EXHIBIT 10.1

 

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[chaselogo.gif]
 
CREDIT AGREEMENT
 
dated as of
 
May 13, 2009
 
among
 
JONES APPAREL GROUP, INC.,
JONES APPAREL GROUP HOLDINGS, INC.,
JONES APPAREL GROUP USA, INC.,
JONES RETAIL CORPORATION,
NINE WEST FOOTWEAR CORPORATION,
ENERGIE KNITWEAR, INC.,
JONES INVESTMENT CO. INC.,
JONES JEANSWEAR GROUP, INC.,
L.E.I. GROUP, INC.,
NINE WEST DEVELOPMENT CORPORATION and
VICTORIA + CO LTD.,
as U.S. Borrowers
 
JONES APPAREL GROUP CANADA, LP, as Canadian Borrower
 
The Lenders Party Hereto,
 
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent,
 
JPMORGAN CHASE BANK, NA., TORONTO BRANCH,
as Canadian Administrative Agent,
 
JPMORGAN CHASE BANK, N.A.  AND GENERAL ELECTRIC CAPITAL CORPORATION,
as Joint Collateral Agents
 
CITIBANK, N.A., as Syndication Agent,
and
BANK OF AMERICA, N.A, WACHOVIA BANK, NATIONAL ASSOCIATION
and SUNTRUST BANK, as Documentation Agents
___________________________

J.P. MORGAN SECURITIES INC., CITIGROUP GLOBAL MARKETS INC., BANC OF
AMERICA SECURITIES LLC, WACHOVIA CAPITAL MARKETS LLC, SUNTRUST
ROBINSON HUMPHREY, INC. AND GENERAL ELECTRIC CAPITAL CORPORATION,
as Joint Bookrunners,
and
J.P. MORGAN SECURITIES INC. AND CITIGROUP GLOBAL MARKETS INC.,
as Joint Lead Arrangers
 

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CHASE BUSINESS CREDIT
 
 
 

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Table of Contents
 
TABLE OF CONTENTS
 
Page
 
ARTICLE I            Definition
    1
            SECTION 1.01.
Defined Terms
    1
            SECTION 1.02.
Classification of Loans and Borrowings
  56
            SECTION 1.03.
Terms Generally
  56
            SECTION 1.04.
Accounting Terms; GAAP
  57
            SECTION 1.05.
Currency Translations
  57
ARTICLE II           The Credits
  57
            SECTION 2.01.
Revolving Commitments
  57
            SECTION 2.02.
Loans and Borrowings
  58
            SECTION 2.03.
Requests for Revolving Borrowings
  59
            SECTION 2.04.
Protective Advances
  60
            SECTION 2.05.
Swingline Loans
  61
            SECTION 2.06.
Letters of Credit
  63
            SECTION 2.07.
Funding of Borrowings
  68
            SECTION 2.08.
Interest Elections
  69
            SECTION 2.09.
Termination and Reduction of Revolving Commitments; Increase in Revolving
Commitments
  71
            SECTION 2.10.
Repayment and Amortization of Loans and B/As; Evidence of Debt
  73
            SECTION 2.11.
Prepayment of Loans and B/As
  74
            SECTION 2.12.
Fees
  76
            SECTION 2.13.
Interest
  78
            SECTION 2.14.
Alternate Rate of Interest
  79
            SECTION 2.15.
Increased Costs
  79
            SECTION 2.16.
Break Funding Payments
  80
            SECTION 2.17.
Taxes
  81
            SECTION 2.18.
Payments Generally; Allocation of Proceeds; Sharing of Set-offs
  84
            SECTION 2.19.
Mitigation Obligations; Replacement of Lenders
  87
            SECTION 2.20.
Returned Payments
  88
            SECTION 2.21.
Bankers’ Acceptances
  88
            SECTION 2.22.
Circumstances Making Bankers’ Acceptances Unavailable
  92
            SECTION 2.23.
Defaulting Lenders
  92
            SECTION 2.24.
Excess Resulting From Exchange Rate Change
  94
ARTICLE III         Representations and Warranties
  95
            SECTION 3.01.
Organization; Powers
  95
            SECTION 3.02.
Authorization; Enforceability
  95
            SECTION 3.03.
Governmental Approvals; No Conflicts
  95
            SECTION 3.04.
Financial Condition; No Material Adverse Change
  96
            SECTION 3.05.
Properties
  96
            SECTION 3.06.
Litigation and Environmental Matters
  96
            SECTION 3.07.
Compliance with Laws and Agreements
  97
            SECTION 3.08.
Investment Company Status
  97

 
 
 
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            SECTION 3.09.
Taxes
  97
            SECTION 3.10.
ERISA
  97
            SECTION 3.11.
Disclosure
  98
            SECTION 3.12.
No Default
  98
            SECTION 3.13.
Solvency
  98
            SECTION 3.14.
Insurance
  99
            SECTION 3.15.
Capitalization and Subsidiaries
  99
            SECTION 3.16.
Security Interest in Collateral
  99
            SECTION 3.17.
Employment Matters
  99
            SECTION 3.18.
Credit Card Arrangements
100
            SECTION 3.19.
PATRIOT Act and Other Specified Laws
100
            SECTION 3.20.
Margin Regulations
100
ARTICLE IV         Conditions
101
            SECTION 4.01.
Effective Date
101
            SECTION 4.02.
Each Credit Event
104
ARTICLE V          Affirmative Covenants
105
            SECTION 5.01.
Financial Statements; Borrowing Base and Other Information
105
            SECTION 5.02.
Notices of Material Events
109
            SECTION 5.03.
Existence; Conduct of Business
110
            SECTION 5.04.
Payment of Obligations
110
            SECTION 5.05.
Maintenance of Properties
110
            SECTION 5.06.
Books and Records; Inspection Rights
110
            SECTION 5.07.
Compliance with Laws and Contractual Obligations
111
            SECTION 5.08.
Use of Proceeds
111
            SECTION 5.09.
Insurance
111
            SECTION 5.10.
Casualty and Condemnation
111
            SECTION 5.11.
Appraisals
112
            SECTION 5.12.
Field Examinations
112
            SECTION 5.13.
Depository Banks
112
            SECTION 5.14.
Additional Collateral; Further Assurances
113
            SECTION 5.15.
Credit Card Notification Agreements
115
            SECTION 5.16.
Post Closing Requirements
115
ARTICLE VI         Negative Covenants
115
            SECTION 6.01.
Indebtedness
115
            SECTION 6.02.
Liens
117
            SECTION 6.03.
Fundamental Changes
118
            SECTION 6.04.
Investments, Loans, Advances, Guarantees and Acquisitions
119
            SECTION 6.05.
Asset Sales
121
            SECTION 6.06.
Sale and Leaseback Transactions
122
            SECTION 6.07.
Swap Agreements
123
            SECTION 6.08.
Restricted Payments; Certain Payments of Indebtedness
123
            SECTION 6.09.
Transactions with Affiliates
124

 
 
 
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            SECTION 6.10.
Restrictive Agreements
124
            SECTION 6.11.
Amendment of Material Documents
125
            SECTION 6.12.
Fixed Charge Coverage Ratio
125
            SECTION 6.13.
Open Account Agreements
125
ARTICLE VII        Events of Default
125
ARTICLE VIII       The Administrative Agent and Canadian Administrative Agent,
Joint Collateral Agents; Other Agents
129
            SECTION 8.01.
The Administrative Agent and the Canadian Administrative Agent
129
            SECTION 8.02.
The Joint Collateral Agents
132
            SECTION 8.03.
Other Agents
134
ARTICLE IX         Miscellaneous
135
            SECTION 9.01.
Notices
135
            SECTION 9.02.
Waivers; Amendments
136
            SECTION 9.03.
Expenses; Indemnity; Damage Waiver
139
            SECTION 9.04.
Successors and Assigns
141
            SECTION 9.05.
Survival
144
            SECTION 9.06.
Counterparts; Integration; Effectiveness
145
            SECTION 9.07.
Severability
145
            SECTION 9.08.
Right of Setoff
145
            SECTION 9.09.
Governing Law; Jurisdiction; Consent to Service of Process
146
            SECTION 9.10.
WAIVER OF JURY TRIAL
146
            SECTION 9.11.
Headings
147
            SECTION 9.12.
Confidentiality
147
            SECTION 9.13.
Several Obligations; Nonreliance; Violation of Law
148
            SECTION 9.14.
USA PATRIOT Act
148
            SECTION 9.15.
Disclosure
148
            SECTION 9.16.
Appointment for Perfection
149
            SECTION 9.17.
Interest Rate Limitation
149
            SECTION 9.18.
Judgment Currency
149
            SECTION 9.19.
Canadian Anti-Money Laundering Legislation
149
            SECTION 9.20.
Lender Loss Sharing Agreement
150
            SECTION 9.21.
No Fiduciary Duty
152
ARTICLE X          Loan Guaranty of US. Obligations
153
            SECTION 10.01.
Guaranty
153
            SECTION 10.02.
Guaranty of Payment
153
            SECTION 10.03.
No Discharge or Diminishment of Loan Guaranty
153
            SECTION 10.04.
Defenses Waived
154
            SECTION 10.05.
Rights of Subrogation
154
            SECTION 10.06.
Reinstatement; Stay of Acceleration
155
            SECTION 10.07.
Information
155
            SECTION 10.08.
Maximum Liability
155
            SECTION 10.09.
Contribution
155
            SECTION 10.10.
Liability Cumulative
156
            SECTION 10.11.
Common Enterprise
156

 
 
 
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ARTICLE XI         The Borrower Representative
156
            SECTION 11.01.
Appointment; Nature of Relationship
156
            SECTION 11.02.
Powers
157
            SECTION 11.03.
Employment of Agents
157
            SECTION 11.04.
Notices
157
            SECTION 11.05,
Successor Borrower Representative
157
            SECTION 11.06.
Execution of Loan Documents; Borrowing Base Certificate
157
            SECTION 11.07.
Reporting
158

SCHEDULES:
 
Revolving Commitment Schedule
Schedule I -- Borrowers and U.S. Loan Guarantors Signatory
Schedule 2.06(1) -- Existing Letters of Credit
Schedule 3.05 -- Properties
Schedule 3.06 -- Disclosed Matters
Schedule 3.14 -- Insurance
Schedule 3.15 -- Capitalization and Subsidiaries
Schedule 3.18 – Credit Card Arrangements
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.04 -- Existing Investments
Schedule 6.05 -- Asset Sales
Schedule 6.10 -- Existing Restrictions
 
EXHIBITS:
 
Exhibit A -- Form of Assignment and Assumption
Exhibit B -- Form of Opinion of Borrower’s Counsel
Exhibit C -- Form of Borrowing Base Certificate
Exhibit D -- Form of Compliance Certificate
Exhibit E -- Joinder Agreement
Exhibit F -- Form of U.S. Tax Compliance Certificate
Exhibit G -- Form of Borrowing Request
Exhibit H -- Form of Discount Note
 
 
 
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                               CREDIT AGREEMENT dated as of May 13, 2009 (as it
may be amended or modified from time to time, this “Agreement”), among JONES
APPAREL GROUP, INC., a Pennsylvania corporation, JONES APPAREL GROUP HOLDINGS,
INC., a Delaware corporation, JONES APPAREL GROUP USA, INC., a Delaware
corporation, JONES RETAIL CORPORATION, a New Jersey corporation, NINE WEST
FOOTWEAR CORPORATION, a Delaware corporation, ENERGIE KNITWEAR, INC., a Delaware
corporation, JONES INVESTMENT CO. INC., a Delaware corporation, JONES JEANSWEAR
GROUP, INC., a New York corporation, L.E.I. GROUP, INC., a Delaware corporation,
NINE WEST DEVELOPMENT CORPORATION, a Delaware corporation, and VICTORIA + CO
LTD., a Rhode Island corporation, as Borrowers, JONES APPAREL GROUP CANADA, LP,
an Ontario limited partnership, as Canadian Borrower, the other Loan Parties
party hereto, the Lenders party hereto, JPMORGAN CHASE BANK, N.A., as
Administrative Agent, JPMORGAN CHASE BANK, N.A., TORONTO BRANCH, as Canadian
Administrative Agent, J.P. MORGAN SECURITIES INC. and GENERAL ELECTRIC CAPITAL
CORPORATION, as Joint Collateral Agents, CITIBANK, N.A., as Syndication Agent,
and BANK OF AMERICA, N.A., WACHOVIA BANK, NATIONAL ASSOCIATION and SUNTRUST
BANK, as Documentation Agents.
 
The parties hereto agree as follows:
 
ARTICLE I
 
Definitions
 
                      SECTION 1.01.      Defined Terms.  As used in this
Agreement, the following terms have the meanings specified below:
 
“ABR”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.
 
“Acceptance Fee” has the meaning assigned to such term in Section 2.21(m).
 
“Account” has the meaning assigned to such term in the U.S. Security Agreement.
 
“Account Debtor” means any Person obligated on an Account.
 
“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.
 
“Administrative Agent” means JPMorgan Chase Bank, N.A., in its capacity as
administrative agent for the Lenders hereunder, and its successors and assigns
in such capacity.
 
“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.
 
 
 
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“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
 
“Agents” means, individually and collectively as the context may require, the
Administrative Agent, the Canadian Administrative Agent, the Joint Collateral
Agents, the Syndication Agent and the Documentation Agents.
 
“Aggregate Borrowing Base” means the aggregate amount of the U.S. Borrowing Base
and the Canadian Borrowing Base; provided that the maximum amount of the
Canadian Borrowing Base which may be included in the Aggregate Borrowing Base is
the Canadian Sublimit.
 
“Aggregate Credit Exposure” means, at any time, the aggregate Credit Exposure of
all the Lenders.
 
                               “Alternate Base Rate” means, for any day, a rate
per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b)
the Federal Funds Effective Rate in effect on such day plus ½ of 1% and (c) the
Adjusted LIBO Rate for a one month Interest Period on such day (or if such day
is not a Business Day, the immediately preceding Business Day) plus 1%; provided
that, for the avoidance of doubt, the Adjusted LIBO Rate for any day shall be
based on the one-month rate appearing on the Reuters Screen LIBOR01 Page (or on
any successor or substitute page) at approximately 11:00 a.m. London time on
such day (without any rounding).  Any change in the Alternate Base Rate due to a
change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO
Rate shall be effective from and including the effective date of such change in
the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate,
respectively.
 
“Alternative Currency” means (a) Pounds Sterling, (b) the Euro or (c) any other
lawful currency (other than dollars) acceptable to the Issuing Banks which, in
the case of this clause (c), is freely transferable and convertible into dollars
in the United States currency market and is freely available to the applicable
Issuing Bank in the London interbank deposit market.
 
“AML Legislation” has the meaning assigned to such term in Section 9.19.
 
“Applicable Percentage” means (a) with respect to Revolving Loans, LC Exposure
or Swingline Loans, the percentage of the total Revolving Commitments equal to
such Lender’s Revolving Commitment (or, if the Revolving Commitments have
terminated or expired, such Lender’s share of the total Revolving Exposure at
that time), (b) with respect to U.S. Revolving Loans, U.S. LC Exposure or U.S.
Swingline Loans, a percentage of the total U.S. Commitments equal to such U.S.
Lender’s U.S. Commitment (or, if the U.S. Commitments have terminated or
expired, such U.S. Lender’s share of the total U.S. Revolving Exposure at that
time) and (c) with respect to Canadian Revolving Loans, Canadian LC Exposure or
Canadian Swingline Loans, a percentage of the total Canadian Commitments equal
to such Canadian Lender’s Canadian Commitment (or, if the Canadian Commitments
have terminated or expired, such Canadian Lender’s share of the total Canadian
Revolving Exposure at that time); provided that in the case of Section 2.23 when
a Defaulting Lender shall exist, any such Defaulting Lender’s Revolving
Commitment (or U.S. Commitment or Canadian Commitment, as applicable) shall be
disregarded in any of such calculations.
 
 
 
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“Applicable Rate” means, for any day, with respect to any ABR Loan, Canadian
Prime Rate Loan, Eurodollar Loan or BA Drawing, as the case may be, the
applicable rate per annum set forth below under the caption “ABR Spread”,
“Canadian Prime Spread”, “Eurodollar Spread” or “BA Drawing Spread”, as the case
may be, based upon the daily average Availability during the most recently
completed fiscal quarter of the Company (the “Average Availability”); provided
that until the last day of the second fiscal quarter ending after the Effective
Date, the Applicable Rate shall be the applicable rate per annum set forth below
in Category 2:
 
Availability
ABR Spread and Canadian Prime Spread
Eurodollar Spread and BA Drawing Spread
Category 1
≥ $400,000,000
3.25%
4.25%
Category 2
 < $400,000,000 but ≥ 200,000,000
3.50%
4.50%
Category 3
< 200,000,000
3.75%
4.75%

For purposes of the foregoing, the Applicable Rate shall be determined as of the
end of each fiscal quarter of the Company based upon the Borrowing Base
Certificate that is delivered from time to time pursuant to Section 5.01(g),
with any changes to the Applicable Rate resulting from changes in the Average
Availability to be effective on the first day of the first month following
delivery of such Borrowing Base Certificate; provided that the Average
Availability shall be deemed to be in Category 3 (A) at any time that any Event
of Default has occurred and is continuing (other than an Event of Default
arising from the failure to deliver any Borrowing Base Certificate) or (B) if
the Company fails to deliver any Borrowing Base Certificate that is required to
be delivered pursuant to Section 5.01(g), during the period from the expiration
of the time for delivery thereof until five days after each such Borrowing Base
Certificate is so delivered; provided further that if any Borrowing Base
Certificate is at any time restated or otherwise revised or if the information
set forth in any Borrowing Base Certificate otherwise proves to be false or
incorrect such that the Applicable Rate would have been higher than was
otherwise in effect during any period, without constituting a waiver of any
Default or Event of Default arising as a result thereof, interest due under this
Agreement shall be immediately recalculated at such higher rate for any such
applicable periods and shall be due and payable on demand.
 
“Approved Fund” has the meaning assigned to such term in Section 9.04.
 
“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 9.04), and accepted by the Administrative Agent, in the form of
Exhibit A or any other form approved by the Administrative Agent.
 
 
 
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“Availability” means, at any time, an amount equal to (a) the lesser of (i) the
Revolving Commitment, and (ii) the Aggregate Borrowing Base minus (b) the sum of
(i) the aggregate Revolving Exposure of all the Lenders and (ii) the Open
Account Aggregate Cap.
 
“Availability Period” means the period from and including the Effective Date to
but excluding the earlier of the Maturity Date and the date of termination of
the Revolving Commitment.
 
“Available Revolving Commitment” means, at any time, the Revolving Commitment
then in effect minus the Revolving Exposure of all Revolving Lenders at such
time.
 
“BA Drawing” means B/As accepted and purchased, and any BA Equivalent Loan made
in lieu of such acceptance and purchase, on the same date and as to which a
single Contract Period is in effect.
 
“BA Equivalent Loan” has the meaning assigned to such term in Section 2.21(j).
 
“Bankers’ Acceptance” and “B/A” means a bill of exchange, including a depository
bill issued in accordance with the Depository Bills and Notes Act (Canada),
denominated in Canadian Dollars, drawn by the Canadian Borrower and accepted by
a Canadian Lender (the foregoing to include a Discount Note except where the
context otherwise requires).
 
“Banking Services” means each and any of the following bank services provided at
any time to any Loan Party by any Lender or any of its Affiliates:  (a) credit
cards for commercial customers (including, without limitation, “commercial
credit cards” and purchasing cards), (b) stored value cards and (c) treasury
management services (including, without limitation, controlled disbursement,
automated clearinghouse transactions, return items, overdrafts and interstate
depository network services).
 
“Banking Services Obligations” of the Loan Parties means any and all obligations
of the Loan Parties, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor) in connection with Banking
Services, including, without limitation, liabilities arising in respect of
guarantees and indemnifications in favor of steamship lines or other carriers of
Inventory.  For the avoidance of doubt, the Open Account Obligations do not
constitute Banking Services Obligations.
 
“Banking Services Reserves” means all Reserves which the Joint Collateral Agents
from time to time establish, in their Permitted Discretion, for Banking Services
then provided or outstanding; provided that any such Reserves shall be net of
any cash securing the Banking Services.
 
“Board” means the Board of Governors of the Federal Reserve System of the United
States of America.
 
“Bonds” has the meaning assigned to such term in Section 8.01.
 
 
 
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“Borrower” or “Borrowers” means, individually and collectively as the context
may require, the Company, Jones Apparel USA, Jones Holdings, Jones Retail, Nine
West Footwear, Energie Knitwear, Jones Investment, Jones Jeanswear, L.E.I., Nine
West Development, Victoria and the Canadian Borrower.
 
“Borrower Representative” means the Company, in its capacity as contractual
representative of the Borrowers pursuant to Article XI.
 
“Borrowing” means (a) Revolving Loans of the same Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect and, in the case of BA Drawings, as to which
a single Contract Period is in effect, (b) a Swingline Loan and (c) a Protective
Advance.
 
“Borrowing Base” means, individually and collectively as the context may
require, the Aggregate Borrowing Base, the U.S. Borrowing Base and the Canadian
Borrowing Base.
 
“Borrowing Base Certificate” means a certificate, signed and certified as
accurate and complete by a Financial Officer of the Borrower Representative, in
substantially the form of Exhibit C or another form which is acceptable to the
Joint Collateral Agents in their Permitted Discretion, setting forth the
Canadian Borrowing Base and the U.S. Borrowing Base.
 
“Borrowing Request” means a request by the Borrower Representative for a
Borrowing of Revolving Loans in accordance with Section 2.03.
 
“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; provided that (a) when used in connection with a Eurodollar Loan
or any U.S. Letter of Credit denominated in an Alternative Currency, the term
“Business Day” shall also exclude any day on which banks are not open for
dealings in deposits in the London interbank market in (i) dollars, in the case
of Eurodollar Loans, or (ii) such Alternative Currency, in the case of U.S.
Letters of Credit; (b) in the case of U.S. Letters of Credit denominated in
Euros, the term “Business Day” shall also exclude any day which is not a TARGET
Day as determined by the Administrative Agent; and (c) when used in connection
with any Canadian Loan or Canadian Letter of Credit, the term “Business Day”
shall also exclude any day in which commercial banks in Toronto, Canada are
authorized or required by law to remain closed.
 
“Canadian Administrative Agent” means JPMorgan Chase Bank, N.A., Toronto Branch,
in its capacity as administrative agent for the Canadian Lenders hereunder, and
its successors in such capacity.
 
“Canadian Availability” means (a) the lesser of (x) the Canadian Sublimit and
(y) the sum of (i) the Canadian Borrowing Base plus (ii) solely to the extent
the total Canadian Revolving Exposure exceeds the Canadian Borrowing Base, the
U.S. Availability (if any, to the extent that it is available), minus (b) the
total Canadian Revolving Exposure.
 
“Canadian Borrower” means Jones Apparel Group Canada, LP, an Ontario limited
partnership.
 
 
 
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“Canadian Borrowing Base” means, at any time (without duplication),
 
the sum of
 
(a)           (i) the product of (A) 85% multiplied by (B) the Eligible Accounts
of the Canadian Borrower at such time plus (ii) the product of (A) 90%
multiplied by (B) the Eligible Credit Card Accounts Receivable of the Canadian
Borrower at such time,
 
plus
 
(b)           the lesser of (i) the product of 85% multiplied by the Net Orderly
Liquidation Value percentage in respect of Retail Inventory of the Canadian
Borrower identified in the most recent inventory appraisal ordered by the Joint
Collateral Agents multiplied by the Eligible Retail Inventory of the Canadian
Borrower, valued at the lower of cost (determined in accordance with the
historical practices of the Borrowers prior to the Effective Date) or market
value, at such time and (ii) the product of 75% multiplied by the Eligible
Retail Inventory of the Canadian Borrower, valued at the lower of cost
(determined in accordance with the historical practices of the Borrowers prior
to the Effective Date) or market value, at such time,
 
plus
 
(c)           the lesser of (i) the product of 85% multiplied by the High Season
or Low Season, as applicable, Net Orderly Liquidation Value percentage in
respect of Wholesale Inventory of the Canadian Borrower identified in the most
recent inventory appraisal ordered by the Joint Collateral Agents multiplied by
the Eligible Wholesale Inventory of the Canadian Borrower, valued at the lower
of cost (determined in accordance with the historical practices of the Borrowers
prior to the Effective Date) or market value, at such time and (ii) the product
of 75% multiplied by the Eligible Wholesale Inventory of the Canadian Borrower,
valued at the lower of cost (determined in accordance with the historical
practices of the Borrowers prior to the Effective Date) or market value, at such
time,
 
minus
 
(d)           without duplication, Reserves established by the Joint Collateral
Agents in their Permitted Discretion.
 
The Joint Collateral Agents may, in their Permitted Discretion, reduce the
advance rates set forth above (and subsequently increase the advance rates up to
the levels set forth above), adjust Reserves or reduce one or more of the other
elements used in computing the Canadian Borrowing Base (and subsequently
increase such elements up to the levels set forth above).  Any changes after the
Effective Date in how the Borrowers value their Inventory in accordance with
their historical practices prior to the Effective Date shall be subject to the
approval of the Joint Collateral Agents.
 
“Canadian Collection Deposit Account” has the meaning assigned to such term in
the U.S. Security Agreement.
 
 
 
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“Canadian Commitment” means, with respect to each Lender, the commitment, if
any, of such Canadian Lender to make Canadian Revolving Loans and to acquire
participations in Canadian Letters of Credit and Canadian Swingline Loans
hereunder, expressed as an amount representing the maximum possible aggregate
amount of such Canadian Lender’s Canadian Revolving Exposure hereunder, as such
commitment may be reduced or increased from time to time pursuant to (a) Section
2.09 and (b) assignments by or to such Canadian Lender pursuant to Section
9.04.  The initial amount of each Canadian Lender’s Canadian Commitment is set
forth on the Revolving Commitment Schedule, or in the Assignment and Assumption
pursuant to which such Canadian Lender shall have assumed its Canadian
Commitment, as applicable. The Canadian Commitment is a sub-facility of the
Revolving Commitment and is not in addition to the Revolving Commitment.
 
“Canadian Dollars” and “Cdn.$” means dollars in the lawful currency of Canada.
 
“Canadian Funding Office” means the office of JPMorgan Chase Bank, N.A., Toronto
Branch specified in Section 9.01 or such other office as may be specified from
time to time by the Administrative Agent or the Canadian Administrative Agent by
written notice to the Canadian Borrower and the Canadian Lenders.
 
“Canadian Guarantee” means, individually and collectively as the context may
require, (a) the Guarantee of Jones Canada GP, dated as of the date hereof, in
favor of the Administrative Agent (for the benefit of the Canadian Lender
Parties) and (b) the Guarantee of Jones Canada LP, dated as of the date hereof,
in favor of the Administrative Agent (for the benefit of the Canadian Lender
Parties), in each case as amended, restated or otherwise modified from time to
time.
 
“Canadian LC Collateral Account” has the meaning assigned to such term in
Section 2.06(k).
 
“Canadian LC Exposure” means, at any time, the sum of the Dollar Amount of the
Commercial LC Exposure and the Standby LC Exposure of the Canadian Borrower. The
Canadian LC Exposure of any Canadian Revolving Lender at any time shall be its
Applicable Percentage of the total Canadian LC Exposure at such time.
 
“Canadian Lender Parties” means, individually and collectively as the context
may require, the Canadian Administrative Agent, the Issuing Banks issuing
Canadian Letters of Credit and the Canadian Lenders.
 
“Canadian Lenders” means the Persons listed on the Revolving Commitment Schedule
as having a Canadian Commitment (provided that such Person or an Affiliate of
such Person also has a U.S. Commitment) and any other Person that shall acquire
a Canadian Commitment (provided that at such time such Person or an Affiliate of
such Person has, or is acquiring, a U.S. Commitment pursuant to an Assignment
and Assumption), other than any such Person that ceases to be a Canadian Lender
pursuant to an Assignment and Assumption.  Each Canadian Lender shall be a
financial institution that is listed on Schedule I, II, or III of the Bank Act
(Canada) or is not a foreign bank for purposes of the Bank Act (Canada), and if
such financial institution is not resident in Canada and is not deemed to be
resident in Canada for purposes of the ITA, that financial institution deals at
arm’s length with each Canadian Borrower for purposes of the ITA.
 
 
 
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“Canadian Letter of Credit” means any Letter of Credit or similar instrument
(including a bank guarantee) acceptable to the applicable Issuing Bank issued
hereunder for the purpose of providing credit support for the Canadian Borrower.
 
“Canadian Loan Documents” means, individually and collectively as the context
may require, the Canadian Guarantee, the Canadian Security Agreement and all
other agreements, instruments and certificates delivered, from time to time in
connection therewith, in each case as amended, restated or otherwise modified
from time to time.
 
“Canadian Loan Parties” means, individually and collectively as the context may
require, Jones Canada GP, Jones Canada LP, the Canadian Borrower and its
Subsidiaries, and any other Person who becomes a party to a guarantee that
guarantees the payment of, or a security agreement that secures the repayment
of, the Canadian Obligations, in each case pursuant to Section 5.14(c), together
with their successors and assigns.
 
“Canadian Loans” means, individually and collectively as the context may
require, the Canadian Revolving Loans, the Canadian Swingline Loans and the
Canadian Protective Advances.
 
“Canadian Obligations” means all unpaid principal of and accrued and unpaid
interest on the Canadian Loans, all Canadian LC Exposure, all accrued and unpaid
fees and all expenses, reimbursements, indemnities and other obligations of the
Canadian Loan Parties to the Canadian Lenders or to any Canadian Lender, the
Administrative Agent, the Canadian Administrative Agent, any Issuing Bank with
respect to Canadian Letters of Credit or any indemnified party arising under the
Loan Documents.
 
“Canadian Pension Plans” means each pension plan required to be registered under
Canadian federal or provincial law that is maintained or contributed to by a
Canadian Loan Party for its employees or former employees, but does not include
the Canada Pension Plan or the Quebec Pension Plan as maintained by the
Government of Canada or the Province of Quebec, respectively.
 
