their Subsidiaries on a Consolidated basis without
duplication, the sum of all Indebtedness of the Credit Parties and their
Subsidiaries.

 

“Uniform Customs” means the Uniform Customs and Practice for Documentary Credits
(1993 Revision), effective January, 1994 International Chamber of Commerce
Publication No. 500.

 

“UCC” means the Uniform Commercial Code as in effect in the State of New York,
as amended or modified from time to time.

 

“United States” means the United States of America.

 

“Wachovia” means Wachovia Bank, National Association, a national banking
association, and its successors.

 

“Wholly-Owned” means, with respect to a Subsidiary, that all of the shares of
Capital Stock of such Subsidiary are, directly or indirectly, owned or
controlled by the Parent and/or one or more of its Wholly-Owned Subsidiaries
(except for directors’ qualifying shares or other shares required by Applicable
Law to be owned by a Person other than the Parent).

 

SECTION 1.2                          Other Definitions and 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, (b) whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms, (c) the words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation”, (d) the word

 

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“will” shall be construed to have the same meaning and effect as the word
“shall”, (e) any definition of or reference to any agreement, instrument or
other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements
or modifications set forth herein), (f) any reference herein to any Person shall
be construed to include such Person’s successors and assigns, (g) the words
“herein”, “hereof” and “hereunder”, and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (h) all references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, this Agreement, (i) 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, (j) the term “documents” includes any and all
instruments, documents, agreements, certificates, notices, reports, financial
statements and other writings, however evidenced, whether in physical or
electronic form, (k) 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”, and (l) 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.

 

SECTION 1.3                          Accounting Terms.  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 required by Section 7.1(b), except as otherwise
specifically prescribed herein.

 

SECTION 1.4                          UCC Terms.  Terms defined in the UCC in
effect on the Closing Date and not otherwise defined herein shall, unless the
context otherwise indicates, have the meanings provided by those definitions. 
Subject to the foregoing, the term “UCC” refers, as of any date of
determination, to the UCC then in effect.

 

SECTION 1.5                          Rounding.  Any financial ratios required to
be maintained by the Credit Parties 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).

 

SECTION 1.6                          References to Agreement and Laws.  Unless
otherwise expressly provided herein, (a) references to formation documents,
governing documents, agreements (including the Loan Documents) and other
contractual instruments shall be deemed to include all subsequent amendments,
restatements, extensions, supplements and other modifications thereto, but only
to the extent that such amendments, restatements, extensions, supplements and
other modifications are not prohibited by any Loan Document; and (b) references
to any Applicable

 

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Law shall include all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting such Applicable Law.

 

SECTION 1.7                          Times of Day.  Unless otherwise specified,
all references herein to times of day shall be references to Eastern time
(daylight or standard, as applicable).

 

SECTION 1.8                          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 mean the maximum face amount of such Letter of Credit after
giving effect to all increases thereof contemplated by such Letter of Credit or
the Letter of Credit Application therefor, whether or not such maximum face
amount is in effect at such time.

 

ARTICLE II

 

REVOLVING CREDIT FACILITY

 

SECTION 2.1                          Revolving Credit Loans.  Subject to the
terms and conditions of this Agreement, and in reliance upon the representations
and warranties set forth herein, each Lender severally agrees to make Revolving
Credit Loans to the Borrower from time to time from the Closing Date through,
but not including, the Revolving Credit Maturity Date as requested by the
Borrower in accordance with the terms of Section 2.3; provided, that (a) the
aggregate principal amount of all outstanding Revolving Credit Loans (after
giving effect to any amount requested) shall not exceed the Revolving Credit
Commitment less the sum of all outstanding Swingline Loans and L/C Obligations
and (b) the principal amount of outstanding Revolving Credit Loans from any
Lender to the Borrower shall not at any time exceed such Lender’s Revolving
Credit Commitment less such Lender’s Revolving Credit Commitment Percentage of
outstanding L/C Obligations and outstanding Swingline Loans.  Each Revolving
Credit Loan by a Lender shall be in a principal amount equal to such Lender’s
Revolving Credit Commitment Percentage of the aggregate principal amount of
Revolving Credit Loans requested on such occasion.  Subject to the terms and
conditions hereof, the Borrower may borrow, repay and reborrow Revolving Credit
Loans hereunder until the Revolving Credit Maturity Date.

 

SECTION 2.2                          Swingline Loans.

 

(a)                                  Availability.  Subject to the terms and
conditions of this Agreement, the Swingline Lender agrees to make Swingline
Loans to the Borrower from time to time from the Closing Date through, but not
including, the Swingline Termination Date; provided, that the aggregate
principal amount of all outstanding Swingline Loans (after giving effect to any
amount requested), shall not exceed the lesser of (i) the Revolving Credit
Commitment less the sum of all outstanding Revolving Credit Loans and the L/C
Obligations and (ii) the Swingline Commitment.

 

(b)                                 Refunding.

 

(i)                                     Swingline Loans shall be refunded by the
Lenders on demand by the Swingline Lender.  Such refundings shall be made by the
Lenders in accordance with their

 

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respective Revolving Credit Commitment Percentages and shall thereafter be
reflected as Revolving Credit Loans of the Lenders on the books and records of
the Administrative Agent.  Each Lender shall fund its respective Revolving
Credit Commitment Percentage of Revolving Credit Loans as required to repay
Swingline Loans outstanding to the Swingline Lender upon demand by the Swingline
Lender but in no event later than 1:00 p.m. on the next succeeding Business Day
after such demand is made.  No Lender’s obligation to fund its respective
Revolving Credit Commitment Percentage of a Swingline Loan shall be affected by
any other Lender’s failure to fund its Revolving Credit Commitment Percentage of
a Swingline Loan, nor shall any Lender’s Revolving Credit Commitment Percentage
be increased as a result of any such failure of any other Lender to fund its
Revolving Credit Commitment Percentage of a Swingline Loan.

 

(ii)                                  The Borrower shall pay to the Swingline
Lender within two (2) Business Days of a demand therefor the amount of such
Swingline Loans to the extent amounts received from the Lenders are not
sufficient to repay in full the outstanding Swingline Loans requested or
required to be refunded.  In addition, the Borrower hereby authorizes the
Administrative Agent to charge any account maintained by the Borrower with the
Swingline Lender (up to the amount available therein) in order to immediately
pay the Swingline Lender the amount of such Swingline Loans to the extent
amounts received from the Lenders are not sufficient to repay in full the
outstanding Swingline Loans requested or required to be refunded.  If any
portion of any such amount paid to the Swingline Lender shall be recovered by or
on behalf of the Borrower from the Swingline Lender in bankruptcy or otherwise,
the loss of the amount so recovered shall be ratably shared among all the
Lenders in accordance with their respective Revolving Credit Commitment
Percentages.

 

(iii)                               Each Lender acknowledges and agrees that its
obligation to refund Swingline Loans in accordance with the terms of this
Section is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including non-satisfaction of the conditions set forth
in Article V.  Further, each Lender agrees and acknowledges that if prior to the
refunding of any outstanding Swingline Loans pursuant to this Section, one of
the events described in Section 11.1(j) or (k) shall have occurred, each Lender
will, on the date the applicable Revolving Credit Loan would have been made,
purchase an undivided participating interest in the Swingline Loan to be
refunded in an amount equal to its Revolving Credit Commitment Percentage of the
aggregate amount of such Swingline Loan.  Each Lender will immediately transfer
to the Swingline Lender, in immediately available funds, the amount of its
participation and upon receipt thereof the Swingline Lender will deliver to such
Lender a certificate evidencing such participation dated the date of receipt of
such funds and for such amount.  Whenever, at any time after the Swingline
Lender has received from any Lender such Lender’s participating interest in a
Swingline Loan, the Swingline Lender receives any payment on account thereof,
the Swingline Lender will distribute to such Lender its participating interest
in such amount (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Lender’s participating interest was
outstanding and funded).

 

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SECTION 2.3                          Procedure for Advances of Revolving Credit
Loans and Swingline Loans.

 

(a)                                  Requests for Borrowing.  The Borrower shall
give the Administrative Agent irrevocable prior written notice substantially in
the form attached hereto as Exhibit B (a “Notice of Borrowing”) not later than
1:00 p.m. (i) on the same Business Day as each Base Rate Loan and each Swingline
Loan and (ii) at least three (3) Business Days before each LIBOR Rate Loan, of
its intention to borrow, specifying (A) the date of such borrowing, which shall
be a Business Day, (B) the amount of such borrowing, which shall be, (x) with
respect to Base Rate Loans (other than Swingline Loans) in an aggregate
principal amount of $1,000,000 or a whole multiple of $500,000 in excess
thereof, (y) with respect to LIBOR Rate Loans in an aggregate principal amount
of $3,000,000 or a whole multiple of $500,000 in excess thereof and (z) with
respect to Swingline Loans in an aggregate principal amount of $100,000 or a
whole multiple of $100,000 in excess thereof, (C) whether such Loan is to be a
Revolving Credit Loan or Swingline Loan, (D) in the case of a Revolving Credit
Loan whether the Loans are to be LIBOR Rate Loans or Base Rate Loans, and (E) in
the case of a LIBOR Rate Loan, the duration of the Interest Period applicable
thereto.  A Notice of Borrowing received after 1:00 p.m. shall be deemed
received on the next Business Day.  The Administrative Agent shall promptly
notify the Lenders of each Notice of Borrowing.

 

(b)                                 Disbursement of Revolving Credit and
Swingline Loans.  Not later than 1:00 p.m. on the proposed borrowing date, (i)
each Lender will make available to the Administrative Agent, for the account of
the Borrower, at the office of the Administrative Agent in funds immediately
available to the Administrative Agent, such Lender’s Revolving Credit Commitment
Percentage of the Revolving Credit Loans to be made on such borrowing date and
(ii) the Swingline Lender will make available to the Administrative Agent, for
the account of the Borrower, at the office of the Administrative Agent in funds
immediately available to the Administrative Agent, the Swingline Loans to be
made on such borrowing date.  The Borrower hereby irrevocably authorizes the
Administrative Agent to disburse the proceeds of each borrowing requested
pursuant to this Section in immediately available funds by crediting or wiring
such proceeds to the deposit account of the Borrower identified in the most
recent notice substantially in the form of Exhibit C hereto (a “Notice of
Account Designation”) delivered by the Borrower to the Administrative Agent or
as may be otherwise agreed upon by the Borrower and the Administrative Agent
from time to time.  Subject to Section 4.7 hereof, the Administrative Agent
shall not be obligated to disburse the portion of the proceeds of any Revolving
Credit Loan requested pursuant to this Section to the extent that any Lender has
not made available to the Administrative Agent its Revolving Credit Commitment
Percentage of such Loan.  Revolving Credit Loans to be made for the purpose of
refunding Swingline Loans shall be made by the Lenders as provided in
Section 2.2(b).

 

SECTION 2.4                          Repayment of Loans.

 

(a)                                  Repayment on Maturity Date.  The Borrower
hereby agrees to repay the outstanding principal amount of (i) all Revolving
Credit Loans in full on the Revolving Credit Maturity Date, and (ii) all
Swingline Loans in accordance with Section 2.2(b), together, in each case, with
all accrued but unpaid interest thereon.

 

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(b)                                 Mandatory Repayment of Revolving Credit
Loans.  If at any time the outstanding principal amount of all Revolving Credit
Loans plus the sum of all outstanding Swingline Loans and L/C Obligations
exceeds the Revolving Credit Commitment, the Borrower agrees to repay
immediately upon notice from the Administrative Agent, by payment to the
Administrative Agent for the account of the Lenders, Extensions of Credit in an
amount equal to such excess with each such repayment applied first to the
principal amount of outstanding Swingline Loans, second to the principal amount
of outstanding Revolving Credit Loans and third, with respect to any Letters of
Credit then outstanding, a payment of cash collateral into a cash collateral
account opened by the Administrative Agent, for the benefit of the Lenders in an
amount equal to the aggregate then undrawn and unexpired amount of such Letters
of Credit (such cash collateral to be applied in accordance with
Section 11.2(b)).

 

(c)                                  Optional Prepayments.  The Borrower may at
any time and from time to time prepay Revolving Credit Loans and Swingline
Loans, in whole or in part, with irrevocable prior written notice to the
Administrative Agent substantially in the form attached hereto as Exhibit D (a
“Notice of Prepayment”) given not later than 1:00 p.m. (i) on the same Business
Day as each Base Rate Loan and each Swingline Loan and (ii) at least three (3)
Business Days before each LIBOR Rate Loan, specifying the date and amount of
prepayment and whether the prepayment is of LIBOR Rate Loans, Base Rate Loans,
Swingline Loans or a combination thereof, and, if of a combination thereof, the
amount allocable to each.  Upon receipt of such notice, the Administrative Agent
shall promptly notify each Lender.  If any such notice is given, the amount
specified in such notice shall be due and payable on the date set forth in such
notice.  Partial prepayments shall be in an aggregate amount of $1,000,000 or a
whole multiple of $500,000 in excess thereof with respect to Base Rate Loans
(other than Swingline Loans), $3,000,000 or a whole multiple of $500,000 in
excess thereof with respect to LIBOR Rate Loans and $100,000 or a whole multiple
of $100,000 in excess thereof with respect to Swingline Loans.  A Notice of
Prepayment received after 1:00 p.m. shall be deemed received on the next
Business Day.  Each such repayment shall be accompanied by any amount required
to be paid pursuant to Section 4.9 hereof.

 

(d)                                 Limitation on Prepayment of LIBOR Rate
Loans.  The Borrower may not prepay any LIBOR Rate Loan on any day other than on
the last day of the Interest Period applicable thereto unless such prepayment is
accompanied by any amount required to be paid pursuant to Section 4.9 hereof.

 

(f)                                    Hedging Agreements.  No repayment or
prepayment pursuant to this Section shall affect any of the Borrower’s
obligations under any Hedging Agreement.

 

SECTION 2.5                          Permanent Reduction of the Revolving Credit
Commitment.

 

(a)                                  Voluntary Reduction.  The Borrower shall
have the right at any time and from time to time, upon at least five (5)
Business Days prior written notice to the Administrative Agent, to permanently
reduce, without premium or penalty, (i) the entire Revolving Credit Commitment
at any time or (ii) portions of the Revolving Credit Commitment, from time to
time, in an aggregate principal amount not less than $5,000,000 or any whole
multiple of

 

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$1,000,000 in excess thereof.  Any reduction of the Revolving Credit Commitments
shall be applied to the Revolving Credit Commitment of each Lender according to
its Revolving Credit Commitment Percentage.  All commitment fees accrued until
the effective date of any termination of the Revolving Credit Commitments shall
be paid on the effective date of such termination.

 

(b)                                 Corresponding Payment.  Each permanent
reduction permitted pursuant to this Section shall be accompanied by a payment
of principal sufficient to reduce the aggregate outstanding Revolving Credit
Loans, Swingline Loans and L/C Obligations, as applicable, after such reduction
to the Revolving Credit Commitment as so reduced and if the Revolving Credit
Commitment as so reduced is less than the aggregate amount of all outstanding
Letters of Credit, the Borrower shall be required to deposit cash collateral in
a cash collateral account opened by the Administrative Agent in an amount equal
to the aggregate then undrawn and unexpired amount of such Letters of Credit. 
Such cash collateral shall be applied in accordance with Section 11.2(b).  Any
reduction of the Revolving Credit Commitment to zero shall be accompanied by
payment of all outstanding Revolving Credit Loans and Swingline Loans (and
furnishing of cash collateral satisfactory to the Administrative Agent for all
L/C Obligations) and shall result in the termination of the Revolving Credit
Commitment and the Swingline Commitment and the Revolving Credit Facility.  Such
cash collateral shall be applied in accordance with Section 11.2(b).  If the
reduction of the Revolving Credit Commitment requires the repayment of any LIBOR
Rate Loan, such repayment shall be accompanied by any amount required to be paid
pursuant to Section 4.9 hereof.

 

SECTION 2.6                          Termination of Revolving Credit Facility. 
The Revolving Credit Facility shall terminate on the Revolving Credit Maturity
Date.

 

SECTION 2.7                          Optional Increase of Revolving Credit
Commitment.   The Borrower shall have the right upon not less than thirty (30)
days prior written notice to the Administrative Agent to increase the Revolving
Credit Commitment by an aggregate amount of $90,000,000; provided that:

 

(a)                                  the Borrower shall not make more than two
(2) increases prior to the Revolving Credit Maturity Date and the amount of any
such requested increase shall not (i) be less than 45,000,000 (or the remaining
amount of increases available under this Section after giving effect to any
prior increases) and (ii) together with all other increases in the Revolving
Credit Commitment pursuant to this Section 2.7 since the date of this Agreement,
cause the Revolving Credit Commitment to exceed $300,000,000;

 

(b)                                 no Default or Event of Default shall have
occurred and be continuing or would result from such proposed increase and any
borrowings thereunder;

 

(c)                                  the Credit Parties shall deliver an
Officer’s Compliance Certificate to the Administrative Agent demonstrating pro
forma compliance with the covenants set forth in Article IX hereof; using the
financial statements delivered pursuant to Section 7.1(a) for the most recently
ended fiscal quarter of the Credit Parties.

 

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(d)                                 (i) Each existing Lender shall have the
right, but not the obligation, to commit to all or a portion of the proposed
increase, (ii) the failure by any existing Lender to respond to a request for
such increase shall be deemed to be a refusal of such request by such existing
Lender and (iii) if the Administrative Agent does not receive sufficient
commitments from the existing Lenders to fund the entire amount of the proposed
increase, the Borrower may then solicit commitments from other banks, financial
institutions or investment funds reasonably acceptable to the Administrative
Agent;

 

(e)                                  Any increase in the Revolving Credit
Commitment which is accomplished by increasing the Commitment of any Lender or
Lenders who are at the time of such increase party to this Agreement (which
Lender or Lenders shall consent to such increase in their sole and absolute
discretion) shall be accomplished as follows:  (i) this Agreement will be
amended by the Credit Parties, the Administrative Agent and those Lender(s)
whose Commitment(s) is or are being increased (but without any requirement that
the consent of any other Lender be obtained) to reflect the revised Commitment
of each of the Lenders, (ii) entries in the Register will be revised to reflect
the revised Commitment and Commitment Percentage of each of the Lenders, (iii)
the outstanding Revolving Credit Loans and Commitment Percentages of Swingline
Loans and L/C Obligations will be reallocated on the effective date of such
increase among the Lenders in accordance with their revised Commitment
Percentages (and the Lenders agree to make all payments and adjustments
necessary to effect the reallocation and the Borrower shall pay any and all
costs required pursuant to Section 4.9 in connection with such reallocation as
if such reallocation were a repayment) and (iv) if requested by such Lender or
Lenders, the Borrower will deliver new Revolving Credit Note(s) to the Lender or
Lenders whose Commitment(s) is or are being increased reflecting the revised
Commitment of such Lender(s);

 

(f)                                    Any increase in the Revolving Credit
Commitment which is accomplished by addition of a new Lender or Lenders under
the Agreement shall be accomplished as follows: (i) each new Lender shall be an
Eligible Assignee and shall be subject to the consent of the Administrative
Agent and the Borrower which consents shall not be unreasonably withheld, (ii)
this Agreement will be amended by the Credit Parties, the Administrative Agent
and each new Lender (but without any requirement that the consent of the any
other Lender be obtained) to reflect the addition of each new Lender as a Lender
hereunder, (iii) entries in the Register will be revised to reflect the revised
Commitment and Commitment Percentages of each of the Lenders (including each new
Lender), (iv) the outstanding Revolving Credit Loans and Commitment Percentages
of Swingline Loans and L/C Obligations will be reallocated on the effective date
of such increase among the Lenders (including each new Lender) in accordance
with their revised Commitment Percentages (and the Lenders (including each new
Lender) agree to make all payments and adjustments necessary to effect the
reallocation and the Borrower shall pay any and all costs required pursuant to
Section 4.9 in connection with such reallocation as if such reallocation were a
repayment) and (v) at the request of each new Lender, the Borrower will deliver
a Revolving Credit Note to each new Lender; and

 

(g)                                 Each increase to the Revolving Credit
Commitment pursuant to this Section 2.7 (i) shall rank pari passu in right of
payment and security with the Revolving Credit Facility and (ii) will have the
same pricing and tenor as the Revolving Credit Facility.

 

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ARTICLE III

 

LETTER OF CREDIT FACILITY

 

SECTION 3.1                          L/C Commitment.  Subject to the terms and
conditions hereof, the Issuing Lender, in reliance on the agreements of the
other Lenders set forth in Section 3.4(a), agrees to issue standby and
commercial Letters of Credit for the account of the Borrower on any Business Day
from the Closing Date through but not including the Revolving Credit Maturity
Date in such form as may be approved from time to time by the Issuing Lender;
provided, that the Issuing Lender shall have no obligation to issue any Letter
of Credit if, after giving effect to such issuance, (a) the L/C Obligations
would exceed the L/C Commitment or (b) the aggregate principal amount of
outstanding Revolving Credit Loans, plus the aggregate principal amount of
outstanding Swingline Loans, plus the aggregate amount of L/C Obligations would
exceed the Revolving Credit Commitment.  Each Letter of Credit shall (i) be
denominated in Dollars in a minimum amount of $100,000, (ii) be a standby or
commercial letter of credit issued to support obligations of the Credit Parties
and their Subsidiaries, contingent or otherwise, incurred in the ordinary course
of business, (iii) expire on a date no later than the earlier of (A) five (5)
Business Days prior to the Revolving Credit Maturity Date and (B) one year after
its date of issuance and (iv) be subject to the Uniform Customs and/or ISP98, as
set forth in the Letter of Credit Application or as determined by the Issuing
Lender and, to the extent not inconsistent therewith, the laws of the State of
New York.  The Issuing Lender shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause the
Issuing Lender or any L/C Participant to exceed any limits imposed by, any
Applicable Law.  References herein to “issue” and derivations thereof with
respect to Letters of Credit shall also include extensions or modifications of
any existing Letters of Credit, unless the context otherwise requires.

 

SECTION 3.2                          Procedure for Issuance of Letters of
Credit.  The Borrower may from time to time request that the Issuing Lender
issue a Letter of Credit by delivering to the Issuing Lender at the
Administrative Agent’s Office a Letter of Credit Application therefor, completed
to the satisfaction of the Issuing Lender, and such other certificates,
documents and other papers and information as the Issuing Lender may request. 
Upon receipt of any Letter of Credit Application, the Issuing Lender shall
process such Letter of Credit Application and the certificates, documents and
other papers and information delivered to it in connection therewith in
accordance with its customary procedures and shall, subject to Section 3.1 and
Article V, promptly issue the Letter of Credit requested thereby (but in no
event shall the Issuing Lender be required to issue any Letter of Credit earlier
than three (3) Business Days after its receipt of the Letter of Credit
Application therefor and all such other certificates, documents and other papers
and information relating thereto) by issuing the original of such Letter of
Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing
Lender and the Borrower.  The Issuing Lender shall promptly furnish to the
Borrower a copy of such Letter of Credit and promptly notify each Lender of the
issuance and upon request by any Lender, furnish to such Lender a copy of such
Letter of Credit and the amount of such Lender’s participation therein.

 

SECTION 3.3                          Commissions and Other Charges.

(a)                                  Letter of Credit Commissions.  The Borrower
shall pay to the Administrative Agent, for the account of the Issuing Lender and
the L/C Participants, a letter of credit

 

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commission with respect to each Letter of Credit in an amount equal to the face
amount of such Letter of Credit multiplied by the Applicable Margin with respect
to Revolving Credit Loans that are LIBOR Rate Loans (determined on a per annum
basis).  Such commission shall be payable quarterly in arrears on the last
Business Day of each calendar quarter, on the Revolving Credit Maturity Date and
thereafter on demand of the Administrative Agent.  The Administrative Agent
shall, promptly following its receipt thereof, distribute to the Issuing Lender
and the L/C Participants all commissions received pursuant to this Section in
accordance with their respective Revolving Credit Commitment Percentages.

 

(b)                                 Issuance Fee.  In addition to the foregoing
commission, the Borrower shall pay to the Administrative Agent, for the account
of the Issuing Lender, an issuance fee with respect to each Letter of Credit in
an amount equal to the face amount of such Letter of Credit multiplied by
one-eighth of one percent (0.125%) per annum.  Such issuance fee shall be
payable quarterly in arrears on the last Business Day of each calendar quarter
commencing with the first such date to occur after the issuance of such Letter
of Credit, on the Revolving Credit Maturity Date and thereafter on demand of the
Issuing Lender (through the Administrative Agent).

 

(c)                                  Other Costs.  In addition to the foregoing
fees and commissions, the Borrower shall pay or reimburse the Issuing Lender for
such normal and customary costs and expenses as are incurred or charged by the
Issuing Lender in issuing, effecting payment under, amending or otherwise
administering any Letter of Credit.

 

SECTION 3.4                          L/C Participations.

 

(a)                                  The Issuing Lender irrevocably agrees to
grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Lender, on the terms and conditions hereinafter stated, for such L/C
Participant’s own account and risk an undivided interest equal to such L/C
Participant’s Revolving Credit Commitment Percentage in the Issuing Lender’s
obligations and rights under and in respect of each Letter of Credit issued
hereunder and the amount of each draft paid by the Issuing Lender thereunder. 
Each L/C Participant unconditionally and irrevocably agrees with the Issuing
Lender that, if a draft is paid under any Letter of Credit for which the Issuing
Lender is not reimbursed in full by the Borrower through a Revolving Credit Loan
or otherwise in accordance with the terms of this Agreement, such L/C
Participant shall pay to the Issuing Lender upon demand at the Issuing Lender’s
address for notices specified herein an amount equal to such L/C Participant’s
Revolving Credit Commitment Percentage of the amount of such draft, or any part
thereof, which is not so reimbursed.

 

(b)                                 Upon becoming aware of any amount required
to be paid by any L/C Participant to the Issuing Lender pursuant to
Section 3.4(a) in respect of any unreimbursed portion of any payment made by the
Issuing Lender under any Letter of Credit, the Issuing Lender shall notify each
L/C Participant of the amount and due date of such required payment and such L/C
Participant shall pay to the Issuing Lender the amount specified on the
applicable due date.  If any such amount is paid to the Issuing Lender after the
date such payment is due, such L/C Participant shall pay to the Issuing Lender
on demand, in addition to such amount, the product of

 

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(i) such amount, times (ii) the daily average Federal Funds Rate as determined
by the Administrative Agent during the period from and including the date such
payment is due to the date on which such payment is immediately available to the
Issuing Lender, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360.  A
certificate of the Issuing Lender with respect to any amounts owing under this
Section shall be conclusive in the absence of manifest error.  With respect to
payment to the Issuing Lender of the unreimbursed amounts described in this
Section, if the L/C Participants receive notice that any such payment is due (A)
prior to 1:00 p.m. on any Business Day, such payment shall be due that Business
Day, and (B) after 1:00 p.m. on any Business Day, such payment shall be due on
the following Business Day.

 

(c)                                  Whenever, at any time after the Issuing
Lender has made payment under any Letter of Credit and has received from any L/C
Participant its Revolving Credit Commitment Percentage of such payment in
accordance with this Section, the Issuing Lender receives any payment related to
such Letter of Credit (whether directly from the Borrower or otherwise), or any
payment of interest on account thereof, the Issuing Lender will distribute to
such L/C Participant its pro rata share thereof; provided, that in the event
that any such payment received by the Issuing Lender shall be required to be
returned by the Issuing Lender, such L/C Participant shall return to the Issuing
Lender the portion thereof previously distributed by the Issuing Lender to it.

 

SECTION 3.5                          Reimbursement Obligation of the Borrower. 
In the event of any drawing under any Letter of Credit, the Borrower agrees to
reimburse (either with the proceeds of a Revolving Credit Loan as provided for
in this Section or with funds from other sources), in same day funds, the
Issuing Lender on each date on which the Issuing Lender notifies the Borrower of
the date and amount of a draft paid under any Letter of Credit for the amount of
(a) such draft so paid and (b) any amounts referred to in Section 3.3(c)
incurred by the Issuing Lender in connection with such payment.  Unless the
Borrower shall immediately notify the Issuing Lender that the Borrower intends
to reimburse the Issuing Lender for such drawing from other sources or funds,
the Borrower shall be deemed to have timely given a Notice of Borrowing to the
Administrative Agent requesting that the Lenders make a Revolving Credit Loan
bearing interest at the Base Rate on such date in the amount of (a) such draft
so paid and (b) any amounts referred to in Section 3.3(c) incurred by the
Issuing Lender in connection with such payment, and the Lenders shall make a
Revolving Credit Loan bearing interest at the Base Rate in such amount, the
proceeds of which shall be applied to reimburse the Issuing Lender for the
amount of the related drawing and costs and expenses. Each Lender acknowledges
and agrees that its obligation to fund a Revolving Credit Loan in accordance
with this Section to reimburse the Issuing Lender for any draft paid under a
Letter of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including non-satisfaction of the conditions set forth
in Section 2.3(a) or Article V.  If the Borrower has elected to pay the amount
of such drawing with funds from other sources and shall fail to reimburse the
Issuing Lender as provided above, the unreimbursed amount of such drawing shall
bear interest at the rate which would be payable on any outstanding Base Rate
Loans which were then overdue from the date such amounts become payable (whether
at stated maturity, by acceleration or otherwise) until payment in full.

 

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SECTION 3.6                          Obligations Absolute.  The Borrower’s
obligations under this Article III (including the Reimbursement Obligation)
shall be absolute and unconditional under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Lender or any beneficiary of a
Letter of Credit or any other Person.  The Borrower also agrees that the Issuing
Lender and the L/C Participants shall not be responsible for, and the Borrower’s
Reimbursement Obligation under Section 3.5 shall not be affected by, among other
things, the validity or genuineness of documents or of any endorsements thereon,
even though such documents shall in fact prove to be invalid, fraudulent or
forged, or any dispute between or among the Borrower and any beneficiary of any
Letter of Credit or any other party to which such Letter of Credit may be
transferred or any claims whatsoever of the Borrower against any beneficiary of
such Letter of Credit or any such transferee.  The Issuing Lender shall not be
liable for any error, omission, interruption or delay in transmission, dispatch
or delivery of any message or advice, however transmitted, in connection with
any Letter of Credit, except for errors or omissions caused by the Issuing
Lender’s gross negligence or willful misconduct.  The Borrower agrees that any
action taken or omitted by the Issuing Lender under or in connection with any
Letter of Credit or the related drafts or documents, if done in the absence of
gross negligence or willful misconduct, shall be binding on the Borrower and
shall not result in any liability of the Issuing Lender or any L/C Participant
to the Borrower.  The responsibility of the Issuing Lender to the Borrower in
connection with any draft presented for payment under any Letter of Credit
shall, in addition to any payment obligation expressly provided for in such
Letter of Credit, be limited to determining that the documents (including each
draft) delivered under such Letter of Credit in connection with such presentment
are in conformity with such Letter of Credit.

 

SECTION 3.7                          Effect of Letter of Credit Application.  To
the extent that any provision of any Letter of Credit Application related to any
Letter of Credit is inconsistent with the provisions of this Article III, the
provisions of this Article III shall apply.

 

ARTICLE IV

 

GENERAL LOAN PROVISIONS

 

SECTION 4.1                          Interest.

 

(a)                                  Interest Rate Options.  Subject to the
provisions of this Section, at the election of the Borrower, (i) Revolving
Credit Loans shall bear interest at (A) the Base Rate plus the Applicable Margin
or (B) the LIBOR Rate plus the Applicable Margin (provided that the LIBOR Rate
shall not be available until three (3) Business Days after the Closing Date) and
(ii) any Swingline Loan shall bear interest at the Base Rate plus the Applicable
Margin.  The Borrower shall select the rate of interest and Interest Period, if
any, applicable to any Loan at the time a Notice of Borrowing is given or at the
time a Notice of Conversion/Continuation is given pursuant to Section 4.2.  Any
Loan or any portion thereof as to which the Borrower has not duly specified an
interest rate as provided herein shall be deemed a Base Rate Loan.

 

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(b)                                 Interest Periods.  In connection with each
LIBOR Rate Loan, the Borrower, by giving notice at the times described in
Section 2.3 or Section 4.2, as applicable, shall elect an interest period (each,
an “Interest Period”) to be applicable to such Loan, which Interest Period shall
be a period of one (1), two (2), three (3), or six (6) months; provided that:

 

(i)                                                        the Interest Period
shall commence on the date of advance of or conversion to any LIBOR Rate Loan
and, in the case of immediately successive Interest Periods, each successive
Interest Period shall commence on the date on which the immediately preceding
Interest Period expires;

 

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

 

(iii)                                                  any Interest Period with
respect to a LIBOR Rate Loan 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 relevant calendar month at the end of such Interest Period;

 

(iv)                                                 no Interest Period shall
extend beyond the Revolving Credit Maturity Date; and

 

(v)                                                    there shall be no more
than ten (10) Interest Periods in effect at any time.

 

(c)                                  Default Rate.  (i) Automatically upon the
occurrence and during the continuance of an Event of Default under
Section 11.1(a), Section 11.1(b), Section 11.1(j) or Section 11.1(k) and (ii)
subject to Section 11.3, at the election of the Required Lenders upon the
occurrence and during the continuance of any other Event of Default, (A) the
Borrower shall no longer have the option to request LIBOR Rate Loans, Swingline
Loans or Letters of Credit, (B) all outstanding LIBOR Rate Loans shall bear
interest at a rate per annum of two percent (2%) in excess of the rate then
applicable to LIBOR Rate Loans until the end of the applicable Interest Period
and thereafter at a rate equal to two percent (2%) in excess of the rate then
applicable to Base Rate Loans, and (C) all outstanding Base Rate Loans and other
Obligations arising hereunder or under any other Loan Document shall bear
interest at a rate per annum equal to two percent (2%) in excess of the rate
then applicable to Base Rate Loans or such other Obligations arising hereunder
or under any other Loan Document.  Interest shall continue to accrue on the
Obligations after the filing by or against the Borrower of any petition seeking
any relief in bankruptcy or under any act or law pertaining to insolvency or
debtor relief, whether state, federal or foreign.

 

(d)                                 Interest Payment and Computation.  Interest
on each Base Rate Loan shall be due and payable in arrears on the last Business
Day of each calendar quarter commencing March 31, 2005; and interest on each
LIBOR Rate Loan shall be due and payable on the last day of each Interest Period
applicable thereto, and if such Interest Period extends over three (3) months,
at

 

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the end of each three (3) month interval during such Interest Period.  Interest
on LIBOR Rate Loans and all fees payable hereunder shall be computed on the
basis of a 360-day year and assessed for the actual number of days elapsed and
interest on Base Rate Loans shall be computed on the basis of a 365/66-day year
and assessed for the actual number of days elapsed.

 

(e)                                  Maximum Rate.  In no contingency or event
whatsoever shall the aggregate of all amounts deemed interest under this
Agreement charged or collected pursuant to the terms of this Agreement exceed
the highest rate permissible under any Applicable Law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto.  In the
event that such a court determines that the Lenders have charged or received
interest hereunder in excess of the highest applicable rate, the rate in effect
hereunder shall automatically be reduced to the maximum rate permitted by
Applicable Law and the Lenders shall at the Administrative Agent’s option (i)
promptly refund to the Borrower any interest received by the Lenders in excess
of the maximum lawful rate or (ii) apply such excess to the principal balance of
the Obligations on a pro rata basis.  It is the intent hereof that the Borrower
not pay or contract to pay, and that neither the Administrative Agent nor any
Lender receive or contract to receive, directly or indirectly in any manner
whatsoever, interest in excess of that which may be paid by the Borrower under
Applicable Law.

 

SECTION 4.2                          Notice and Manner of Conversion or
Continuation of Loans.  Provided that no Event of Default has occurred and is
then continuing, the Borrower shall have the option to (a) convert at any time
following the third Business Day after the Closing Date all or any portion of
any outstanding Base Rate Loans (other than Swingline Loans) in a principal
amount equal to $3,000,000 or any whole multiple of $500,000 in excess thereof
into one or more LIBOR Rate Loans and (b) upon the expiration of any Interest
Period, (i) convert all or any part of its outstanding LIBOR Rate Loans in a
principal amount equal to $1,000,000 or a whole multiple of $500,000 in excess
thereof into Base Rate Loans (other than Swingline Loans) or (ii) continue such
LIBOR Rate Loans as LIBOR Rate Loans.  Whenever the Borrower desires to convert
or continue Loans as provided above, the Borrower shall give the Administrative
Agent irrevocable prior written notice in the form attached as Exhibit E (a
“Notice of Conversion/Continuation”) not later than 1:00 p.m. three (3) Business
Days before the day on which a proposed conversion or continuation of such Loan
is to be effective specifying (A) the Loans to be converted or continued, and,
in the case of any LIBOR Rate Loan to be converted or continued, the last day of
the Interest Period therefor, (B) the effective date of such conversion or
continuation (which shall be a Business Day), (C) the principal amount of such
Loans to be converted or continued, and (D) the Interest Period to be applicable
to such converted or continued LIBOR Rate Loan.  The Administrative Agent shall
promptly notify the Lenders of such Notice of Conversion/Continuation.

 

SECTION 4.3                          Fees.

 

(a)                                  Commitment Fee.  Commencing on the Closing
Date, the Borrower shall pay to the Administrative Agent, for the account of the
Lenders, a non-refundable commitment fee at a rate per annum based upon the
table set forth in the definition of Applicable Margin (the “Commitment Fee
Rate”) on the average daily unused portion of the Revolving Credit Commitment;
provided, that the amount of outstanding Swingline Loans shall not be considered

 

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usage of the Revolving Credit Commitment for the purpose of calculating such
commitment fee except when calculating the commitment fee of the Swingline
Lender.  The commitment fee shall be payable in arrears on the last Business Day
of each calendar quarter during the term of this Agreement commencing March,
2005, and on the Revolving Credit Maturity Date.  Such commitment fee shall be
distributed by the Administrative Agent to the Lenders pro rata in accordance
with the Lenders’ respective Revolving Credit Commitment Percentages.

 

(b)                                 Administrative Agent’s and Other Fees.  In
order to compensate the Administrative Agent for structuring and syndicating the
Loans and for its obligations hereunder, the Borrower agrees to pay to the
Administrative Agent and its Affiliates, for their own account, the fees set
forth in the Fee Letter.

 

SECTION 4.4                          Manner of Payment.  Each payment by the
Borrower on account of the principal of or interest on the Loans or of any fee,
commission or other amounts (including the Reimbursement Obligation) payable to
the Lenders under this Agreement shall be made not later than 1:00 p.m. on the
date specified for payment under this Agreement to the Administrative Agent at
the Administrative Agent’s Office for the account of the Lenders (other than as
set forth below) pro rata in accordance with their respective Revolving Credit
Commitment Percentages (except as specified below), in Dollars, in immediately
available funds and shall be made without any set-off, counterclaim or deduction
whatsoever.  Any payment received after such time but before 2:00 p.m. on such
day shall be deemed a payment on such date for the purposes of Section 11.1, but
for all other purposes shall be deemed to have been made on the next succeeding
Business Day.  Any payment received after 2:00 p.m. shall be deemed to have been
made on the next succeeding Business Day for all purposes.  Upon receipt by the
Administrative Agent of each such payment, the Administrative Agent shall
distribute to each Lender at its address for notices set forth herein its pro
rata share of such payment in accordance with such Lender’s Revolving Credit
Commitment Percentage (except as specified below) and shall wire advice of the
amount of such credit to each Lender.  Each payment to the Administrative Agent
of the Issuing Lender’s fees or L/C Participants’ commissions shall be made in
like manner, but for the account of the Issuing Lender or the L/C Participants,
as the case may be.  Each payment to the Administrative Agent of Administrative
Agent’s fees or expenses shall be made for the account of the Administrative
Agent and any amount payable to any Lender under Section 4.9, Section 4.10,
Section 4.11 or Section 13.3 shall be paid to the Administrative Agent for the
account of the applicable Lender.  Subject to Section 4.1(b)(ii) if any payment
under this Agreement shall be specified to be made upon a day which is not a
Business Day, it shall be made on the next succeeding day which is a Business
Day and such extension of time shall in such case be included in computing any
interest if payable along with such payment.

 

SECTION 4.5                          Evidence of Indebtedness.

 

(a)                                  Extensions of Credit.  The Extensions of
Credit made by each Lender shall be evidenced by one or more accounts or records
maintained by such Lender and by the Administrative Agent in the ordinary course
of business.  The accounts or records maintained by the Administrative Agent and
each Lender shall be conclusive absent manifest error of the amount of the
Extensions of Credit made by the Lenders to the Borrower and the interest and

 

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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 Administrative Agent in respect of such matters, the
accounts and records of the Administrative Agent shall control in the absence of
manifest error.  Upon the request of any Lender made through the Administrative
Agent, the Borrower shall execute and deliver to such Lender (through the
Administrative Agent) a Revolving Credit Note and/or Swingline Note, as
applicable, which shall evidence such Lender’s Revolving Credit Loans in
addition to such accounts or records.  Each Lender may attach schedules to its
Notes and endorse thereon the date, amount and maturity of its Loans and
payments with respect thereto.

 

(b)                                 Participations.  In addition to the accounts
and records referred to in subsection (a), each Lender and the Administrative
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 Swingline Loans.  In the event of any conflict between the
accounts and records maintained by the Administrative Agent and the accounts and
records of any Lender in respect of such matters, the accounts and records of
the Administrative Agent shall control in the absence of manifest error.

 

SECTION 4.6                          Adjustments.  If any Lender shall, by
exercising any right of setoff or counterclaim or otherwise, obtain payment in
respect of any principal of or interest on any of its Loans or other obligations
hereunder resulting in such Lender’s receiving payment of a proportion of the
aggregate amount of its Loans and accrued interest thereon or other such
obligations (other than pursuant to Section 4.9, Section 4.10, Section 4.11 or
Section 13.3 hereof) greater than its pro rata share thereof as provided herein,
then the Lender receiving such greater proportion shall (a) notify the
Administrative Agent of such fact, and (b) purchase (for cash at face value)
participations in the Loans and such other obligations of the other Lenders, or
make such other adjustments as shall be equitable, so that the benefit of all
such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans
and other amounts owing them; provided that

 

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

 

(ii)                                  the provisions of this paragraph shall not
be construed to apply to (x) any payment made by the Borrower 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 Loans or participations in Swingline Loans and Letters of Credit to
any assignee or Participant, other than to the Borrower or any Subsidiary
thereof (as to which the provisions of this paragraph shall apply).

 

Each Credit 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 each
Credit Party rights of setoff and counterclaim with

 

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respect to such participation as fully as if such Lender were a direct creditor
of each Credit Party in the amount of such participation.

 

SECTION 4.7                          Nature of Obligations of Lenders Regarding
Extensions of Credit; Assumption by the Administrative Agent.  The obligations
of the Lenders under this Agreement to make the Loans and issue or participate
in Letters of Credit are several and are not joint or joint and several.  Unless
the Administrative Agent shall have received notice from a Lender prior to a
proposed borrowing date that such Lender will not make available to the
Administrative Agent such Lender’s ratable portion of the amount to be borrowed
on such date (which notice shall not release such Lender of its obligations
hereunder), the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the proposed borrowing date in
accordance with Sections 2.3(b), and the Administrative Agent may, in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount.  If such amount is made available to the Administrative
Agent on a date after such borrowing date, such Lender shall pay to the
Administrative Agent on demand an amount, until paid, equal to the product of
(a) the amount not made available by such Lender in accordance with the terms
hereof, times (b) the daily average Federal Funds Rate during such period as
determined by the Administrative Agent, times (c) a fraction the numerator of
which is the number of days that elapse from and including such borrowing date
to the date on which such amount not made available by such Lender in accordance
with the terms hereof shall have become immediately available to the
Administrative Agent and the denominator of which is 360.  A certificate of the
Administrative Agent with respect to any amounts owing under this Section shall
be conclusive, absent manifest error.  If such Lender’s Revolving Credit
Commitment Percentage of such borrowing is not made available to the
Administrative Agent by such Lender within three (3) Business Days after such
borrowing date, the Administrative Agent shall be entitled to recover such
amount made available by the Administrative Agent with interest thereon at the
rate per annum applicable to Base Rate Loans hereunder, on demand, from the
Borrower.  The failure of any Lender to make available its Revolving Credit
Commitment Percentage of any Loan requested by the Borrower shall not relieve it
or any other Lender of its obligation, if any, hereunder to make its Revolving
Credit Commitment Percentage of such Loan available on the borrowing date, but
no Lender shall be responsible for the failure of any other Lender to make its
Revolving Credit Commitment Percentage of such Loan available on the borrowing
date.  Notwithstanding anything set forth herein to the contrary and without
limiting any rights which the Borrower may have against such Lender as a result
of such failure, any Lender that fails to make available its Revolving Credit
Commitment Percentage of any Loan shall not (a) have any voting or consent
rights under or with respect to any Loan Document or (b) constitute a “Lender”
(or be included in the calculation of Required Lenders hereunder) for any voting
or consent rights under or with respect to any Loan Document.

 

SECTION 4.8                          Changed Circumstances.

 

(a)                                  Circumstances Affecting LIBOR Rate
Availability.  If with respect to any Interest Period the Administrative Agent
or any Lender (after consultation with the Administrative Agent) shall determine
that, by reason of circumstances affecting the foreign exchange and interbank
markets generally, deposits in eurodollars, in the applicable amounts are not
being quoted via the Telerate Page 3750 or offered to the Administrative Agent
or such Lender for

 

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such Interest Period, then the Administrative Agent shall forthwith give notice
thereof to the Borrower.  Thereafter, until the Administrative Agent notifies
the Borrower that such circumstances no longer exist, the obligation of the
Lenders to make LIBOR Rate Loans and the right of the Borrower to convert any
Loan to or continue any Loan as a LIBOR Rate Loan shall be suspended, and the
Borrower shall repay in full (or cause to be repaid in full) the then
outstanding principal amount of each such LIBOR Rate Loan together with accrued
interest thereon, on the last day of the then current Interest Period applicable
to such LIBOR Rate Loan or convert the then outstanding principal amount of each
such LIBOR Rate Loan to a Base Rate Loan as of the last day of such Interest
Period.

 

(b)                                 Laws Affecting LIBOR Rate Availability.  If,
after the date hereof, the introduction of, or any change in, any Applicable Law
or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any of the Lenders
(or any of their respective Lending Offices) with any request or directive
(whether or not having the force of law) of any such Governmental Authority,
central bank or comparable agency, shall make it unlawful or impossible for any
of the Lenders (or any of their respective Lending Offices) to honor its
obligations hereunder to make or maintain any LIBOR Rate Loan, such Lender shall
promptly give notice thereof to the Administrative Agent and the Administrative
Agent shall promptly give notice to the Borrower and the other Lenders. 
Thereafter, until the Administrative Agent notifies the Borrower that such
circumstances no longer exist, (i) the obligations of the Lenders to make LIBOR
Rate Loans and the right of the Borrower to convert any Loan or continue any
Loan as a LIBOR Rate Loan shall be suspended and thereafter the Borrower may
select only Base Rate Loans hereunder, and (ii) if any of the Lenders may not
lawfully continue to maintain a LIBOR Rate Loan to the end of the then current
Interest Period applicable thereto as a LIBOR Rate Loan, the applicable LIBOR
Rate Loan shall immediately be converted to a Base Rate Loan for the remainder
of such Interest Period.

 

SECTION 4.9                          Indemnity.  The Borrower hereby indemnifies
each of the Lenders against any loss or expense (other than lost profits) which
may arise or be attributable to each Lender’s obtaining, liquidating or
employing deposits or other funds acquired to effect, fund or maintain any Loan
(a) as a consequence of any failure by the Borrower to make any payment when due
of any amount due hereunder in connection with a LIBOR Rate Loan, (b) due to any
failure of the Borrower to borrow, continue or convert on a date specified
therefor in a Notice of Borrowing or Notice of Conversion/Continuation, (c) due
to any payment, prepayment or conversion of any LIBOR Rate Loan on a date other
than the last day of the Interest Period therefor or (d) due to an assignment
required pursuant to Section 4.12(b).  The amount of such loss or expense shall
be determined, in the applicable Lender’s sole discretion, based upon the
assumption that such Lender funded its Revolving Credit Commitment Percentage of
the LIBOR Rate Loans in the London interbank market and using any reasonable
attribution or averaging methods which such Lender deems appropriate and
practical.  A certificate of such Lender setting forth the basis for determining
such amount or amounts necessary to compensate such Lender shall be forwarded to
the Borrower through the Administrative Agent and shall be conclusively presumed
to be correct save for manifest error.

 

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SECTION 4.10                    Increased Costs.

 

(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 advances,
loans or other credit extended or participated in by, any Lender (except any
reserve requirement reflected in the LIBOR Rate) or the Issuing Lender;

 

(ii)                                  subject any Lender or the Issuing Lender
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 LIBOR Rate Loan made by
it, or change the basis of taxation of payments to such Lender or the Issuing
Lender in respect thereof (except for Indemnified Taxes or Other Taxes covered
by Section 4.11 and the imposition of, or any change in the rate of any Excluded
Tax payable by such Lender or the Issuing Lender); or

 

(iii)                               impose on any Lender or the Issuing Lender
or the London interbank market any other condition, cost or expense affecting
this Agreement or LIBOR Rate Loans made by such Lender or any Letter of Credit
or participation therein;

 

and the result of any of the foregoing shall be to increase the cost to such
Lender of making, converting into or maintaining any LIBOR Rate Loan (or of
maintaining its obligation to make any such Loan), or to increase the cost to
such Lender or the Issuing Lender of participating in, issuing or maintaining
any Letter of Credit (or 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 Issuing Lender hereunder (whether of principal,
interest or any other amount) then, upon request of such Lender or the Issuing
Lender, the Borrower shall promptly pay to any such Lender or the Issuing
Lender, as the case may be, such additional amount or amounts as will compensate
such Lender or the Issuing Lender, as the case may be, for such additional costs
incurred or reduction suffered.

 

(b)                                 Capital Requirements.  If any Lender or the
Issuing Lender determines that any Change in Law affecting such Lender or the
Issuing Lender or any Lending Office of such Lender or such Lender’s or the
Issuing Lender’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
Issuing Lender’s capital or on the capital of such Lender’s or the Issuing
Lender’s holding company, if any, as a consequence of this Agreement, 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 Issuing
Lender, to a level below that which such Lender or the Issuing Lender or such
Lender’s or the Issuing Lender’s holding company could have achieved but for
such Change in Law (taking into consideration such Lender’s or the Issuing
Lender’s policies and the policies of such Lender’s or the Issuing Lender’s
holding company with respect to capital adequacy), then from time to time the
Borrower shall promptly pay to such Lender or the Issuing Lender, as the case
may be, such additional amount or amounts as will compensate such Lender or the
Issuing Lender or such Lender’s or the Issuing Lender’s holding company for any
such reduction suffered.

 

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(c)                                  Certificates for Reimbursement.  A
certificate of a Lender or the Issuing Lender setting forth the amount or
amounts necessary to compensate such Lender or the Issuing Lender or its holding
company, as the case may be, as specified in paragraph (a) or (b) of this
Section and delivered to the Borrower shall be conclusive absent manifest
error.  The Borrower shall pay such Lender or the Issuing Lender, as the case
may be, the amount shown as due on any such certificate within ten (10) days
after receipt thereof.

 

(d)                                 Delay in Requests.  Failure or delay on the
part of any Lender or the Issuing Lender to demand compensation pursuant to this
Section shall not constitute a waiver of such Lender’s or the Issuing Lender’s
right to demand such compensation; provided that the Borrower shall not be
required to compensate a Lender or the Issuing Lender pursuant to this
Section for any increased costs incurred or reductions suffered more than one
hundred eighty (180) days prior to the date that such Lender or the Issuing
Lender, as the case may be, notifies the Borrower of the Change in Law giving
rise to such increased costs or reductions and of such Lender’s or the Issuing
Lender’s intention to claim compensation therefor (except that, if the Change in
Law giving rise to such increased costs or reductions is retroactive, then the
one hundred eighty (180) day period referred to above shall be extended to
include the period of retroactive effect thereof).

 

SECTION 4.11                    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 Administrative Agent, Lender or Issuing Lender, as the case may be, receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower 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 paragraph (a) above, the Borrower shall
timely pay any Other Taxes to the relevant Governmental Authority in accordance
with applicable law.

 

(c)                                  Indemnification by the Borrower. The
Borrower shall indemnify the Administrative Agent, each Lender and the Issuing
Lender, within ten (10) Business Days after demand therefore (accompanied by
reasonable evidence thereof), 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
Administrative Agent, such Lender or the Issuing Lender, as the case may be, and
any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, 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 Issuing Lender (with a copy to the
Administrative Agent), or by

 

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the Administrative Agent on its own behalf or on behalf of a Lender or the
Issuing Lender, shall be presumed correct 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 Administrative Agent
the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative
Agent.

 

(e)                                  Status of Lenders. Any Foreign Lender 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 Administrative Agent), at the time or times prescribed by Applicable Law or
reasonably requested by the Borrower or the Administrative 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.  In addition, any Lender at the time or times prescribed by
Applicable Law or if reasonably requested by the Borrower or the Administrative
Agent, shall deliver such other documentation prescribed by Applicable Law or
reasonably requested by the Borrower or the Administrative Agent as will enable
the Borrower or the Administrative Agent to determine whether or not such Lender
is subject to backup withholding or information reporting requirements.  Without
limiting the generality of the foregoing, in the event that the Borrower is a
resident for tax purposes in the United States, any Foreign Lender shall deliver
to the Borrower and the Administrative Agent (in such number of copies as shall
be requested by the recipient) on or prior to the date on which such Foreign
Lender becomes a Lender under this Agreement (and from time to time thereafter
upon the request of the Borrower or the Administrative Agent, but only if such
Foreign Lender is legally entitled to do so), whichever of the following is
applicable:

 

(i)                                     duly completed copies of Internal
Revenue Service Form W-8BEN claiming the benefits of the portfolio interest
exemption pursuant to subsection (iii) below or 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, (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

 

(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.

 

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(f)                                    Treatment of Certain Refunds. If the
Administrative Agent, a Lender or the Issuing Lender determines, in its
reasonable discretion, 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 Administrative Agent, such Lender or
the Issuing Lender, as the case may be, and without 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 Administrative
Agent, such Lender or the Issuing Lender, agrees to repay the amount paid over
to the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent, such Lender or the
Issuing Lender in the event the Administrative Agent, such Lender or the Issuing
Lender is required to repay such refund to such Governmental Authority.  This
paragraph shall not be construed to require the Administrative Agent, any Lender
or the Issuing Lender to make available its tax returns (or any other
information relating to its taxes which it deems confidential) to the Borrower
or any other Person.

 

(g)                                 Survival.  Without prejudice to the survival
of any other agreement of the Borrower hereunder, the agreements and obligations
of the Borrower contained in this Section shall survive the payment in full of
the Obligations and the termination of the Commitments.

 

SECTION 4.12                    Mitigation Obligations; Replacement of Lenders.

 

(a)                                  Designation of a Different Lending Office.
If any Lender requests compensation under Section 4.10, or requires the Borrower
to pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 4.11, then such Lender shall use
reasonable efforts to designate a different Lending Office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 4.10 or Section 4.11, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

 

(b)                                 Replacement of Lenders.  If any Lender
requests compensation under Section 4.10, or if the Borrower is required to pay
any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 4.11, or if any Lender defaults in its
obligation to fund Loans hereunder, then the Borrower may, at its sole expense
and effort, upon notice to such Lender and the Administrative 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 13.11), 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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(i)                                     the Borrower shall have paid to the
Administrative Agent the assignment fee specified in Section 13.11(b)(iv),

 

(ii)                                  such Lender shall have received payment of
an amount equal to the outstanding principal of its Loans and participations in
Letters of Credit, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder and under the other Loan Documents (including any
amounts under Section 4.9) 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),

 

(iii)                               in the case of any such assignment resulting
from a claim for compensation under Section 4.10 or payments required to be made
pursuant to Section 4.11, such assignment will result in a reduction in such
compensation or payments thereafter, and

 

(iv)                              such assignment does not conflict with
Applicable Law.

 

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.

 

SECTION 4.13                    Security.  The Obligations of the Borrower shall
be secured as provided in the Security Documents.

 

ARTICLE V

 

CLOSING; CONDITIONS OF CLOSING AND BORROWING

 

SECTION 5.1                          Closing.  The closing shall take place at
the offices of Kennedy Covington Lobdell & Hickman, L.L.P. at 10:00 a.m. on
December 22, 2004, or on such other place, date and time as the parties hereto
shall mutually agree.

 

SECTION 5.2                          Conditions to Closing and Initial
Extensions of Credit.  The obligation of the Lenders to close this Agreement and
to make the initial Loan or issue or participate in the initial Letter of
Credit, if any, is subject to the satisfaction of each of the following
conditions:

 

(a)                                  Executed Loan Documents.  This Agreement, a
Revolving Credit Note in favor of each Lender requesting a Revolving Credit
Note, a Swingline Note in favor of the Swingline Lender (if requested thereby),
the Parental Entity Guaranty Agreement, the Subsidiary Guaranty Agreement, the
Security Documents, together with any other applicable Loan Documents, shall
have been duly authorized, executed and delivered to the Administrative Agent by
the parties thereto, shall be in full force and effect and no Default or Event
of Default shall exist hereunder or thereunder.

 

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(b)                                 Closing Certificates; Etc.  The
Administrative Agent shall have received each of the following in form and
substance reasonably satisfactory to the Administrative Agent:

 

(i)                                     Officer’s Certificate of the Borrower
and Parent.  A certificate from a Responsible Officer of each of the Borrower
and the Parent to the effect that all representations and warranties of the
Credit Parties contained in this Agreement and the other Loan Documents are
true, correct and complete; that none of the Credit Parties is in violation of
any of the covenants contained in this Agreement and the other Loan Documents;
that, after giving effect to the transactions contemplated by this Agreement, no
Default or Event of Default has occurred and is continuing; and that each of the
Credit Parties, as applicable, has satisfied each of the conditions set forth in
Section 5.2 and Section 5.3.

 

(ii)                                  Certificate of Responsible Officer of each
Credit Party.  A certificate of a Responsible Officer of each Credit Party
certifying as to the incumbency and genuineness of the signature of each officer
of such Credit Party executing Loan Documents to which it is a party and
certifying that attached thereto is a true, correct and complete copy of (A) the
articles or certificate of incorporation or formation of such Credit Party and
all amendments thereto, certified as of a recent date by the appropriate
Governmental Authority in its jurisdiction of incorporation or formation, (B)
the bylaws or other governing document of such Credit Party as in effect on the
Closing Date, (C) resolutions duly adopted by the board of directors or other
governing body of such Credit Party authorizing the transactions contemplated
hereunder and the execution, delivery and performance of this Agreement and the
other Loan Documents to which it is a party, and (D) each certificate required
to be delivered pursuant to Section 5.2(b)(iii).

 

(iii)                               Certificates of Good Standing.  Certificates
as of a recent date of the good standing or status of each Credit Party under
the laws of its jurisdiction of organization and, to the extent requested by the
Administrative Agent, each other jurisdiction where such Credit Party is
qualified to do business and, to the extent available, a certificate of the
relevant taxing authorities of such jurisdictions certifying that such Credit
Party has filed required tax returns and owes no delinquent taxes.

 

(iv)                              Opinions of Counsel.  Favorable opinions of
counsel to the Credit Parties addressed to the Administrative Agent and the
Lenders with respect to the Credit Parties, the Loan Documents and such other
matters as the Lenders shall request, each in form and substance satisfactory to
the Administrative Agent.

 

(v)                                 Tax Forms.  Copies of the United States
Internal Revenue Service forms required by Section 4.11(e).

 

(c)                                  Personal Property Collateral.

 

(i)                                     Filings and Recordings.  The
Administrative Agent shall have received all filings and recordations that are
necessary to perfect the security interests of the Administrative Agent, on
behalf of itself and the Lenders, in the Collateral shall have been received by
the Administrative Agent and the Administrative Agent shall have received
evidence

 

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and evidence reasonably satisfactory to the Administrative Agent that upon such
filings and recordations such security interests constitute valid and perfected
first priority Liens thereon.

 

(ii)                                  Pledged Collateral.  The Administrative
Agent shall have received original stock certificates or other certificates
evidencing the Capital Stock pledged pursuant to the Security Documents,
together with an undated stock power for each such certificate duly executed in
blank by the registered owner thereof.

 

(iii)                               Lien Search. The Administrative Agent shall
have received (A) the results of a Lien search (including a search as to
judgments, pending litigation and tax matters), in form and substance reasonably
satisfactory thereto, made against the Credit Parties under the Uniform
Commercial Code (or applicable judicial docket) as in effect in Delaware and
Texas, indicating among other things that its assets are free and clear of any
Lien except for Permitted Liens and (B) the results of a Lien search (but not
including a search as to judgments, pending litigation and tax matters), in form
and substance reasonably satisfactory to the Administrative Agent, made against
the Credit Parties under the Uniform Commercial Code as in effect in the states
listed on Schedule 5.2(c)(iii), indicating among other things that its assets
are free and clear of any Lien except for Permitted Liens.

 

(iv)                              Hazard and Liability Insurance.  The
Administrative Agent shall have received certificates of property hazard,
business interruption and liability insurance, evidence of payment of all
insurance premiums for the current policy year of each (naming the
Administrative Agent as loss payee on all certificates for property hazard
insurance as to inventory only and as additional insured on all certificates for
liability insurance), and, if requested by the Administrative Agent, copies
(certified by a Responsible Officer) of insurance policies otherwise in form and
substance reasonably satisfactory to the Administrative Agent.

 

(d)                                 Consents; Defaults.

 

(i)                                     Governmental and Third Party Approvals. 
The Credit Parties shall have received all material governmental, shareholder
and third party consents and approvals necessary (or any other material consents
as determined in the reasonable discretion of the Administrative Agent) in
connection with the transactions contemplated by this Agreement and the other
Loan Documents and the other transactions contemplated hereby and all applicable
waiting periods shall have expired without any action being taken by any Person
that could reasonably be expected to restrain, prevent or impose any material
adverse conditions on any of the Credit Parties or such other transactions or
that could seek or threaten any of the foregoing, and no law or regulation shall
be applicable which in the reasonable judgment of the Administrative Agent could
reasonably be expected to have such effect.

 

(ii)                                  No Injunction, Etc.  No action,
proceeding, investigation, regulation or legislation shall have been instituted,
threatened or proposed before any Governmental Authority to enjoin, restrain, or
prohibit, or to obtain substantial damages in respect of, or which is related to
or arises out of this Agreement or the other Loan Documents or the consummation
of the transactions contemplated hereby or thereby, or which, in the
Administrative Agent’s sole discretion, would make it inadvisable to consummate
the

 

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transactions contemplated by this Agreement or the other Loan Documents or the
consummation of the transactions contemplated hereby or thereby.

 

(e)                                  Financial Matters.

 

(i)                                     Financial Statements.  The
Administrative Agent shall have received the most recent audited Consolidated
financial statements of the Parent and its Subsidiaries, all in form and
substance satisfactory to the Administrative Agent and prepared in accordance
with GAAP.

 

(ii)                                  Financial Condition Certificate.  The
Parent and the Borrower shall have delivered to the Administrative Agent a
certificate, in form and substance satisfactory to the Administrative Agent, and
certified as accurate by a Responsible Officer of each entity, that (A) each
Credit Party and each Subsidiary thereof is Solvent, (B) the payables of each
Credit Party and each Subsidiary thereof are current and not past due (except to
the extent consistent with its customary past practice), (C) attached thereto
are calculations evidencing compliance with the covenants contained in
Article IX hereof (utilizing the financial statements of the Credit Parties and
their Subsidiaries for the quarter under September 30, 2004), (D) the financial
projections previously delivered to the Administrative Agent represent the good
faith estimates (utilizing reasonable assumptions) of the financial condition
and operations of the Credit Parties and their Subsidiaries and (E) attached
thereto is a calculation of the Applicable Margin.

 

(iii)                               Financial Projections.  The Administrative
Agent shall have received financial projections with respect to the Credit
Parties and their Subsidiaries for the five (5) years following the Closing Date
prepared by a Responsible Officer of the Parent, in form reasonably satisfactory
to the Administrative Agent, of balance sheets, income statements and cash flow
statements.

 

(iv)                              Payment at Closing; Fee Letters. The Borrower
shall have paid to the Administrative Agent and the Lenders the fees set forth
or referenced in Section 4.3 and any other accrued and unpaid fees or
commissions due hereunder (including legal fees and expenses) and to any other
Person such amount as may be due thereto in connection with the transactions
contemplated hereby, including all taxes, fees and other charges in connection
with the execution, delivery, recording, filing and registration of any of the
Loan Documents.

 

(f)                                    Miscellaneous.

 

(i)                                     Notice of Borrowing.  The Administrative
Agent shall have received a Notice of Borrowing from the Borrower in accordance
with Section 2.3(a) and a Notice of Account Designation specifying the account
or accounts to which the proceeds of any Loans made after the Closing Date are
to be disbursed.

 

(ii)                                  Due Diligence.  The Administrative Agent
shall have completed, to its satisfaction, all legal due diligence with respect
to the Credit Parties and their Subsidiaries in scope and determination
satisfactory to the Administrative Agent in its sole discretion.

 

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(iii)                               Existing Facility.  The Existing Facility
shall be repaid in full and terminated and all collateral security therefor
shall be released, and the Administrative Agent shall have received a pay-off
letter in form and substance satisfactory to it evidencing such repayment,
termination, reconveyance and release.

 

(iv)                              Other Documents.  All opinions, certificates
and other instruments and all proceedings in connection with the transactions
contemplated by this Agreement shall be satisfactory in form and substance to
the Administrative Agent.  The Administrative Agent shall have received copies
of all other documents, certificates and instruments reasonably requested
thereby, with respect to the transactions contemplated by this Agreement.

 

SECTION 5.3                          Conditions to All Extensions of Credit. 
The obligations of the Lenders to make any Extensions of Credit (including the
initial Extension of Credit), convert or continue any Loan pursuant to
Section 4.2, and/or the Issuing Lender to issue or extend any Letter of Credit
are subject to the satisfaction of the following conditions precedent on the
relevant borrowing, continuation, conversion, issuance or extension date:

 

(a)                                  Continuation of Representations and
Warranties.  The representations and warranties contained in Article VI shall be
true and correct on and as of such borrowing, continuation, conversion, issuance
or extension date with the same effect as if made on and as of such date, except
for any representation and warranty made as of an earlier date, which
representation and warranty shall remain true and correct as of such earlier
date.

 

(b)                                 No Existing Default.  No Default or Event of
Default shall have occurred and be continuing (i) on the borrowing, continuation
or conversion date with respect to such Loan or after giving effect to the Loans
to be made, continued or converted on such date or (ii) on the issuance or
extension date with respect to such Letter of Credit or after giving effect to
the issuance or extension of such Letter of Credit on such date.

 

(c)                                  Notices.  The Administrative Agent shall
have received a Notice of Borrowing or Notice of Conversion/Continuation, as
applicable, from the Borrower in accordance with Section 2.3(a) or Section 4.2,
as applicable.

 

ARTICLE VI

 

REPRESENTATIONS AND WARRANTIES OF THE BORROWER

 

SECTION 6.1                          Representations and Warranties.  To induce
the Administrative Agent and Lenders to enter into this Agreement and to induce
the Lenders to make Extensions of Credit, each of the Borrower, the Parent and
Holdings hereby represents and warrants to the Administrative Agent and Lenders
as of the Closing Date and as of each date that representations and warranties
are required to be brought down pursuant to this Agreement and the other Loan
Documents that:

 

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(a)                                  Organization; Power; Qualification.  Each
Credit Party and each Subsidiary thereof is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or
formation, has the power and authority to own its properties and to carry on its
business as now being conducted and is duly qualified and authorized to do
business in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification and authorization except
where the failure to be qualified or authorized, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect. 
The jurisdictions in which each Credit Party and each Subsidiary thereof are
organized and qualified to do business as of the Closing Date are described on
Schedule 6.1(a).

 

(b)                                 Ownership.  Each Subsidiary of the Parent as
of the Closing Date is listed on Schedule 6.1(b).  As of the Closing Date, the
capitalization of the Parent and each Subsidiary thereof consists of the number
of shares (or other ownership interests), authorized, issued and outstanding, of
such classes and series, with or without par value, described on
Schedule 6.1(b).  All outstanding shares (or other ownership interests) have
been duly authorized and validly issued and are fully paid and nonassessable,
with no personal liability attaching to the ownership thereof, and not subject
to any preemptive or similar rights.  The equityholders of the Subsidiaries of
the Parent and the number of shares (or other ownership interests) owned by each
as of the Closing Date are described on Schedule 6.1(b).  As of the Closing
Date, there are no outstanding stock purchase warrants, subscriptions, options,
securities, instruments or other rights of any type or nature whatsoever, which
are convertible into, exchangeable for or otherwise provide for or permit the
issuance of Capital Stock of any Credit Party or its Subsidiaries, except as
described on Schedule 6.1(b).

 

(c)                                  Authorization of Agreement, Loan Documents
and Borrowing. Each Credit Party and each Subsidiary thereof has the right,
power and authority and has taken all necessary corporate or other entity action
to authorize the execution, delivery and performance of this Agreement and each
of the other Loan Documents to which it is a party.  This Agreement and each of
the other Loan Documents have been duly executed and delivered by the duly
authorized officers of each Credit Party and each Subsidiary thereof that is a
party thereto, and each such document constitutes the legal, valid and binding
obligation of each Credit Party and each Subsidiary thereof that is a party
thereto, enforceable in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
state or federal debtor relief laws from time to time in effect which affect the
enforcement of creditors’ rights in general and the availability of equitable
remedies.

 

(d)                                 Compliance of Agreement, Loan Documents and
Borrowing with Laws, Etc.

 

(i) The execution, delivery and performance by each Credit Party and each
Subsidiary thereof of the Loan Documents to which each such Person is a party,
in accordance with their respective terms, the Extensions of Credit hereunder
and the transactions contemplated hereby do not and will not, by the passage of
time, the giving of notice or otherwise, (i) require any Governmental Approval
or violate any Applicable Law relating to any Credit Party or any Subsidiary
thereof, (ii) conflict with, result in a breach of or constitute a default under
the articles of incorporation, bylaws or other organizational documents of any
Credit Party or any Subsidiary thereof or any indenture, agreement or other
instrument to which such Person is a party or by

 

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which any of its properties may be bound or any Governmental Approval relating
to such Person, (iii) result in or require the creation or imposition of any
Lien upon or with respect to any property now owned or hereafter acquired by
such Person other than Liens arising under the Loan Documents or (iv) require
any consent or authorization of, filing with, or other act in respect of, an
arbitrator or Governmental Authority and no consent of any other Person is
required in connection with the execution, delivery, performance, validity or
enforceability of this Agreement.

 

(ii)                                  None of the Borrower, Subsidiary of a
Borrower, or any Affiliate of the Borrower or any Guarantor:  (i) is a person
named on the list of Specially Designated Nationals or Blocked Persons
maintained by the U.S. Department of the Treasury’s Office of Foreign Assets
Control (“OFAC”) available at
http://www.treas.gov/offices/eotffc/ofac/sdn/index.html. or as otherwise
published from time to time; or (ii) is (A) an agency of the government of a
country, (B) an organization controlled by a country, or (C) a person resident
in a country that is subject to a sanctions program identified on the list
maintained by OFAC and available at
http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html. or as otherwise
published from time to time, as such program may be applicable to such agency,
organization or person; or (iii) does business in such country or with any such
agency, organization or person, in violation of the economic sanctions of the
United States administered by OFAC.

 

(e)                                  Compliance with Law; Governmental
Approvals.  Each Credit Party and each Subsidiary thereof (i) has all
Governmental Approvals required by any Applicable Law for it to conduct its
business, each of which is in full force and effect, is final and not subject to
review on appeal and is not the subject of any pending or, to the best of its
knowledge, threatened attack by direct or collateral proceeding except where the
failure to so comply with the foregoing, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect (ii) is in
compliance with each Governmental Approval applicable to it and in compliance
with all other Applicable Laws relating to it or any of its respective
properties except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect and (iii) has
timely filed all material reports, documents and other materials required to be
filed by it under all Applicable Laws with any Governmental Authority and has
retained all material records and documents required to be retained by it under
Applicable Law, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

(f)                                    Tax Returns and Payments.  Each Credit
Party and each Subsidiary thereof has duly filed or caused to be filed all
federal, state, local and other tax returns required by Applicable Law to be
filed, and has paid, or made adequate provision for the payment of, all federal,
state, local and other taxes, assessments and governmental charges or levies
upon it and its property, income, profits and assets which are due and payable. 
Such returns accurately reflect in all material respects all liability for Taxes
of each Credit Party and each Subsidiary thereof for the periods covered
thereby.  There is no ongoing audit or examination or, to the knowledge of the
Parent, Holdings and the Borrower, other investigation by any Governmental
Authority of the tax liability of any Credit Party or any Subsidiary thereof in
each case, except as could not reasonably be expected to have a liability in
excess of $5,000,000.  No Governmental Authority has asserted any Lien or other
claim against any Credit Party or any Subsidiary thereof

 

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with respect to unpaid taxes which has not been discharged or resolved except to
the extent contemplated in Section 10.2(a).  The charges, accruals and reserves
on the books of each Credit Party and each Subsidiary thereof in respect of
federal, state, local and other Taxes for all Fiscal Years and portions thereof
since the organization of such Person are in the judgment of the Parent,
Holdings and the Borrower adequate, and the Parent, Holdings and the Borrower do
not anticipate any additional material Taxes or assessments for any of such
years.

 

(g)                                 Intellectual Property Matters.  Each Credit
Party and each Subsidiary thereof owns or possesses rights to use all
franchises, licenses, copyrights, copyright applications, patents, patent rights
or licenses, patent applications, trademarks, trademark rights, service mark,
service mark rights, trade names, trade name rights, copyrights and rights with
respect to the foregoing which are required to conduct its business, except as
could not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.  No event has occurred which permits, or after notice
or lapse of time or both would permit, the revocation or termination of any such
rights, and no Credit Party or any Subsidiary thereof is liable to any Person
for infringement under Applicable Law with respect to any such rights as a
result of its business operations except any such revocation, termination or
liability as could not reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect.

 

(h)                                 Environmental Matters.

 

(i)                                     The properties owned, leased or operated
by each Credit Party and each Subsidiary thereof now or in the past do not
contain, and to their knowledge have not previously contained, any Hazardous
Materials in amounts or concentrations which (A) constitute or constituted a
violation of applicable Environmental Laws or (B) could give rise to liability
under applicable Environmental Laws, except where such violation or liability
could not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect;

 

(ii)                                  Each Credit Party, each Subsidiary thereof
and such properties and all operations conducted in connection therewith are in
compliance, and have been in compliance, with all applicable Environmental Laws,
and there is no contamination at, under or about such properties or such
operations which could interfere with the continued operation of such properties
or impair the fair saleable value thereof, except for any such noncompliance or
contamination, that could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect;

 

(iii)                               No Credit Party or any Subsidiary thereof
has received any notice of violation, alleged violation, non-compliance,
liability or potential liability under any Environmental Laws or regarding or
relating to Hazardous Materials, nor does any Credit Party or any Subsidiary
thereof have knowledge or reason to believe that any such notice is being
threatened, except where such violation, alleged violation, noncompliance,
liability or potential liability which is the subject of such notice could not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect;

 

(iv)                              Hazardous Materials have not been transported
or disposed of to or from the properties owned, leased or operated by any Credit
Party or any Subsidiary thereof in

 

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violation of, or in a manner or to a location which could give rise to liability
under, Environmental Laws, nor have any Hazardous Materials been generated,
treated, stored or disposed of at, on or under any of such properties in
violation of, or in a manner that could give rise to liability under, any
applicable Environmental Laws, except where such violation or liability could
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect;

 

(v)                                 No judicial proceedings or governmental or
administrative action is pending, or, to the knowledge of the Parent, Holdings
and the Borrower, threatened, under any Environmental Law to which any Credit
Party or any Subsidiary thereof is or will be named as a potentially responsible
party with respect to such properties or operations conducted in connection
therewith, nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect to any Credit
Party, any Subsidiary thereof or such properties or such operations, except
where such proceeding, action, degree, order or other requirement could not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect; and

 

(vi)                              There has been no release, or to the knowledge
of the Parent, Holdings and the Borrower, threat of release, of Hazardous
Materials at or from properties owned, leased or operated by any Credit Party or
any Subsidiary thereof, now or in the past, in violation of or in amounts or in
a manner that could give rise to liability under Environmental Laws, except
where such violation or liability could not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect.

 

(i)                                     ERISA.

 

(i)                                     As of the Closing Date, no Credit Party
or any ERISA Affiliate maintains or contributes to, or has any obligation under,
any Pension Plans or Multiemployer Plans that are subject to Title IV of ERISA
other than those identified on Schedule 6.1(i);

 

(ii)                                  Each Credit Party and each ERISA Affiliate
is in material compliance with all applicable provisions of ERISA and the
regulations and published interpretations thereunder with respect to all
Employee Benefit Plans except for any required amendments for which the remedial
amendment period as defined in Section 401(b) of the Code has not yet expired
and except where a failure to so comply could not reasonably be expected to have
a Material Adverse Effect.  Each Employee Benefit Plan that is intended to be
qualified under Section 401(a) of the Code has been determined by the Internal
Revenue Service to be so qualified, and each trust related to such plan has been
determined to be exempt under Section 501(a) of the Code except for such plans
that have not yet received determination letters but for which the remedial
amendment period for submitting a determination letter has not yet expired.  No
liability has been incurred by any Credit Party or any ERISA Affiliate which
remains unsatisfied for any taxes or penalties with respect to any Employee
Benefit Plan or any Multiemployer Plan except for a liability that could not
reasonably be expected to have a Material Adverse Effect;

 

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(iii)                               As of the Closing Date, no Pension Plan has
been terminated, in a distress termination under Section 4041(c) of ERISA, no
accumulated funding deficiency (as defined in Section 412 of the Code) has been
incurred by a Pension Plan as of the close of the most recently completed fiscal
year of the Pension Plan (without regard to any waiver granted under Section 412
of the Code), no funding waiver from the Internal Revenue Service has been
received or requested with respect to any Pension Plan, nor has any Credit Party
or any ERISA Affiliate failed to make any contributions or to pay any amounts
due and owing as required by Section 412 of the Code, Section 302 of ERISA or
the terms of any Pension Plan prior to the due dates of such contributions under
Section 412 of the Code or Section 302 of ERISA, nor has there been any event
requiring any disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with
respect to any Pension Plan;

 

(iv)                              Except as could not reasonably be expected to
have a Material Adverse Effect, no Credit Party or any ERISA Affiliate has:  (A)
engaged in a nonexempt prohibited transaction described in Section 406 of the
ERISA or Section 4975 of the Code, (B) incurred any liability to the PBGC which
remains outstanding other than the payment of premiums and there are no premium
payments which are due and unpaid, (C) failed to make a required contribution or
payment to a Multiemployer Plan, or (D) failed to make a required installment or
other required payment under Section 412 of the Code;

 

(v)                                 No Termination Event has occurred or is
reasonably expected to occur; and

 

(vi)                              Except as could not reasonably be expected to
have a Material Adverse Effect, no proceeding, claim (other than a benefits
claim in the ordinary course of business), lawsuit and/or investigation is
existing or, to the best knowledge of the Parent, Holdings and the Borrower
after due inquiry, threatened concerning or involving any (A) employee welfare
benefit plan (as defined in Section 3(1) of ERISA) currently maintained or
contributed to by any Credit Party or any ERISA Affiliate, (B) Pension Plan or
(C) Multiemployer Plan.

 

(j)                                     Margin Stock.  No Credit Party or any
Subsidiary thereof is engaged principally or as one of its activities in the
business of extending credit for the purpose of “purchasing” or “carrying” any
“margin stock” (as each such term is defined or used, directly or indirectly, in
Regulation U of the Board of Governors of the Federal Reserve System).  No part
of the proceeds of any of the Loans or Letters of Credit will be used for
purchasing or carrying margin stock or for any purpose which violates, or which
would be inconsistent with, the provisions of Regulation T, U or X of such Board
of Governors.

 

(k)                                  Government Regulation.  No Credit Party or
any Subsidiary thereof is an “investment company” or a company “controlled” by
an “investment company” (as each such term is defined or used in the Investment
Company Act of 1940, as amended) and no Credit Party or any Subsidiary thereof
is, or after giving effect to any Extension of Credit will be, subject to
regulation under the Public Utility Holding Company Act of 1935 or the
Interstate Commerce Act, each as amended, or any other Applicable Law which
limits its ability to incur or consummate the transactions contemplated hereby.

 

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(l)                                     Material Contracts.  Schedule 6.1(l)
sets forth a complete and accurate list of all Material Contracts of the Credit
Parties and the Subsidiaries thereof in effect as of the Closing Date not listed
on any other Schedule hereto; other than as set forth in Schedule 6.1(l), each
such Material Contract is, and after giving effect to the consummation of the
transactions contemplated by the Loan Documents will be, in full force and
effect in accordance with the terms thereof.  The Credit Parties and their
Subsidiaries have delivered to the Administrative Agent a true and complete copy
of each Material Contract required to be listed on Schedule 6.1(l) or any other
Schedule hereto.  No Credit Party or any Subsidiary thereof (nor, to the
knowledge of the Parent, Holdings and the Borrower, any other party thereto) is
in breach of or in default under any Material Contract in any material respect.

 

(m)                               Employee Relations. Except as could not
reasonably be expected to have a Material Adverse Effect, each Credit Party and
its Subsidiaries has a stable work force in place and is not, as of the Closing
Date, party to any collective bargaining agreement nor has any labor union been
recognized as the representative of its employees except as set forth on
Schedule 6.1(m).  None of the Parent, Holdings and the Borrower knows of any
pending, threatened or contemplated strikes, work stoppage or other collective
labor disputes involving its employees or those of its Subsidiaries.

 

(n)                                 Burdensome Provisions.  No Credit Party or
any Subsidiary thereof is a party to any indenture, agreement, lease or other
instrument, or subject to any corporate or partnership restriction, Governmental
Approval or Applicable Law which is so unusual or burdensome as in the
foreseeable future could be reasonably expected to have a Material Adverse
Effect.  The Credit Parties and their Subsidiaries do not presently anticipate
that future expenditures needed to meet the provisions of any statutes, orders,
rules or regulations of a Governmental Authority will be so burdensome as to
have a Material Adverse Effect.  No Subsidiary of the Borrower is party to any
agreement or instrument or otherwise subject to any restriction or encumbrance
that restricts or limits its ability to make dividend payments or other
distributions in respect of its Capital Stock to the Borrower or any Subsidiary
thereof or to transfer any of its assets or properties to the Borrower or any
other Subsidiary thereof in each case other than existing under or by reason of
the Loan Documents or Applicable Law.

 

(o)                                 Financial Statements.  The (i) audited
Consolidated balance sheet of the Parent and its Subsidiaries as of December 31,
2003 and the related audited statements of income, shareholder’s equity and cash
flows for the Fiscal Year then ended and (ii) unaudited Consolidated balance
sheet of the Parent and its Subsidiaries as of September 30, 2004 and related
unaudited interim statements of income and cash flows, copies of which have been
furnished to the Administrative Agent and each Lender, are complete and correct
and fairly present in all material respects on a Consolidated basis the assets,
liabilities and financial position of the Parent and its Subsidiaries as at such
dates, and the results of the operations and changes of financial position for
the periods then ended (other than customary year-end adjustments for unaudited
financial statements).  All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP.  The
Credit Parties and their Subsidiaries have no Indebtedness, obligation or other
unusual forward or long-term

 

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commitment which is not fairly reflected in the foregoing financial statements
or in the notes thereto.

 

(p)                                 No Material Adverse Change.  Since
September 30, 2004, there has been no material adverse change in the properties,
business, operations or financial condition of the Credit Parties and their
Subsidiaries and no event has occurred or condition arisen that could reasonably
be expected to have a Material Adverse Effect.

 

(q)                                 Solvency.  As of the Closing Date and after
giving effect to each Extension of Credit made hereunder, each Credit Party and
each Subsidiary thereof will be Solvent.

 

(r)                                    Titles to Properties.  Each Credit Party
and each Subsidiary thereof has such title to or a valid leasehold in such real
property as is necessary or desirable to the conduct of its business and has
valid and legal title to all of its personal property and assets, including
those reflected on the balance sheets of the Parent and its Subsidiaries
delivered pursuant to Section 6.1(o), except such property that has been
disposed of by a Credit Party subsequent to such date which dispositions have
been in the ordinary course of business or as otherwise expressly permitted
hereunder.

 

(s)                                  Liens.  None of the properties and assets
of any Credit Party or any Subsidiary thereof is subject to any Lien, except
Permitted Liens.  No financing statement under the Uniform Commercial Code of
any state which names any Credit Party or any Subsidiary thereof or any of their
respective trade names or divisions as debtor and which has not been terminated,
has been filed in any state or other jurisdiction and no Credit Party or any
Subsidiary thereof has signed any such financing statement or any security
agreement authorizing any secured party thereunder to file any such financing
statement, except to perfect those Permitted Liens.

 

(t)                                    Indebtedness and Guaranty Obligations. 
Schedule 6.1(t) is a complete and correct listing of all Indebtedness and
Guaranty Obligations of the Credit Parties and their Subsidiaries to any Person
as of the Closing Date in excess of $5,000,000.  The Credit Parties and their
Subsidiaries have performed and are in compliance with all of the terms of such
Indebtedness and Guaranty Obligations and all instruments and agreements
relating thereto, and no default or event of default, or event or condition
which with notice or lapse of time or both would constitute such a default or
event of default on the part of any Credit Party or any of its Subsidiaries
exists with respect to any such Indebtedness or Guaranty Obligation.

 

(u)                                 Litigation. Except for matters existing on
the Closing Date and set forth on Schedule 6.1(u), there are no actions, suits
or proceedings pending nor, to the knowledge of the Parent, Holdings and the
Borrower, threatened against or in any other way relating adversely to or
affecting any Credit Party or any Subsidiary thereof or any of their respective
properties in any court or before any arbitrator of any kind or before or by any
Governmental Authority that (a) purport to affect or pertain to this Agreement
or any other Loan Document, or any of the transactions provided for herein or
therein, or (b) either individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect.

 

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(v)                                 Absence of Defaults.  No event has occurred
and is continuing which constitutes a Default or an Event of Default, or which
constitutes, or which with the passage of time or giving of notice or both would
constitute, a default or event of default by any Credit Party or any Subsidiary
thereof under any Material Contract or judgment, decree or order to which any
Credit Party or its Subsidiaries is a party or by which any Credit Party or its
Subsidiaries or any of their respective properties may be bound or which would
require any Credit Party or its Subsidiaries to make any payment thereunder
prior to the scheduled maturity date therefor.

 

(w)                               Senior Indebtedness Status.  The Obligations
of each Credit Party and each Subsidiary thereof under this Agreement and each
of the other Loan Documents ranks and shall continue to rank at least senior in
priority of payment to all Subordinated Indebtedness of each such Person and is
designated as “Senior Indebtedness” under all instruments and documents, now or
in the future, relating to all Subordinated Indebtedness and all senior
unsecured Indebtedness of such Person.

 

(x)                                   Accuracy and Completeness of Information. 
All written information, reports and other papers and data produced by or on
behalf of any Credit Party or any Subsidiary thereof (other than financial
projections, which shall be subject to the standard set forth in Section 7.1(c))
and furnished to the Lenders were, at the time the same were so furnished,
complete and correct in all material respects to the extent necessary to give
the recipient a true and accurate knowledge of the subject matter.

 

(y)                                 Disclosure.  The Parent, Holdings and the
Borrower have disclosed to the Administrative Agent and the Lenders all
agreements, instruments and corporate or other restrictions to which any of the
Credit Parties and their Subsidiaries are subject, and all other matters known
to it that could reasonably be expected to result in a Material Adverse Effect;
provided that for purposes of compliance with this sentence after the Closing
Date, such disclosures may be made by the Parent, Holdings and the Borrower by
delivery to the Administrative Agent and the Lenders of the Parent’s appropriate
SEC filings containing such disclosures, or the availability of such filings on
EDGAR Online with notice thereof to the Administrative Agent.  No financial
statement, material report, material certificate or other material information
furnished (whether in writing or orally) by or on behalf of any of the Credit
Parties and their Subsidiaries to the Administrative Agent or any Lender in
connection with the transactions contemplated hereby and the negotiation of this
Agreement or delivered hereunder (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, pro forma financial
information, estimated financial information and other projected or estimated
information, the Parent, Holdings and the Borrower represents only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time.

 

SECTION 6.2                          Survival of Representations and Warranties,
Etc.  All representations and warranties set forth in this Article VI and all
representations and warranties contained in any certificate, or any of the Loan
Documents (including, but not limited to, any such representation or warranty
made in or in connection with any amendment thereto) shall

 

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constitute representations and warranties made under this Agreement.  All
representations and warranties made under this Agreement shall be made or deemed
to be made at and as of the Closing Date (except those that are expressly made
as of a specific date), shall survive the Closing Date and shall not be waived
by the execution and delivery of this Agreement, any investigation made by or on
behalf of the Lenders or any borrowing hereunder.

 

ARTICLE VII

 

FINANCIAL INFORMATION AND NOTICES

 

Until all the Obligations have been paid and satisfied in full and the
Commitments terminated, unless consent has been obtained in the manner set forth
in Section 13.2, the Parent, on behalf of the Parent, Holdings and the Borrower,
will furnish or cause to be furnished to the Administrative Agent at the
Administrative Agent’s Office at the address set forth in Section 13.1(b) and to
the Lenders at their respective addresses as set forth on the Register, or such
other office as may be designated by the Administrative Agent and Lenders from
time to time:

 

SECTION 7.1                          Financial Statements and Projections.

 

(a)                                  Quarterly Financial Statements.  As soon as
practicable and in any event within forty-five (45) days (or, if earlier, on the
date of any required public filing thereof) after the end of each fiscal quarter
of each Fiscal Year, an unaudited Consolidated balance sheet of the Parent and
its Subsidiaries as of the close of such fiscal quarter and unaudited
Consolidated statements of income and cash flows for the fiscal quarter then
ended and that portion of the Fiscal Year then ended, including the notes
thereto, all in reasonable detail setting forth in comparative form the
corresponding figures as of the end of and for the corresponding period in the
preceding Fiscal Year and prepared by the Parent in accordance with GAAP and, if
applicable, containing disclosure of the effect on the financial position or
results of operations of any change in the application of accounting principles
and practices during the period, and certified by the chief financial officer of
the Parent to present fairly in all material respects the financial condition of
the Parent and its Subsidiaries on a Consolidated basis as of their respective
dates and the results of operations of the Parent and its Subsidiaries for the
respective periods then ended, subject to normal year end adjustments.  Delivery
by the Parent to the Administrative Agent and the Lenders of the Parent’s
quarterly report to the SEC on Form 10-Q with respect to any fiscal quarter, or
the availability of such report on EDGAR Online, within the period specified
above shall be deemed to be compliance with this Section 7.1(a).

 

(b)                                 Annual Financial Statements.  As soon as
practicable and in any event within ninety (90) days (or, if earlier, on the
date of any required public filing thereof) after the end of each Fiscal Year,
an audited Consolidated balance sheet of the Parent and its Subsidiaries as of
the close of such Fiscal Year and audited Consolidated statements of income,
shareholder’s equity, and cash flows for the Fiscal Year then ended, including
the notes thereto, all in reasonable detail setting forth in comparative form
the corresponding figures as of the end of and for the preceding Fiscal Year and
prepared in accordance with GAAP and, if applicable, containing disclosure of
the effect on the financial position or results of operations of any change in
the application of accounting principles and practices during the year.  Such
annual financial

 

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statements shall be audited by an independent certified public accounting firm
acceptable to the Administrative Agent, and accompanied by a report thereon by
such certified public accountants that is not qualified with respect to scope
limitations imposed by the Parent or any of its Subsidiaries or with respect to
accounting principles followed by the Parent or any of its Subsidiaries not in
accordance with GAAP.  Delivery by the Parent to the Administrative Agent and
the Lenders of the Parent’s annual report to the SEC on Form 10-K with respect
to any Fiscal Year, or the availability of such report on EDGAR Online, within
the period specified above shall be deemed to be compliance with this
Section 7.1(b).

 

(c)                                  Annual Business Plan and Financial
Projections.  As soon as practicable and in any event within sixty (60) days
after the beginning of each Fiscal Year, a business plan of the Parent and its
Subsidiaries for the ensuing four (4) fiscal quarters, such plan to be prepared
in accordance with GAAP and to include, on a quarterly basis, the following:  a
quarterly operating and capital budget, a projected income statement, statement
of cash flows and balance sheet.

 

SECTION 7.2                          Officer’s Compliance Certificate.  At each
time financial statements are delivered pursuant to Sections 7.1(a) or (b) and
at such other times as the Administrative Agent shall reasonably request, an
Officer’s Compliance Certificate.

 

SECTION 7.3                          Intentionally Omitted.

 

SECTION 7.4                          Other Reports.

 

(a)                                  Promptly after becoming available, copies
of each annual report, proxy or financial statement or other report or
communication sent to the stockholders of the Parent generally, and copies of
all annual, regular, periodic and special reports and registration statements
which the Parent may file or be required to file with the SEC under Section 13
or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to
be delivered to the Administrative Agent pursuant hereto; provided that,
delivery of the foregoing shall be deemed to have been made if made available on
Edgar Online or the website of the Parent and the Parent shall have given notice
thereof to Administrative Agent;

 

(b)                                 Promptly upon receipt thereof, copies of all
reports, if any, submitted to any Credit Party, any Subsidiary thereof or any of
their respective boards of directors by its independent public accountants in
connection with their auditing function, including, without limitation, any
management report and any management responses thereto, if the matters stated in
any such reports could reasonably be expected to have a Material Adverse Effect;
and

 

(c)                                  such other information regarding the
operations, business affairs and financial condition of any Credit Party or any
Subsidiary thereof as the Administrative Agent or any Lender may reasonably
request.

 

SECTION 7.5                          Notice of Litigation and Other Matters. 
Prompt (but in no event later than ten (10) days after an officer of the Parent,
Holdings or the Borrower obtains knowledge thereof) telephonic and written
notice of:

 

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(a)                                  the commencement of all proceedings and
investigations by or before any Governmental Authority and all actions and
proceedings in any court or before any arbitrator against or involving any
Credit Party, or any Subsidiary thereof or any of their respective properties,
assets or businesses which individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect;

 

(b)                                 any notice of any violation received by any
Credit Party or any Subsidiary thereof from any Governmental Authority including
any notice of violation of Environmental Laws which in any such case could
reasonably be expected to have a Material Adverse Effect;

 

(c)                                  any labor controversy that has resulted in,
or is reasonably expected to result in, a strike or other work action against
any Credit Party or any Subsidiary thereof which could reasonably be expected
to, individually or in the aggregate with any other labor controversy, work
stoppage or slow down, have a Material Adverse Effect;

 

(d)                                 any attachment, judgment, lien, levy or
order exceeding $10,000,000 (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage) that
may be assessed against or threatened against any Credit Party or any Subsidiary
thereof;

 

(e)                                  any Default or Event of Default; and

 

(f)                                    (i) any unfavorable determination letter
from the Internal Revenue Service regarding the qualification of an Employee
Benefit Plan under Section 401(a) of the Code (along with a copy thereof), (ii)
all notices received by any Credit Party or any ERISA Affiliate of the PBGC’s
intent to terminate any Pension Plan or to have a trustee appointed to
administer any Pension Plan, (iii) all notices received by any Credit Party or
any ERISA Affiliate from a Multiemployer Plan sponsor concerning the imposition
or amount of withdrawal liability pursuant to Section 4202 of ERISA and (iv) the
Parent, Holdings or the Borrower obtaining knowledge or reason to know that any
Credit Party or any ERISA Affiliate has filed or intends to file a notice of
intent to terminate any Pension Plan under a distress termination within the
meaning of Section 4041(c) of ERISA.

 

Each notice pursuant to this Section 7.5 shall be accompanied by a statement of
a Responsible Officer of the Parent setting forth details of the occurrence
referred to therein and stating what action the Parent or any Subsidiary
thereof, as applicable, has taken and proposes to take with respect thereto. 
Each notice pursuant to Section 7.5(e) shall describe with particularity any and
all provisions of this Agreement and any other Loan Document that have been
breached; provided that, delivery of the foregoing notices shall be deemed to
have been made if made available on Edgar Online or the website of the Parent
and the Parent shall have given notice thereof to Administrative Agent.

 

SECTION 7.6                          Accuracy of Information.  All written
information, reports, statements and other papers and data furnished by or on
behalf of the Credit Parties and their Subsidiaries to the Administrative Agent
or any Lender whether pursuant to this Article VII or

 

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any other provision of this Agreement, or any of the Security Documents, shall,
at the time the same is so furnished, comply with the representations and
warranties set forth in Section 6.1(y).

 

ARTICLE VIII

 

AFFIRMATIVE COVENANTS

 

Until all of the Obligations have been paid and satisfied in full and the
Commitments terminated, unless consent has been obtained in the manner provided
for in Section 13.2, each of the Parent, Holdings and the Borrower will, and
will cause each of its Subsidiaries to:

 

SECTION 8.1                          Preservation of Corporate Existence and
Related Matters.  Except as permitted by Section 10.4, preserve and maintain its
separate corporate existence and all rights, franchises, licenses and privileges
necessary to the conduct of its business, and qualify and remain qualified as a
foreign corporation and authorized to do business in each jurisdiction in which
the failure to so qualify could reasonably be expected to have a Material
Adverse Effect.

 

SECTION 8.2                          Maintenance of Property.  In addition to
the requirements of any of the Security Documents, and except as permitted by
Section 10.5, protect and preserve all properties material to its business,
including copyrights, patents, trade names, service marks and trademarks;
maintain in good working order and condition, ordinary wear and tear excepted,
all buildings, equipment and other tangible real and personal property; and from
time to time make or cause to be made all repairs, renewals and replacements
thereof and additions to such property necessary for the conduct of its
business, so that the business carried on in connection therewith may be
conducted in a commercially reasonable manner.

 

SECTION 8.3                          Insurance.  Maintain insurance with
financially sound and reputable insurance companies against such risks and in
such amounts and with such deductibles as are customarily maintained by similar
businesses (including hazard and business interruption insurance) and as may be
required by Applicable Law and as are required by any Security Documents, all in
form and substance reasonably satisfactory to the Administrative Agent and the
Lenders, and on the Closing Date and from time to time thereafter deliver to the
Administrative Agent upon its request a detailed list of the insurance then in
effect, stating the names of the insurance companies, the amounts and rates of
the insurance, the dates of the expiration thereof and the properties and risks
covered thereby.

 

SECTION 8.4                          Accounting Methods and Financial Records. 
Maintain a system of accounting, and keep such books, records and accounts
(which shall be true and complete in all material respects) as may be required
or as may be necessary to permit the preparation of financial statements in
accordance with GAAP and in compliance with the regulations of any Governmental
Authority having jurisdiction over it or any of its properties.

 

SECTION 8.5                          Payment and Performance of Obligations. 
Pay and perform all Obligations under this Agreement and the other Loan
Documents, and pay or perform (a) all

 

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taxes, assessments and other governmental charges that may be levied or assessed
upon it or any of its property, and (b) all other indebtedness, obligations and
liabilities in accordance with customary trade practices; provided, that the
relevant Credit Party or Subsidiary may contest any item described in clauses
(a) or (b) of this Section in good faith so long as adequate reserves are
maintained with respect thereto in accordance with GAAP.

 

SECTION 8.6                          Compliance With Laws and Approvals. 
Observe and remain in compliance in all material respects with all Applicable
Laws and maintain in full force and effect all Governmental Approvals, in each
case applicable to the conduct of its business, except where the failure to so
comply or maintain such Governmental Approval could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.

 

SECTION 8.7                          Environmental Laws.  In addition to and
without limiting the generality of Section 8.6, (a) comply with, and ensure such
compliance by all tenants and subtenants with all applicable Environmental Laws
and obtain and comply with and maintain, and ensure that all tenants and
subtenants, if any, obtain and comply with and maintain, any and all licenses,
approvals, notifications, registrations or permits required by applicable
Environmental Laws, except where the failure to do so could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect,
(b) conduct and complete all investigations, studies, sampling and testing, and
all remedial, removal and other actions required under Environmental Laws, and
promptly comply with all lawful orders and directives of any Governmental
Authority regarding Environmental Laws, except where the failure to conduct or
complete such actions, or comply with such orders or directions, could not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect, and (c) defend, indemnify and hold harmless the Administrative
Agent and the Lenders, and their respective parents, Subsidiaries, Affiliates,
employees, agents, officers and directors, from and against any claims, demands,
penalties, fines, liabilities, settlements, damages, costs and expenses of
whatever kind or nature known or unknown, contingent or otherwise, arising out
of, or in any way relating to the presence of Hazardous Materials, or the
violation of, noncompliance with or liability under any Environmental Laws
applicable to the operations any Credit Party or any such Subsidiary, or any
orders, requirements or demands of Governmental Authorities related thereto,
including reasonable attorney’s and consultant’s fees, investigation and
laboratory fees, response costs, court costs and litigation expenses, except to
the extent that any of the foregoing directly result from the gross negligence
or willful misconduct of the party seeking indemnification therefor.

 

SECTION 8.8                          Compliance with ERISA. In addition to and
without limiting the generality of Section 8.6, (a) except where the failure to
so comply could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, (i) comply with all material applicable
provisions of ERISA with respect to all Employee Benefit Plans, (ii) not take
any action or fail to take action the result of which could be a liability to
the PBGC or to a Multiemployer Plan, (iii) not participate in any prohibited
transaction that could result in any civil penalty under ERISA or tax under the
Code and (iv) operate each Employee Benefit Plan in such a manner that will not
incur any tax liability under Section 4980B of the Code or any liability to any
qualified beneficiary as defined in Section 4980B of the Code and (b) furnish to
the Administrative Agent upon the Administrative Agent’s request such additional
information

 

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about any Employee Benefit Plan or Multiemployer Plan as may be reasonably
requested by the Administrative Agent.

 

SECTION 8.9                          Compliance With Agreements.  Comply in all
material respects with each term, condition and provision of all leases,
agreements and other instruments entered into in the conduct of its business
including any Material Contract; provided, that any Credit Party or any such
Subsidiary may contest any such lease, agreement or other instrument in good
faith through applicable proceedings so long as adequate reserves are maintained
in accordance with GAAP.

 

SECTION 8.10                    Visits and Inspections.  Permit, at Lender’s
expense (other than upon the occurrence and during the continuance of an Event
of Default), representatives of the Administrative Agent or any Lender, from
time to time, to visit and inspect its properties; inspect, audit and make
extracts from its books, records and files, including, but not limited to,
management letters prepared by independent accountants; and discuss with its
principal officers, and its independent accountants, its business, assets,
liabilities, financial condition, results of operations and business prospects;
provided that so long as no Default or Event of Default has occurred and is
continuing, the Administrative Agent or applicable Lender shall give reasonable
prior notice to the applicable Credit Party of its intention to visit and
inspect the properties and records pursuant to this Section .

 

SECTION 8.11                    Additional Subsidiaries.  Within thirty (30)
days after any newly created or acquired Subsidiary of any Credit Party
(including as a result of any Permitted Acquisition) conducts business
operations or has assets in excess of $3,000,000 the Credit Parties shall cause
such Person to (a) become a Guarantor by delivering to the Administrative Agent
a duly executed supplement to the Subsidiary Guaranty Agreement, Parental Entity
Guaranty Agreement or such other document as the Administrative Agent shall deem
appropriate for such purpose, (b) pledge a security interest in all Collateral
owned by such Subsidiary by delivering to the Administrative Agent a duly
executed supplement to each Security Document or such other document as the
Administrative Agent shall deem appropriate for such purpose and comply with the
terms of each Security Document, (c) deliver to the Administrative Agent such
documents and certificates referred to in Section 5.2 as may be reasonably
requested by the Administrative Agent, (d) deliver to the Administrative Agent
such original Capital Stock or other certificates and stock or other transfer
powers evidencing the Capital Stock of such Person, (e) deliver to the
Administrative Agent such updated Schedules to the Loan Documents as requested
by the Administrative Agent with respect to such Person, and (f) deliver to the
Administrative Agent such other documents as may be reasonably requested by the
Administrative Agent in furtherance of the foregoing, all in form, content and
scope reasonably satisfactory to the Administrative Agent.

 

SECTION 8.12                    Use of Proceeds.  The Borrower shall use the
proceeds of the Extensions of Credit (a) to finance the acquisition of Capital
Assets, (b) to finance Permitted Acquisitions, (c) to refinance the Existing
Facility and (d) for working capital and general corporate requirements of the
Credit Parties and their Subsidiaries, including the payment of certain fees and
expenses incurred in connection with the transactions and restricted payments
permitted hereunder.

 

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SECTION 8.13                    Further Assurances.  Make, execute and deliver
all such additional and further acts, things, deeds and instruments as the
Administrative Agent or the Required Lenders (through the Administrative Agent)
may reasonably require to document and consummate the transactions contemplated
hereby and to vest completely in and insure the Administrative Agent and the
Lenders their respective rights under this Agreement, the Letters of Credit and
the other Loan Documents.

 

ARTICLE IX

 

FINANCIAL COVENANTS

 

Until all of the Obligations have been paid and satisfied in full and the
Commitments terminated, unless consent has been obtained in the manner set forth
in Section 13.2, the Credit Parties and their Subsidiaries on a Consolidated
basis will not:

 

SECTION 9.1                          Total Leverage Ratio.  As of any fiscal
quarter end, permit the ratio of (a) Total Indebtedness on such date to (b)
EBITDA for the period of four (4) consecutive fiscal quarters ending on or
immediately prior to such date to be greater than 3.00 to 1.0.

 

SECTION 9.2                          Fixed Charge Coverage Ratio.  As of any
fiscal quarter end, permit the ratio of (a) EBITDAR for the period of four (4)
consecutive fiscal quarters ending on or immediately prior to such date minus
Capital Expenditures made during such period to (b) Fixed Charges for the period
of four (4) consecutive fiscal quarters ending on or immediately prior to such
date to be less than 1.25 to 1.0.

 

SECTION 9.3                          Interest Coverage Ratio.  As of any fiscal
quarter end, permit the ratio of (a) EBITDA for the period of four (4)
consecutive fiscal quarters ending on or immediately prior to such date to (b)
Cash Interest Expense, net of interest income, for the period of four (4)
consecutive fiscal quarters ending on or immediately prior to such date to be
less than 4.00 to 1.0.

 

ARTICLE X

 

NEGATIVE COVENANTS

 

Until all of the Obligations have been paid and satisfied in full and the
Commitments terminated, unless consent has been obtained in the manner set forth
in Section 13.2, the Credit Parties have not and will not and will not permit
any of its Subsidiaries to:

 

SECTION 10.1                    Limitations on Indebtedness.  Create, incur,
assume or suffer to exist any Indebtedness except:

 

(a)                                  the Obligations (excluding Hedging
Obligations permitted pursuant to Section 10.1(b));

 

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(b)                                 Indebtedness incurred in connection with a
Hedging Agreement (which are non-speculative) with a counterparty and upon terms
and conditions (including interest rate) reasonably satisfactory to the
Administrative Agent; provided, that any counterparty that is a Lender or an
Affiliate of a Lender shall be deemed satisfactory to the Administrative Agent;

 

(c)                                  Indebtedness existing on the Closing Date
and not otherwise permitted under this Section, as set forth on Schedule 6.1(t),
and the renewal, refinancing, extension and replacement (but not the increase in
the aggregate principal amount) thereof;

 

(d)                                 Indebtedness of the Credit Parties and their
Subsidiaries incurred in connection with Capital Leases plus purchase money
Indebtedness of the Credit Parties and their Subsidiaries in an aggregate amount
not to exceed $20,000,000 on any date of determination;

 

(e)                                  Guaranty Obligations in favor of the
Administrative Agent for the benefit of the Administrative Agent and the
Lenders;

 

(f)                                    Guaranty Obligations with respect to
Indebtedness permitted pursuant to subsections (a) through (e) of this Section;

 

(g)                                 Indebtedness owed by any Subsidiary to the
Borrower, by the Borrower to any Guarantor, by any Guarantor to the Borrower, or
by any Subsidiary to any Guarantor;

 

(h)                                 Subordinated Indebtedness; provided that in
the case of each issuance of Subordinated Indebtedness, (i) no Default or Event
of Default shall have occurred and be continuing or would be caused by the
issuance of such Subordinated Indebtedness and (ii) the Administrative Agent
shall have received satisfactory written evidence that the Borrower would be in
compliance with all covenants contained in this Agreement on a pro forma basis
after giving effect to the issuance of any such Subordinated Indebtedness; and

 

(i)                                     unsecured Indebtedness not otherwise
permitted pursuant to this Section; provided that in the case of each issuance
of unsecured Indebtedness, (i) no Default or Event of Default shall have
occurred and be continuing or would be caused by the issuance of such unsecured
Indebtedness, (ii) the Administrative Agent shall have received satisfactory
written evidence that the Credit Parties would be in compliance with Section 9.1
on a pro forma basis after giving effect to the issuance of any such unsecured
Indebtedness and (iii) the terms and conditions of any such unsecured
indebtedness shall be no more restrictive than the terms and conditions hereof
and shall otherwise be reasonably satisfactory to the Administrative Agent; and

 

provided, that no agreement or instrument with respect to Indebtedness permitted
to be incurred by this Section shall restrict, limit or otherwise encumber (by
covenant or otherwise) the ability of any Credit Party or Subsidiary thereof to
make any payment to the Borrower (in the form of dividends, intercompany
advances or otherwise) for the purpose of enabling the Borrower to pay the
Obligations.