“Canadian Prime Rate” means on any day, the greater of (a) the annual rate of
interest announced from time to time by the Canadian Administrative Agent as
being its reference rate then in effect for determining interest rates on
Canadian Dollar-denominated commercial loans made by it in Canada and (b) the
CDOR Rate for a one-month term in effect from time to time plus 1% per annum.
 
“Canadian Prime Rate Loan” means a Loan denominated in Canadian Dollars the rate
of interest applicable to which is based upon the Canadian Prime Rate.
 
“Canadian Protective Advance” has the meaning assigned to such term in
Section 2.04(a).
 
 
 
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“Canadian Revolving Exposure” means, with respect to any Canadian Lender at any
time, the sum of (a) the outstanding principal amount of Canadian Revolving
Loans of such Canadian Lender at such time, plus (b) an amount equal to the
Applicable Percentage of the aggregate principal amount of the Canadian
Swingline Loans of such Canadian Lender at such time, plus (c) an amount equal
to the Applicable Percentage of the Canadian LC Exposure at such time.
 
“Canadian Revolving Loan” means a Revolving Loan made to the Canadian Borrower.
 
“Canadian Security Agreement” means, individually and collectively as the
context may require, (a) the General Security Agreement, dated as of the date
hereof, of the Canadian Borrower in favor of the Administrative Agent (for the
benefit of the Canadian Lender Parties), (b) the General Security Agreement,
dated as of the date hereof, of Jones Canada GP in favor of the Administrative
Agent (for the benefit of the Canadian Lender Parties), (c) the General Security
Agreement, dated as of the date hereof, of Jones Canada LP in favor of the
Administrative Agent (for the benefit of the Canadian Lender Parties), (d) the
Securities Pledge Agreement, dated as of the date hereof, between Jones Canada
LP and the Administrative Agent (for the benefit of the Canadian Lender
Parties), (e) the Securities Pledge Agreement, dated as of the date hereof, of
Jones Canada LP in favor of the Administrative Agent (for the benefit of the
U.S. Lender Parties) and (f) the Deed of Hypothec, dated as of the date hereof,
between the Canadian Borrower and the Administrative Agent (for the benefit of
the Canadian Lender Parties), and any other pledge or security agreement entered
into, after the Effective Date, by any Canadian Loan Party pursuant to the terms
of this Agreement or any other Loan Document, including Section 5.14(c), as the
same may be amended, restated or otherwise modified from time to time.
 
“Canadian Secured Obligations” means all Canadian Obligations, together with all
(a) Banking Services Obligations of the Canadian Loan Parties; (b) Swap
Obligations of the Canadian Loan Parties owing to one or more Canadian Lenders
or their respective Affiliates; provided that at or prior to the time that any
transaction relating to such Swap Obligation is executed, the Canadian Lender or
Affiliate of a Canadian Lender party thereto (other than Chase) shall have
delivered written notice to the Administrative Agent that such a transaction has
been entered into and that it constitutes a Canadian Secured Obligation entitled
to the benefits of the Collateral Documents in favor of the Canadian Lender
Parties; and (c) the Open Account Obligations of Open Account Obligors that are
Canadian Loan Parties.
 
“Canadian Sublimit” means $25,000,000, as such sublimit may be reduced or
terminated in accordance with Section 2.09.
 
“Canadian Swingline Lender” means JPMorgan Chase Bank, N.A., Toronto Branch, in
its capacity as lender of Canadian Swingline Loans hereunder, and its successors
and assigns in such capacity.
 
“Canadian Swingline Loan” has the meaning assigned to such term in
Section 2.05(b).
 
 
 
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“Canadian U.S. Borrowing Base Utilization” means the excess of (a) the total
Canadian Revolving Exposure of all the Canadian Lenders minus (b) the Canadian
Borrowing Base.
 
“Capital Expenditures” means, without duplication, any expenditure for any
purchase or other acquisition of any asset which would be set forth in a
consolidated statement of cash flows of the Company and its Subsidiaries
prepared in accordance with GAAP.
 
“Capital Lease Obligations” of any Person means the obligations of such Person
to pay rent or other amounts under any lease of (or other arrangement conveying
the right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP.
 
“CDOR Rate” means on any day, with respect to a particular term as specified
herein, the annual rate of discount or interest which is the arithmetic average
of the discount rates for such term applicable to Canadian Dollar bankers’
acceptances identified as such on the Reuters Screen CDOR Page at approximately
10:00 a.m. on such day, or if such day is not a Business Day, then on the
immediately preceding Business Day (as adjusted by the Canadian Administrative
Agent after 10:00 a.m. to reflect any error in any posted rate or in the posted
average annual rate). If such rate does not appear on the Reuters Screen CDOR
Page as provided in preceding sentence, the CDOR Rate on any day shall be
calculated as the arithmetic average of the annual discount rates for such term
applicable to Canadian Dollar bankers’ acceptances of, and as quoted by, the
Schedule I Reference Banks, as of 10:00 a.m. on that day, or if that day is not
a Business Day, then on the immediately preceding Business Day.
 
“Change in Control” means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof), of Equity
Interests representing more than 50% of the aggregate ordinary voting power
represented by the issued and outstanding Equity Interests of the Company; (b)
occupation of a majority of the seats (other than vacant seats) on the board of
directors of the Company by Persons who were neither (i) nominated by the board
of directors of the Company nor (ii) appointed by directors so nominated; (c)
cessation of ownership (directly or indirectly) by the Company, free and clear
of all Liens or other encumbrances, of 100% of the outstanding voting Equity
Interests of the other Borrowers or any other Loan Party on a fully diluted
basis; or (d) the occurrence under the (i) Indenture or (ii) any other indenture
or other instrument to which the Company or any other Loan Party is a party
evidencing any debt in excess of $50,000,000, of any “change in control” or
similar event obligating the Company or any other Loan Party to repurchase,
redeem or repay all or any part of the debt or Equity Interests provided for
therein.
 
“Change in Law” means (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by any Lender or any Issuing Bank (or,
for purposes of Section 2.15(b), by any lending office of such Lender or by such
Lender’s or the Issuing Bank’s holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
 
 
 
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“Chase” means JPMorgan Chase Bank, N.A., a national banking association, in its
individual capacity, and its successors.
 
“Citibank Open Account Agent” means Citibank, N.A. and any of its successors and
assigns that is a Lender or Affiliate thereof in its capacity as agent for each
Citibank Open Account Bank.
 
“Citibank Open Account Agreement” means that certain Amended and Restated Open
Account Paying Agency Agreement, dated as of February 5, 2009, between Citibank,
N.A., the Company and the other Open Account Obligors that are parties thereto,
as any of the foregoing may be amended, modified, restated or replaced from time
to time in accordance with Section 6.11.
 
“Citibank Open Account Bank” means Citibank, N.A. and any Lender or Affiliate
thereof that may become a party to the Citibank Open Account Agreement.
 
“Citibank Open Account Cap” means, with respect to the Citibank Open Account
Agreement at any time such Agreement is in effect or any Citibank Open Account
Obligations are outstanding, (a) until the date that is 90 days after the
Effective Date, $40,000,000, and (b) on any date thereafter, such lesser amount
as may be specified in a written notice by the Citibank Open Account Agent and
the Company to the Administrative Agent; provided that, without the consent of
the Company and the Administrative Agent, the Citibank Open Account Agent may
specify such lesser amount pursuant to this clause (b) only once during the term
of this Agreement.
 
“Citibank Open Account Obligations” means the “Payment Obligation”, as defined
in Section 5 of the Citibank Open Account Agreement, including without
limitation, the obligation of the applicable Open Account Obligors under the
Citibank Open Account Agreement to pay or reimburse the Citibank Open Account
Agent and each Citibank Open Account Bank for each (a) overadvance made pursuant
to Section 4 (iii) of the Citibank Open Account Agreement or (b) “Vendor
Financing” provided for and as defined in Section 5 of the Citibank Open Account
Agreement, together with fees, interest and expenses accruing thereon or that
are otherwise payable with respect thereto.
 
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
 
“Collateral” means any and all personal/movable property owned, leased or
operated by a Person covered by the Collateral Documents and any and all other
personal/movable property of any Loan Party, now existing or hereafter acquired,
that may at any time be or become subject to a security interest, hypothec or
Lien in favor of the Administrative Agent, on behalf of the Lender Parties (to
secure the U.S. Secured Obligations) and the Canadian Lender Parties (to secure
the Canadian Secured Obligations), as the case may be.
 
 
 
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“Collateral Access Agreement” has the meaning assigned to such term in the U.S.
Security Agreement.
 
“Collateral Documents” means, individually and collectively as the context may
require, the Canadian Security Agreement, each additional security and pledge
agreement of a Canadian Loan Party entered into pursuant to Section 5.14(c), the
U.S. Security Agreement, each Collateral Access Agreement, each Trademark
Security Agreement, each Credit Card Notification Agreement, each Deposit
Account Control Agreement, each Lock Box Agreement and each other document
granting a Lien upon the Collateral as security for payment of the Secured
Obligations.
 
“Collection Deposit Account” has the meaning assigned to such term in the U.S.
Security Agreement.
 
“Commercial LC Exposure” means, at any time, the sum of (a) the aggregate
undrawn amount of all outstanding Commercial Letters of Credit at such time plus
(b) the aggregate amount of all LC Disbursements relating to Commercial Letters
of Credit that have not yet been reimbursed by or on behalf of the Borrowers at
such time.  The Commercial LC Exposure of any Revolving Lender at any time shall
be its Applicable Percentage of the total Commercial LC Exposure at such time.
 
“Commercial Letter of Credit” means any Letter of Credit issued for the purpose
of providing the primary payment mechanism in connection with the purchase of
any materials, goods or services by a Borrower in the ordinary course of
business of such Borrower.
 
“Company” means Jones Apparel Group, Inc., a Pennsylvania corporation.
 
“Compliance Certificate” means a certificate, signed and certified as accurate
and complete by a Financial Officer of the Borrower Representative, in
substantially the form of Exhibit D or another form which is mutually acceptable
to the Joint Collateral Agents and the Borrower Representative.
 
“Contract Period” means the term selected by the Canadian Borrower applicable to
Bankers’ Acceptances in accordance with Section 2.21(b).
 
“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or
otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.
 
“Credit Card Accounts Receivable” means (a) any receivables due to any Borrower
from a credit card issuer in connection with purchases of Inventory of such
Borrower on credit cards issued by Visa, MasterCard, American Express, Discover
and any other credit card issuers or providers that are reasonably acceptable to
the Administrative Agent, and (b) debit cards and mall cards issued by issuers
or providers that are reasonably acceptable to the Administrative Agent, in each
case which have been earned by performance by such Borrower but not yet paid to
such Borrower by the credit card issuer or the credit card processor, as
applicable.
 
 
 
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“Credit Card Notification Agreements” means each Credit Card Notification
Agreement, in form and substance satisfactory to the Administrative Agent,
executed by the Borrowers and delivered to the Borrowers’ credit card providers,
as the same may be amended, restated or otherwise modified from time to time.
 
“Credit Exposure” means, as to any Lender at any time, the sum of (a) such
Lender’s Revolving Exposure at such time, plus (b) an amount equal to its
Applicable Percentage, if any, of the aggregate principal amount of Protective
Advances outstanding at such time.
 
“Customer Credit Liability Reserves” means, at any time, the sum of (a) 50% of
the aggregate remaining amount at such time of outstanding gift certificates and
gift cards sold by the Borrowers entitling the holder thereof to use all or a
portion of the certificate or gift card to pay all or a portion of the purchase
price of Inventory and (b) 100% of the aggregate amount at such time of
outstanding customer deposits and merchandise credits entitling the holder
thereof to use all or a portion of such deposit or credit to pay all or a
portion of the purchase price of Inventory.
 
“Default” means any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.
 
“Defaulting Lender” means any Lender, as reasonably determined by the
Administrative Agent, that has (a) failed to fund any portion of its Loans or
participations in Letters of Credit or Swingline Loans within three Business
Days of the date required to be funded by it hereunder, (b) notified any
Borrower, the Administrative Agent, any Issuing Bank, the Swingline Lender or
any Lender in writing that it does not intend to comply with any of its funding
obligations under this Agreement or has made a public statement to the effect
that it does not intend to comply with its funding obligations under this
Agreement or under other agreements in which it commits to extend credit, (c)
failed, within five Business Days after request by the Administrative Agent, to
confirm that it will comply with the terms of this Agreement relating to its
obligations to fund prospective Loans and participations in then outstanding
Letters of Credit and Swingline Loans; provided that any such Lender shall cease
to be a Defaulting Lender under this clause (c) upon receipt of such
confirmation by the Administrative Agent, (d) otherwise failed to pay over to
the Administrative Agent or any other Lender any other amount required to be
paid by it hereunder within three Business Days of the date when due, unless the
subject of a good faith dispute, or (e) (i) become or is insolvent or has a
parent company that has become or is insolvent or (ii) become the subject of a
bankruptcy or insolvency proceeding, or has had a receiver, interim receiver,
receiver and manager, administrator, liquidator, conservator, trustee or
custodian appointed for it, or has taken any action in furtherance of, or
indicating its consent to, approval of or acquiescence in any such proceeding or
appointment or has a parent company that has become the subject of a bankruptcy
or insolvency proceeding, or has had a receiver, interim receiver, receiver and
manager,  liquidator, conservator, administrator, trustee or custodian appointed
for it, or has taken any action in furtherance of, or indicating its consent to,
approval of or acquiescence in any such proceeding or appointment; unless, in
the case of any Lender referred to in this clause (e), the Company, the
Administrative Agent, the Swingline Lender and each Issuing Lender shall
determine in their sole and absolute discretion that such Lender intends and has
the ability, and has all approvals required to enable it, to continue to perform
its obligations as a Lender hereunder in accordance with all of the terms of
this Agreement.
 
 
 
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“Deposit Account Control Agreement” has the meaning assigned to such term in the
U.S. Security Agreement.
 
“Disclosed Matters” means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.
 
“Discount Note” means a non-interest bearing promissory note denominated in
Canadian Dollars, substantially in the form of Exhibit H, issued by the Canadian
Borrower to a Non BA Lender to evidence a BA Equivalent Loan.
 
“Discount Proceeds” means for any Bankers’ Acceptance issued hereunder, an
amount calculated on the applicable date of Borrowing or conversion or
continuation by multiplying (a) the face amount of the Bankers’ Acceptance by
(b) the quotient obtained by dividing (i) one by (ii) the sum of one plus the
product of (A) the Discount Rate applicable to the Bankers’ Acceptance and (B) a
fraction, the numerator of which is the applicable Contract Period and the
denominator of which is 365, with the quotient being rounded up or down to the
fifth decimal place and .00005 being rounded up.
 
“Discount Rate” means with respect to an issue of Bankers’ Acceptances with the
same maturity date, (a) for a Revolving Lender which is a Schedule I Lender, the
CDOR Rate for the appropriate term, and (b) for a Revolving Lender which is not
a Schedule I Lender, the arithmetic average (rounded upwards to the nearest
multiple of 0.01%) of the actual discount rates (expressed as annual rates) for
B/As for such term accepted by three Schedule I banks (that are acceptable to
the Canadian Administrative Agent) in accordance with their normal practices at
or about 10:00 a.m. (Toronto time) on the date of issuance but not to exceed the
actual rate of discount applicable to B/As established pursuant to clause (a)
for the same B/A issue plus 0.1% per annum.
 
“Document” has the meaning assigned to such term in the U.S. Security Agreement.
 
“Documentation Agents” means, individually and collectively as the context may
require, Bank of America, N.A., Wachovia Bank, National Association and SunTrust
Bank, in their respective capacities as documentation agents hereunder, and each
of their successors and assigns in such capacity.
 
“dollars” or “$” refers to lawful money of the United States of America.
 
“Dollar Amount” means (a) with regard to any Obligation or calculation
denominated in dollars, the amount thereof, and (b) with regard to any
Obligation or calculation denominated in an Alternative Currency, the amount of
dollars which is equivalent to the sum of (i) the amount so expressed in an
Alternative Currency at the applicable quoted spot rate on the appropriate page
of the Reuter’s Screen as determined by the Administrative Agent at the relevant
time; plus (ii) any amounts owed by the Borrowers pursuant to Section 2.06(f).
 
 
 
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“Domestic Subsidiary” means each Subsidiary of a Borrower that is organized
under the laws of the United States, any State of the United States or the
District of Columbia.
 
“Dominion Period” means any period (a) during which any Default under paragraph
(a) of Article VII or any Event of Default has occurred and is continuing or (b)
that constitutes a Level 2 Minimum Availability Period; provided that if the
applicable circumstances described in clause (a) or (b)  shall cease to exist
the Borrower may, not more than twice during each period of 12 consecutive
months, request that the Administrative Agent discontinue the applicable
Dominion Period, and the Administrative Agent will promptly comply with such
request and will provide notification of such discontinuance to the Borrower’s
credit card processors.
 
“Draft” means (a) a blank bill of exchange, within the meaning of the Bills of
Exchange Act (Canada), drawn by the Canadian Borrower on a Canadian Lender,
denominated in Canadian Dollars and bearing such distinguishing letters and
numbers as such Canadian Lender may determine, but which at such time, except as
otherwise provided herein, has not been completed or accepted by such Canadian
Lender, or (b) a depository bill within the meaning of the Depository Bills and
Notes Act (Canada); provided, however, that the Canadian Administrative Agent
may require such Canadian Lender to use a general form of Bankers’ Acceptance
satisfactory to the Canadian Borrower and such Canadian Lender, each acting
reasonably, provided by the Canadian Administrative Agent for such purpose in
place of each Canadian Lender’s own form.
 
“EBITDAR” means, for any period, Net Income for such period plus without
duplication and to the extent deducted in determining Net Income for such
period, the sum of (a) Interest Expense for such period, (b) income tax expense
for such period, (c) all amounts attributable to depreciation and amortization
expense for such period, (d) any non-cash charges for such period (but excluding
any non-cash charge in respect of an item that was included in Net Income in a
prior period), (e) cash restructuring charges, cash charges in connection with
store closures and other non-recurring cash charges, in each case related to
cost reduction and brand exiting related activities in an aggregate amount not
to exceed $18,000,000 during the term of this Agreement and (f) Rentals, all
calculated for the Company and its Subsidiaries on a consolidated basis in
accordance with GAAP.
 
“Effective Date” means the date on which the conditions specified in Section
4.01, with respect to the each of the U.S. Commitment and the Canadian
Commitment, are satisfied as provided in Section 4.01 or waived in accordance
with Section 9.02.
 
“Eligible Accounts” means, at any time, the Accounts of a Borrower which the
Joint Collateral Agents determine, in their Permitted Discretion, are eligible
as the basis for the (i) extension of Revolving Loans and Swingline Loans and
(ii) the issuance of Letters of Credit.  Without limiting the Joint Collateral
Agents’ discretion provided herein, Eligible Accounts shall not include any
Account:
 
(a)           which is not subject to a first priority perfected security
interest in favor of the Administrative Agent (for the benefit of the Lender
Parties or the Canadian Lender Parties, as the case may be);
 
 
 
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(b)           which is subject to any Lien other than (i) a Lien in favor of the
Administrative Agent (for the benefit of the Lender Parties or the Canadian
Lender Parties, as the case may be) or (ii) a Permitted Encumbrance which does
not have priority over the Lien in favor of the Administrative Agent (for the
benefit of the Lender Parties or the Canadian Lender Parties, as the case may
be);
 
(c)           which (i) is unpaid more than 90 days after the date of the
original invoice therefor or more than 60 days after the original due date;
provided that (x) no Accounts owing by Specified Customers shall be ineligible
solely as a result of this paragraph (c) except to the extent such Accounts are
unpaid more than 120 days after the date of the original invoice therefor and
(y) the availability represented in the Borrowing Base by such Accounts owing by
Specified Customers that are unpaid more than 90 days but less than 120 days
after the date of the original invoice therefor shall not exceed $15,000,000 at
any time, or (ii) has been written off the books of the Borrower or otherwise
designated as uncollectible;
 
(d)           which is owing by an Account Debtor for which more than 50% of the
Accounts owing from such Account Debtor and its Affiliates are ineligible under
this Agreement (other than as a result of the operation of paragraph (e) below);
 
(e)           which is owing by an Account Debtor to the extent the aggregate
amount of Accounts owing from such Account Debtor and its Affiliates to all the
Borrowers exceeds 20% of the aggregate amount of Eligible Accounts of all the
Borrowers; provided that (i) no Accounts owing by Macy’s, Inc. or its Affiliates
shall be ineligible solely as a result of this paragraph (e) except to the
extent the aggregate amount of Accounts owing from Macy’s, Inc. and its
Affiliates to all the Borrowers exceeds 30% (or, in the case of the Accounts
owing from Macy’s, Inc. and its Affiliates and Wal-Mart Stores, Inc. and its
Affiliates to all the Borrowers exceeds 50%) of the aggregate amount of Eligible
Accounts of all the Borrowers; and (ii) no Accounts owing by Wal-Mart Stores,
Inc. or its Affiliates shall be ineligible solely as a result of this paragraph
(e) except to the extent the aggregate amount of Accounts owing from Wal-Mart
Stores, Inc. and its Affiliates to all the Borrowers exceeds 30% (or, in the
case of the Accounts owing from Macy’s, Inc. and its Affiliates and Wal-Mart
Stores, Inc. and its Affiliates to all the Borrowers exceeds 50%) of the
aggregate amount of Eligible Accounts of all the Borrowers;
 
(f)           with respect to which any (i) covenant has been breached or
(ii)  representation or warranty is not true in all material respects, in each
case to the extent contained in this Agreement, the U.S. Security Agreement or
the Canadian Security Agreement; provided that each such representation and
warranty shall be true and correct in all respects to the extent it is already
qualified by a materiality standard;
 
(g)           which (i) does not arise from the sale of goods or performance of
services in the ordinary course of business, (ii) is not evidenced by an invoice
or other documentation reasonably satisfactory to the Administrative Agent which
has been sent to the Account Debtor, (iii) represents a progress billing, (iv)
is contingent upon the Borrower’s completion of any further performance, (v)
represents a sale on a bill-and-hold, guaranteed sale, sale-and-return, sale on
approval, consignment, cash-on-delivery or any other repurchase or return basis
or (vi) relates to payments of interest;
 
 
 
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(h)           for which the goods giving rise to such Account have not been
shipped to the Account Debtor or for which the services giving rise to such
Account have not been performed by such Borrower or if such Account was invoiced
more than once;
 
(i)           with respect to which any check or other instrument of payment has
been returned uncollected for any reason;
 
(j)           which is owed by an Account Debtor which has (i) applied for,
suffered, or consented to the appointment of any receiver, interim receiver,
custodian, trustee, monitor, administrator, sequestrator or liquidator of its
assets, (ii) has had possession of all or a material part of its property taken
by any receiver, interim receiver, custodian, trustee, monitor, administrator,
sequestrator or liquidator, (iii) filed, or had filed against it, any request or
petition for liquidation, reorganization, arrangement, adjustment of debts,
adjudication as bankrupt, winding-up, or voluntary or involuntary case under any
state, provincial, territorial or federal bankruptcy laws, (iv) has admitted in
writing its inability, or is generally unable to, pay its debts as they become
due, (v) become insolvent, or (vi) ceased operation of its business;
 
(k)           which is owed by any Account Debtor which has sold all or
substantially all of its assets;
 
(l)           which is owed by an Account Debtor which (i) does not maintain its
chief executive office in the U.S. or Canada or (ii) is not organized under
applicable law of the U.S., any state of the U.S., Canada, or any province of
Canada unless, in either case, such Account is backed by a Letter of Credit
acceptable to the Administrative Agent which is in the possession of, has been
assigned to and is directly drawable by the Administrative Agent;
 
(m)           which is owed in any currency other than U.S. or Canadian dollars;
 
(n)           which is owed by (i) the government (or any department, agency,
public corporation, or instrumentality thereof) of any country other than the
U.S. unless such Account is backed by a Letter of Credit acceptable to the
Administrative Agent which is in the possession of the Administrative
Agent,  (ii) the government of the U.S., or any department, agency, public
corporation, or instrumentality thereof, unless the Federal Assignment of Claims
Act of 1940, as amended (31 U.S.C. § 3727 et seq. and 41 U.S.C. § 15 et seq.,
the “Assignment of Claims Act”), has been complied with to the Administrative
Agent’s satisfaction, or (iii) the federal government of Canada, unless the
Financial Administration Act (Canada), as amended, has been complied with to the
Administrative Agent’s satisfaction and any other steps necessary to perfect the
Lien of the Administrative Agent in such Account have been complied with to the
Administrative Agent’s satisfaction; provided that Accounts in an aggregate
amount of up to $7,500,000 that would otherwise be ineligible solely as a result
of non-compliance with the requirements of the Assignment of Claims Act shall
nevertheless be eligible for purposes of clause (ii);
 
 
 
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(o)           which is owed by any Affiliate, employee, officer, director, agent
or stockholder of any Loan Party;
 
(p)           which is owed by an Account Debtor or any Affiliate of such
Account Debtor to which any Loan Party is indebted, but only to the extent of
such indebtedness or is subject to any security, deposit, progress payment,
retainage or other similar advance made by or for the benefit of an Account
Debtor, in each case to the extent thereof;
 
(q)           which is subject to any counterclaim, deduction, defense, setoff
or dispute but only to the extent of any such counterclaim, deduction, defense,
setoff or dispute;
 
(r)           which is evidenced by any promissory note, chattel paper, or
instrument;
 
(s)           which is owed by an Account Debtor located in the States of New
Jersey, Minnesota, Indiana, West Virginia or any other State which requires
filing of a “Notice of Business Activities Report” or other similar report in
order to permit the Borrower to which such Account is owed to seek judicial
enforcement in such jurisdiction of payment of such Account, unless such
Borrower has qualified to do business in New Jersey, Minnesota, Indiana, West
Virginia or such other States, has filed a Notice of Business Activities Report
or similar report with the appropriate Governmental Authority in each such State
and the foregoing is duly effective, or is exempt from such filing requirement;
 
(t)           with respect to which such Borrower has made any agreement with
the Account Debtor for any reduction thereof, other than discounts and
adjustments given in the ordinary course of business, or any Account which was
partially paid and such Borrower created a new receivable for the unpaid portion
of such Account;
 
(u)           which does not comply in all material respects with the
requirements of all applicable laws and regulations, whether Federal, state,
provincial, territorial or local, including without limitation the Federal
Consumer Credit Protection Act, the Federal Truth in Lending Act and Regulation
Z of the Board;
 
(v)           which is for goods that have been sold under a purchase order or
pursuant to the terms of a contract or other agreement or understanding (written
or oral) that indicates or purports that any Person other than such Borrower has
or has had an ownership interest in such goods, or which indicates any party
other than such Borrower as payee or remittance party;
 
(w)           which is a Credit Card Accounts Receivable or Licensee Receivable;
or
 
(x)           which the Joint Collateral Agents, in their Permitted Discretion,
determine may not be paid by reason of the Account Debtor’s inability to pay or
which the Joint Collateral Agents in their Permitted Discretion otherwise
determine is unacceptable for any reason whatsoever.
 
 
 
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In the event that a Financial Officer has knowledge that any Account Debtor with
respect to an Eligible Account ceases to comply with the requirements of
paragraphs (j), (k) or (l), such Borrower or the Borrower Representative shall
notify the Administrative Agent thereof on and at the time of submission to the
Administrative Agent of the next Borrowing Base Certificate.  In determining the
amount of an Eligible Account, the face amount of an Account may, in the Joint
Collateral Agents’ Permitted Discretion, be reduced by, without duplication, to
the extent not reflected in such face amount, (i) the amount of all accrued and
actual discounts, claims, credits or credits pending, promotional program
allowances, price adjustments, finance charges or other allowances (including
any amount that such Borrower may be obligated to rebate to an Account Debtor
pursuant to the terms of any agreement or understanding (written or oral)) and
(ii) the aggregate amount of all cash received in respect of such Account but
not yet applied by such Borrower to reduce the amount of such Account.
 
“Eligible Credit Card Accounts Receivable” means, at any time, the Credit Card
Accounts Receivable of a Borrower which the Joint Collateral Agents determine,
in their Permitted Discretion, are eligible as the basis for the (i) extension
of Revolving Loans and Swingline Loans and (ii) the issuance of Letters of
Credit.  Without limiting the Joint Collateral Agents’ discretion provided
herein, Eligible Credit Card Accounts Receivable shall not include any Credit
Card Accounts Receivable:
 
(a)           which is not earned or does not represent the bona fide amount due
to a Borrower from a credit card processor and/or credit card issuer that
originated in the ordinary course of business of the applicable Borrower;
 
(b)           which is not owned by a Borrower;
 
(c)           in which the payee of such Credit Card Accounts Receivable is a
Person other than a Borrower;
 
(d)           which  does not constitute an Account (as defined in the UCC or
the PPSA, as applicable);
 
(e)           which has been outstanding more than five Business Days;
 
(f)           with respect to which the applicable credit card issuer or credit
card processor has (i) applied for, suffered, or consented to the appointment of
any receiver, interim receiver, custodian, trustee, monitor, administrator,
sequestrator or liquidator of its assets, (ii) has had possession of all or a
material part of its property taken by any receiver, interim receiver,
custodian, trustee, monitor, administrator, sequestrator or liquidator, (iii)
filed, or had filed against it, any request or petition for liquidation,
reorganization, arrangement, adjustment of debts, adjudication as bankrupt,
winding-up, or voluntary or involuntary case under any state, provincial,
territorial or federal bankruptcy laws, (iv) has admitted in writing its
inability, or is generally unable to, pay its debts as they become due, (v)
become insolvent or (vi) ceased operation of its business;
 
(g)           which is not a valid, legally enforceable obligation of the
applicable credit card issuer with respect thereto;
 
 
 
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(h)           which is not subject to a first priority perfected security
interest in favor of the Administrative Agent (for the benefit of the Lender
Parties or the Canadian Lender Parties, as the case may be);
 
(i)           which is subject to any Lien other than (i) a Lien in favor of the
Administrative Agent (for the benefit of the Lender Parties or the Canadian
Lender Parties, as the case may be) and (ii) any Permitted Encumbrances
contemplated by the processor agreements and for which appropriate Reserves (as
determined by the Joint Collateral Agents in their Permitted Discretion) have
been established;
 
(j)           with respect to which any (i) covenant has been breached or (ii)
representation or warranty is not true in all material respects, in each case to
the extent contained in this Agreement, the U.S. Security Agreement, the
Canadian Security Agreement or in the credit card agreements relating to such
Credit Card Accounts Receivable; provided that each such representation and
warranty shall be true and correct in all respects to the extent already
qualified by a materiality standard;
 
(k)           which is subject to risk of set-off, recoupment, non-collection or
not being processed due to unpaid and/or accrued credit card processor fee
balances, to the extent of the lesser of the balance of such Credit Card
Accounts Receivable or unpaid credit card processor fees;
 
(l)           which is evidenced by “chattel paper” or an “instrument” of any
kind unless such “chattel paper” or “instrument” is in the possession of the
Administrative Agent, and to the extent necessary or appropriate, endorsed to
the Administrative Agent;
 
(m)           which the Joint Collateral Agents in their Permitted Discretion
determine may not be paid by reason of the applicable credit card processor’s or
credit card issuer’s inability to pay or which the Joint Collateral Agents in
their Permitted Discretion otherwise determine is unacceptable for any reason
whatsoever;
 
(n)           which represents a deposit or partial payment in connection with
the purchase of Inventory of such Borrower;
 
(o)           which is not subject to a Credit Card Notification Agreement; or
 
(p)           which does not meet such other usual and customary eligibility
criteria for Credit Card Accounts Receivable as the Joint Collateral Agents, in
their Permitted Discretion, may determine from time to time in their Permitted
Discretion.
 