 

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SECTION 10.2                    Limitations on Liens.  Create, incur, assume or
suffer to exist, any Lien on or with respect to any of its assets or properties
(including, without limitation, shares of Capital Stock), real or personal,
whether now owned or hereafter acquired, except:

 

(a)                                  Liens for taxes, assessments and other
governmental charges or levies (excluding any Lien imposed pursuant to any of
the provisions of ERISA or Environmental Laws) not yet due or as to which the
period of grace (not to exceed thirty (30) days), if any, related thereto has
not expired or which are being contested in good faith and by appropriate
proceedings if adequate reserves are maintained to the extent required by GAAP;

 

(b)                                 the claims of materialmen, mechanics,
carriers, warehousemen, processors or landlords for labor, materials, supplies
or rentals incurred in the ordinary course of business, (i) which are not
overdue for a period of more than sixty (60) days or (ii) which are being
contested in good faith and by appropriate proceedings;

 

(c)                                  Liens consisting of deposits or pledges
made in the ordinary course of business in connection with, or to secure payment
of, obligations under workers’ compensation, unemployment insurance or similar
legislation;

 

(d)                                 Liens constituting encumbrances in the
nature of zoning restrictions, easements and rights or restrictions of record on
the use of real property, which in the aggregate are not substantial in amount
and which do not, in any case, detract from the value of such property or impair
the use thereof in the ordinary conduct of business;

 

(e)                                  Liens of the Administrative Agent for the
benefit of the Administrative Agent and the Lenders;

 

(f)                                    Liens not otherwise permitted hereunder
securing obligations not at any time exceeding in the aggregate $5,000,000;

 

(g)                                 Liens not otherwise permitted by this
Section and in existence on the Closing Date and described on Schedule 10.2; and

 

(h)                                 Liens securing Indebtedness permitted under
Section 10.1(d); provided that (i) such Liens shall be created substantially
simultaneously with the acquisition or lease of the related asset, (ii) such
Liens do not at any time encumber any property other than the property financed
by such Indebtedness, (iii) the amount of Indebtedness secured thereby is not
increased and (iv) the principal amount of Indebtedness secured by any such Lien
shall at no time exceed one hundred percent (100%) of the original purchase
price or lease payment amount of such property at the time it was acquired.

 

SECTION 10.3                    Limitations on Loans, Advances, Investments and
Acquisitions.  Purchase, own, invest in or otherwise acquire, directly or
indirectly, any Capital Stock, interests in any partnership or joint venture
(including, without limitation, the creation or capitalization of any
Subsidiary), evidence of Indebtedness or other obligation or security,
substantially all or a portion of the business or assets of any other Person or
any other investment or interest

 

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whatsoever in any other Person, or make or permit to exist, directly or
indirectly, any loans, advances or extensions of credit to, or any investment in
cash or by delivery of property in, any Person except:

 

(a)                                  investments (i) existing on the Closing
Date in Subsidiaries, (ii) in Subsidiaries formed or acquired after the Closing
Date so long as the applicable Credit Party and its Subsidiaries comply with the
provisions of Section 8.11 and (iii) the other loans, advances and investments
described on Schedule 10.3 existing on the Closing Date;

 

(b)                                 investments in (i) marketable direct
obligations issued or unconditionally guaranteed by the United States or any
agency thereof maturing within one hundred twenty (120) days from the date of
acquisition thereof, (ii) commercial paper maturing no more than one hundred
twenty (120) days from the date of creation thereof and currently having the
highest rating obtainable from either Standard & Poor’s Ratings Services, a
division of The McGraw-Hill Companies, Inc. or Moody’s Investors Service, Inc.,
(iii) certificates of deposit maturing no more than one hundred twenty (120)
days from the date of creation thereof issued by commercial banks incorporated
under the laws of the United States, each having combined capital, surplus and
undivided profits of not less than $500,000,000 and having a rating of “A” or
better by a nationally recognized rating agency; provided, that the aggregate
amount invested in such certificates of deposit shall not at any time exceed
$5,000,000 for any one such certificate of deposit and $10,000,000 for any one
such bank, or (iv) time deposits maturing no more than thirty (30) days from the
date of creation thereof with commercial banks or savings banks or savings and
loan associations each having membership either in the FDIC or the deposits of
which are insured by the FDIC and in amounts not exceeding the maximum amounts
of insurance thereunder;

 

(c)                                  investments by the Credit Parties or any
Subsidiaries thereof in the form of acquisitions of all or substantially all of
the business or a line of business (whether by the acquisition of Capital Stock,
assets or any combination thereof) of any other Person up to an aggregate cash
amount of $50,000,000 over the term of this Agreement and provided that each
acquisition hereunder meets all of the following requirements (such acquisition
being referred to herein as a “Permitted Acquisition”):

 

(i)                                     the Person to be acquired shall be
organized under the laws of the United States, shall be a going concern and such
Person shall be engaged in a business, or the assets acquired shall be used in a
business, which is substantially similar to that of the Credit Parties and their
Subsidiaries;

 

(ii)                                  a Credit Party or Subsidiary thereof
(including any entity being acquired that becomes a Subsidiary) shall be the
surviving Person and no Change of Control shall have been effected thereby;

 

(iii)                               the Credit Parties shall have delivered to
the Administrative Agent such documents reasonably requested by the
Administrative Agent pursuant to Section 8.11 to be delivered at the time
required by Section 8.11 and shall confirm that any such Person

 

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acquired or created in connection with the Permitted Acquisition is a Guarantor
hereunder;

 

(iv)                              the Person to be acquired shall not be subject
to any material pending litigation which could reasonably be expected to have a
Material Adverse Effect;

 

(v)                                 prior to the closing of such acquisition,
the acquisition is approved by the board of directors (or a majority of the
holders of the Capital Stock of such Person) of the Person whose assets or
Capital Stock are being acquired pursuant to such acquisition;

 

(vi)                              no Default or Event of Default shall have
occurred and be continuing both before and after giving effect to such proposed
acquisition;

 

(vii)                           the Credit Parties shall have (A) demonstrated
to the Administrative Agent pro forma compliance (as of the date of the proposed
acquisition and after giving effect thereto and any Extensions of Credit made or
to be made in connection therewith) with each covenant contained herein (as
evidenced by an Officer’s Compliance Certificate), (B) delivered to the
Administrative Agent evidence of the approval referred to in clause (v) above
for each acquisition where the aggregate consideration exceeds $20,000,000, and
(C) delivered written notice of such proposed acquisition to the Administrative
Agent and the Lenders, which notice shall include the proposed closing date of
such proposed acquisition and a description of the acquisition in the form
customarily prepared by the Credit Parties, not less than five (5) Business Days
prior to such proposed closing date; and

 

(viii)                        the Credit Parties shall have delivered to the
Administrative Agent such documents reasonably requested by the Administrative
Agent or the Required Lenders (through the Administrative Agent) pursuant to
Section 8.11 to be delivered at the time required pursuant to Section 8.11.

 

(d)                                 Hedging Agreements permitted pursuant to
Section 10.1(b);

 

(e)                                  purchases of assets in the ordinary course
of business;

 

(f)                                    investments in the form of loans and
advances to employees in the ordinary course of business, which, in the
aggregate, do not exceed at any time $500,000;

 

(g)                                 intercompany Indebtedness permitted pursuant
to Section 10.1(g); and

 

(h)                                 other additional investments, advances or
other extensions of credit not otherwise permitted pursuant to this Section in
an aggregate amount not to exceed $5,000,000 over the term of this Agreement;
provided that no Default or Event of Default shall have occurred and be
continuing or would be occasioned by any such investment.

 

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SECTION 10.4                    Limitations on Mergers and Liquidation.  Merge,
consolidate or enter into any similar combination with any other Person or
liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution)
except:

 

(a)                                  any Wholly-Owned Subsidiary of the Parent
may be merged or consolidated (i) with or into the Borrower (provided that the
Borrower shall be the continuing or surviving Person) or (ii) with or into any
Guarantor (provided that the Guarantor shall be the continuing or surviving
Person);

 

(b)                                 any Wholly-Owned Subsidiary of the Parent
may sell, lease, transfer or otherwise dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to the Borrower or any other Wholly-Owned
Subsidiary; provided that if the transferor in such a transaction is a
Guarantor, then the transferee must either be the Borrower or a Guarantor;

 

(c)                                  any Wholly-Owned Subsidiary of the Parent
may merge into the Person such Wholly-Owned Subsidiary was formed to acquire in
connection with a Permitted Acquisition; and

 

(d)                                 any Subsidiary of the Borrower may wind-up
into the Borrower or any Subsidiary Guarantor.

 

SECTION 10.5                    Limitations on Sale of Assets.  Convey, sell,
lease, assign, transfer or otherwise dispose of any of its property, business or
assets (including the sale of any receivables and leasehold interests but
excluding sale-leaseback transactions), whether now owned or hereafter acquired
except:

 

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

 

(b)                                 the sale of obsolete assets no longer used
or usable in the business of the Credit Parties or any of their Subsidiaries;

 

(c)                                  the transfer of assets to the Borrower or
any Guarantor pursuant to Section 10.4 (d);

 

(d)                                 the sale or discount without recourse of
accounts receivable arising in the ordinary course of business in connection
with the compromise or collection thereof;

 

(e)                                  the disposition of any Hedging Agreement;

 

(f)                                    additional dispositions of assets not
otherwise permitted pursuant to this Section the fair market value with respect
to which does not exceed an aggregate amount of $5,000,000 in any Fiscal Year;
and

 

(g)                                 entering into non-exclusive licenses.

 

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SECTION 10.6                    Limitations on Dividends and Distributions. 
Declare or pay any dividends upon any of its Capital Stock; purchase, redeem,
retire or otherwise acquire, directly or indirectly, any shares of its Capital
Stock, or make any distribution of cash, property or assets among the holders of
shares of its Capital Stock, or make any change in its capital structure which
such change in its capital structure could reasonably be expected to have a
Material Adverse Effect; provided that:

 

(a)                                  the Borrower or any Subsidiary may pay
dividends in shares of its own Capital Stock;

 

(b)                                 any Subsidiary of the Borrower may pay cash
dividends or make distributions to its shareholders or other equity owners;

 

(c)                                  so long as no Default or Event of Default
has occurred and is continuing or would result therefrom, (i) the Borrower may
declare and pay dividends to Holdings, (ii) Holdings may declare and pay
dividends to Parent and (iii) Parent may declare and pay dividends to its
shareholders; and

 

(d)                                 so long as no Default or Event of Default
has occurred and is continuing or would result therefrom, the Parent may
repurchase the Capital Stock of the Parent.

 

SECTION 10.7                    Limitations on Exchange and Issuance of Capital
Stock.  Issue, sell or otherwise dispose of any class or series of Capital Stock
that, by its terms or by the terms of any security into which it is convertible
or exchangeable, is, or upon the happening of an event or passage of time would
be, (a) convertible or exchangeable into Indebtedness or (b) required to be
redeemed or repurchased, including at the option of the holder, in whole or in
part, or has, or upon the happening of an event or passage of time would have, a
redemption or similar payment due.

 

SECTION 10.8                    Transactions with Affiliates.  Except for
transactions permitted by Sections 10.3, 10.6 and 10.7, and those transactions
existing on the Closing Date and identified on Schedule 10.8, directly or
indirectly (a) make any loan or advance to, or purchase or assume any note or
other obligation to or from, any of its officers, directors or other Affiliates,
or to or from any member of the immediate family of any of its officers,
directors or other Affiliates, or subcontract any operations to any of its
Affiliates or (b) enter into, or be a party to, any other transaction not
described in clause (a) above with any of its Affiliates, except pursuant to the
reasonable requirements of its business and upon fair and reasonable terms that
are no less favorable to it than it would obtain in a comparable arm’s length
transaction with a Person not its Affiliate.

 

SECTION 10.9                    Certain Accounting Changes; Organizational
Documents.  (a) Change its Fiscal Year end, or make any change in its accounting
treatment and reporting practices except as required by GAAP; provided that upon
reasonable prior notice to the Administrative Agent, the Credit Parties and
their Subsidiaries may all change their fiscal year-ends from December 31 to the
fourth (4th) Saturday in January for fiscal year 2006 and thereafter, or (b)
amend, modify or change its articles of incorporation (or corporate charter or

 

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other similar organizational documents) or amend, modify or change its bylaws
(or other similar documents) in any manner adverse in any respect to the rights
or interests of the Lenders.

 

SECTION 10.10              Amendments; Payments and Prepayments of Subordinated
Indebtedness.

 

(a)                                  Amend or modify (or permit the modification
or amendment of) any of the terms or provisions of any Subordinated Indebtedness
incurred pursuant to Section 10.1(i) hereof in any respect which would
materially adversely affect the rights or interests of the Administrative Agent
and Lenders hereunder.

 

(b)                                 Make any payment or prepayment on, or redeem
or acquire for value (including (i) by way of depositing with any trustee with
respect thereto money or securities before due for the purpose of paying when
due and (ii) at the maturity thereof) any Subordinated Indebtedness incurred
pursuant to Section 10.1(h).

 

SECTION 10.11              Restrictive Agreements.

 

(a)                                  Enter into any Indebtedness which contains
any negative pledge on assets or any covenants more restrictive than the
provisions of Articles VIII, IX and X hereof, or which restricts, limits or
otherwise encumbers its ability to incur Liens on or with respect to any of its
assets or properties other than the assets or properties securing such
Indebtedness.

 

(b)                                 Enter into or permit to exist any agreement
(other than this Agreement or the other Loan Documents) which impairs or limits
the ability of any Subsidiary of the Borrower to pay dividends to the Borrower.

 

SECTION 10.12              Nature of Business.  Alter in any material respect
the character or conduct of the business conducted by the Credit Parties and
their Subsidiaries as of the Closing Date.

 

SECTION 10.13              Impairment of Security Interests. Take or omit to
take any action, which might or would have the result of materially impairing
the security interests in favor of the Administrative Agent with respect to the
Collateral or grant to any Person (other than the Administrative Agent for the
benefit of itself and the Lenders pursuant to the Security Documents) any
interest whatsoever in the Collateral, except for Permitted Liens and asset
sales permitted under Section 10.5.

 

ARTICLE XI

 

DEFAULT AND REMEDIES

 

SECTION 11.1                    Events of Default.  Each of the following shall
constitute an Event of Default, whatever the reason for such event and whether
it shall be voluntary or involuntary or

 

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be effected by operation of law or pursuant to any judgment or order of any
court or any order, rule or regulation of any Governmental Authority or
otherwise:

 

(a)                                  Default in Payment of Principal of Loans
and Reimbursement Obligations.  The Borrower shall default in any payment of
principal of any Loan or Reimbursement Obligation when and as due (whether at
maturity, by reason of acceleration or otherwise).

 

(b)                                 Other Payment Default.  The Borrower or any
other Credit Party shall default in the payment when and as due (whether at
maturity, by reason of acceleration or otherwise) of interest on any Loan or
Reimbursement Obligation or the payment of any other Obligation, and such
default shall continue for a period of five (5) Business Days.

 

(c)                                  Misrepresentation.  Any representation,
warranty, certification or statement of fact made or deemed made by or on behalf
of the Borrower or any other Credit Party herein, in any other Loan Document, or
in any document delivered in connection herewith or therewith that is subject to
materiality or Material Adverse Effect qualifications, shall be incorrect or
misleading in any respect when made or deemed made or any representation,
warranty, certification or statement of fact made or deemed made by or on behalf
of the Borrower or any other Credit Party herein, any other Loan Document, or in
any document delivered in connection herewith or therewith that is not subject
to materiality or Material Adverse Effect qualifications, shall be incorrect or
misleading in any material respect when made or deemed made

 

(d)                                 Default in Performance of Certain
Covenants.  The Borrower or any other Credit Party shall default in the
performance or observance of any covenant or agreement contained in
Section 7.5(e) or Articles IX or X of this Agreement.

 

(e)                                  Default in Performance of Other Covenants
and Conditions.  The Borrower or any other Credit Party shall default in the
performance or observance of any term, covenant, condition or agreement
contained in this Agreement (other than as specifically provided for otherwise
in this Section) or any other Loan Document and such default shall continue for
a period of thirty (30) days after written notice thereof has been given to the
Borrower by the Administrative Agent; provided, that with respect to a default
under Section 7.1 or Section 7.2, such default shall continue for a period of
thirty (30) days whether or not any notice, written or otherwise, has been
provided.

 

(f)                                    Hedging Agreement.  The Borrower or any
other Credit Party shall default in the performance or observance of any terms,
covenant, condition or agreement (after giving effect to any applicable grace or
cure period) under any Hedging Agreement and such default causes the termination
of such Hedging Agreement and the Termination Value owned by such Credit Party
as a result thereof exceeds $5,000,000.

 

(g)                                 Indebtedness Cross-Default.  The Borrower or
any other Credit Party shall (i) default in the payment of any Indebtedness
(other than the Loans or any Reimbursement Obligation) the aggregate outstanding
amount of which Indebtedness is in excess of $10,000,000 beyond the period of
grace if any, provided in the instrument or agreement under which such
Indebtedness was created, or (ii) default in the observance or performance of
any other

 

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agreement or condition relating to any Indebtedness (other than the Loans or any
Reimbursement Obligation) the aggregate outstanding amount of which Indebtedness
is in excess of $10,000,000 or contained in any instrument or agreement
evidencing, securing or relating thereto or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause, with the giving of notice
if required, any such Indebtedness to become due prior to its stated maturity
(any applicable grace period having expired).

 

(h)                                 Other Cross-Defaults.  The Borrower or any
other Credit Party shall default in the payment when due, or in the performance
or observance, of any material obligation or material condition of any Material
Contract unless, but only as long as, the existence of any such default is being
contested by the Borrower or any such Subsidiary in good faith by appropriate
proceedings and adequate reserves in respect thereof have been established on
the books of the Borrower or such Credit Party to the extent required by GAAP.

 

(i)                                     Change in Control.  A Change in Control
shall occur.

 

(j)                                     Voluntary Bankruptcy Proceeding.  Any
Credit Party or a Subsidiary thereof shall (i) commence a voluntary case under
the federal bankruptcy laws (as now or hereafter in effect), (ii) file a
petition seeking to take advantage of any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding up or composition
for adjustment of debts, (iii) consent to or fail to contest in a timely and
appropriate manner any petition filed against it in an involuntary case under
such bankruptcy laws or other laws, (iv) apply for or consent to, or fail to
contest in a timely and appropriate manner, the appointment of, or the taking of
possession by, a receiver, custodian, trustee, or liquidator of itself or of a
substantial part of its property, domestic or foreign, (v) admit in writing its
inability to pay its debts as they become due, (vi) make a general assignment
for the benefit of creditors, or (vii) take any corporate action for the purpose
of authorizing any of the foregoing.

 

(k)                                  Involuntary Bankruptcy Proceeding.  A case
or other proceeding shall be commenced against any Credit Party or a Subsidiary
thereof in any court of competent jurisdiction seeking (i) relief under the
federal bankruptcy laws (as now or hereafter in effect) or under any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding
up or adjustment of debts, or (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like for any Credit Party or Subsidiary thereof or
for all or any substantial part of their respective assets, domestic or foreign,
and such case or proceeding shall continue without dismissal or stay for a
period of sixty (60) consecutive days, or an order granting the relief requested
in such case or proceeding (including, but not limited to, an order for relief
under such federal bankruptcy laws) shall be entered.

 

(l)                                     Failure of Agreements.  Any provision of
this Agreement or any provision of any other Loan Document shall for any reason
cease to be valid and binding on the Borrower or any other Credit Party party
thereto or any such Person shall so state in writing, or any Security Document
shall for any reason cease to create a valid and perfected first priority Lien
on, or security interest in, any of the Collateral purported to be covered
thereby, in each case other than in accordance with the express terms hereof or
thereof.

 

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(m)                               Termination Event.  The occurrence of any of
the following events:  (i) any Credit Party or any ERISA Affiliate fails to make
full payment when due of all material amounts which, under the provisions of any
Pension Plan or Section 412 of the Code, such Credit Party or ERISA Affiliate is
required to pay as contributions thereto, (ii) an accumulated funding deficiency
in excess of $5,000,000 occurs or exists, whether or not waived, with respect to
any Pension Plan as of the close of the most recently completed fiscal year of
the Pension Plan, or (iii) a Termination Event.

 

(n)                                 Judgment.  A judgment or order for the
payment of money which causes the aggregate amount of all such judgments to
exceed $5,000,000 in any Fiscal Year (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage) shall
be entered against the Borrower or any Credit Party by any court and such
judgment or order shall continue without having been discharged, vacated, stayed
or stayed pending appeal for a period of (i) sixty (60) days after the entry
thereof or (ii) such longer period as may be granted within any such judgment or
order provided that the Borrower or the applicable Credit Party complies with
the terms thereof.

 

(o)                                 Environmental.  Any one or more
Environmental Claims shall have been asserted against the Borrower or any Credit
Party; the Borrower and any Credit Party would be reasonable likely to incur
liability as a result thereof; and such liability would be reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect.

 

SECTION 11.2                    Remedies.  Upon the occurrence of an Event of
Default and during the continuance thereof, with the consent of the Required
Lenders, the Administrative Agent may, or upon the request of the Required
Lenders, the Administrative Agent shall, by notice to the Borrower:

 

(a)                                  Acceleration; Termination of Facilities. 
Terminate the Commitments and declare the principal of and interest on the Loans
and the Reimbursement Obligations at the time outstanding, and all other amounts
owed to the Lenders and to the Administrative Agent under this Agreement or any
of the other Loan Documents (including, without limitation, all L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit shall
have presented or shall be entitled to present the documents required
thereunder) and all other Obligations (other than Hedging Obligations), to be
forthwith due and payable, whereupon the same shall immediately become due and
payable without presentment, demand, protest or other notice of any kind, all of
which are expressly waived by each Credit Party, anything in this Agreement or
the other Loan Documents to the contrary notwithstanding, and terminate the
Credit Facility and any right of the Borrower to request borrowings or Letters
of Credit thereunder; provided, that upon the occurrence of an Event of Default
specified in Section 11.1(j) or (k), the Credit Facility shall be automatically
terminated and all Obligations (other than Hedging Obligations) shall
automatically become due and payable without presentment, demand, protest or
other notice of any kind, all of which are expressly waived by each Credit
Party, anything in this Agreement or in any other Loan Document to the contrary
notwithstanding.

 

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(b)                                 Letters of Credit.  With respect to all
Letters of Credit with respect to which presentment for honor shall not have
occurred at the time of an acceleration pursuant to the preceding subsection,
the Borrower shall at such time deposit in a cash collateral account opened by
the Administrative Agent an amount equal to one hundred and five percent (105%)
of the aggregate then undrawn and unexpired amount of such Letters of Credit. 
Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay the
other Obligations on a pro rata basis.  After all such Letters of Credit shall
have expired or been fully drawn upon, the Reimbursement Obligation shall have
been satisfied and all other Obligations shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to the
Borrower.

 

(c)                                  Rights of Collection.  Exercise on behalf
of the Lenders all of its other rights and remedies under this Agreement, the
other Loan Documents and Applicable Law, in order to satisfy all of the
Borrower’s Obligations.

 

SECTION 11.3                    Rights and Remedies Cumulative; Non-Waiver;
etc.  The enumeration of the rights and remedies of the Administrative Agent and
the Lenders set forth in this Agreement is not intended to be exhaustive and the
exercise by the Administrative Agent and the Lenders of any right or remedy
shall not preclude the exercise of any other rights or remedies, all of which
shall be cumulative, and shall be in addition to any other right or remedy given
hereunder or under the other Loan Documents or that may now or hereafter exist
at law or in equity or by suit or otherwise.  No delay or failure to take action
on the part of the Administrative Agent or any Lender in exercising any right,
power or privilege shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
or shall be construed to be a waiver of any Event of Default.  No course of
dealing between any Credit Party, the Administrative Agent and the Lenders or
their respective agents or employees shall be effective to change, modify or
discharge any provision of this Agreement or any of the other Loan Documents or
to constitute a waiver of any Event of Default.

 

SECTION 11.4                    Crediting of Payments and Proceeds.  In the
event that the Borrower shall fail to pay any of the Obligations when due and
the Obligations have been accelerated pursuant to Section 11.2(a), all payments
received by the Lenders upon the Obligations and all net proceeds from the
enforcement of the Obligations shall be applied:

 

First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts, including reasonable attorney fees,
payable to the Administrative Agent in its capacity as such and the Issuing
Lender in its capacity as such (ratably among the Administrative Agent and the
Issuing Lender in proportion to the respective amounts described in this clause
First payable to them);

 

Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to the
Lenders, including reasonable

 

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attorney fees (ratably among the Lenders in proportion to the respective amounts
described in this clause Second payable to them);

 

Third, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Loans and Reimbursement Obligations (ratably among the
Lenders in proportion to the respective amounts described in this clause Third
payable to them);

 

Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans, Reimbursement Obligations, and any Hedging Obligations
(including any termination payments and any accrued and unpaid interest thereon)
(ratably among the Lenders in proportion to the respective amounts described in
this clause Fourth held by them);

 

Fifth, to the Administrative Agent for the account of the Issuing Lender, to
cash collateralize any L/C Obligations then outstanding; and

 

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

 

SECTION 11.5                    Administrative Agent May File Proofs of Claim. 
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to any Credit Party, the Administrative 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 Administrative Agent shall have made any demand on
the Borrower) 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 and the Administrative Agent (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Lenders and
the Administrative Agent and their respective agents and counsel and all other
amounts due the Lenders and the Administrative Agent under Section 3.3,
Section 4.3 and Section 13.3) 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 to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Section 4.3 and Section 13.3.

 

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

 

ARTICLE XII

 

THE ADMINISTRATIVE AGENT

 

SECTION 12.1                    Appointment and Authority.  Each of the Lenders
hereby irrevocably designates and appoints Wachovia to act on its behalf as the
Administrative Agent of such Lender under this Agreement and the other Loan
Documents for the term hereof and each such Lender irrevocably authorizes
Wachovia, as Administrative Agent for such Lender, to take such action on its
behalf under the provisions of this Agreement and the other Loan Documents and
to exercise such powers and perform such duties as are expressly delegated to
the Administrative Agent by the terms of this Agreement and such other Loan
Documents, together with such other powers as are reasonably incidental
thereto.  Notwithstanding any provision to the contrary elsewhere in this
Agreement or such other Loan Documents, the Administrative Agent shall not have
any duties or responsibilities, except those expressly set forth herein and
therein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or the other Loan Documents or otherwise exist
against the Administrative Agent.  Any reference to the Administrative Agent in
this Article XII shall be deemed to refer to the Administrative Agent solely in
its capacity as Administrative Agent and not in its capacity as a Lender.

 

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

 

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

 

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in, or conditions of, this Agreement, or to inspect the properties, books or
records of the Borrower or any of the Credit Parties.

 

SECTION 12.4                    Reliance by the Administrative Agent.

 

(a)                                  The Administrative Agent shall be entitled
to rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including counsel to the Credit Parties),
independent accountants and other experts selected by the Administrative Agent. 
The Administrative Agent shall be fully justified in failing or refusing to take
any action under this Agreement and the other Loan Documents unless it shall
first receive such advice or concurrence of the Required Lenders (or, when
expressly required hereby or by the relevant other Loan Documents, all the
Lenders) as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action
except for its own gross negligence or willful misconduct.  The Administrative
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement in accordance with a request of the Required
Lenders (or, when expressly required hereby, all the Lenders), and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders.

 

(b)                                 For purposes of determining compliance with
the conditions specified in Section 5.2, 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
Administrative Agent shall have received notice from such Lender prior to the
proposed Closing Date specifying its objection thereto.

 

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

 

SECTION 12.6                    Non-Reliance on the Administrative Agent and
Other Lenders.  Each Lender expressly acknowledges that neither the
Administrative Agent nor any of its

 

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respective officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates has made any representations or warranties to it and
that no act by the Administrative Agent hereafter taken, including any review of
the affairs of the Borrower or any Credit Party, shall be deemed to constitute
any representation or warranty by the Administrative Agent to any Lender.  Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Borrower, the other
Credit Parties and their Subsidiaries and made its own decision to make its
Loans and issue or participate in Letters of Credit hereunder and enter into
this Agreement.  Each Lender also represents that it will, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower or any Credit Party.  Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder or by the other Loan Documents, the Administrative Agent shall not
have any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, financial and other
condition or creditworthiness of the Borrower or any of the Credit Parties which
may come into the possession of the Administrative Agent or any of its
respective officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates.

 

SECTION 12.7                    Indemnification.  The Lenders agree to indemnify
the Administrative Agent in its capacity as such and (to the extent not
reimbursed by the Borrower and without limiting the obligation of the Borrower
to do so), ratably according to the respective amounts of their Revolving Credit
Commitment Percentages from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including at any
time following the payment of the Loans or any Reimbursement Obligation) be
imposed on, incurred by or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement or the other Loan Documents, or any
documents, reports or other information provided to the Administrative Agent or
any Lender or contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted by
the Administrative Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Administrative
Agent’s bad faith, gross negligence or willful misconduct.  The agreements in
this Section shall survive the payment of the Obligations and the termination of
this Agreement.

 

SECTION 12.8                    The Administrative Agent in Its Individual
Capacity.  The Administrative Agent and its respective Subsidiaries and
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower as though the Administrative Agent were not
the Administrative Agent hereunder.  With respect to any Loans made or renewed
by it and with respect to any Letter of Credit issued by it or participated in
by

 

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it, the Administrative Agent shall have the same rights and powers under this
Agreement and the other Loan Documents as any Lender and may exercise the same
as though it were not the Administrative Agent, and the terms “Lender” and
“Lenders” shall include the Administrative Agent in its individual capacity.

 

SECTION 12.9                    Resignation of the Administrative Agent;
Successor Administrative Agent.

 

(a)                                  Subject to the appointment and acceptance
of a successor as provided below, Wachovia may resign as the Administrative
Agent at any time by giving notice thereof to the Lenders and the Borrower. 
Upon any such resignation, the Required Lenders shall appoint from among the
Lenders a successor administrative agent for the Lenders, which successor
administrative agent shall be consented to by the Borrower at all times other
than during the existence of an Event of Default (which consent of the Borrower
shall not be unreasonably withheld or delayed).  If no successor administrative
agent shall have been so appointed by the Required Lenders and shall have
accepted such appointment within thirty (30) days after the Administrative
Agent’s giving of notice of resignation, then the Administrative Agent may, on
behalf of the Lenders, appoint a successor administrative agent.  Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
administrative agent, such successor administrative agent shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Administrative Agent and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder without any other or
further act or deed on the part of such retiring Administrative Agent or any
other Lender.  After any retiring Administrative Agent’s resignation hereunder
as Administrative Agent, the provisions of this Article XII and Section 13.3
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement.  If no successor
administrative agent has accepted appointment as Administrative Agent by the
date which is thirty (30) days following a retiring Administrative Agent’s
notice of resignation, the retiring Administrative Agent’s resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of the Administrative Agent hereunder until such time, if any, as the
Required Lenders appoint a successor agent as provided for above.

 

(b)                                 Notwithstanding anything to the contrary
contained herein, Wachovia may, (i) upon thirty (30) days’ notice to the
Borrower and the Lenders, resign as Issuing Lender and/or (ii) upon thirty (30)
days’ notice to the Borrower, resign as Swingline Lender.  In the event of any
such resignation as Issuing Lender or Swingline Lender, the Borrower shall be
entitled to appoint from among the Lenders a successor Issuing Lender or
Swingline Lender hereunder; provided that no failure by the Borrower to appoint
any such successor shall affect the resignation of Wachovia as Issuing Lender or
Swingline Lender, as the case may be.  If Wachovia resigns as Issuing Lender, it
shall retain all the rights and obligations of the Issuing Lender hereunder with
respect to all Letters of Credit outstanding as of the effective date of its
resignation as Issuing Lender and all L/C Obligations with respect thereto,
including the right to require the Lenders to make Revolving Credit Loans or
fund risk participations for unreimbursed amounts of Letters of Credit pursuant
to Section 3.4.  If Wachovia resigns as Swingline Lender, it shall retain all
the rights of the Swingline Lender provided for hereunder with respect to
Swingline Loans made by it and outstanding as of the effective date of such
resignation,

 

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including the right to require the Lenders to make Revolving Credit Loans or
fund risk participations in outstanding Swingline Loans pursuant to
Section 2.2(b).

 

SECTION 12.10              Collateral and Guaranty Matters.  The Lenders
irrevocably authorize the Administrative Agent, at its option and in its
discretion,

 

(a)                                  to release any Lien on any Collateral
granted to or held by the Administrative Agent, for the ratable benefit of
itself and the Lenders, under any Loan Document (i) upon repayment of the
outstanding principal of and all accrued interest on the Loans, payment of all
outstanding fees and expenses hereunder, the termination of the Lenders’
Commitments and the expiration or termination of all Letters of Credit, (ii)
that is sold or to be sold as part of or in connection with any sale permitted
hereunder or under any other Loan Document, or (iii) if approved, authorized or
ratified in writing by the necessary Lenders in accordance with Section 13.2;

 

(b)                                 to subordinate any Lien on any Collateral
granted to or held by the Administrative Agent under any Loan Document to the
holder of any Lien on such Collateral that is permitted by Section 10.2(g); and

 

(c)                                  to release any Subsidiary Guarantor from
its obligations under the Guaranty Agreement if such Person ceases to be a
Subsidiary as a result of a transaction permitted hereunder.

 

Upon request by the Administrative Agent at any time, the Required Lenders will
confirm in writing the Administrative 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 Guaranty Agreement pursuant to this
Section.

 

SECTION 12.11              Other Agents, Arrangers and Managers.  None of the
Lenders or other Persons identified on the facing page or signature pages of
this Agreement as a “syndication agent,” “documentation agent,” “co-agent,”
“book manager,” “lead manager,” “arranger,” “lead arranger” or “co-arranger”
shall have any right, power, obligation, liability, responsibility or duty under
this Agreement other than, in the case of such Lenders, those applicable to all
Lenders as such.  Without limiting the foregoing, none of the Lenders or other
Persons so identified shall have or be deemed to have any fiduciary relationship
with any Lender.  Each Lender acknowledges that it has not relied, and will not
rely, on any of the Lenders or other Persons so identified in deciding to enter
into this Agreement or in taking or not taking action hereunder.

 

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ARTICLE XIII

 

MISCELLANEOUS

 

SECTION 13.1                    Notices.

 

(a)                                  Method of Communication.  Except as
otherwise provided in this Agreement, all notices and communications hereunder
shall be in writing (for purposes hereof, the term “writing” shall include
information in electronic format such as electronic mail and internet web
pages), or by telephone subsequently confirmed in writing.  Any notice shall be
effective if delivered by hand delivery or sent via electronic mail, posting on
an internet web page, telecopy, recognized overnight courier service or
certified mail, return receipt requested, and shall be presumed to be received
by a party hereto (i) on the date of delivery if delivered by hand or sent by
electronic mail, posting on an internet web page, telecopy, (ii) on the next
Business Day if sent by recognized overnight courier service and (iii) on the
third Business Day following the date sent by certified mail, return receipt
requested.  A telephonic notice to the Administrative Agent as understood by the
Administrative Agent will be deemed to be the controlling and proper notice in
the event of a discrepancy with or failure to receive a confirming written
notice.

 

(b)                                 Addresses for Notices.  Notices to any party
shall be sent to it at the following addresses, or any other address as to which
all the other parties are notified in writing.

 

If to the Borrower:

 

Tuesday Morning, Inc.

 

 

6250 LBJ Freeway

 

 

Dallas, Texas 75240

 

 

Attention:

Loren K. Jensen, Executive Vice President

 

 

 

and Chief Financial Officer

 

 

Telephone No.: (972) 934-7251

 

 

Telecopy No.: (469) 374-0493

 

 

 

With copies to:

 

Tuesday Morning Corporation

 

 

6250 LBJ Freeway

 

 

Dallas, Texas 75240

 

 

Attention:

Loren K. Jensen, Executive Vice President

 

 

 

and Chief Financial Officer

 

 

Telephone No.: (972) 934-7251

 

 

Telecopy No.: (469) 374-0493

 

 

 

 

 

Fulbright & Jaworski L.L.P.

 

 

2200 Ross Avenue, Suite 2800

 

 

Dallas, Texas 75201

 

 

Attention:

Harva R. Dockery, Esq.

 

 

Telephone No.: (214) 855-8369

 

 

Telecopy No.: (214) 855-8200

 

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If to Wachovia as

 

Wachovia Bank, National Association

Administrative Agent:

 

Charlotte Plaza, CP-8

 

 

201 South College Street

 

 

Charlotte, North Carolina 28288-0680

 

 

Attention: Syndication Agency Services

 

 

Telephone No.: (704) 374-2698

 

 

Telecopy No.: (704) 383-0288

 

 

 

If to any Lender:

 

To the address set forth on the Register

 

(c)                                  Administrative Agent’s Office.  The
Administrative Agent hereby designates its office located at the address set
forth above, or any subsequent office which shall have been specified for such
purpose by written notice to the Borrower and Lenders, as the Administrative
Agent’s Office referred to herein, to which payments due are to be made and at
which Loans will be disbursed and Letters of Credit requested.

 

SECTION 13.2                    Amendments, Waivers and Consents.  Except as set
forth below or as specifically provided in any Loan Document, any term,
covenant, agreement or condition of this Agreement or any of the other Loan
Documents may be amended or waived by the Lenders, and any consent given by the
Lenders, if, but only if, such amendment, waiver or consent is in writing signed
by the Required Lenders (or by the Administrative Agent with the consent of the
Required Lenders) and delivered to the Administrative Agent and, in the case of
an amendment, signed by the Borrower; provided, that no amendment, waiver or
consent shall:

 

(a)                                  waive any condition set forth in
Section 5.2 without the written consent of each Lender;

 

(b)                                 extend or increase the Commitment of any
Lender (or reinstate any Commitment terminated pursuant to Section 11.2(a)) or
the amount of Loans of any Lender without the written consent of each Lender
directly affected thereby;

 

(c)                                  postpone any date fixed by this Agreement
or any other Loan Document for any payment of principal, interest, fees or other
amounts due to the Lenders (or any of them) hereunder or under any other Loan
Document without the written consent of each Lender directly affected thereby;

 

(d)                                 reduce the principal of, or the rate of
interest specified herein on, any Loan or Reimbursement Obligation, or (subject
to clause (iv) of the second proviso to this Section) any fees or other amounts
payable hereunder or under any other Loan Document without the written consent
of each Lender directly affected thereby; provided that only the consent of the
Required Lenders shall be necessary (i) to waive any obligation of the Borrower
to pay interest at the rate set forth in Section 4.1(c) during the continuance
of an Event of Default, or (ii) to amend any financial covenant hereunder (or
any defined term used therein) even if the effect of such amendment would be to
reduce the rate of interest on any Loan or L/C Borrowing or to reduce any fee
payable hereunder;

 

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(e)                                  change Section 4.4 or Section 11.4 in a
manner that would alter the pro rata sharing of payments required thereby
without the written consent of each Lender directly affected thereby;

 

(f)                                    change any provision of this Section or
the definition of “Required 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;

 

(g)                                 release the Parent or Holdings from the
Parental Entity Guaranty Agreement or release all of the Subsidiary Guarantors
or release Subsidiary Guarantors comprising substantially all of the credit
support for the Credit Party Obligations, in either case, from the Subsidiary
Guaranty Agreement (other than as authorized in Section 12.10), without the
written consent of each Lender; or

 

(h)                                 release all or a material portion of the
Collateral or release any Security Document (other than as authorized in
Section 12.10 or as otherwise specifically permitted or contemplated in this
Agreement or the applicable Security Document) without the written consent of
each Lender;

 

provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Issuing Lender in addition to the Lenders required
above, affect the rights or duties of the Issuing Lender under this Agreement or
any Letter of Credit Application 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 Swingline Lender in addition to the Lenders required above,
affect the rights or duties of the Swingline Lender under this Agreement; (iii)
no amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above, affect the
rights or duties of the Administrative 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 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.

 

SECTION 13.3                    Expenses; Indemnity.  The Borrower will (a) pay
all out-of-pocket expenses (including all costs of electronic or internet
distribution of any information hereunder) of the Administrative Agent in
connection with (i) the preparation, execution and delivery of this Agreement
and each other Loan Document, whenever the same shall be executed and delivered,
including all out-of-pocket syndication and due diligence expenses and
reasonable fees and disbursements of counsel for the Administrative Agent and
(ii) the preparation, execution and delivery of any waiver, amendment or consent
by the Administrative Agent or the Lenders relating to this Agreement or any
other Loan Document, including reasonable fees, disbursements and other charges
of counsel for the Administrative Agent, (b) pay all reasonable out-of-pocket
expenses of the Administrative Agent and each Lender actually incurred in
connection with the administration and enforcement of any rights and remedies of
the Administrative Agent and Lenders under the Credit Facility, including in
connection with any

 

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workout, restructuring, bankruptcy or other similar proceeding, creating and
perfecting Liens in favor of the Administrative Agent on behalf of the Lenders
pursuant to any Security Document, enforcing any Obligations of, or collecting
any payments due from, the Borrower or any Guarantor by reason of an Event of
Default (including by reason of an Event of Default, in connection with the sale
of, collection from, or other realization upon any of the Collateral or the
enforcement of the Subsidiary Guaranty Agreement; consulting with appraisers,
accountants, engineers, attorneys and other Persons concerning the nature, scope
or value of any right or remedy of the Administrative Agent or any Lender
hereunder or under any other Loan Document or any factual matters in connection
therewith, which expenses shall include the reasonable fees and disbursements of
such Persons, (c) any civil penalty or fine assessed by the U.S. Department of
the Treasury’s Office of Foreign Assets Control against, and all reasonable
costs and expenses (including counsel fees and disbursements) incurred in
connection with defense thereof by the Administrative Agent or any Lender as a
result of the funding of Loans, the issuance of Letters of Credit, the
acceptance of payment or of collateral due under the Loan Documents and (d)
defend, indemnify and hold harmless the Administrative Agent and the Lenders,
and their respective parents, Subsidiaries, Affiliates, partners, employees,
agents, officers, advisors and directors, from and against any losses,
penalties, fines, liabilities, settlements, damages, costs and expenses,
suffered by any such Person in connection with any claim (including any
Environmental Claims), investigation, litigation or other proceeding (whether or
not the Administrative Agent or any Lender is a party thereto) and the
prosecution and defense thereof, arising out of or in any way connected with the
Extensions of Credit, this Agreement, any other Loan Document, or any documents,
reports or other information provided to the Administrative Agent or any Lender
or contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby, including reasonable attorney’s and consultant’s
fees, except to the extent that any of the foregoing (a) are determined by a
court of competent jurisdiction by a final and nonappealable judgment to have
resulted directly from the gross negligence or willful misconduct of the party
seeking indemnification therefor or (b) result from a claim brought by any
Credit Party against an indemnitee for breach in bad faith of the obligations
under this Agreement or the other Loan Documents of the party seeking
indemnification if such Credit Party has obtained a final and nonappealable
judgment in its favor on such claim as determined by a court of competent
jurisdiction.

 

SECTION 13.4                    Set-off.  If an Event of Default shall have
occurred and be continuing, each Lender, the Issuing Lender, the Swingline
Lender and each of their respective Affiliates is hereby authorized at any time
and from time to time, 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) at any time held and other
obligations (in whatever currency) at any time owing by such Lender, the Issuing
Lender, the Swingline Lender or any such Affiliate to or for the credit or the
account of the Borrower or any other Credit Party against any and all of the
obligations of the Borrower or such Credit Party now or hereafter existing under
this Agreement or any other Loan Document to such Lender, the Issuing Lender or
the Swingline Lender, irrespective of whether or not such Lender, the Issuing
Lender or the Swingline Lender shall have made any demand under this Agreement
or any other Loan Document and although such obligations of the Borrower or such
Credit Party may be contingent or unmatured or are owed to a branch or office of
such Lender, the Issuing Lender or the Swingline Lender different from the
branch or office holding such deposit or obligated on such

 

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indebtedness.  The rights of each Lender, the Issuing Lender, the Swingline
Lender and their respective Affiliates under this Section are in addition to
other rights and remedies (including other rights of setoff) that such Lender,
the Issuing Lender, the Swingline Lender or their respective Affiliates may
have.  Each Lender, the Issuing Lender and the Swingline Lender agrees to notify
the Borrower and the Administrative 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.

 

SECTION 13.5                    Governing Law.  This Agreement and the other
Loan Documents, unless otherwise expressly set forth therein, shall be governed
by, construed and enforced in accordance with the laws of the State of New York,
including Section 5-1401 and Section 5-1402 of the General Obligations Law of
the State of New York, without reference to any other conflicts of law
principles thereof.

 

SECTION 13.6                    Jurisdiction and Venue.

 

(a)                                  Jurisdiction.  Each Credit Party party
hereto hereby irrevocably consents to the personal jurisdiction of the state and
federal courts located in New York, New York (and any courts from which an
appeal from any of such courts must or may be taken), in any action, claim or
other proceeding arising out of any dispute in connection with this Agreement
and the other Loan Documents, any rights or obligations hereunder or thereunder,
or the performance of such rights and obligations.  Each Credit Party party
hereto hereby irrevocably consents to the service of a summons and complaint and
other process in any action, claim or proceeding brought by the Administrative
Agent or any Lender in connection with this Agreement or the other Loan
Documents, any rights or obligations hereunder or thereunder, or the performance
of such rights and obligations, on behalf of itself or its property, in the
manner specified in Section 13.1.  Nothing in this Section shall affect the
right of the Administrative Agent or any Lender to serve legal process in any
other manner permitted by Applicable Law or affect the right of the
Administrative Agent or any Lender to bring any action or proceeding against any
Credit Party or their respective properties in the courts of any other
jurisdictions.

 

(b)                                 Venue.  Each Credit Party party hereto
hereby irrevocably waives any objection it may have now or in the future to the
laying of venue in the aforesaid jurisdiction in any action, claim or other
proceeding arising out of or in connection with this Agreement, any other Loan
Document or the rights and obligations of the parties hereunder or thereunder. 
Each Credit Party party hereto irrevocably waives, in connection with such
action, claim or proceeding, any plea or claim that the action, claim or other
proceeding has been brought in an inconvenient forum.

 

SECTION 13.7                    Waiver of Jury Trial.

THE ADMINISTRATIVE AGENT, EACH LENDER, THE PARENT, HOLDINGS AND THE BORROWER
HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO
ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.

 

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(a)                                  Preservation of Certain Remedies.  The
parties hereto and the other Loan Documents preserve, without diminution,
certain remedies that such Persons may employ or exercise freely, either alone,
in conjunction with or during a dispute, claim or controversy in connection
with, or relating to this Agreement, the Notes or the other Loan Documents . 
Each such Person shall have and hereby reserves the right to proceed in any
court of proper jurisdiction or by self help to exercise or prosecute the
following remedies, as applicable:  (i) all rights to foreclose against any real
or personal property or other security granted under a Loan Document by
exercising a power of sale granted in the Loan Documents or under Applicable Law
or by judicial foreclosure and sale, including a proceeding to confirm the sale,
(ii) all rights of self help including peaceful occupation of property and
collection of rents, set off, and peaceful possession of property, (iii)
obtaining provisional or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of receiver and in filing an
involuntary bankruptcy proceeding, and (iv) when applicable, a judgment by
confession of judgment.  Preservation of these remedies does not limit the power
of an arbitrator to grant similar remedies that may be requested by a party in a
Dispute.

 

SECTION 13.8                    Reversal of Payments.  To the extent the
Borrower makes a payment or payments to the Administrative Agent for the ratable
benefit of the Lenders or the Administrative Agent receives any payment or
proceeds of the Collateral which payments or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds repaid, the Obligations or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if such payment or proceeds had not been received by the Administrative
Agent.

 

SECTION 13.9                    Punitive Damages.The Administrative Agent, the
Lenders, the Parent, Holdings and the Borrower (on behalf of itself and the
other Credit Parties) hereby agree that no such Person shall have a remedy of
punitive or exemplary damages against any other party to a Loan Document and
each such Person hereby waives any right or claim to punitive or exemplary
damages that they may now have or may arise in the future in connection with any
Dispute, whether such Dispute is resolved through arbitration or judicially.

 

SECTION 13.10              Accounting Matters.  If at any time any change in
GAAP would affect the computation of any financial ratio or requirement set
forth in any Loan Document, and either the Borrower or the Required Lenders
shall so request, the Administrative 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 Administrative 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.

 

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SECTION 13.11              Successors and Assigns; Participations.

 

(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 neither the Borrower nor any other Credit Party may assign or
otherwise transfer any of its rights or obligations hereunder without the prior
written consent of the Administrative 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 subsection (b)
of this Section, (ii) by way of participation in accordance with the provisions
of subsection (d) of this Section or (iii) by way of pledge or assignment of a
security interest subject to the restrictions of subsection (f) of this
Section (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 Administrative Agent and
the Lenders) 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 and the Loans at the time owing to it); provided that

 

(i)                                     except 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 with respect to a Lender, the aggregate amount of the
Commitment (which for this purpose includes Loans outstanding thereunder) or, if
the applicable 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 Administrative 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, in the case of any assignment in respect of the Revolving
Credit Facility, unless such assignment is made to an existing Lender or to an
Affiliate thereof, in which case no minimum amount shall apply, unless each of
the Administrative Agent and, so long as no Default or Event of Default has
occurred and is continuing, the Borrower otherwise consent (each such consent
not to be unreasonably withheld or delayed); provided that the Borrower shall be
deemed to have given its consent five (5) Business Days after the date written
notice thereof has been delivered by the assigning Lender (through the
Administrative Agent) unless such consent is expressly refused by the Borrower
prior to such fifth (5th) Business Day;

 

(ii)                                  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 Loan or the Commitment
assigned;

 

(iii)                               any assignment of a Revolving Credit
Commitment must be approved by the Administrative Agent, the Swingline Lender
and the Issuing Lender unless the Person that is the proposed assignee is itself
a Lender with a Revolving Credit Commitment (whether or not the proposed
assignee would otherwise qualify as an Eligible Assignee); and

 

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(iv)                              the parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Assumption, together
with a processing and recordation fee of $3,500, and the Eligible Assignee, if
it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire.

 

Subject to acceptance and recording thereof by the Administrative 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 Section 4.8, Section 4.9, Section 4.10,
Section 4.11 and Section 13.3 with respect to facts and circumstances occurring
prior to the effective date of such assignment.  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
subsection (d) of this Section.

 

(c)                                  Register.  The Administrative Agent, acting
solely for this purpose as an agent of the Borrower, shall maintain at one of
its offices in Charlotte, North Carolina, 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 the
Loans owing to, each Lender pursuant to the terms hereof from time to time (the
“Register”).  The entries in the Register shall be conclusive, and the Borrower,
the Administrative 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 purposes of this Agreement, notwithstanding notice to the contrary.  The
Register shall be available for inspection by the Borrower and any Lender solely
to the extent of any entries applicable to such 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 Borrower or the Administrative Agent,
sell participations to any Person (other than a natural person or the Borrower
or any of the Borrower’s 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 owing to it);
provided that (i) such Lender’s obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Borrower, the
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.

 

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

 

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Participant, agree to any amendment, modification or waiver or modification
described in the Section 13.2 that directly affects such Participant.  Subject
to subsection (e) of this Section, the Borrower agrees that each Participant
shall be entitled to the benefits of Section 4.8, Section 4.9, Section 4.10 and
Section 4.11 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section.  To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 13.4 as though it were a Lender, provided such Participant agrees to be
subject to Section 4.6 as though it were a Lender.

 

(e)                                  Limitations upon Participant Rights.  A
Participant shall not be entitled to receive any greater payment under
Section 4.10 and Section 4.11 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant. 
A Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 4.11 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 4.11(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 to secure 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.

 

SECTION 13.12              Confidentiality.  Each of the Administrative Agent
and the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its
Affiliates’ directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) in
accordance with the Administrative Agent’s regulatory compliance policy, to the
extent requested by, or required to be disclosed to, any rating agency, or
regulatory or similar authority (including any self-regulatory authority, such
as the National Association of Insurance Commissioners), (c) to the extent
required by applicable laws or regulations or by any subpoena or similar legal
process, (d) to any other party hereto, (e) in connection with the exercise of
any remedies under this Agreement or under any other Loan Document (or any
Hedging Agreement with a Lender or the Administrative Agent) or any action or
proceeding relating to this Agreement or any other Loan Document (or any Hedging
Agreement with a Lender or the Administrative Agent) or the enforcement of
rights hereunder or thereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to (i) any
purchasing lender, proposed purchasing lender, Participant or proposed
Participant or (ii) any actual or prospective counterparty (or its advisors) to
any swap or derivative transaction relating to the Borrower and its obligations,
(g) with the consent of the Borrower, (h) to Gold Sheets and other similar bank
trade publications, such information to consist of deal terms and other
information customarily found in such publications, or (i) to the extent such
Information (x) becomes publicly available other than as a result of a breach of
this Section or (y) becomes available to the Administrative Agent or any Lender
on a nonconfidential basis from a source other than the Borrower.  For purposes
of this Section, “Information” means all information received from any Credit
Party relating to any Credit Party or any of their respective businesses, other
than any such information that is

 

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available to the Administrative Agent or any Lender on a nonconfidential basis
prior to disclosure by any Credit Party; provided that, in the case of
information received from a Credit Party after the date hereof, such information
is clearly identified at the time of delivery as confidential.  Any Person
required to maintain the confidentiality of Information as provided in this
Section shall be considered to have complied with its obligation to do so if
such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.

 

SECTION 13.13              Performance of Duties.  Each of the Credit Party’s
obligations under this Agreement and each of the other Loan Documents shall be
performed by such Credit Party at its sole cost and expense.

 

SECTION 13.14              All Powers Coupled with Interest.  All powers of
attorney and other authorizations granted to the Lenders, the Administrative
Agent and any Persons designated by the Administrative Agent or any Lender
pursuant to any provisions of this Agreement or any of the other Loan Documents
shall be deemed coupled with an interest and shall be irrevocable so long as any
of the Obligations remain unpaid or unsatisfied, any of the Commitments remain
in effect or the Credit Facility has not been terminated.

 

SECTION 13.15              Survival of Indemnities.  Notwithstanding any
termination of this Agreement, the indemnities to which the Administrative Agent
and the Lenders are entitled under the provisions of this Article XIII and any
other provision of this Agreement and the other Loan Documents shall continue in
full force and effect and shall protect the Administrative Agent and the Lenders
against events arising after such termination as well as before.

 

SECTION 13.16              Titles and Captions.  Titles and captions of
Articles, Sections and subsections in, and the table of contents of, this
Agreement are for convenience only, and neither limit nor amplify the provisions
of this Agreement.

 

SECTION 13.17              Severability of Provisions.  Any provision of this
Agreement or any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.

 

SECTION 13.18              Counterparts.  This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns, and all of which taken
together shall constitute one and the same agreement.

 

SECTION 13.19              Integration.  This Agreement, together with the other
Loan Documents, comprises the complete and integrated agreement of the parties
on the subject matter hereof and thereof and supersedes all prior agreements,
written or oral, on such subject matter.  In the event of any conflict between
the provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control; provided that the inclusion of
supplemental rights or remedies in favor of the Administrative Agent or the
Lenders in any other

 

86

--------------------------------------------------------------------------------

 

Loan Document shall not be deemed a conflict with this Agreement.  Each Loan
Document was drafted with the joint participation of the respective parties
thereto and shall be construed neither against nor in favor of any party, but
rather in accordance with the fair meaning thereof.

 

SECTION 13.20              Term of Agreement.  This Agreement shall remain in
effect from the Closing Date through and including the date upon which all
Obligations arising hereunder or under any other Loan Document shall have been
indefeasibly and irrevocably paid and satisfied in full and all Commitments have
been terminated.  No termination of this Agreement shall affect the rights and
obligations of the parties hereto arising prior to such termination or in
respect of any provision of this Agreement which survives such termination.

 

SECTION 13.21              Advice of Counsel, No Strict Construction. Each of
the parties represents to each other party hereto that it has discussed this
Agreement with its counsel.  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.

 

SECTION 13.22              Inconsistencies with Other Documents; Independent
Effect of Covenants.

 

(a)                                  In the event there is a conflict or
inconsistency between this Agreement and any other Loan Document, the terms of
this Agreement shall control; provided that any provision of the Security
Documents which imposes additional burdens on the Credit Parties or their
Subsidiaries or further restricts the rights of the Credit Parties or their
Subsidiaries or gives the Administrative Agent or Lenders additional rights
shall not be deemed to be in conflict or inconsistent with this Agreement and
shall be given full force and effect.

 

(b)                                 Each of the Parent, Holdings and the
Borrower expressly acknowledges and agrees that each covenant contained in
Articles VIII, IX, or X hereof shall be given independent effect.  Accordingly,
the Parent, Holdings and the Borrower shall not engage in any transaction or
other act otherwise permitted under any covenant contained in Articles VIII, IX,
or X if, before or after giving effect to such transaction or act, such Person
shall or would be in breach of any other covenant contained in Articles VIII,
IX, or X.

 

[Signature pages to follow]

 

87

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
under seal by their duly authorized officers, all as of the day and year first
written above.

 

 

TUESDAY MORNING, INC., as Borrower

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

TUESDAY MORNING CORPORATION, as
Parent

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

TMI HOLDINGS, INC., as Holdings

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

--------------------------------------------------------------------------------

 

 

AGENTS AND LENDERS:

 

 

 

WACHOVIA BANK, NATIONAL ASSOCIATION,

 

as Administrative Agent, Swingline Lender, Issuing
Lender and Lender

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

--------------------------------------------------------------------------------

 

 

WELLS FARGO BANK, N.A., as
Co-Syndication Agent, Co-Lead Arranger
and Lender

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

--------------------------------------------------------------------------------

 

 

LASALLE BANK NATIONAL ASSOCIATION,
as Co-Syndication Agent and Lender

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

--------------------------------------------------------------------------------

 

 

U.S. BANK NATIONAL ASSOCIATION,
as Co-Documentation Agent and Lender

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

--------------------------------------------------------------------------------

 

 

SOVEREIGN BANK,
as Co-Documentation Agent and Lender

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

--------------------------------------------------------------------------------

 

 

THE ROYAL BANK OF SCOTLAND plc,
as Lender

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

--------------------------------------------------------------------------------

 

 

HIBERNIA NATIONAL BANK, as Lender

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

--------------------------------------------------------------------------------

 

EXHIBIT A-1

to

Credit Agreement

dated as of December 22, 2004

by and among

TUESDAY MORNING, INC., as Borrower,

TUESDAY MORNING CORPORATION, as Parent,

TMI HOLDINGS, INC., as Holdings,

the lenders party thereto, as Lenders,

and

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent

 

 

FORM OF REVOLVING CREDIT NOTE

 

--------------------------------------------------------------------------------

 

REVOLVING CREDIT NOTE

 

$                  

                   , 200  

 

FOR VALUE RECEIVED, the undersigned, TUESDAY MORNING, INC., a corporation
organized under the laws of the State of Texas (the “Borrower”), promises to pay
to the order of                                      , (the “Lender”), at the
place and times provided in the Credit Agreement referred to below, the
principal sum of                                     DOLLARS
($                      ) or, if less, the principal amount of all Revolving
Credit Loans made by the Lender from time to time pursuant to that certain
Credit Agreement, dated as of December 22, 2004 (as amended, restated,
supplemented or otherwise modified, the “Credit Agreement”), by and among the
Borrower, Tuesday Morning Corporation, a Delaware corporation (the “Parent”),
TMI Holdings, Inc., a Delaware corporation (“Holdings”), the lenders who are or
may become a party thereto (collectively, the “Lenders”) and Wachovia Bank,
National Association, a national banking association, as the administrative
agent for the Lenders (the “Administrative Agent”).  Capitalized terms used
herein and not defined herein shall have the meanings assigned thereto in the
Credit Agreement.

 

The unpaid principal amount of this Revolving Credit Note from time to time
outstanding is subject to mandatory repayment from time to time as provided in
the Credit Agreement and shall bear interest as provided in Section 4.1 of the
Credit Agreement.  All payments of principal and interest on this Revolving
Credit Note shall be payable in lawful currency of the United States of America
in immediately available funds to the account designated in the Credit
Agreement.

 

This Revolving Credit Note is entitled to the benefits of, and evidences
Obligations incurred under, the Credit Agreement, to which reference is made for
a description of the security for this Revolving Credit Note and for a statement
of the terms and conditions on which the Borrower is permitted and required to
make prepayments and repayments of principal of the Obligations evidenced by
this Revolving Credit Note and on which such Obligations may be declared to be
immediately due and payable.

 

THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 AND
SECTION 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT
REFERENCE TO ANY OTHER CONFLICTS OF LAW PRINCIPLES THEREOF.

 

The Indebtedness evidenced by this Revolving Credit Note is senior in right of
payment to all Subordinated Indebtedness referred to in the Credit Agreement.

 

--------------------------------------------------------------------------------

 

The Borrower hereby waives all requirements as to diligence, presentment, demand
of payment, protest and (except as required by the Credit Agreement) notice of
any kind with respect to this Revolving Credit Note.

 

 

[Signature Page Follows]

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned has executed this Revolving Credit Note
under seal as of the day and year first above written.

 

 

 

TUESDAY MORNING, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

--------------------------------------------------------------------------------

 

EXHIBIT A-2

to

Credit Agreement

dated as of December 22, 2004

by and among

TUESDAY MORNING, INC., as Borrower,

TUESDAY MORNING CORPORATION, as Parent,

TMI HOLDINGS, INC., as Holdings,

the lenders party thereto, as Lenders,

and

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent

 

 

FORM OF SWINGLINE NOTE

 

--------------------------------------------------------------------------------

 

SWINGLINE NOTE

 

$                  

                   , 200  

 

FOR VALUE RECEIVED, the undersigned, TUESDAY MORNING, INC., a corporation
organized under the laws of the State of Texas (the “Borrower”), promises to pay
to the order of                        (the “Lender”), at the place and times
provided in the Credit Agreement referred to below, the principal sum of
                                  DOLLARS ($                     ) or, if less,
the principal amount of all Swingline Loans made by the Lender from time to time
pursuant to that certain Credit Agreement, dated as of December 22, 2004 (as
amended, restated, supplemented or otherwise modified, the “Credit Agreement”),
by and among the Borrower, Tuesday Morning Corporation, a Delaware corporation
(the “Parent”), TMI Holdings, Inc., a Delaware corporation (“Holdings”), the
lenders who are or may become a party thereto (collectively, the “Lenders”) and
Wachovia Bank, National Association, a national banking association, as the
administrative agent for the Lenders (the “Administrative Agent”).  Capitalized
terms used herein and not defined herein shall have the meanings assigned
thereto in the Credit Agreement.

 

The unpaid principal amount of this Swingline Note from time to time outstanding
is subject to mandatory repayment from time to time as provided in the Credit
Agreement and shall bear interest as provided in Section 4.1 of the Credit
Agreement.  Swingline Loans refunded as Revolving Credit Loans in accordance
with Section 2.2(b) of the Credit Agreement shall be payable by the Borrower as
Revolving Credit Loans pursuant to the Revolving Credit Notes, and shall not be
payable under this Swingline Note as Swingline Loans.  All payments of principal
and interest on this Swingline Note shall be payable in lawful currency of the
United States of America in immediately available funds to the account
designated in the Credit Agreement.

 

This Swingline Note is entitled to the benefits of, and evidences Obligations
incurred under, the Credit Agreement, to which reference is made for a
description of the security for this Swingline Note and for a statement of the
terms and conditions on which the Borrower is permitted and required to make
prepayments and repayments of principal of the Obligations evidenced by this
Swingline Note and on which such Obligations may be declared to be immediately
due and payable.

 

THIS SWINGLINE NOTE SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 AND SECTION 5-1402
OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REFERENCE TO
ANY OTHER CONFLICTS OF LAW PRINCIPLES THEREOF.

 

The Indebtedness evidenced by this Swingline Note is senior in right of payment
to all Subordinated Indebtedness referred to in the Credit Agreement.

 

The Borrower hereby waives all requirements as to diligence, presentment, demand
of payment, protest and (except as required by the Credit Agreement) notice of
any kind with respect to this Swingline Note.

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned has executed this Swingline Note under seal
as of the day and year first above written.

 

 

 

TUESDAY MORNING, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

2

--------------------------------------------------------------------------------

 

EXHIBIT B

to

Credit Agreement

dated as of December 22, 2004

by and among

TUESDAY MORNING, INC., as Borrower,

TUESDAY MORNING CORPORATION, as Parent,

TMI HOLDINGS, INC., as Holdings,

the lenders party thereto, as Lenders,

and

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent

 

 

FORM OF NOTICE OF BORROWING

 

--------------------------------------------------------------------------------

 

NOTICE OF BORROWING

 

Dated as of:                 

 

Wachovia Bank, National Association,
  as Administrative Agent

Charlotte Plaza, CP-8

201 South College Street

Charlotte, North Carolina 28288-0680

Attention:  Syndication Agency Services

 

Ladies and Gentlemen:

 

This irrevocable Notice of Borrowing is delivered to you pursuant to Section 2.3
of the Credit Agreement dated as of December 22, 2004 (as amended, restated,
supplemented or otherwise modified, the “Credit Agreement”), by and among
TUESDAY MORNING, INC., a Texas corporation (the “Borrower”), TUESDAY MORNING
CORPORATION, a Delaware corporation (the “Parent”), TMI HOLDINGS, INC., a
Delaware corporation (“Holdings”), the lenders who are or may become party
thereto (collectively, the “Lenders”) and WACHOVIA BANK, NATIONAL ASSOCIATION, a
national banking association, as the administrative agent for the Lenders (the
“Administrative Agent”).

 

1.             The Borrower hereby requests that the Lenders make a [Revolving
Credit Loan] [Swingline Loan] to the Borrower in the aggregate principal amount
of $                 .  (Complete with an amount in accordance with Section
2.3(a) of the Credit Agreement.)

 

2.             The Borrower hereby requests that such Loan be made on the
following Business Day:                           .  (Complete with a Business
Day in accordance with Section 2.3(a) of the Credit Agreement).

 

3.             The Borrower hereby requests that the Revolving Credit Loan bear
interest at the following interest rate, plus the Applicable Margin, as set
forth below:

 

Component
of Loan

 

Interest Rate

 

Interest Period
(LIBOR
Rate only)

 

Termination Date for
Interest Period
(if applicable)

 

 

 

 

 

 

 

 

 

[Base Rate or LIBOR Rate](1)

 

 

 

 

 

--------------------------------------------------------------------------------

(1)           Complete with (i) the Base Rate or LIBOR Rate for Revolving Credit
Loans and (ii) the Base Rate for Swingline Loans.

 

--------------------------------------------------------------------------------

 

4.             The principal amount of all Loans and L/C Obligations outstanding
as of the date hereof (including the Loan requested herein) does not exceed the
maximum amount permitted to be outstanding pursuant to the terms of the Credit
Agreement.

 

5.             All of the conditions applicable to the Loan requested herein as
set forth in the Credit Agreement have been satisfied as of the date hereof and
will remain satisfied to the date of such Loan.

 

6.             Capitalized terms used herein and not defined herein shall have
the meanings assigned thereto in the Credit Agreement.

 

[Signature Page Follows]

 

2

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned has executed this Notice of Borrowing as of
the              day of         , 200  .

 

 

 

TUESDAY MORNING, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

3

--------------------------------------------------------------------------------

 

EXHIBIT C

to

Credit Agreement

dated as of December 22, 2004

by and among

TUESDAY MORNING, INC., as Borrower,

TUESDAY MORNING CORPORATION, as Parent,

TMI HOLDINGS, INC., as Holdings,

the lenders party thereto, as Lenders,

and

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent

 

 

FORM OF NOTICE OF ACCOUNT DESIGNATION

 

--------------------------------------------------------------------------------

 

NOTICE OF ACCOUNT DESIGNATION

 

Dated as of:                

 

Wachovia Bank, National Association,
  as Administrative Agent

Charlotte Plaza, CP-8

201 South College Street

Charlotte, North Carolina 28288-0680

Attention:  Syndication Agency Services

 

Ladies and Gentlemen:

 

This Notice of Account Designation is delivered to you pursuant to Section
2.3(b) of the Credit Agreement, dated as of December 22, 2004 (as amended,
restated, supplemented or otherwise modified, the “Credit Agreement”), by and
among TUESDAY MORNING, INC., a Texas corporation (the “Borrower”), TUESDAY
MORNING CORPORATION, a Delaware corporation (the “Parent”), TMI HOLDINGS, INC.,
a Delaware corporation (“Holdings”), the lenders who are or may become party
thereto (collectively, the “Lenders”) and WACHOVIA BANK, NATIONAL ASSOCIATION, a
national banking association, as the administrative agent for the Lenders (the
“Administrative Agent”).

 

1.             The Administrative Agent is hereby authorized to disburse all
Loan proceeds into the following account(s):

 

 

ABA Routing Number:           

Account Number:                   

 

2.             This authorization shall remain in effect until revoked or until
a subsequent Notice of Account Designation is provided to the Administrative
Agent.

 

3.             Capitalized terms used herein and not defined herein shall have
the meanings assigned thereto in the Credit Agreement.

 

[Signature Page Follows]

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned has executed this Notice of Account
Designation as of the        day of          , 200  .

 

 

 

TUESDAY MORNING, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

--------------------------------------------------------------------------------

 

EXHIBIT D

to

Credit Agreement

dated as of December 22, 2004

by and among

TUESDAY MORNING, INC., as Borrower,

TUESDAY MORNING CORPORATION, as Parent,

TMI HOLDINGS, INC., as Holdings,

the lenders party thereto, as Lenders,

and

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent

 

 

FORM OF NOTICE OF PREPAYMENT

 

--------------------------------------------------------------------------------

 

NOTICE OF PREPAYMENT

 

Dated as of:              

 

Wachovia Bank, National Association,
  as Administrative Agent

Charlotte Plaza, CP-8

201 South College Street

Charlotte, North Carolina 28288-0680

Attention:  Syndication Agency Services

 

Ladies and Gentlemen:

 

This irrevocable Notice of Prepayment is delivered to you pursuant to Section
2.4(c) of the Credit Agreement, dated as of December 22, 2004 (as amended,
restated, supplemented or otherwise modified, the “Credit Agreement”), by and
among TUESDAY MORNING, INC., a Texas corporation (the “Borrower”), TUESDAY
MORNING CORPORATION, a Delaware corporation (the “Parent”), TMI HOLDINGS, INC.,
a Delaware corporation (“Holdings”), the lenders who are or may become a party
thereto (collectively, the “Lenders”) and WACHOVIA BANK, NATIONAL ASSOCIATION, a
national banking association, as the administrative agent for the Lenders (the
“Administrative Agent”).

 

1.             The Borrower hereby provides notice to the Administrative Agent
that it shall prepay the following [Base Rate Loans] and/or [LIBOR Rate Loans]:
                       .

(Complete with the amount of prepayment allocable to each type of loan in
accordance with Section 2.4 of the Credit Agreement.)

 

2.            The Loan to be prepaid is a [check each applicable box]

 

•              Swingline Loan

 

•              Revolving Credit Loan

 

3.             The Borrower shall repay the above-referenced Loans on the
following Business Day:                        . (Complete with the same
Business Day as the date of this Notice of Prepayment or any Business Day
thereafter with respect to any Swingline Loan or any Base Rate Loan, and a date
which is at least three (3) Business Days subsequent to date of this Notice of
Prepayment with respect to any LIBOR Rate Loan.)

 

4.             Capitalized terms used herein and not defined herein shall have
the meanings assigned thereto in the Credit Agreement.

 

[Signature Page Follows]

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned has executed this Notice of Prepayment as of
the       day of      , 200  .

 

 

 

TUESDAY MORNING, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

2

--------------------------------------------------------------------------------

 

EXHIBIT E

to

Credit Agreement

dated as of December 22, 2004

by and among

TUESDAY MORNING, INC., as Borrower,

TUESDAY MORNING CORPORATION, as Parent,

TMI HOLDINGS, INC., as Holdings,

the lenders party thereto, as Lenders,

and

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent

 

 

FORM OF NOTICE OF CONVERSION/CONTINUATION

 

--------------------------------------------------------------------------------

 

NOTICE OF CONVERSION/CONTINUATION

 

Dated as of:               

 

Wachovia Bank, National Association,
  as Administrative Agent

Charlotte Plaza, CP-8

201 South College Street

Charlotte, North Carolina 28288-0680

Attention:  Syndication Agency Services

 

Ladies and Gentlemen:

 

This irrevocable Notice of Conversion/Continuation (this “Notice”) is delivered
to you pursuant to Section 4.2 of the Credit Agreement, dated as of December 22,
2004 (as amended, restated, supplemented or otherwise modified, the “Credit
Agreement”), by and among TUESDAY MORNING, INC., a Texas corporation (the
“Borrower”), TUESDAY MORNING CORPORATION, a Delaware corporation (the “Parent”),
TMI HOLDINGS, INC., a Delaware corporation (“Holdings”), the lenders who are or
may become a party thereto (collectively, the “Lenders”) and WACHOVIA BANK,
NATIONAL ASSOCIATION, a national banking association, as the administrative
agent for the Lenders.

 

1.             This Notice is submitted for the purpose of:  (Check one and
complete applicable information in accordance with the Credit Agreement.)

 

• Converting all or a portion of a Base Rate Loan into a LIBOR Rate Loan

 

(a)           The aggregate outstanding principal balance of such Loan is
$                      .

 

(b)           The principal amount of such Loan to be converted is
$                      .

 

(c)           The requested effective date of the conversion of such Loan is
                      .

 

(d)           The requested Interest Period applicable to the converted Loan is
                      .

 

• Converting all or a portion of a LIBOR Rate Loan into a Base Rate Loan

 

(a)           The aggregate outstanding principal balance of such Loan is
$                      .

 

--------------------------------------------------------------------------------

 

(b)                                 The last day of the current Interest Period
for such Loan is                       .

 

(c)                                  The principal amount of such Loan to be
converted is $                      .

 

(d)                                 The requested effective date of the
conversion of such Loan is                       .

 

• Continuing all or a portion of a LIBOR Rate Loan as a LIBOR Rate Loan

 

(a)                                  The aggregate outstanding principal balance
of such Loan is $                      .

 

(b)                                 The last day of the current Interest Period
for such Loan is                       .

 

(c)                                  The principal amount of such Loan to be
continued is $                      .

 

(d)                                 The requested effective date of the
continuation of such Loan is                       .

 

(e)                                  The requested Interest Period applicable to
the continued Loan is                       .

 

2.                                       The principal amount of all Loans and
L/C Obligations outstanding as of the date hereof does not exceed the maximum
amount permitted to be outstanding pursuant to the terms of the Credit
Agreement.

 

3.                                       All of the conditions applicable to the
conversion or continuation of the Loan requested herein as set forth in the
Credit Agreement have been satisfied or waived as of the date hereof and will
remain satisfied or waived to the date of such Loan.

 

4.                                       Capitalized terms used herein and not
defined herein shall have the meanings assigned thereto in the Credit Agreement.

 

[Signature Page Follows]

 

2

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned has executed this Notice of
Conversion/Continuation as of the       day of             , 200  .

 

 

 

TUESDAY MORNING, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

3

--------------------------------------------------------------------------------

 

EXHIBIT F

to

Credit Agreement

dated as of December 22, 2004

by and among

TUESDAY MORNING, INC., as Borrower,

TUESDAY MORNING CORPORATION, as Parent,

TMI HOLDINGS, INC., as Holdings,

the lenders party thereto, as Lenders,

and

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent

 

 

FORM OF OFFICER’S COMPLIANCE CERTIFICATE

 

--------------------------------------------------------------------------------

 

OFFICER’S COMPLIANCE CERTIFICATE

 

The undersigned, on behalf of TUESDAY MORNING, INC., a Texas corporation (the
“Borrower”), and TUESDAY MORNING CORPORATION, a Delaware corporation (the
“Parent”), hereby certify (solely in their capacities as Responsible Officers of
the Borrower and Parent, as applicable, and not in their individual capacities)
to the Administrative Agent and the Lenders each as defined in the Credit
Agreement referred to below, as follows:

 

1.                                       This Certificate is delivered to you
pursuant to Section 7.2 of the Credit Agreement, dated as of December 22, 2004
(as amended, restated, supplemented or otherwise modified, the “Credit
Agreement”), by and among the Borrower, the Parent, TMI Holdings, Inc., a
Delaware corporation (“Holdings”), the lenders who are or may become a party
thereto (collectively, the “Lenders”) and Wachovia Bank, National Association, a
national banking association, as administrative agent for the Lenders (the
“Administrative Agent”).  Capitalized terms used herein and not defined herein
shall have the meanings assigned thereto in the Credit Agreement.

 

2.                                       We have reviewed the financial
statements of the Parent and its Subsidiaries dated as of September 30, 2004 and
for the three (3) period[s] then ended and such statements fairly present in all
material respects, in accordance with GAAP, the financial condition of the
Parent and its Subsidiaries on a Consolidated basis, subject to changes
resulting from audit and normal year-end adjustments, as of the dates indicated
and the results of their operations and cash flows for the period[s] indicated.

 

3.                                       We have reviewed the terms of the
Credit Agreement, and the related Loan Documents and have made, or caused to be
made under our supervision, a review in reasonable detail of the transactions
and the condition of the Parent and its Subsidiaries during the accounting
period covered by the financial statements referred to in Paragraph 2 above. 
Such review has not disclosed the existence of any condition or event that
constitutes a Default or an Event of Default, nor do we have any knowledge of
the existence of any such condition or event as of the date of this Certificate.

 

4.                                       The Applicable Margin and calculations
determining the Average Total Leverage Ratio and the Applicable Margin are set
forth on the attached Schedule 1.  The Parent and its Subsidiaries are in
compliance with the financial covenants contained in Article IX of the Credit
Agreement as shown on such Schedule 1.  The Parent and its Subsidiaries are in
compliance with the other covenants and restrictions contained in the Credit
Agreement.

 

[Signature Page Follows]

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF the undersigned have executed this Officer’s Compliance
Certificate as of the             day of         , 200  .

 

 

 

TUESDAY MORNING, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

TUESDAY MORNING CORPORATION

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

2

--------------------------------------------------------------------------------

 

Schedule 1

to

Officer’s Compliance Certificate

 

[To be provided by Borrower and Parent in form acceptable to Administrative
Agent]

 

--------------------------------------------------------------------------------

 

EXHIBIT G

to

Credit Agreement

dated as of December 22, 2004

by and among

TUESDAY MORNING, INC., as Borrower,

TUESDAY MORNING CORPORATION, as Parent,

TMI HOLDINGS, INC., as Holdings,

the lenders party thereto, as Lenders,

and

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent

 

 

FORM OF ASSIGNMENT AND ASSUMPTION

 

--------------------------------------------------------------------------------

 

ASSIGNMENT AND ASSUMPTION

 

Dated as of:      

 

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”).  Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below, receipt of a
copy of which is hereby acknowledged by the Assignee.  The Standard Terms and
Conditions set forth in Annex 1 attached hereto (the “Standard Terms and
Conditions”) are hereby agreed to and incorporated herein by reference and made
a part of this Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor’s rights and
obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the
amount and percentage interest identified below of all of such outstanding
rights and obligations of the Assignor under the respective facilities
identified below (including any letters of credit, guarantees, and swingline
loans included in such facilities) and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other
right of the Assignor (in its capacity as a Lender) against any Person, whether
known or unknown, arising under or in connection with the Credit Agreement, any
other documents or instruments delivered pursuant thereto or the loan
transactions governed thereby or in any way based on or related to any of the
foregoing, including, but not limited to, contract claims, tort claims,
malpractice claims, statutory claims and all other claims at law or in equity
related to the rights and obligations sold and assigned pursuant to clause (i)
above (the rights and obligations sold and assigned pursuant to clauses (i) and
(ii) above being referred to herein collectively as, the “Assigned Interest”). 
Such sale and assignment is without recourse to the Assignor and, except as
expressly provided in this Assignment and Assumption, without representation or
warranty by the Assignor.

 

1.

Assignor:

 

 

 

 

2.

Assignee:

 

 

 

[and is an Affiliate of [identify Lender](2)]

 

 

 

3.

Borrower:

Tuesday Morning, Inc.

 

--------------------------------------------------------------------------------

(2)                                  Select as applicable.

 

--------------------------------------------------------------------------------

 

4.

Administrative Agent:

Wachovia Bank, National Association, as Administrative Agent under the Credit
Agreement

 

 

 

5.

Credit Agreement:

Credit Agreement dated as of December 22, 2004 by and among Tuesday Morning,
Inc., a Texas corporation (the “Borrower”), Tuesday Morning Corporation, a
Delaware corporation (the “Parent”), TMI Holdings, Inc., a Delaware corporation
(“Holdings”), the lenders who are or may become a party thereto (collectively,
the “Lenders”), and Wachovia Bank, National Association, a national banking
association, as administrative agent for the Lenders (the “Administrative
Agent”) (as amended, restated, supplemented or otherwise modified, the “Credit
Agreement”)

 

 

 

6.

Assigned Interest:

 

 

 

Facility
Assigned(3)

 

Aggregate Amount of
Commitment/Loans
for all Lenders

 

Amount of
Commitment/Loans
Assigned(4)

 

Percentage Assigned
of
Commitment/Loans(5)

 

CUSIP
Number

 

 

$

 

$

 

%

 

 

 

 

$

 

$

 

%

 

 

 

 

$

 

$

 

%

 

 

 

[7.

Trade Date:

                                 ](6)

 

 

 

8.

Effective Date:

                                       [TO BE INSERTED BY THE ADMINISTRATIVE
AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE
REGISTER THEREFOR.]

 

--------------------------------------------------------------------------------

(3)                                  Fill in the appropriate terminology for the
types of facilities under the Credit Agreement that are being assigned under
this Assignment (e.g. “Revolving Credit Commitment”)

(4)                                  Amount to be adjusted by the counterparties
to take into account any payments or prepayments made between the Trade Date and
the Effective Date.

(5)                                  Set forth, to at least 9 decimals, as a
percentage of the Commitment/Loans of all Lenders thereunder.

(6)                                  To be completed if the Assignor and the
Assignee intend that the minimum assignment amount is to be determined as of the
Trade Date.

 

2

--------------------------------------------------------------------------------

 

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

 

ASSIGNOR

 

[NAME OF ASSIGNOR]

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

3

--------------------------------------------------------------------------------

 

 

ASSIGNEE

 

  [NAME OF ASSIGNEE]

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

4

--------------------------------------------------------------------------------

 

[Consented to:](7)

 

 

 

[NAME OF RELEVANT PARTY]

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

(7)                                  To be added only if the consent of the
Borrower and/or other parties (e.g. Swingline Lender, L/C Issuer) is required by
the terms of the Credit Agreement.

 

--------------------------------------------------------------------------------

 

Consented to and Accepted by:

 

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent

 

By:

 

 

Name:

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

ANNEX 1 to Assignment and Assumption

 

CREDIT AGREEMENT DATED AS OF DECEMBER 22, 2004 BY AND AMONG

TUESDAY MORNING, INC. (THE “BORROWER”), TUESDAY MORNING CORPORATION
(THE “PARENT”), TMI HOLDINGS, INC. (“HOLDINGS”),

THE LENDERS WHO ARE OR MAY BECOME A PARTY THERETO, AS LENDERS,

AND WACHOVIA BANK, NATIONAL ASSOCIATION, AS ADMINISTRATIVE AGENT

 

 

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

 

1.                                       Representations and Warranties.

 

1.1                                 Assignor.  The Assignor (a) represents and
warrants that (i) it is the legal and beneficial owner of the Assigned Interest,
(ii) the Assigned Interest is free and clear of any lien, encumbrance or other
adverse claim and (iii) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Loan Document,
(ii) the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Borrower, the Parent, Holdings, any of their respective
Subsidiaries or Affiliates or any other Person obligated in respect of any Loan
Document or (iv) the performance or observance by the Borrower, the Parent,
Holdings, any of their respective Subsidiaries or Affiliates or any other Person
of any of their respective obligations under any Loan Document.

 

1.2.                              Assignee.  The Assignee (a) represents and
warrants that (i) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby and to become a Lender under the
Credit Agreement, (ii) it meets all requirements of an Eligible Assignee under
the Credit Agreement (subject to receipt of such consents as may be required
under the Credit Agreement), (iii) from and after the Effective Date, it shall
be bound by the provisions of the Credit Agreement as a Lender thereunder and,
to the extent of the Assigned Interest, shall have the obligations of a Lender
thereunder, (iv) it has received a copy of the Credit Agreement, together with
copies of the most recent financial statements delivered pursuant to Section 7.1
thereof, as applicable, 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 and to purchase the Assigned Interest on the
basis of which it has made such analysis and decision independently and without
reliance on the Administrative Agent or any other Lender, and (v) if it is a
foreign lender, attached to the Assignment and Assumption is any documentation
required to be delivered by it pursuant to the terms of the Credit Agreement,
duly completed and executed by the Assignee; and (b) agrees that (i) it will,
independently and without reliance on the Administrative Agent, the Assignor or
any other Lender, and based on such documents and

 

--------------------------------------------------------------------------------

 

information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Documents, and
(ii) it will perform in accordance with their terms all of the obligations that
by the terms of the Loan Documents are required to be performed by it as a
Lender.

 

2.                                       Payments.  From and after the Effective
Date, the Administrative Agent shall make all payments in respect of the
Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignor for amounts that have accrued to but excluding the
Effective Date and to the Assignee for amounts that have accrued from and after
the Effective Date.

 

3.                                       General Provisions.  This Assignment
and Assumption shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors and assigns.  This Assignment and
Assumption may be executed in any number of counterparts, which together shall
constitute one instrument.  Delivery of an executed counterpart of a signature
page of this Assignment and Assumption by telecopy shall be effective as
delivery of a manually executed counterpart of this Assignment and Assumption. 
This Assignment and Assumption shall be governed by, and construed in accordance
with, the law of the State of New York.

 

3

--------------------------------------------------------------------------------

 

EXHIBIT H

to

Credit Agreement

dated as of December 22, 2004

by and among

TUESDAY MORNING, INC., as Borrower,

TUESDAY MORNING CORPORATION, as Parent,

TMI HOLDINGS, INC., as Holdings,

the lenders party thereto, as Lenders,

and

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent

 

 

FORM OF PARENTAL ENTITY GUARANTY AGREEMENT

 

--------------------------------------------------------------------------------

 

EXHIBIT I

to

Credit Agreement

dated as of December 22, 2004

by and among

TUESDAY MORNING, INC., as Borrower,

TUESDAY MORNING CORPORATION, as Parent,

TMI HOLDINGS, INC., as Holdings,

the lenders party thereto, as Lenders,

and

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent

 

 

FORM OF SUBSIDIARY GUARANTY AGREEMENT

 

--------------------------------------------------------------------------------

 

EXHIBIT J

to

Credit Agreement

dated as of December 22, 2004

by and among

TUESDAY MORNING, INC., as Borrower,

TUESDAY MORNING CORPORATION, as Parent,

TMI HOLDINGS, INC., as Holdings,

the lenders party thereto, as Lenders,

and

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent

 

 

FORM OF COLLATERAL AGREEMENT

 

--------------------------------------------------------------------------------

 

Execution Version

 

 

PARENTAL ENTITY GUARANTY AGREEMENT

 

dated as of December 22, 2004

 

 

by and among

 

 

TUESDAY MORNING CORPORATION

and

TMI HOLDINGS, INC.,

as Guarantors

in favor of

 

WACHOVIA BANK, NATIONAL ASSOCIATION

as Administrative Agent

 

 

--------------------------------------------------------------------------------

 

Table of Contents

 

ARTICLE I DEFINED TERMS

 

SECTION 1.1

Definitions

 

SECTION 1.2

Other Definitional Provisions

 

 

 

 

ARTICLE II GUARANTY

 

SECTION 2.1

Guaranty

 

SECTION 2.2

Bankruptcy Limitations on each Guarantor

 

SECTION 2.3

Agreement Regarding Subrogation

 

SECTION 2.4

Agreements for Reimbursement

 

SECTION 2.5

Nature of Guaranty.

 

SECTION 2.6

Waivers

 

SECTION 2.7

Modification of Loan Documents, etc

 

SECTION 2.8

Demand by the Administrative Agent

 

SECTION 2.9

Remedies

 

SECTION 2.10

Benefits of Guaranty

 

SECTION 2.11

Termination; Reinstatement

 

SECTION 2.12

Payments

 

 

 

 

ARTICLE III REPRESENTATIONS AND WARRANTIES

 

SECTION 3.1

Organization; Power; Qualification

 

SECTION 3.2

Authorization of Agreement; Enforceability

 

SECTION 3.3

Compliance of Guaranty with Laws, etc

 

SECTION 3.4

Title to Properties

 

SECTION 3.5

Litigation

 

SECTION 3.6

Solvency

 

 

 

 

ARTICLE IV MISCELLANEOUS

 

SECTION 4.1

Amendments, Waivers and Consents

 

SECTION 4.2

Notices

 

SECTION 4.3

Enforcement Expenses, Indemnification

 

SECTION 4.4

Governing Law

 

SECTION 4.5

Jurisdiction and Venue

 

SECTION 4.6

Waiver of Jury Trial

 

SECTION 4.7

Punitive Damages

 

SECTION 4.8

No Waiver by Course of Conduct, Cumulative Remedies

 

SECTION 4.9

Successors and Assigns

 

SECTION 4.10

Severability

 

SECTION 4.11

Headings

 

SECTION 4.12

Counterparts

 

SECTION 4.13

Set-Off

 

SECTION 4.14

Integration

 

SECTION 4.15

Acknowledgements

 

SECTION 4.16

Releases

 

SECTION 4.17

Joint and Several Liability

 

 

i

--------------------------------------------------------------------------------

 

Execution Version

 

PARENTAL ENTITY GUARANTY AGREEMENT

 

PARENTAL ENTITY GUARANTY AGREEMENT (as amended, restated, supplemented or
otherwise modified, this “Guaranty”), dated as of December 22, 2004, made by
TUESDAY MORNING CORPORATION, a Delaware corporation (the “Parent”) and TMI
HOLDINGS, INC., a Delaware corporation (“Holdings” and, together with the
Parent, the “Guarantors”, and individually the “Guarantor”) in favor of WACHOVIA
BANK, NATIONAL ASSOCIATION, a national banking association, as administrative
agent (in such capacity, the “Administrative Agent”) for the ratable benefit of
itself and the financial institutions (the “Lenders”) from time to time parties
to the Credit Agreement, dated of even date herewith (as amended, restated,
supplemented or otherwise modified, the “Credit Agreement”), by and among
Tuesday Morning, Inc., a Texas corporation (the “Borrower”), the Guarantors, the
Lenders, and the Administrative Agent.

 

STATEMENT OF PURPOSE

 

Pursuant to the terms of the Credit Agreement, the Lenders have agreed to make
Extensions of Credit to the Borrower upon the terms and subject to the
conditions set forth therein.

 

The Borrower and the Guarantors, though separate legal entities, comprise one
integrated financial enterprise, and all Extensions of Credit to the Borrower
will inure, directly or indirectly to the benefit of each of the Guarantors.

 

It is a condition precedent to the obligation of the Lenders to make their
respective Extensions of Credit to the Borrower under the Credit Agreement that
the Guarantors shall have executed and delivered this Guaranty to the
Administrative Agent, for the ratable benefit of itself and the Lenders.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties hereto, and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective Extensions of Credit to the Borrower
thereunder, each Guarantor hereby agrees with the Administrative Agent, for the
ratable benefit of itself and the Lenders, as follows:

 

ARTICLE I

DEFINED TERMS

 

SECTION 1.1                          DEFINITIONS.  THE FOLLOWING TERMS WHEN USED
IN THIS GUARANTY SHALL HAVE THE MEANINGS ASSIGNED TO THEM BELOW:

 

“Applicable Insolvency Laws” means all Applicable Laws governing bankruptcy,
reorganization, arrangement, adjustment of debts, relief of debtors,
dissolution, insolvency, fraudulent transfers or conveyances or other similar
laws (including, without limitation, 11 U.S.C. Sections 544, 547, 548 and 550
and other “avoidance” provisions of Title 11 of the United States Code, as
amended or supplemented).

 

“Guaranteed Obligations” has the meaning set forth in Section 2.1.

 

--------------------------------------------------------------------------------

 

“Guaranty” means this Parental Entity Guaranty Agreement, as amended, restated,
supplemented or otherwise modified.

 

“Subsidiary Guarantor” means each Subsidiary party to the Subsidiary Guaranty
Agreement.

 

“Subsidiary Guaranty Agreement” means the Guaranty Agreement dated as of the
date hereof, and made by each of the Subsidiaries of the Parent in favor of the
Administrative Agent for the benefit of itself and the other Lenders, as
amended, restated, supplemented or otherwise modified.

 

SECTION 1.2                          OTHER DEFINITIONAL PROVISIONS.  CAPITALIZED
TERMS USED AND NOT OTHERWISE DEFINED IN THIS GUARANTY INCLUDING THE PREAMBLES
AND RECITALS HEREOF SHALL HAVE THE MEANINGS ASCRIBED TO THEM IN THE CREDIT
AGREEMENT.  THE WORDS “HEREOF,” “HEREIN”, “HERETO” AND “HEREUNDER” AND WORDS OF
SIMILAR IMPORT WHEN USED IN THIS GUARANTY SHALL REFER TO THIS GUARANTY AS A
WHOLE AND NOT TO ANY PARTICULAR PROVISION OF THIS GUARANTY, AND
SECTION REFERENCES IN THIS GUARANTY ARE TO SECTIONS OF THIS GUARANTY UNLESS
OTHERWISE SPECIFIED.  THE MEANINGS GIVEN TO TERMS DEFINED HEREIN SHALL BE
EQUALLY APPLICABLE TO BOTH THE SINGULAR AND PLURAL FORMS OF SUCH TERMS.  WHERE
THE CONTEXT REQUIRES, TERMS RELATING TO THE COLLATERAL OR ANY PART THEREOF, WHEN
USED IN RELATION TO A GUARANTOR, SHALL REFER TO SUCH GUARANTOR’S COLLATERAL OR
THE RELEVANT PART THEREOF.

 

ARTICLE II

GUARANTY

 

SECTION 2.1                          GUARANTY.  EACH GUARANTOR, JOINTLY AND
SEVERALLY WITH THE OTHER GUARANTORS, UNCONDITIONALLY GUARANTEES TO THE
ADMINISTRATIVE AGENT FOR THE RATABLE BENEFIT OF ITSELF AND THE LENDERS, AND
THEIR RESPECTIVE PERMITTED SUCCESSORS, ENDORSEES, TRANSFEREES AND ASSIGNS, THE
PROMPT PAYMENT AND PERFORMANCE OF ALL OBLIGATIONS, WHETHER PRIMARY OR SECONDARY
(WHETHER BY WAY OF ENDORSEMENT OR OTHERWISE), WHETHER NOW EXISTING OR HEREAFTER
ARISING, WHETHER OR NOT FROM TIME TO TIME REDUCED OR EXTINGUISHED (EXCEPT BY
PAYMENT AND PERFORMANCE THEREOF) OR HEREAFTER INCREASED OR INCURRED, WHETHER OR
NOT RECOVERY MAY BE OR HEREAFTER BECOMES BARRED BY THE STATUTE OF LIMITATIONS,
WHETHER ENFORCEABLE OR UNENFORCEABLE AS AGAINST THE CREDIT PARTIES, WHETHER OR
NOT DISCHARGED, STAYED OR OTHERWISE AFFECTED BY ANY APPLICABLE INSOLVENCY LAW OR
PROCEEDING THEREUNDER, WHETHER CREATED DIRECTLY WITH THE ADMINISTRATIVE AGENT OR
ANY LENDER OR ACQUIRED BY THE ADMINISTRATIVE AGENT OR ANY LENDER THROUGH
ASSIGNMENT, ENDORSEMENT OR OTHERWISE, WHETHER MATURED OR UNMATURED, WHETHER
JOINT OR SEVERAL, AS AND WHEN THE SAME BECOME DUE AND PAYABLE (WHETHER AT
MATURITY OR EARLIER, BY REASON OF ACCELERATION, MANDATORY REPAYMENT OR
OTHERWISE), IN ACCORDANCE WITH THE TERMS OF ANY SUCH INSTRUMENTS EVIDENCING ANY
SUCH OBLIGATIONS, INCLUDING ALL RENEWALS, EXTENSIONS OR MODIFICATIONS THEREOF
(ALL OBLIGATIONS, INCLUDING ALL OF THE FOREGOING BEING HEREAFTER COLLECTIVELY
REFERRED TO AS THE “GUARANTEED OBLIGATIONS”).

 

SECTION 2.2                          BANKRUPTCY LIMITATIONS ON EACH GUARANTOR. 
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTION 2.1, IT IS THE
INTENTION OF EACH GUARANTOR, THE ADMINISTRATIVE AGENT AND THE LENDERS THAT, IN
ANY PROCEEDING INVOLVING THE BANKRUPTCY, REORGANIZATION, ARRANGEMENT, ADJUSTMENT
OF DEBTS, RELIEF OF DEBTORS, DISSOLUTION OR INSOLVENCY OR ANY SIMILAR PROCEEDING
WITH RESPECT TO ANY GUARANTOR OR ITS ASSETS, THE AMOUNT OF SUCH

 

2

--------------------------------------------------------------------------------

 

GUARANTOR’S OBLIGATIONS WITH RESPECT TO THE GUARANTEED OBLIGATIONS SHALL BE
EQUAL TO, BUT NOT IN EXCESS OF, THE MAXIMUM AMOUNT THEREOF NOT SUBJECT TO
AVOIDANCE OR RECOVERY BY OPERATION OF APPLICABLE INSOLVENCY LAWS.  TO THAT END,
BUT ONLY IN THE EVENT AND TO THE EXTENT THAT SUCH GUARANTOR’S OBLIGATIONS WITH
RESPECT TO THE GUARANTEED OBLIGATIONS OR ANY PAYMENT MADE PURSUANT TO SUCH
GUARANTEED OBLIGATIONS WOULD, BUT FOR THE OPERATION OF THE FIRST SENTENCE OF
THIS SECTION 2.2, BE SUBJECT TO AVOIDANCE OR RECOVERY IN ANY SUCH PROCEEDING
UNDER APPLICABLE INSOLVENCY LAWS, THE AMOUNT OF EACH GUARANTOR’S OBLIGATIONS
WITH RESPECT TO THE GUARANTEED OBLIGATIONS SHALL BE LIMITED TO THE LARGEST
AMOUNT WHICH, AFTER GIVING EFFECT THERETO, WOULD NOT, UNDER APPLICABLE
INSOLVENCY LAWS, RENDER SUCH GUARANTOR’S OBLIGATIONS WITH RESPECT TO THE
GUARANTEED OBLIGATIONS UNENFORCEABLE OR AVOIDABLE OR OTHERWISE SUBJECT TO
RECOVERY UNDER APPLICABLE INSOLVENCY LAWS.  TO THE EXTENT ANY PAYMENT ACTUALLY
MADE PURSUANT TO THE GUARANTEED OBLIGATIONS EXCEEDS THE LIMITATION OF THE FIRST
SENTENCE OF THIS SECTION 2.2 AND IS OTHERWISE SUBJECT TO AVOIDANCE AND RECOVERY
IN ANY SUCH PROCEEDING UNDER APPLICABLE INSOLVENCY LAWS, THE AMOUNT SUBJECT TO
AVOIDANCE SHALL IN ALL EVENTS BE LIMITED TO THE AMOUNT BY WHICH SUCH ACTUAL
PAYMENT EXCEEDS SUCH LIMITATION AND THE GUARANTEED OBLIGATIONS AS LIMITED BY THE
FIRST SENTENCE OF THIS SECTION 2.2 SHALL IN ALL EVENTS REMAIN IN FULL FORCE AND
EFFECT AND BE FULLY ENFORCEABLE AGAINST EACH GUARANTOR.  THE FIRST SENTENCE OF
THIS SECTION 2.2 IS INTENDED SOLELY TO PRESERVE THE RIGHTS OF THE ADMINISTRATIVE
AGENT HEREUNDER AGAINST EACH GUARANTOR IN SUCH PROCEEDING TO THE MAXIMUM EXTENT
PERMITTED BY APPLICABLE INSOLVENCY LAWS AND NEITHER SUCH GUARANTOR, THE
BORROWER, ANY OTHER GUARANTOR NOR ANY OTHER PERSON SHALL HAVE ANY RIGHT OR CLAIM
UNDER SUCH SENTENCE THAT WOULD NOT OTHERWISE BE AVAILABLE UNDER APPLICABLE
INSOLVENCY LAWS IN SUCH PROCEEDING.

 

SECTION 2.3                          AGREEMENT REGARDING SUBROGATION. 
NOTWITHSTANDING ANY PAYMENT OR PAYMENTS BY ANY OF THE GUARANTORS HEREUNDER, OR
ANY SET-OFF OR APPLICATION OF FUNDS OF ANY OF THE GUARANTORS BY THE
ADMINISTRATIVE AGENT OR ANY LENDER, OR THE RECEIPT OF ANY AMOUNTS BY THE
ADMINISTRATIVE AGENT OR ANY LENDER WITH RESPECT TO ANY OF THE GUARANTEED
OBLIGATIONS, NONE OF THE GUARANTORS SHALL BE ENTITLED TO BE SUBROGATED TO ANY OF
THE RIGHTS OF THE ADMINISTRATIVE AGENT OR ANY LENDER AGAINST THE BORROWER OR THE
OTHER GUARANTOR, THE SUBSIDIARY GUARANTORS OR AGAINST ANY COLLATERAL SECURITY
HELD BY THE ADMINISTRATIVE AGENT OR ANY LENDER FOR THE PAYMENT OF THE GUARANTEED
OBLIGATIONS NOR SHALL ANY OF THE GUARANTORS SEEK ANY REIMBURSEMENT FROM THE
BORROWER, THE SUBSIDIARY GUARANTORS OR ANY OF THE OTHER GUARANTORS IN RESPECT OF
PAYMENTS MADE BY SUCH GUARANTOR IN CONNECTION WITH THE GUARANTEED OBLIGATIONS,
UNTIL ALL AMOUNTS OWING TO THE ADMINISTRATIVE AGENT AND THE LENDERS ON ACCOUNT
OF THE GUARANTEED OBLIGATIONS ARE PAID IN FULL AND THE COMMITMENTS ARE
TERMINATED.  IF ANY AMOUNT SHALL BE PAID TO ANY GUARANTOR ON ACCOUNT OF SUCH
SUBROGATION RIGHTS AT ANY TIME WHEN ALL OF THE GUARANTEED OBLIGATIONS SHALL NOT
HAVE BEEN PAID IN FULL, SUCH AMOUNT SHALL BE HELD BY SUCH GUARANTOR IN TRUST FOR
THE ADMINISTRATIVE AGENT, SEGREGATED FROM OTHER FUNDS OF SUCH GUARANTOR, AND
SHALL, FORTHWITH UPON RECEIPT BY SUCH GUARANTOR, BE TURNED OVER TO THE
ADMINISTRATIVE AGENT IN THE EXACT FORM RECEIVED BY SUCH GUARANTOR (DULY ENDORSED
BY SUCH GUARANTOR TO THE ADMINISTRATIVE AGENT, IF REQUIRED) TO BE APPLIED
AGAINST THE GUARANTEED OBLIGATIONS, WHETHER MATURED OR UNMATURED, IN SUCH ORDER
AS SET FORTH IN THE CREDIT AGREEMENT.

 

SECTION 2.4                          AGREEMENTS FOR REIMBURSEMENT. 
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, THE PARTIES HERETO
ACKNOWLEDGE AND AGREE THAT, AS THE BORROWER IS A WHOLLY-OWNED SUBSIDIARY OF THE
GUARANTORS AND PART OF AN INTEGRATED FINANCIAL ENTERPRISE TO WHICH THE
GUARANTORS ARE A PARTY, EACH SUBSIDIARY GUARANTOR SHALL HAVE A RIGHT OF
REIMBURSEMENT

 

3

--------------------------------------------------------------------------------

 

AND INDEMNITY FROM THE GUARANTORS FOR ANY AMOUNT PAID BY SUCH SUBSIDIARY
GUARANTOR IN LIEU OF A RIGHT OF CONTRIBUTION BETWEEN THE SUBSIDIARY GUARANTORS
AND THE GUARANTORS.

 

SECTION 2.5                          NATURE OF GUARANTY.

 

(A)                                  EACH GUARANTOR AGREES THAT THIS GUARANTY IS
A CONTINUING, UNCONDITIONAL GUARANTY OF PAYMENT AND PERFORMANCE AND NOT OF
COLLECTION, AND THAT ITS OBLIGATIONS UNDER THIS GUARANTY SHALL BE PRIMARY,
ABSOLUTE AND UNCONDITIONAL, IRRESPECTIVE OF, AND UNAFFECTED BY:

 

(I)                                     THE GENUINENESS, VALIDITY,
ENFORCEABILITY OR ANY FUTURE AMENDMENT OF, OR CHANGE IN, THE CREDIT AGREEMENT OR
ANY OTHER LOAN DOCUMENT OR ANY OTHER AGREEMENT, DOCUMENT OR INSTRUMENT TO WHICH
THE BORROWER, ANY GUARANTOR, ANY SUBSIDIARY GUARANTOR OR ANY OF THEIR RESPECTIVE
SUBSIDIARIES OR AFFILIATES IS OR MAY BECOME A PARTY;

 

(II)                                  THE ABSENCE OF ANY ACTION TO ENFORCE THIS
GUARANTY, THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE WAIVER OR
CONSENT BY THE ADMINISTRATIVE AGENT OR ANY LENDER WITH RESPECT TO ANY OF THE
PROVISIONS OF THIS GUARANTY, THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT;

 

(III)                               THE EXISTENCE, VALUE OR CONDITION OF, OR
FAILURE TO PERFECT THE ADMINISTRATIVE AGENT’S LIEN AGAINST, ANY SECURITY FOR OR
OTHER GUARANTY OF, THE GUARANTEED OBLIGATIONS OR ANY ACTION, OR THE ABSENCE OF
ANY ACTION, BY THE ADMINISTRATIVE AGENT OR ANY LENDER IN RESPECT OF SUCH
SECURITY OR GUARANTY (INCLUDING, WITHOUT LIMITATION, THE RELEASE OF ANY SUCH
SECURITY OR GUARANTY);

 

(IV)                              ANY STRUCTURAL CHANGE IN, RESTRUCTURING OF OR
OTHER SIMILAR CHANGE OF THE BORROWER, ANY GUARANTOR, ANY SUBSIDIARY GUARANTOR OR
ANY OF THEIR RESPECTIVE SUBSIDIARIES;

 

(V)                                 ANY OTHER ACTION OR CIRCUMSTANCES WHICH
MIGHT OTHERWISE CONSTITUTE A LEGAL OR EQUITABLE DISCHARGE OR DEFENSE OF A SURETY
OR GUARANTOR;

 

it being agreed by each Guarantor that, subject to the first sentence of
Section 2.2, its obligations under this Guaranty shall not be discharged until
the final indefeasible payment and performance, in full, of the Guaranteed
Obligations and the termination of the Commitments; provided that
notwithstanding anything to the contrary in this Section 2.5, a Guarantor may be
released from the Guaranteed Obligations and any other obligations hereunder
pursuant to Section 4.16 of this Guaranty.

 

(B)                                 EACH GUARANTOR HEREBY REPRESENTS AND
WARRANTS THAT THE GUARANTEED OBLIGATIONS AND ANY OTHER OBLIGATIONS HEREUNDER ARE
NOT, AND AGREES THAT ITS OBLIGATIONS UNDER THIS GUARANTY SHALL NOT BE, SUBJECT
TO ANY COUNTERCLAIMS, OFFSETS OR DEFENSES (OTHER THAN A DEFENSE OF PAYMENT) OF
ANY KIND AGAINST THE ADMINISTRATIVE AGENT, THE LENDERS OR THE BORROWER WHETHER
NOW EXISTING OR WHICH MAY ARISE IN THE FUTURE.