In the event that a Financial Officer has knowledge that any credit card issuer
or processor with respect to Eligible Credit Card Accounts Receivable ceases to
comply with the requirements of clause (f), such Borrower or the Borrower
Representative shall notify the Administrative Agent thereof on and at the time
of submission to the Administrative Agent of the next Borrowing Base
Certificate.  In determining the amount of an Eligible Credit Card Accounts
Receivable, the face amount of a Credit Card Accounts Receivable may, in the
Joint Collateral Agents’ permitted discretion, be reduced by, without
duplication, to the extent not reflected in such face amount, (i) the amount of
all customary fees and expenses in connection with any credit card arrangements
and (ii) the aggregate amount of all cash received in respect thereof but not
yet applied by the Borrower to reduce the amount of such Credit Card Accounts
Receivable.
 
 
 
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“Eligible Domestic Licensee Receivables” means, at any time, that portion of
Eligible Licensee Receivables owed by any Licensee that is organized under the
applicable laws of the U.S., any State of the U.S., Canada or any Province of
Canada.
 
“Eligible Foreign Accounts” means, at any time, the Accounts of a U.S. Borrower
which the Joint Collateral Agents determine, in their Permitted Discretion, are
eligible as the basis for the (i) extension of Revolving Loans and Swingline
Loans and (ii) the issuance of Letters of Credit.  Without limiting the Joint
Collateral Agents’ discretion provided herein, Eligible Foreign Accounts shall
not include any Account:
 
(a)           which does not satisfy all of the criteria set forth in paragraphs
(a) through (k), (o) through (r) and (t) through (x) of the definition of
“Eligible Accounts”;
 
(b)           which is owed by an Account Debtor which is either located in, or
organized under the laws of, any country (other than the U.S., any State of the
U.S., Canada or any Province of Canada) that is not acceptable to the Joint
Collateral Agents in their Permitted Discretion (it being agreed that, for
purposes of this paragraph (b), as of the Effective Date the United Kingdom,
France, Ireland, the Netherlands, Norway, Spain, Germany and Switzerland are
acceptable to the Joint Collateral Agents; it being further agreed that the
Joint Collateral Agents, in their Permitted Discretion, shall have the right to
remove any such countries or add additional countries that are acceptable to
them);
 
(c)           which is owed in any currency that is not acceptable to the Joint
Collateral Agents in their Permitted Discretion (dollars and Canadian Dollars
being acceptable for purposes of this paragraph (c));
 
(d)           which is owed by the government (or any department, agency, public
corporation, or instrumentality thereof) of any country, other than the U.S. and
Canada, unless such Account is backed by a Letter of Credit acceptable to the
Administrative Agent which is in the possession of the Administrative Agent and
any other steps necessary to perfect the Lien of the Administrative Agent in
such Account have been complied with to the Administrative Agent’s satisfaction;
 
(e)           which does not comply in all material respects with all applicable
laws and regulations, whether Federal, state or local; or
 
(f)           which the Joint Collateral Agents, in their Permitted Discretion,
determine may not be paid by reason of the Account Debtor’s inability to pay or
which the Joint Collateral Agents in their Permitted Discretion otherwise
determine is unacceptable for any reason whatsoever.
 
In the event that a Financial Officer has knowledge that any Account Debtor with
respect to an Eligible Foreign Account ceases to comply with the requirements of
paragraphs (j) or (k) of the definition of “Eligible Accounts” (as incorporated
pursuant to paragraph (a)) or paragraph (b), such U.S. Borrower or the Borrower
Representative shall notify the Administrative Agent thereof on and at the time
of submission to the Administrative Agent of the next Borrowing Base
Certificate.  In determining the amount of an Eligible Foreign Account, the face
amount of an Account may, in the Joint Collateral Agents’ Permitted Discretion,
be reduced by, without duplication, to the extent not reflected in such face
amount, (i) the amount of all accrued and actual discounts, claims, credits or
credits pending, promotional program allowances, price adjustments, finance
charges or other allowances (including any amount that such U.S. Borrower may be
obligated to rebate to an Account Debtor pursuant to the terms of any agreement
or understanding (written or oral)) and (ii) the aggregate amount of all cash
received in respect of such Account but not yet applied by such U.S. Borrower to
reduce the amount of such Account.
 
 
 
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“Eligible Foreign Licensee Receivables” means, at any time, that portion of
Eligible Licensee Receivables owed by any Licensee that is organized under the
laws of any country (other than the U.S., any State of the U.S., Canada or any
Province of Canada) which the Joint Collateral Agents determine, in their
Permitted Discretion, are acceptable as the basis for (i) extensions of
Revolving Loans and Swingline Loans and (ii) the issuance of Letters of Credit.
 
“Eligible GRI Accounts” means, at any time, the Accounts of a U.S. Borrower in
which the Account Debtor is GRI or any of its subsidiaries and the Joint
Collateral Agents determine, in their Permitted Discretion, are acceptable as
the basis for (i) extensions of Revolving Loans and Swingline Loans and (ii) the
issuance of Letters of Credit.  Without limiting the Joint Collateral Agents’
discretion provided herein, Eligible GRI Accounts shall not include any Account:
 
(a)           which does not satisfy all of the criteria set forth in paragraphs
(a) through(c), (e) through (k), (p) through (x) of the definition of “Eligible
Accounts”;
 
(b)           which is owed in any currency that is not acceptable to the Joint
Collateral Agents in their Permitted Discretion (U.S. and Canadian Dollars being
acceptable for purposes of this paragraph (b));
 
(c)           which does not comply in all material respects of all applicable
laws and regulations, whether Federal, state or local;
 
(d)           which is an Account of a subsidiary of GRI unless the Joint
Collateral Agents have approved such Account in their sole and absolute
discretion; or
 
(e)           which the Joint Collateral Agents, in their Permitted Discretion,
determine may not be paid by reason of the Account Debtor’s inability to pay or
which the Joint Collateral Agents in their Permitted Discretion otherwise
determine is unacceptable for any reason whatsoever.
 
In the event that a Financial Officer has knowledge that GRI ceases to comply
with the requirements of paragraphs (j) or (k) of the definition of “Eligible
Accounts” (as incorporated pursuant to paragraph (a)), such U.S. Borrower or the
Borrower Representative shall notify the Administrative Agent thereof on and at
the time of submission to the Administrative Agent of the next Borrowing Base
Certificate.  In determining the amount of an Eligible GRI Account, the face
amount of an Account may, in the Joint Collateral Agents’ Permitted Discretion,
be reduced by, without duplication, to the extent not reflected in such face
amount, (i) the amount of all accrued and actual discounts, claims, credits or
credits pending, promotional program allowances, price adjustments, finance
charges or other allowances (including any amount that such U.S. Borrower may be
obligated to rebate to GRI pursuant to the terms of any agreement or
understanding (written or oral)) and (ii) the aggregate amount of all cash
received in respect of such Account but not yet applied by such U.S. Borrower to
reduce the amount of such Account.
 
 
 
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Notwithstanding the foregoing, none of the Accounts of GRI shall constitute
Eligible GRI Accounts at any time that GRI is a Subsidiary.
 
“Eligible GRI Licensee Receivables” means, at any time, that portion of the
Eligible Licensee Receivables owed by GRI or any of its subsidiaries that the
Joint Collateral Agents determine, in their Permitted Discretion, are
acceptable.
 
“Eligible Inventory” means, at any time, the Inventory of a Borrower which the
Joint Collateral Agents determine, in their Permitted Discretion, are eligible
as the basis for the (i) extension of Revolving Loans and Swingline Loans and
(ii) the issuance of Letters of Credit.  Without limiting the Joint Collateral
Agents’ discretion provided herein, Eligible Inventory shall not include any
Inventory:
 
(a)           which is not subject to a first priority perfected Lien in favor
of the Administrative Agent (for the benefit of the Lender Parties or the
Canadian Lender Parties, as the case may be);
 
(b)           which is shipped by a Borrower on F.O.B. destination terms;
provided that up to $2,000,000 at any one time of Inventory that is shipped on
such terms may be included as Eligible Inventory;
 
(c)           which is subject to any Lien other than (i) a Lien in favor of the
Administrative Agent (for the benefit of the Lender Parties or the Canadian
Lender Parties, as the case may be)  and (ii) a Permitted Encumbrance which does
not have priority over the Lien in favor of the Administrative Agent (for the
benefit of the Lender Parties or the Canadian Lender Parties, as the case may
be);
 
(d)           which is, in the Joint Collateral Agents’ Permitted Discretion,
slow moving, obsolete, unmerchantable, defective, used, unfit for sale, not
salable at prices approximating at least the cost of such Inventory in the
ordinary course of business or unacceptable due to age, type, category and/or
quantity;
 
(e)           with respect to which any (i) covenant has been breached or (ii)
representation or warranty is not true and correct in all material respects, in
each case contained in this Agreement, the U.S. Security Agreement or the
Canadian Security Agreement; provided that each such representation and warranty
shall be true and correct in all respects to the extent it is already qualified
by a materiality standard;
 
(f)           in which any Person other than such Borrower shall (i) have any
direct or indirect ownership, interest or title to such Inventory or (ii) be
indicated on any purchase order or invoice with respect to such Inventory as
having or purporting to have an interest therein;
 
 
 
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(g)           which is not finished goods or which constitutes work-in-process,
raw materials, spare or replacement parts, subassemblies, packaging and shipping
material, manufacturing supplies, samples, prototypes, displays or display
items, bill-and-hold goods, goods that are returned or marked for return (other
than Wholesale Inventory that otherwise satisfies the requirements for being
Eligible Inventory and subject to the imposition of Reserves with respect
thereto (as determined by the Joint Collateral Agents in their Permitted
Discretion)), repossessed goods, damaged goods, goods held on consignment, or
goods which are not of a type held for sale in the ordinary course of the
Borrowers’ business;
 
(h)           which is not located in the U.S. or Canada (only with respect to
the Inventory owned by the Canadian Borrower) or is in transit with a common
carrier from vendors and suppliers; provided that, up to the lesser of (x)
$200,000,000 and (y) 33% of the total Revolving Commitment of Inventory in
transit from vendors and suppliers may be included as eligible pursuant to this
paragraph (h) so long as (i) the Administrative Agent shall have received (1)
access, during normal business hours and at other times reasonably requested by
the Administrative Agent, to a true and correct copy of the bill of lading and
other shipping documents for such Inventory, (2) evidence of satisfactory
casualty insurance naming the Administrative Agent as loss payee and otherwise
covering such risks as the Administrative Agent may reasonably request, and (3)
if the bill of lading is (A) non-negotiable and the inventory is in transit
within the United States or in transit to the United States, a duly executed
Collateral Access Agreement from the applicable customs broker for such
Inventory, or (B) negotiable, confirmation that the bill is issued in the name
of a Borrower and consigned to the order of the Administrative Agent, and an
acceptable agreement has been executed with such Borrower’s customs broker, in
which the customs broker agrees that it holds the negotiable bill as agent for
the Administrative Agent and has granted the Administrative Agent access to the
Inventory, (ii) the common carrier is not an Affiliate of the applicable vendor
or supplier and (iii) the customs broker is not an Affiliate of any Borrower;
 
(i)           which is located in any (a) warehouse, cross-docking facility,
distribution center, regional distribution center or depot or (b) any retail
store located in a jurisdiction providing for a common law or statutory
landlord’s lien on the personal property of tenants, which lien would be prior
or superior to that of the Administrative Agent (for the benefit of the Lender
Parties or the Canadian Lender Parties, as the case may be), in each case leased
by the applicable Borrower unless (i) the lessor has delivered to the
Administrative Agent a Collateral Access Agreement or (ii) a Rent Reserve has
been established by the Joint Collateral Agents in their Permitted Discretion
(provided that in the case of any location described in clause (a) above,
(x) unless located in a jurisdiction providing for a common law or statutory
landlord’s lien on the personal property of tenants, such Rent Reserve may be
reduced if a Collateral Access Agreement has subsequently been received by the
Administrative Agent) and (y) unless located in a jurisdiction providing for a
common law or statutory landlord’s lien on the personal property of tenants, no
Rent Reserve shall be established prior to the sixty-first day following the
Effective Date;
 
 
 
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(j)           which is located in any third party warehouse or is in the
possession of a bailee (other than a third party processor) and is not evidenced
by a Document (other than bills of lading to the extent permitted pursuant to
paragraph (h) above), unless (i) such warehouseman or bailee has delivered to
the Administrative Agent a Collateral Access Agreement and such other
documentation as the Administrative Agent may require in its Permitted
Discretion or (ii) an appropriate Reserve has been established by the Joint
Collateral Agents in their Permitted Discretion (which Rent Reserve may be
reduced if a Collateral Access Agreement has subsequently been received by the
Administrative Agent);
 
(k)           which is at a third party location or outside processor, or is
in-transit to or from said third party location or outside processor (other than
Inventory permitted to be included under paragraph (h) above);
 
(l)           which is a discontinued product or component thereof unless and to
the extent that the salability thereof is not adversely impacted;
 
(m)           which is the subject of a consignment by such Borrower as
consignor; provided that up to $25,000,000 of Inventory that is consigned to a
third Person shall be Eligible Inventory if (i) it satisfies the other
requirements for being Eligible Inventory, (ii) each applicable consignee has
delivered to the Administrative Agent a Collateral Access Agreement and such
other documentation as the Administrative Agent may require and (iii) such
consigned Inventory is, in the reasonable determination of the Joint Collateral
Agents, identifiable and traceable.
 
(n)           which contains or bears any intellectual property rights licensed
to such Borrower unless the Administrative Agent is satisfied that it may sell
or otherwise dispose of such Inventory without (i) infringing the rights of such
licensor, (ii) violating any contract with such licensor, or (iii) incurring any
liability with respect to payment of royalties other than royalties incurred
pursuant to sale of such Inventory under the current licensing agreement;
 
(o)           which is not reflected in a current perpetual inventory report of
such Borrower (unless such Inventory is reflected in a report to the
Administrative Agent as “in transit” Inventory);
 
(p)           which does not conform in all material respects to all standards
imposed by any Governmental Authority;
 
(q)           for which reclamation rights have been asserted by the seller; or
 
(r)           which the Joint Collateral Agents, in their Permitted Discretion,
otherwise determine is unacceptable for any reason whatsoever including, without
limitation, to address potential rights of vendors with respect to in transit
Inventory;
 
 
 
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provided that in determining the value of the Eligible Inventory, such value
shall be reduced by, without duplication, any amounts representing (a) Vendor
Rebates; (b) costs included in Inventory relating to advertising; (c) the shrink
reserve; (d) the unreconciled discrepancy between the general inventory ledger
and the perpetual Inventory ledger, to the extent the general Inventory ledger
reflects less Inventory than the perpetual inventory ledger; and (e) a reserve
for Inventory which is designated or demanded to be returned to or retained by
the applicable vendor or which is recognized as damaged or off quality by the
applicable Borrower.
 
In the event that a Financial Officer has knowledge that Inventory at any
location having a fair market value of $7,500,000 or more which was previously
Eligible Inventory ceases to be Eligible Inventory hereunder, such Borrower or
the Borrower Representative shall notify the Joint Collateral Agents thereof on
and at the time of submission to the Administrative Agent of the next Borrowing
Base Certificate.
 
“Eligible Licensee Receivables” means, at any time, the Licensee Receivables
payable by a Licensee which the Joint Collateral Agents determine, in their
Permitted Discretion, are eligible as the basis for the (i) extension of
Revolving Loans and Swingline Loans and (ii) the issuance of Letters of
Credit.  Without limiting the Joint Collateral Agents’ discretion provided
herein, Eligible Licensee Receivables shall not include any Licensee Receivable:
 
(a)           which does not represent (i) a fixed contractual minimum amount
irrevocably payable  not less than quarterly under the applicable licensing
agreement or (ii) a contractual amount based on the net sales of the Licensee
that is payable at such times and on such terms and conditions as is acceptable
to the Administrative Agent in all respects;
 
(b)           which is not subject to a first priority perfected security
interest in favor of the Administrative Agent (for the benefit of the Lender
Parties or the Canadian Lender Parties, as the case may be);
 
(c)           which is subject to any Lien other than (i) a Lien in favor of the
Administrative Agent (for the benefit of the Lender Parties or the Canadian
Lender Parties, as the case may be) and (ii) any Permitted Encumbrances which do
not have priority over the Lien in favor of the Administrative Agent (for the
benefit of the Lender Parties or the Canadian Lender Parties, as the case may
be);
 
(d)           which (i) is unpaid more than 60 days after the original due date
or (ii) has been written off the books of the Borrower or otherwise designated
as uncollectible;
 
(e)           which is owing by a Licensee for which more than 50% of the
Licensee Receivables owing from such Licensee and its Affiliates are ineligible
hereunder (other than as a result of the operation of paragraph (f) below);
 
(f)           which is owing by a Licensee to the extent the aggregate amount of
Licensee Receivables owing from such Licensee and its Affiliates to all the
Borrowers exceeds 20% of the aggregate amount of Eligible Licensee Receivables
of all the Borrowers;
 
 
 
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(g)           with respect to which any (i) covenant has been breached or
(ii)  representation or warranty is not true in all material respects, in each
case to the extent contained in this Agreement, the U.S. Security Agreement or
the Canadian Security Agreement; provided that each such representation and
warranty shall be true and correct in all respects to the extent it is already
qualified by a materiality standard;
 
(h)           which does not arise from the licensing of intellectual property
of the Borrowers in the ordinary course of business;
 
(i)           with respect to which any check or other instrument of payment has
been returned uncollected for any reason;
 
(j)           which is owed by any Licensee which has (i) applied for, suffered,
or consented to the appointment of any receiver, interim receiver custodian,
trustee, monitor, administrator, sequestrator or liquidator of its assets, (ii)
has had possession of all or a material part of its property taken by any
receiver, interim receiver custodian, trustee, monitor, administrator,
sequestrator or liquidator, (iii) filed, or had filed against it, any request or
petition for liquidation, reorganization, arrangement, adjustment of debts,
adjudication as bankrupt, winding-up, or voluntary or involuntary case under any
state or federal bankruptcy laws, (iv) has admitted in writing its inability, or
is generally unable to, pay its debts as they become due, (v) become insolvent,
or (vi) ceased operation of its business;
 
(k)           which is owed by any Licensee which has sold all or substantially
all of its assets;
 
(l)           which is denominated in or owed in any currency other than U.S. or
Canadian dollars (unless a currency swap or similar hedge approved by the
Administrative Agent has been entered into with respect to such Licensee
Receivable the effect of which is to cause payment to be denominated in dollars)
or payable in a jurisdiction other than the U.S. or Canada;
 
(m)           which is owed by (i) the government (or any department, agency,
public corporation, or instrumentality thereof) of any country other than the
U.S. unless such Licensee Receivable is backed by a Letter of Credit acceptable
to the Administrative Agent which is in the possession of the Administrative
Agent, (ii) the government of the U.S., or any department, agency, public
corporation, or instrumentality thereof, unless the  Assignment of Claims Act
has been complied with to the Administrative Agent’s satisfaction or (iii) the
federal government of Canada unless the Financial Administration Act (Canada),
as amended, has been complied with to the Administrative Agent’s satisfaction
and any other steps necessary to perfect the Lien of the Administrative Agent in
such Account have been complied with to the Administrative Agent’s satisfaction;
 
(n)           which is owed by any Affiliate, employee, officer, director, agent
or stockholder of any Loan Party; provided that the Licensee Receivables for
which GRI is a Licensee shall be excepted from this paragraph;
 
 
 
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(o)           which is owed by a Licensee or any Affiliate of a Licensee to
which any Loan Party is indebted, but only to the extent of such indebtedness or
is subject to any security, deposit, progress payment, retainage or other
similar advance made by or for the benefit of a Licensee, in each case to the
extent thereof;
 
(p)           which is owed by a Licensee or any Affiliate of a Licensee that is
a supplier to any Loan Party to the extent of any amounts that may be set-off by
such supplier against the Licensee Receivable of such Loan Party;
 
(q)           which is subject to any counterclaim, deduction, defense, setoff
or dispute but only to the extent of any such counterclaim, deduction, defense,
setoff or dispute;
 
(r)           which is owed by a Licensee located in the States of New Jersey,
Minnesota, Indiana, West Virginia or any other State which requires filing of a
“Notice of Business Activities Report” or other similar report in order to
permit the Borrower to which such Licensee Receivable is owed to seek judicial
enforcement in such jurisdiction of payment of such Licensee Receivable, unless
such Borrower has qualified to do business in New Jersey, Minnesota, Indiana,
West Virginia or such other States, has filed a Notice of Business Activities
Report or similar report with the appropriate Governmental Authority in each
State and the foregoing is duly effective, or is exempt from such filing
requirement;
 
(s)           with respect to which such Borrower has made any agreement with
the Licensee for any reduction thereof, other than discounts and adjustments
given in the ordinary course of business, or any Licensee Receivable which was
partially paid and such Borrower created a new receivable for the unpaid portion
of such Licensee Receivable;
 
(t)           which does not comply in all material respects with the
requirements of all applicable laws and regulations, whether Federal, state or
local, including without limitation  (to the extent applicable) the Federal
Consumer Credit Protection Act, the Federal Truth in Lending Act and Regulation
Z of the Board;
 
(u)           which is with respect to trademarks of a Borrower for which any
claim has been asserted or made that challenges the enforceability of the
applicable trademark pursuant to which such Licensee Receivable relates;
 
(v)           which did not arise under a licensing agreement that (i) cannot be
canceled by the Licensee during its stated term (other than as a result of the
failure of the applicable Borrower to comply with the terms thereof), (ii) is
assignable by the applicable Borrower and (iii) has at least six months
remaining on the term of such agreement;
 
(w)           which did not arise from a completed and bona fide transaction,
except to the extent that the applicable licensing agreement provides for the
payment of fixed amounts regardless of any performance or non-performance
thereunder;
 
 
 
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(x)           which does not constitute an “account” or “chattel paper” within
the meaning of the UCC or the PPSA of the state or province in which the
applicable Borrower is located;
 
(y)           which, to the knowledge of the Borrowers, is not in full force and
effect or does not constitute a legal, valid and binding obligation of the
Licensee enforceable in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium and other similar
laws affecting the enforcement of creditors’ rights generally and by general
equity principles; or
 
(z)           which the Joint Collateral Agents, in their Permitted Discretion,
determine may not be paid by reason of the Licensee’s inability to pay or which
the Joint Collateral Agents in their Permitted Discretion otherwise determine is
unacceptable for any reason whatsoever.
 
In the event that a Financial Officer has knowledge that any Licensee with
respect to an Eligible Licensee Receivable ceases to comply with the
requirements of paragraphs (f), (j) or (k), such Borrower or the Borrower
Representative shall notify the Administrative Agent thereof on and at the time
of submission to the Administrative Agent of the next Borrowing Base
Certificate.  In determining the amount of an Eligible Licensee Receivable, the
face amount of a Licensee Receivable may, in the Joint Collateral Agents’
Permitted Discretion, be reduced by, without duplication, to the extent not
reflected in such face amount, (i) the amount of all accrued and actual
discounts, claims, credits or credits pending, promotional program allowances,
price adjustments, finance charges or other allowances (including any amount
that such Borrower may be obligated to rebate to Licensee pursuant to the terms
of any agreement or understanding (written or oral)) and (ii) the aggregate
amount of all cash received in respect of such Licensee Receivable but not yet
applied by such Borrower to reduce the amount of such Licensee Receivable.
 
“Eligible Retail Inventory” means Eligible Inventory that is Retail Inventory.
 
“Eligible Wholesale Inventory” means Eligible Inventory that is Wholesale
Inventory.
 
“Energie Knitwear” means Energie Knitwear, Inc., a Delaware corporation.
 
“Environmental Laws” means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority relating in any way to
the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or to health
and safety matters.
 
“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of any Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) any violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
 
 
 
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“Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
equity interest.
 
“Equivalent Amount” means, on any date, the amount of dollars into which an
amount of Canadian Dollars may be converted or the amount of Canadian Dollars
into which an amount of dollars may be converted, in each case, at the Canadian
Administrative Agent’s spot buying rate in Toronto as at approximately 12:00
noon (Toronto time) on such date.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
 
“ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with a Borrower, is treated as a single employer under Section
414(b), (c), (m) or (o) of the Code.
 
“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Pension Plan (other
than an event for which the 30-day notice period is waived); (b) the failure by
any Pension Plan to satisfy any minimum funding standard (as defined in Section
412 of the Code or Section 302 of ERISA) applicable to such Pension Plan,
whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or
Section 302(c) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Pension Plan; (d) the incurrence by any Borrower or
any of its ERISA Affiliates of any liability under Title IV of ERISA with
respect to the termination of any Pension Plan; (e) the taking of any steps by
any Borrower or any ERISA Affiliate to terminate any Pension Plan or the receipt
by any Borrower or any ERISA Affiliate from the PBGC or a plan administrator of
any notice relating to an intention to terminate any Pension Plan or Pension
Plans or to appoint a trustee to administer any Pension Plan; (f) the incurrence
by any Borrower or any of its ERISA Affiliates of any liability with respect to
the withdrawal or partial withdrawal from any Pension Plan or Multiemployer
Plan; (g) the receipt by any Borrower or any ERISA Affiliate of any notice, or
the receipt by any Multiemployer Plan from any Borrower or any ERISA Affiliate
of any notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, in endangered
or critical status, within the meaning of Section 305 of ERISA; (h) the adoption
of an amendment to any Pension Plan that, pursuant to Section 401(a)(29) of the
Code, would result in the loss of tax-exempt status of the trust of which such
Pension Plan is a part if any Borrower or any of its ERISA Affiliates fails to
timely provide security to such Pension Plan in accordance with the provisions
of said Section; or (i) a contribution failure has occurred with respect to any
Pension Plan sufficient to give rise to a lien under Section 303(k) of ERISA.
 
“Euro” means the single currency of the Participating Member States as
constituted by the Treaty on European Union and as referred to in the
legislative measures of the Participating Member States for the introduction of,
change over to or operation of the Euro in one or more member states.
 
 
 
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“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Adjusted LIBO Rate.
 
“Event of Default” has the meaning assigned to such term in Article VII.
 
“Excluded Taxes” means, with respect to the Administrative Agent, any Lender,
any Issuing Bank or any other recipient of any payment to be made by or on
account of any obligation of any Borrower under any Loan Document, (a) income or
franchise taxes imposed on (or measured by) its net income by the United States
of America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which such recipient is located and (c) any U.S.
federal withholding tax that is imposed on amounts payable to such recipient
(other than an assignee pursuant to a request by a Borrower under Section
2.19(b)) at the time such recipient becomes a party to this Agreement (or
designates a new lending office) or is attributable to such recipient’s failure
to comply with Section 2.17(f), except to the extent that such recipient (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 Borrowers with
respect to such withholding tax pursuant to Section 2.17(a).
 
“Existing Debt Securities” means, individually and collectively as the context
may require, the 4.250% Senior Notes of the Company due 2009, the 5.125% Senior
Notes of the Company due 2014 and the 6.125% Senior Notes of the Company due
2034.
 
“Existing Debt Securities Reserve” means with respect to the Existing Debt
Securities, as of any date during any Dominion Period, the sum of (a) an amount
equal to all remaining principal payments due in respect thereof through and
including the Maturity Date plus (b) an amount equal to the interest to be paid
thereon on the next interest payment date following such date which, in each
case, shall, at the request of the Borrowers, be released if and to the extent
each such amount is paid in full in cash.
 
“Existing Letters of Credit” means the letters of credit referred to on Schedule
2.06(1) hereto, which letters of credit have been issued by an Issuing Bank or a
Lender.
 
“Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it.
 
 
 
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“Financial Officer” means the chief financial officer, principal accounting
officer, treasurer or controller of a Borrower.
 
“First-Tier Foreign DRE” means any Foreign DRE (other than Jones Canada LP and
Nine West Melbourne Pty Ltd., an Australian corporation) that is owned directly,
or indirectly through one or more Foreign DREs, by a U.S. Borrower or a Domestic
Subsidiary; provided that if Nine West Melbourne Pty Ltd. is not dissolved in
the entirety on or prior to the sixtieth day following the Effective Date (or
such later date that may be approved by the Administrative Agent in its
discretion), it shall be a First-Tier Foreign DRE as of such date.
 
“First-Tier Foreign Subsidiary” means any Foreign Subsidiary (other than a
Foreign DRE and Asia Expert Limited, a Hong Kong corporation), owned directly by
one or more of the U.S. Borrowers, the Domestic Subsidiaries, or the First-Tier
Foreign DREs; provided that if Asia Expert Limited is not dissolved in the
entirety on or prior to the sixtieth day following the Effective Date (or such
later date that may be approved by the Administrative Agent in its discretion),
it shall be a First-Tier Foreign Subsidiary as of such date.
 