 

(C)                                  EACH GUARANTOR HEREBY AGREES AND
ACKNOWLEDGES THAT THE GUARANTEED OBLIGATIONS, AND ANY OTHER OBLIGATIONS
HEREUNDER, AND ANY OF THEM, SHALL CONCLUSIVELY BE DEEMED TO HAVE BEEN CREATED,
CONTRACTED OR INCURRED, OR RENEWED, EXTENDED, AMENDED OR WAIVED, IN RELIANCE
UPON THIS

 

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GUARANTY, AND ALL DEALINGS BETWEEN THE BORROWER AND ANY OF THE GUARANTORS, ON
THE ONE HAND, AND THE ADMINISTRATIVE AGENT AND THE LENDERS, ON THE OTHER HAND,
LIKEWISE SHALL BE CONCLUSIVELY PRESUMED TO HAVE BEEN HAD OR CONSUMMATED IN
RELIANCE UPON THIS GUARANTY. 

 

SECTION 2.6                          WAIVERS.  TO THE EXTENT PERMITTED BY
APPLICABLE LAWS, EACH GUARANTOR EXPRESSLY WAIVES ALL OF THE FOLLOWING RIGHTS AND
DEFENSES (AND AGREES NOT TO TAKE ADVANTAGE OF OR ASSERT ANY SUCH RIGHT OR
DEFENSE):

 

(A)                                  ANY RIGHTS IT MAY NOW OR IN THE FUTURE HAVE
UNDER ANY STATUTE, OR AT LAW OR IN EQUITY, OR OTHERWISE, TO COMPEL THE
ADMINISTRATIVE AGENT OR ANY LENDER TO PROCEED IN RESPECT OF THE OBLIGATIONS
AGAINST THE BORROWER OR ANY OTHER PERSON OR AGAINST ANY SECURITY FOR OR OTHER
GUARANTY OF THE PAYMENT AND PERFORMANCE OF THE GUARANTEED OBLIGATIONS BEFORE
PROCEEDING AGAINST, OR AS A CONDITION TO PROCEEDING AGAINST, SUCH GUARANTOR;

 

(B)                                 ANY DEFENSE BASED UPON THE FAILURE OF THE
ADMINISTRATIVE AGENT OR ANY LENDER TO COMMENCE AN ACTION IN RESPECT OF THE
GUARANTEED OBLIGATIONS AGAINST THE BORROWER, ANY GUARANTOR, ANY OTHER SUBSIDIARY
GUARANTOR OR ANY OTHER PERSON OR ANY SECURITY FOR THE PAYMENT AND PERFORMANCE OF
THE GUARANTEED OBLIGATIONS;

 

(C)                                  ANY RIGHT TO INSIST UPON, PLEAD OR IN ANY
MANNER WHATSOEVER CLAIM OR TAKE THE BENEFIT OR ADVANTAGE OF, ANY APPRAISAL,
VALUATION, STAY, EXTENSION, MARSHALLING OF ASSETS OR REDEMPTION LAWS, OR
EXEMPTION, WHETHER NOW OR AT ANY TIME HEREAFTER IN FORCE, WHICH MAY DELAY,
PREVENT OR OTHERWISE AFFECT THE PERFORMANCE BY SUCH GUARANTOR OF ITS OBLIGATIONS
UNDER, OR THE ENFORCEMENT BY THE ADMINISTRATIVE AGENT OR THE LENDERS OF THIS
GUARANTY;

 

(D)                                 ANY RIGHT OF DILIGENCE, PRESENTMENT, DEMAND,
PROTEST AND NOTICE (EXCEPT AS SPECIFICALLY REQUIRED HEREIN OR IN THE CREDIT
AGREEMENT) OF WHATEVER KIND OR NATURE WITH RESPECT TO ANY OF THE GUARANTEED
OBLIGATIONS AND WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAWS, THE BENEFIT
OF ALL PROVISIONS OF LAW WHICH ARE OR MIGHT BE IN CONFLICT WITH THE TERMS OF
THIS GUARANTY; AND

 

(E)                                  ANY AND ALL RIGHT TO NOTICE OF THE
CREATION, RENEWAL, EXTENSION OR ACCRUAL OF ANY OF THE OBLIGATIONS AND NOTICE OF
OR PROOF OF RELIANCE BY THE ADMINISTRATIVE AGENT OR ANY LENDER UPON, OR
ACCEPTANCE OF, THIS GUARANTY.

 

Each Guarantor agrees that any notice or directive given at any time to the
Administrative Agent or any Lender which is inconsistent with any of the
foregoing waivers shall be null and void and may be ignored by the
Administrative Agent or such Lender and, in addition, may not be pleaded or
introduced as evidence in any litigation relating to this Guaranty for the
reason that such pleading or introduction would be at variance with the written
terms of this Guaranty, unless the Administrative Agent and the Required Lenders
have specifically agreed otherwise in writing.  The foregoing waivers are of the
essence of the transaction contemplated by the Credit Agreement and the other
Loan Documents and, but for this Guaranty and such waivers, the Administrative
Agent and Lenders would decline to enter into the Credit Agreement and the other
Loan Documents.

 

SECTION 2.7                          MODIFICATION OF LOAN DOCUMENTS, ETC.  NONE
OF THE FOLLOWING SHALL IMPAIR OR RELEASE THIS GUARANTY OR ANY OF THE OBLIGATIONS
OF ANY GUARANTOR UNDER THIS GUARANTY:

 

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(A)                                  ANY CHANGE OR EXTENSION OF THE MANNER,
PLACE OR TERMS OF PAYMENT OF, OR RENEWAL OR ALTERATION OF ALL OR ANY PORTION OF,
THE GUARANTEED OBLIGATIONS;

 

(B)                                 ANY ACTION UNDER OR IN RESPECT OF THE CREDIT
AGREEMENT OR THE OTHER LOAN DOCUMENTS IN THE EXERCISE OF ANY REMEDY, POWER OR
PRIVILEGE CONTAINED THEREIN OR AVAILABLE TO ANY OF THEM AT LAW, IN EQUITY OR
OTHERWISE, OR WAIVER OR REFRAIN FROM EXERCISING ANY SUCH REMEDIES, POWERS OR
PRIVILEGES;

 

(C)                                  ANY AMENDMENT OR MODIFICATION, IN ANY
MANNER WHATSOEVER, OF THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT;

 

(D)                                 ANY EXTENSION OR WAIVER OF THE TIME FOR
PERFORMANCE BY THE BORROWER, ANY GUARANTOR, ANY SUBSIDIARY GUARANTOR OR ANY
OTHER PERSON OF, OR COMPLIANCE WITH, ANY TERM, COVENANT OR AGREEMENT ON ITS PART
TO BE PERFORMED OR OBSERVED UNDER THE CREDIT AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR WAIVER OF SUCH PERFORMANCE OR COMPLIANCE OR CONSENT TO A FAILURE
OF, OR DEPARTURE FROM, SUCH PERFORMANCE OR COMPLIANCE;

 

(E)                                  ANY TAKING AND HOLDING OF SECURITY OR
COLLATERAL FOR THE PAYMENT OF THE OBLIGATIONS OR THE SALE, EXCHANGE, RELEASE,
DISPOSAL OF, OR OTHER DEALING WITH, ANY PROPERTY PLEDGED, MORTGAGED OR CONVEYED,
OR IN WHICH THE ADMINISTRATIVE AGENT OR THE LENDERS HAVE BEEN GRANTED A LIEN, TO
SECURE ANY INDEBTEDNESS OF THE BORROWER, ANY GUARANTOR, ANY SUBSIDIARY GUARANTOR
OR ANY OTHER PERSON TO THE ADMINISTRATIVE AGENT OR THE LENDERS;

 

(F)                                    ANY RELEASE OF ANYONE WHO MAY BE LIABLE
IN ANY MANNER FOR THE PAYMENT OF ANY AMOUNTS OWED BY THE BORROWER, ANY
GUARANTOR, ANY SUBSIDIARY GUARANTOR,  ANY OTHER PERSON TO THE ADMINISTRATIVE
AGENT OR ANY LENDER OTHER THAN PURSUANT TO SECTION 4.16, IT BEING UNDERSTOOD
THAT THE RELEASE OF A GUARANTOR PURSUANT TO SECTION 4.16 SHALL NOT RELEASE ANY
OTHER GUARANTOR FROM ITS OBLIGATIONS HEREUNDER;

 

(G)                                 ANY MODIFICATION OR TERMINATION OF THE TERMS
OF ANY INTERCREDITOR OR SUBORDINATION AGREEMENT PURSUANT TO WHICH CLAIMS OF
OTHER CREDITORS OF THE BORROWER, ANY GUARANTOR, ANY SUBSIDIARY GUARANTOR OR ANY
OTHER PERSON ARE SUBORDINATED TO THE CLAIMS OF THE ADMINISTRATIVE AGENT OR ANY
LENDER; OR

 

(H)                                 ANY APPLICATION OF ANY SUMS BY WHOMEVER PAID
OR HOWEVER REALIZED TO ANY OBLIGATIONS OWING BY THE BORROWER, ANY GUARANTOR, ANY
SUBSIDIARY GUARANTOR OR ANY OTHER PERSON TO THE ADMINISTRATIVE AGENT OR ANY
LENDER IN ACCORDANCE WITH THE TERMS OF THE CREDIT AGREEMENT.

 

SECTION 2.8                          DEMAND BY THE ADMINISTRATIVE AGENT.  IN
ADDITION TO THE TERMS SET FORTH IN THIS ARTICLE II AND IN NO MANNER IMPOSING ANY
LIMITATION ON SUCH TERMS, IF ALL OR ANY PORTION OF THE THEN OUTSTANDING
GUARANTEED OBLIGATIONS UNDER THE CREDIT AGREEMENT ARE DECLARED TO BE IMMEDIATELY
DUE AND PAYABLE, THEN THE GUARANTORS SHALL, UPON DEMAND IN WRITING THEREFOR BY
THE ADMINISTRATIVE AGENT TO THE GUARANTORS, PAY ALL OR SUCH PORTION OF THE
OUTSTANDING GUARANTEED OBLIGATIONS DUE HEREUNDER THEN DECLARED DUE AND PAYABLE.

 

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SECTION 2.9                          REMEDIES.

 

(A)                                  UPON THE OCCURRENCE AND DURING THE
CONTINUANCE OF ANY EVENT OF DEFAULT, WITH THE CONSENT OF THE REQUIRED LENDERS,
THE ADMINISTRATIVE AGENT MAY, OR UPON THE REQUEST OF THE REQUIRED LENDERS, THE
ADMINISTRATIVE AGENT SHALL, ENFORCE AGAINST THE GUARANTORS THEIR RESPECTIVE
OBLIGATIONS AND LIABILITIES HEREUNDER AND EXERCISE SUCH OTHER RIGHTS AND
REMEDIES AS MAY BE AVAILABLE TO THE ADMINISTRATIVE AGENT HEREUNDER, UNDER THE
CREDIT AGREEMENT OR THE OTHER LOAN DOCUMENTS OR OTHERWISE.

 

(B)                                 ADDITIONALLY, AND WITHOUT LIMITING ANY OTHER
REMEDY OF THE ADMINISTRATIVE AGENT HEREUNDER OR UNDER THE CREDIT AGREEMENT OR
OTHER LOAN DOCUMENTS, EACH GUARANTOR HEREBY ACKNOWLEDGES THAT THIS GUARANTY
CONSTITUTES AN INSTRUMENT FOR THE PAYMENT OF MONEY, AND CONSENTS AND AGREES THAT
THE ADMINISTRATIVE AGENT, AT ITS SOLE OPTION, IN THE EVENT OF A DISPUTE BY SUCH
GUARANTOR IN THE PAYMENT OF ANY MONEYS DUE HEREUNDER, SHALL HAVE THE RIGHT TO
BRING MOTION-ACTION UNDER NEW YORK CPLR SECTION 3213.

 

SECTION 2.10                    BENEFITS OF GUARANTY.  THE PROVISIONS OF THIS
GUARANTY ARE FOR THE BENEFIT OF THE ADMINISTRATIVE AGENT AND THE LENDERS AND
THEIR RESPECTIVE PERMITTED SUCCESSORS, TRANSFEREES, ENDORSEES AND ASSIGNS, AND
NOTHING HEREIN CONTAINED SHALL IMPAIR, AS BETWEEN THE CREDIT PARTIES, THE
ADMINISTRATIVE AGENT AND THE LENDERS, THE OBLIGATIONS OF THE CREDIT PARTIES
UNDER THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS.  IN THE EVENT ALL OR
ANY PART OF THE OBLIGATIONS ARE TRANSFERRED, ENDORSED OR ASSIGNED BY THE
ADMINISTRATIVE AGENT OR ANY LENDER TO ANY PERSON OR PERSONS AS PERMITTED UNDER
THE CREDIT AGREEMENT, ANY REFERENCE TO AN “ADMINISTRATIVE AGENT”, OR “LENDER”
HEREIN SHALL BE DEEMED TO REFER EQUALLY TO SUCH PERSON OR PERSONS.

 

SECTION 2.11                    TERMINATION; REINSTATEMENT. 

 

(A)                                  SUBJECT TO SUBSECTION (C) BELOW, THIS
GUARANTY SHALL REMAIN IN FULL FORCE AND EFFECT UNTIL ALL THE GUARANTEED
OBLIGATIONS AND ALL THE OBLIGATIONS OF THE GUARANTORS SHALL HAVE BEEN PAID IN
FULL AND THE COMMITMENTS TERMINATED.

 

(B)                                 NO PAYMENT MADE BY THE BORROWER, ANY
GUARANTOR, OR ANY OTHER PERSON RECEIVED OR COLLECTED BY THE ADMINISTRATIVE AGENT
OR ANY LENDER FROM THE BORROWER, ANY GUARANTOR, OR ANY OTHER PERSON BY VIRTUE OF
ANY ACTION OR PROCEEDING OR ANY SET-OFF OR APPROPRIATION OR APPLICATION AT ANY
TIME OR FROM TIME TO TIME IN REDUCTION OF OR IN PAYMENT OF THE GUARANTEED
OBLIGATIONS SHALL BE DEEMED TO MODIFY, REDUCE, RELEASE OR OTHERWISE AFFECT THE
LIABILITY OF ANY GUARANTOR HEREUNDER WHICH SHALL, NOTWITHSTANDING ANY SUCH
PAYMENT (OTHER THAN ANY PAYMENT MADE BY SUCH GUARANTOR IN RESPECT OF THE
OBLIGATIONS OF THE GUARANTORS OR ANY PAYMENT RECEIVED OR COLLECTED FROM SUCH
GUARANTOR IN RESPECT OF THE OBLIGATIONS OF THE GUARANTORS), REMAIN LIABLE FOR
THE OBLIGATIONS OF THE GUARANTOR UP TO THE MAXIMUM LIABILITY OF SUCH GUARANTOR
HEREUNDER UNTIL THE GUARANTEED OBLIGATIONS AND ALL THE OBLIGATIONS OF THE
GUARANTORS SHALL HAVE BEEN PAID IN FULL AND THE COMMITMENTS TERMINATED.

 

(C)                                  EACH GUARANTOR AGREES THAT, IF ANY PAYMENT
MADE BY THE BORROWER OR ANY OTHER PERSON APPLIED TO THE OBLIGATIONS IS AT ANY
TIME ANNULLED, SET ASIDE, RESCINDED, INVALIDATED, DECLARED TO BE FRAUDULENT OR
PREFERENTIAL OR OTHERWISE REQUIRED TO BE REFUNDED OR REPAID OR THE PROCEEDS OF
ANY COLLATERAL ARE REQUIRED TO BE REFUNDED BY THE ADMINISTRATIVE AGENT OR ANY
LENDER TO THE BORROWER, ITS ESTATE, TRUSTEE, RECEIVER OR ANY OTHER PERSON,
INCLUDING, WITHOUT LIMITATION, ANY GUARANTOR, UNDER ANY APPLICABLE LAW OR
EQUITABLE CAUSE, THEN, TO THE EXTENT OF

 

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SUCH PAYMENT OR REPAYMENT, EACH GUARANTOR’S LIABILITY HEREUNDER (AND ANY LIEN OR
COLLATERAL SECURING SUCH LIABILITY) SHALL BE AND REMAIN IN FULL FORCE AND
EFFECT, AS FULLY AS IF SUCH PAYMENT HAD NEVER BEEN MADE, AND, IF PRIOR THERETO,
THIS GUARANTY SHALL HAVE BEEN CANCELED OR SURRENDERED (AND IF ANY LIEN OR
COLLATERAL SECURING SUCH GUARANTOR’S LIABILITY HEREUNDER SHALL HAVE BEEN
RELEASED OR TERMINATED BY VIRTUE OF SUCH CANCELLATION OR SURRENDER), THIS
GUARANTY SHALL BE REINSTATED IN FULL FORCE AND EFFECT, (AND EACH GUARANTOR SHALL
TAKE SUCH ACTION AS IS NECESSARY TO REINSTATE SUCH LIEN OR COLLATERAL) AND SUCH
PRIOR CANCELLATION OR SURRENDER SHALL NOT DIMINISH, RELEASE, DISCHARGE, IMPAIR
OR OTHERWISE AFFECT THE OBLIGATIONS OF SUCH GUARANTOR IN RESPECT OF THE AMOUNT
OF SUCH PAYMENT (OR THE OBLIGATION OF SUCH GUARANTOR TO PROVIDE SUCH LIEN OR
COLLATERAL SECURING SUCH OBLIGATION).

 

SECTION 2.12                    PAYMENTS.  PAYMENTS BY THE GUARANTORS SHALL BE
MADE TO THE ADMINISTRATIVE AGENT, TO BE CREDITED AND APPLIED TO THE GUARANTEED
OBLIGATIONS IN ACCORDANCE WITH SECTIONS 4.4 AND 11.4 OF THE CREDIT AGREEMENT, IN
IMMEDIATELY AVAILABLE DOLLARS TO AN ACCOUNT DESIGNATED BY THE ADMINISTRATIVE
AGENT OR AT THE ADMINISTRATIVE AGENT’S OFFICE OR AT ANY OTHER ADDRESS THAT MAY
BE SPECIFIED IN WRITING FROM TIME TO TIME BY THE ADMINISTRATIVE AGENT.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

To induce the Administrative Agent and the Lenders to make any Extensions of
Credit each Guarantor hereby represents and warrants that:

 

SECTION 3.1                          ORGANIZATION; POWER; QUALIFICATION.  EACH
OF THE REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 6.1(A) OF THE CREDIT
AGREEMENT IS TRUE AND CORRECT AS OF THE DATE HEREOF WITH RESPECT TO SUCH
GUARANTOR.

 

SECTION 3.2                          AUTHORIZATION OF AGREEMENT;
ENFORCEABILITY.  EACH OF THE REPRESENTATIONS AND WARRANTIES SET FORTH IN
SECTION 6.1(C) OF THE CREDIT AGREEMENT IS TRUE AND CORRECT AS OF THE DATE HEREOF
WITH RESPECT TO SUCH GUARANTOR.

 

SECTION 3.3                          COMPLIANCE OF GUARANTY WITH LAWS, ETC. 
EACH OF THE REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 6.1(E) OF THE
CREDIT AGREEMENT IS TRUE AND CORRECT AS OF THE DATE HEREOF WITH RESPECT TO SUCH
GUARANTOR.

 

SECTION 3.4                          TITLE TO PROPERTIES.  EACH OF THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 6.1(R) OF THE CREDIT
AGREEMENT IS TRUE AND CORRECT AS OF THE DATE HEREOF WITH RESPECT TO SUCH
GUARANTOR.

 

SECTION 3.5                          LITIGATION.  EACH OF THE REPRESENTATIONS
AND WARRANTIES SET FORTH IN SECTION 6.1(U) OF THE CREDIT AGREEMENT IS TRUE AND
CORRECT AS OF THE DATE HEREOF WITH RESPECT TO SUCH GUARANTOR.

 

SECTION 3.6                          SOLVENCY.  AS OF THE CLOSING DATE (OR SUCH
LATER DATE UPON WHICH SUCH GUARANTOR BECAME A PARTY HERETO), AFTER GIVING EFFECT
TO THE EXTENSIONS OF CREDIT TO BE MADE UNDER THE CREDIT AGREEMENT, SUCH
GUARANTOR (A) HAS CAPITAL SUFFICIENT TO CARRY ON ITS BUSINESS AND

 

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TRANSACTIONS AND ALL BUSINESS AND TRANSACTIONS IN WHICH IT ENGAGES AND IS ABLE
TO PAY ITS DEBTS AS THEY MATURE, (B) OWNS PROPERTY HAVING A VALUE, BOTH AT FAIR
VALUATION ON A GOING CONCERN BASIS AND AT PRESENT FAIR SALEABLE VALUE ON A GOING
CONCERN BASIS, GREATER THAN THE AMOUNT REQUIRED TO PAY ITS PROBABLE LIABILITIES
(INCLUDING CONTINGENCIES) AND (C) DOES NOT BELIEVE THAT IT WILL INCUR DEBTS OR
LIABILITIES BEYOND ITS ABILITY TO PAY SUCH DEBTS OR LIABILITIES AS THEY MATURE,
SUBJECT IN EACH CASE TO THE FIRST SENTENCE OF SECTION 2.2.

 

ARTICLE IV

 

MISCELLANEOUS

 

SECTION 4.1                          AMENDMENTS, WAIVERS AND CONSENTS.  NONE OF
THE TERMS, COVENANTS, AGREEMENTS OR CONDITIONS OF THIS GUARANTY MAY BE AMENDED,
SUPPLEMENTED OR OTHERWISE MODIFIED, NOR MAY THEY BE WAIVED, NOR MAY ANY CONSENT
BE GIVEN, EXCEPT IN ACCORDANCE WITH SECTION 13.2 OF THE CREDIT AGREEMENT.

 

SECTION 4.2                          NOTICES.  ALL NOTICES, REQUESTS AND DEMANDS
TO OR UPON THE ADMINISTRATIVE AGENT OR ANY GUARANTOR HEREUNDER SHALL BE EFFECTED
IN THE MANNER PROVIDED FOR IN SECTION 13.1 OF THE CREDIT AGREEMENT; PROVIDED
THAT NOTICES AND COMMUNICATIONS TO THE GUARANTORS SHALL BE DIRECTED TO THE
GUARANTORS AT THE ADDRESS OF THE BORROWER SET FORTH IN SECTION 13.1(B) OF THE
CREDIT AGREEMENT.

 

SECTION 4.3                          ENFORCEMENT EXPENSES, INDEMNIFICATION.

 

(A)                                  EACH GUARANTOR WILL (I) PAY ALL
OUT-OF-POCKET EXPENSES (INCLUDING, WITHOUT LIMITATION,  ALL COSTS OF ELECTRONIC
OR INTERNET DISTRIBUTION OF ANY INFORMATION HEREUNDER) OF THE ADMINISTRATIVE
AGENT IN CONNECTION WITH (A) THE PREPARATION, EXECUTION AND DELIVERY OF THIS
GUARANTY AND EACH OTHER LOAN DOCUMENT, WHENEVER THE SAME SHALL BE EXECUTED AND
DELIVERED, INCLUDING, WITHOUT LIMITATION, ALL OUT-OF-POCKET SYNDICATION AND DUE
DILIGENCE EXPENSES AND REASONABLE FEES AND DISBURSEMENTS OF COUNSEL FOR THE
ADMINISTRATIVE AGENT AND (B) THE PREPARATION, EXECUTION AND DELIVERY OF ANY
WAIVER, AMENDMENT OR CONSENT BY THE ADMINISTRATIVE AGENT OR THE LENDERS RELATING
TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, INCLUDING, WITHOUT LIMITATION,
REASONABLE FEES, DISBURSEMENTS AND OTHER CHARGES OF COUNSEL FOR THE
ADMINISTRATIVE AGENT, (II) PAY ALL REASONABLE OUT-OF-POCKET EXPENSES OF THE
ADMINISTRATIVE AGENT AND EACH LENDER ACTUALLY INCURRED IN CONNECTION WITH THE
ADMINISTRATION AND ENFORCEMENT OF ANY RIGHTS AND REMEDIES OF THE ADMINISTRATIVE
AGENT AND LENDERS UNDER THIS GUARANTY, INCLUDING, WITHOUT LIMITATION, IN
CONNECTION WITH ANY WORKOUT, RESTRUCTURING, BANKRUPTCY OR OTHER SIMILAR
PROCEEDING, CREATING AND PERFECTING LIENS IN FAVOR OF THE ADMINISTRATIVE AGENT
ON BEHALF OF THE LENDERS PURSUANT TO ANY SECURITY DOCUMENT, ENFORCING ANY
OBLIGATIONS OF, OR COLLECTING ANY PAYMENTS DUE FROM, THE BORROWER OR ANY
GUARANTOR BY REASON OF AN EVENT OF DEFAULT (INCLUDING BY REASON OF AN EVENT OF
DEFAULT, IN CONNECTION WITH THE SALE OF, COLLECTION FROM, OR OTHER REALIZATION
UPON ANY OF THE COLLATERAL OR THE ENFORCEMENT OF THIS GUARANTY OR THE SUBSIDIARY
GUARANTY AGREEMENT); CONSULTING WITH APPRAISERS, ACCOUNTANTS, ENGINEERS,
ATTORNEYS AND OTHER PERSONS CONCERNING THE NATURE, SCOPE OR VALUE OF ANY RIGHT
OR REMEDY OF THE ADMINISTRATIVE AGENT OR ANY LENDER HEREUNDER OR UNDER ANY OTHER
LOAN DOCUMENT OR ANY FACTUAL MATTERS IN CONNECTION THEREWITH, WHICH EXPENSES
SHALL INCLUDE THE REASONABLE FEES AND DISBURSEMENTS OF SUCH PERSONS, (III) ANY
CIVIL PENALTY OR FINE ASSESSED BY THE U.S. DEPARTMENT OF THE TREASURY’S

 

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OFFICE OF FOREIGN ASSETS CONTROL AGAINST, AND ALL REASONABLE COSTS AND EXPENSES
(INCLUDING COUNSEL FEES AND DISBURSEMENTS) INCURRED IN CONNECTION WITH DEFENSE
THEREOF BY THE ADMINISTRATIVE AGENT OR ANY LENDER AS A RESULT OF THE FUNDING OF
LOANS, THE ISSUANCE OF LETTERS OF CREDIT, THE ACCEPTANCE OF PAYMENT OR OF
COLLATERAL DUE UNDER THE LOAN DOCUMENTS AND (IV) DEFEND, INDEMNIFY AND HOLD
HARMLESS THE ADMINISTRATIVE AGENT AND THE LENDERS, AND THEIR RESPECTIVE PARENTS,
SUBSIDIARIES, AFFILIATES, PARTNERS, EMPLOYEES, AGENTS, OFFICERS, ADVISORS AND
DIRECTORS, FROM AND AGAINST ANY LOSSES, PENALTIES, FINES, LIABILITIES,
SETTLEMENTS, DAMAGES, COSTS AND EXPENSES, SUFFERED BY ANY SUCH PERSON IN
CONNECTION WITH ANY CLAIM (INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL
CLAIMS), INVESTIGATION, LITIGATION OR OTHER PROCEEDING (WHETHER OR NOT THE
ADMINISTRATIVE AGENT OR ANY LENDER IS A PARTY THERETO) AND THE PROSECUTION AND
DEFENSE THEREOF, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE LOANS, THIS
GUARANTY, ANY OTHER LOAN DOCUMENT, OR ANY DOCUMENTS, REPORTS OR OTHER
INFORMATION PROVIDED TO THE ADMINISTRATIVE AGENT OR ANY LENDER OR CONTEMPLATED
BY OR REFERRED TO HEREIN OR THEREIN OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEY’S AND CONSULTANT’S
FEES, EXCEPT TO THE EXTENT THAT ANY OF THE FOREGOING (A) ARE DETERMINED BY A
COURT OF COMPETENT JURISDICTION BY A FINAL AND NONAPPEALABLE JUDGMENT TO HAVE
RESULTED DIRECTLY FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PARTY
SEEKING INDEMNIFICATION THEREFOR OR (B) RESULT FROM A CLAIM BROUGHT BY ANY
CREDIT PARTY AGAINST AN INDEMNITEE FOR BREACH IN BAD FAITH OF THE OBLIGATIONS
UNDER THIS GUARANTY OR THE OTHER LOAN DOCUMENTS OF THE PARTY SEEKING
INDEMNIFICATION IF SUCH CREDIT PARTY HAS OBTAINED A FINAL AND NONAPPEALABLE
JUDGMENT IN ITS FAVOR ON SUCH CLAIM AS DETERMINED BY A COURT OF COMPETENT
JURISDICTION. 

 

(B)                                 THE AGREEMENTS IN THIS SECTION 4.3 SHALL
SURVIVE TERMINATION OF THE COMMITMENTS AND REPAYMENT OF THE OBLIGATIONS AND ALL
OTHER AMOUNTS PAYABLE UNDER THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS.

 

SECTION 4.4                          GOVERNING LAW.  THIS GUARANTY, UNLESS
OTHERWISE EXPRESSLY SET FORTH HEREIN, SHALL BE GOVERNED BY, CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING
SECTION 5-1401 AND SECTION 5-1402 OF THE GENERAL OBLIGATIONS LAWS OF THE STATE
OF NEW YORK, WITHOUT REFERENCE TO ANY OTHER CONFLICTS OF LAW PRINCIPLES THEREOF.

 

SECTION 4.5                          JURISDICTION AND VENUE.

 

(A)                                  JURISDICTION.  EACH GUARANTOR PARTY HERETO
HEREBY IRREVOCABLY CONSENTS TO THE PERSONAL JURISDICTION OF THE STATE AND
FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK (AND ANY COURTS FROM WHICH AN
APPEAL FROM ANY OF SUCH COURTS MUST OR MAY BE TAKEN) IN ANY ACTION, CLAIM OR
OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS GUARANTY,
ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS.  EACH GUARANTOR HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF A
SUMMONS AND COMPLAINT AND OTHER PROCESS IN ANY ACTION, CLAIM OR PROCEEDING
BROUGHT BY THE ADMINISTRATIVE AGENT OR ANY LENDER IN CONNECTION WITH THIS
GUARANTY, ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS
AND OBLIGATIONS, ON BEHALF OF ITSELF OR ITS PROPERTY, IN THE MANNER SPECIFIED IN
SECTION 4.2.  NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE
ADMINISTRATIVE AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY APPLICABLE LAW OR AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR
ANY LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST ANY GUARANTOR OR ITS
PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTIONS.

 

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(B)                                 VENUE.  EACH GUARANTOR PARTY HERETO HEREBY
IRREVOCABLY WAIVES ANY OBJECTION IT MAY HAVE NOW OR IN THE FUTURE TO THE LAYING
OF VENUE IN THE AFORESAID JURISDICTION IN ANY ACTION, CLAIM OR OTHER PROCEEDING
ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY OR THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER.  EACH GUARANTOR PARTY HERETO IRREVOCABLY WAIVES, IN
CONNECTION WITH SUCH ACTION, CLAIM OR PROCEEDING, ANY PLEA OR CLAIM THAT THE
ACTION, CLAIM OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

SECTION 4.6                          WAIVER OF JURY TRIAL.  THE ADMINISTRATIVE
AGENT AND EACH GUARANTOR HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF
OR IN CONNECTION WITH THIS GUARANTY, ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.

 

SECTION 4.7                          PUNITIVE DAMAGES.  THE ADMINISTRATIVE
AGENT, THE LENDERS, AND EACH GUARANTOR HEREBY AGREE THAT NO SUCH PERSON SHALL
HAVE A REMEDY OF PUNITIVE OR EXEMPLARY DAMAGES AGAINST ANY OTHER PARTY TO THIS
GUARANTY OR OTHER LOAN DOCUMENT AND EACH SUCH PERSON HEREBY WAIVES ANY RIGHT OR
CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THAT THEY MAY NOW HAVE OR MAY ARISE IN
THE FUTURE IN CONNECTION WITH ANY DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF,
CONNECTED WITH OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT.

 

SECTION 4.8                          NO WAIVER BY COURSE OF CONDUCT, CUMULATIVE
REMEDIES.  NEITHER THE ADMINISTRATIVE AGENT NOR ANY LENDER SHALL BY ANY ACT
(EXCEPT BY A WRITTEN INSTRUMENT PURSUANT TO SECTION 4.1), DELAY, INDULGENCE,
OMISSION OR OTHERWISE BE DEEMED TO HAVE WAIVED ANY RIGHT OR REMEDY HEREUNDER OR
TO HAVE ACQUIESCED IN ANY DEFAULT OR EVENT OF DEFAULT.  NO FAILURE TO EXERCISE,
NOR ANY DELAY IN EXERCISING ON THE PART OF THE ADMINISTRATIVE AGENT OR ANY
LENDER, ANY RIGHT, POWER OR PRIVILEGE HEREUNDER SHALL OPERATE AS A WAIVER
THEREOF.  NO SINGLE OR PARTIAL EXERCISE OF ANY RIGHT, POWER OR PRIVILEGE
HEREUNDER SHALL PRECLUDE ANY OTHER OR FURTHER EXERCISE THEREOF OR THE EXERCISE
OF ANY OTHER RIGHT, POWER OR PRIVILEGE.  A WAIVER BY THE ADMINISTRATIVE AGENT OR
ANY LENDER OF ANY RIGHT OR REMEDY HEREUNDER ON ANY ONE OCCASION SHALL NOT BE
CONSTRUED AS A BAR TO ANY RIGHT OR REMEDY WHICH THE ADMINISTRATIVE AGENT OR SUCH
LENDER WOULD OTHERWISE HAVE ON ANY FUTURE OCCASION.  THE RIGHTS AND REMEDIES
HEREIN PROVIDED ARE CUMULATIVE, MAY BE EXERCISED SINGLY OR CONCURRENTLY AND ARE
NOT EXCLUSIVE OF ANY OTHER RIGHTS OR REMEDIES PROVIDED BY LAW.

 

SECTION 4.9                          SUCCESSORS AND ASSIGNS.  THIS GUARANTY
SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF THE PARTIES HERETO AND THEIR
RESPECTIVE SUCCESSORS AND ASSIGNS PERMITTED HEREBY; PROVIDED THAT, EXCEPT FOR
ANY MERGER, CONSOLIDATION OR SIMILAR COMBINATION OR LIQUIDATION PERMITTED BY THE
CREDIT AGREEMENT, NO GUARANTOR MAY ASSIGN, TRANSFER OR DELEGATE ANY OF ITS
RIGHTS OR OBLIGATIONS UNDER THIS GUARANTY WITHOUT THE PRIOR WRITTEN CONSENT OF
THE ADMINISTRATIVE AGENT AND THE LENDERS (GIVEN IN ACCORDANCE WITH SECTION 4.1).

 

SECTION 4.10                    SEVERABILITY.  ANY PROVISION OF THIS GUARANTY OR
ANY OTHER LOAN DOCUMENT WHICH IS PROHIBITED OR UNENFORCEABLE IN ANY JURISDICTION
SHALL, AS TO SUCH JURISDICTION, BE INEFFECTIVE ONLY TO THE EXTENT OF SUCH
PROHIBITION OR UNENFORCEABILITY WITHOUT INVALIDATING THE REMAINDER OF SUCH
PROVISION OR THE REMAINING PROVISIONS HEREOF OR THEREOF OR AFFECTING THE
VALIDITY OR ENFORCEABILITY OF SUCH PROVISION IN ANY OTHER JURISDICTION.

 

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SECTION 4.11                    HEADINGS.  THE VARIOUS HEADINGS USED IN THIS
GUARANTY ARE FOR CONVENIENCE ONLY, AND NEITHER LIMIT NOR AMPLIFY THE PROVISIONS
OF THIS GUARANTY.

 

SECTION 4.12                    COUNTERPARTS.  THIS GUARANTY MAY BE EXECUTED IN
ANY NUMBER OF COUNTERPARTS AND BY DIFFERENT PARTIES HERETO IN SEPARATE
COUNTERPARTS, EACH OF WHICH WHEN SO EXECUTED SHALL BE DEEMED TO BE AN ORIGINAL
AND SHALL BE BINDING UPON ALL PARTIES, THEIR SUCCESSORS AND ASSIGNS, AND ALL OF
WHICH TAKEN TOGETHER SHALL CONSTITUTE ONE AND THE SAME AGREEMENT.

 

SECTION 4.13                    SET-OFF.  EACH GUARANTOR HEREBY IRREVOCABLY
AUTHORIZES THE ADMINISTRATIVE AGENT AND EACH LENDER AT ANY TIME AND FROM TIME TO
TIME PURSUANT TO SECTION 13.4 OF THE CREDIT AGREEMENT, WITHOUT NOTICE TO SUCH
GUARANTOR OR ANY OTHER GUARANTOR, ANY SUCH NOTICE BEING EXPRESSLY WAIVED BY EACH
GUARANTOR, AND PROVIDED THAT AN EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE
CONTINUING, TO SET-OFF AND APPROPRIATE AND APPLY ANY AND ALL DEPOSITS (GENERAL
OR SPECIAL, TIME OR DEMAND, PROVISIONAL OR FINAL), IN ANY CURRENCY, AND ANY
OTHER CREDITS, INDEBTEDNESS OR CLAIMS, IN ANY CURRENCY, IN EACH CASE WHETHER
DIRECT OR INDIRECT, ABSOLUTE OR CONTINGENT, MATURED OR UNMATURED, AT ANY TIME
HELD OR OWING BY THE ADMINISTRATIVE AGENT OR SUCH LENDER TO OR FOR THE CREDIT OR
THE ACCOUNT OF SUCH GUARANTOR, OR ANY PART THEREOF IN SUCH AMOUNTS AS THE
ADMINISTRATIVE AGENT OR SUCH LENDER MAY ELECT, AGAINST AND ON ACCOUNT OF THE
OBLIGATIONS AND LIABILITIES OF SUCH GUARANTOR TO THE ADMINISTRATIVE AGENT OR
SUCH LENDER HEREUNDER AND CLAIMS OF EVERY NATURE AND DESCRIPTION OF THE
ADMINISTRATIVE AGENT OR SUCH LENDER AGAINST SUCH GUARANTOR, IN ANY CURRENCY,
WHETHER ARISING HEREUNDER, UNDER THE CREDIT AGREEMENT, ANY OTHER LOAN DOCUMENT
OR OTHERWISE, AS THE ADMINISTRATIVE AGENT OR SUCH LENDER MAY ELECT, WHETHER OR
NOT THE ADMINISTRATIVE AGENT OR ANY LENDER HAS MADE ANY DEMAND FOR PAYMENT AND
ALTHOUGH SUCH OBLIGATIONS, LIABILITIES AND CLAIMS MAY BE CONTINGENT OR
UNMATURED.  THE ADMINISTRATIVE AGENT AND EACH LENDER SHALL NOTIFY SUCH GUARANTOR
PROMPTLY OF ANY SUCH SET-OFF AND THE APPLICATION MADE BY THE ADMINISTRATIVE
AGENT OR SUCH LENDER OF THE PROCEEDS THEREOF; PROVIDED THAT THE FAILURE TO GIVE
SUCH NOTICE SHALL NOT AFFECT THE VALIDITY OF SUCH SET-OFF AND APPLICATION.  THE
RIGHTS OF THE ADMINISTRATIVE AGENT AND EACH LENDER UNDER THIS SECTION 4.13 ARE
IN ADDITION TO OTHER RIGHTS AND REMEDIES (INCLUDING, WITHOUT LIMITATION, OTHER
RIGHTS OF SET-OFF) WHICH THE ADMINISTRATIVE AGENT OR SUCH LENDER MAY HAVE.

 

SECTION 4.14                    INTEGRATION.  THIS GUARANTY AND THE OTHER LOAN
DOCUMENTS REPRESENT THE AGREEMENT OF THE GUARANTORS, THE ADMINISTRATIVE AGENT
AND THE LENDERS WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF, AND THERE
ARE NO PROMISES, UNDERTAKINGS, REPRESENTATIONS OR WARRANTIES BY THE
ADMINISTRATIVE AGENT OR ANY LENDER RELATIVE TO SUBJECT MATTER HEREOF AND THEREOF
NOT EXPRESSLY SET FORTH OR REFERRED TO HEREIN OR IN THE OTHER LOAN DOCUMENTS.

 

SECTION 4.15                    ACKNOWLEDGEMENTS.  EACH GUARANTOR HEREBY
ACKNOWLEDGES THAT:

 

(A)                                  IT HAS BEEN ADVISED BY COUNSEL IN THE
NEGOTIATION, EXECUTION AND DELIVERY OF THIS GUARANTY AND THE OTHER LOAN
DOCUMENTS TO WHICH IT IS A PARTY;

 

(B)                                 NEITHER THE ADMINISTRATIVE AGENT NOR ANY
LENDER HAS ANY FIDUCIARY RELATIONSHIP WITH OR DUTY TO ANY GUARANTOR ARISING OUT
OF OR IN CONNECTION WITH THIS GUARANTY OR ANY OF THE OTHER LOAN DOCUMENTS, AND
THE RELATIONSHIP BETWEEN THE GUARANTORS, ON THE ONE HAND, AND THE ADMINISTRATIVE
AGENT AND LENDERS, ON THE OTHER HAND, IN CONNECTION HEREWITH OR THEREWITH IS
SOLELY THAT OF DEBTOR AND CREDITOR; AND

 

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(C)                                  NO JOINT VENTURE IS CREATED HEREBY OR BY
THE OTHER LOAN DOCUMENTS OR OTHERWISE EXISTS BY VIRTUE OF THE TRANSACTIONS
CONTEMPLATED HEREBY AMONG THE LENDERS OR AMONG THE GUARANTORS AND THE LENDERS.

 

SECTION 4.16                    RELEASES.  AT SUCH TIME AS THE GUARANTEED
OBLIGATIONS SHALL HAVE BEEN PAID IN FULL AND THE COMMITMENTS HAVE BEEN
TERMINATED, THIS GUARANTY AND ALL OBLIGATIONS HEREUNDER (OTHER THAN THOSE
EXPRESSLY STATED TO SURVIVE SUCH TERMINATION) OF THE ADMINISTRATIVE AGENT AND
EACH GUARANTOR HEREUNDER SHALL TERMINATE, ALL WITHOUT DELIVERY OF ANY INSTRUMENT
OR PERFORMANCE OF ANY ACT BY ANY PARTY.  AT THE REQUEST AND SOLE EXPENSE OF ANY
GUARANTOR FOLLOWING ANY SUCH TERMINATION, THE ADMINISTRATIVE AGENT SHALL EXECUTE
AND DELIVER TO SUCH GUARANTOR SUCH DOCUMENTS AS SUCH GUARANTOR SHALL REASONABLY
REQUEST TO EVIDENCE SUCH TERMINATION.

 

SECTION 4.17                    JOINT AND SEVERAL LIABILITY.  THE LIABILITY OF
THE GUARANTORS HEREUNDER SHALL BE JOINT AND SEVERAL WITH THE LIABILITY OF THE
SUBSIDIARY GUARANTORS UNDER THE SUBSIDIARY GUARANTY AGREEMENT.

 

 

[Signature Pages to Follow]

 

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IN WITNESS WHEREOF, each of the Guarantors has executed and delivered this
Guaranty under seal by their duly authorized officers, all as of the day and
year first above written.

 

 

TUESDAY MORNING CORPORATION, as

 

Guarantor

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

 

TMI HOLDINGS, INC., as Guarantor

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

[Signature Pages Continue]

 

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WACHOVIA BANK, NATIONAL
  ASSOCIATION, as Administrative Agent

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

Execution Version

 

 

SUBSIDIARY GUARANTY AGREEMENT

 

dated as of December 22, 2004

 

 

by and among

 

 

certain Subsidiaries of TUESDAY MORNING, INC.,

as Guarantors

 

in favor of

 

WACHOVIA BANK, NATIONAL ASSOCIATION

as Administrative Agent

 

 

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TABLE OF CONTENTS

 

ARTICLE I DEFINED TERMS

 

SECTION 1.1

Definitions

 

SECTION 1.2

Other Definitional Provisions

 

 

 

 

ARTICLE II GUARANTY

 

SECTION 2.1

Guaranty

 

SECTION 2.2

Bankruptcy Limitations on each Guarantor

 

SECTION 2.3

Agreements for Contribution

 

SECTION 2.4

Agreements for Reimbursement

 

SECTION 2.5

Nature of Guaranty

 

SECTION 2.6

Waivers

 

SECTION 2.7

Modification of Loan Documents, etc

 

SECTION 2.8

Demand by the Administrative Agent

 

SECTION 2.9

Remedies

 

SECTION 2.10

Benefits of Guaranty

 

SECTION 2.11

Termination; Reinstatement

 

SECTION 2.12

Payments

 

 

 

 

ARTICLE III REPRESENTATIONS AND WARRANTIES

 

SECTION 3.1

Organization; Power; Qualification

 

SECTION 3.2

Authorization of Agreement; Enforceability

 

SECTION 3.3

Compliance of Guaranty with Laws, etc

 

SECTION 3.4

Title to Properties

 

SECTION 3.5

Litigation

 

SECTION 3.6

Solvency

 

 

 

 

ARTICLE IV MISCELLANEOUS

 

SECTION 4.1

Amendments, Waivers and Consents

 

SECTION 4.2

Notices

 

SECTION 4.3

Enforcement Expenses, Indemnification

 

SECTION 4.4

Governing Law

 

SECTION 4.5

Jurisdiction and Venue

 

SECTION 4.6

Waiver of Jury Trial

 

SECTION 4.7

Punitive Damages

 

SECTION 4.8

No Waiver by Course of Conduct, Cumulative Remedies

 

SECTION 4.9

Successors and Assigns

 

SECTION 4.10

Severability

 

SECTION 4.11

Headings

 

SECTION 4.12

Counterparts

 

SECTION 4.13

Set-Off

 

SECTION 4.14

Integration

 

 

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SECTION 4.15

Acknowledgements

 

SECTION 4.16

Releases

 

SECTION 4.17

Additional Guarantors

 

SECTION 4.18

Joint and Several Liability

 

 

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SUBSIDIARY GUARANTY AGREEMENT

 

SUBSIDIARY GUARANTY AGREEMENT (as amended, restated, supplemented or otherwise
modified, this “Guaranty”), dated as of December 22, 2004, made by certain
Subsidiaries (collectively, the “Guarantors”, each, a “Guarantor”) of TUESDAY
MORNING, INC., a Texas corporation (the “Borrower”), in favor of WACHOVIA BANK,
NATIONAL ASSOCIATION, a national banking association, as administrative agent
(in such capacity, the “Administrative Agent”) for the ratable benefit of itself
and the financial institutions (the “Lenders”) from time to time parties to the
Credit Agreement, dated of even date herewith (as amended, restated,
supplemented or otherwise modified, the “Credit Agreement”), by and among the
Borrower, Tuesday Morning Corporation, a Delaware corporation (the “Parent”),
TMI Holdings, Inc., a Delaware corporation (“Holdings”), the Lenders and the
Administrative Agent.

 

STATEMENT OF PURPOSE

 

Pursuant to the terms of the Credit Agreement, the Lenders have agreed to make
Extensions of Credit to the Borrower upon the terms and subject to the
conditions set forth therein.

 

The Borrower and the Guarantors, though separate legal entities, comprise one
integrated financial enterprise, and all Extensions of Credit to the Borrower
will inure, directly or indirectly, to the benefit of each of the Guarantors.

 

It is a condition precedent to the obligation of the Lenders to make their
respective Extensions of Credit to the Borrower under the Credit Agreement that
the Guarantors shall have executed and delivered this Guaranty to the
Administrative Agent, for the ratable benefit of itself and the Lenders.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties hereto, and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective Extensions of Credit to the Borrower
thereunder, each Guarantor hereby agrees with the Administrative Agent, for the
ratable benefit of itself and the Lenders, as follows:

 

ARTICLE I

 

DEFINED TERMS

 

SECTION 1.1                          Definitions.  The following terms when used
in this Guaranty shall have the meanings assigned to them below:

 

 “Applicable Insolvency Laws” means all Applicable Laws governing bankruptcy,
reorganization, arrangement, adjustment of debts, relief of debtors,
dissolution, insolvency, fraudulent transfers or conveyances or other similar
laws (including, without limitation, 11 U.S.C. Sections 544, 547, 548 and 550
and other “avoidance” provisions of Title 11 of the United States Code, as
amended or supplemented).

 

“Guaranteed Obligations” has the meaning set forth in Section 2.1.

 

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“Guaranty” means this Subsidiary Guaranty Agreement, as amended, restated,
supplemented or otherwise modified.

 

“Parental Entity Guarantors” means, collectively, the Parent and Holdings as
guarantors under the Parental Entity Guaranty Agreement.

 

“Parental Entity Guaranty Agreement” means the Guaranty Agreement dated as of
the date hereof made by the Parental Entity Guarantors in favor of the
Administrative Agent for the benefit of itself and the Lenders.

 

SECTION 1.2                          Other Definitional Provisions. Capitalized
terms used and not otherwise defined in this Guaranty including the preambles
and recitals hereof shall have the meanings ascribed to them in the Credit
Agreement.  The words “hereof,” “herein”, “hereto” and “hereunder” and words of
similar import when used in this Guaranty shall refer to this Guaranty as a
whole and not to any particular provision of this Guaranty, and
Section references in this Guaranty are to Sections of this Guaranty unless
otherwise specified.  The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.  Where
the context requires, terms relating to the Collateral or any part thereof, when
used in relation to a Guarantor, shall refer to such Guarantor’s Collateral or
the relevant part thereof.

 

ARTICLE II

 

GUARANTY

 

SECTION 2.1                          Guaranty.  Each Guarantor hereby, jointly
and severally with the other Guarantors, unconditionally guarantees to the
Administrative Agent for the ratable benefit of itself and the Lenders, and
their respective permitted successors, endorsees, transferees and assigns, the
prompt payment and performance of all Obligations, whether primary or secondary
(whether by way of endorsement or otherwise), whether now existing or hereafter
arising, whether or not from time to time reduced or extinguished (except by
payment and performance thereof) or hereafter increased or incurred, whether or
not recovery may be or hereafter becomes barred by the statute of limitations,
whether enforceable or unenforceable as against the Credit Parties, whether or
not discharged, stayed or otherwise affected by any Applicable Insolvency Law or
proceeding thereunder, whether created directly with the Administrative Agent or
any Lender or acquired by the Administrative Agent or any Lender through
assignment, endorsement or otherwise, whether matured or unmatured, whether
joint or several, as and when the same become due and payable (whether at
maturity or earlier, by reason of acceleration, mandatory repayment or
otherwise), in accordance with the terms of any instruments evidencing any such
Obligations, including all renewals, extensions or modifications thereof (all
Obligations, including all of the foregoing being hereafter collectively
referred to as the “Guaranteed Obligations”).

 

SECTION 2.2                          Bankruptcy Limitations on each Guarantor. 
Notwithstanding anything to the contrary contained in Section 2.1, it is the
intention of each Guarantor, the Administrative Agent and the Lenders that, in
any proceeding involving the bankruptcy, reorganization, arrangement, adjustment
of debts, relief of debtors, dissolution or insolvency or any similar proceeding
with respect to any Guarantor or its assets, the amount of such Guarantor’s

 

2

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obligations with respect to the Guaranteed Obligations shall be equal to, but
not in excess of, the maximum amount thereof not subject to avoidance or
recovery by operation of Applicable Insolvency Laws.  To that end, but only in
the event and to the extent that such Guarantor’s obligations with respect to
the Guaranteed Obligations or any payment made pursuant to such Guaranteed
Obligations would, but for the operation of the first sentence of this
Section 2.2, be subject to avoidance or recovery in any such proceeding under
Applicable Insolvency Laws, the amount of each Guarantor’s obligations with
respect to the Guaranteed Obligations shall be limited to the largest amount
which, after giving effect thereto, would not, under Applicable Insolvency Laws,
render such Guarantor’s obligations with respect to the Guaranteed Obligations
unenforceable or avoidable or otherwise subject to recovery under Applicable
Insolvency Laws.  To the extent any payment actually made pursuant to the
Guaranteed Obligations exceeds the limitation of the first sentence of this
Section 2.2 and is otherwise subject to avoidance and recovery in any such
proceeding under Applicable Insolvency Laws, the amount subject to avoidance
shall in all events be limited to the amount by which such actual payment
exceeds such limitation and the Guaranteed Obligations as limited by the first
sentence of this Section 2.2 shall in all events remain in full force and effect
and be fully enforceable against each Guarantor.  The first sentence of this
Section 2.2 is intended solely to preserve the rights of the Administrative
Agent hereunder against each Guarantor in such proceeding to the maximum extent
permitted by Applicable Insolvency Laws and neither such Guarantor, the
Borrower, any other Guarantor nor any other Person shall have any right or claim
under such sentence that would not otherwise be available under Applicable
Insolvency Laws in such proceeding.

 

SECTION 2.3                          Agreements for Contribution.

 

(A)                                  TO THE EXTENT ANY GUARANTOR IS REQUIRED, BY
REASON OF ITS OBLIGATIONS HEREUNDER, TO PAY TO THE ADMINISTRATIVE AGENT OR ANY
LENDER AN AMOUNT GREATER THAN THE AMOUNT OF VALUE (AS DETERMINED IN ACCORDANCE
WITH APPLICABLE INSOLVENCY LAWS) ACTUALLY MADE AVAILABLE TO OR FOR THE BENEFIT
OF SUCH GUARANTOR ON ACCOUNT OF THE CREDIT AGREEMENT, THIS GUARANTY OR ANY OTHER
LOAN DOCUMENT, SUCH GUARANTOR SHALL HAVE AN ENFORCEABLE RIGHT OF CONTRIBUTION
AGAINST THE BORROWER AND THE REMAINING GUARANTORS, AND THE BORROWER AND THE
REMAINING GUARANTORS SHALL BE JOINTLY AND SEVERALLY LIABLE FOR REPAYMENT OF THE
FULL AMOUNT OF SUCH EXCESS PAYMENT.  SUBJECT ONLY TO THE SUBORDINATION PROVIDED
IN SECTION 2.3(D), SUCH GUARANTOR FURTHER SHALL BE SUBROGATED TO ANY AND ALL
RIGHTS OF THE LENDERS AGAINST THE BORROWER AND THE REMAINING GUARANTORS TO THE
EXTENT OF SUCH EXCESS PAYMENT.

 

(B)                                 TO THE EXTENT THAT ANY GUARANTOR WOULD, BUT
FOR THE OPERATION OF THIS SECTION 2.3 AND BY REASON OF ITS OBLIGATIONS HEREUNDER
OR ITS OBLIGATIONS TO OTHER GUARANTORS UNDER THIS SECTION 2.3, BE RENDERED
INSOLVENT FOR ANY PURPOSE UNDER APPLICABLE INSOLVENCY LAWS, EACH OF THE
GUARANTORS HEREBY AGREES TO INDEMNIFY SUCH GUARANTOR AND COMMITS TO MAKE A
CONTRIBUTION TO SUCH GUARANTOR’S CAPITAL IN AN AMOUNT AT LEAST EQUAL TO THE
AMOUNT NECESSARY TO PREVENT SUCH GUARANTOR FROM HAVING BEEN RENDERED INSOLVENT
BY REASON OF THE INCURRENCE OF ANY SUCH OBLIGATIONS.

 

(C)                                  TO THE EXTENT THAT ANY GUARANTOR WOULD, BUT
FOR THE OPERATION OF THIS SECTION 2.3, BE RENDERED INSOLVENT UNDER ANY
APPLICABLE INSOLVENCY LAW BY REASON OF ITS INCURRING OF OBLIGATIONS TO ANY OTHER
GUARANTOR UNDER THE FOREGOING SECTIONS 2.3(A) AND (B), SUCH GUARANTOR

 

3

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shall, in turn, have rights of contribution and indemnity, to the full extent
provided in the foregoing Sections 2.3(a) and (b), against the Borrower and the
remaining Guarantors, such that all obligations of all of the Guarantors
hereunder and under this Section 2.3 shall be allocated in a manner such that no
Guarantor shall be rendered insolvent for any purpose under Applicable
Insolvency Law by reason of its incurrence of such obligations.

 

(D)                                 NOTWITHSTANDING ANY PAYMENT OR PAYMENTS BY
ANY OF THE GUARANTORS HEREUNDER, OR ANY SET-OFF OR APPLICATION OF FUNDS OF ANY
OF THE GUARANTORS BY THE ADMINISTRATIVE AGENT OR ANY LENDER, OR THE RECEIPT OF
ANY AMOUNTS BY THE ADMINISTRATIVE AGENT OR ANY LENDER WITH RESPECT TO ANY OF THE
GUARANTEED OBLIGATIONS, NONE OF THE GUARANTORS SHALL BE ENTITLED TO BE
SUBROGATED TO ANY OF THE RIGHTS OF THE ADMINISTRATIVE AGENT OR ANY LENDER
AGAINST THE BORROWER OR THE OTHER GUARANTORS OR AGAINST ANY COLLATERAL SECURITY
HELD BY THE ADMINISTRATIVE AGENT OR ANY LENDER FOR THE PAYMENT OF THE GUARANTEED
OBLIGATIONS NOR SHALL ANY OF THE GUARANTORS SEEK ANY REIMBURSEMENT FROM THE
BORROWER OR ANY OF THE OTHER GUARANTORS IN RESPECT OF PAYMENTS MADE BY SUCH
GUARANTOR IN CONNECTION WITH THE GUARANTEED OBLIGATIONS, UNTIL ALL AMOUNTS OWING
TO THE ADMINISTRATIVE AGENT AND THE LENDERS ON ACCOUNT OF THE GUARANTEED
OBLIGATIONS ARE PAID IN FULL AND THE COMMITMENTS ARE TERMINATED.  IF ANY AMOUNT
SHALL BE PAID TO ANY GUARANTOR ON ACCOUNT OF SUCH SUBROGATION RIGHTS AT ANY TIME
WHEN ALL OF THE GUARANTEED OBLIGATIONS SHALL NOT HAVE BEEN PAID IN FULL, SUCH
AMOUNT SHALL BE HELD BY SUCH GUARANTOR IN TRUST FOR THE ADMINISTRATIVE AGENT,
SEGREGATED FROM OTHER FUNDS OF SUCH GUARANTOR, AND SHALL, FORTHWITH UPON RECEIPT
BY SUCH GUARANTOR, BE TURNED OVER TO THE ADMINISTRATIVE AGENT IN THE EXACT FORM
RECEIVED BY SUCH GUARANTOR (DULY ENDORSED BY SUCH GUARANTOR TO THE
ADMINISTRATIVE AGENT, IF REQUIRED) TO BE APPLIED AGAINST THE GUARANTEED
OBLIGATIONS, WHETHER MATURED OR UNMATURED, IN SUCH ORDER AS SET FORTH IN THE
CREDIT AGREEMENT.

 

SECTION 2.4                          Agreements for Reimbursement. 
Notwithstanding anything to the contrary contained herein, the parties hereto
acknowledge and agree that, as the Borrower is either a Wholly-Owned Subsidiary
of the Parental Entity Guarantors or part of an integrated financial enterprise
to which the Parental Entity Guarantors are a party, each Subsidiary Guarantor
shall have a right of reimbursement and indemnity from the Parental Entity
Guarantors for any amount paid by such Subsidiary Guarantor in lieu of a right
of contribution between the Subsidiary Guarantors and the Parental Entity
Guarantors.

 

SECTION 2.5                          Nature of Guaranty.

 

(A)                                  EACH GUARANTOR AGREES THAT THIS GUARANTY IS
A CONTINUING, UNCONDITIONAL GUARANTY OF PAYMENT AND PERFORMANCE AND NOT OF
COLLECTION, AND THAT ITS OBLIGATIONS UNDER THIS GUARANTY SHALL BE PRIMARY,
ABSOLUTE AND UNCONDITIONAL, IRRESPECTIVE OF, AND UNAFFECTED BY:

 

(I)                                     THE GENUINENESS, VALIDITY,
ENFORCEABILITY OR ANY FUTURE AMENDMENT OF, OR CHANGE IN, THE CREDIT AGREEMENT OR
ANY OTHER LOAN DOCUMENT OR ANY OTHER AGREEMENT, DOCUMENT OR INSTRUMENT TO WHICH
THE BORROWER, ANY PARENTAL ENTITY GUARANTOR, ANY GUARANTOR OR ANY OF THEIR
RESPECTIVE SUBSIDIARIES OR AFFILIATES IS OR MAY BECOME A PARTY;

 

(II)                                  THE ABSENCE OF ANY ACTION TO ENFORCE THIS
GUARANTY, THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE WAIVER OR
CONSENT BY THE ADMINISTRATIVE AGENT OR ANY

 

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LENDER WITH RESPECT TO ANY OF THE PROVISIONS OF THIS GUARANTY, THE CREDIT
AGREEMENT OR ANY OTHER LOAN DOCUMENT;

 

(III)                               THE EXISTENCE, VALUE OR CONDITION OF, OR
FAILURE TO PERFECT THE ADMINISTRATIVE AGENT’S LIEN AGAINST, ANY SECURITY FOR, OR
OTHER GUARANTY OF, THE GUARANTEED OBLIGATIONS OR ANY ACTION, OR THE ABSENCE OF
ANY ACTION, BY THE ADMINISTRATIVE AGENT OR ANY LENDER IN RESPECT OF SUCH
SECURITY OR GUARANTY (INCLUDING, WITHOUT LIMITATION, THE RELEASE OF ANY SUCH
SECURITY OR GUARANTY);

 

(IV)                              ANY STRUCTURAL CHANGE IN, RESTRUCTURING OF OR
SIMILAR CHANGE OF THE BORROWER, THE PARENTAL ENTITY GUARANTORS, ANY GUARANTOR OR
ANY OF THEIR RESPECTIVE SUBSIDIARIES; OR

 

(V)                                 ANY OTHER ACTION OR CIRCUMSTANCES WHICH
MIGHT OTHERWISE CONSTITUTE A LEGAL OR EQUITABLE DISCHARGE OR DEFENSE OF A SURETY
OR GUARANTOR;

 

it being agreed by each Guarantor that, subject to the first sentence of
Section 2.2, its obligations under this Guaranty shall not be discharged until
the final indefeasible payment and performance, in full, of the Guaranteed
Obligations and the termination of the Commitments; provided that
notwithstanding anything to the contrary in this Section 2.5, a Guarantor may be
released from the Guaranteed Obligations and any other obligations hereunder
pursuant to Section 4.16 of this Guaranty.

 

(B)                                 EACH GUARANTOR HEREBY REPRESENTS AND
WARRANTS THAT ITS OBLIGATIONS UNDER THIS GUARANTY ARE NOT, AND AGREES THAT THE
GUARANTEED OBLIGATIONS AND ANY OTHER OBLIGATIONS HEREUNDER SHALL NOT BE, SUBJECT
TO ANY COUNTERCLAIMS, OFFSETS OR DEFENSES (OTHER THAN A DEFENSE OF PAYMENT) OF
ANY KIND AGAINST THE ADMINISTRATIVE AGENT, THE LENDERS OR THE BORROWER WHETHER
NOW EXISTING OR WHICH MAY ARISE IN THE FUTURE.

 

(C)                                  EACH GUARANTOR HEREBY AGREES AND
ACKNOWLEDGES THAT THE GUARANTEED OBLIGATIONS AND ANY OTHER OBLIGATIONS
HEREUNDER, AND ANY OF THEM, SHALL CONCLUSIVELY BE DEEMED TO HAVE BEEN CREATED,
CONTRACTED OR INCURRED, OR RENEWED, EXTENDED, AMENDED OR WAIVED, IN RELIANCE
UPON THIS GUARANTY, AND ALL DEALINGS BETWEEN THE BORROWER AND ANY OF THE
GUARANTORS, ON THE ONE HAND, AND THE ADMINISTRATIVE AGENT AND THE LENDERS, ON
THE OTHER HAND, LIKEWISE SHALL BE CONCLUSIVELY PRESUMED TO HAVE BEEN HAD OR
CONSUMMATED IN RELIANCE UPON THIS GUARANTY.

 

SECTION 2.6                          Waivers.  To the extent permitted by
Applicable Laws, each Guarantor expressly waives all of the following rights and
defenses (and agrees not to take advantage of or assert any such right or
defense):

 

(A)                                  ANY RIGHTS IT MAY NOW OR IN THE FUTURE HAVE
UNDER ANY STATUTE, OR AT LAW OR IN EQUITY, OR OTHERWISE, TO COMPEL THE
ADMINISTRATIVE AGENT OR ANY LENDER TO PROCEED IN RESPECT OF THE OBLIGATIONS
AGAINST THE BORROWER OR ANY OTHER PERSON OR AGAINST ANY SECURITY FOR OR OTHER
GUARANTY OF THE PAYMENT AND PERFORMANCE OF THE GUARANTEED OBLIGATIONS BEFORE
PROCEEDING AGAINST, OR AS A CONDITION TO PROCEEDING AGAINST, SUCH GUARANTOR;

 

(B)                                 ANY DEFENSE BASED UPON THE FAILURE OF THE
ADMINISTRATIVE AGENT OR ANY LENDER TO COMMENCE AN ACTION IN RESPECT OF THE
GUARANTEED OBLIGATIONS AGAINST THE BORROWER, ANY PARENTAL

 

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Entity Guarantor, any other Guarantor or any other Person or any security for
the payment and performance of the Guaranteed Obligations;

 

(C)                                  ANY RIGHT TO INSIST UPON, PLEAD OR IN ANY
MANNER WHATSOEVER CLAIM OR TAKE THE BENEFIT OR ADVANTAGE OF, ANY APPRAISAL,
VALUATION, STAY, EXTENSION, MARSHALLING OF ASSETS OR REDEMPTION LAWS, OR
EXEMPTION, WHETHER NOW OR AT ANY TIME HEREAFTER IN FORCE, WHICH MAY DELAY,
PREVENT OR OTHERWISE AFFECT THE PERFORMANCE BY SUCH GUARANTOR OF ITS OBLIGATIONS
UNDER, OR THE ENFORCEMENT BY THE ADMINISTRATIVE AGENT OR THE LENDERS OF THIS
GUARANTY;

 

(D)                                 ANY RIGHT OF DILIGENCE, PRESENTMENT, DEMAND,
PROTEST AND NOTICE (EXCEPT AS SPECIFICALLY REQUIRED HEREIN OR IN THE CREDIT
AGREEMENT) OF WHATEVER KIND OR NATURE WITH RESPECT TO ANY OF THE GUARANTEED
OBLIGATIONS AND WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAWS, THE BENEFIT
OF ALL PROVISIONS OF LAW WHICH ARE OR MIGHT BE IN CONFLICT WITH THE TERMS OF
THIS GUARANTY; AND

 

(E)                                  ANY AND ALL RIGHT TO NOTICE OF THE
CREATION, RENEWAL, EXTENSION OR ACCRUAL OF ANY OF THE OBLIGATIONS AND NOTICE OF
OR PROOF OF RELIANCE BY THE ADMINISTRATIVE AGENT OR ANY LENDER UPON, OR
ACCEPTANCE OF, THIS GUARANTY.

 

Each Guarantor agrees that any notice or directive given at any time to the
Administrative Agent or any Lender which is inconsistent with any of the
foregoing waivers shall be null and void and may be ignored by the
Administrative Agent or such Lender, and, in addition, may not be pleaded or
introduced as evidence in any litigation relating to this Guaranty for the
reason that such pleading or introduction would be at variance with the written
terms of this Guaranty, unless the Administrative Agent and the Required Lenders
have specifically agreed otherwise in writing.  The foregoing waivers are of the
essence of the transaction contemplated by the Credit Agreement and the other
Loan Documents and, but for this Guaranty and such waivers, the Administrative
Agent and Lenders would decline to enter into the Credit Agreement and the other
Loan Documents.

 

SECTION 2.7                          Modification of Loan Documents, etc.  None
of the following shall impair or release this Guaranty or any of the obligations
of any Guarantor under this Guaranty:

 

(A)                                  ANY CHANGE OR EXTENSION OF THE MANNER,
PLACE OR TERMS OF PAYMENT OF, OR RENEWAL OR ALTERATION OF ALL OR ANY PORTION OF,
THE GUARANTEED OBLIGATIONS;

 

(B)                                 ANY ACTION UNDER OR IN RESPECT OF THE CREDIT
AGREEMENT OR THE OTHER LOAN DOCUMENTS IN THE EXERCISE OF ANY REMEDY, POWER OR
PRIVILEGE CONTAINED THEREIN OR AVAILABLE TO ANY OF THEM AT LAW, IN EQUITY OR
OTHERWISE, OR WAIVER OR REFRAIN FROM EXERCISING ANY SUCH REMEDIES, POWERS OR
PRIVILEGES;

 

(C)                                  ANY AMENDMENT OR MODIFICATION, IN ANY
MANNER WHATSOEVER, OF THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT;

 

(D)                                 ANY EXTENSION OR WAIVER OF THE TIME FOR
PERFORMANCE BY THE BORROWER, ANY PARENTAL ENTITY GUARANTOR, ANY GUARANTOR OR ANY
OTHER PERSON OF, OR COMPLIANCE WITH, ANY TERM, COVENANT OR AGREEMENT ON ITS PART
TO BE PERFORMED OR OBSERVED UNDER THE CREDIT AGREEMENT OR ANY OTHER

 

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Loan Document, or waiver of such performance or compliance or consent to a
failure of, or departure from, such performance or compliance;

 

(E)                                  ANY TAKING AND HOLDING OF SECURITY OR
COLLATERAL FOR THE PAYMENT OF THE GUARANTEED OBLIGATIONS OR ANY SALE, EXCHANGE,
RELEASE, DISPOSAL OF, OR OTHER DEALING WITH, ANY PROPERTY PLEDGED, MORTGAGED OR
CONVEYED, OR IN WHICH THE ADMINISTRATIVE AGENT OR THE LENDERS HAVE BEEN GRANTED
A LIEN, TO SECURE ANY INDEBTEDNESS OF THE BORROWER, ANY PARENTAL ENTITY
GUARANTOR, ANY GUARANTOR OR ANY OTHER PERSON TO THE ADMINISTRATIVE AGENT OR THE
LENDERS;

 

(F)                                    ANY RELEASE OF ANYONE WHO MAY BE LIABLE
IN ANY MANNER FOR THE PAYMENT OF ANY AMOUNTS OWED BY THE BORROWER, ANY PARENTAL
ENTITY GUARANTOR, ANY GUARANTOR OR ANY OTHER PERSON TO THE ADMINISTRATIVE AGENT
OR ANY LENDER OTHER THAN PURSUANT TO SECTION 4.16, IT BEING UNDERSTOOD THAT THE
RELEASE OF A GUARANTOR PURSUANT TO SECTION 4.16 SHALL NOT RELEASE ANY OTHER
GUARANTOR FROM ITS OBLIGATIONS HEREUNDER;

 

(G)                                 ANY MODIFICATION OR TERMINATION OF THE TERMS
OF ANY INTERCREDITOR OR SUBORDINATION AGREEMENT PURSUANT TO WHICH CLAIMS OF
OTHER CREDITORS OF THE BORROWER, ANY PARENTAL ENTITY GUARANTOR, ANY GUARANTOR OR
ANY OTHER PERSON ARE SUBORDINATED TO THE CLAIMS OF THE ADMINISTRATIVE AGENT OR
ANY LENDER; OR

 

(H)                                 ANY APPLICATION OF ANY SUMS BY WHOMEVER PAID
OR HOWEVER REALIZED TO ANY OBLIGATIONS OWING BY THE BORROWER, ANY PARENTAL
ENTITY GUARANTOR, ANY GUARANTOR OR ANY OTHER PERSON TO THE ADMINISTRATIVE AGENT
OR ANY LENDER IN ACCORDANCE WITH THE TERMS OF THE LOAN DOCUMENTS.

 

SECTION 2.8                          Demand by the Administrative Agent.  In
addition to the terms set forth in this Article II and in no manner imposing any
limitation on such terms, if all or any portion of the then outstanding
Guaranteed Obligations under the Credit Agreement are declared to be immediately
due and payable, then the Guarantors shall, upon demand in writing therefor by
the Administrative Agent to the Guarantors, pay all or such portion of the
outstanding Guaranteed Obligations due hereunder then declared due and payable.

 

SECTION 2.9                          Remedies.

 

(A)                                  UPON THE OCCURRENCE AND DURING THE
CONTINUANCE OF ANY EVENT OF DEFAULT, WITH THE CONSENT OF THE REQUIRED LENDERS,
THE ADMINISTRATIVE AGENT MAY, OR UPON THE REQUEST OF THE REQUIRED LENDERS, THE
ADMINISTRATIVE AGENT SHALL, ENFORCE AGAINST THE GUARANTORS THEIR RESPECTIVE
OBLIGATIONS AND LIABILITIES HEREUNDER AND EXERCISE SUCH OTHER RIGHTS AND
REMEDIES AS MAY BE AVAILABLE TO THE ADMINISTRATIVE AGENT HEREUNDER, UNDER THE
CREDIT AGREEMENT OR THE OTHER LOAN DOCUMENTS OR OTHERWISE.

 

(B)                                 ADDITIONALLY, AND WITHOUT LIMITING ANY OTHER
REMEDY OF THE ADMINISTRATIVE AGENT HEREUNDER OR UNDER THE CREDIT AGREEMENT OR
OTHER LOAN DOCUMENTS, EACH GUARANTOR HEREBY ACKNOWLEDGES THAT THIS GUARANTY
CONSTITUTES AN INSTRUMENT FOR THE PAYMENT OF MONEY, AND CONSENTS AND AGREES THAT
THE ADMINISTRATIVE AGENT, AT ITS SOLE OPTION, IN THE EVENT OF A DISPUTE BY SUCH
GUARANTOR IN THE PAYMENT OF ANY MONEYS DUE HEREUNDER, SHALL HAVE THE RIGHT TO
BRING MOTION-ACTION UNDER NEW YORK CPLR SECTION 3213.

 

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SECTION 2.10                    Benefits of Guaranty.  The provisions of this
Guaranty are for the benefit of the Administrative Agent and the Lenders and
their respective permitted successors, transferees, endorsees and assigns, and
nothing herein contained shall impair, as between the Credit Parties, the
Administrative Agent and the Lenders, the obligations of the Credit Parties
under the Credit Agreement and the other Loan Documents.  In the event all or
any part of the Obligations are transferred, endorsed or assigned by the
Administrative Agent or any Lender to any Person or Persons as permitted under
the Credit Agreement, any reference to an “Administrative Agent”, or “Lender”
herein shall be deemed to refer equally to such Person or Persons.

 

SECTION 2.11                    Termination; Reinstatement.

 

(A)                                  SUBJECT TO SUBSECTION (C) BELOW, THIS
GUARANTY SHALL REMAIN IN FULL FORCE AND EFFECT UNTIL ALL THE GUARANTEED
OBLIGATIONS AND ALL THE OBLIGATIONS OF THE GUARANTORS SHALL HAVE BEEN PAID IN
FULL AND THE COMMITMENTS TERMINATED.

 

(B)                                 NO PAYMENT MADE BY THE BORROWER, ANY
GUARANTOR, OR ANY OTHER PERSON RECEIVED OR COLLECTED BY THE ADMINISTRATIVE AGENT
OR ANY LENDER FROM THE BORROWER, ANY GUARANTOR, OR ANY OTHER PERSON BY VIRTUE OF
ANY ACTION OR PROCEEDING OR ANY SET-OFF OR APPROPRIATION OR APPLICATION AT ANY
TIME OR FROM TIME TO TIME IN REDUCTION OF OR IN PAYMENT OF THE GUARANTEED
OBLIGATIONS SHALL BE DEEMED TO MODIFY, REDUCE, RELEASE OR OTHERWISE AFFECT THE
LIABILITY OF ANY GUARANTOR HEREUNDER WHICH SHALL, NOTWITHSTANDING ANY SUCH
PAYMENT (OTHER THAN ANY PAYMENT MADE BY SUCH GUARANTOR IN RESPECT OF THE
OBLIGATIONS OF THE GUARANTORS OR ANY PAYMENT RECEIVED OR COLLECTED FROM SUCH
GUARANTOR IN RESPECT OF THE OBLIGATIONS OF THE GUARANTORS), REMAIN LIABLE FOR
THE OBLIGATIONS OF THE GUARANTORS UP TO THE MAXIMUM LIABILITY OF SUCH GUARANTOR
HEREUNDER UNTIL THE GUARANTEED OBLIGATIONS AND ALL THE OBLIGATIONS OF THE
GUARANTORS SHALL HAVE BEEN PAID IN FULL AND THE COMMITMENTS TERMINATED.

 

(C)                                  EACH GUARANTOR AGREES THAT, IF ANY PAYMENT
MADE BY THE BORROWER OR ANY OTHER PERSON APPLIED TO THE OBLIGATIONS IS AT ANY
TIME ANNULLED, SET ASIDE, RESCINDED, INVALIDATED, DECLARED TO BE FRAUDULENT OR
PREFERENTIAL OR OTHERWISE REQUIRED TO BE REFUNDED OR REPAID OR THE PROCEEDS OF
ANY COLLATERAL ARE REQUIRED TO BE REFUNDED BY THE ADMINISTRATIVE AGENT OR ANY
LENDER TO THE BORROWER, ITS ESTATE, TRUSTEE, RECEIVER OR ANY OTHER PERSON,
INCLUDING, WITHOUT LIMITATION, ANY GUARANTOR, UNDER ANY APPLICABLE LAW OR
EQUITABLE CAUSE, THEN, TO THE EXTENT OF SUCH PAYMENT OR REPAYMENT, EACH
GUARANTOR’S LIABILITY HEREUNDER (AND ANY LIEN OR COLLATERAL SECURING SUCH
LIABILITY) SHALL BE AND REMAIN IN FULL FORCE AND EFFECT, AS FULLY AS IF SUCH
PAYMENT HAD NEVER BEEN MADE, AND, IF PRIOR THERETO, THIS GUARANTY SHALL HAVE
BEEN CANCELED OR SURRENDERED (AND IF ANY LIEN OR COLLATERAL SECURING SUCH
GUARANTOR’S LIABILITY HEREUNDER SHALL HAVE BEEN RELEASED OR TERMINATED BY VIRTUE
OF SUCH CANCELLATION OR SURRENDER), THIS GUARANTY SHALL BE REINSTATED IN FULL
FORCE AND EFFECT, (AND EACH GUARANTOR SHALL TAKE SUCH ACTION AS IS NECESSARY TO
REINSTATE SUCH LIEN OR COLLATERAL) AND SUCH PRIOR CANCELLATION OR SURRENDER
SHALL NOT DIMINISH, RELEASE, DISCHARGE, IMPAIR OR OTHERWISE AFFECT THE
OBLIGATIONS OF SUCH GUARANTOR IN RESPECT OF THE AMOUNT OF SUCH PAYMENT (OR THE
OBLIGATION OF SUCH GUARANTOR TO PROVIDE SUCH LIEN OR COLLATERAL SECURING SUCH
OBLIGATION).

 

SECTION 2.12                    Payments.  Payments by the Guarantors shall be
made to the Administrative Agent, to be credited and applied to the Guaranteed
Obligations in accordance

 

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with Sections 4.4 and 11.4 of the Credit Agreement, in immediately available
Dollars to an account designated by the Administrative Agent or at the
Administrative Agent’s Office or at any other address that may be specified in
writing from time to time by the Administrative Agent.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

To induce the Administrative Agent and the Lenders to make any Extensions of
Credit each Guarantor hereby represents and warrants that:

 

SECTION 3.1                          Organization; Power; Qualification.  Each
of the representations and warranties set forth in Section 6.1(a) of the Credit
Agreement is true and correct as of the date hereof with respect to such
Guarantor.

 

SECTION 3.2                          Authorization of Agreement;
Enforceability.  Each of the representations and warranties set forth in
Section 6.1(c) of the Credit Agreement is true and correct as of the date hereof
with respect to such Guarantor.

 

SECTION 3.3                          Compliance of Guaranty with Laws, etc. 
Each of the representations and warranties set forth in Section 6.1(e) of the
Credit Agreement is true and correct as of the date hereof with respect to such
Guarantor.

 

SECTION 3.4                          Title to Properties.  Each of the
representations and warranties set forth in Section 6.1(r) of the Credit
Agreement is true and correct as of the date hereof with respect to such
Guarantor.

 

SECTION 3.5                          Litigation.  Each of the representations
and warranties set forth in Section 6.1(u) of the Credit Agreement is true and
correct as of the date hereof with respect to such Guarantor.

 

SECTION 3.6                          Solvency.  As of the Closing Date (or such
later date upon which such Guarantor became a party hereto) after giving effect
to the Extensions of Credit to be made under the Credit Agreement, such
Guarantor (i) has capital sufficient to carry on its business and transactions
and all business and transactions in which it engages and is able to pay its
debts as they mature, (ii) owns property having a value, both at fair valuation
on a going concern basis and at present fair saleable value on a going concern
basis, greater than the amount required to pay its probable liabilities
(including contingencies) and (iii) does not believe that it will incur debts or
liabilities beyond its ability to pay such debts or liabilities as they mature,
subject in each case to the first sentence of Section 2.2.

 

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ARTICLE IV

 

MISCELLANEOUS

 

SECTION 4.1                          Amendments, Waivers and Consents.  None of
the terms, covenants, agreements or conditions of this Guaranty may be amended,
supplemented or otherwise modified, nor may they be waived, nor may any consent
be given, except in accordance with Section 13.2 of the Credit Agreement.

 

SECTION 4.2                          Notices.  All notices, requests and demands
to or upon the Administrative Agent or any Guarantor hereunder shall be effected
in the manner provided for in Section 13.1 of the Credit Agreement; provided
that notices and communications to the Guarantors shall be directed to the
Guarantors at the address of the Borrower set forth in Section 13.1(b) of the
Credit Agreement.

 

SECTION 4.3                          Enforcement Expenses, Indemnification.

 

(A)                                  EACH GUARANTOR WILL (I) PAY ALL
OUT-OF-POCKET EXPENSES (INCLUDING, WITHOUT LIMITATION,  ALL COSTS OF ELECTRONIC
OR INTERNET DISTRIBUTION OF ANY INFORMATION HEREUNDER) OF THE ADMINISTRATIVE
AGENT IN CONNECTION WITH (A) THE PREPARATION, EXECUTION AND DELIVERY OF THIS
GUARANTY AND EACH OTHER LOAN DOCUMENT, WHENEVER THE SAME SHALL BE EXECUTED AND
DELIVERED, INCLUDING, WITHOUT LIMITATION, ALL OUT-OF-POCKET SYNDICATION AND DUE
DILIGENCE EXPENSES AND REASONABLE FEES AND DISBURSEMENTS OF COUNSEL FOR THE
ADMINISTRATIVE AGENT AND (B) THE PREPARATION, EXECUTION AND DELIVERY OF ANY
WAIVER, AMENDMENT OR CONSENT BY THE ADMINISTRATIVE AGENT OR THE LENDERS RELATING
TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, INCLUDING, WITHOUT LIMITATION,
REASONABLE FEES, DISBURSEMENTS AND OTHER CHARGES OF COUNSEL FOR THE
ADMINISTRATIVE AGENT, (II) PAY ALL REASONABLE OUT-OF-POCKET EXPENSES OF THE
ADMINISTRATIVE AGENT AND EACH LENDER ACTUALLY INCURRED IN CONNECTION WITH THE
ADMINISTRATION AND ENFORCEMENT OF ANY RIGHTS AND REMEDIES OF THE ADMINISTRATIVE
AGENT AND LENDERS UNDER THIS GUARANTY, INCLUDING, WITHOUT LIMITATION, IN
CONNECTION WITH ANY WORKOUT, RESTRUCTURING, BANKRUPTCY OR OTHER SIMILAR
PROCEEDING, CREATING AND PERFECTING LIENS IN FAVOR OF THE ADMINISTRATIVE AGENT
ON BEHALF OF THE LENDERS PURSUANT TO ANY SECURITY DOCUMENT, ENFORCING ANY
OBLIGATIONS OF, OR COLLECTING ANY PAYMENTS DUE FROM, THE BORROWER OR ANY
GUARANTOR BY REASON OF AN EVENT OF DEFAULT (INCLUDING BY REASON OF AN EVENT OF
DEFAULT, IN CONNECTION WITH THE SALE OF, COLLECTION FROM, OR OTHER REALIZATION
UPON ANY OF THE COLLATERAL OR THE ENFORCEMENT OF THIS GUARANTY OR THE PARENTAL
ENTITY GUARANTY AGREEMENT); CONSULTING WITH APPRAISERS, ACCOUNTANTS, ENGINEERS,
ATTORNEYS AND OTHER PERSONS CONCERNING THE NATURE, SCOPE OR VALUE OF ANY RIGHT
OR REMEDY OF THE ADMINISTRATIVE AGENT OR ANY LENDER HEREUNDER OR UNDER ANY OTHER
LOAN DOCUMENT OR ANY FACTUAL MATTERS IN CONNECTION THEREWITH, WHICH EXPENSES
SHALL INCLUDE THE REASONABLE FEES AND DISBURSEMENTS OF SUCH PERSONS, (III) ANY
CIVIL PENALTY OR FINE ASSESSED BY THE U.S. DEPARTMENT OF THE TREASURY’S OFFICE
OF FOREIGN ASSETS CONTROL AGAINST, AND ALL REASONABLE COSTS AND EXPENSES
(INCLUDING COUNSEL FEES AND DISBURSEMENTS) INCURRED IN CONNECTION WITH DEFENSE
THEREOF BY THE ADMINISTRATIVE AGENT OR ANY LENDER AS A RESULT OF THE FUNDING OF
LOANS, THE ISSUANCE OF LETTERS OF CREDIT, THE ACCEPTANCE OF PAYMENT OR OF
COLLATERAL DUE UNDER THE LOAN DOCUMENTS AND (IV) DEFEND, INDEMNIFY AND HOLD
HARMLESS THE ADMINISTRATIVE AGENT AND THE LENDERS, AND THEIR RESPECTIVE PARENTS,
SUBSIDIARIES, AFFILIATES, PARTNERS, EMPLOYEES, AGENTS, OFFICERS, ADVISORS AND
DIRECTORS, FROM AND AGAINST ANY LOSSES, PENALTIES, FINES, LIABILITIES,
SETTLEMENTS, DAMAGES, COSTS AND EXPENSES, SUFFERED BY ANY SUCH PERSON IN
CONNECTION WITH ANY CLAIM (INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL
CLAIMS), INVESTIGATION, LITIGATION OR OTHER PROCEEDING (WHETHER OR NOT THE
ADMINISTRATIVE AGENT OR ANY LENDER IS A PARTY THERETO) AND THE PROSECUTION AND
DEFENSE THEREOF, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE LOANS, THIS
GUARANTY, ANY OTHER LOAN

 

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Document, or any documents, reports or other information provided to the
Administrative Agent or any Lender or contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby, including, without
limitation, reasonable attorney’s and consultant’s fees, except to the extent
that any of the foregoing (A) are determined by a court of competent
jurisdiction by a final and nonappealable judgment to have resulted directly
from the gross negligence or willful misconduct of the party seeking
indemnification therefor or (B) result from a claim brought by any Credit Party
against an indemnitee for breach in bad faith of the obligations under this
Guaranty or the other Loan Documents of the party seeking indemnification if
such Credit Party has obtained a final and nonappealable judgment in its favor
on such claim as determined by a court of competent jurisdiction.

 

(B)                                 THE AGREEMENTS IN THIS SECTION 4.3 SHALL
SURVIVE TERMINATION OF THE COMMITMENTS AND REPAYMENT OF THE OBLIGATIONS AND ALL
OTHER AMOUNTS PAYABLE UNDER THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS.

 

SECTION 4.4                          Governing Law.  This Guaranty, unless
otherwise expressly set forth herein, shall be governed by, construed and
enforced in accordance with the laws of the State of New York, including
Section 5-1401 and Section 5-1402 of the General Obligations Laws of the State
of New York, without reference to any other conflicts of law principles thereof.

 

SECTION 4.5                          Jurisdiction and Venue.

 

(A)                                  JURISDICTION.  EACH GUARANTOR PARTY HERETO
HEREBY IRREVOCABLY CONSENTS TO THE PERSONAL JURISDICTION OF THE STATE AND
FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK (AND ANY COURTS FROM WHICH AN
APPEAL FROM ANY OF SUCH COURTS MUST OR MAY BE TAKEN) IN ANY ACTION, CLAIM OR
OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS GUARANTY,
ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS.  EACH GUARANTOR HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF A
SUMMONS AND COMPLAINT AND OTHER PROCESS IN ANY ACTION, CLAIM OR PROCEEDING
BROUGHT BY THE ADMINISTRATIVE AGENT OR ANY LENDER IN CONNECTION WITH THIS
GUARANTY, ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS
AND OBLIGATIONS, ON BEHALF OF ITSELF OR ITS PROPERTY, IN THE MANNER SPECIFIED IN
SECTION 4.2.  NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE
ADMINISTRATIVE AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY APPLICABLE LAW OR AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR
ANY LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST ANY GUARANTOR OR ITS
PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTIONS.

 

(B)                                 VENUE.  EACH GUARANTOR PARTY HERETO HEREBY
IRREVOCABLY WAIVES ANY OBJECTION IT MAY HAVE NOW OR IN THE FUTURE TO THE LAYING
OF VENUE IN THE AFORESAID JURISDICTION IN ANY ACTION, CLAIM OR OTHER PROCEEDING
ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY OR THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER.  EACH GUARANTOR PARTY HERETO IRREVOCABLY WAIVES, IN
CONNECTION WITH SUCH ACTION, CLAIM OR PROCEEDING, ANY PLEA OR CLAIM THAT THE
ACTION, CLAIM OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

SECTION 4.6                          Waiver of Jury Trial.  THE ADMINISTRATIVE
AGENT AND EACH GUARANTOR HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF
OR IN CONNECTION WITH THIS GUARANTY, ANY RIGHTS OR

 

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OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.

 

SECTION 4.7                          Punitive Damages.  The Administrative
Agent, the Lenders, and each Guarantor hereby agree that no such Person shall
have a remedy of punitive or exemplary damages against any other party to this
Guaranty or other Loan Document and each such Person hereby waives any right or
claim to punitive or exemplary damages that they may now have or may arise in
the future in connection with any dispute, claim or controversy arising out of,
connected with or relating to this Guaranty or any other Loan Document.

 

SECTION 4.8                          No Waiver by Course of Conduct, Cumulative
Remedies.  Neither the Administrative Agent nor any Lender shall by any act
(except by a written instrument pursuant to Section 4.1), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or Event of Default.  No failure to exercise,
nor any delay in exercising on the part of the Administrative Agent or any
Lender, any right, power or privilege hereunder shall operate as a waiver
thereof.  No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.  A waiver by the Administrative Agent or
any Lender of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Administrative Agent or such
Lender would otherwise have on any future occasion.  The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any other rights or remedies provided by law.

 

SECTION 4.9                          Successors and Assigns.  This Guaranty
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby; provided that, except for
any merger, consolidation or similar combination or liquidation permitted by the
Credit Agreement, no Guarantor may assign, transfer or delegate any of its
rights or obligations under this Guaranty without the prior written consent of
the Administrative Agent and the Lenders (given in accordance with Section 4.1).

 

SECTION 4.10                    Severability.  Any provision of this Guaranty or
any other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective only to the extent of such
prohibition or unenforceability without invalidating the remainder of such
provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.

 

SECTION 4.11                    Headings.  The various headings used in this
Guaranty are for convenience only, and neither limit nor amplify the provisions
of this Guaranty.

 

SECTION 4.12                    Counterparts.  This Guaranty may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and shall be binding upon all parties, their successors and assigns, and all of
which taken together shall constitute one and the same agreement.

 

SECTION 4.13                    Set-Off.  Each Guarantor hereby irrevocably
authorizes the Administrative Agent and each Lender at any time and from time to
time pursuant to Section 13.4

 

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of the Credit Agreement, without notice to such Guarantor or any other
Guarantor, any such notice being expressly waived by each Guarantor, and
provided that an Event of Default shall have occurred and be continuing, to
set-off and appropriate and apply any and all deposits (general or special, time
or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Administrative Agent or such Lender to or for the credit or the
account of such Guarantor, or any part thereof in such amounts as the
Administrative Agent or such Lender may elect, against and on account of the
obligations and liabilities of such Guarantor to the Administrative Agent or
such Lender hereunder and claims of every nature and description of the
Administrative Agent or such Lender against such Guarantor, in any currency,
whether arising hereunder, under the Credit Agreement, any other Loan Document
or otherwise, as the Administrative Agent or such Lender may elect, whether or
not the Administrative Agent or any Lender has made any demand for payment and
although such obligations, liabilities and claims may be contingent or
unmatured.  The Administrative Agent and each Lender shall notify such Guarantor
promptly of any such set-off and the application made by the Administrative
Agent or such Lender of the proceeds thereof; provided that the failure to give
such notice shall not affect the validity of such set-off and application.  The
rights of the Administrative Agent and each Lender under this Section 4.13 are
in addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Administrative Agent or such Lender may have.

 

SECTION 4.14                    Integration.  This Guaranty and the other Loan
Documents represent the agreement of the Guarantors, the Administrative Agent
and the Lenders with respect to the subject matter hereof and thereof, and there
are no promises, undertakings, representations or warranties by the
Administrative Agent or any Lender relative to subject matter hereof and thereof
not expressly set forth or referred to herein or in the other Loan Documents.

 

SECTION 4.15                    Acknowledgements.  Each Guarantor hereby
acknowledges that:

 

(A)                                  IT HAS BEEN ADVISED BY COUNSEL IN THE
NEGOTIATION, EXECUTION AND DELIVERY OF THIS GUARANTY AND THE OTHER LOAN
DOCUMENTS TO WHICH IT IS A PARTY;

 

(B)                                 NEITHER THE ADMINISTRATIVE AGENT NOR ANY
LENDER HAS ANY FIDUCIARY RELATIONSHIP WITH OR DUTY TO ANY GUARANTOR ARISING OUT
OF OR IN CONNECTION WITH THIS GUARANTY OR ANY OF THE OTHER LOAN DOCUMENTS, AND
THE RELATIONSHIP BETWEEN THE GUARANTORS, ON THE ONE HAND, AND THE ADMINISTRATIVE
AGENT AND LENDERS, ON THE OTHER HAND, IN CONNECTION HEREWITH OR THEREWITH IS
SOLELY THAT OF DEBTOR AND CREDITOR; AND

 

(C)                                  NO JOINT VENTURE IS CREATED HEREBY OR BY
THE OTHER LOAN DOCUMENTS OR OTHERWISE EXISTS BY VIRTUE OF THE TRANSACTIONS
CONTEMPLATED HEREBY AMONG THE LENDERS OR AMONG THE GUARANTORS AND THE LENDERS.

 

SECTION 4.16                    Releases.  At such time as (a) the Guaranteed
Obligations shall have been paid in full and the Commitments have been
terminated, this Guaranty and all obligations hereunder (other than those
expressly stated to survive such termination) of the Administrative Agent and
each Guarantor hereunder shall terminate, all without delivery of any instrument
or performance of any act by any party, or (b) a Guarantor ceases to be a
Subsidiary of the

 

13

--------------------------------------------------------------------------------

 

Borrower in connection with a transaction expressly permitted under the terms
and conditions of the Credit Agreement, such Guarantor shall be released from
the Guaranteed Obligations and its obligations hereunder (other than obligations
expressly stated to survive the termination of this Guaranty).  At the request
and sole expense of any Guarantor following any such termination, the
Administrative Agent shall execute and deliver to such Guarantor such documents
as such Guarantor shall reasonably request to evidence such termination.

 

SECTION 4.17                    Additional Guarantors.  Each Subsidiary of the
Parent that is required to become a party to this Guaranty pursuant to
Section 8.11 of the Credit Agreement shall become a Guarantor for all purposes
of this Guaranty upon execution and delivery by such Subsidiary of a joinder
agreement in form and substance reasonably satisfactory to the Administrative
Agent.

 

SECTION 4.18                    Joint and Several Liability.  The liability of
each Guarantor hereunder shall be joint and several with the liability of the
Parental Entity Guarantors under the Parental Entity Guaranty Agreement.

 

[Signature Pages to Follow]

 

14

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, each of the Guarantors has executed and delivered this
Guaranty under seal by their duly authorized officers, all as of the day and
year first above written.

 

 

 

FRIDAY MORNING, INC., as Guarantor

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

DAYS OF THE WEEK, INC., as Guarantor

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

NIGHTS OF THE WEEK, INC., as Guarantor

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

TUESDAY MORNING PARTNERS, LTD., as
Guarantor

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

[Signature Pages Continue]

 

15

--------------------------------------------------------------------------------

 

 

WACHOVIA BANK, NATIONAL
ASSOCIATION, as Administrative Agent

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

--------------------------------------------------------------------------------

Execution Version

 

 

 

 

COLLATERAL AGREEMENT,

 

dated as of December 22, 2004,

 

 

by and among

 

 

TUESDAY MORNING, INC.,

 

TUESDAY MORNING CORPORATION,

 

TMI HOLDINGS, INC.,

 

and certain of its Subsidiaries

as Grantors,

 

in favor of

 

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent

 

 

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

ARTICLE I DEFINED TERMS

 

SECTION 1.1. Terms Defined in the Uniform Commercial Code.

 

SECTION 1.2. Definitions

 

SECTION 1.3. Other Definitional Provisions

 

 

 

ARTICLE II SECURITY INTEREST

 

SECTION 2.1. Grant of Security Interest

 

SECTION 2.2. Grantors Remain Liable

 

 

 

ARTICLE III REPRESENTATIONS AND WARRANTIES

 

SECTION 3.1. Existence

 

SECTION 3.2. Authorization of Agreement; No Conflict

 

SECTION 3.3. Consents

 

SECTION 3.4. Perfected First Priority Liens

 

SECTION 3.5. Title, No Other Liens

 

SECTION 3.6. State of Organization; Location of Inventory; Other Information

 

SECTION 3.7. Deposit Accounts

 

SECTION 3.8. Inventory

 

SECTION 3.9. Investment Property; Partnership/LLC Interests

 

 

 

ARTICLE IV COVENANTS

 

SECTION 4.1. Maintenance of Perfected Security Interest; Further Information

 

SECTION 4.2. Maintenance of Insurance

 

SECTION 4.3. Changes in Locations; Changes in Name or Structure

 

SECTION 4.4. Required Notifications

 

SECTION 4.5. Delivery Covenants

 

SECTION 4.6. Control Covenants

 

SECTION 4.7. Filing Covenants

 

SECTION 4.8. Pledged Investment Property; Partnership/LLC Interests

 

SECTION 4.9. Further Assurances

 

 

 

ARTICLE V REMEDIAL PROVISIONS

 

SECTION 5.1. General Remedies

 

SECTION 5.2. Specific Remedies

 

SECTION 5.3. Registration Rights [a05-1757_1ex10d6.htm#Section5_3_074013]

 

SECTION 5.4. Application of Proceeds [a05-1757_1ex10d6.htm#Section5_4_074050]

 

SECTION 5.5. Waiver, Deficiency [a05-1757_1ex10d6.htm#Section5_5_074105]

 

 

 

ARTICLE VI THE ADMINISTRATIVE AGENT [a05-1757_1ex10d6.htm#ArticleVi_085405]

 

SECTION 6.1. Administrative Agent’s Appointment as Attorney-In-Fact
[a05-1757_1ex10d6.htm#Section6_1_085409]

 

SECTION 6.2. Duty of Administrative Agent
[a05-1757_1ex10d6.htm#Section6_2_074225]

 

SECTION 6.3. Authority of Administrative Agent
[a05-1757_1ex10d6.htm#Section6_3_074233]

 

 

 

ARTICLE VII MISCELLANEOUS [a05-1757_1ex10d6.htm#ArticleVii_074238]

 

SECTION 7.1. Amendments, Waivers and Consents. .
[a05-1757_1ex10d6.htm#Section7_1_074244]

 

SECTION 7.2. Notices [a05-1757_1ex10d6.htm#Section7_2_074251]

 

 

i

--------------------------------------------------------------------------------

 

SECTION 7.3. No Waiver by Course of Conduct, Cumulative Remedies
[a05-1757_1ex10d6.htm#Section7_3_074317]

 

SECTION 7.4. Enforcement Expenses, Indemnification
[a05-1757_1ex10d6.htm#Section7_4_074322]

 

SECTION 7.5. Waiver of Jury Trial; Preservation of Remedies
[a05-1757_1ex10d6.htm#Section7_5_074509]

 

SECTION 7.6. Successors and Assigns [a05-1757_1ex10d6.htm#Section7_6_074540]

 

SECTION 7.7. Counterparts [a05-1757_1ex10d6.htm#Section7_7_074550]

 

SECTION 7.8. Severability [a05-1757_1ex10d6.htm#Section7_8_074559]

 

SECTION 7.9. Section Heading [a05-1757_1ex10d6.htm#Section7_9_074605]

 

SECTION 7.10. Integration [a05-1757_1ex10d6.htm#Section7_10_074610]

 

SECTION 7.11. Governing Law [a05-1757_1ex10d6.htm#Section7_11_074618]

 

SECTION 7.12. Jurisdiction and Venue. [a05-1757_1ex10d6.htm#Section7_12_074627]

 

SECTION 7.13. Acknowledgements [a05-1757_1ex10d6.htm#Section7_13_074729]

 

SECTION 7.14. Additional Grantors [a05-1757_1ex10d6.htm#Section7_14_074746]

 

SECTION 7.15. Releases [a05-1757_1ex10d6.htm#Section7_15_074757]

 

 

ii

--------------------------------------------------------------------------------

 

SCHEDULES:

 

Exhibit A [a05-1757_1ex10d6.htm#ExhibitA_084540]

 

Form of Perfection Certificate [a05-1757_1ex10d6.htm#ExhibitA_084540]

 

 

 

Schedule 3.6 [a05-1757_1ex10d6.htm#Schedule3_6_084554]

 

Exact Legal Name; Jurisdiction of Organization; Taxpayer Identification Number;
Registered Organization Number; Mailing Address; Chief Executive Office and
other Locations [a05-1757_1ex10d6.htm#Schedule3_6_084554]

Schedule 3.7 [a05-1757_1ex10d6.htm#Schedule3_7_084604]

 

Deposit Accounts [a05-1757_1ex10d6.htm#Schedule3_7_084604]

Schedule 3.9 [a05-1757_1ex10d6.htm#Schedule3_9_084611]

 

Investment Property and Partnership/LLC Interests
[a05-1757_1ex10d6.htm#Schedule3_9_084611]

 

i

--------------------------------------------------------------------------------

 

Execution Version

 

 

COLLATERAL AGREEMENT (this “Agreement”), dated as of December 22, 2004, by and
among TUESDAY MORNING, INC., a Texas corporation (the “Borrower”), TUESDAY
MORNING CORPORATION, a Delaware corporation (the “Parent”), TMI HOLDINGS, INC.,
a Delaware corporation (“Holdings”), certain of the Parent’s Subsidiaries as
identified on the signature pages hereto and any Additional Grantor (as defined
below) who may become party to this Agreement (such Subsidiaries and Additional
Grantors, collectively, with the Borrower, the Parent and Holdings, the
“Grantors”), in favor of WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
association, as administrative agent (in such capacity, the “Administrative
Agent”) for the ratable benefit of the banks and other financial institutions
(the “Lenders”) from time to time parties to the Credit Agreement, dated as of
December 22, 2004 (as amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”), by and among the Borrower, the Parent,
Holdings, the Lenders, and the Administrative Agent.

 

STATEMENT OF PURPOSE

 

Pursuant to the Credit Agreement, the Lenders have agreed to make Extensions of
Credit to the Borrower upon the terms and subject to the conditions set forth
therein.

 

Pursuant to the terms of (i) a Subsidiary Guaranty Agreement of even date
herewith, and (ii) a Parental Entity Guaranty Agreement of even date herewith,
certain Subsidiaries of the Parent who are parties hereto, the Parent and
Holdings have guaranteed payment and performance of the Obligations of the
Borrower.

 

It is a condition precedent to the obligation of the Lenders to make their
respective Extensions of Credit to the Borrower under the Credit Agreement that
the Grantors shall have executed and delivered this Agreement to the
Administrative Agent, for the ratable benefit of itself and the Lenders.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties hereto, and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective Extensions of Credit to the Borrower
thereunder, each Grantor hereby agrees with the Administrative Agent, for the
ratable benefit of itself and the Lenders, as follows:

 

ARTICLE I

 

DEFINED TERMS

 

SECTION 1.1.  TERMS DEFINED IN THE UNIFORM COMMERCIAL CODE.

 

(A)           THE FOLLOWING TERMS WHEN USED IN THIS AGREEMENT SHALL HAVE THE
MEANINGS ASSIGNED TO THEM IN THE UCC (AS DEFINED IN SECTION 1.2 BELOW) AS IN
EFFECT FROM TIME TO TIME:  “AUTHENTICATE”, “CERTIFICATED SECURITY”, “DEPOSIT
ACCOUNT”, “FINANCIAL ASSETS”, “GENERAL INTANGIBLE”, “INSTRUMENT”, “INVENTORY”,
“INVESTMENT COMPANY SECURITY”, “INVESTMENT PROPERTY”, “PROCEEDS”, “RECORD”,
“REGISTERED ORGANIZATION”, “SECURITY”, “SECURITIES ENTITLEMENT”,

 

--------------------------------------------------------------------------------

 

“SECURITIES INTERMEDIARY”, “SECURITIES ACCOUNT”, “SUPPORTING OBLIGATION”, AND
“UNCERTIFICATED SECURITY”.

 

(B)           TERMS DEFINED IN THE UCC AND NOT OTHERWISE DEFINED HEREIN OR IN
THE CREDIT AGREEMENT SHALL HAVE THE MEANING ASSIGNED IN THE UCC AS IN EFFECT
FROM TIME TO TIME.

 

SECTION 1.2.  DEFINITIONS.  THE FOLLOWING TERMS WHEN USED IN THIS AGREEMENT
SHALL HAVE THE MEANINGS ASSIGNED TO THEM BELOW:

 

“Additional Grantor” means each Subsidiary of the Parent which hereafter becomes
a Grantor pursuant to Section 7.14 hereof and Section 8.11 of the Credit
Agreement.

 

“Agreement” means this Collateral Agreement, as amended, restated, supplemented
or otherwise modified from time to time.

 

“Collateral” has the meaning assigned thereto in Section 2.1.

 

“Collateral Account” means any collateral account established by the
Administrative Agent as provided in Section 5.2.

 

“Control” means the manner in which “control” is achieved under the UCC with
respect, with respect to any Collateral for which the UCC specifies a method of
achieving “control”.

 

“Controlled Depositary” has the meaning assigned thereto in Section 4.6(a).

 

“Controlled Intermediary” has the meaning assigned thereto in Section 4.6(a).

 

“Effective Endorsement and Assignment”  means, with respect to any specific type
of Collateral, all such endorsements, assignments and other instruments of
transfer reasonably requested by the Administrative Agent with respect to the
Security Interest granted in such Collateral, and in each case, in form and
substance satisfactory to the Administrative Agent.

 

“Grantors” has the meaning set forth in the preamble of this Agreement.

 

“Guarantor” means any Person executing a Guaranty Agreement.

 

“Guaranty Agreement” means the collective reference to the Subsidiary Guaranty
Agreement and the Parental Entity Guaranty Agreement.

 

“Investment Property Collateral” has the meaning assigned thereto in Section
2.1(a)(v).

 

 “Issuer” means any issuer of any Investment Property or Partnership/LLC
Interests (including, without limitation, any Issuer as defined in the UCC).

 

 “Material Contracts” has the meaning assigned thereto in the Credit Agreement.

 

“Material Deposit Account” has the meaning assigned thereto in Section 4.4.

 

2

--------------------------------------------------------------------------------

 

“Obligations” means with respect to the Borrower, the meaning assigned thereto
in the Credit Agreement, and with respect to each Guarantor, the obligations of
such Guarantor under the Guaranty Agreement executed by such Guarantor and with
respect to all Grantors, all liabilities and obligations of the Grantors
hereunder.

 

“OFAC” shall mean the U.S. Department of the Treasury’s Office of Foreign Assets
Control.

 

“Parental Entity Guaranty Agreement” has the meaning assigned thereto in the
Credit Agreement.

 

“Partnership/LLC Interests” means, with respect to any Grantor, the entire
partnership, membership interest or limited liability company interest, as
applicable, of such Grantor in each partnership, limited partnership or limited
liability company owned thereby, including, without limitation, such Grantor’s
capital account, its interest as a partner or member, as applicable, in the net
cash flow, net profit and net loss, and items of income, gain, loss, deduction
and credit of any such partnership, limited partnership or limited liability
company, as applicable, such Grantor’s interest in all distributions made or to
be made by any such partnership, limited partnership or limited liability
company, as applicable, to such Grantor and all of the other economic rights,
titles and interests of such Grantor as a partner or member, as applicable, of
any such partnership, limited partnership or limited liability company, as
applicable, whether set forth in the partnership agreement or membership
agreement, as applicable, of such partnership, limited partnership or limited
liability company, as applicable, by separate agreement or otherwise.