“Fixed Charges” means, with reference to any period, without duplication, cash
Interest Expense (including, without limitation, any interest portion of Capital
Lease Obligation payments), plus Rentals, plus prepayments and scheduled
principal payments on Indebtedness made during such period, plus cash taxes paid
(net of cash refunds), plus dividends, distributions or redemptions of Equity
Interests paid in cash, plus Capital Lease Obligation payments, plus normal cash
contributions to any Pension Plan (which shall exclude 401(k) and other defined
contribution plans), all calculated for the Company and its Subsidiaries on a
consolidated basis; provided, however, that Fixed Charges shall not include any
amounts paid on the Existing Debt Securities that are maturing in November 2009.
 
“Fixed Charge Coverage Ratio” means the ratio, as determined at the end of any
Test Period, of (a) EBITDAR minus the unfinanced portion of Capital Expenditures
to (b) Fixed Charges, all calculated for the Company and its Subsidiaries on a
consolidated basis in accordance with GAAP.
 
“Foreign DRE” means a Foreign Subsidiary that for U.S. federal income tax
purposes is classified as a partnership or that is “disregarded as an entity
separate from its owner” (within the meaning of Treas. Reg. § 301.7701-3), but
not any such Foreign Subsidiary whose assets consist solely of stock of a
“controlled foreign corporation” (within the meaning of Section 957(a) of the
Code).
 
“Foreign Subsidiary” means each Subsidiary of a Borrower that is not a Domestic
Subsidiary.
 
“Funding Accounts” has the meaning assigned to such term in Section 4.01(g).
 
“GAAP” means generally accepted accounting principles in the United States of
America.
 
“Governmental Authority” means the government of the United States, Canada, any
other nation or any political subdivision thereof, whether state, provincial or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
 
 
 
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“GRI” means GRI Group Limited, a British Virgin Islands company.
 
“Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.
 
“Guaranteed Obligations” has the meaning assigned to such term in Section 10.01.
 
“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.
 
“High Season” means all times other than Low Season.
 
“Indebtedness” of any Person means, without duplication, (a) all obligations of
such Person for borrowed money (including, without limitation, the Existing Debt
Securities), (b) all obligations of such Person evidenced by bonds, debentures,
notes or similar instruments, (c) all obligations of such Person under
conditional sale or other title retention agreements relating to property
acquired by such Person, (d) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business, deferred compensation and
any purchase price adjustment, earnout or deferred payments of a similar
nature), (e) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed; provided that if recourse for the
payment of such Indebtedness is limited exclusively to such property and such
Person has absolutely no personal liability with respect thereto, the amount of
such Indebtedness shall equal the lesser of (A) the fair market value of such
property and (B) the amount of Indebtedness so secured, (f) all Guarantees by
such Person of Indebtedness of others, (g) all Capital Lease Obligations of such
Person, (h) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and letters of guaranty, (i) all
obligations, contingent or otherwise, of such Person in respect of bankers’
acceptances, (j) obligations under any liquidated earn-out and (k) any other
Off-Balance Sheet Liability.  The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person’s ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor.  Notwithstanding the foregoing, Indebtedness shall not
include (x) unsecured trade payables that are paid to banks financing vendor
receivables in the ordinary course of business of the Borrowers to the extent
any such trade payables are deemed to be indebtedness solely as a result of
requirements under GAAP and (y) operating leases as defined under GAAP as of the
Effective Date to the extent that such leases are deemed to be Indebtedness
solely as a result of any change in the requirements under GAAP after the
Effective Date.
 
 
 
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“Indemnified Taxes” means Taxes (including Other Taxes) other than Excluded
Taxes.
 
“Indenture” means the Indenture, dated as of November 22, 2004, as the same may
be amended, supplemented or otherwise modified from time to time in accordance
with Section 6.11, among the Company, Jones Holdings, Jones Apparel USA, Nine
West Footwear and Jones Retail, as issuers, and U.S. Bank as successor in
interest to SunTrust Bank, as trustee.
 
“Information Memorandum” means the Confidential Information Memorandum dated
April 2009 relating to the Borrowers and the Transactions.
 
“Interest Election Request” means a request by the Borrower Representative to
convert or continue a Revolving Borrowing in accordance with Section 2.08.
 
“Interest Expense” means, with reference to any period, total interest expense
(including that attributable to Capital Lease Obligations) of the Company and
its Subsidiaries for such period with respect to all outstanding Indebtedness of
the Company and its Subsidiaries (including all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers’ acceptance
financing and net costs under Swap Agreements in respect of interest rates to
the extent such net costs are allocable to such period in accordance with GAAP),
calculated on a consolidated basis for the Company and its Subsidiaries for such
period in accordance with GAAP.
 
“Interest Payment Date” means (a) with respect to any ABR Loan and Canadian
Prime Rate Loan (other than a Swingline Loan), the first day of each calendar
month and the Maturity Date, and (b) with respect to any Eurodollar Loan, the
last day of the Interest Period applicable to the Borrowing of which such Loan
is a part and, in the case of a Eurodollar Loan with an Interest Period of more
than three months’ duration, each day prior to the last day of such Interest
Period that occurs at intervals of three months’ duration after the first day of
such Interest Period and the Maturity Date.
 
 
 
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“Interest Period” means with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower Representative may elect; provided that (i) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless, in the case
of a Eurodollar Borrowing only, such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day and (ii) any Interest Period pertaining to a
Eurodollar Borrowing that commences on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period.  For purposes hereof, the date
of a Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
 
“Inventory” has the meaning assigned to such term in the U.S. Security
Agreement.
 
“Investment” by any Person in any other Person means (i) any direct or indirect
loan, advance or other extension of credit or capital contribution to or for the
account of such other Person (by means of any transfer of cash or other property
to any Person or any payment for property or services for the account or use of
any Person, or otherwise), (ii) any direct or indirect purchase or other
acquisition of any Equity Interests, bond, note, debenture or other debt or
equity security or evidence of Indebtedness, or any other ownership interest
(including, any option, warrant or any other right to acquire any of the
foregoing), issued by such other Person, whether or not such acquisition is from
such or any other Person, (iii) any direct or indirect payment by such Person on
a Guarantee of any obligation of or for the account of such other Person or any
direct or indirect issuance by such Person of such a Guarantee (provided,
however, that for purposes of Section 6.04, payments under Guarantees not
exceeding the amount of the Investment attributable to the issuance of such
Guarantee will not be deemed to result in an increase in the amount of such
Investment) or (iv) any other investment of cash or other property by such
Person in or for the account of such other Person.  Any repurchase by any
Borrower of its own Equity Interests or Indebtedness shall not constitute an
Investment for purposes of this Agreement.  The amount of any Investment shall
be the original principal or capital amount thereof less all returns of
principal or equity thereon (and without adjustment by reason of the financial
condition of such other Person) and shall, if made by the transfer or exchange
of property other than cash, be deemed to have been made in an original
principal or capital amount equal to the fair market value of such property at
the time of such transfer or exchange.
 
“Investment Basket” has the meaning assigned to such term in Section 6.04(c).
 
“IP Secured Financing” means a transaction or series of substantially
contemporaneous transactions pursuant to which one or more of the Borrowers
incur Indebtedness, on terms reasonably satisfactory to the Administrative
Agent, in an aggregate principal amount of not less than $150,000,000 that is
secured exclusively by the Borrowers’ registered intellectual property; provided
that (a) substantially concurrently with the incurrence of such Indebtedness (i)
the Administrative Agent has (A) been granted a second priority perfected
security interest in such registered intellectual property and (B) entered into
an intercreditor agreement with the issuer of such Indebtedness, in each case on
terms that are in form and substance satisfactory to the Administrative Agent,
(ii) the Administrative Agent has been granted, on terms satisfactory to it, a
royalty-free license with respect to such intellectual property to the extent
any such intellectual property is used in connection with or affixed to any of
the Collateral and (iii) all of the Net Proceeds of such Indebtedness have been
applied to prepay the Revolving Loans then outstanding as provided in Section
2.11(e); and (b) no Default or Event of Default has occurred and is continuing
immediately prior to or after giving effect to the incurrence of such
Indebtedness.
 
 
 
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“IRS” means the United States Internal Revenue Service.
 
“Issuing Banks” means, individually and collectively as the context may require,
(a) in the case of each Letter of Credit, other than the Existing Letters of
Credit, Chase, Wachovia Bank, National Association and any other Lender proposed
by the Borrower Representative that is reasonably acceptable to the
Administrative Agent, each in its capacity as an issuer of Letters of Credit
hereunder, and its successors and assigns in such capacity as provided in
Section 2.06(j); and (b) in the case of each Existing Letter of Credit, the
issuer thereof under the Prior Credit Agreement, and its successors and assigns
in such capacity as provided in Section 2.06(j).  Each Issuing Bank referred to
in clause (a) of this definition, may, in its sole  discretion, arrange for one
or more Letters of Credit to be issued by Affiliates of such Issuing Bank, in
which case the term “Issuing Bank” shall include any such Affiliate with respect
to Letters of Credit issued by such Affiliate.
 
“ITA” means the Income Tax Act (Canada), as amended.
 
“Joinder Agreement” has the meaning assigned to such term in Section 5.14(a).
 
“Joint Bookrunners” means, individually and collectively as the context may
require, J.P. Morgan Securities Inc., Citigroup Global Markets Inc., Banc of
America Securities LLC, Wachovia Capital Markets LLC, SunTrust Robinson
Humphrey, Inc. and General Electric Capital Corporation, in their respective
capacities as joint bookrunners hereunder, and each of their successors and
assigns in such capacity.
 
“Joint Collateral Agents” means, individually and collectively as the context
may require, Chase and General Electric Capital Corporation, in their respective
capacities as joint collateral agents hereunder, and each of their successors
and assigns in such capacity; provided that if one or more of the Joint
Collateral Agents shall resign as provided in Section 8.02, reference to the
Joint Collateral Agents shall refer to the Sole Remaining Collateral Agent or
the Sole Successor Collateral Agent, as the case may be.
 
“Joint Lead Arrangers” means, individually and collectively as the context may
require, J.P. Morgan Securities Inc. and Citigroup Global Markets Inc., in their
capacity as joint lead arrangers, and each of their successors and assigns in
such capacity.
 
“Jones Apparel USA” means Jones Apparel Group USA, Inc., a Delaware corporation.
 
“Jones Canada GP” means Jones Canada, Inc., an Ontario corporation.
 
 
 
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“Jones Canada LP” means Jones Apparel Group Canada ULC, a Nova Scotia unlimited
liability company.
 
“Jones Holdings” means Jones Apparel Group Holdings, Inc., a Delaware
corporation.
 
“Jones Investment” means Jones Investment Co. Inc., a Delaware corporation.
 
“Jones Jeanswear” means Jones Jeanswear Group, Inc., a New York corporation.
 
“Jones Retail” means Jones Retail Corporation, a New Jersey corporation.
 
“LC Collateral Account” has the meaning assigned to such term in Section
2.06(k).
 
“LC Disbursement” means a payment made by an Issuing Bank pursuant to a Letter
of Credit, including in respect of a time draft presented thereunder; provided
that, with respect to any component of any such amount in an Alternative
Currency under a U.S. Letter of Credit, such amount shall be the Dollar Amount
thereof.  The date of an LC Disbursement shall be the date of payment by the
applicable Issuing Bank under a Letter of Credit or a time draft presented
thereunder, as the case may be.
 
“LC Exposure” means, at any time, the sum of the U.S. LC Exposure and the
Canadian LC Exposure.
 
“L.E.I.” means L.E.I. Group, Inc., a Delaware corporation.
 
“Lender Parties” means, individually and collectively as the context may
require, the Agents, the Lenders and the Issuing Banks.
 
“Lenders” means, individually and collectively as the context may require, the
Canadian Lenders and the U.S. Lenders.  Unless the context otherwise requires,
the term “Lenders” includes the Swingline Lender.
 
“Letter of Credit” means any Commercial Letter of Credit or Standby Letter of
Credit issued pursuant to this Agreement.  Without limiting the foregoing, (a)
Letters of Credit shall include any time draft presented under a Letter of
Credit and (b) the Existing Letters of Credit shall be deemed Letters of Credit
issued under this Agreement.
 
“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, the rate appearing on Reuters Screen LIBOR01 Page (or on any successor
or substitute page of such Service, or any successor to or substitute for such
Service, providing rate quotations comparable to those currently provided on
such page of such Service, as determined by the Administrative Agent from time
to time for purposes of providing quotations of interest rates applicable to
dollar deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for dollar deposits having a maturity comparable to such
Interest Period.  In the event that such rate is not available at such time for
any reason, then the “LIBO Rate” with respect to such Eurodollar Borrowing for
such Interest Period shall be the rate at which dollar deposits of $5,000,000
and for a maturity comparable to such Interest Period are offered by the
principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
 
 
 
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“Licensee” means any Person (other than a natural person) that licenses
trademarks of one or more of the Borrowers.
 
“Licensee Receivable” means any receivables due to any Borrower from a Licensee
that arise as a result of such Licensee manufacturing, selling or distributing
goods utilizing or incorporating trademarks of such Borrower.
 
“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of
such asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
 
“Loan Documents” means, individually and collectively as the context may
require, this Agreement, any promissory notes issued pursuant to this Agreement,
any Letters of Credit applications, the Collateral Documents, the Loan Guaranty,
the Canadian Guarantee and each additional guaranty entered into by a Canadian
Loan Party pursuant to Section 5.14(c), the Post-Closing Deliverables Agreement
and all other agreements, instruments, documents and certificates identified in
Section 4.01 executed and delivered to, or in favor of, the Administrative
Agent, the Canadian Administrative Agent or any Lenders and including all other
pledges, powers of attorney, consents, assignments, contracts, notices, letter
of credit agreements and all other written matter whether heretofore, now or
hereafter executed by or on behalf of any Loan Party, or any employee or partner
of any Loan Party, and delivered to the Administrative Agent, the Canadian
Administrative Agent or any Lender in connection with this Agreement or the
transactions contemplated thereby.  Any reference in this Agreement or any other
Loan Document to a Loan Document shall include all appendices, exhibits or
schedules thereto, and all amendments, restatements, supplements or other
modifications thereto, and shall refer to this Agreement or such Loan Document
as the same may be in effect at any and all times such reference becomes
operative.  For the avoidance of doubt, the Open Account Agreements, the Swap
Agreements and the agreements pursuant to which Banking Services are provided
shall not constitute Loan Documents.
 
“Loan Guarantor” means (a) with respect to the U.S. Obligations, each Loan Party
(other than the Canadian Loan Parties) and any other Person that becomes a U.S.
Loan Guarantor pursuant to Section 5.14(a); and (b) with respect to the Canadian
Obligations, each Loan Party (other than the Canadian Borrower) and any other
Person that becomes a Loan Guarantor pursuant to Section 5.14 (a) and (c).
 
“Loan Guaranty” means Article X of this Agreement.
 
 
 
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“Loan Parties” means, individually and collectively as the context may require,
the U.S. Loan Parties and the Canadian Loan Parties.
 
“Loans” means the loans and advances made by the Lenders pursuant to this
Agreement, including Swingline Loans and Protective Advances.
 
“Lock Box Agreement” means, individually and collectively as the context may
require, each “Lock Box Agreement” referred to in the U.S. Security Agreement.
 
“Low Season” means, for any period of determination of the Borrowing Base with
respect to Wholesale Inventory, the periods (a) (i) commencing March 1 of each
year and ending May 30 of such year and (ii) commencing October 1 of each year
and ending December 31 of such year, and (b) such other periods that have been
approved by the Administrative Agent and are identified as the “low season” in
the most recent appraisal delivered from the time pursuant to this Agreement.
 
“Material Adverse Effect” means a material adverse effect on (a) the business,
assets, property, operations, prospects or condition, financial or otherwise, of
the Company and its Subsidiaries, taken as a whole, (b) the ability of any Loan
Party to perform any of its obligations under the Loan Documents to which it is
a party, (c) the Collateral, the Administrative Agent’s Liens (for the benefit
of the Lender Parties or the Canadian Lender Parties, as the case may be) on the
Collateral or the priority of such Liens or (d) the rights of or benefits
available to the Administrative Agent, any other Agent, the Issuing Banks or the
Lenders under the Loan Documents.
 
“Material Indebtedness” means Indebtedness (other than the Loans and Letters of
Credit) or obligations in respect of one or more Swap Agreements, of any one or
more of the Company and its Subsidiaries in an aggregate principal amount
exceeding $50,000,000.  For purposes of determining Material Indebtedness, the
“obligations” of any Borrower or any Subsidiary in respect of any Swap Agreement
at any time shall be the maximum aggregate amount (giving effect to any netting
agreements) that such Borrower or such Subsidiary would be required to pay if
such Swap Agreement were terminated at such time.
 
“Maturity Date” means May 13, 2012 or any earlier date on which the Revolving
Commitments are reduced to zero or otherwise terminated pursuant to the terms
hereof.
 
“Maximum Liability” has the meaning assigned to such term in Section 10.08.
 
“Maximum Utilization Period” means any period (a) commencing, on any date when
the aggregate principal amount of Revolving Loans is greater than or equal to
33.3% of the total Revolving Commitment, and (b) ending on the date immediately
after the aggregate principal amount of Revolving Loans is less than 33.3% of
the total Revolving Commitment.
 
“Minimum Availability Period” means (including by reference to the Levels
described below), any period (a) commencing when Availability is on any date
less than:
 
 
 
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Level 1:                      an amount equal to 15% (or if the IP Secured
Financing has been consummated, 17.5%) of the total Revolving Commitments then
in effect;
 
Level 2:                      an amount equal to 20% of the total Revolving
Commitments then in effect, but more than Level 1;
 
and (b) ending after Availability is greater than 25% of the total Revolving
Commitments then in effect for a period of 60 consecutive days (such period
being referred to herein as a “Level 1 Minimum Availability Period” or a “Level
2 Minimum Availability Period”, as applicable). For the avoidance of doubt, (x)
at any time that Availability is equal to or greater than the amounts set forth
in Level 2 above, Availability shall also be deemed to be greater than Level 1
and (y) a Level 1 Minimum Availability Period includes a Level 2 Minimum
Availability Period.
 
“Moody’s” means Moody’s Investors Service, Inc.
 
“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3)
of ERISA.
 
“Net Income” means, for any period, the consolidated net income (or loss) of the
Company and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP; provided that there shall be excluded (a) the income (or deficit) of
any Person accrued prior to the date it becomes a Subsidiary or is merged into
or consolidated with the Company or any of its Subsidiaries, (b) the income (or
deficit) of any Person (other than a Subsidiary) in which the Company or any of
its Subsidiaries has an ownership interest, except to the extent that any such
income is actually received by the Company or such Subsidiary in the form of
dividends or similar distributions, (c) the undistributed earnings of any
Subsidiary to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any contractual obligation (other than under any Loan Document) or Requirement
of Law applicable to such Subsidiary.
 
“Net Orderly Liquidation Value” means, with respect to Inventory of any Person,
the orderly liquidation value thereof as determined in a manner acceptable to
the Administrative Agent by an appraiser acceptable to the Joint Collateral
Agents, net of all costs of liquidation thereof.
 
“Net Proceeds” means, with respect to any event, (a) the cash proceeds received
in respect of such event including (i) any cash received in respect of any
non-cash proceeds (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or purchase
price adjustment receivable or otherwise, but excluding any interest payments),
but only as and when received, (ii) in the case of a casualty, insurance
proceeds and (iii) in the case of a condemnation or similar event, condemnation
awards and similar payments, net of (b) the sum of (i) all reasonable fees and
out-of-pocket expenses paid to third parties (other than Affiliates) in
connection with such event, (ii) in the case of a sale, transfer or other
disposition of an asset (including pursuant to a sale and leaseback transaction
or a casualty or a condemnation or similar proceeding), the amount of all
payments required to be made as a result of such event to repay Indebtedness
(other than Loans) secured by such asset or otherwise subject to mandatory
prepayment as a result of such event and (iii) the amount of all taxes paid (or
reasonably estimated to be payable) and the amount of any reserves established
to fund contingent liabilities reasonably estimated to be payable, in each case
during the year that such event occurred or the next succeeding year and that
are directly attributable to such event (as determined reasonably and in good
faith by a Financial Officer).
 
 
 
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“Nine West Development” means Nine West Development Corporation, a Delaware
corporation.
 
“Nine West Footwear” means Nine West Footwear Corporation, a Delaware
corporation.
 
“Non BA Lender” means a Canadian Lender that cannot or does not as a matter of
policy accept bankers’ acceptances.
 
“Non-Consenting Lender” has the meaning assigned to such term in Section
9.02(d).
 
“Non-Paying Guarantor” has the meaning assigned to such term in Section 10.09.
 
“Obligated Party” has the meaning assigned to such term in Section 10.02.
 
“Obligations” means, individually and collectively as the context may require,
the U.S. Obligations and the Canadian Obligations.
 
“Off-Balance Sheet Liability” of a Person means (a) any repurchase obligation or
liability of such Person with respect to accounts or notes receivable sold by
such Person, (b) any indebtedness, liability or obligation under any so-called
“synthetic lease” transaction entered into by such Person, or (c) any
indebtedness, liability or obligation arising with respect to any other
transaction which is the functional equivalent of or takes the place of
borrowing but which does not constitute a liability on the balance sheets of
such Person (other than operating leases).
 
“Open Account Agent” means, individually and collectively as the context may
require, (a) the Citibank Open Account Agent and (b) any other Lender or
Affiliate thereof that is acting as agent from time to time pursuant to any
Other Open Account Agreement.
 
“Open Account Aggregate Cap” means the sum of (a) the Citibank Open Account Cap
and (b) the Open Account Other Cap.
 
“Open Account Agreement” means, individually and collectively as the context may
require, (a) the Citibank Open Account Agreement and (b) each Other Open Account
Agreement.
 
“Open Account Bank” means, individually and collectively as the context may
require, (a) the Citibank Open Account Banks and (b) any Lender or Affiliate
thereof that may become a party to any Other Open Account Agreement.
 
“Open Account Excess Obligations” means, individually and collectively as the
context may require, (a) the Citibank Open Account Obligations that are in
excess of the Citibank Open Account Cap and (b) the Open Account Obligations
with respect to any Other Open Account Agreement that are in excess of the
applicable Open Account Other Cap with respect to each such Other Open Account
Agreement.
 
 
 
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“Open Account Obligations” means, individually and collectively as the context
may require, (a) the Citibank Open Account Obligations and (b) the obligations
of the other Open Account Obligors that are parties to the Other Open Account
Agreements to pay and reimburse each applicable Open Account Agent and Open
Account Bank that are parties thereto for any advances, overadvances or
financings provided to any vendor of one or more of such Open Account Obligors,
together with fees, interest and expenses accruing thereon or that are otherwise
payable with respect thereto.
 
“Open Account Obligors” means each Loan Party that is a party to an Open Account
Agreement.
 
“Open Account Other Cap” means, with respect to all the Other Open Account
Agreements, initially zero, and thereafter, at any time any such other Open
Account Agreement is in effect or any Open Account Obligations with respect
thereto are outstanding, an aggregate amount not to exceed $15,000,000 in the
aggregate at any time; provided, that the Open Account Other Cap with respect to
each such Other Open Account Agreement shall be equal to the aggregate amount
that is authorized to be outstanding pursuant to the terms of each such other
Open Account Agreement (which amount shall be specified in a written notice of
the applicable Open Account Agent and the Company that is delivered to the
Administrative Agent prior to the effectiveness of each applicable Open Account
Agreement), the foregoing to be subject to the approval of the Administrative
Agent (such approval to not be unreasonably withheld or delayed).
 
“Original Currency” has the meaning assigned to such term in Section 9.18.
 
“Other Open Account Agreement” means each open account funding agreement, other
than the Citibank Open Account Agreement, entered into by any Open Account Agent
and Open Account Bank with the Company and the other Open Account Obligors, as
each such open account funding agreement may be amended, modified, restated or
replaced from time to time in accordance with Section 6.11.
 
“Other Taxes” means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement.
 
“Participant” has the meaning assigned to such term in Section 9.04(c).
 
“Participant Register” has the meaning assigned to such term in Section 9.04(c).
 
“Participating Member States” means each State so described in any legislative
measures of the European Council for the introduction of, change over to or
operation of a single or unified European Community, and includes, without
limitation, each member State of the European Community that adopts or has
adopted the Euro as its lawful currency in accordance with the aforementioned
legislative measures.
 
 
 
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“Patriot Act” has the meaning assigned to such term in Section 3.19(a).
 
“Paying Guarantor” has the meaning assigned to such term in Section 10.09.
 
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.
 
“Pension Event” means (a) the whole or partial withdrawal of a Canadian Loan
Party from a Canadian Pension Plan during a plan year; or (b) the filing of a
notice of interest to terminate in whole or in part a Canadian Pension Plan or
the treatment of a Canadian Pension Plan amendment as a termination or partial
termination; or (c) the institution of proceedings by any Governmental Authority
to terminate in whole or in part or have a trustee appointed to administer a
Canadian Pension Plan; or (d) any other event or condition which might
constitute grounds for the termination of, winding up or partial termination of
winding up or the appointment of trustee to administer, any Canadian Pension
Plan.
 
“Pension Plan” means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which any Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of
ERISA.
 
“Permitted Acquisition” means any acquisition by any Loan Party, whether by
purchase, merger, amalgamation or otherwise, of all or substantially all of the
assets of, or of the voting Equity Interests of, or a business line or unit or a
division of, any Person or the subsidiaries of such Person; provided that:
 
(a)           such acquisition shall be consensual;
 
(b)           such Person is in the same or similar line of business as the
Company and its Subsidiaries, or a component thereof;
 
(c)           such acquisition shall be consummated in accordance with all
Requirements of Law, except where the failure to so comply would not reasonably
be expected to have a Material Adverse Effect;
 
(d)           in the case of the acquisition of Equity Interests, (i) all of the
Equity Interests (except for any such securities in the nature of directors’
qualifying shares) acquired or otherwise issued by such Person (or, in the case
of an acquisition of a group of companies, the parent company of such group) or
any newly formed Subsidiary of any Borrower in connection with such acquisition
shall be directly and beneficially owned 100% by such Loan Party, except with
respect to Investments permitted by Section 6.04(c)(ii) in Subsidiaries that are
not Loan Parties, and (ii) such newly acquired Subsidiary shall be a Loan Party
and the Company and its Subsidiaries shall have complied with Section 5.14 with
respect thereto; and
 
 
 
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(e)           in the case of any acquisition or series of related acquisitions
in excess of $50,000,000 (whether paid in cash, deferred payments, securities,
the assumption of debt (including to the extent that any continuing debt would
be newly reflected on a consolidated balance sheet of the Company) or
otherwise), the Company shall furnish to the Administrative Agent at least five
Business Days prior to such proposed acquisition a certificate from a Financial
Officer evidencing compliance with Section 6.04(l), together with such detailed
information relating thereto as the Administrative Agent may reasonably request
to demonstrate such compliance;
 
provided further, that it is understood that to the extent the assets acquired
are to be included in any Borrowing Base, due diligence (including, without
limitation, field exams and appraisals) in respect of such acquired assets
satisfactory to the Administrative Agent, in its Permitted Discretion, shall be
completed prior to the inclusion of such assets in the Borrowing Base.
 
“Permitted Discretion” means a determination made in good faith and in the
exercise of reasonable (from the perspective of a secured asset-based lender)
business judgment.
 
“Permitted Encumbrances” means:
 
(a)           Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 5.04;
 
(b)           carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s
and other like Liens imposed by law, arising in the ordinary course of business
and securing obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 5.04;
 
(c)           pledges and deposits made in the ordinary course of business in
compliance with workers’ compensation laws, unemployment, general liability and
other insurance and other social security laws or retirement benefits or similar
laws or regulations;
 
(d)           Liens granted and deposits and other investments made to secure
the performance of bids, trade contracts, leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature, in
each case in the ordinary course of business;
 
(e)           Liens incurred to secure appeal bonds and judgment and attachment
liens in respect of judgments that do not constitute an Event of Default under
paragraph (k) of Article VII;
 
(f)           easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially
detract from the value of the affected property or interfere with the ordinary
conduct of business of any Borrower or any Subsidiary; and
 
 
 
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(g)           Liens in favor of a credit card processor arising in the ordinary
course of business under any processor agreement;
 
provided that the term “Permitted Encumbrances” shall not include any Lien
securing Indebtedness.
 
“Permitted Investments” means:
 
(a)           direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
 
(b)           investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the highest
credit rating obtainable from S&P or from Moody’s;
 
(c)           investments in (i) certificates of deposit and time deposits, in
each case maturing within 365 days and (ii) banker’s acceptances, in each case
maturing within 180 days from the date of acquisition thereof, issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any domestic office of any commercial bank organized under the laws
of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000;
 
(d)           fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in paragraph (a) above and entered into
with a financial institution satisfying the criteria described in paragraph (c)
above; and
 
(e)           money market funds that (i) comply with the criteria set forth in
Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of
1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio
assets of at least $5,000,000,000.
 
“Permitted Lien” means any Lien permitted under Section 6.02.
 
“Person” means any natural person, corporation, limited liability company,
unlimited liability company, trust, joint venture, association, company,
partnership, Governmental Authority or other entity.
 
“Post-Closing Deliverables Agreement” means that certain Post-Closing
Deliverables Agreement, dated as of the date hereof, between the Loan Parties
and the Administrative Agent, as the same may be amended, restated or otherwise
modified from time to time.
 
“Pounds Sterling” means the lawful currency of the United Kingdom of Great
Britain and Northern Ireland.
 
 
 
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“PPSA” means the Personal Property Security Act (Ontario), including the
regulations thereto, provided that if perfection or the effect of perfection or
non-perfection or the priority of any Lien created hereunder or under any other
Loan Document on the Collateral is governed by the personal property security
legislation or other applicable legislation with respect to personal property
security in effect in a jurisdiction in Canada other than the Province of
Ontario, “PPSA” means the Personal Property Security Act or such other
applicable legislation in effect from time to time in such other jurisdiction in
Canada for purposes of the provisions hereof relating to such perfection, effect
of perfection or non-perfection or priority.
 