 

“Perfection Certificate” means the perfection certificate dated as of even date
herewith, substantially in the form of Exhibit A attached hereto, and otherwise
in form and substance satisfactory to the Administrative Agent, and duly
certified by an officer, partner or member, as applicable, of each Grantor.

 

“Permitted Liens” means Liens permitted pursuant to Section 10.2 of the Credit
Agreement.

 

“Pledged Investment Property” has the meaning assigned thereto in Section
2.1(a)(iv).

 

“Proceeds Investment Property” has the meaning assigned thereto in Section
2.1(a)(v).

 

“Restricted Securities Collateral” has the meaning assigned thereto in Section
5.3(a).

 

“Sanctioned Country” shall mean a country subject to a sanctions program
identified on the list maintained by OFAC and available at
http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html, or as otherwise
published from time to time.

 

“Sanctioned Person” shall mean (i) a person named on the list of Specially
Designated Nationals or Blocked Persons maintained by OFAC available at
http://www.treas.gov/offices/eotffc/ofac/sdn/index.html, or as otherwise
published from time to time, or (ii) (A) an agency of the government of a
Sanctioned Country, (B) an organization

 

 

3

--------------------------------------------------------------------------------

 

controlled by a Sanctioned Country, or (C) a person resident in a Sanctioned
Country, to the extent subject to a sanctions program administered by OFAC.

 

“Securities Act” means the Securities Act of 1933, including all amendments
thereto and regulations promulgated thereunder.

 

“Security Interests” means the security interests granted pursuant to Article
II, as well as all other security interests created or assigned as additional
security for the Obligations pursuant to the provisions of the Credit Agreement.

 

“Subsidiary Guaranty Agreement” has the meaning assigned thereto in the Credit
Agreement.

 

“UCC” means the Uniform Commercial Code as in effect in the State of New York,
as amended or modified from time to time.

 

SECTION 1.3.  OTHER DEFINITIONAL PROVISIONS.  TERMS DEFINED IN THE CREDIT
AGREEMENT AND NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANING ASSIGNED
THERETO IN THE CREDIT AGREEMENT.  THE WORDS “HEREOF”, “HEREIN”, “HERETO” AND
“HEREUNDER” AND WORDS OF SIMILAR IMPORT WHEN USED IN THIS AGREEMENT SHALL REFER
TO THIS AGREEMENT AS A WHOLE AND NOT TO ANY PARTICULAR PROVISION OF THIS
AGREEMENT, AND SECTION AND SCHEDULE REFERENCES ARE TO THIS AGREEMENT UNLESS
OTHERWISE SPECIFIED.  THE MEANINGS GIVEN TO TERMS DEFINED HEREIN SHALL BE
EQUALLY APPLICABLE TO BOTH THE SINGULAR AND PLURAL FORMS OF SUCH TERMS.  WHERE
THE CONTEXT REQUIRES, TERMS RELATING TO THE COLLATERAL OR ANY PART THEREOF, WHEN
USED IN RELATION TO A GRANTOR, SHALL REFER TO SUCH GRANTOR’S COLLATERAL OR THE
RELEVANT PART THEREOF.

 

ARTICLE II

 

SECURITY INTEREST

 

SECTION 2.1.  GRANT OF SECURITY INTEREST.

 

(A)           EACH GRANTOR HEREBY GRANTS, PLEDGES AND COLLATERALLY ASSIGNS TO
THE ADMINISTRATIVE AGENT, FOR THE RATABLE BENEFIT OF THE ADMINISTRATIVE AGENT
AND THE LENDERS, A SECURITY INTEREST IN, ALL OF SUCH GRANTOR’S RIGHT, TITLE AND
INTEREST IN THE FOLLOWING PROPERTY NOW OWNED OR AT ANY TIME HEREAFTER ACQUIRED
BY SUCH GRANTOR OR IN WHICH SUCH GRANTOR NOW HAS OR AT ANY TIME IN THE FUTURE
MAY ACQUIRE ANY RIGHT, TITLE OR INTEREST, AND WHEREVER LOCATED OR DEEMED LOCATED
(COLLECTIVELY, THE “COLLATERAL”), AS COLLATERAL SECURITY FOR THE PROMPT AND
COMPLETE PAYMENT AND PERFORMANCE WHEN DUE (WHETHER AT THE STATED MATURITY, BY
ACCELERATION OR OTHERWISE) OF THE OBLIGATIONS:

 

(I)            ALL DEPOSIT ACCOUNTS;

 

(II)           ALL DOCUMENTS COVERING OR RELATED TO INVENTORY;

 

(III)          ALL INVENTORY;

 

4

--------------------------------------------------------------------------------

 

(IV)          ALL INVESTMENT PROPERTY REPRESENTING OWNERSHIP INTERESTS OF ANY
GRANTOR IN THE SUBSIDIARIES OF THE PARENT NOW EXISTING OR HEREAFTER CREATED OR
ACQUIRED (THE “PLEDGED INVESTMENT PROPERTY”);

 

(V)           ALL INVESTMENT PROPERTY CONSISTING OF PROCEEDS OF THE SALE OF
INVENTORY OF ANY GRANTOR WHICH ARE FINANCIAL ASSETS OR WHICH ARE FINANCIAL
ASSETS CREDITED TO A SECURITIES ACCOUNT (THE “PROCEEDS INVESTMENT PROPERTY”,
AND, TOGETHER WITH THE PLEDGED INVESTMENT PROPERTY, THE “INVESTMENT PROPERTY
COLLATERAL”);

 

(VI)          ALL GENERAL INTANGIBLES (I) REPRESENTING ANY OWNERSHIP INTERESTS
IN THE SUBSIDIARIES OF THE PARENT NOW EXISTING OR HEREAFTER CREATED OR ACQUIRED
OR (II) RELATING TO ANY OF THE FOREGOING COLLATERAL DESCRIBED IN CLAUSES (I)
THROUGH (V) ABOVE; AND

 

(VII)         TO THE EXTENT NOT OTHERWISE INCLUDED, ALL PROCEEDS AND PRODUCTS OF
ANY AND ALL OF THE FOREGOING AND ALL COLLATERAL SECURITY AND SUPPORTING
OBLIGATIONS (AS NOW OR HEREAFTER DEFINED IN THE UCC) GIVEN BY ANY PERSON WITH
RESPECT TO ANY OF THE FOREGOING.

 

(b)           Notwithstanding clause (a) of this Section 2.1, the payment and
performance of the Obligations shall not be secured by any Hedging Agreement
between any Grantor and the Administrative Agent or any Lender or any Affiliate
of the Administrative Agent or any Lender.

 

(c)           Notwithstanding the foregoing grants, no obligation or property of
any kind due from, owed by, or belonging to, a Sanctioned Person shall be
Collateral.

 

SECTION 2.2.  GRANTORS REMAIN LIABLE.   ANYTHING HEREIN TO THE CONTRARY
NOTWITHSTANDING: (A) EACH GRANTOR SHALL REMAIN LIABLE UNDER THE CONTRACTS AND
AGREEMENTS INCLUDED IN THE COLLATERAL TO THE EXTENT SET FORTH THEREIN TO PERFORM
ALL OF ITS DUTIES AND OBLIGATIONS THEREUNDER TO THE SAME EXTENT AS IF THIS
AGREEMENT HAD NOT BEEN EXECUTED, (B) THE EXERCISE BY THE ADMINISTRATIVE AGENT OF
ANY OF THE RIGHTS HEREUNDER SHALL NOT RELEASE ANY GRANTOR FROM ANY OF ITS DUTIES
OR OBLIGATIONS UNDER THE CONTRACTS AND AGREEMENTS INCLUDED IN THE COLLATERAL,
(C) NEITHER THE ADMINISTRATIVE AGENT NOR ANY LENDER SHALL HAVE ANY OBLIGATION OR
LIABILITY UNDER THE CONTRACTS AND AGREEMENTS INCLUDED IN THE COLLATERAL BY
REASON OF THIS AGREEMENT, NOR SHALL THE ADMINISTRATIVE AGENT OR ANY LENDER BE
OBLIGATED TO PERFORM ANY OF THE OBLIGATIONS OR DUTIES OF ANY GRANTOR THEREUNDER
OR TO TAKE ANY ACTION TO COLLECT OR ENFORCE ANY CLAIM FOR PAYMENT ASSIGNED
HEREUNDER, AND (D) NEITHER THE ADMINISTRATIVE AGENT NOR ANY LENDER SHALL HAVE
ANY LIABILITY IN CONTRACT OR TORT FOR ANY GRANTOR’S ACTS OR OMISSIONS.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

To induce the Administrative Agent and the Lenders to enter into the Credit
Agreement and to induce the Lenders to make their respective Extensions of
Credit to the Borrower thereunder, each Grantor hereby represents and warrants
to the Administrative Agent and each Lender that:

 

SECTION 3.1.  EXISTENCE.  EACH GRANTOR IS DULY ORGANIZED, VALIDLY EXISTING AND
IN GOOD STANDING UNDER THE LAWS OF THE JURISDICTION OF ITS INCORPORATION OR
FORMATION, HAS THE REQUISITE

 

5

--------------------------------------------------------------------------------

 

POWER AND AUTHORITY TO OWN, LEASE AND OPERATE ITS PROPERTIES AND TO CARRY ON ITS
BUSINESS AS NOW BEING AND HEREAFTER PROPOSED TO BE CONDUCTED AND IS DULY
QUALIFIED AND AUTHORIZED TO DO BUSINESS IN EACH JURISDICTION IN WHICH THE
CHARACTER OF ITS PROPERTIES OR THE NATURE OF ITS BUSINESS REQUIRES SUCH
QUALIFICATION AND AUTHORIZATION OTHER THAN IN SUCH JURISDICTION WHERE FAILURE TO
SO QUALIFY COULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.

 

SECTION 3.2.  AUTHORIZATION OF AGREEMENT; NO CONFLICT.  EACH GRANTOR HAS THE
RIGHT, POWER AND AUTHORITY AND HAS TAKEN ALL NECESSARY CORPORATE AND OTHER
ACTION TO AUTHORIZE THE EXECUTION, DELIVERY AND PERFORMANCE OF, THIS AGREEMENT. 
THIS AGREEMENT HAS BEEN DULY EXECUTED AND DELIVERED BY THE DULY AUTHORIZED
OFFICERS OF EACH GRANTOR AND THIS AGREEMENT CONSTITUTES THE LEGAL, VALID AND
BINDING OBLIGATION OF THE GRANTORS ENFORCEABLE IN ACCORDANCE WITH ITS TERMS,
EXCEPT AS SUCH ENFORCEMENT MAY BE LIMITED BY BANKRUPTCY, INSOLVENCY,
REORGANIZATION, MORATORIUM OR SIMILAR STATE OR FEDERAL DEBTOR RELIEF LAWS FROM
TIME TO TIME IN EFFECT WHICH AFFECT THE ENFORCEMENT OF CREDITORS’ RIGHTS IN
GENERAL AND THE AVAILABILITY OF EQUITABLE REMEDIES.  THE EXECUTION, DELIVERY AND
PERFORMANCE BY THE GRANTORS OF THIS AGREEMENT WILL NOT, BY THE PASSAGE OF TIME,
THE GIVING OF NOTICE OR OTHERWISE, VIOLATE ANY MATERIAL PROVISION OF ANY
APPLICABLE LAW OR MATERIAL CONTRACT AND WILL NOT RESULT IN THE CREATION OR
IMPOSITION OF ANY LIEN, OTHER THAN THE SECURITY INTERESTS, UPON OR WITH RESPECT
TO ANY PROPERTY OR REVENUES OF ANY GRANTOR.

 

SECTION 3.3.  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 GRANTOR OR ANY ISSUER OF THIS
AGREEMENT, EXCEPT (I) AS MAY BE REQUIRED BY LAWS AFFECTING THE OFFERING AND SALE
OF SECURITIES GENERALLY AND (II) FILINGS UNDER THE UCC.

 

SECTION 3.4.  PERFECTED FIRST PRIORITY LIENS.  EACH FINANCING STATEMENT NAMING
ANY GRANTOR AS A DEBTOR IS IN APPROPRIATE FORM FOR FILING IN THE APPROPRIATE
FILING OFFICES OF THE STATES SPECIFIED ON SCHEDULE 3.6.  THE SECURITY INTERESTS
GRANTED PURSUANT TO THIS AGREEMENT (A) CONSTITUTE VALID PERFECTED SECURITY
INTERESTS IN ALL OF THE COLLATERAL IN FAVOR OF THE ADMINISTRATIVE AGENT, FOR THE
RATABLE BENEFIT OF ITSELF AND THE LENDERS, AS COLLATERAL SECURITY FOR THE
OBLIGATIONS, ENFORCEABLE IN ACCORDANCE WITH THE TERMS HEREOF AGAINST ALL
CREDITORS OF SUCH GRANTOR AND ANY PERSONS PURPORTING TO PURCHASE ANY COLLATERAL
FROM SUCH GRANTOR AND (B) ARE PRIOR TO ALL OTHER LIENS ON THE COLLATERAL IN
EXISTENCE ON THE DATE HEREOF EXCEPT FOR PERMITTED LIENS.

 

SECTION 3.5.  TITLE, NO OTHER LIENS.  EXCEPT FOR THE SECURITY INTERESTS, EACH
GRANTOR OWNS EACH ITEM OF THE COLLATERAL FREE AND CLEAR OF ANY AND ALL LIENS OR
CLAIMS OTHER THAN PERMITTED LIENS.  EXCEPT FOR THE FINANCING STATEMENTS NAMING
CERTAIN OF THE GRANTORS AS “DEBTOR” AND FLEET NATIONAL BANK AS “SECURED PARTY”
FILED IN CONNECTION WITH THE EXISTING FACILITY RELATING TO SECURITY INTERESTS IN
FAVOR OF FLEET NATIONAL BANK WHICH WILL BE TERMINATED ON THE CLOSING DATE (WHICH
FINANCING STATEMENTS WILL BE TERMINATED WITHIN TEN (10) DAYS FOLLOWING THE
CLOSING DATE), NO FINANCING STATEMENT UNDER THE UCC OF ANY STATE WHICH NAMES A
GRANTOR AS DEBTOR OR OTHER PUBLIC NOTICE WITH RESPECT TO ALL OR ANY PART OF THE
COLLATERAL IS ON FILE OR OF RECORD IN ANY PUBLIC OFFICE, EXCEPT SUCH AS HAVE
BEEN FILED IN FAVOR OF THE ADMINISTRATIVE AGENT, FOR THE RATABLE BENEFIT OF
ITSELF AND THE LENDERS, PURSUANT TO THIS AGREEMENT OR IN CONNECTION WITH
PERMITTED LIENS.  NO COLLATERAL IS IN THE POSSESSION OR CONTROL OF ANY PERSON
ASSERTING ANY CLAIM THERETO OR SECURITY INTEREST THEREIN, EXCEPT THAT (A) THE
ADMINISTRATIVE AGENT OR ITS DESIGNEE MAY HAVE POSSESSION OR

 

 

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CONTROL OF COLLATERAL AS CONTEMPLATED HEREBY, (B) A DEPOSITARY BANK MAY HAVE
CONTROL OF A DEPOSIT ACCOUNT OWNED BY A GRANTOR AT SUCH DEPOSITARY BANK AND A
SECURITIES INTERMEDIARY MAY HAVE CONTROL OVER A SECURITIES ACCOUNT OWNED BY A
GRANTOR AT SUCH SECURITIES INTERMEDIARY, IN EACH CASE SUBJECT TO THE TERMS OF
ANY DEPOSIT ACCOUNT CONTROL AGREEMENT OR SECURITIES ACCOUNT CONTROL AGREEMENT,
AS APPLICABLE, AND TO THE EXTENT REQUIRED BY SECTION 4, IN FAVOR OF THE
ADMINISTRATIVE AGENT, AND (C) A BAILEE, CONSIGNEE OR OTHER PERSON MAY HAVE
POSSESSION OF THE COLLATERAL AS CONTEMPLATED BY, AND SO LONG AS, THE APPLICABLE
GRANTORS HAVE COMPLIED TO THE SATISFACTION OF THE ADMINISTRATIVE AGENT WITH THE
APPLICABLE PROVISIONS OF SECTION 4.

 

SECTION 3.6.  STATE OF ORGANIZATION; LOCATION OF INVENTORY; OTHER INFORMATION.

 

(A)           THE EXACT LEGAL NAME OF EACH GRANTOR IS SET FORTH ON SCHEDULE 3.6.

 

(B)           EACH GRANTOR IS A REGISTERED ORGANIZATION ORGANIZED UNDER THE LAWS
OF THE STATE IDENTIFIED ON SCHEDULE 3.6 UNDER SUCH GRANTOR’S NAME.  THE TAXPAYER
IDENTIFICATION NUMBER AND REGISTERED ORGANIZATION NUMBER OF EACH GRANTOR IS SET
FORTH ON SCHEDULE 3.6 UNDER SUCH GRANTOR’S NAME.

 

(C)           ALL COLLATERAL CONSISTING OF INVENTORY (WHETHER NOW OWNED OR
HEREAFTER ACQUIRED) IS (OR WILL BE) LOCATED AT THE LOCATIONS SPECIFIED ON
SCHEDULE 3.6, EXCEPT AS OTHERWISE PERMITTED HEREUNDER.

 

(D)           THE MAILING ADDRESS, CHIEF PLACE OF BUSINESS, CHIEF EXECUTIVE
OFFICE AND OFFICE WHERE EACH GRANTOR KEEPS ITS BOOKS AND RECORDS RELATING TO
DOCUMENTS, GENERAL INTANGIBLES, AND INVESTMENT PROPERTY COLLATERAL IN WHICH IT
HAS ANY INTEREST IS LOCATED AT THE LOCATIONS SPECIFIED ON SCHEDULE 3.6 UNDER
SUCH GRANTOR’S NAME.  AS OF THE DATE HEREOF, NO GRANTOR HAS ANY OTHER PLACES OF
BUSINESS EXCEPT THOSE SEPARATELY SET FORTH ON SCHEDULE 3.6 UNDER SUCH GRANTOR’S
NAME.  NO GRANTOR DOES BUSINESS NOR HAS DONE BUSINESS DURING THE PAST FIVE (5)
YEARS UNDER ANY TRADE NAME OR FICTITIOUS BUSINESS NAME EXCEPT AS DISCLOSED ON
SCHEDULE 3.6 UNDER SUCH GRANTOR’S NAME.  EXCEPT AS DISCLOSED ON SCHEDULE 3.6
UNDER SUCH GRANTOR’S NAME, NO GRANTOR HAS ACQUIRED ASSETS FROM ANY PERSON, OTHER
THAN ASSETS ACQUIRED IN THE ORDINARY COURSE OF SUCH GRANTOR’S BUSINESS, DURING
THE PAST FIVE (5) YEARS.

 

SECTION 3.7.  DEPOSIT ACCOUNTS.  AS OF THE DATE HEREOF, ALL DEPOSIT ACCOUNTS
(INCLUDING, WITHOUT LIMITATION, CASH MANAGEMENT ACCOUNTS THAT ARE DEPOSIT
ACCOUNTS) OWNED BY ANY GRANTOR ARE LISTED ON SCHEDULE 3.7.

 

SECTION 3.8.  INVENTORY.  COLLATERAL CONSISTING OF INVENTORY IS OF GOOD AND
MERCHANTABLE QUALITY, FREE FROM ANY DEFECTS.  TO THE KNOWLEDGE OF EACH GRANTOR,
NONE OF SUCH INVENTORY IS SUBJECT TO ANY LICENSING, PATENT, TRADEMARK, TRADE
NAME OR COPYRIGHT WITH ANY PERSON THAT RESTRICTS ANY GRANTOR’S ABILITY TO SELL
SUCH INVENTORY.  THE COMPLETION OF THE MANUFACTURING PROCESS OF SUCH INVENTORY
BY A PERSON OTHER THAN THE APPLICABLE GRANTOR WOULD BE PERMITTED UNDER ANY
CONTRACT TO WHICH SUCH GRANTOR IS A PARTY OR TO WHICH THE INVENTORY IS SUBJECT.

 

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SECTION 3.9.  INVESTMENT PROPERTY; PARTNERSHIP/LLC INTERESTS.

 

(A)           AS OF THE DATE HEREOF, ALL INVESTMENT PROPERTY COLLATERAL
(INCLUDING, WITHOUT LIMITATION, SECURITIES ACCOUNTS AND CASH MANAGEMENT ACCOUNTS
THAT ARE INVESTMENT PROPERTY COLLATERAL) AND ALL PARTNERSHIP/LLC INTERESTS OWNED
BY ANY GRANTOR IS LISTED ON SCHEDULE 3.9.

 

(B)           ALL PLEDGED INVESTMENT PROPERTY AND ALL PARTNERSHIP/LLC INTERESTS
ISSUED BY ANY ISSUER TO ANY GRANTOR (I) HAVE BEEN DULY AND VALIDLY ISSUED AND,
IF APPLICABLE, ARE FULLY PAID AND NONASSESSABLE, (II) ARE BENEFICIALLY OWNED AS
OF RECORD BY SUCH GRANTOR AND (III) CONSTITUTE ALL THE ISSUED AND OUTSTANDING
SHARES OF ALL CLASSES OF THE CAPITAL STOCK OF SUCH ISSUER ISSUED TO SUCH
GRANTOR.

 

(C)           NONE OF THE PARTNERSHIP/LLC INTERESTS (I) ARE TRADED ON A
SECURITIES EXCHANGE OR IN SECURITIES MARKETS, (II) BY THEIR TERMS EXPRESSLY
PROVIDE THAT THEY ARE SECURITIES GOVERNED BY ARTICLE 8 OF THE UCC, (III) ARE
INVESTMENT COMPANY SECURITIES OR (IV) ARE HELD IN A SECURITIES ACCOUNT.

 

ARTICLE IV

 

COVENANTS

 

Until the Obligations shall have been paid in full and the Commitments
terminated, unless consent has been obtained in the manner provided for in
Section 7.1, each Grantor covenants and agrees that:

 

SECTION 4.1.  MAINTENANCE OF PERFECTED SECURITY INTEREST; FURTHER INFORMATION.

 

(A)           EACH GRANTOR SHALL MAINTAIN THE SECURITY INTEREST CREATED BY THIS
AGREEMENT AS A PERFECTED SECURITY INTEREST HAVING AT LEAST THE PRIORITY
DESCRIBED IN SECTION 3.4 AND SHALL DEFEND SUCH SECURITY INTEREST AGAINST THE
CLAIMS AND DEMANDS OF ALL PERSONS WHOMSOEVER.

 

(B)           UPON THE REASONABLE REQUEST OF THE ADMINISTRATIVE AGENT, EACH
GRANTOR WILL FURNISH TO THE ADMINISTRATIVE AGENT AND THE LENDERS STATEMENTS AND
SCHEDULES FURTHER IDENTIFYING AND DESCRIBING THE ASSETS AND PROPERTY OF SUCH
GRANTOR AND SUCH OTHER REPORTS IN CONNECTION THEREWITH AS THE ADMINISTRATIVE
AGENT MAY REASONABLY REQUEST, ALL IN REASONABLE DETAIL.

 

SECTION 4.2.  MAINTENANCE OF INSURANCE.

 

(A)           EACH GRANTOR WILL MAINTAIN, WITH FINANCIALLY SOUND AND REPUTABLE
COMPANIES, INSURANCE POLICIES (I) INSURING THE COLLATERAL AGAINST LOSS BY FIRE,
EXPLOSION, THEFT, FRAUD AND SUCH OTHER CASUALTIES IN AMOUNTS AND WITH
DEDUCTIBLES AT LEAST AS FAVORABLE AS THOSE GENERALLY MAINTAINED BY BUSINESSES OF
SIMILAR SIZE ENGAGED IN SIMILAR ACTIVITIES AND (II) INSURING SUCH GRANTOR AND
THE ADMINISTRATIVE AGENT, FOR THE RATABLE BENEFIT OF THE ADMINISTRATIVE AGENT
AND THE LENDERS, AGAINST LIABILITY FOR HAZARDS, RISKS AND LIABILITY TO PERSONS
AND PROPERTY RELATING TO THE COLLATERAL.

 

(B)           ALL SUCH INSURANCE SHALL (I) NAME THE ADMINISTRATIVE AGENT FOR THE
RATABLE BENEFIT OF ITSELF AND THE LENDERS AS LOSS PAYEE (TO THE EXTENT COVERING
RISK OF LOSS OR DAMAGE TO TANGIBLE

 

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PROPERTY CONSTITUTING COLLATERAL) AND AS AN ADDITIONAL INSURED AS ITS INTERESTS
MAY APPEAR (TO THE EXTENT COVERING ANY OTHER RISK), AND (II) PROVIDE THAT NO
CANCELLATION, MATERIAL REDUCTION IN AMOUNT OR MATERIAL CHANGE IN COVERAGE
THEREOF SHALL BE EFFECTIVE UNTIL AT LEAST THIRTY (30) DAYS AFTER RECEIPT BY THE
ADMINISTRATIVE AGENT OF WRITTEN NOTICE THEREOF.

 

(C)           UPON THE REQUEST OF THE ADMINISTRATIVE AGENT, EACH GRANTOR SHALL
DELIVER TO THE ADMINISTRATIVE AGENT AND THE LENDERS PERIODIC INFORMATION FROM A
REPUTABLE INSURANCE BROKER WITH RESPECT TO THE INSURANCE REFERRED TO IN THIS
SECTION 4.2.

 

SECTION 4.3.  CHANGES IN LOCATIONS; CHANGES IN NAME OR STRUCTURE.  NO GRANTOR
WILL, EXCEPT UPON THIRTY (30) DAYS’ PRIOR WRITTEN NOTICE TO THE ADMINISTRATIVE
AGENT AND DELIVERY TO THE ADMINISTRATIVE AGENT OF (A) ALL ADDITIONAL FINANCING
STATEMENTS (EXECUTED IF NECESSARY FOR ANY PARTICULAR FILING JURISDICTION) AND
OTHER INSTRUMENTS AND DOCUMENTS REASONABLY REQUESTED BY THE ADMINISTRATIVE AGENT
TO MAINTAIN THE VALIDITY, PERFECTION AND PRIORITY OF THE SECURITY INTERESTS AND
(B) IF APPLICABLE, A WRITTEN SUPPLEMENT TO THE SCHEDULES OF THIS AGREEMENT:

 

(I)            PERMIT ANY DEPOSIT ACCOUNT SUBJECT TO A CONTROL AGREEMENT IN
FAVOR OF THE ADMINISTRATIVE AGENT TO BE HELD BY OR AT A DEPOSITARY BANK OTHER
THAN THE DEPOSITARY BANK IDENTIFIED IN SUCH CONTROL AGREEMENT;

 

(II)           PERMIT ANY OF THE INVENTORY, OTHER THAN INVENTORY IN TRANSIT IN
THE ORDINARY COURSE OF BUSINESS, TO BE KEPT AT A LOCATION OTHER THAN THOSE
LISTED ON SCHEDULE 3.6, EXCEPT AS OTHERWISE PERMITTED HEREUNDER (INCLUDING AS
CONTEMPLATED IN SECTION 4.6(B)); PROVIDED, THAT THE GRANTORS MAY MOVE INVENTORY
TO INDIVIDUAL RETAIL STORE LOCATIONS THAT ARE ACQUIRED, CREATED OR OTHERWISE
OPENED AFTER THE DATE HEREOF IN ACCORDANCE WITH THE CREDIT AGREEMENT; PROVIDED,
FURTHER THAT NO LESS FREQUENTLY THAN ON EACH ANNIVERSARY OF THE CLOSING DATE,
THE GRANTORS SHALL PROVIDE THE ADMINISTRATIVE AGENT WITH A LIST OF ALL LOCATIONS
OF INVENTORY.

 

(III)          PERMIT ANY INVESTMENT PROPERTY COLLATERAL (OTHER THAN
CERTIFICATED SECURITIES DELIVERED TO THE ADMINISTRATIVE AGENT PURSUANT TO
SECTION 4.5) SUBJECT TO A CONTROL AGREEMENT IN FAVOR OF THE ADMINISTRATIVE AGENT
TO BE HELD BY OR AT A SECURITIES INTERMEDIARY OTHER THAN THE SECURITIES
INTERMEDIARY IDENTIFIED IN SUCH CONTROL AGREEMENT;

 

(IV)          CHANGE ITS JURISDICTION OF ORGANIZATION OR THE LOCATION OF ITS
CHIEF EXECUTIVE OFFICE FROM THAT IDENTIFIED ON SCHEDULE 3.6; OR

 

(V)           CHANGE ITS NAME, IDENTITY OR CORPORATE OR ORGANIZATIONAL STRUCTURE
TO SUCH AN EXTENT THAT ANY FINANCING STATEMENT FILED BY THE ADMINISTRATIVE AGENT
IN CONNECTION WITH THIS AGREEMENT WOULD BECOME MISLEADING.

 

SECTION 4.4.  REQUIRED NOTIFICATIONS.  (A) EACH GRANTOR SHALL PROMPTLY NOTIFY
THE ADMINISTRATIVE AGENT, IN WRITING, OF: (I) ANY LIEN (OTHER THAN THE SECURITY
INTERESTS OR PERMITTED LIENS) ON ANY OF THE COLLATERAL WHICH WOULD ADVERSELY
AFFECT THE ABILITY OF THE ADMINISTRATIVE AGENT TO EXERCISE ANY OF ITS REMEDIES
HEREUNDER, (II) THE OCCURRENCE OF ANY OTHER EVENT WHICH COULD REASONABLY BE
EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT ON THE AGGREGATE VALUE OF THE
COLLATERAL OR ON THE SECURITY INTERESTS, AND (III) THE ACQUISITION, OPENING OR
OTHER OWNERSHIP BY SUCH GRANTOR OF ANY (A) CONCENTRATION, SWEEP OR OTHER
MATERIAL DEPOSIT ACCOUNT (EACH OF THE

 

9

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FOREGOING A “MATERIAL DEPOSIT ACCOUNT”) OR (B) PROCEEDS INVESTMENT PROPERTY, IN
EACH CASE, AFTER THE DATE HEREOF.

 

(b)           No less frequently than on each anniversary of the Closing Date,
the Grantors shall deliver to the Administrative Agent a current list of all
Deposit Accounts of the Grantors.

 

SECTION 4.5.  DELIVERY COVENANTS.  EACH GRANTOR WILL DELIVER AND PLEDGE TO THE
ADMINISTRATIVE AGENT, FOR THE RATABLE BENEFIT OF ITSELF AND THE LENDERS, ALL
CERTIFICATED SECURITIES, AND PARTNERSHIP/LLC INTERESTS EVIDENCED BY A
CERTIFICATE, AND, AT THE REQUEST OF THE ADMINISTRATIVE AGENT AT ANY TIME
FOLLOWING THE OCCURRENCE AND DURING THE CONTINUANCE OF A AN EVENT OF DEFAULT,
NEGOTIABLE DOCUMENTS OWNED OR HELD BY SUCH GRANTOR, IN EACH CASE, TOGETHER WITH
AN EFFECTIVE ENDORSEMENT AND ASSIGNMENT AND ALL SUPPORTING OBLIGATIONS, AS
APPLICABLE, UNLESS SUCH DELIVERY AND PLEDGE HAS BEEN WAIVED IN WRITING BY THE
ADMINISTRATIVE AGENT.

 

SECTION 4.6.  CONTROL COVENANTS.

 

(A)           UPON THE REQUEST OF THE ADMINISTRATIVE AGENT (I) AT ANY TIME WITH
RESPECT TO ALL MATERIAL DEPOSIT ACCOUNTS AND ALL PROCEEDS INVESTMENT PROPERTY
AND (II) AT ANY TIME FOLLOWING THE OCCURRENCE AND DURING THE CONTINUANCE OF AN
EVENT OF DEFAULT WITH RESPECT TO ALL OTHER DEPOSIT ACCOUNTS OF THE GRANTORS,
EACH GRANTOR SHALL INSTRUCT (AND OTHERWISE USE ITS REASONABLE EFFORTS) TO CAUSE
(A) EACH DEPOSITARY BANK (OTHER THAN THE ADMINISTRATIVE AGENT) HOLDING A DEPOSIT
ACCOUNT OWNED BY SUCH GRANTOR AND (B) EACH SECURITIES INTERMEDIARY HOLDING ANY
PROCEEDS INVESTMENT PROPERTY OWNED BY SUCH GRANTOR, TO EXECUTE AND DELIVER A
CONTROL AGREEMENT, SUFFICIENT TO PROVIDE THE ADMINISTRATIVE AGENT WITH CONTROL
OF SUCH DEPOSIT ACCOUNT AND OTHERWISE IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE ADMINISTRATIVE AGENT (ANY SUCH DEPOSITARY BANK EXECUTING AND
DELIVERING ANY SUCH CONTROL AGREEMENT, A “CONTROLLED DEPOSITARY” AND ANY SUCH
SECURITIES INTERMEDIARY EXECUTING AND DELIVERING ANY SUCH CONTROL AGREEMENT, A
“CONTROLLED INTERMEDIARY”) WITHIN THIRTY (30) BUSINESS DAYS OF SUCH REQUEST.  IN
THE EVENT ANY SUCH DEPOSITARY BANK OR SECURITIES INTERMEDIARY REFUSES TO EXECUTE
AND DELIVER SUCH CONTROL AGREEMENT, THE ADMINISTRATIVE AGENT, IN ITS SOLE
DISCRETION, MAY REQUIRE THE APPLICABLE DEPOSIT ACCOUNT AND PROCEEDS INVESTMENT
PROPERTY TO BE TRANSFERRED TO THE ADMINISTRATIVE AGENT OR A CONTROLLED
DEPOSITARY OR CONTROLLED INTERMEDIARY, AS APPLICABLE.  FOLLOWING ANY SUCH
REQUEST, ALL DEPOSIT ACCOUNTS AND PROCEEDS INVESTMENT PROPERTY WILL BE
MAINTAINED WITH THE ADMINISTRATIVE AGENT OR A CONTROLLED DEPOSITARY OR
CONTROLLED INTERMEDIARY, AS APPLICABLE.

 

(B)           IF (I) ANY COLLATERAL (OTHER THAN COLLATERAL SPECIFICALLY SUBJECT
TO THE PROVISIONS OF SECTION 4.6(A)) EXCEEDING IN VALUE $10,000,000 IN THE
AGGREGATE (SUCH COLLATERAL EXCEEDING SUCH AMOUNT, THE “EXCESS COLLATERAL”) IS AT
ANY SUCH TIME IN THE POSSESSION OR CONTROL OF ANY CONSIGNEE, WAREHOUSEMAN,
BAILEE (OTHER THAN A CARRIER TRANSPORTING INVENTORY TO A PURCHASER IN THE
ORDINARY COURSE OF BUSINESS), PROCESSOR, OR ANY OTHER THIRD PARTY, OR IS STORED
AT ANY LOCATION WHICH IS NOT OWNED BY THE GRANTORS OR (II) IF AN EVENT OF
DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING, THEN (A) THE ADMINISTRATIVE AGENT
MAY REQUIRE THAT THAT SUCH GRANTOR SHALL NOTIFY IN WRITING SUCH PERSON OF THE
SECURITY INTERESTS CREATED HEREBY, SHALL USE ITS REASONABLE EFFORTS TO OBTAIN
SUCH PERSON’S WRITTEN AGREEMENT IN WRITING TO HOLD ALL SUCH COLLATERAL FOR THE
ADMINISTRATIVE AGENT’S ACCOUNT SUBJECT TO THE ADMINISTRATIVE AGENT’S
INSTRUCTIONS, AND SHALL CAUSE SUCH PERSON TO ISSUE AND DELIVER TO THE
ADMINISTRATIVE AGENT WAREHOUSE RECEIPTS, BILLS OF LADING OR ANY SIMILAR
DOCUMENTS RELATING TO SUCH COLLATERAL TOGETHER WITH AN EFFECTIVE

 

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ENDORSEMENT AND ASSIGNMENT (WHICH DOCUMENTS MAY INCLUDE, WITHOUT LIMITATION,
LIEN SUBORDINATIONS OF SUCH THIRD PARTIES AND, IN THE CASE OF LEASED LOCATIONS,
LANDLORD AGREEMENTS, IN EACH CASE, IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE
TO THE ADMINISTRATIVE AGENT); PROVIDED THAT IF SUCH GRANTOR IS NOT ABLE TO
OBTAIN SUCH AGREEMENT AND CAUSE THE DELIVERY OF SUCH ITEMS, THE ADMINISTRATIVE
AGENT, IN ITS SOLE DISCRETION, MAY REQUIRE SUCH EXCESS COLLATERAL TO BE MOVED TO
ANOTHER LOCATION SPECIFIED THEREBY; AND (B) THE ADMINISTRATIVE AGENT MAY REQUIRE
THAT EACH GRANTOR PERFECT AND PROTECT SUCH GRANTOR’S OWNERSHIP INTERESTS IN ALL
INVENTORY STORED WITH A CONSIGNEE AGAINST CREDITORS OF THE CONSIGNEE BY FILING
AND MAINTAINING FINANCING STATEMENTS AGAINST THE CONSIGNEE REFLECTING THE
CONSIGNMENT ARRANGEMENT FILED IN ALL APPROPRIATE FILING OFFICES, PROVIDING ANY
WRITTEN NOTICES REQUIRED TO NOTIFY ANY PRIOR CREDITORS OF THE CONSIGNEE OF THE
CONSIGNMENT ARRANGEMENT, AND TAKING SUCH OTHER ACTIONS AS MAY BE APPROPRIATE TO
PERFECT AND PROTECT SUCH GRANTOR’S INTERESTS IN SUCH INVENTORY UNDER SECTION
2-326, SECTION 9-103, SECTION 9-324 AND SECTION 9-505 OF THE UCC OR OTHERWISE. 
ALL SUCH FINANCING STATEMENTS FILED PURSUANT TO THIS SECTION 4.6(B) SHALL BE
ASSIGNED, ON THE FACE THEREOF, TO THE ADMINISTRATIVE AGENT, FOR THE RATABLE
BENEFIT OF ITSELF AND THE OTHER LENDERS.

 

SECTION 4.7.  FILING COVENANTS.  PURSUANT TO SECTION 9-509 OF THE UCC AND ANY
OTHER APPLICABLE LAW, EACH GRANTOR AUTHORIZES THE ADMINISTRATIVE AGENT TO FILE
OR RECORD FINANCING STATEMENTS AND OTHER FILING OR RECORDING DOCUMENTS OR
INSTRUMENTS WITH RESPECT TO THE COLLATERAL WITHOUT THE SIGNATURE OF SUCH GRANTOR
IN SUCH FORM AND IN SUCH OFFICES AS THE ADMINISTRATIVE AGENT DETERMINES
APPROPRIATE TO PERFECT THE SECURITY INTERESTS OF THE ADMINISTRATIVE AGENT UNDER
THIS AGREEMENT.  SUCH FINANCING STATEMENTS MAY DESCRIBE THE COLLATERAL IN THE
SAME MANNER AS DESCRIBED HEREIN OR MAY CONTAIN AN INDICATION OR DESCRIPTION OF
COLLATERAL THAT DESCRIBES SUCH PROPERTY IN ANY OTHER MANNER AS THE
ADMINISTRATIVE AGENT MAY DETERMINE, IN ITS SOLE DISCRETION, IS NECESSARY,
ADVISABLE OR PRUDENT TO ENSURE THE PERFECTION OF THE SECURITY INTEREST IN THE
COLLATERAL GRANTED HEREIN.  FURTHER, A PHOTOGRAPHIC OR OTHER REPRODUCTION OF
THIS AGREEMENT SHALL BE SUFFICIENT AS A FINANCING STATEMENT OR OTHER FILING OR
RECORDING DOCUMENT OR INSTRUMENT FOR FILING OR RECORDING IN ANY JURISDICTION. 
GRANTOR HEREBY AUTHORIZES, RATIFIES AND CONFIRMS ALL FINANCING STATEMENTS AND
OTHER FILING OR RECORDING DOCUMENTS OR INSTRUMENTS FILED BY ADMINISTRATIVE AGENT
PRIOR TO THE DATE OF THIS AGREEMENT.

 

SECTION 4.8.  PLEDGED INVESTMENT PROPERTY; PARTNERSHIP/LLC INTERESTS.

 

(A)           WITHOUT THE PRIOR WRITTEN CONSENT OF THE ADMINISTRATIVE AGENT, NO
GRANTOR WILL (I) VOTE TO ENABLE, OR TAKE ANY OTHER ACTION TO PERMIT, ANY
APPLICABLE ISSUER TO ISSUE ANY PLEDGED INVESTMENT PROPERTY OR PARTNERSHIP/LLC
INTERESTS, EXCEPT FOR THOSE ADDITIONAL PLEDGED INVESTMENT PROPERTY OR
PARTNERSHIP/LLC INTERESTS THAT WILL BE SUBJECT TO THE SECURITY INTEREST GRANTED
HEREIN IN FAVOR OF THE ADMINISTRATIVE AGENT, OR (II) ENTER INTO ANY AGREEMENT OR
UNDERTAKING RESTRICTING THE RIGHT OR ABILITY OF SUCH GRANTOR OR THE
ADMINISTRATIVE AGENT TO SELL, ASSIGN OR TRANSFER ANY PLEDGED INVESTMENT PROPERTY
OR PARTNERSHIP/LLC INTERESTS OR PROCEEDS THEREOF.  THE GRANTORS WILL DEFEND THE
RIGHT, TITLE AND INTEREST OF THE ADMINISTRATIVE AGENT IN AND TO ANY PLEDGED
INVESTMENT PROPERTY AND PARTNERSHIP/LLC INTERESTS AGAINST THE CLAIMS AND DEMANDS
OF ALL PERSONS WHOMSOEVER.

 

(B)           IF ANY GRANTOR SHALL BECOME ENTITLED TO RECEIVE OR SHALL RECEIVE
(I) ANY CERTIFICATED SECURITIES (INCLUDING, WITHOUT LIMITATION, ANY CERTIFICATE
REPRESENTING A STOCK DIVIDEND OR A DISTRIBUTION IN CONNECTION WITH ANY
RECLASSIFICATION, INCREASE OR REDUCTION OF CAPITAL OR ANY

 

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CERTIFICATE ISSUED IN CONNECTION WITH ANY REORGANIZATION), OPTION OR RIGHTS IN
RESPECT OF THE OWNERSHIP INTERESTS OF ANY ISSUER, WHETHER IN ADDITION TO, IN
SUBSTITUTION OF, AS A CONVERSION OF, OR IN EXCHANGE FOR, ANY PLEDGED INVESTMENT
PROPERTY, OR OTHERWISE IN RESPECT THEREOF, OR (II) ANY SUMS PAID UPON OR IN
RESPECT OF ANY PLEDGED INVESTMENT PROPERTY UPON THE LIQUIDATION OR DISSOLUTION
OF ANY ISSUER, SUCH GRANTOR SHALL ACCEPT THE SAME AS THE AGENT OF THE
ADMINISTRATIVE AGENT AND THE LENDERS, HOLD THE SAME IN TRUST FOR THE
ADMINISTRATIVE AGENT AND THE LENDERS, SEGREGATED FROM OTHER FUNDS OF SUCH
GRANTOR, AND PROMPTLY DELIVER THE SAME TO THE ADMINISTRATIVE AGENT IN ACCORDANCE
WITH THE TERMS HEREOF.

 

(C)           NOTHING CONTAINED IN THIS AGREEMENT SHALL PROHIBIT ANY ISSUER FROM
REORGANIZING AS A LIMITED LIABILITY COMPANY OR A CORPORATION, PROVIDED THAT (I)
SUCH REORGANIZATION IS PERMITTED BY AND UNDERTAKEN IN COMPLIANCE WITH THE
PROVISIONS OF THE CREDIT AGREEMENT,  (II) SUCH REORGANIZATION IS UNDERTAKEN IN
COMPLIANCE WITH THE PROVISIONS OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION,
ARTICLE IV HEREOF, AND (III) ALL OF THE OWNERSHIP INTERESTS IN THE CONVERTED
ENTITY SHALL BE PLEDGED TO THE ADMINISTRATIVE AGENT AS COLLATERAL FOR THE
OBLIGATIONS IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.

 

SECTION 4.9.  FURTHER ASSURANCES.  UPON THE REQUEST OF THE ADMINISTRATIVE AGENT
AND AT THE SOLE EXPENSE OF THE GRANTORS, EACH GRANTOR WILL PROMPTLY AND DULY
EXECUTE AND DELIVER, AND HAVE RECORDED, SUCH FURTHER INSTRUMENTS AND DOCUMENTS
AND TAKE SUCH FURTHER ACTIONS AS THE ADMINISTRATIVE AGENT MAY REASONABLY REQUEST
FOR THE PURPOSE OF OBTAINING OR PRESERVING THE FULL BENEFITS OF THIS AGREEMENT
AND OF THE RIGHTS AND POWERS HEREIN GRANTED, INCLUDING, WITHOUT LIMITATION, ALL
APPLICATIONS, CERTIFICATES, INSTRUMENTS, REGISTRATION STATEMENTS, AND ALL OTHER
DOCUMENTS AND PAPERS THE ADMINISTRATIVE AGENT MAY REASONABLY REQUEST AND AS MAY
BE REQUIRED BY LAW IN CONNECTION WITH THE OBTAINING OF ANY CONSENT, APPROVAL,
REGISTRATION, QUALIFICATION, OR AUTHORIZATION OF ANY PERSON DEEMED NECESSARY OR
APPROPRIATE FOR THE EFFECTIVE EXERCISE OF ANY RIGHTS UNDER THIS AGREEMENT.

 

ARTICLE V

 

REMEDIAL PROVISIONS

 

SECTION 5.1.  GENERAL REMEDIES.  IF AN EVENT OF DEFAULT SHALL OCCUR AND BE
CONTINUING, THE ADMINISTRATIVE AGENT, ON BEHALF OF THE LENDERS, MAY EXERCISE, IN
ADDITION TO ALL OTHER RIGHTS AND REMEDIES GRANTED TO THEM IN THIS AGREEMENT AND
IN ANY OTHER INSTRUMENT OR AGREEMENT SECURING, EVIDENCING OR RELATING TO THE
OBLIGATIONS, ALL RIGHTS AND REMEDIES OF A SECURED PARTY UNDER THE UCC OR ANY
OTHER APPLICABLE LAW.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE
ADMINISTRATIVE AGENT, WITHOUT DEMAND OF PERFORMANCE OR OTHER DEMAND,
PRESENTMENT, PROTEST, ADVERTISEMENT OR NOTICE OF ANY KIND (EXCEPT ANY NOTICE
REQUIRED BY LAW REFERRED TO BELOW) TO OR UPON ANY GRANTOR OR ANY OTHER PERSON
(ALL AND EACH OF WHICH DEMANDS, DEFENSES, ADVERTISEMENTS AND NOTICES ARE HEREBY
WAIVED), MAY IN SUCH CIRCUMSTANCES FORTHWITH COLLECT, RECEIVE, APPROPRIATE AND
REALIZE UPON THE COLLATERAL, OR ANY PART THEREOF, AND/OR MAY FORTHWITH SELL,
LEASE, ASSIGN, GIVE OPTION OR OPTIONS TO PURCHASE, OR OTHERWISE DISPOSE OF AND
DELIVER THE COLLATERAL OR ANY PART THEREOF (OR CONTRACT TO DO ANY OF THE
FOREGOING), IN ONE OR MORE PARCELS AT PUBLIC OR PRIVATE SALE OR SALES, AT ANY
EXCHANGE, BROKER’S BOARD OR OFFICE OF THE ADMINISTRATIVE AGENT OR ANY LENDER OR
ELSEWHERE UPON SUCH TERMS AND CONDITIONS AS IT MAY DEEM ADVISABLE AND AT SUCH
PRICES AS IT MAY DEEM BEST, FOR CASH OR ON CREDIT OR FOR FUTURE DELIVERY WITHOUT
ASSUMPTION

 

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OF ANY CREDIT RISK.  THE ADMINISTRATIVE AGENT MAY DISCLAIM ALL WARRANTIES IN
CONNECTION WITH ANY SALE OR OTHER DISPOSITION OF THE COLLATERAL, INCLUDING,
WITHOUT LIMITATION, ALL WARRANTIES OF TITLE, POSSESSION, QUIET ENJOYMENT AND THE
LIKE.  THE ADMINISTRATIVE AGENT OR ANY LENDER SHALL HAVE THE RIGHT UPON ANY SUCH
PUBLIC SALE OR SALES, AND, TO THE EXTENT PERMITTED BY LAW, UPON ANY SUCH PRIVATE
SALE OR SALES, TO PURCHASE THE WHOLE OR ANY PART OF THE COLLATERAL SO SOLD, FREE
OF ANY RIGHT OR EQUITY OF REDEMPTION IN ANY GRANTOR, WHICH RIGHT OR EQUITY IS
HEREBY WAIVED AND RELEASED.  EACH GRANTOR FURTHER AGREES, AT THE ADMINISTRATIVE
AGENT’S REQUEST, TO ASSEMBLE THE COLLATERAL AND MAKE IT AVAILABLE TO THE
ADMINISTRATIVE AGENT AT PLACES WHICH THE ADMINISTRATIVE AGENT SHALL REASONABLY
SELECT, WHETHER AT SUCH GRANTOR’S PREMISES OR ELSEWHERE.  TO THE EXTENT
PERMITTED BY APPLICABLE LAW, EACH GRANTOR WAIVES ALL CLAIMS, DAMAGES AND DEMANDS
IT MAY ACQUIRE AGAINST THE ADMINISTRATIVE AGENT OR ANY LENDER ARISING OUT OF THE
EXERCISE BY THEM OF ANY RIGHTS HEREUNDER EXCEPT TO THE EXTENT ANY SUCH CLAIMS,
DAMAGES, OR DEMANDS RESULT SOLELY FROM THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE ADMINISTRATIVE AGENT OR ANY LENDER, IN EACH CASE AGAINST WHOM
SUCH CLAIM IS ASSERTED.  IF ANY NOTICE OF A PROPOSED SALE OR OTHER DISPOSITION
OF COLLATERAL SHALL BE REQUIRED BY LAW, SUCH NOTICE SHALL BE DEEMED REASONABLE
AND PROPER IF GIVEN AT LEAST TEN (10) DAYS BEFORE SUCH SALE OR OTHER
DISPOSITION.  THE ADMINISTRATIVE AGENT MAY REJECT OR REFUSE TO ACCEPT ANY
COLLATERAL FOR CREDIT TOWARD PAYMENT OF THE OBLIGATIONS THAT IS AN OBLIGATION OR
PROPERTY OF ANY KIND DUE FROM, OWED BY, OR BELONGING TO, A SANCTIONED PERSON.

 

SECTION 5.2.  SPECIFIC REMEDIES.

 

(A)           UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF
DEFAULT:

 

(I)            EACH GRANTOR SHALL FORWARD TO THE ADMINISTRATIVE AGENT, ON THE
LAST BUSINESS DAY OF EACH WEEK, DEPOSIT SLIPS RELATED TO ALL CASH, MONEY, CHECKS
OR ANY OTHER SIMILAR ITEMS OF PAYMENT RECEIVED BY THE GRANTOR DURING SUCH WEEK,
AND, IF REQUESTED BY THE ADMINISTRATIVE AGENT, COPIES OF SUCH CHECKS OR ANY
OTHER SIMILAR ITEMS OF PAYMENT, TOGETHER WITH A STATEMENT SHOWING THE
APPLICATION OF ALL PAYMENTS ON THE COLLATERAL DURING SUCH WEEK AND A COLLECTION
REPORT WITH REGARD THERETO, IN FORM AND SUBSTANCE SATISFACTORY TO THE
ADMINISTRATIVE AGENT;

 

(II)           WHENEVER ANY GRANTOR SHALL RECEIVE ANY CASH, MONEY, CHECKS OR ANY
OTHER SIMILAR ITEMS OF PAYMENT RELATING TO ANY COLLATERAL (INCLUDING ANY
PROCEEDS OF ANY COLLATERAL), SUCH GRANTOR AGREES THAT IT WILL, WITHIN ONE (1)
BUSINESS DAY OF SUCH RECEIPT, DEPOSIT ALL SUCH ITEMS OF PAYMENT INTO THE
COLLATERAL ACCOUNT OR IN A DEPOSIT ACCOUNT AT A CONTROLLED DEPOSITARY, UNTIL
SUCH GRANTOR SHALL DEPOSIT SUCH CASH, MONEY, CHECKS OR ANY OTHER SIMILAR ITEMS
OF PAYMENT IN THE COLLATERAL ACCOUNT OR IN A DEPOSIT ACCOUNT AT A CONTROLLED
DEPOSITARY, SUCH GRANTOR SHALL HOLD SUCH CASH, MONEY, CHECKS OR ANY OTHER
SIMILAR ITEMS OF PAYMENT IN TRUST FOR THE ADMINISTRATIVE AGENT AND LENDERS AND
AS PROPERTY OF THE ADMINISTRATIVE AGENT AND LENDERS, SEPARATE FROM THE OTHER
FUNDS OF SUCH GRANTOR, AND THE ADMINISTRATIVE AGENT SHALL HAVE THE RIGHT TO
TRANSFER OR DIRECT THE TRANSFER OF THE BALANCE OF EACH DEPOSIT ACCOUNT TO THE
COLLATERAL ACCOUNT.  ALL SUCH COLLATERAL AND PROCEEDS OF COLLATERAL RECEIVED BY
THE ADMINISTRATIVE AGENT HEREUNDER SHALL BE HELD BY THE ADMINISTRATIVE AGENT IN
THE COLLATERAL ACCOUNT AS COLLATERAL SECURITY FOR ALL THE OBLIGATIONS AND SHALL
NOT CONSTITUTE PAYMENT THEREOF UNTIL APPLIED AS PROVIDED IN SECTION 5.4.

 

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(III)          THE ADMINISTRATIVE AGENT SHALL HAVE THE RIGHT TO RECEIVE ANY AND
ALL CASH DIVIDENDS, PAYMENTS OR DISTRIBUTIONS MADE IN RESPECT OF ANY PLEDGED
INVESTMENT PROPERTY, PARTNERSHIP/LLC INTERESTS OR OTHER PROCEEDS PAID IN RESPECT
OF ANY PLEDGED INVESTMENT PROPERTY OR PARTNERSHIP/LLC INTERESTS, AND ANY OR ALL
OF ANY PLEDGED INVESTMENT PROPERTY OR PARTNERSHIP/LLC INTERESTS SHALL BE
REGISTERED IN THE NAME OF THE ADMINISTRATIVE AGENT OR ITS NOMINEE, AND THE
ADMINISTRATIVE AGENT OR ITS NOMINEE MAY THEREAFTER EXERCISE (A) ALL VOTING,
CORPORATE AND OTHER RIGHTS PERTAINING TO SUCH PLEDGED INVESTMENT PROPERTY OR
PARTNERSHIP/LLC INTERESTS AT ANY MEETING OF SHAREHOLDERS, PARTNERS OR MEMBERS OF
THE RELEVANT ISSUERS AND (B) ANY AND ALL RIGHTS OF CONVERSION, EXCHANGE AND
SUBSCRIPTION AND ANY OTHER RIGHTS, PRIVILEGES OR OPTIONS PERTAINING TO SUCH
PLEDGED INVESTMENT PROPERTY OR PARTNERSHIP/LLC INTERESTS AS IF IT WERE THE
ABSOLUTE OWNER THEREOF (INCLUDING, WITHOUT LIMITATION, THE RIGHT TO EXCHANGE AT
ITS DISCRETION ANY AND ALL OF THE PLEDGED INVESTMENT PROPERTY OR PARTNERSHIP/LLC
INTERESTS UPON THE MERGER, CONSOLIDATION, REORGANIZATION, RECAPITALIZATION OR
OTHER FUNDAMENTAL CHANGE IN THE CORPORATE, PARTNERSHIP OR COMPANY STRUCTURE OF
ANY ISSUER OR UPON THE EXERCISE BY ANY GRANTOR OR THE ADMINISTRATIVE AGENT OF
ANY RIGHT, PRIVILEGE OR OPTION PERTAINING TO SUCH PLEDGED INVESTMENT PROPERTY OR
PARTNERSHIP/LLC INTERESTS, AND IN CONNECTION THEREWITH, THE RIGHT TO DEPOSIT AND
DELIVER ANY AND ALL OF THE PLEDGED INVESTMENT PROPERTY OR PARTNERSHIP/LLC
INTERESTS WITH ANY COMMITTEE, DEPOSITARY, TRANSFER AGENT, REGISTRAR OR OTHER
DESIGNATED AGENCY UPON SUCH TERMS AND CONDITIONS AS THE ADMINISTRATIVE AGENT MAY
DETERMINE), ALL WITHOUT LIABILITY EXCEPT TO ACCOUNT FOR PROPERTY ACTUALLY
RECEIVED BY IT; BUT THE ADMINISTRATIVE AGENT SHALL HAVE NO DUTY TO ANY GRANTOR
TO EXERCISE ANY SUCH RIGHT, PRIVILEGE OR OPTION AND THE ADMINISTRATIVE AGENT AND
THE LENDERS SHALL NOT BE RESPONSIBLE FOR ANY FAILURE TO DO SO OR DELAY IN SO
DOING.  IN FURTHERANCE THEREOF, EACH GRANTOR HEREBY AUTHORIZES AND INSTRUCTS
EACH ISSUER WITH RESPECT TO ANY COLLATERAL CONSISTING OF PLEDGED INVESTMENT
PROPERTY AND PARTNERSHIP/LLC INTERESTS TO (I) COMPLY WITH ANY INSTRUCTION
RECEIVED BY IT FROM THE ADMINISTRATIVE AGENT IN WRITING THAT (A) STATES THAT AN
EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING AND (B) IS OTHERWISE IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT, WITHOUT ANY OTHER OR FURTHER
INSTRUCTIONS FROM SUCH GRANTOR, AND EACH GRANTOR AGREES THAT EACH ISSUER SHALL
BE FULLY PROTECTED IN SO COMPLYING, AND (II) EXCEPT AS OTHERWISE EXPRESSLY
PERMITTED HEREBY, PAY ANY DIVIDENDS, DISTRIBUTIONS OR OTHER PAYMENTS WITH
RESPECT TO ANY PLEDGED INVESTMENT PROPERTY OR PARTNERSHIP/LLC INTERESTS DIRECTLY
TO THE ADMINISTRATIVE AGENT; AND

 

(IV)          THE ADMINISTRATIVE AGENT SHALL BE ENTITLED TO (BUT SHALL NOT BE
REQUIRED TO) DO ALL OTHER ACTS WHICH THE ADMINISTRATIVE AGENT MAY DEEM NECESSARY
OR PROPER TO PROTECT ITS SECURITY INTEREST GRANTED HEREUNDER, PROVIDED SUCH ACTS
ARE NOT INCONSISTENT WITH OR IN VIOLATION OF THE TERMS OF ANY OF THE CREDIT
AGREEMENT, OF THE OTHER LOAN DOCUMENTS OR APPLICABLE LAW.

 

(B)           UNLESS AN EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING
AND THE ADMINISTRATIVE AGENT SHALL HAVE GIVEN NOTICE TO THE RELEVANT GRANTOR OF
THE ADMINISTRATIVE AGENT’S INTENT TO EXERCISE ITS CORRESPONDING RIGHTS PURSUANT
TO SECTION 5.2(A), EACH GRANTOR SHALL BE PERMITTED TO RECEIVE ALL CASH
DIVIDENDS, PAYMENTS OR OTHER DISTRIBUTIONS MADE IN RESPECT OF ANY PLEDGED
INVESTMENT PROPERTY AND PARTNERSHIP/LLC INTERESTS, IN EACH CASE PAID IN THE
NORMAL COURSE OF BUSINESS OF THE RELEVANT ISSUER AND CONSISTENT WITH PAST
PRACTICE, TO THE EXTENT PERMITTED

 

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IN THE CREDIT AGREEMENT, AND TO EXERCISE ALL VOTING AND OTHER CORPORATE, COMPANY
AND PARTNERSHIP RIGHTS WITH RESPECT TO ANY PLEDGED INVESTMENT PROPERTY AND
PARTNERSHIP/LLC INTERESTS.

 

SECTION 5.3.  REGISTRATION RIGHTS.

 

(A)           IF THE ADMINISTRATIVE AGENT SHALL DETERMINE THAT IN ORDER TO
EXERCISE ITS RIGHT TO SELL ANY OR ALL OF THE COLLATERAL IT IS NECESSARY OR
ADVISABLE TO HAVE SUCH COLLATERAL REGISTERED UNDER THE PROVISIONS OF THE
SECURITIES ACT (ANY SUCH COLLATERAL, THE “RESTRICTED SECURITIES COLLATERAL”),
THE RELEVANT GRANTOR WILL CAUSE EACH APPLICABLE ISSUER (AND THE OFFICERS AND
DIRECTORS THEREOF) TO (I) EXECUTE AND DELIVER ALL SUCH INSTRUMENTS AND
DOCUMENTS, AND DO OR CAUSE TO BE DONE ALL SUCH OTHER ACTS AS MAY BE, IN THE
OPINION OF THE ADMINISTRATIVE AGENT, NECESSARY OR ADVISABLE TO REGISTER SUCH
RESTRICTED SECURITIES COLLATERAL, OR THAT PORTION THEREOF TO BE SOLD, UNDER THE
PROVISIONS OF THE SECURITIES ACT, (II) USE ITS BEST EFFORTS TO CAUSE THE
REGISTRATION STATEMENT RELATING THERETO TO BECOME EFFECTIVE AND TO REMAIN
EFFECTIVE FOR A PERIOD OF ONE YEAR FROM THE DATE OF THE FIRST PUBLIC OFFERING OF
SUCH RESTRICTED SECURITIES COLLATERAL, OR THAT PORTION THEREOF TO BE SOLD, AND
(III) MAKE ALL AMENDMENTS THERETO AND/OR TO THE RELATED PROSPECTUS WHICH, IN THE
OPINION OF THE ADMINISTRATIVE AGENT, ARE NECESSARY OR ADVISABLE, ALL IN
CONFORMITY WITH THE REQUIREMENTS OF THE SECURITIES ACT AND THE RULES AND
REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION APPLICABLE THERETO.  EACH
GRANTOR AGREES TO CAUSE EACH APPLICABLE ISSUER (AND THE OFFICERS AND DIRECTORS
THEREOF) TO COMPLY WITH THE PROVISIONS OF THE SECURITIES OR “BLUE SKY” LAWS OF
ANY AND ALL JURISDICTIONS WHICH THE ADMINISTRATIVE AGENT SHALL DESIGNATE AND TO
MAKE AVAILABLE TO ITS SECURITY HOLDERS, AS SOON AS PRACTICABLE, AN EARNINGS
STATEMENT (WHICH NEED NOT BE AUDITED) WHICH WILL SATISFY THE PROVISIONS OF
SECTION 2 (A) OF THE SECURITIES ACT.

 

(B)           EACH GRANTOR RECOGNIZES THAT THE ADMINISTRATIVE AGENT MAY BE
UNABLE TO EFFECT A PUBLIC SALE OF ANY OR ALL THE RESTRICTED SECURITIES
COLLATERAL, BY REASON OF CERTAIN PROHIBITIONS CONTAINED IN THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS OR OTHERWISE, AND MAY BE COMPELLED TO
RESORT TO ONE OR MORE PRIVATE SALES THEREOF TO A RESTRICTED GROUP OF PURCHASERS
WHICH WILL BE OBLIGED TO AGREE, AMONG OTHER THINGS, TO ACQUIRE SUCH SECURITIES
FOR THEIR OWN ACCOUNT FOR INVESTMENT AND NOT WITH A VIEW TO THE DISTRIBUTION OR
RESALE THEREOF.  EACH GRANTOR ACKNOWLEDGES AND AGREES THAT ANY SUCH PRIVATE SALE
MAY RESULT IN PRICES AND OTHER TERMS LESS FAVORABLE THAN IF SUCH SALE WERE A
PUBLIC SALE AND, NOTWITHSTANDING SUCH CIRCUMSTANCES, AGREES THAT ANY SUCH
PRIVATE SALE SHALL BE DEEMED TO HAVE BEEN MADE IN A COMMERCIALLY REASONABLE
MANNER.  THE ADMINISTRATIVE AGENT SHALL BE UNDER NO OBLIGATION TO DELAY A SALE
OF ANY OF THE RESTRICTED SECURITIES COLLATERAL FOR THE PERIOD OF TIME NECESSARY
TO PERMIT THE ISSUER THEREOF TO REGISTER SUCH SECURITIES FOR PUBLIC SALE UNDER
THE SECURITIES ACT, OR UNDER APPLICABLE STATE SECURITIES LAWS, EVEN IF SUCH
ISSUER WOULD AGREE TO DO SO.

 

(C)           EACH GRANTOR AGREES TO USE ITS BEST EFFORTS TO DO OR CAUSE TO BE
DONE ALL SUCH OTHER ACTS AS MAY BE NECESSARY TO MAKE SUCH SALE OR SALES OF ALL
OR ANY PORTION OF THE RESTRICTED SECURITIES COLLATERAL VALID AND BINDING AND IN
COMPLIANCE WITH ANY AND ALL OTHER APPLICABLE LAWS.  EACH GRANTOR FURTHER AGREES
THAT A BREACH OF ANY OF THE COVENANTS CONTAINED IN THIS SECTION 5.3 WILL CAUSE
IRREPARABLE INJURY TO THE ADMINISTRATIVE AGENT AND THE LENDERS, THAT THE
ADMINISTRATIVE AGENT AND THE LENDERS HAVE NO ADEQUATE REMEDY AT LAW IN RESPECT
OF SUCH BREACH AND, AS A CONSEQUENCE, THAT EACH AND EVERY COVENANT CONTAINED IN
THIS SECTION 5.3 SHALL BE SPECIFICALLY ENFORCEABLE AGAINST SUCH GRANTOR, AND
SUCH GRANTOR HEREBY WAIVES AND AGREES NOT TO

 

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ASSERT ANY DEFENSES AGAINST AN ACTION FOR SPECIFIC PERFORMANCE OF SUCH COVENANTS
EXCEPT FOR A DEFENSE THAT NO EVENT OF DEFAULT HAS OCCURRED UNDER THE CREDIT
AGREEMENT.

 

SECTION 5.4.  APPLICATION OF PROCEEDS.  AT SUCH INTERVALS AS MAY BE AGREED UPON
BY THE BORROWER AND THE ADMINISTRATIVE AGENT, OR, IF AN EVENT OF DEFAULT SHALL
HAVE OCCURRED AND BE CONTINUING, AT ANY TIME AT THE ADMINISTRATIVE AGENT’S
ELECTION, THE ADMINISTRATIVE AGENT MAY APPLY ALL OR ANY PART OF THE COLLATERAL
OR ANY PROCEEDS OF THE COLLATERAL IN PAYMENT IN WHOLE OR IN PART OF THE
OBLIGATIONS (AFTER DEDUCTING ALL REASONABLE COSTS AND EXPENSES OF EVERY KIND
INCURRED IN CONNECTION THEREWITH OR INCIDENTAL TO THE CARE OR SAFEKEEPING OF ANY
OF THE COLLATERAL OR IN ANY WAY RELATING TO THE COLLATERAL OR THE RIGHTS OF THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREUNDER, INCLUDING, WITHOUT LIMITATION,
REASONABLE ATTORNEYS’ FEES AND DISBURSEMENTS) IN ACCORDANCE WITH SECTION 11.4 OF
THE CREDIT AGREEMENT.  ANY BALANCE OF SUCH PROCEEDS REMAINING AFTER SHALL BE
PAID OVER TO THE BORROWER, ON BEHALF OF THE GRANTORS, OR TO WHOMSOEVER (IF SUCH
PERSON IS NOT A GRANTOR) MAY BE LAWFULLY ENTITLED TO RECEIVE THE SAME. ONLY
AFTER (I) THE PAYMENT BY THE ADMINISTRATIVE AGENT OF ANY OTHER AMOUNT REQUIRED
BY ANY PROVISION OF LAW, INCLUDING, WITHOUT LIMITATION, SECTION 9-610 AND
SECTION 9-615 OF THE UCC AND (II) THE PAYMENT IN FULL OF THE OBLIGATIONS AND THE
TERMINATION OF THE COMMITMENTS, SHALL THE ADMINISTRATIVE AGENT ACCOUNT FOR THE
SURPLUS, IF ANY, TO ANY GRANTOR, OR TO WHOMEVER MAY BE LAWFULLY ENTITLED TO
RECEIVE THE SAME (IF SUCH PERSON IS NOT A GRANTOR).

 

SECTION 5.5.  WAIVER, DEFICIENCY.  EACH GRANTOR HEREBY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, ALL RIGHTS OF REDEMPTION, APPRAISEMENT, VALUATION,
STAY, EXTENSION OR MORATORIUM NOW OR HEREAFTER IN FORCE UNDER ANY APPLICABLE LAW
IN ORDER TO PREVENT OR DELAY THE ENFORCEMENT OF THIS AGREEMENT OR THE ABSOLUTE
SALE OF THE COLLATERAL OR ANY PORTION THEREOF.  EACH GRANTOR SHALL REMAIN LIABLE
FOR ANY DEFICIENCY IF THE PROCEEDS OF ANY SALE OR OTHER DISPOSITION OF THE
COLLATERAL ARE INSUFFICIENT TO PAY ITS OBLIGATIONS AND THE FEES AND
DISBURSEMENTS OF ANY ATTORNEYS EMPLOYED BY THE ADMINISTRATIVE AGENT OR ANY
LENDER TO COLLECT SUCH DEFICIENCY.

 

ARTICLE VI

 

THE ADMINISTRATIVE AGENT

 

SECTION 6.1.  ADMINISTRATIVE AGENT’S APPOINTMENT AS ATTORNEY-IN-FACT.

 

(A)           EACH GRANTOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS THE
ADMINISTRATIVE AGENT AND ANY OFFICER OR AGENT THEREOF, WITH FULL POWER OF
SUBSTITUTION, AS ITS TRUE AND LAWFUL ATTORNEY-IN-FACT WITH FULL IRREVOCABLE
POWER AND AUTHORITY IN THE PLACE AND STEAD OF SUCH GRANTOR AND IN THE NAME OF
SUCH GRANTOR OR IN ITS OWN NAME, FOR THE PURPOSE OF CARRYING OUT THE TERMS OF
THIS AGREEMENT, TO TAKE ANY AND ALL APPROPRIATE ACTION AND TO EXECUTE ANY AND
ALL DOCUMENTS AND INSTRUMENTS WHICH MAY BE NECESSARY OR DESIRABLE TO ACCOMPLISH
THE PURPOSES OF THIS AGREEMENT, AND, WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, EACH GRANTOR HEREBY GIVES THE ADMINISTRATIVE AGENT THE POWER AND
RIGHT, ON BEHALF OF SUCH GRANTOR, WITHOUT NOTICE TO OR ASSENT BY SUCH GRANTOR,
TO DO ANY OR ALL OF THE FOLLOWING UPON THE OCCURRENCE AND CONTINUATION OF AN
EVENT OF DEFAULT:

 

(I)            IN THE NAME OF SUCH GRANTOR OR ITS OWN NAME, OR OTHERWISE, TAKE
POSSESSION OF AND INDORSE AND COLLECT ANY CHECKS, DRAFTS, NOTES, ACCEPTANCES OR
OTHER

 

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INSTRUMENTS FOR THE PAYMENT OF MONEYS DUE WITH RESPECT TO ANY COLLATERAL AND
FILE ANY CLAIM OR TAKE ANY OTHER ACTION OR PROCEEDING IN ANY COURT OF LAW OR
EQUITY OR OTHERWISE DEEMED APPROPRIATE BY THE ADMINISTRATIVE AGENT FOR THE
PURPOSE OF COLLECTING ANY AND ALL SUCH MONEYS DUE WITH RESPECT TO ANY COLLATERAL
WHENEVER PAYABLE;

 

(II)           PAY OR DISCHARGE TAXES AND LIENS LEVIED OR PLACED ON OR
THREATENED AGAINST THE COLLATERAL, EFFECT ANY REPAIRS OR ANY INSURANCE CALLED
FOR BY THE TERMS OF THIS AGREEMENT AND PAY ALL OR ANY PART OF THE PREMIUMS
THEREFOR AND THE COSTS THEREOF;

 

(III)          EXECUTE, IN CONNECTION WITH ANY SALE PROVIDED FOR IN THIS
AGREEMENT, ANY ENDORSEMENTS, ASSIGNMENTS OR OTHER INSTRUMENTS OF CONVEYANCE OR
TRANSFER WITH RESPECT TO THE COLLATERAL; AND

 

(IV)          (A) DIRECT ANY PARTY LIABLE FOR ANY PAYMENT UNDER ANY OF THE
COLLATERAL TO MAKE PAYMENT OF ANY AND ALL MONEYS DUE OR TO BECOME DUE THEREUNDER
DIRECTLY TO THE ADMINISTRATIVE AGENT OR AS THE ADMINISTRATIVE AGENT SHALL
DIRECT; (B) ASK OR DEMAND FOR, COLLECT, AND RECEIVE PAYMENT OF AND RECEIPT FOR,
ANY AND ALL MONEYS, CLAIMS AND OTHER AMOUNTS DUE OR TO BECOME DUE AT ANY TIME IN
RESPECT OF OR ARISING OUT OF ANY COLLATERAL; (C) SIGN AND INDORSE ANY INVOICES,
FREIGHT OR EXPRESS BILLS, BILLS OF LADING, STORAGE OR WAREHOUSE RECEIPTS, DRAFTS
AGAINST DEBTORS, ASSIGNMENTS, VERIFICATIONS, NOTICES AND OTHER DOCUMENTS IN
CONNECTION WITH ANY OF THE COLLATERAL; (D) COMMENCE AND PROSECUTE ANY SUITS,
ACTIONS OR PROCEEDINGS AT LAW OR IN EQUITY IN ANY COURT OF COMPETENT
JURISDICTION TO COLLECT THE COLLATERAL OR ANY PORTION THEREOF AND TO ENFORCE ANY
OTHER RIGHT IN RESPECT OF ANY COLLATERAL; (E) DEFEND ANY SUIT, ACTION OR
PROCEEDING BROUGHT AGAINST SUCH GRANTOR WITH RESPECT TO ANY COLLATERAL; (F)
SETTLE, COMPROMISE OR ADJUST ANY SUCH SUIT, ACTION OR PROCEEDING AND, IN
CONNECTION THEREWITH, GIVE SUCH DISCHARGES OR RELEASES AS THE ADMINISTRATIVE
AGENT MAY DEEM APPROPRIATE; AND (G) GENERALLY, SELL, TRANSFER, PLEDGE AND MAKE
ANY AGREEMENT WITH RESPECT TO OR OTHERWISE DEAL WITH ANY OF THE COLLATERAL AS
FULLY AND COMPLETELY AS THOUGH THE ADMINISTRATIVE AGENT WERE THE ABSOLUTE OWNER
THEREOF FOR ALL PURPOSES, AND DO, AT THE ADMINISTRATIVE AGENT’S OPTION AND SUCH
GRANTOR’S EXPENSE, AT ANY TIME, OR FROM TIME TO TIME, ALL ACTS AND THINGS WHICH
THE ADMINISTRATIVE AGENT DEEMS NECESSARY TO PROTECT, PRESERVE OR REALIZE UPON
THE COLLATERAL AND THE ADMINISTRATIVE AGENT’S AND THE LENDERS’ SECURITY
INTERESTS THEREIN AND TO EFFECT THE INTENT OF THIS AGREEMENT, ALL AS FULLY AND
EFFECTIVELY AS SUCH GRANTOR MIGHT DO.

 

(B)           IF ANY GRANTOR FAILS TO PERFORM OR COMPLY WITH ANY OF ITS
AGREEMENTS CONTAINED HEREIN, THE ADMINISTRATIVE AGENT, AT ITS OPTION, BUT
WITHOUT ANY OBLIGATION SO TO DO, MAY PERFORM OR COMPLY, OR OTHERWISE CAUSE
PERFORMANCE OR COMPLIANCE, WITH SUCH AGREEMENT IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 6.1(A).

 

(C)           THE EXPENSES OF THE ADMINISTRATIVE AGENT INCURRED IN CONNECTION
WITH ACTIONS TAKEN PURSUANT TO THE TERMS OF THIS AGREEMENT, TOGETHER WITH
INTEREST THEREON AT A RATE PER ANNUM EQUAL TO THE HIGHEST RATE PER ANNUM AT
WHICH INTEREST WOULD THEN BE PAYABLE ON ANY CATEGORY OF PAST DUE BASE RATE LOANS
UNDER THE CREDIT AGREEMENT, FROM THE DATE OF PAYMENT BY THE ADMINISTRATIVE AGENT
TO THE DATE REIMBURSED BY THE RELEVANT GRANTOR, SHALL BE PAYABLE BY SUCH GRANTOR
TO THE ADMINISTRATIVE AGENT ON DEMAND.

 

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(D)           EACH GRANTOR HEREBY RATIFIES ALL THAT SAID ATTORNEYS SHALL
LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF IN ACCORDANCE WITH SECTION
6.1(A).  ALL POWERS, AUTHORIZATIONS AND AGENCIES CONTAINED IN THIS AGREEMENT ARE
COUPLED WITH AN INTEREST AND ARE IRREVOCABLE UNTIL THIS AGREEMENT IS TERMINATED
AND THE SECURITY INTERESTS CREATED HEREBY ARE RELEASED.

 

SECTION 6.2.  DUTY OF ADMINISTRATIVE AGENT.  THE ADMINISTRATIVE AGENT’S SOLE
DUTY WITH RESPECT TO THE CUSTODY, SAFEKEEPING AND PHYSICAL PRESERVATION OF THE
COLLATERAL IN ITS POSSESSION, UNDER SECTION 9-207 OF THE UCC OR OTHERWISE, SHALL
BE TO DEAL WITH IT IN THE SAME MANNER AS THE ADMINISTRATIVE AGENT DEALS WITH
SIMILAR PROPERTY FOR ITS OWN ACCOUNT.  NEITHER THE ADMINISTRATIVE AGENT, ANY
LENDER NOR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS
SHALL BE LIABLE FOR FAILURE TO DEMAND, COLLECT OR REALIZE UPON ANY OF THE
COLLATERAL OR FOR ANY DELAY IN DOING SO OR SHALL BE UNDER ANY OBLIGATION TO SELL
OR OTHERWISE DISPOSE OF ANY COLLATERAL UPON THE REQUEST OF ANY GRANTOR OR ANY
OTHER PERSON OR TO TAKE ANY OTHER ACTION WHATSOEVER WITH REGARD TO THE
COLLATERAL OR ANY PART THEREOF.  THE POWERS CONFERRED ON THE ADMINISTRATIVE
AGENT AND THE LENDERS HEREUNDER ARE SOLELY TO PROTECT THE ADMINISTRATIVE AGENT’S
AND THE LENDERS’ INTERESTS IN THE COLLATERAL AND SHALL NOT IMPOSE ANY DUTY UPON
THE ADMINISTRATIVE AGENT OR ANY LENDER TO EXERCISE ANY SUCH POWERS.  THE
ADMINISTRATIVE AGENT AND THE LENDERS SHALL BE ACCOUNTABLE ONLY FOR AMOUNTS THAT
THEY ACTUALLY RECEIVE AS A RESULT OF THE EXERCISE OF SUCH POWERS, AND NEITHER
THEY NOR ANY OF THEIR OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS SHALL BE
RESPONSIBLE TO ANY GRANTOR FOR ANY ACT OR FAILURE TO ACT HEREUNDER, EXCEPT FOR
THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

 

SECTION 6.3.  AUTHORITY OF ADMINISTRATIVE AGENT.  EACH GRANTOR ACKNOWLEDGES THAT
THE RIGHTS AND RESPONSIBILITIES OF THE ADMINISTRATIVE AGENT UNDER THIS AGREEMENT
WITH RESPECT TO ANY ACTION TAKEN BY THE ADMINISTRATIVE AGENT OR THE EXERCISE OR
NON-EXERCISE BY THE ADMINISTRATIVE AGENT OF ANY OPTION, VOTING RIGHT, REQUEST,
JUDGMENT OR OTHER RIGHT OR REMEDY PROVIDED FOR HEREIN OR RESULTING OR ARISING
OUT OF THIS AGREEMENT SHALL, AS BETWEEN THE ADMINISTRATIVE AGENT AND THE
LENDERS, BE GOVERNED BY THE CREDIT AGREEMENT AND BY SUCH OTHER AGREEMENTS WITH
RESPECT THERETO AS MAY EXIST FROM TIME TO TIME AMONG THEM, BUT, AS BETWEEN THE
ADMINISTRATIVE AGENT AND THE GRANTORS, THE ADMINISTRATIVE AGENT SHALL BE
CONCLUSIVELY PRESUMED TO BE ACTING AS AGENT FOR THE LENDERS WITH FULL AND VALID
AUTHORITY SO TO ACT OR REFRAIN FROM ACTING, AND NO GRANTOR SHALL BE UNDER ANY
OBLIGATION, OR ENTITLEMENT TO MAKE ANY INQUIRY RESPECTING SUCH AUTHORITY.

 

ARTICLE VII

 

MISCELLANEOUS

 

SECTION 7.1.  AMENDMENTS, WAIVERS AND CONSENTS.  NONE OF THE TERMS, COVENANTS,
AGREEMENTS OR CONDITIONS OF THIS AGREEMENT MAY BE AMENDED, SUPPLEMENTED OR
OTHERWISE MODIFIED, NOR MAY THEY BE WAIVED, NOR MAY ANY CONSENT BE GIVEN, EXCEPT
IN ACCORDANCE WITH SECTION 13.2 OF THE CREDIT AGREEMENT.

 

SECTION 7.2.  NOTICES.  ALL NOTICES, REQUESTS AND DEMANDS TO OR UPON THE
ADMINISTRATIVE AGENT OR ANY GRANTOR HEREUNDER SHALL BE EFFECTED IN THE MANNER
PROVIDED FOR IN SECTION 13.1 OF THE CREDIT AGREEMENT; PROVIDED THAT NOTICES AND
COMMUNICATIONS TO THE GRANTORS SHALL BE DIRECTED TO THE GRANTORS AT THE ADDRESS
OF THE BORROWER SET FORTH IN SECTION 13.1(B).

 

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SECTION 7.3.  NO WAIVER BY COURSE OF CONDUCT, CUMULATIVE REMEDIES.  NEITHER THE
ADMINISTRATIVE AGENT NOR ANY LENDER SHALL BY ANY ACT (EXCEPT BY A WRITTEN
INSTRUMENT PURSUANT TO SECTION 7.1), DELAY, INDULGENCE, OMISSION OR OTHERWISE BE
DEEMED TO HAVE WAIVED ANY RIGHT OR REMEDY HEREUNDER OR TO HAVE ACQUIESCED IN ANY
DEFAULT OR EVENT OF DEFAULT.  NO FAILURE TO EXERCISE, NOR ANY DELAY IN
EXERCISING ON THE PART OF THE ADMINISTRATIVE AGENT OR ANY LENDER, ANY RIGHT,
POWER OR PRIVILEGE HEREUNDER SHALL OPERATE AS A WAIVER THEREOF.  NO SINGLE OR
PARTIAL EXERCISE OF ANY RIGHT, POWER OR PRIVILEGE HEREUNDER SHALL PRECLUDE ANY
OTHER OR FURTHER EXERCISE THEREOF OR THE EXERCISE OF ANY OTHER RIGHT, POWER OR
PRIVILEGE.  A WAIVER BY THE ADMINISTRATIVE AGENT OR ANY LENDER OF ANY RIGHT OR
REMEDY HEREUNDER ON ANY ONE OCCASION SHALL NOT BE CONSTRUED AS A BAR TO ANY
RIGHT OR REMEDY WHICH THE ADMINISTRATIVE AGENT OR SUCH LENDER WOULD OTHERWISE
HAVE ON ANY FUTURE OCCASION.  THE RIGHTS AND REMEDIES HEREIN PROVIDED ARE
CUMULATIVE, MAY BE EXERCISED SINGLY OR CONCURRENTLY AND ARE NOT EXCLUSIVE OF ANY
OTHER RIGHTS OR REMEDIES PROVIDED BY LAW.

 

SECTION 7.4.  ENFORCEMENT EXPENSES, INDEMNIFICATION.

 

(A)           EACH GRANTOR WILL (I) PAY ALL OUT-OF-POCKET EXPENSES (INCLUDING,
WITHOUT LIMITATION,  ALL COSTS OF ELECTRONIC OR INTERNET DISTRIBUTION OF ANY
INFORMATION HEREUNDER) OF THE ADMINISTRATIVE AGENT IN CONNECTION WITH (A) THE
PREPARATION, EXECUTION AND DELIVERY OF THIS AGREEMENT AND EACH OTHER LOAN
DOCUMENT, WHENEVER THE SAME SHALL BE EXECUTED AND DELIVERED, INCLUDING, WITHOUT
LIMITATION, ALL OUT-OF-POCKET SYNDICATION AND DUE DILIGENCE EXPENSES AND
REASONABLE FEES AND DISBURSEMENTS OF COUNSEL FOR THE ADMINISTRATIVE AGENT AND
(B) THE PREPARATION, EXECUTION AND DELIVERY OF ANY WAIVER, AMENDMENT OR CONSENT
BY THE ADMINISTRATIVE AGENT OR THE LENDERS RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, INCLUDING, WITHOUT LIMITATION, REASONABLE FEES,
DISBURSEMENTS AND OTHER CHARGES OF COUNSEL FOR THE ADMINISTRATIVE AGENT, (II)
PAY ALL REASONABLE OUT-OF-POCKET EXPENSES OF THE ADMINISTRATIVE AGENT AND EACH
LENDER ACTUALLY INCURRED IN CONNECTION WITH THE ADMINISTRATION AND ENFORCEMENT
OF ANY RIGHTS AND REMEDIES OF THE ADMINISTRATIVE AGENT AND LENDERS UNDER THIS
AGREEMENT, INCLUDING, WITHOUT LIMITATION, IN CONNECTION WITH ANY WORKOUT,
RESTRUCTURING, BANKRUPTCY OR OTHER SIMILAR PROCEEDING, CREATING AND PERFECTING
LIENS IN FAVOR OF THE ADMINISTRATIVE AGENT ON BEHALF OF THE LENDERS PURSUANT TO
ANY SECURITY DOCUMENT, ENFORCING ANY OBLIGATIONS OF, OR COLLECTING ANY PAYMENTS
DUE FROM, ANY GRANTOR BY REASON OF AN EVENT OF DEFAULT (INCLUDING BY REASON OF
AN EVENT OF DEFAULT, IN CONNECTION WITH THE SALE OF, COLLECTION FROM, OR OTHER
REALIZATION UPON ANY OF THE COLLATERAL OR THE ENFORCEMENT OF THIS AGREEMENT);
CONSULTING WITH APPRAISERS, ACCOUNTANTS, ENGINEERS, ATTORNEYS AND OTHER PERSONS
CONCERNING THE NATURE, SCOPE OR VALUE OF ANY RIGHT OR REMEDY OF THE
ADMINISTRATIVE AGENT OR ANY LENDER HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT OR
ANY FACTUAL MATTERS IN CONNECTION THEREWITH, WHICH EXPENSES SHALL INCLUDE,
WITHOUT LIMITATION, THE REASONABLE FEES AND DISBURSEMENTS OF SUCH PERSONS, (III)
ANY CIVIL PENALTY OR FINE ASSESSED BY THE U.S. DEPARTMENT OF THE TREASURY’S
OFFICE OF FOREIGN ASSETS CONTROL AGAINST, AND ALL REASONABLE COSTS AND EXPENSES
(INCLUDING COUNSEL FEES AND DISBURSEMENTS) INCURRED IN CONNECTION WITH DEFENSE
THEREOF BY THE ADMINISTRATIVE AGENT OR ANY LENDER AS A RESULT OF THE FUNDING OF
LOANS, THE ISSUANCE OF LETTERS OF CREDIT, THE ACCEPTANCE OF PAYMENT OR OF
COLLATERAL DUE UNDER THE LOAN DOCUMENTS AND (IV) DEFEND, INDEMNIFY AND HOLD
HARMLESS THE ADMINISTRATIVE AGENT AND THE LENDERS, AND THEIR RESPECTIVE PARENTS,
SUBSIDIARIES, AFFILIATES, PARTNERS, EMPLOYEES, AGENTS, OFFICERS, ADVISORS AND
DIRECTORS, FROM AND AGAINST ANY LOSSES, PENALTIES, FINES, LIABILITIES,
SETTLEMENTS, DAMAGES, COSTS AND EXPENSES, SUFFERED BY ANY SUCH PERSON IN
CONNECTION WITH ANY CLAIM (INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL
CLAIMS), INVESTIGATION, LITIGATION OR OTHER

 

19

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PROCEEDING (WHETHER OR NOT THE ADMINISTRATIVE AGENT OR ANY LENDER IS A PARTY
THERETO) AND THE PROSECUTION AND DEFENSE THEREOF, ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THE EXTENSIONS OF CREDIT, THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT, OR ANY DOCUMENTS, REPORTS OR OTHER INFORMATION PROVIDED TO THE
ADMINISTRATIVE AGENT OR ANY LENDER OR CONTEMPLATED BY OR REFERRED TO HEREIN OR
THEREIN OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, INCLUDING, WITHOUT
LIMITATION, REASONABLE ATTORNEY’S AND CONSULTANT’S FEES, EXCEPT TO THE EXTENT
THAT ANY OF THE FOREGOING (A) ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY A FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED DIRECTLY
FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PARTY SEEKING
INDEMNIFICATION THEREFOR OR (B) RESULT FROM A CLAIM BROUGHT BY ANY CREDIT PARTY
AGAINST AN INDEMNITEE FOR BREACH IN BAD FAITH OF THE OBLIGATIONS UNDER THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS OF THE PARTY SEEKING INDEMNIFICATION IF
SUCH CREDIT PARTY HAS OBTAINED A FINAL AND NONAPPEALABLE JUDGMENT IN ITS FAVOR
ON SUCH CLAIM AS DETERMINED BY A COURT OF COMPETENT JURISDICTION.

 

(B)           EACH GRANTOR AGREES TO PAY, AND TO SAVE THE ADMINISTRATIVE AGENT
AND THE LENDERS HARMLESS FROM, ANY AND ALL LIABILITIES WITH RESPECT TO, OR
RESULTING FROM ANY DELAY IN PAYING, ANY AND ALL OTHER TAXES, SUBJECT TO THE
TERMS OF THE CREDIT AGREEMENT, INCLUDING, WITHOUT LIMITATION, SECTIONS 4.11 AND
4.12 THEREOF, WHICH MAY BE PAYABLE OR DETERMINED TO BE PAYABLE WITH RESPECT TO
ANY OF THE COLLATERAL.

 

(C)           THE AGREEMENTS IN THIS SECTION 7.4 SHALL SURVIVE TERMINATION OF
THE COMMITMENTS AND REPAYMENT OF THE OBLIGATIONS AND ALL OTHER AMOUNTS PAYABLE
UNDER THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS.

 

SECTION 7.5.  WAIVER OF JURY TRIAL; PRESERVATION OF REMEDIES.

 

(A)           WAIVER OF JURY TRIAL.  THE ADMINISTRATIVE AGENT AND EACH GRANTOR
HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO
ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF SUCH
RIGHTS AND OBLIGATIONS.

 

(B)           PRESERVATION OF CERTAIN REMEDIES.  THE PARTIES HERETO AND THE
OTHER LOAN DOCUMENTS PRESERVE, WITHOUT DIMINUTION, CERTAIN REMEDIES THAT SUCH
PERSONS MAY EMPLOY OR EXERCISE FREELY, EITHER ALONE, IN CONJUNCTION WITH OR
DURING A DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF, CONNECTED WITH OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (EACH A “DISPUTE”).  EACH
SUCH PERSON SHALL HAVE AND HEREBY RESERVES THE RIGHT TO PROCEED IN ANY COURT OF
PROPER JURISDICTION OR BY SELF HELP TO EXERCISE OR PROSECUTE THE FOLLOWING
REMEDIES, AS APPLICABLE:  (I) ALL RIGHTS TO FORECLOSE AGAINST ANY REAL OR
PERSONAL PROPERTY OR OTHER SECURITY GRANTED UNDER A LOAN DOCUMENT BY EXERCISING
A POWER OF SALE GRANTED IN THE LOAN DOCUMENTS OR UNDER APPLICABLE LAW OR BY
JUDICIAL FORECLOSURE AND SALE, INCLUDING A PROCEEDING TO CONFIRM THE SALE, (II)
ALL RIGHTS OF SELF HELP INCLUDING PEACEFUL OCCUPATION OF PROPERTY AND COLLECTION
OF RENTS, SET OFF, AND PEACEFUL POSSESSION OF PROPERTY, (III) OBTAINING
PROVISIONAL OR ANCILLARY REMEDIES INCLUDING INJUNCTIVE RELIEF, SEQUESTRATION,
GARNISHMENT, ATTACHMENT, APPOINTMENT OF RECEIVER AND IN FILING AN INVOLUNTARY
BANKRUPTCY PROCEEDING, AND (IV) WHEN APPLICABLE, A JUDGMENT BY

 

20

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CONFESSION OF JUDGMENT.  PRESERVATION OF THESE REMEDIES DOES NOT LIMIT THE POWER
OF AN ARBITRATOR TO GRANT SIMILAR REMEDIES THAT MAY BE REQUESTED BY A PARTY IN A
DISPUTE.

 

SECTION 7.6.  SUCCESSORS AND ASSIGNS.  THE PROVISIONS OF THIS AGREEMENT SHALL BE
BINDING UPON AND INURE TO THE BENEFIT OF THE PARTIES HERETO (AND SHALL BIND ALL
PERSONS WHO BECOME BOUND AS A GRANTOR TO THIS COLLATERAL AGREEMENT) AND THEIR
RESPECTIVE SUCCESSORS AND ASSIGNS PERMITTED HEREBY; PROVIDED THAT NO GRANTOR MAY
ASSIGN, TRANSFER OR DELEGATE ANY OF ITS RIGHTS OR OBLIGATIONS UNDER THIS
AGREEMENT WITHOUT THE PRIOR WRITTEN CONSENT OF THE ADMINISTRATIVE AGENT (GIVEN
IN ACCORDANCE WITH SECTION 7.1).

 

SECTION 7.7.  COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED IN ANY NUMBER OF
COUNTERPARTS AND BY DIFFERENT PARTIES HERETO IN SEPARATE COUNTERPARTS, EACH OF
WHICH WHEN SO EXECUTED SHALL BE DEEMED TO BE AN ORIGINAL AND SHALL BE BINDING
UPON ALL PARTIES, THEIR SUCCESSORS AND ASSIGNS, AND ALL OF WHICH TAKEN TOGETHER
SHALL CONSTITUTE ONE AND THE SAME AGREEMENT.

 

SECTION 7.8.  SEVERABILITY.  ANY PROVISION OF THIS AGREEMENT OR ANY OTHER LOAN
AGREEMENT WHICH IS PROHIBITED OR UNENFORCEABLE IN ANY JURISDICTION SHALL, AS TO
SUCH JURISDICTION, BE INEFFECTIVE ONLY TO THE EXTENT OF SUCH PROHIBITION OR
UNENFORCEABILITY WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE
REMAINING PROVISIONS HEREOF OR THEREOF OR AFFECTING THE VALIDITY OR
ENFORCEABILITY OF SUCH PROVISION IN ANY OTHER JURISDICTION.

 

SECTION 7.9.  SECTION HEADING.  THE SECTION HEADINGS USED IN THIS AGREEMENT ARE
FOR CONVENIENCE OF REFERENCE ONLY AND NEITHER LIMIT NOR AMPLIFY THE PROVISIONS
OF THIS AGREEMENT.

 

SECTION 7.10.  INTEGRATION.  THIS AGREEMENT COMPRISES THE COMPLETE AND
INTEGRATED AGREEMENT OF THE PARTIES ON THE SUBJECT MATTER HEREOF AND SUPERSEDES
ALL PRIOR AGREEMENTS, WRITTEN OR ORAL, ON SUCH SUBJECT MATTER.

 

SECTION 7.11.  GOVERNING LAW.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS,
UNLESS OTHERWISE EXPRESSLY SET FORTH THEREIN, SHALL BE GOVERNED BY, CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING
SECTION 5-1401 AND SECTION 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK, WITHOUT REFERENCE TO ANY OTHER CONFLICTS OF LAW PRINCIPLES THEREOF.

 

SECTION 7.12.  JURISDICTION AND VENUE.

 

(a)           Jurisdiction.  Each Grantor party hereto hereby irrevocably
consents to the personal jurisdiction of the state and federal courts located in
New York, New York (and any courts from which an appeal from any of such courts
must or may be taken), in any action, claim or other proceeding arising out of
any dispute in connection with this Agreement and the other Loan Documents, any
rights or obligations hereunder or thereunder, or the performance of such rights
and obligations.  Each Grantor party hereto hereby irrevocably consents to the
service of a summons and complaint and other process in any action, claim or
proceeding brought by the Administrative Agent or any Lender in connection with
this Agreement or the other Loan Documents, any rights or obligations hereunder
or thereunder, or the performance of such rights and obligations, on behalf of
itself or its property, in the manner specified in Section 7.2.  Nothing in this
Section shall affect the right of the Administrative Agent or any Lender to
serve

 

21

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legal process in any other manner permitted by Applicable Law or affect the
right of the Administrative Agent or any Lender to bring any action or
proceeding against any Grantor or its respective properties in the courts of any
other jurisdictions.

 

(b)           Venue.  Each Grantor party hereto hereby irrevocably waives any
objection it may have now or in the future to the laying of venue in the
aforesaid jurisdiction in any action, claim or other proceeding arising out of
or in connection with this Agreement, any other Loan Document or the rights and
obligations of the parties hereunder or thereunder.  Each Grantor party hereto
irrevocably waives, in connection with such action, claim or proceeding, any
plea or claim that the action, claim or other proceeding has been brought in an
inconvenient forum.

 

SECTION 7.13.  ACKNOWLEDGEMENTS.

 

(A)           EACH GRANTOR HEREBY ACKNOWLEDGES THAT:  (I) IT HAS BEEN ADVISED BY
COUNSEL IN THE NEGOTIATION, EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY, (II) NEITHER THE ADMINISTRATIVE
AGENT NOR ANY LENDER HAS ANY FIDUCIARY RELATIONSHIP WITH OR DUTY TO ANY GRANTOR
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS, AND THE RELATIONSHIP BETWEEN THE GRANTORS, ON THE ONE HAND, AND THE
ADMINISTRATIVE AGENT AND LENDERS, ON THE OTHER HAND, IN CONNECTION HEREWITH OR
THEREWITH IS SOLELY THAT OF DEBTOR AND CREDITOR, AND (III) NO JOINT VENTURE IS
CREATED HEREBY OR BY THE OTHER LOAN DOCUMENTS OR OTHERWISE EXISTS BY VIRTUE OF
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY AMONG THE LENDERS OR AMONG THE
GRANTORS AND THE LENDERS.

 

(B)           EACH ISSUER PARTY TO THIS AGREEMENT ACKNOWLEDGES RECEIPT OF A COPY
OF THIS AGREEMENT AND AGREES TO BE BOUND THEREBY AND TO COMPLY WITH THE TERMS
THEREOF INSOFAR AS SUCH TERMS ARE APPLICABLE TO IT.  EACH ISSUER AGREES TO
PROVIDE SUCH NOTICES TO THE ADMINISTRATIVE AGENT AS MAY BE NECESSARY TO GIVE
FULL EFFECT TO THE PROVISIONS OF THIS AGREEMENT.

 

SECTION 7.14.  ADDITIONAL GRANTORS.  EACH SUBSIDIARY OF THE PARENT THAT IS
REQUIRED TO BECOME A PARTY TO THIS AGREEMENT PURSUANT TO SECTION 8.11 OF THE
CREDIT AGREEMENT SHALL BECOME A GRANTOR FOR ALL PURPOSES OF THIS AGREEMENT UPON
EXECUTION AND DELIVERY BY SUCH SUBSIDIARY OF A JOINDER AGREEMENT IN FORM AND
SUBSTANCE SATISFACTORY TO THE ADMINISTRATIVE AGENT.

 

SECTION 7.15.  RELEASES.

 

(A)           AT SUCH TIME AS THE OBLIGATIONS SHALL HAVE BEEN PAID IN FULL AND
THE COMMITMENTS HAVE BEEN TERMINATED, THE COLLATERAL SHALL BE RELEASED FROM THE
LIENS CREATED HEREBY, AND THIS AGREEMENT AND ALL OBLIGATIONS (OTHER THAN THOSE
EXPRESSLY STATED TO SURVIVE SUCH TERMINATION) OF THE ADMINISTRATIVE AGENT AND
EACH GRANTOR HEREUNDER SHALL TERMINATE, ALL WITHOUT DELIVERY OF ANY INSTRUMENT
OR PERFORMANCE OF ANY ACT BY ANY PARTY, AND ALL RIGHTS TO THE COLLATERAL SHALL
REVERT TO THE GRANTORS.  AT THE REQUEST AND SOLE EXPENSE OF ANY GRANTOR
FOLLOWING ANY SUCH TERMINATION, THE ADMINISTRATIVE AGENT SHALL DELIVER TO SUCH
GRANTOR ANY COLLATERAL HELD BY THE ADMINISTRATIVE AGENT HEREUNDER, AND EXECUTE
AND DELIVER TO SUCH GRANTOR SUCH DOCUMENTS AS SUCH GRANTOR SHALL REASONABLY
REQUEST TO EVIDENCE SUCH TERMINATION.

 

(B)           IF ANY OF THE COLLATERAL SHALL BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF BY ANY GRANTOR IN A TRANSACTION PERMITTED BY THE CREDIT AGREEMENT,
THEN THE ADMINISTRATIVE AGENT, AT

 

22

--------------------------------------------------------------------------------

 

THE REQUEST AND SOLE EXPENSE OF SUCH GRANTOR, SHALL EXECUTE AND DELIVER TO SUCH
GRANTOR ALL RELEASES OR OTHER DOCUMENTS REASONABLY NECESSARY OR DESIRABLE FOR
THE RELEASE OF THE LIENS CREATED HEREBY ON SUCH COLLATERAL.  IN THE EVENT THAT
ALL THE CAPITAL STOCK OF ANY GRANTOR SHALL BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF IN A TRANSACTION PERMITTED BY THE CREDIT AGREEMENT, THEN, AT THE
REQUEST OF THE BORROWER AND AT THE EXPENSE OF THE GRANTORS, SUCH GRANTOR SHALL
BE RELEASED FROM ITS OBLIGATIONS HEREUNDER; PROVIDED THAT THE BORROWER SHALL
HAVE DELIVERED TO THE ADMINISTRATIVE AGENT, AS SOON AS PRACTICABLE BUT IN ANY
EVENT, AT LEAST TEN (10) BUSINESS DAYS PRIOR TO THE DATE OF THE PROPOSED
RELEASE, A WRITTEN REQUEST FOR RELEASE IDENTIFYING THE RELEVANT GRANTOR AND THE
TERMS OF THE SALE OR OTHER DISPOSITION IN REASONABLE DETAIL, INCLUDING THE PRICE
THEREOF AND ANY EXPENSES IN CONNECTION THEREWITH, TOGETHER WITH A CERTIFICATION
BY THE BORROWER STATING THAT SUCH TRANSACTION IS IN COMPLIANCE WITH THE CREDIT
AGREEMENT AND THE OTHER LOAN DOCUMENTS.

 

 

[Signature Pages to Follow]

 

23

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Collateral Agreement to
be executed under seal by their duly authorized officers, all as of the day and
year first written above.

 

 

TUESDAY MORNING, INC., as Grantor and Issuer

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

 

TUESDAY MORNING CORPORATION, as
Grantor

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

 

TMI HOLDINGS, INC., as Grantor and Issuer

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

 

FRIDAY MORNING, INC., as Grantor and Issuer

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

 

DAYS OF THE WEEK, INC., as Grantor and Issuer

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

[Signature Pages Continue]

 

--------------------------------------------------------------------------------

 

 

NIGHTS OF THE WEEK, INC., as Grantor and
Issuer

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

 

TUESDAY MORNING PARTNERS, LTD., as
Grantor and Issuer

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

 

WACHOVIA BANK, NATIONAL
ASSOCIATION, as Administrative Agent

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT A

to

Collateral Agreement

 

Form of Perfection Certificate

 

Dated as of                   , 200    

 

TUESDAY MORNING, INC., a Texas corporation (the “Borrower”), TUESDAY MORNING
CORPORATION, a Delaware corporation (the “Parent”), TMI HOLDINGS, INC., a
Delaware corporation (“Holdings”), the Subsidiaries of the Parent (the
“Subsidiary Grantors”, and together with the Borrower, the Parent and Holdings,
the “Grantors”, each individually, a “Grantor”) have entered into a Collateral
Agreement dated as of the 22nd day of December 2004 (as amended, restated,
supplemented or otherwise modified, the “Collateral Agreement”) in favor of
WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, as
administrative agent (the “Administrative Agent”) for the benefit of itself and
the lenders (the “Lenders”) who are or may become a party to the Credit
Agreement.  Capitalized terms used herein and not otherwise defined shall have
the meanings assigned to them in the Collateral Agreement.

 

Each Grantor hereby certifies to the Administrative Agent and each Lender as
follows:

 

SECTION 1.           Identification Information.

 

(a)           The jurisdiction of incorporation, organization or formation of
each Grantor and the date of such incorporation, organization or formation is as
follows:

 

(b)           The location of the chief executive office of each Grantor is as
follows:

 

(c)           The exact legal name of each Grantor as it appears in its
[Articles or Certificate of Incorporation][Formation] [or] [other applicable
document evidencing formation] is as follows:

 

(d)           Except as set forth herein, (i) no Grantor has changed its
identity or organizational structure in any way within the past five years and
(ii) no Person has merged or consolidated with or into any Grantor and no Person
has liquidated into or transferred all or substantially all of its assets to any
Grantor in any way within the past year.

 

(e)           The following is a list of all other names (including trade names
or similar appellations) used by any Grantor or any of their respective
divisions or other business units at any time during the past five years:

 

The taxpayer identification number of each Grantor is as follows:

 

 

The registered organization identification number of each Grantor is as follows:

 

A-1

--------------------------------------------------------------------------------

 

SECTION 2.           Current Locations.               The following are all the
locations where the Grantors maintain any Inventory:

 

Grantor

 

Mailing Address

 

County and State

 

 

SECTION 3.           Deposit Accounts:  Each Grantor maintains the following
Deposit Accounts:

 

Grantor

 

Financial Institution

 

Account Number

 

Address of Financial
Institution

 

Account Purpose

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SECTION 4.           Unusual Transactions.  Other than as set forth below, all
Inventory has been acquired by the Grantors in the ordinary course of business
from Persons in the business of selling goods of such kind.

 

SECTION 5.           Reliance.  The undersigned acknowledges that the
Administrative Agent and the Lenders are entitled to rely and have, in fact,
relied on the information contained herein, and any successor or assign of the
Agent or the Lenders is entitled to rely on the information contained herein.

 

 

[Signature Pages to Follow]

 

A-2

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned have executed this Perfection Certificate as
of the date first above written.

 

 

TUESDAY MORNING, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

TUESDAY MORNING CORPORATION

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

TMI HOLDINGS, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

FRIDAY MORNING, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

DAYS OF THE WEEK, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

[Signature Pages Continue]

 

--------------------------------------------------------------------------------

 

 

NIGHTS OF THE WEEK, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

TUESDAY MORNING PARTNERS, LTD.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

SCHEDULE 3.6

to

Collateral Agreement

 

Exact Legal Name; Jurisdiction of Organization; Taxpayer Identification Number;
Registered Organization Number; Mailing Address; Chief Executive Office and
other Locations

 

1

--------------------------------------------------------------------------------

 

SCHEDULE 3.7

to

Collateral Agreement

 

Deposit Accounts

 

 

Grantor

 

Financial Institution

 

Account Number

 

Address of Financial
Institution

 

Account Purpose

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

--------------------------------------------------------------------------------

 

SCHEDULE 3.9

to

Collateral Agreement

 

Investment Property Collateral and Partnership/LLC Interests

 

Certificated Securities:

Grantor:

 

Name of Issuer

 

Class and Series

 

Par Value

 

Certificate Number

 

Percentage of
Ownership Interests
of such Class and Series

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities Accounts (including cash management accounts that are Proceeds
Investment Property) and Uncertificated Securities:

Grantor:

 

Financial Institution

 

Account Number

 

Address of Financial
Institution

 

Account Purpose

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name of Issuer

 

Class and Series

 

Par Value

 

Percentage of
Ownership Interests
of such Class and Series

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partnerships/LLC Interests:

Grantor:

 

Name of Issuer
(including identification of
type of entity)

 

Type of Ownership
Interest

 

Certificate Number
(if any)

 

Percentage of Ownership
Interests of such Type

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------