“Prepayment Event” means:
 
(a)           any sale, transfer or other disposition (including pursuant to a
sale and leaseback transaction) of any property or asset of any Loan Party,
other than dispositions described in Section 6.05(a), (b), (c) (to the extent
that the transaction is solely among the Loan Parties), (d) or (j); or
 
(b)           any casualty or other insured damage to, or any taking under power
of eminent domain or by condemnation or similar proceeding of, any property or
asset of any Loan Party with a fair value immediately prior to such event equal
to or greater than $10,000,000, in the case of  each individual event, and
$25,000,000 in the aggregate, in the case of a series of related events; or
 
(c)           the issuance by the Company of any Equity Interests, other than
Equity Interests issued pursuant to an employee stock option plan or similar
plan, or pursuant to a merger permitted by Section 6.03; or
 
(d)           the incurrence by any Loan Party of any Indebtedness, other than
Indebtedness permitted under Section 6.01 (other than paragraph (i) thereof) or
permitted by the Required Lenders.
 
“Prime Rate” means (a) for the purpose of Loans made available to the U.S.
Borrowers, the rate of interest per annum publicly announced from time to time
by Chase as its prime rate at its offices at 270 Park Avenue in New York City or
any successor executive office, and (b) for the purpose of dollar-denominated
Loans made available to the Canadian Borrower, the rate of interest per annum
publicly announced from time to time by the Canadian Administrative Agent at its
Toronto office as its U.S. base rate for dollar-denominated commercial loans;
each change in the Prime Rate shall be effective from and including the date
such change is publicly announced as being effective.
 
“Priority Payable Reserve” means reserves for amounts secured by any Liens,
choate or inchoate, which rank or are capable of ranking in priority to the
Administrative Agent’s or any other Canadian Lender Parties’ Liens and/or for
amounts which may represent costs relating to the enforcement of the
Administrative Agent’s Liens including, without limitation, in the Permitted
Discretion of the Canadian Administrative Agent, any such amounts due and not
paid for wages, vacation pay, amounts due and not paid under any legislation
relating to workers’ compensation or to employment insurance, all amounts
deducted or withheld and not paid and remitted when due under the ITA, amounts
currently or past due and not paid for realty, municipal or similar taxes (to
the extent impacting personal or moveable property) and all amounts currently or
past due and not contributed, remitted or paid to or under any Canadian Pension
Plan or under the Canada Pension Plan, the Pension Benefits Act (Ontario) or any
similar legislation.
 
 
 
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“Prior Credit Agreement” means the Amended and Restated Five-Year Credit
Agreement dated as of May 16, 2005, as amended and restated as of January 5,
2009, among the Company, Jones Apparel USA, Jones Holdings, Nine West Footwear,
Jones Retail, the lenders parties thereto and Wachovia Bank, National
Association, as administrative agent.
 
“Proceeds of Crime Act” means the Proceeds of Crime (Money Laundering) and
Terrorist Financing Act (Canada), as amended from time to time, and including
all regulations thereunder.
 
“Pro Forma Basis” means, with respect to any test hereunder in connection with
any event, that such test shall be calculated after giving effect on a pro forma
basis for the period of such calculation to (i) such event as if it happened on
the first day of such period or (ii) the incurrence of any Indebtedness by the
Company or any Subsidiary and any incurrence, repayment, issuance or redemption
of other Indebtedness of the Company or any Subsidiary occurring at any time
subsequent to the last day of the Test Period and on or prior to the date of
determination, as if such incurrence, repayment, issuance or redemption, as the
case may be, occurred on the first day of the Test Period.
 
“Projections” has the meaning assigned to such term in Section 5.01(f).
 
“Protective Advance” means, individually and collectively as the context may
require, the U.S. Protective Advances and the Canadian Protective Advances.
 
“Register” has the meaning assigned to such term in Section 9.04.
 
“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person’s Affiliates.
 
“Rentals” means, with reference to any period, the aggregate amounts payable by
the Company and its Subsidiaries under any operating leases (net of sublease
income), calculated on a consolidated basis for the Company and its Subsidiaries
for such period in accordance with GAAP.
 
“Rent Reserve” means with respect to (a) any warehouse, cross-docking facility,
distribution center, regional distribution center or depot that is not located
in a jurisdiction providing for a common law or statutory landlord’s Lien on the
personal property of tenants, which Lien would be prior or superior to that of
the Administrative Agent (for the benefit of the Lender Parties or the Canadian
Lender Parties, as the case may be) and with respect to which no Collateral
Access Agreement is in effect; or (b) any store, warehouse, cross-docking
facility, distribution center, regional distribution center, depot or other
location that is located in a jurisdiction providing for a common law or
statutory landlord’s Lien on the personal property of tenants, which Lien would
be prior or superior to that of the Administrative Agent (for the benefit of the
Lender Parties or the Canadian Lender Parties, as the case may be), a reserve
equal to two months’ rent at such store, warehouse, cross-docking facility,
distribution center, regional distribution center, depot or other location.
 
 
 
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“Report” means reports prepared by the Joint Collateral Agents or another Person
showing the results of appraisals, field examinations or audits pertaining to
the Borrowers’ assets from information furnished by or on behalf of the
Borrowers, after the Joint Collateral Agents have exercised their rights of
inspection pursuant to this Agreement, which Reports shall be distributed to the
Lenders by the Administrative Agent.
 
“Required Lenders” means, at any time, Lenders having Aggregate Credit Exposure
and unused Revolving Commitments representing at least 51% of the sum of the
Aggregate Credit Exposure and unused Revolving Commitments at such time.
 
“Requirement of Law” means, as to any Person, the Certificate of Incorporation
and By Laws or other organizational or governing documents of such Person, and
any law, treaty, rule or regulation or determination of an arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.
 
“Reserves” means any and all reserves which the Joint Collateral Agents deem
necessary, in their Permitted Discretion, to maintain (including, without
limitation, reserves for accrued and unpaid interest on the Secured Obligations,
Banking Services Reserves, Customer Credit Liability Reserves, Rent Reserves,
Priority Payable Reserves, Existing Debt Securities Reserves, reserves for
dilution of Accounts, reserves for Inventory shrinkage, reserves for customs
charges and shipping charges related to any Inventory in transit, reserves for
Swap Obligations, reserves for contingent liabilities of any Loan Party
(including with respect to the declaration by any Loan Party that is a public
company of its intention to pay dividends pursuant to Section 6.08(a)(iv) but
not yet paid), reserves for uninsured losses of any Loan Party, reserves for
uninsured, underinsured, un-indemnified or under-indemnified liabilities or
potential liabilities with respect to any litigation and reserves for taxes,
fees, assessments, and other governmental charges) with respect to the
Collateral or any Loan Party.
 
“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in the
Company or any Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any such Equity Interests in the Company or any option, warrant or other right
to acquire any such Equity Interests in the Company.
 
“Retail Inventory” means Inventory to be sold by the Borrowers through the
Borrowers’ retail distribution channels.
 
“Revolver Termination Date” has the meaning assigned to such term in Section
9.03(c).
 
“Revolving Commitment” means, with respect to each Lender, individually and
collectively as the context may require, the U.S. Commitment and the Canadian
Commitment of such Lender.  The initial aggregate amount of the Lenders’
Revolving Commitments is $650,000,000.
 
 
 
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“Revolving Commitment Schedule” means the Schedule attached hereto identified as
such.
 
“Revolving Exposure” means, individually and collectively as the context may
require, the U.S. Revolving Exposure and the Canadian Revolving Exposure.
 
“Revolving Lender” means, as of any date of determination, a Lender with a
Revolving Commitment or, if the Revolving Commitments have terminated or
expired, a Lender with Revolving Exposure.
 
“Revolving Loan” means a Loan made pursuant to Section 2.01.
 
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw Hill
Companies, Inc.
 
“Second Currency” has the meaning assigned to such term in Section 9.18.
 
“Secured Obligations” means, individually and collectively as the context may
require, the U.S. Secured Obligations and the Canadian Secured Obligations.
 
“Settlement” has the meaning assigned to such term in Section 2.05(d).
 
“Settlement Date” has the meaning assigned to such term in Section 2.05(d).
 
“Sole Remaining Collateral Agent” has the meaning assigned to such term in
Section 8.02.
 
“Sole Successor Collateral Agent”  has the meaning assigned to such term in
Section 8.02.
 
“Specified Customers” means, individually and collectively as the context may
require, JC Penney, Costco, Wal-Mart Stores, Inc./Sams Club, Sears, Zellers, TJ
MAXX/MARMAXX, BJs Wholesale Club, Burlington Coat Factory, Ross, Fred Myer and
Beall’s Outlet.
 
“Standby Letter of Credit” means any Letter of Credit other than a Commercial
Letter of Credit.
 
“Standby LC Exposure” means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding standby Letters of Credit at such time plus (b) the
aggregate amount of all LC Disbursements relating to standby Letters of Credit
that have not yet been reimbursed by or on behalf of the Borrowers at such
time.  The Standby LC Exposure of any Revolving Lender at any time shall be its
Applicable Percentage of the total Standby LC Exposure at such time.
 
 
 
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“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board or other Governmental Authority to which the
Administrative Agent is subject with respect to the Adjusted LIBO Rate, for
Eurodollar funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of the Board).  Such reserve percentages shall include those
imposed pursuant to such Regulation D.  Eurodollar Loans shall be deemed to
constitute Eurodollar funding and to be subject to such reserve requirements
without benefit of or credit for proration, exemptions or offsets that may be
available from time to time to any Lender under such Regulation D or any
comparable regulation.  The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
 
“Subordinated Indebtedness” of a Person means any Indebtedness of such Person
the payment of which is subordinated to payment of the Obligations to the
written satisfaction of the Administrative Agent.
 
“subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the
parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent; provided that such term shall
not include any joint venture, corporation, partnership or similar arrangement
the accounts of which would be consolidated with those of the Company in the
Company’s consolidated financial statements in accordance with GAAP but of which
not more than 50% of the equity or the ordinary voting power (or in the case of
a partnership, not more than 50% of the general partnership interests) are, as
of such date, owned controlled or held by the Company or any of its consolidated
Subsidiaries.
 
“Subsidiary” means any direct or indirect subsidiary of the Company or a Loan
Party, as applicable.
 
“Supermajority  Lenders” means, at any time, Lenders having Aggregate Credit
Exposure and unused Revolving Commitments representing at least 75% of the sum
of the total Aggregate Credit Exposure and unused Revolving Commitments at such
time.
 
“Swap Agreement” means any agreement with respect to any swap, forward, future
or derivative transaction or option or similar agreement involving, or settled
by reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar transaction or
any combination of these transactions; provided that no phantom stock or similar
plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Borrowers or the
Subsidiaries shall be a Swap Agreement.
 
 
 
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“Swap Obligations” of a Person means any and all obligations of such Person,
whether absolute or contingent and howsoever and whensoever created, arising,
evidenced or acquired (including all renewals, extensions and modifications
thereof and substitutions therefor), under (a) any and all Swap Agreements, and
(b) any and all cancellations, buy backs, reversals, terminations or assignments
of any Swap Agreement transaction.
 
“Swingline Exposure” means, at any time, the sum of the aggregate amount of all
outstanding Swingline Loans at such time.  The Swingline Exposure of any
Revolving Lender at any time shall be its Applicable Percentage of the total
Swingline Exposure at such time.
 
“Swingline Lender” means, individually and collectively as the context may
require, the U.S. Swingline Lender and the Canadian Swingline Lender.
 
“Swingline Loan” means, individually and collectively as the context may
require, each U.S. Swingline Loan and each Canadian Swingline Loan.
 
“Syndication Agent” means Citibank, N.A., in its capacity as Syndication Agent,
and its successors and assigns in such capacity.
 
“TARGET Day” means any day on which (i) TARGET2 is open for settlement of
payments in Euro and (ii) banks are open for dealings in deposits in Euro in the
London interbank market.
 
“TARGET2” means the Trans-European Automated Real-time Gross Settlement Express
Transfer payment system which utilizes a single shared platform and which was
launched on November 19, 2007.
 
“Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees or other charges imposed by any
Governmental Authority, including any interest, additions to tax or penalties
applicable thereto.
 
“Test Period” means (a) from the date hereof until December 31, 2009, the most
recent period of four fiscal quarters, and (b) at all times thereafter, 12
consecutive full fiscal months immediately preceding each date (taken as one
accounting period) in respect of which the Company has delivered the financial
statements referred to in paragraph (c) of Section 5.01.
 
“Transactions” means the execution, delivery and performance by the Borrowers of
this Agreement, the borrowing of Loans and other credit extensions, the use of
the proceeds thereof and the issuance of Letters of Credit hereunder.
 
“Treaty on European Union” means the Treaty of Rome of March 25, 1957, as
amended by the Single European Act 1986 and the Maastricht Treaty (signed
February 7, 1992), as amended from time to time.
 
 
 
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“Type”, when used in reference to any Loan or Borrowing, refers to whether the
rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate, the Alternate Base Rate or
the Canadian Prime Rate.
 
“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York or any other state the laws of which are required to be
applied in connection with the issue of perfection of security interests.
 
“United States” or “U.S.” means the United States of America.
 
“Unliquidated Obligations” means, at any time, any Secured Obligations (or
portion thereof) that are contingent in nature or unliquidated at such time,
including any Secured Obligation that is:  (i) an obligation to reimburse a bank
for drawings not yet made under a letter of credit issued by it; (ii) any other
obligation (including any guarantee) that is contingent in nature at such time;
or (iii) an obligation to provide collateral to secure any of the foregoing
types of obligations.
 
“U.S. Availability” means (a) the lesser of (i) the U.S. Commitment and (ii) the
U.S. Borrowing Base minus (b) (i) the total U.S. Revolving Exposure and (ii) the
Canadian U.S. Borrowing Base Utilization.
 
“U.S. Borrowers” means, individually and collectively as the context may
require, the Company, Jones Apparel USA, Jones Holdings, Jones Retail, Nine West
Footwear, Energie Knitwear, Jones Investment, Jones Jeanswear, L.E.I., Nine West
Development and Victoria.
 
“U.S. Borrowing Base” means, at any time (without duplication),
 
the sum of
 
(a)           (i) the product of (A) 85% multiplied by (B) the Eligible Accounts
of the U.S. Borrowers at such time plus (ii) the product of (A) 90% multiplied
by (B) the Eligible Credit Card Accounts Receivable of the U.S. Borrowers at
such time,
 
plus
 
(b)           the product of (i) 80% multiplied by (ii) the Eligible Domestic
Licensee Receivables of the U.S. Borrowers at such time; provided that the
availability represented by Eligible Domestic Licensee Receivables of the U.S.
Borrowers included in the Borrowing Base shall not at any time exceed
$10,000,000,
 
plus
 
(c)           the product of (i) 35% multiplied by (ii) the Eligible Foreign
Licensee Receivables of the U.S. Borrowers at such time; provided that the
availability represented by Eligible Foreign Licensee Receivables of the U.S.
Borrowers included in the Borrowing Base shall not at any time exceed
$5,000,000,
 
plus
 
 
 
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(d)           the product of (i) 35% multiplied by (ii) the Eligible Foreign
Accounts of the U.S. Borrowers at such time; provided that the availability
represented by Eligible Foreign Accounts of the U.S. Borrowers included in the
Borrowing Base shall not at any time exceed $5,000,000,
 
plus
 
(e)           subject to the last sentence of this definition, the product of
(i) 35% multiplied by (ii) the sum of (A) the Eligible GRI Accounts of the U.S.
Borrowers and (B) the Eligible GRI Licensee Receivables of the U.S. Borrowers at
such time; provided that the availability represented by Eligible GRI Accounts
of the U.S. Borrowers included in the Borrowing Base shall not at any time
exceed $15,000,000,
 
plus
 
(f)           the lesser of (i) the product of 85% multiplied by the Net Orderly
Liquidation Value percentage in respect of Retail Inventory of the U.S.
Borrowers identified in the most recent inventory appraisal ordered by the Joint
Collateral Agents multiplied by the Eligible Retail Inventory of the U.S.
Borrowers, valued at the lower of cost (determined in accordance with the
historical practices of the Borrowers prior to the Effective Date) or market
value, at such time and (ii) the product of 75% multiplied by the Eligible
Retail Inventory of the U.S. Borrowers, valued at the lower of cost (determined
in accordance with the historical practices of the Borrowers prior to the
Effective Date) or market value, at such time,
 
plus
 
(g)           the lesser of (i) the product of 85% multiplied by the High Season
or Low Season, as applicable, Net Orderly Liquidation Value percentage in
respect of Wholesale Inventory of the U.S. Borrowers identified in the most
recent inventory appraisal ordered by the Joint Collateral Agents multiplied by
the Eligible Wholesale Inventory of the U.S. Borrowers, valued at the lower of
cost (determined in accordance with the historical practices of the Borrowers
prior to the Effective Date) or market value, at such time and (ii) the product
of 75% multiplied by the Eligible Wholesale Inventory of the U.S. Borrowers,
valued at the lower of cost (determined in accordance with the historical
practices of the Borrowers prior to the Effective Date) or market value, at such
time,
 
minus
 
(h)           without duplication, Reserves established by the Joint Collateral
Agents in their Permitted Discretion.
 
The Joint Collateral Agents may, in their Permitted Discretion, reduce the
advance rates set forth above (and subsequently increase the advance rates up to
the levels set forth above) including, for reasons relating to potential rights
of vendors with respect to in transit Inventory, adjust Reserves or reduce one
or more of the other elements used in computing the U.S. Borrowing Base (and
subsequently increase such elements up to the levels set forth above).  Any
changes after the Effective Date in how the Borrowers value their Inventory in
accordance with their historical practices prior to the Effective Date shall be
subject to the approval of the Joint Collateral Agents.
 
 
 
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Notwithstanding the foregoing, the Eligible GRI Accounts and Eligible GRI
Licensee Receivables shall not constitute a part of the U.S. Borrowing Base
unless the Joint Collateral Agents, in the exercise of their Permitted
Discretion, have approved of the same.
 
“U.S. Commitment” means, with respect to each U.S. Lender, the commitment, if
any, of such U.S. Lender to make U.S. Revolving Loans and to acquire
participations in U.S. Letters of Credit and U.S. Swingline Loans hereunder,
expressed as an amount representing the maximum possible aggregate amount of
such U.S. Lender’s U.S. Revolving Exposure hereunder, as such commitment may be
reduced or increased from time to time pursuant to (a) Section 2.09 and (b)
assignments by or to such U.S. Lender pursuant to Section 9.04.  The initial
amount of each U.S. Lender’s U.S. Commitment is set forth on the Revolving
Commitment Schedule, or in the Assignment and Assumption pursuant to which such
U.S. Lender shall have assumed its U.S. Commitment, as applicable.  The U.S.
Commitment is a sub-facility of the Revolving Commitment and is not in addition
to the Revolving Commitment.
 
“U.S. LC Exposure” means, at any time, the sum of the Dollar Amount of the
Commercial LC Exposure and the Standby LC Exposure of the U.S. Borrowers. The
U.S. LC Exposure of any U.S. Lender at any time shall be its Applicable
Percentage of its total U.S. LC Exposure at such time.
 
“U.S. Lender Parties” means, individually and collectively as the context may
require, the Administrative Agent, the U.S. Lenders, the Issuing Banks issuing
U.S. Letters of Credit and the other Agents.
 
“U.S. Lenders” means the Persons listed on the Revolving Commitment Schedule as
having a U.S. Commitment and any other Person that shall acquire a U.S.
Commitment pursuant to an Assignment and Assumption, other than any such Person
that ceases to be such a Person hereto pursuant to an Assignment and Assumption.
 
“U.S. Letter of Credit” means any Letter of Credit or similar instrument
(including a bank guarantee) acceptable to the applicable Issuing Bank issued
for the purpose of providing credit support for the U.S. Borrowers.
 
“U.S. Loan Guarantor” means each Loan Party (other than the Canadian Loan
Parties) and any other Person that becomes a U.S. Loan Guarantor pursuant to
Section 5.14(a).
 
“U.S. Loan Parties” means the U.S. Borrowers, the U.S. Borrowers’ Domestic
Subsidiaries and the First-Tier Foreign DREs (other than those Persons in which
Investments are made pursuant to Sections 6.04(c)(ii) and (iii)) and any other
Person who becomes a party to this Agreement in its capacity as a U.S. Loan
Party pursuant to a Joinder Agreement and their successors and assigns; provided
that neither Rachel Roy IP Company LLC nor GRI shall be a U.S. Loan Party unless
100% of the Equity Interests of each of them is owned by a U.S. Loan Party.
 
 
 
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“U.S. Loans” means, individually and collectively as the context may require,
the U.S. Revolving Loans, the U.S. Swingline Loans and the U.S. Protective
Advances.
 
“U.S. Obligations” means, with respect to the U.S. Loan Parties, all unpaid
principal of and accrued and unpaid interest on the U.S. Loans, all U.S. LC
Exposure, all accrued and unpaid fees and all expenses, reimbursements,
indemnities and other obligations of the U.S. Loan Parties to the Lenders or to
any Lender, the Administrative Agent, any Issuing Bank with respect to a U.S.
Letter of Credit or any indemnified party arising under the Loan Documents.
 
“U.S. Person” means a “United States person” within the meaning of Section
7701(a)(30) of the Code.
 
“U.S. Protective Advance” has the meaning assigned to such term in Section
2.04(a).
 
“U.S. Revolving Exposure” means, with respect to any U.S. Lender at any time,
the sum of (a) the outstanding principal amount of Revolving Loans of such U.S.
Lender at such time, plus (b) an amount equal to the Applicable Percentage of
the aggregate principal amount of the U.S. Swingline Loans of such U.S. Lender
at such time, plus (c) an amount equal to the Applicable Percentage of the U.S.
LC Exposure of such U.S. Lender at such time.
 
“U.S. Revolving Loan” means a Revolving Loan made to the U.S. Borrowers.
 
“U.S. Secured Obligations” means all U.S. Obligations, together with all (a)
Banking Services Obligations of the U.S. Loan Parties; (b) Swap Obligations of
the U.S. Loan Parties owing to one or more U.S. Lenders or their respective
Affiliates; provided that (i) at or prior to the time that any transaction
relating to such Swap Obligation is executed, the U.S. Lender or Affiliate of a
U.S. Lender party thereto (other than Chase) shall have delivered written notice
to the Administrative Agent that such a transaction has been entered into and
that it constitutes a U.S. Secured Obligation entitled to the benefits of the
Collateral Documents in favor of the U.S. Lender Parties; and (c) the Open
Account Obligations of Open Account Obligors that are U.S. Loan Parties.
 
“U.S. Security Agreement” means that certain Pledge and Security Agreement,
dated as of the date hereof, between the Loan Parties (other than Jones Canada
GP and Jones Canada LP) and the Administrative Agent, for the benefit of the
Lender Parties and the Canadian Lender Parties, as the case may be, and any
other pledge or security agreement entered into, after the Effective Date by any
other U.S. Loan Party (as required by this Agreement or any other Loan
Document), or any other Person, as the same may be amended, restated or
otherwise modified from time to time.
 
“U.S. Swingline Lender” means JPMorgan Chase Bank, N.A., in its capacity as
lender of U.S. Swingline Loans hereunder.
 
“U.S. Swingline Loan” has the meaning assigned to such term in Section 2.05(a).
 
“Vendor Rebates” means the credits earned from vendors for volume purchases that
reduce net inventory costs for the Borrowers.
 
 
 
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“Victoria” means Victoria + Co Ltd., a Rhode Island corporation.
 
“Weekly Reporting Period” means any period during (a) which any Default under
paragraph (a) of Article VII or any Event of Default has occurred and is
continuing, (b) that constitutes a Level 2 Minimum Availability Period or (c)
that constitutes a Maximum Utilization Period.
 
“Wholesale Inventory” means Inventory to be sold by the Borrowers through the
Borrowers’ wholesale distribution channels.
 
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.
 
“Withholding Agent” means any Loan Party and the Administrative Agent.
 
                      SECTION 1.02.      Classification of Loans and
Borrowings.  For purposes of this Agreement, Loans and Borrowings may be
classified and referred to by Type (e.g., a “Eurodollar Loan” or a “Eurodollar
Borrowing”).
 
                      SECTION 1.03.      Terms Generally.  The definitions of
terms herein shall apply equally to the singular and plural forms of the terms
defined.  Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms.  The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation”.  The word “will” shall be construed to have the same meaning and
effect as the word “shall”.  Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document herein
shall be construed as referring to such agreement, instrument or other document
as from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person’s successors and assigns, (c) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.  A Default or Event of Default shall be deemed to exist at all
times during the period commencing on the date that such Default or Event of
Default occurs to the date on which such Default or Event of Default is waived
by the Administrative Agent pursuant to this Agreement or, in the case of a
Default, is cured within any period of cure expressly provided for in this
Agreement; and an Event of Default shall “continue” or be “continuing” until
such Event of Default has been waived by the Administrative Agent.
 
For purposes of any Collateral located in the Province of Quebec or charged by
any deed of hypothec (or any other Loan Document) and for all other purposes
pursuant to which the interpretation or construction of a Loan Document may be
subject to the laws of the Province of Quebec or a court or tribunal exercising
jurisdiction in the Province of Quebec, (a) “personal property” shall be deemed
to include “movable property”, (b) “real property” shall be deemed to include
“immovable property”, (c) “tangible property” shall be deemed to include
“corporeal property”, (d) “intangible property” shall be deemed to include
“incorporeal property”, (e) “security interest” and “mortgage” shall be deemed
to include a “hypothec”, (f) all references to filing, registering or recording
under the UCC or the PPSA shall be deemed to include publication under the Civil
Code of Québec, (g) all references to “perfection” of or “perfected” Liens shall
be deemed to include a reference to the “opposability” of such Liens to third
parties, (h) any “right of offset”, “right of setoff” or similar expression
shall be deemed to include a “right of compensation”, (i) “goods” shall be
deemed to include “corporeal movable property” other than chattel paper,
documents of title, instruments, money and securities, and (j) an “agent” shall
be deemed to include a “mandatary”.
 
 
 
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                      SECTION 1.04.      Accounting Terms; GAAP.  Except as
otherwise expressly provided herein, all terms of an accounting or financial
nature shall be construed in accordance with GAAP, as in effect from time to
time; provided that, if the Borrower Representative notifies the Administrative
Agent that the Borrowers request an amendment to any provision hereof to
eliminate the effect of any change occurring after the date hereof in GAAP or in
the application thereof on the operation of such provision (or if the
Administrative Agent notifies the Borrower Representative that the Required
Lenders request an amendment to any provision hereof for such purpose),
regardless of whether any such notice is given before or after such change in
GAAP or in the application thereof, then such provision shall be interpreted on
the basis of GAAP as in effect and applied immediately before such change shall
have become effective until such notice shall have been withdrawn or such
provision amended in accordance herewith.
 
                      SECTION 1.05.      Currency Translations.  Without
limiting the other terms of this Agreement the calculations and determinations
under this Agreement of any amount in any currency other than dollars shall be
deemed to refer to dollars or the Dollar Amount (as determined by the
Administrative Agent) or the Equivalent Amount (as determined by the Canadian
Administrative Agent), as the case may be, and all certificates delivered under
this Agreement, shall express such calculations or determinations in dollars or
the Dollar Amount or the Equivalent Amount thereof, as the case may be.
 
ARTICLE II

 
The Credits
 
                      SECTION 2.01.      Revolving Commitments.  Subject to the
terms and conditions set forth herein, (a) each U.S. Lender agrees to make U.S.
Revolving Loans from time to time during the Availability Period to the U.S.
Borrowers, and (b) each Canadian Lender agrees to make Canadian Revolving Loans
(including by way of BA Drawings in accordance with Section 2.21) from time to
time during the Availability Period to the Canadian Borrower, if, in each case
after giving effect thereto:
 
(i)           the U.S. Revolving Exposure or Canadian Revolving Exposure of any
Lender would not exceed such Lender’s U.S. Commitment or Canadian Commitment, as
the case may be;
 
 
 
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(ii)           the total U.S. Revolving Exposure of all the U.S. Lenders would
not exceed (A) the lesser of (x) the total U.S. Commitments or (y) the U.S.
Borrowing Base minus (B) the Canadian U.S. Borrowing Base Utilization;
 
(iii)           the total Canadian Revolving Exposure of all the Canadian
Lenders would not exceed the lesser of (A) the Canadian Sublimit or (B) (x) the
Canadian Borrowing Base plus (y) the U.S. Availability; and
 
(iv)           the sum of (A) (x) the total Revolving Exposures of all the
Lenders and (y) the Open Account Aggregate Cap would not exceed the lesser of
(B)(x) the total Revolving Commitments or (y) the Aggregate Borrowing Base;
 
subject to the Administrative Agent’s or Canadian Administrative Agent’s
authority, as applicable, in their sole discretion, to make Protective Advances
pursuant to the terms of Section 2.04.  Within the foregoing limits and subject
to the terms and conditions set forth herein, each Borrower may borrow, prepay
and reborrow its Revolving Loans.
 
                      SECTION 2.02.      Loans and Borrowings.  (a) Each Loan
(other than a Swingline Loan) shall be made as part of a Borrowing consisting of
Loans of the same Type made by the Lenders ratably in accordance with their
respective Revolving Commitments.  Any Protective Advance and any Swingline Loan
shall be made in accordance with the procedures set forth in Section 2.04 and
2.05.
 
(b)           Subject to Section 2.14 and Section 2.21, (i) each Borrowing of
U.S. Revolving Loans shall be comprised entirely of ABR Loans or Eurodollar
Loans as the Borrower Representative may request in accordance herewith;
provided that all Borrowings made on the Effective Date must be made as ABR
Borrowings but may be converted into Eurodollar Borrowings in accordance with
Section 2.08; (ii) each Borrowing of Canadian Revolving Loans denominated in
Canadian Dollars shall be comprised entirely of Canadian Prime Rate Loans or,
pursuant to Section 2.21, BA Drawings as the Borrower Representative may request
in accordance herewith; and (iii) each Borrowing of Canadian Revolving Loans
denominated in dollars shall be comprised entirely of ABR Loans or Eurodollar
Loans as the Borrower Representative may request in accordance herewith.  Each
U.S. Swingline Loan and  Canadian Swingline Loan denominated in dollars shall be
an ABR Loan, and each Canadian Swingline Loan denominated in Canadian Dollars
shall be a Canadian Prime Rate Loan.  Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided that any exercise of such option shall not
affect the obligation of the Borrowers to repay such Loan in accordance with the
terms of this Agreement.
 
(c)           At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $5,000,000.  ABR Borrowings and
Canadian Prime Rate Borrowings may be in any amount. Each Swingline Loan shall
be in an amount that is an integral multiple of $1,000,000 and not less than
$5,000,000.  Borrowings of more than one Type may be outstanding at the same
time; provided that there shall not at any time be more than a total of six
Eurodollar Borrowings outstanding.
 
 
 
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(d)           At the commencement of each Contract Period for any BA Drawing of
Canadian Revolving Loans, such Borrowing shall be in an aggregate face amount
that is an integral multiple of Cdn.$1,000,000 and not less than Cdn.$5,000,000;
provided that there shall not at any time be more than a total of five BA
Drawings outstanding.
 
(e)           Notwithstanding any other provision of this Agreement, neither the
Borrower Representative nor any Borrower shall be entitled to request, or to
elect to convert or continue, any Borrowing if the Interest Period or Contract
Period requested with respect thereto would end after the Maturity Date.
 
                      SECTION 2.03.      Requests for Revolving Borrowings.  To
request a Borrowing, the Borrower Representative shall notify the applicable
Administrative Agent of such request either in writing (delivered by hand or
facsimile) substantially in the form attached hereto as Exhibit G and signed by
the Borrower Representative or by telephone (a) with respect to U.S. Loans
(i) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., Chicago
time, three Business Days before the date of the proposed Borrowing or (ii) in
the case of an ABR Borrowing, not later than 2:00 p.m., Chicago time, on the
date of the proposed Borrowing, and (b) with respect to Canadian Loans, (i) in
the case of a Eurodollar Borrowing, not later than 12:00 noon, Toronto time
three Business Days before the date of the proposed Borrowing, (ii) in the case
of a BA Drawing, not later than 3:00 p.m., Toronto time, three Business Days
before the date of the proposed Borrowing, and (iii) in the case of a Canadian
Prime Rate Borrowing or an ABR Borrowing, not later than 1:00 p.m., Toronto
time, one Business Day before the date of the proposed Borrowing, provided that
any such notice of an ABR Borrowing to finance the reimbursement of an LC
Disbursement (in the case of any U.S. Letter of Credit) as contemplated by
Section 2.06(e), may be given not later than 2:00 p.m., Chicago time, on the
date of the proposed Borrowing. Each such telephonic Borrowing Request shall be
irrevocable and shall be confirmed promptly by hand delivery or facsimile to the
Administrative Agent or the Canadian Administrative Agent, as applicable, of a
written Borrowing Request in a form approved by the Administrative Agent or the
Canadian Administrative Agent, as applicable, and signed by the Borrower
Representative. Each such telephonic and written Borrowing Request shall specify
the following information in compliance with Section 2.01:
 
(i)           the name of the applicable Borrower;
 
(ii)          the aggregate amount of the requested Borrowing and a breakdown of
the separate wires comprising such Borrowing;
 
(iii)         the date of such Borrowing, which shall be a Business Day;
 
(iv)         whether such Borrowing is to be an ABR Borrowing, a Canadian Prime
Rate Borrowing, a BA Drawing or a Eurodollar Borrowing;
 
(v)          in the case of a Eurodollar Borrowing, the initial Interest Period
to be applicable thereto, which shall be a period contemplated by the definition
of the term “Interest Period”; and
 
 
 
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(vi)         in the case of a BA Drawing, the initial Contract Period to be
applicable thereto, which shall be a period contemplated by the definition of
the term “Contract Period”.
 
If no election as to the Type of Borrowing of Revolving Loans is specified, then
(A) a Borrowing of U.S. Revolving Loans or Canadian Revolving Loans requested in
dollars shall be an ABR Borrowing, and (B) a Borrowing of Canadian Revolving
Loans requested in Canadian Dollars shall be a Canadian Prime Rate
Borrowing.  If no Interest Period is specified with respect to any requested
Eurodollar Borrowing of Revolving Loans, then the applicable Borrower shall be
deemed to have selected an Interest Period of one month’s duration. Promptly
following receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent or the Canadian Administrative Agent, as applicable, shall
advise each applicable Lender of the details thereof and of the amount of such
Lender’s Loan to be made as part of the requested Borrowing.
 
                      SECTION 2.04.      Protective Advances.  (a) Subject to
the limitations set forth below, the Administrative Agent or the Canadian
Administrative Agent, as applicable, is authorized by the Borrowers and the
Lenders, from time to time in the Administrative Agent’s or the Canadian
Administrative Agent’s, as the case may be, sole discretion (but, in either such
case, neither of them shall have absolutely any obligation to), to make (i) in
the case of the Administrative Agent, Loans to the U.S. Borrowers on behalf of
the U.S. Lenders (each such Loan, a “U.S. Protective Advance”), or (ii) in the
case of the Canadian Administrative Agent, Loans to the Canadian Borrower in
Canadian Dollars or dollars on behalf of the Canadian Lenders (each such Loan, a
“Canadian Protective Advance”), which the Administrative Agent or Canadian
Administrative Agent, as applicable, in its Permitted Discretion, deems
necessary or desirable (A) to preserve or protect the Collateral, or any portion
thereof, (B) to enhance the likelihood of, or maximize the amount of, repayment
of the Loans and other Obligations, or (C) to pay any other amount chargeable to
or required to be paid by the applicable Borrower pursuant to the terms of this
Agreement, including payments of reimbursable expenses (including costs, fees,
and expenses as described in Section 9.03) and other sums payable under the Loan
Documents; provided, that the aggregate amount of Protective Advances
outstanding at any time shall not at any time exceed $30,000,000; provided
further, that (1) the aggregate amount of outstanding Protective Advances in
favor of the U.S. Borrowers plus the aggregate U.S. Revolving Exposure shall not
exceed the U.S. Commitment, (2) the aggregate amount of outstanding Protective
Advances in favor of the Canadian Borrower plus the aggregate Canadian Revolving
Exposure shall not exceed the Canadian Commitment and (3) the aggregate amount
of all outstanding Protective Advances plus the sum of the aggregate Revolving
Exposures of all the Lenders and the Open Account Aggregate Cap shall not exceed
the aggregate Revolving Commitments. Protective Advances may be made even if the
conditions precedent set forth in Section 4.02 have not been satisfied.  The (i)
U.S. Protective Advances shall be secured by the Liens in favor of the
Administrative Agent (for the benefit of the Lender Parties) and (ii) the
Canadian Protective Advance shall be secured by the Liens in favor of the
Administrative Agent (for the benefit of the Canadian Lender Parties) in and to
the Collateral of the U.S. Loan Parties (in the case of the U.S. Protective
Advances) or the Collateral (in the case of the Canadian Protective Advances)
and shall constitute U.S. Obligations (in the case of U.S. Protective Advances)
and Canadian Obligations (in the case of Canadian Protective Advances). All U.S.
Protective Advances and Canadian Protective Advances denominated in dollars
shall be ABR Borrowings, and all Canadian Protective Advances denominated in
Canadian Dollars shall be Canadian Prime Rate Borrowings.  The Administrative
Agent’s or Canadian Administrative Agent’s, as the case may be, authorization to
make Protective Advances may be revoked at any time by the Required
Lenders.  Any such revocation must be in writing and shall become effective
prospectively upon the Administrative Agent’s or the Canadian Administrative
Agent’s (as applicable) receipt thereof.  At any time that there is sufficient
Availability and the conditions precedent set forth in Section 4.02 have been
satisfied, the Administrative Agent, Canadian or Administrative Agent, as
applicable, may request the Revolving Lenders to make a Revolving Loan, in the
currency in which the applicable Protective Advance was denominated, to repay a
Protective Advance.  At any other time the Administrative Agent or Canadian
Administrative Agent (as applicable) may require the Lenders to fund, in the
currency in which the applicable Protective Advance was denominated, their risk
participations described in Section 2.04(b).
 
 
 
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(b)           Upon the making of a Protective Advance (whether before or after
the occurrence of a Default) by the Administrative Agent or the Canadian
Administrative Agent, as applicable, each U.S. Lender or Canadian Lender, as
applicable, shall be deemed, without further action by any party hereto, to have
unconditionally and irrevocably purchased from the Administrative Agent or the
Canadian Administrative Agent, as applicable, without recourse or warranty, an
undivided interest and participation in such U.S. Protective Advance or Canadian
Protective Advance, as applicable, in proportion to its Applicable
Percentage.  From and after the date, if any, on which any Lender is required to
fund its participation in any Protective Advance purchased hereunder, the
Administrative Agent or the Canadian Administrative Agent, as applicable, shall
promptly distribute to such Lender, such Lender’s Applicable Percentage of all
payments of principal and interest and all proceeds of Collateral received by
the Administrative Agent or the Canadian Administrative Agent, as applicable, in
respect of such Protective Advance.
 
                      SECTION 2.05.      Swingline Loans.  (a) The
Administrative Agent, the U.S. Swingline Lender and the U.S. Lenders agree that
in order to facilitate the administration of this Agreement and the other Loan
Documents, promptly after the Borrower Representative requests an ABR Borrowing,
the U.S. Swingline Lender may elect to have the terms of this Section 2.05(a)
apply to such Borrowing Request by advancing, on behalf of the U.S. Lenders and
in the amount requested, same day funds to the U.S. Borrowers, on the applicable
Borrowing date to the Funding Account(s) (each such Loan made solely by the U.S.
Swingline Lender pursuant to this Section 2.05(a) is referred to in this
Agreement as a “U.S. Swingline Loan”), with settlement among them as to the U.S.
Swingline Loans to take place on a periodic basis as set forth in Section
2.05(d).  Each U.S. Swingline Loan shall be subject to all the terms and
conditions applicable to other ABR Loans funded by the U.S. Lenders, except that
all payments thereon shall be payable to the U.S. Swingline Lender solely for
its own account. The aggregate amount of U.S. Swingline Loans outstanding at any
time shall not exceed $60,000,000.  The U.S. Swingline Lender shall not make any
U.S. Swingline Loan if the requested U.S. Swingline Loan exceeds U.S.
Availability (before giving effect to such U.S. Swingline Loan).  All U.S.
Swingline Loans shall be ABR Borrowings.
 
(b)           The Canadian Administrative Agent, the Canadian Swingline Lender
and the Canadian Lenders agree that in order to facilitate the administration of
this Agreement and the other Loan Documents, promptly after the Borrower
Representative requests an ABR Borrowing, the Canadian Swingline Lender may
elect to have the terms of this Section 2.05(b) apply to such Borrowing Request
by advancing, on behalf of the Canadian Lenders and in the amount requested,
same day funds to the Canadian Borrower, on the applicable Borrowing date to the
Funding Account(s) (each such Loan made solely by the Canadian Swingline Lender
pursuant to this Section 2.05(b) is referred to in this Agreement as a “Canadian
Swingline Loan”), with settlement among them as to the Swingline Loans to take
place on a periodic basis as set forth in Section 2.05(d).  Each Canadian
Swingline Loan shall be subject to all the terms and conditions applicable to
other ABR Loans funded by the Canadian Lenders, except that all payments thereon
shall be payable to the Canadian Swingline Lender solely for its own
account.  The aggregate amount of Canadian Swingline Loans outstanding at any
time shall not exceed $2,500,000 (or the Equivalent Amount thereof).  The
Canadian Swingline Lender shall not make any Canadian Swingline Loan if the
requested Canadian Swingline Loan exceeds Canadian Availability (before giving
effect to such Canadian Swingline Loan).  All Canadian Swingline Loans shall be
Canadian Prime Rate Borrowings.
 
 
 
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(c)           Upon the making of a Swingline Loan (whether before or after the
occurrence of a Default and regardless of whether a Settlement has been
requested with respect to such Swingline Loan), each U.S. Lender or Canadian
Lender, as applicable, shall be deemed, without further action by any party
hereto, to have unconditionally and irrevocably purchased from the applicable
Swingline Lender, the Administrative Agent or the Canadian Administrative Agent,
as the case may be, without recourse or warranty, an undivided interest and
participation in the applicable Swingline Loan in proportion to its Applicable
Percentage of the Revolving Commitments.  The applicable Swingline Lender may,
at any time, require the applicable Lenders to fund, in the currency in which
the applicable Swingline Loan was denominated, their participations. From and
after the date, if any, on which any Lender is required to fund its
participation in any Swingline Loan purchased hereunder, the Administrative
Agent or the Canadian Administrative Agent, as applicable, shall promptly
distribute to such Lender, such Lender’s Applicable Percentage of all payments
of principal and interest and all proceeds of Collateral received by such
Administrative Agent in respect of such Loan.
 
(d)           Each of the Administrative Agent and the Canadian Administrative
Agent, on behalf of the U.S. Swingline Lender or the Canadian Swingline Lender,
as applicable, shall request settlement (a “Settlement”) with the U.S. Lenders
or Canadian Lenders, as applicable, on at least a weekly basis or on any more
frequent date that the Administrative Agent or the Canadian Administrative
Agent, as the case may be, elects, by notifying the applicable Lenders of such
requested Settlement by facsimile, telephone or e-mail no later than 12:00 noon
Chicago time (i) on the date of such requested Settlement (the “Settlement
Date”), with regard to U.S. Swingline Loans, and (ii) two Business Days prior to
the Settlement Date, with regard to Canadian Swingline Loans (or on the date of
such requested Settlement, if a Default or an Event of Default has occurred and
is continuing).  Each U.S. Lender or Canadian Lender, as applicable (other than
the Swingline Lenders, in the case of the Swingline Loans) shall transfer, in
the currency in which the applicable Loan was denominated, the amount of such
Lender’s Applicable Percentage of the outstanding principal amount of the
applicable Loan with respect to which Settlement is requested to the
Administrative Agent or the Canadian Administrative Agent, as applicable, to an
account of the Administrative Agent or Canadian Administrative Agent, as
applicable, as it may designate, not later than 2:00 p.m., Chicago time, on such
Settlement Date. Settlements may occur during the existence of a Default and
whether or not the applicable conditions precedent set forth in Section 4.02
have then been satisfied. Such amounts transferred to the Administrative Agent
or the Canadian Administrative Agent, as applicable, shall be applied against
the amounts of the applicable Swingline Lender’s Swingline Loans and, together
with such Swingline Lender’s Applicable Percentage of such Swingline Loan, shall
constitute Revolving Loans of such applicable Lenders (and shall no longer
constitute Swingline Loans).  If any such amount referred to in this paragraph
(d) is not transferred to the applicable Agent by any applicable Lender on such
Settlement Date, the applicable Swingline Lender shall be entitled to recover
such amount on demand from such Lender together with interest thereon as
specified in Section 2.07.
 
 
 
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                      SECTION 2.06.      Letters of
Credit.  (a) General.  Subject to the terms and conditions set forth herein, the
Borrower Representative may request the issuance of Letters of Credit
denominated in dollars, an Alternative Currency (in the case of Commercial
Letters of Credit that are U.S. Letters of Credit) and Canadian Dollars (in the
case of Canadian Letters of Credit) for its own account or for the account of
another Borrower, in a form reasonably acceptable to the Administrative Agent or
the Canadian Administrative Agent, as applicable, and the applicable Issuing
Bank, at any time and from time to time during the Availability Period.  In the
event of any inconsistency between the terms and conditions of this Agreement
and the terms and conditions of any form of letter of credit application or
other agreement submitted by the Borrowers to, or entered into by the Borrowers
with, an Issuing Bank relating to any Letter of Credit, the terms and conditions
of this Agreement shall control.
 
(b)           Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions.  To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower
Representative shall hand deliver or facsimile (or transmit by electronic
communication, if arrangements for doing so have been approved by the applicable
Issuing Bank) to the applicable Issuing Bank and the Administrative Agent (in
the case of U.S. Letters of Credit) and the Canadian Administrative Agent (in
the case of Canadian Letters of Credit) with a copy to the Administrative Agent,
in each case prior to 9:00 a.m., Chicago time at least three Business Days prior
to the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended, and specifying the date of issuance,
amendment, renewal or extension (which shall be a Business Day), the date on
which such Letter of Credit is to expire (which shall comply with paragraph (c)
of this Section), the amount of such Letter of Credit, the currency in which
such Letter of Credit will be denominated (which may be in dollars or Canadian
Dollars (in the case of Canadian Letters of Credit), or, in the case of a
Commercial Letter of Credit that is issued pursuant to the U.S. Commitment, an
Alternative Currency), the name and address of the beneficiary thereof and such
other information as shall be necessary to prepare, amend, renew or extend such
Letter of Credit.  If requested by the applicable Issuing Bank, the applicable
Borrower also shall submit a letter of credit application on such Issuing Bank’s
standard form in connection with any request for a Letter of Credit.  A Letter
of Credit shall be issued, amended, renewed or extended only if (and upon
issuance, amendment, renewal or extension of each Letter of Credit the Borrowers
shall be deemed to represent and warrant that), after giving effect to such
issuance, amendment, renewal or extension (i) the aggregate LC Exposure shall
not exceed $450,000,000, (ii) the Standby LC Exposure shall not exceed
$50,000,000, (iii) the Commercial LC Exposure shall not exceed $400,000,000,
(iv) the LC Exposure on account of Commercial Letters of Credit denominated in
an Alternative Currency that are issued pursuant to the U.S. Commitment shall
not exceed $100,000,000, (v) the Canadian LC Exposure shall not exceed
$5,000,000, (vi) the total U.S. Revolving Exposure of all the U.S. Lenders would
not exceed the lesser of (A) (x) the total U.S. Commitments or (y) the U.S.
Borrowing Base minus (B) the Canadian U.S. Borrowing Base Utilization, (vii) the
total Canadian Revolving Exposure of all the Canadian Lenders would not exceed
the lesser of (A) the Canadian Sublimit or (B) (x) the Canadian Borrowing Base
plus (y) the U.S. Availability and (viii) the sum of (A) (x) the total Revolving
Exposures of all the Lenders and (y) Open Account Aggregate Cap shall not exceed
the lesser of (B) (i) the total Revolving Commitments and (ii) the Aggregate
Borrowing Base then in effect.
 
 
 
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(c)           Expiration Date.  Each Letter of Credit shall expire at or prior
to the close of business on the earlier of (i) the date one year after the date
of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Maturity Date (it being understood that
any Letter of Credit that provides for time drafts to be submitted thereunder
shall have an expiry date which is in advance of such five Business Days prior
to the Maturity Date by the number of days contemplated for such time drafts).
 
(d)           Participations.  By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of any Issuing Bank or the Revolving Lenders, the
applicable Issuing Bank hereby grants to each  U.S. Lender, with respect to a
U.S. Letter of Credit, and each Canadian Lender, with respect to a Canadian
Letter of Credit, and each U.S. Lender and Canadian Lender, as applicable,
hereby acquires from the applicable Issuing Bank, a participation in each such
Letter of Credit equal to such Lender’s Applicable Percentage of the aggregate
Dollar Amount (in the case of each U.S. Letter of Credit) or Equivalent Amount
(in the case of each Canadian Letter of Credit) available to be drawn under such
Letter of Credit.  In consideration and in furtherance of the foregoing, (i)
with respect to each U.S. Letter of Credit, each U.S. Lender hereby absolutely
and unconditionally agrees to pay in dollars to the Administrative Agent, and
(ii) with respect to any Canadian Letters of Credit, each Canadian Lender hereby
absolutely and unconditionally promises to pay, in the same currency in which
such Canadian Letter of Credit is issued, the Canadian Administrative Agent, in
each case for the account of the applicable Issuing Bank, such Lender’s
Applicable Percentage of each LC Disbursement, made by such Issuing Bank and not
reimbursed by the applicable Borrower on the date due as provided in paragraph
(e) of this Section, or of any reimbursement payment required to be refunded to
such Borrowers for any reason.  Each Revolving Lender acknowledges and agrees
that its obligation to acquire participations pursuant to this paragraph in
respect of Letters of Credit is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including any amendment, renewal or
extension of any Letter of Credit or the occurrence and continuance of a Default
or reduction or termination of the Revolving Commitments, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever.
 
 
 
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(e)           Reimbursement.  If any Issuing Bank shall make any LC Disbursement
in respect of a Letter of Credit, the applicable Borrower shall reimburse such
LC Disbursement by paying to (i) the Administrative Agent (in the case of any
U.S. Letter of Credit) in dollars and (ii) the Canadian Administrative Agent (in
the case of any Canadian Letters of Credit) in the same currency as the
applicable LC Disbursement an amount equal to such LC Disbursement not later
than 2:00 p.m., Chicago time, on the Business Day that the Borrower
Representative receives notice of such LC Disbursement, if such notice is
received prior to 9:00 a.m., Chicago time, on such Business Day (or, if the
Borrower Representative receives notice of such LC Disbursement after 9:00 a.m.,
Chicago time, on any Business Day, by 2:00 p.m., Chicago time, on the next
following Business Day); provided, that the Borrowers may, subject to the
conditions to borrowing set forth herein, request in accordance with Section
2.03 or 2.05 that such payment be financed with an ABR Borrowing (in the case of
U.S. Letters of Credit), a Canadian Prime Rate Borrowing (in the case of
Canadian Letters of Credit) or a Swingline Loan in an equivalent amount and, to
the extent so financed (in the event that such LC Disbursement was made in an
Alternative Currency, such Borrowing Request shall be for an amount equal to the
Dollar Amount of the amount of such LC Disbursement, and in the event such LC
Disbursement was made with respect to a Canadian Letter of Credit, such
Borrowing Request shall be in the same currency as such LC Disbursement), the
Borrowers’ obligation to make such payment shall be discharged and replaced by
the resulting ABR Borrowing or Swingline Loan (or the applicable portion
thereof).  If the Borrowers fail to make such payment when due, the
Administrative Agent or the Canadian Administrative Agent, as applicable, shall
notify each U.S. Lender or Canadian Lender of the applicable LC Disbursement,
the payment then due from the applicable Borrower in respect thereof and such
Lender’s Applicable Percentage thereof.  Promptly following receipt of such
notice, each applicable Lender shall pay to (x) the Administrative Agent dollars
(in the case of the U.S. Letter of Credit) or (y) the Canadian Administrative
Agent (in the case of Canadian Letters of Credit) in the same currency as the
applicable LC Disbursement, an amount equal to its Applicable Percentage of the
payment then due from the applicable Borrower, in the same manner as provided in
Section 2.07 with respect to Loans made by such Lender (and Section 2.07 shall
apply, mutatis mutandis, to the payment obligations of the Revolving Lenders),
and Administrative Agent and the Canadian Administrative Agent, as the case may
be, shall promptly pay to the applicable Issuing Bank the amounts so received by
it from the Revolving Lenders.  Promptly following receipt by the Administrative
Agent or the Canadian Administrative Agent, as the case may be, of any payment
from the Borrowers pursuant to this paragraph, each of them shall distribute
such payment to the applicable Issuing Bank or, to the extent that Revolving
Lenders have made payments pursuant to this paragraph to reimburse the
applicable Issuing Bank, then each of them shall distribute such payment to such
Revolving Lenders and the applicable Issuing Bank as their interests may
appear.  Any payment made by a Revolving Lender pursuant to this paragraph to
reimburse the applicable Issuing Bank for any LC Disbursement (other than the
funding of ABR Loans (in the case of U.S. Letters of Credit), a Canadian Prime
Rate Loan (in the case of Canadian Letters of Credit) or a Swingline Loan as
contemplated above) shall not constitute a Loan (but shall be Secured
Obligations) and shall not relieve the Borrowers of their obligation to
reimburse such LC Disbursement.
 
 
 
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(f)           Exchange Indemnification and Increased Costs. The Borrowers shall,
upon demand from any Issuing Bank or any Revolving Lender, pay to such Issuing
Bank or such Revolving Lender, the amount of (i) any loss or cost or increased
cost incurred by such Issuing Bank or such Revolving Lender, (ii) any reduction
in any amount payable to or in the effective return on the capital to such
Issuing Bank or such Revolving Lender, (iii) any currency exchange loss, in each
case with respect to clauses (i), (ii) and (iii), that such Issuing Bank or such
Revolving Lender sustains as a result of the Borrowers’ repayment in dollars of
any Commercial Letter of Credit that is a U.S. Letter of Credit that was
denominated in an Alternative Currency or (iv) any interest or any other return,
including principal, foregone by such Issuing Bank as a result of the
introduction of, change over to or operation of the Euro in any member state
participating in the Euro. A certificate of the applicable Issuing Bank setting
forth in reasonable detail the basis for determining such additional amount or
amounts necessary to compensate such Issuing Bank shall be conclusively presumed
to be correct save for manifest error.
 
(g)           Obligations Absolute.  The Borrowers’ joint and several obligation
to reimburse LC Disbursements as provided in paragraph (e) of this Section shall
be absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability of any
Letter of Credit or this Agreement, or any term or provision therein, (ii) any
draft or other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by an Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrowers’ obligations
hereunder.  Neither the Administrative Agent nor the Canadian Administrative
Agent, the Revolving Lenders nor any Issuing Bank, nor any of their Related
Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
applicable Issuing Bank; provided that the foregoing shall not be construed to
excuse the applicable Issuing Bank from liability to the Borrowers to the extent
of any direct damages (as opposed to consequential damages, claims in respect of
which are hereby waived by the Borrowers to the extent permitted by applicable
law) suffered by any Borrower that are caused by the applicable Issuing Bank’s
failure to exercise the standard of care hereunder to be applicable when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof.  The parties hereto expressly agree that,
in the absence of gross negligence or wilful misconduct on the part of an
Issuing Bank (as finally determined by a court of competent jurisdiction), such
Issuing Bank shall be deemed to have exercised such standard of care in each
such determination.  In furtherance of the foregoing and without limiting the
generality thereof, the parties agree that, with respect to documents presented
which appear on their face to be in substantial compliance with the terms of a
Letter of Credit, the applicable Issuing Bank may, in its sole discretion,
either accept and make payment upon such documents without responsibility for
further investigation, regardless of any notice or information to the contrary,
or refuse to accept and make payment upon such documents if such documents are
not in strict compliance with the terms of such Letter of Credit.
 
(h)           Disbursement Procedures.  The applicable Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit.  The applicable Issuing
Bank shall promptly notify the Administrative Agent or the Canadian
Administrative Agent, as applicable, and the applicable Borrower by telephone
(confirmed by facsimile) of such demand for payment and whether such Issuing
Bank has made or will make an LC Disbursement thereunder; provided that any
failure to give or delay in giving such notice shall not relieve the Borrowers
of their obligation to reimburse the applicable Issuing Bank and the applicable
Revolving Lenders with respect to any such LC Disbursement.
 
 
 
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(i)           Interim Interest.  If any Issuing Bank shall make any LC
Disbursement, then, unless the Borrowers shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrowers reimburse such LC
Disbursement, (i) (x) in the case of LC Disbursements made in dollars, at the
rate per annum then applicable to ABR Loans, and (y) in the case of an LC
Disbursement made in Canadian Dollars, at the rate per annum then applicable to
Canadian Prime Rate Loans, and (ii) in the case of LC Disbursements made in
respect of any Commercial Letters of Credit that are U.S. Letters of Credit in
an Alternative Currency, at the overnight London interbank offered rate for the
relevant Alternative Currency determined by the Administrative Agent in good
faith plus the rate per annum then applicable to Eurodollar Borrowings; provided
that, if the Borrowers fail to reimburse such LC Disbursement when due pursuant
to paragraph (e) of this Section, then Section 2.13(e) shall apply.  Interest
accrued pursuant to this paragraph shall be for the account of the applicable
Issuing Bank, except that interest accrued on and after the date of payment by
any Revolving Lender pursuant to paragraph (e) of this Section to reimburse the
Issuing Bank shall be for the account of such Revolving Lender to the extent of
such payment.
 
(j)           Replacement of the Issuing Banks.  Any Issuing Bank may be
replaced at any time by written agreement among the Borrower Representative, the
Administrative Agent, the Issuing Bank to be replaced and the successor Issuing
Bank.  The Administrative Agent shall notify the Revolving Lenders of any such
replacement of an Issuing Bank.  At the time any such replacement shall become
effective, the Borrowers shall pay all unpaid fees accrued for the account of
the replaced Issuing Bank pursuant to Section 2.12(b).  From and after the
effective date of any such replacement, (i) the successor Issuing Bank shall
have all the rights and obligations of an Issuing Bank under this Agreement with
respect to Letters of Credit to be issued thereafter and (ii) references herein
to the term “Issuing Bank” shall be deemed to refer to such successor or to any
previous Issuing Bank, or to such successor and all previous Issuing Banks, as
the context shall require.  After the replacement of an Issuing Bank hereunder,
the replaced Issuing Bank shall remain a party hereto and shall continue to have
all the rights and obligations of an Issuing Bank under this Agreement with
respect to Letters of Credit issued by it prior to such replacement, but shall
not be required to issue additional Letters of Credit.
 
(k)           Cash Collateralization.  Subject to Section 2.18(b), if any Event
of Default shall occur and be continuing, on the Business Day that the Borrower
Representative receives notice from the Administrative Agent, the Canadian
Administrative Agent or the Required Lenders demanding the deposit of cash
collateral pursuant to this paragraph or if any of the other provisions hereof
require cash collateralization (or, on the Business Day on or immediately
following the maturity of the Loans if the Loans have been accelerated, without
any further notice), (i) the U.S. Borrowers shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lender Parties (the “LC Collateral Account”), the Dollar Amount
in cash equal to 103% of the U.S. LC Exposure as of such date plus accrued and
unpaid interest thereon and (ii) the Canadian Borrower shall deposit in an
account with the Administrative Agent, in the name of the Administrative Agent
and for the benefit of the Canadian Lender Parties (the “Canadian LC Collateral
Account”), the Equivalent Amount in cash equal to 103% of the Canadian LC
Exposure as of such date plus accrued and unpaid interest thereon; provided that
the obligation to deposit such cash collateral shall become effective
immediately, and such deposit shall become immediately due and payable, without
demand or other notice of any kind, upon the occurrence of any Event of Default
with respect to any Borrower described in paragraph (h) or (i) of Article
VII.  Such deposit shall be held by the Administrative Agent as collateral for
the payment and performance of the Secured Obligations, in the case of deposits
in the LC Collateral Account, and the Canadian Secured Obligations, in the case
of deposits in the Canadian LC Collateral Account.  The Administrative Agent
shall have exclusive dominion and control, including the exclusive right of
withdrawal, over such accounts; and (x) the U.S. Borrowers hereby grant the
Administrative Agent (for the benefit of the Lender Parties) a security interest
in the LC Collateral Account and (y) the Canadian Borrower hereby grants the
Administrative Agent (for the benefit of the Canadian Lender Parties) a security
interest in the Canadian LC Collateral Account.  Other than any interest earned
on the investment of such deposits, which investments shall be in the form of
Permitted Investments made at the option and sole discretion of the
Administrative Agent (in accordance with its usual and customary practices for
investments of this type), and at the Borrowers’ risk and reasonable expense,
such deposits shall not bear interest.  Interest or profits, if any, on such
investments shall accumulate in such account.  Moneys in such account shall be
applied by the Administrative Agent to reimburse the applicable Issuing Bank for
LC Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the U.S. Borrowers or the Canadian Borrower, as applicable, for the LC Exposure
at such time or, if the maturity of the Loans has been accelerated (but subject
to the consent of Required Lenders), be applied, in the case of moneys in the LC
Collateral Account, to satisfy other Secured Obligations or, in the case of
moneys in the Canadian LC Collateral Account, to satisfy other Canadian Secured
Obligations.  If the Borrowers are required to provide an amount of cash
collateral hereunder as a result of the occurrence of an Event of Default, such
amount (to the extent not applied as aforesaid) shall be returned to the
Borrowers within three Business Days after all such Events of Default have been
cured or waived.
 
 
 
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(l)           Existing Letters of Credit.  On the Effective Date, each Existing
Letter of Credit shall, automatically and without further action, be deemed to
be a Letter of Credit that has been issued hereunder as of the Effective Date
for all purposes hereunder and under the other Loan Documents.  Without limiting
the foregoing (i) each such Existing Letter of Credit shall be included in the
calculation of LC Exposure, (ii) all liabilities of the Borrowers and the other
Loan Parties with respect to such Existing Letters of Credit shall constitute
Obligations and (iii) each Lender shall have reimbursement obligations with
respect to such Existing Letters of Credit as provided in this Section
2.06.  Any Existing Letter of Credit that is renewed or extended shall be issued
by an Issuing Bank referred to in clause (a) of the definition thereof.
 
(m)           LC Exposure Reporting. Each Issuing Bank shall, not later than
10:00 a.m., New York time, on each Business Day, notify the Administrative Agent
in reasonable detail as to the amount of the LC Exposure with respect to the
Letters of Credit issued by such Issuing Bank.
 
 
 
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                      SECTION 2.07.      Funding of Borrowings.  (a) Each Lender
shall make each Loan to be made by it hereunder on the proposed date thereof by
wire transfer of immediately available funds by 3:00 p.m., Chicago time, to the
account of the Administrative Agent or the Canadian Administrative Agent, as
applicable; provided, that Swingline Loans shall be made as provided in Section
2.05.  Each of the Administrative Agent and the Canadian Administrative Agent,
as applicable, will make such Loans available to the Borrower Representative by
promptly crediting the amounts so received, in like funds, to the Funding
Account(s); provided that ABR Loans made to finance (i) the reimbursement of an
LC Disbursement as provided in Section 2.06(e) shall be remitted by the
Administrative Agent or the Canadian Administrative Agent, as applicable, to the
applicable Issuing Bank and (ii) a Protective Advance shall be retained by the
Administrative Agent or the Canadian Administrative Agent, as applicable, and
disbursed in its discretion.  U.S. Loans and participations in U.S. Swingline
Loans and U.S. Letters of Credit will be funded by each U.S. Lender pro rata in
accordance with its Applicable Percentage of the U.S. Commitments.  Canadian
Loans and participations in Canadian Swingline Loans and Canadian Letters of
Credit will be funded by each Canadian Lender pro rata in accordance with its
Applicable Percentage of the Canadian Commitments.
 
(b)           Unless the Administrative Agent or the Canadian Administrative
Agent, as applicable, shall have received notice from a Lender prior to the
proposed date of any Borrowing (or, in the case of any ABR Borrowing or Canadian
Prime Rate Borrowing, prior to the time of such proposed Borrowing) that such
Lender will not make available to the Administrative Agent or the Canadian
Administrative Agent, as applicable, such Lender’s share of such Borrowing, the
Administrative Agent or the Canadian Administrative Agent, as applicable, may
assume that such Lender has made such share available on such date in accordance
with paragraph (a) of this Section and may, in reliance upon such assumption,
make available to the applicable Borrower a corresponding amount.  In such
event, if a Lender has not in fact made its share of the applicable Borrowing
available to the Administrative Agent or the Canadian Administrative Agent, as
applicable, then the applicable Lender and the Borrowers severally agree to pay
to the Administrative Agent or the Canadian Administrative Agent, as applicable,
forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the applicable
Borrower to but excluding the date of payment to the Administrative Agent or the
Canadian Administrative Agent, as applicable, at (i) in the case of such Lender,
the greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent or the Canadian Administrative Agent, as applicable, in
accordance with banking industry rules on interbank compensation, or (ii) in the
case of the Borrowers, the interest rate applicable to ABR Loans (in the case of
dollar denominated amounts), Canadian Prime Rate Loans (in the case of Canadian
Dollar denominated amounts).  If such Lender pays such amount to the
Administrative Agent or the Canadian Administrative Agent, as applicable, then
such amount shall constitute such Lender’s Loan included in such Borrowing.
 
                      SECTION 2.08.      Interest Elections.  (a) Each Revolving
Borrowing initially shall be of the Type specified in the applicable Borrowing
Request and, (i) in the case of a Eurodollar Revolving Borrowing, shall have an
initial Interest Period as specified in such Borrowing Request and (ii) in the
case of BA Drawings, shall have an initial Contract Period as specified in such
Borrowing Request.  Thereafter, the Borrower Representative may elect to convert
such Borrowing to a Borrowing of a different Type, to convert BA Drawings to
Canadian Prime Rate Loans, to convert Canadian Prime Rate Loans (other than
Swingline Loans) into BA Drawings or to continue such Borrowing and, in the case
of a Eurodollar Revolving Borrowing, may elect Interest Periods therefor, all as
provided in this Section.  The Borrower Representative may elect different
options with respect to different portions of the affected Borrowing, in which
case each such portion shall be allocated ratably (in accordance with the
principal amount of the U.S. Loans or Canadian Loans, as the case may be) among
the Lenders holding the Loans comprising such Borrowing, and the Loans
comprising each such portion shall be considered a separate Borrowing.  This
Section shall not apply to Swingline Borrowings or Protective Advances, which
may not be converted or continued.
 
 
 
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(b)           To make an election pursuant to this Section, the Borrower
Representative shall notify the (i) Administrative Agent, with respect to each
U.S. Revolving Loan, and (ii) the Canadian Administrative Agent (with a copy to
the Administrative Agent) with respect to any Canadian Revolving Loan, of such
election by telephone by the time that a Borrowing Request would be required
under Section 2.03 if the Borrowers were requesting a Revolving Borrowing of the
Type resulting from such election to be made on the effective date of such
election, subject to paragraph (f) below in the case of BA Drawings.  Each such
telephonic Interest Election Request shall be irrevocable and shall be confirmed
promptly by hand delivery or facsimile to the Administrative Agent or the
Canadian Administrative Agent, (with a copy to the Administrative Agent) as
applicable, of a written Interest Election Request in a form approved by the
Administrative Agent or the Canadian Administrative Agent, as applicable, and
signed by the Borrower Representative.
 
(c)           Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02:
 
(i)           the Borrower and the Borrowing to which such Interest Election
Request applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to each
resulting Borrowing (in which case the information to be specified pursuant to
clauses (iii) and (iv) below shall be specified for each resulting Borrowing);
 
(ii)           the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;
 
(iii)           whether the resulting Borrowing is to be an ABR Borrowing, a
Eurodollar Borrowing or Canadian Prime Rate Borrowing; and
 
(iv)           if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such election,
which shall be a period contemplated by the definition of the term “Interest
Period”.
 
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrowers shall be deemed to have
selected an Interest Period of one month’s duration.
 
(d)           Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender’s portion of each resulting Borrowing.
 
 
 
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(e)           If the Borrower Representative fails to deliver a timely Interest
Election Request with respect to a Eurodollar Borrowing prior to the end of the
Interest Period applicable thereto, then, unless such Borrowing is repaid as
provided herein, at the end of such Interest Period such Borrowing shall be
converted to (i) an ABR Borrowing, in the case of a Eurodollar Borrowing of
either U.S. Revolving Loans or Canadian Revolving Loans denominated in dollars,
and (ii) a Canadian Prime Rate Borrowing, in the case of any BA
Drawing.  Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing and the Administrative Agent, at the request of
the Required Lenders, so notifies the Borrower Representative, then, so long as
an Event of Default is continuing (i) no outstanding Revolving Borrowing may be
converted to or continued as a Eurodollar Borrowing and (ii) no outstanding
Canadian Prime Rate Loans may be converted to BA Drawings, and (iii) unless
repaid, (A) each Eurodollar Borrowing of U.S. Revolving Loans or of Canadian
Revolving Loans denominated in dollars shall be converted to an ABR Borrowing at
the end of the Interest Period applicable thereto and (B) each BA Drawing shall
be converted to, or repaid with the proceeds of, a Canadian Prime Rate Borrowing
at the end of the Contract Period applicable thereto.
 
(f)           At or before 12:00 noon (Toronto time) three Business Days before
the last day of the Contract Period of any BA Drawing, the Borrower
Representative shall give to the Canadian Administrative Agent its written
Interest Election Request in respect of such BA Drawing which shall specify
either that the Canadian Borrower intends to repay the maturing B/As on such
date or to continue to issue B/As on such date to provide for the payment of the
maturing B/As. If the Borrower Representative fails to deliver such timely
notice with respect to a BA Drawing prior to the end of the Contract Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Contract Period such Borrowing shall be converted to Canadian
Prime Rate Loans.  Upon the conversion to or continuation of any Borrowing or
portion thereof as a BA Drawing, the Discount Proceeds that would otherwise be
payable to the Canadian Borrower by each Canadian Lender pursuant to Section
2.21(d) in respect of such new BA Drawing shall be applied against the principal
amount of such Borrowing (in the case of a conversion) or the reimbursement
obligation owed to such Lender in respect of such maturing B/As (in the case of
a continuation) (collectively, the “maturing amounts”) and the Canadian Borrower
shall pay to such Canadian Lender an amount equal to the excess of the maturing
amounts over such Discount Proceeds
 
                      SECTION 2.09.     Termination and Reduction of Revolving
Commitments; Increase in Revolving Commitments.  (a) Unless previously
terminated, all Revolving Commitments shall terminate on the Maturity Date.
 
(b)           The Borrowers may at any time terminate the Revolving Commitments
upon (i) the payment in full in cash of all outstanding U.S. Loans, in the case
of the U.S. Commitment, and Canadian Loans, in the case of the Canadian
Commitment, together with accrued and unpaid interest thereon and on any U.S.
Letters of Credit, in the case of the U.S. Commitment, and Canadian Letters of
Credit, in the case of the Canadian Commitment, as applicable, (ii) the
cancellation and return of all outstanding U.S. Letters of Credit, in the case
of the U.S. Commitment, and Canadian Letters of Credit, in the case of the
Canadian Commitment, (or alternatively, (A) with respect to each such U.S.
Letter of Credit, the deposit in the LC Collateral Account of cash equal to 103%
of the U.S. LC Exposure or with respect to each such Canadian Letter of Credit,
the deposit in the Canadian LC Collateral Account of cash equal to 103% Canadian
LC Exposure, as applicable, as of such date in accordance with Section 2.06(k),
(B) with the consent of the Administrative Agent and the Canadian Administrative
Agent, as applicable, and each applicable Issuing Bank, a back-up standby letter
of credit equal to 103% of the U.S. LC Exposure or Canadian LC Exposure, as
applicable, as of such date or (C) the inclusion of such Letters of Credit in a
credit facility that refinances the Obligations outstanding under this
Agreement), (iii) the payment in full in cash of the accrued and unpaid fees,
and (iv) the payment in full in cash of all reimbursable expenses and other U.S.
Obligations or Canadian Obligations, as applicable, together with accrued and
unpaid interest thereon.
 
 
 
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(c)           The Borrowers may from time to time reduce the U.S. Commitment and
the Canadian Sublimit; provided that (i) each reduction shall be in an amount
that is an integral multiple of $5,000,000 (or, if less, the aggregate remaining
U.S. Commitment or Canadian Sublimit), (ii) the Borrower Representative shall
allocate each such reduction, in whole or in part, to the U.S. Commitment or the
Canadian Sublimit, (iii) each reduction in the U.S. Commitment to an amount less
than the then effective Canadian Sublimit shall result in a dollar-for-dollar
reduction in the Canadian Sublimit and (iv) the Borrowers shall not reduce the
Revolving Commitments if, after giving effect to any concurrent prepayment of
the Revolving Loans in accordance with Section 2.10, (A) the sum of (1) the
total Revolving Exposures of all the Lenders, plus the Open Account Aggregate
Cap would exceed the lesser of (B) (1) the total Revolving Commitments and (2)
the Aggregate Borrowing Base.
 
                               (d)           The Borrower Representative shall
notify (i) the Administrative Agent of any election to terminate or reduce the
U.S. Commitments and (ii) the Canadian Administrative Agent (with a copy to the
Administrative Agent) of any election to terminate or reduce the Canadian
Commitments, in each case under paragraph (b) or (c) of this Section at least
five Business Days prior to the effective date of such termination or reduction,
specifying such election and the effective date thereof.  Promptly following
receipt of any notice, the Administrative Agent or the Canadian Administrative
Agent, as applicable, shall advise the U.S. Lenders or the Canadian Lenders, as
applicable, of the contents thereof.  Each notice delivered by the Borrower
Representative pursuant to this Section shall be irrevocable; provided that a
notice of termination of the Revolving Commitments delivered by the Borrower
Representative may state that such notice is conditioned upon the effectiveness
of other credit facilities, in which case such notice may be revoked by the
Borrower Representative (by notice to the Administrative Agent on or prior to
the specified effective date) if such condition is not satisfied.  Any
termination or reduction of the Revolving Commitments shall be permanent.  Each
reduction of the Revolving Commitments shall be made ratably among the Lenders
in accordance with their respective Revolving Commitments.
 
                               (e)           The Borrowers shall have the right
to increase the Revolving Commitment by obtaining additional U.S. Commitments,
either from one or more of the Lenders or another lending institution; provided
that (i) any such request for an increase shall be in a minimum amount of
$10,000,000, (ii) the Borrower Representative, on behalf of the Borrowers, may
make a maximum of five such requests, (iii) the Administrative Agent has
approved the identity of any such new Lender, such approval not to be
unreasonably withheld, (iv) any such new Lender assumes all of the rights and
obligations of a “Lender” hereunder, (v) any such additional Revolving
Commitments shall be on the same terms as the other Revolving Commitments and
(vi) the procedure described in Section 2.09(f) have been satisfied.
 
 
 
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(f)           Any amendment hereto for such an increase or addition shall be in
form and substance satisfactory to the Administrative Agent and shall only
require the written signatures of the Administrative Agent, the Borrowers and
the Lender(s) being added or increasing their U.S. Commitment, subject only to
the approval of all Lenders if any such increase would cause the Revolving
Commitment to exceed $700,000,000.  As a condition precedent to such an
increase, (1) the Borrower Representative shall deliver to the Administrative
Agent a certificate of each Loan Party (in sufficient copies for each Lender)
signed by an authorized officer of such Loan Party (i) certifying and attaching
the resolutions adopted by such Loan Party approving or consenting to such
increase, and (ii) in the case of the Borrowers, certifying that, before and
after giving effect to such increase, (A) the representations and warranties
contained in Article III and the other Loan Documents are true and correct in
all material respects, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they are true
and correct in all material respects as of such earlier date, and (B) no Default
exists; and (2) the Indenture shall have been amended in accordance with the
terms thereof to provide that the incremental Indebtedness incurred pursuant to
this Section 2.09 (in addition to all the other Indebtedness outstanding
pursuant to this Agreement) is excepted from the requirements of Section 4.04 of
the Indenture.
 
(g)           Within a reasonable time after the effective date of any increase,
the Administrative Agent shall, and is hereby authorized and directed to, revise
the Revolving Commitment Schedule to reflect such increase and shall distribute
such revised Revolving Commitment Schedule to each of the Lenders and the
Borrowers, whereupon such revised Revolving Commitment Schedule shall replace
the old Revolving Commitment Schedule and become part of this Agreement.  On the
Business Day following any such increase, all outstanding ABR Loans shall be
reallocated among the Lenders (including any newly added Lenders) in accordance
with the Lenders’ respective revised Applicable Percentages.  Eurodollar Loans
shall not be reallocated among the Lenders prior to the expiration of the
applicable Interest Period in effect at the time of any such increase; provided
that if an Event of Default occurs after the date of any such increase but prior
to the reallocation of the Eurodollar Loans such Loans shall, subject to Section
2.16, be reallocated among the Lenders pro rata in accordance with their
Revolving Commitments.
 
                      SECTION 2.10.       Repayment and Amortization of Loans
and B/As; Evidence of Debt.  (a) The Borrowers hereby unconditionally promise to
pay (i) to the Administrative Agent or the Canadian Administrative Agent, as
applicable, for the account of each U.S. Lender and Canadian Lender, as the case
may be, the then unpaid principal amount of each Revolving Loan on the Maturity
Date, (ii) to the Canadian Administrative Agent for the account of each
applicable Canadian Lender, the then unpaid principal amount of any BA Drawing
in accordance with Section 2.21 and (iii) the then unpaid amount of each
Protective Advance on the earlier of the Maturity Date and demand by the
Administrative Agent (with respect to the U.S. Protective Advances) or the
Canadian Administrative Agent (with respect to the Canadian Protective
Advances).
 
(b)           On each Business Day during a Dominion Period, (i) the
Administrative Agent shall apply all funds credited to the Collection Deposit
Account as of the previous Business Day (whether or not immediately available)
first to prepay any Protective Advances that may be outstanding, second to
prepay the Swingline Loans, and third, pro rata, to prepay the Revolving Loans
(without a corresponding reduction in the Revolving Commitments) and to deposit
in the LC Collateral Account  and the Canadian LC Collateral Account, as the
case may be, cash in an amount equal to 103% of the U.S. LC Exposure and the
Canadian LC Exposure at such time and (ii) the Canadian Administrative Agent
shall apply all funds credited to the Canadian Collection Deposit Account as of
the previous Business Day (whether or not immediately available) first to prepay
any Canadian Protective Advances that may be outstanding, second to prepay the
Canadian Swingline Loans, and third, pro rata, to prepay the Canadian Revolving
Loans (without a corresponding reduction in the Canadian Commitments) and to
deposit in the Canadian LC Collateral Account cash in an amount equal to 103% of
the Canadian LC Exposure at such time.  All amounts applied pursuant to clause
(i) above shall be applied pro rata as among the U.S. Lenders and all amounts
applied pursuant to clause (ii) above shall be applied pro rata as among the
Canadian Lenders.
 
 
 
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(c)           Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrowers to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
 
(d)           The Administrative Agent and the Canadian Administrative Agent, as
the case may be, shall maintain accounts in which it shall record (i) the amount
of each Loan made hereunder, the Type thereof and the Interest Period applicable
thereto, (ii) the amount of any principal or interest due and payable or to
become due and payable from the Borrowers to each Lender hereunder and (iii) the
amount of any sum received by the Administrative Agent or the Canadian
Administrative Agent hereunder for the account of the Lenders and each Lender’s
share thereof.
 
(e)           The entries made in the accounts maintained pursuant to paragraph
(c) or (d) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of any
Lender or the Administrative Agent or the Canadian Administrative Agent to
maintain such accounts or any error therein shall not in any manner affect the
obligation of the Borrowers to repay the Loans in accordance with the terms of
this Agreement.
 
(f)           Any Lender may request that Loans made by it be evidenced by a
promissory note.  In such event, the Borrowers shall prepare, execute and
deliver to such Lender a promissory note payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns) and
in a form approved by the Administrative Agent.  Thereafter, the Loans evidenced
by such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
 
                      SECTION 2.11.       Prepayment of Loans and B/As.  (a) The
Borrowers shall have the right at any time and from time to time to prepay any
Borrowing in whole or in part, subject to prior notice in accordance with
paragraph (f) of this Section, except that the Borrowers shall not prepay any BA
Drawings except on the last day of the Contract Period applicable thereto
(subject to any mandatory prepayment requirements hereunder).
 
 
 
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(b)           In the event and on such occasion that (i) the sum of (A) the
total Revolving Exposure of all the Lenders and (B) the Open Account Aggregate
Cap exceeds the lesser of (x) the total Revolving Commitments or (y) the
Aggregate Borrowing Base, (ii) the total U.S. Revolving Exposure of all the U.S.
Lenders exceeds (A) the lesser of (x) the total U.S. Commitments or (y) the U.S.
Borrowing Base minus (B) the Canadian U.S. Borrowing Base Utilization or (iii)
the total Canadian Revolving Exposure of all the Canadian Lenders exceeds the
lesser of (A) the Canadian Sublimit or (B) (x) the Canadian Borrowing Base plus
(y) the U.S. Availability, the Borrowers shall promptly prepay (or in the case
of the LC Exposure, cash collateralize) the Revolving Loans, LC Exposure and/or
Swingline Loans in an aggregate amount equal to such excess.
 
(c)           If the Administrative Agent determines that the outstanding
principal Dollar Amount of all outstanding Commercial Letters of Credit issued
that are U.S. Letters of Credit denominated in an Alternative Currency exceeds
the lesser of (A) $450,000,000 less the sum of the outstanding principal amount
of the LC Exposure denominated in dollars and (B) $100,000,000, then not later
than one Business Day after notice of the amount of such excess from the
Administrative Agent to the Borrower Representative, the U.S. Borrowers shall
deposit in the LC Collateral Account cash in an amount equal to such excess (to
be held as cash collateral in accordance with Section 2.06(k)).
 
(d)           During a Dominion Period, in the event and on each occasion that
any Net Proceeds are received by or on behalf of any Loan Party in respect of
any Prepayment Event, the Borrowers shall, immediately after such Net Proceeds
are received by any Loan Party, prepay the Obligations as set forth in Section
2.11(f) below in an aggregate amount equal to 100% of such Net Proceeds to the
extent that such Obligations are then outstanding; provided that, in the case of
any event described in paragraph (a) or (b) of the definition of the term
“Prepayment Event”, if the Borrower Representative shall deliver to the
Administrative Agent a certificate of a Financial Officer to the effect that the
Loan Parties intend to apply the Net Proceeds from such event (or a portion
thereof specified in such certificate), within 180 days after receipt of such
Net Proceeds, to acquire (or replace or rebuild) real property, equipment or
other tangible assets (excluding inventory) to be used in the business of the
Loan Parties, and certifying that no Default has occurred and is continuing,
then if the Net Proceeds specified in such certificate are to be applied by (A)
the Borrowers, then such Net Proceeds shall be applied by the Administrative
Agent to reduce the outstanding principal balance of the Revolving Loans
(without a permanent reduction of the Revolving Commitment) and upon such
application, the Administrative Agent shall establish a Reserve against the
Borrowing Base in an amount equal to the amount of such proceeds so applied and
(B) any Loan Party that is not a Borrower, then such Net Proceeds shall be
deposited in a cash collateral account and in either case, thereafter, such
funds shall be made available to the applicable Loan Party as follows:
 
(1)           the Borrower Representative shall request a Revolving Loan
(specifying that the request is to use Net Proceeds pursuant to this Section) or
the applicable Loan Party shall request a release from the cash collateral
account be made in the amount needed;
 
 
 
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(2)           so long as the conditions set forth in Section 4.02 have been met,
the Revolving Lenders shall make such Revolving Loan or the Administrative Agent
shall release funds from the cash collateral account; and
 
(3)           in the case of Net Proceeds applied against the Revolving Loan,
the Reserve established with respect to such insurance proceeds shall be reduced
by the amount of such Revolving Loan;
 
provided that to the extent of any such Net Proceeds therefrom that have not
been so applied by the end of such 180 day period, at which time a prepayment
shall be required in an amount equal to such Net Proceeds that have not been so
applied; provided further that the Borrowers shall not be permitted to make
elections to use Net Proceeds to acquire (or replace or rebuild) equipment or
other tangible assets (excluding inventory) with respect to Net Proceeds in any
fiscal year in an aggregate amount in excess of $50,000,000.
 
(e)           In the event that the IP Secured Financing is consummated, the Net
Proceeds that are received by or on behalf of any Loan Party shall, as provided
in the definition of “IP Secured Financing” be applied to prepay the Obligations
as set forth in Section 2.11(f) below in an aggregate amount equal to 100% of
such Net Proceeds to the extent that such Obligations are then outstanding.
 
(f)           All such amounts pursuant to Sections 2.11(d) and (e) shall be
applied, first to prepay any Protective Advances that may be outstanding, pro
rata,  and second to prepay the Revolving Loans (including Swingline Loans)
without a corresponding reduction in the Revolving Commitment and, except in the
case of amounts due pursuant to paragraph (e) above, to cash collateralize
outstanding LC Exposure.  If the precise amount of insurance or condemnation
proceeds allocable to Inventory as compared to equipment, fixtures and real
property is not otherwise determined, the allocation and application of those
proceeds shall be determined by the Administrative Agent, in its Permitted
Discretion.  Notwithstanding the foregoing, any such application of proceeds
from Collateral securing solely the Canadian Obligations shall be made solely in
respect of the Canadian Obligations.
 
(g)           The Borrower Representative shall notify the Administrative
Agent  and the Canadian Administrative Agent (and, in the case of prepayment of
a Swingline Loan, the applicable Swingline Lender) by telephone (confirmed by
facsimile) of any prepayment hereunder (i) in the case of prepayment of a
Eurodollar Borrowing, not later than 10:00 a.m., Chicago time, three Business
Days before the date of prepayment, or (ii) in the case of prepayment of an ABR
Borrowing or a Canadian Prime Rate Borrowing, not later than 10:00 a.m., Chicago
time, on the date of prepayment.  Each such notice shall be irrevocable and
shall specify the prepayment date and the principal amount of each Borrowing or
portion thereof to be prepaid; provided that, if a notice of prepayment is given
in connection with a conditional notice of termination of the Revolving
Commitments as contemplated by Section 2.09, then such notice of prepayment may
be revoked if such notice of termination is revoked in accordance with Section
2.09.  Promptly following receipt of any such notice relating to a Revolving
Borrowing, the Administrative Agent shall advise the Lenders of the contents
thereof.  Each partial prepayment of any Revolving Borrowing shall be in an
amount that would be permitted in the case of an advance of a Revolving
Borrowing of the same Type as provided in Section 2.02.  Each prepayment of a
Revolving Borrowing shall be applied ratably to the Revolving Loans included in
the prepaid Borrowing.  Prepayments shall be accompanied by accrued interest to
the extent required by Section 2.13.
 
 
 
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                      SECTION 2.12.      Fees.  (a) The U.S. Borrowers agree to
pay to the Administrative Agent for the account of each Lender a
commitment  fee, which shall accrue at a rate equal to (i), if the average daily
unused portion of the Revolving Commitment is greater than 50% of the total
Revolving Commitment during the period in respect of which the payment is being
made, 1.00%, per annum, and (ii), if the average daily unused portion of the
total Revolving Commitment is less than or equal to 50% of the total Revolving
Commitment during the period in respect of which the payment is being made,
0.75%, per annum, in each case on the average daily amount of the Available
Revolving Commitment of such Lender during the period from and including the
Effective Date to but excluding the date on which the Lenders’ Revolving
Commitments terminate.  Accrued commitment fees shall be payable in arrears on
the first day of each calendar month and on the date on which the Revolving
Commitments terminate, commencing on the first such date to occur after the date
hereof.  All commitment fees shall be computed on the basis of a year of 360
days and shall be payable for the actual number of days elapsed (including the
first day but excluding the last day).
 
(b)           The (i) U.S. Borrowers agree to pay to the Administrative Agent
for the account of each U.S. Lender a participation fee with respect to its
participations in U.S. Letters of Credit and (ii) Canadian Borrower agrees to
pay to the Canadian Administrative Agent for the account of each Canadian Lender
a participation fee with respect to its participations in Canadian Letters of
Credit, which, in each case, which shall accrue at the same Applicable Rate used
to determine the interest rate applicable to Eurodollar Loans (or, in the case
of Commercial Letters of Credit that do not provide for the presentation of a
time draft, 50% of such Applicable Rate) on the average daily amount of such
Lender’s applicable LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date on which such Lender’s
Revolving Commitment terminates and the date on which such Revolving Lender
ceases to have any LC Exposure. In addition, each Borrower agrees to pay  to the
applicable Issuing Bank with respect to each Standby Letter of Credit issued for
the account of such Borrower a fronting fee, which shall accrue at the rate of
0.1% per annum on the average daily amount of the Standby LC Exposure (excluding
any portion thereof attributable to unreimbursed LC Disbursements) during the
period from and including the Effective Date to but excluding the later of the
date of termination of the Revolving Commitments and the date on which there
ceases to be any LC Exposure, as well as the applicable Issuing Bank’s standard
fees with respect to the issuance, amendment, renewal or extension of any Letter
of Credit or processing of drawings thereunder.  Participation fees and fronting
fees accrued through and including the last day of each calendar quarter shall
be payable on the first day of each January, April, July and October following
such last day, commencing on the first such date to occur after the Effective
Date; provided that all such fees shall be payable on the date on which the
Revolving Commitments terminate and any such fees accruing after the date on
which the Revolving Commitments terminate shall be payable on demand.  Any other
fees payable to an Issuing Bank pursuant to this paragraph shall be payable
within 10 days after demand.  All participation fees and fronting fees payable
pursuant to this paragraph (b) shall be computed on the basis of a year of 360
days and shall be payable for the actual number of days elapsed (including the
first day but excluding the last day).
 
 
 
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(c)           The U.S. Borrowers agree to pay to the Administrative Agent, for
its own account, fees payable in the amounts and at the times separately agreed
upon between the Borrowers and the Administrative Agent.
 
(d)           All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent or the Canadian
Administrative Agent, as applicable, (or to the applicable Issuing Bank in the
case of fees payable to it) for distribution, in the case of commitment fees and
participation fees, to the Lenders.  Fees paid shall not be refundable under any
circumstances.
 
                      SECTION 2.13.      Interest.  (a) The Loans comprising
each ABR Borrowing (including each Swingline Loan) shall bear interest at the
Alternate Base Rate plus the Applicable Rate.
 
(b)           The Loans comprising each Eurodollar Borrowing shall bear interest
at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus the Applicable Rate.
 
(c)           Each Protective Advance shall bear interest at the Alternate Base
Rate plus the Applicable Rate for Revolving Loans plus 2%.
 
(d)           The Loans comprising each Canadian Prime Rate Borrowing shall bear
interest at the Canadian Prime Rate plus the Applicable Rate.
 
(e)           Notwithstanding the foregoing, during the occurrence and
continuance of any Event of Default under paragraph (a) of Article VII, the
Administrative Agent or the Required Lenders may, at their option, by notice to
the Borrower Representative (which notice may be revoked at the option of the
Required Lenders notwithstanding any provision of Section 9.02 requiring the
consent of “each Lender affected thereby” for reductions in interest rates),
declare that (i) all Loans that are subject to such Event of Default shall bear
interest at 2% plus the rate otherwise applicable to such Loans as provided in
the preceding paragraphs of this Section or (ii) in the case of any other
amounts outstanding hereunder that are subject to such Event of Default, (x) if
such amount is denominated in dollars, such amount shall accrue at 2% plus the
rate applicable to such fee or other obligation as provided hereunder (or, if no
such interest rate is specified, at a rate of interest equal to 2% plus the rate
otherwise applicable to ABR Loans) and (y) if such amount is denominated in
Canadian Dollars, such amount shall accrue at 2% plus the rate applicable to
Canadian Prime Rate Loans as provided in paragraph (d) of this Section.
 
(f)           Accrued interest on each Loan (for ABR Loans, accrued through the
last day of the prior calendar month) shall be payable in arrears on each
Interest Payment Date for such Loan and upon termination of the Revolving
Commitments; provided that (i) interest accrued pursuant to paragraph (d) of
this Section shall be payable on demand, (ii) in the event of any repayment or
prepayment of any Loan (other than a prepayment of an ABR Loan or Canadian Prime
Rate Loan prior to the end of the Availability Period), accrued interest on the
principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.  Accrued interest shall be payable (i) to the Administrative Agent,
for the account of each U.S. Lender, ratably with respect to interest on any
U.S. Revolving Loan or U.S. Swingline Loan, (ii) to the Administrative Agent,
with respect to interest on any U.S. Protective Advance, (iii) to the Canadian
Administrative Agent, for the account of each Canadian Lender, ratably with
respect to interest on a Canadian Revolving Loan or a Canadian Swingline Loan,
and (iv) to the Canadian Administrative Agent, with respect to interest on any
Canadian Protective Advance denominated in Canadian Dollars.
 
 
 
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(g)           All interest hereunder shall be computed on the basis of a year of
360 days, except that the Acceptance Fee and the interest computed by reference
to the Alternate Base Rate at times when the Alternate Base Rate is based on the
Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in
a leap year), and in each case shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).  The applicable
Alternate Base Rate, Canadian Prime Rate, Discount Rate, Adjusted LIBO Rate or
LIBO Rate shall be determined by the Administrative Agent or the Canadian
Administrative Agent, as applicable, and such determination shall be conclusive
absent manifest error.
 
(h)           For purposes of the Interest Act (Canada) and disclosure
thereunder, whenever any interest or any fee to be paid hereunder or under any
other Loan Document is to be calculated on the basis of a 360-day year or any
other period of time less than a calendar year, the yearly rate of interest or
fees to which the rate used in such calculation is equivalent, is the rate so
used multiplied by the actual number of days in the applicable calendar year and
divided by 360 or such other period of time.
 
                      SECTION 2.14.      Alternate Rate of Interest.  If prior
to the commencement of any Interest Period for a Eurodollar Borrowing:
 
(a)           the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable,
for such Interest Period; or
 
(b)           the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (or Lender) of
making or maintaining their Loans (or its Loan) included in such Borrowing for
such Interest Period;
 
then the Administrative Agent shall give notice thereof to the Borrower
Representative and the Lenders by telephone or facsimile as promptly as
practicable thereafter and, until the Administrative Agent notifies the Borrower
Representative and the Lenders that the circumstances giving rise to such notice
no longer exist, (i) any Interest Election Request that requests the conversion
of any Revolving Borrowing to, or continuation of any Revolving Borrowing as, a
Eurodollar Borrowing shall be ineffective, and (ii) any such request for a
continuation of a Eurodollar Borrowing of (A) U.S. Revolving Loans or Canadian
Revolving Loans denominated in dollars shall be deemed to be a request to
convert such Borrowing to an ABR Borrowing, and (B) Canadian Revolving Loans
denominated in Canadian Dollars shall be deemed to be a request to convert such
Borrowing to a Canadian Prime Rate Borrowing.
 
 
 
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                      SECTION 2.15.      Increased Costs.  (a) If any Change in
Law shall:
 
(i)           impose, modify or deem applicable any reserve, special deposit or
similar requirement (other than any Taxes) against assets of, deposits with or
for the account of, or credit extended by, any Lender (except any such reserve
requirement reflected in the Adjusted LIBO Rate) or Issuing Bank; or
 
(ii)           impose on any Lender or Issuing Bank, or the London interbank
market, any other condition affecting this Agreement or Eurodollar Loans,
Bankers’ Acceptances of BA Equivalent Loans made by such Lender or Letter of
Credit (or any  participation therein);
 
and the result of any of the foregoing shall be (A) to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan), (B) to increase the cost to such Lender or
such Issuing Bank of participating in, issuing or maintaining any Letter of
Credit, (C) to increase the cost to such Lender of participating in or of
purchasing or accepting Bankers’ Acceptances or (D) to reduce the amount of any
sum received or receivable by such Lender or Issuing Bank hereunder (whether of
principal, interest or otherwise), then the Borrowers will pay to such Lender or
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or Issuing Bank, as the case may be, for such additional
costs incurred or reduction suffered.
 
(b)           If any Lender or Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender’s or Issuing Bank’s capital or on the capital of such
Lender’s or Issuing Bank’s holding company, if any, as a consequence of this
Agreement or the Loans made by, or Letters of Credit held by, such Lender or
Issuing Bank, to a level below that which such Lender or Issuing Bank or such
Lender’s or Issuing Bank’s holding company could have achieved but for such
Change in Law (taking into consideration such Lender’s or Issuing Bank’s
policies and the policies of such Lender’s or Issuing Bank’s holding company
with respect to capital adequacy), then from time to time the Borrowers will pay
to such Lender or Issuing Bank, as the case may be, such additional amount or
amounts as will compensate such Lender or Issuing Bank or such Lender’s or
Issuing Bank’s holding company for any such reduction suffered.
 
(c)           A certificate of a Lender or Issuing Bank setting forth the amount
or amounts necessary to compensate such Lender or Issuing Bank or its holding
company, as the case may be, as specified in paragraph (a) or (b) of this
Section shall be delivered to the Borrower Representative and shall be
conclusive absent manifest error.  The Borrowers shall pay such Lender or
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.
 
(d)           Failure or delay on the part of any Lender or Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender’s or Issuing Bank’s right to demand such compensation; provided that
the Borrowers shall not be required to compensate a Lender or Issuing Bank
pursuant to this Section for any increased costs or reductions incurred more
than 270 days prior to the date that such Lender or Issuing Bank, as the case
may be, notifies the Borrower Representative of the Change in Law giving rise to
such increased costs or reductions and of such Lender’s or Issuing Bank’s
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 270-day period referred to above shall be extended to include the period of
retroactive effect thereof.
 
 
 
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                      SECTION 2.16.      Break Funding Payments.  In the event
of (a) the payment of any principal of any Eurodollar Loan other than on the
last day of an Interest Period applicable thereto (including as a result of an
Event of Default), (b) the conversion of any Eurodollar Loan other than on the
last day of the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Eurodollar Loan on the date specified in any
notice delivered pursuant hereto (regardless of whether such notice may be
revoked under Section 2.09(d) and is revoked in accordance therewith), or (d)
the assignment of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto as a result of a request by the Borrower
Representative pursuant to Section 2.19, then, in any such event, the Borrowers
shall compensate each Lender for the loss, cost and expense attributable to such
event.  In the case of a Eurodollar Loan, such loss, cost or expense to any
Lender shall be deemed to include an amount determined by such Lender to be the
excess, if any, of (i) the amount of interest which would have accrued on the
principal amount of such Loan had such event not occurred, at the Adjusted LIBO
Rate (including the Applicable Rate) that would have been applicable to such
Loan, for the period from the date of such event to the last day of the then
current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the eurodollar market.  A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section shall be delivered to the
Borrower Representative and shall be conclusive absent manifest error.  The
Borrowers shall pay such Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.
 
                      SECTION 2.17.      Taxes.  (a) Each payment by any Loan
Party under any Loan Document shall be made without deduction or withholding for
any Taxes, unless such deduction or withholding is required by applicable
law.  If any Withholding Agent determines, in its sole discretion exercised in
good faith, that it is so required to deduct or withhold Taxes, then such
Withholding Agent may so deduct or withhold and shall timely pay the full amount
of withheld Taxes to the relevant Governmental Authority in accordance with
applicable law.  If such Taxes are Indemnified Taxes, then the amount to be paid
by the Loan Parties shall be increased as necessary so that, net of such
withholding (including any deduction or withholding applicable to additional
amounts payable under this Section), the applicable recipient of such payment
receives the amount it would have received had no such deduction or withholding
been made.
 
(b)           The Loan Parties shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
 
 
 
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(c)           The Loan Parties shall jointly and severally indemnify the
Administrative Agent, the Canadian Administrative Agent, each Lender and each
Issuing Bank, within 10 days after written demand therefor, for the full amount
of any Indemnified Taxes paid by the Administrative Agent, the Canadian
Administrative Agent, such Lender or such Issuing Bank, as the case may be, on
or with respect to any payment by or on account of any obligation of the Loan
Parties under any Loan Document (including Indemnified Taxes imposed or asserted
on or attributable to amounts payable under this Section) and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified 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 Representative by a Lender or an Issuing
Bank, or by the Administrative Agent or the Canadian Administrative Agent on its
own behalf or on behalf of any Lender Party, shall be conclusive absent manifest
error.
 
(d)           Each Lender and Issuing Bank shall indemnify each Loan Party and
the Administrative Agent, within 10 days after written demand therefor, for the
full amount of any Taxes described in clause (c) of the definition of “Excluded
Taxes” that are imposed on amounts paid to such Lender or Issuing Bank by such
Loan Party or the Administrative Agent on or with respect to any payment by or
on account of any obligation of any Loan Party under any Loan Document and any
reasonable expenses arising therefrom or with respect thereto, whether or not
such 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 applicable Lender or Issuing Bank by the Loan Party
or the Administrative Agent shall be conclusive absent manifest error.  The Loan
Party or the Administrative Agent, as applicable, shall notify the applicable
Lender or Issuing Bank of the incurrence or assertion of such liability within a
reasonable time after the incurrence or assertion.  Each Lender and Issuing Bank
hereby authorizes the Administrative Agent to set off and apply any and all
amounts at any time owing to such Lender or Issuing Bank, as the case may be,
under this Agreement or any other Loan Document against any amount due to the
Administrative Agent under this Section 2.17(d).
 
(e)           As soon as practicable after any payment of Indemnified Taxes by a
Loan Party to a Governmental Authority, such Loan Party or the Borrower
Representative shall deliver to the Administrative Agent or the Canadian
Administrative Agent, as applicable, 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 or the Canadian Administrative Agent,
as applicable.
 
(f)           (i) Any Lender that is entitled to an exemption from or reduction
of withholding tax under the law of the jurisdiction in which any Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under any Loan Document shall deliver to the Borrower Representative
and the Administrative Agent or the Canadian Administrative Agent, as
applicable, at the time or times prescribed by applicable law or reasonably
requested in writing by the Borrower Representative or the Administrative Agent
or the Canadian Administrative Agent, as applicable, such properly completed and
executed documentation prescribed by applicable law or reasonably requested by
the Borrower Representative or the Administrative Agent or the Canadian
Administrative Agent, as applicable, as will permit such payments to be made
without withholding or at a reduced rate.  In addition, any Lender shall deliver
such other documentation prescribed by applicable law or reasonably requested by
the Borrower Representative or the Administrative Agent or the Canadian
Administrative Agent, as applicable, as will enable the Borrower Representative
or the Administrative Agent or the Canadian Administrative Agent, as applicable,
to determine whether or not such Lender is subject to backup withholding or
information reporting requirements.  Upon the reasonable request of the Borrower
Representative or the Administrative Agent or the Canadian Administrative Agent,
as applicable, any Lender shall update any form or certification previously
delivered pursuant to this Section.  If any such form or certification expires
or becomes obsolete or inaccurate in any respect with respect to a Lender, such
Lender shall promptly (and in any event within 10 days after such expiration,
obsolescence or inaccuracy) notify the Borrower Representative and the
Administrative Agent or the Canadian Administrative Agent, as applicable, in
writing of such expiration, obsolescence or inaccuracy; provided that in no
event shall a Lender be liable to the Borrower, the Administrative Agent or the
Canadian Administrative Agent, as applicable, or any other Person for failing to
provide the notification referenced in this sentence.
 
 
 
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(ii)           Without limiting the generality of the foregoing, if any Borrower
is a U.S. Person, any Lender with respect to such Borrower shall, if it is
legally eligible to do so, deliver to the Borrower Representative and the
Administrative Agent (in such number of copies reasonably requested by the
Borrower Representative and the Administrative Agent) on or prior to the date on
which such Lender becomes a party hereto, duly completed and executed copies of
whichever of the following is applicable:
 
 
(A)
in the case of a Lender that is a U.S. Person, IRS Form W-9;

 
 
(B)
in the case of a Lender (other than a U.S. Person) claiming the benefits of an
income tax treaty to which the United States is a party (1) with respect to
payments of interest under any Loan Document, IRS Form W-8BEN establishing an
exemption from, or reduction of, U.S. federal withholding Tax pursuant to the
“interest” article of such tax treaty and (2) with respect to all other payments
under any Loan Document, IRS Form W-8BEN establishing an exemption from U.S.
federal withholding Tax pursuant to the “business profits” or “other income”
article of such tax treaty;

 
 
(C)
in the case of a Lender (other than a U.S. Person) for whom payments under any
Loan Document constitute income that is effectively connected with such Lender’s
conduct of a trade or business in the United States, IRS Form W-8ECI;

 
 
(D)
in the case of a Lender (other than a U.S. Person) claiming the benefits of the
exemption for portfolio interest under Section 881(c) of the Code both (1) IRS
Form W-8BEN and (2) a certificate substantially in the form of Exhibit F (a
“U.S. Tax Compliance Certificate”) to the effect that such Lender is not (a) a
“bank” within the meaning of Section 881(c)(3)(A) of the Code, (b) a “10 percent
shareholder” of a Borrower within the meaning of Section 881(c)(3)(B) of the
Code, (c) a “controlled foreign corporation” described in Section 881(c)(3)(C)
of the Code and (d) conducting a trade or business in the United States with
which the relevant interest payments are effectively connected;

 
 
 
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(E)
in the case of a Lender (other than a U.S. Person) that either is not the
beneficial owner of payments made under any Loan Document or is a partnership
(1) an IRS Form W-8IMY on behalf of itself and (2) the relevant forms prescribed
in clauses (A), (B), (C), (D) and (F) of this paragraph (f)(ii) that would be
required of each such beneficial owner or partner of such partnership if such
beneficial owner or partner were a Lender; or

 
 
(F)
any other form prescribed by law as a basis for claiming exemption from, or a
reduction of, U.S. federal withholding Tax together with such supplementary
documentation necessary to enable the Borrower Representative or the
Administrative Agent to determine the amount of Tax (if any) required by law to
be withheld.

 
(g)           If any recipient of any payment to be made by or on account of any
obligation of a Loan Party under any Loan Document determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes
as to which it has been indemnified pursuant to this Section 2.17 (including
additional amounts paid by any Loan Party pursuant to this Section 2.17), it
shall pay to the indemnifying party an amount equal to such refund (but only to
the extent of indemnity payments made under this Section 2.17 with respect to
the Taxes giving rise to such refund), net of all out-of-pocket expenses
(including any Taxes) of each such Person and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund).  Such indemnifying party, upon the request of any such Person, shall
repay to such Person the amount paid to such indemnifying party pursuant to the
previous sentence (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) in the event any such Person is required to
repay such refund to such Governmental Authority.  Notwithstanding anything to
the contrary in this paragraph, in no event will any such Person be required to
pay any amount to any Loan Party pursuant to this paragraph if such payment
would place any such Person in a less favorable position (on a net after-Tax
basis) than any such Person would have been in if the indemnification payments
or additional amounts giving rise to such refund had never been paid.  This
paragraph shall not be construed to require any such Person to make available
its Tax returns (or any other information relating to its Taxes that it deems
confidential) to any Loan Party or any other Person.
 
                      SECTION 2.18.      Payments Generally; Allocation of
Proceeds; Sharing of Set-offs.  (a) The Borrowers shall make each payment
required to be made by them hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Section 2.15,
2.16 or 2.17, or otherwise) prior to 2:00 p.m., Chicago time, on the date when
due, in immediately available funds, without set off or counterclaim.  All
payments hereunder shall be made in dollars except that all payments in respect
of Loans (and interest thereon) and LC Exposures to be made to the Canadian
Lenders or the Canadian Administrative Agent shall be made in the same currency
in which such Loan was made or Letter of Credit issued.  All such payments shall
be made and allocated, in the case of the U.S. Loans, for the account of the
U.S. Lenders, and in the case of the Canadian Loans, for the account of its
Canadian Lenders, in each case pro rata in accordance with the respective unpaid
principal amounts of the U.S. Loans and the U.S. LC Exposure or the Canadian
Loans and the Canadian LC Exposure, as the case may be, made to the applicable
Borrower held by them.  Any amounts received after such time on any date may, in
the discretion of the Administrative Agent or the Canadian Administrative Agent,
as applicable, be deemed to have been received on the next succeeding Business
Day for purposes of calculating interest thereon.  All such payments shall be
made to the Administrative Agent at its offices at 10 South Dearborn Street,
22nd Floor, Chicago, Illinois, except (i) with respect to payments of Canadian
Loans, LC Disbursements of any Issuing Bank in respect of Canadian Letters of
Credit, fronting fees payable to any Issuing Bank in respect of Canadian Letters
of Credit, the Canadian Administrative Agent at its offices at 200 Bay Street,
Royal Bank Plaza, Floor 18, Toronto M57 2J2 Canada, and (ii) payments to be made
directly to an Issuing Bank or Swingline Lender as expressly provided herein and
except that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be
made directly to the Persons entitled thereto.  Each of the Administrative Agent
and the Canadian Administrative Agent shall distribute any such payments
received by it for the account of any other Person to the appropriate recipient,
in like funds, promptly following receipt thereof.  If any payment hereunder
shall be due on a day that is not a Business Day, the date for payment shall be
extended to the next succeeding Business Day, and, in the case of any payment
accruing interest, interest thereon shall be payable for the period of such
extension.
 
 
 
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(b)           Any proceeds of Collateral received by the Administrative Agent or
the Canadian Administrative Agent after an Event of Default has occurred and is
continuing and the Administrative Agent or the Canadian Administrative Agent so
elects or the Required Lenders so direct shall be applied ratably (based in
respect of each of the following separate categories, computed independently of
the other categories, on each Lender Party’s interest in the aggregate specific
type of outstanding Secured Obligations described within (and only within) each
specific category of Secured Obligations listed respectively below) first, to
pay any fees, indemnities or expense reimbursements, including amounts then due
to the Administrative Agent, the Canadian Administrative Agent and each Issuing
Bank from the Borrowers (other than in connection with Banking Services, Swap
Obligations or Open Account Obligations), second, to pay any fees or expense
reimbursements then due to the Lenders from the Borrowers (other than in
connection with Banking Services, Swap Obligations or Open Account Obligations),
third, to pay interest due in respect of the Protective Advances, fourth, to pay
the principal of the Protective Advances, fifth, to pay interest then due and
payable on the Loans (other than the Protective Advances), sixth, to prepay
principal on the Loans (other than the Protective Advances) and LC
Disbursements, seventh, to deposit in the U.S. LC Collateral Account and the
Canadian L.C. Collateral Account cash (as provided in Section 2.06(k))
collateral equal to 103% of the sum of the U.S. LC Exposure and Canadian LC
Exposure, as the case may be, to be held as cash collateral for such Obligations
and such Canadian Obligations, as the case may be, eighth, to pay (i) the
Citibank Open Account Obligations in an aggregate amount up to the Citibank Open
Account Cap and (ii) the other Open Account Obligations in an aggregate amount
up to the applicable Open Account Other Cap with respect to each Other Open
Account Agreement related thereto, ninth, to payment of any amounts owing with
respect to Banking Services and Swap Obligations, tenth, to the payment of any
other Secured Obligation due to any Lender Party by the Borrowers and eleventh,
to pay the Open Account Excess Obligations.  Notwithstanding anything to the
contrary contained in this Agreement, unless so directed by the Borrower
Representative, or unless an Event of Default is in existence, none of the
Administrative Agent, the Canadian Administrative Agent nor any Lender shall
apply any payment which it receives to any Eurodollar Loan, except (a) on the
expiration date of the Interest Period applicable to any such Eurodollar Loan or
(b) in the event, and only to the extent, that there are no outstanding ABR
Loans or Canadian Prime Rate Loans and, in any such event, the Borrowers shall
pay the break funding payment required in accordance with Section 2.16.  Each of
the Administrative Agent, the Canadian Administrative Agent and the Lenders
shall have the continuing and exclusive right to apply and reverse and reapply
all such proceeds and payments to any portion of the Secured
Obligations.  Notwithstanding the foregoing, any such application of proceeds
from Collateral securing solely the Canadian Obligations shall be made solely in
respect of Canadian Obligations.
 
 
 
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(c)           At the election of the Administrative Agent or the Canadian
Administrative Agent, as the case may be, all payments of principal, interest,
LC Disbursements, Open Account Obligations, fees, premiums, reimbursable
expenses (including, without limitation, all reimbursement for fees and expenses
pursuant to Section 9.03), and other sums payable under the Loan Documents, may
be paid from the proceeds of Borrowings made hereunder whether made following a
request by the Borrower Representative pursuant to Section 2.03 or a deemed
request as provided in this Section or (following substantially contemporaneous
notice to the Borrower Representative, except that delivery of such notice shall
not be required during the continuance of any Event of Default and the
Administrative Agent shall have no liability, in any event, for failing to
deliver such notice) may be deducted from any deposit account of any Borrower
maintained with the Administrative Agent or the Canadian Administrative
Agent.  Each Borrower hereby irrevocably authorizes (i) the Administrative Agent
or the Canadian Administrative Agent, as applicable, to make a Borrowing for the
purpose of paying each payment referred to in the preceding sentence and agrees
that all such amounts charged shall constitute Loans (including Swingline Loans,
but such a Borrowing may only constitute a Protective Advance if it is to
reimburse costs, fees and expenses as described in Section 9.03) and that all
such Borrowings shall be deemed to have been requested pursuant to Sections
2.03, 2.04 or 2.05, as applicable and (ii) the Administrative Agent or the
Canadian Administrative Agent, as applicable (following substantially
contemporaneous notice to the Borrower Representative, except that delivery of
such notice shall not be required during the continuance of any Event of Default
and the Administrative Agent shall have no liability, in any event, for failing
to deliver such notice) to charge any deposit account of any Borrower maintained
with the Administrative Agent or the Canadian Administrative Agent, as
applicable, for each payment of principal, interest and fees as it becomes due
hereunder or any other amount due under the Loan Documents.
 
(d)           If any Lender shall, by exercising any right of set off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans or participations in LC Disbursements resulting in
such Lender receiving payment of a greater proportion of the aggregate amount of
its Loans and participations in LC Disbursements and accrued interest thereon
than the proportion received by any other Lender, then the Lender receiving such
greater proportion shall purchase (for cash at face value) participations in the
Loans and participations in LC Disbursements of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans and participations in LC
Disbursements; provided that (i) if any such participations are purchased and
all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and (ii) the provisions of this paragraph
shall not be construed to apply to any payment made by the Borrowers pursuant to
and in accordance with the express terms of this Agreement or any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in LC Disbursements to any
assignee or participant.  Each Borrower consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against such Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such Borrower
in the amount of such participation.
 
 
 
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(e)           Unless the Administrative Agent shall have received notice from
the Borrower Representative prior to the date on which any payment is due to the
Administrative Agent or the Canadian Administrative Agent, as applicable, for
the account of the Lenders or an Issuing Bank hereunder that the Borrowers will
not make such payment, the Administrative Agent or the Canadian Administrative
Agent, if applicable, may assume that the Borrowers have made such payment on
such date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders, the Open Account Banks or the Issuing Banks, as the
case may be, the amount due.  In such event, if the Borrowers have not in fact
made such payment, then each of the Lenders, the Open Account Banks or the
Issuing Banks, as the case may be, severally agrees to repay to the
Administrative Agent or the Canadian Administrative Agent, as applicable,
forthwith on demand the amount so distributed to such Lender,  Open Account Bank
or such Issuing Bank with interest thereon, for each day from and including the
date such amount is distributed to it to but excluding the date of payment to
the Administrative Agent or the Canadian Administrative Agent, if applicable, at
the greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent or the Canadian Administrative Agent, as applicable, in
accordance with banking industry rules on interbank compensation.
 
(f)           If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.05, 2.06(d) or (e), 2.07(b), 2.18(e), 2.21(d) or
9.03(c), then the Administrative Agent and, if applicable, the Canadian
Administrative Agent, may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender’s obligations under
such Sections until all such unsatisfied obligations are fully paid.
 
                      SECTION 2.19.      Mitigation Obligations; Replacement of
Lenders.  (a) If any Lender or Issuing Bank requests compensation under Section
2.15, or if the Borrowers are required to pay any additional amount to any
Lender Issuing Bank or any Governmental Authority for the account of any Lender
or Issuing Bank pursuant to Section 2.17, then such Lender or Issuing Bank shall
use reasonable efforts to designate a different lending office for funding or
booking its Loans or Letters of Credit hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Lender or Issuing Bank, such designation or assignment (i)
would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, as
the case may be, in the future and (ii) would not subject such Lender or Issuing
Bank to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender or Issuing Bank.  The Borrowers hereby agree to
pay all reasonable costs and expenses incurred by any Lender in connection with
any such designation or assignment;
 
 
 
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(b)           If any Lender or Issuing Bank requests compensation under Section
2.15, or if the Borrowers are required to pay any additional amount to any
Lender, Issuing Bank or any Governmental Authority for the account of any Lender
or Issuing Bank pursuant to Section 2.17, or if any Lender becomes a Defaulting
Lender, then the Borrowers may, at their sole expense and effort, upon notice to
such Lender or Issuing Bank and the Administrative Agent, require such Lender or
Issuing Bank to assign and delegate, without recourse (in accordance with and
subject to the restrictions contained in Section 9.04), all its interests,
rights and obligations under this Agreement to an assignee that shall assume
such obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrowers shall have received the prior
written consent of the Administrative Agent and the Issuing Banks (other than
any Issuing Bank required to assign and delegate its interests, rights and
obligations pursuant to this paragraph (b)), which consent shall not
unreasonably be withheld, (ii) such Lender or Issuing Bank shall have received
payment of an amount equal to the outstanding principal of its Loans and
participations in LC Disbursements and Swingline Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrowers (in the case of all other amounts) and (iii) in the case
of any such assignment resulting from a claim for compensation under Section
2.15 or payments required to be made pursuant to Section 2.17, such assignment
will result in a reduction in such compensation or payments.  No Lender or
Issuing Bank shall be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or Issuing Bank or
otherwise, the circumstances entitling the Borrowers to require such assignment
and delegation cease to apply.
 
                      SECTION 2.20.      Returned Payments.  If after receipt of
any payment which is applied to the payment of all or any part of the
Obligations, the Administrative Agent, the Canadian Administrative Agent or any
Lender is for any reason compelled to surrender such payment or proceeds to any
Person because such payment or application of proceeds is invalidated, declared
fraudulent, set aside, determined to be void or voidable as a preference,
impermissible setoff, or a diversion of trust funds, or for any other reason,
then the Obligations or part thereof intended to be satisfied shall be revived
and continued and this Agreement shall continue in full force as if such payment
or proceeds had not been received by the Administrative Agent, the Canadian
Administrative Agent or such Lender.  The provisions of this Section 2.20 shall
be and remain effective notwithstanding any contrary action which may have been
taken by the Administrative Agent or any Lender in reliance upon such payment or
application of proceeds.  The provisions of this Section 2.20 shall survive the
termination of this Agreement.
 
                      SECTION 2.21.      Bankers’ Acceptances.  (a) The Canadian
Borrower may issue Bankers’ Acceptances denominated in Canadian Dollars for
acceptance and purchase by the Canadian Lenders in accordance with the
provisions of Section 2.01, Section 2.03 and this Section 2.21.
 
(b)           Each Bankers’ Acceptance shall have a Contract Period of
approximately 30, 60 or 90 days.  No Contract Period shall extend beyond the
Maturity Date.  If such Contract Period would otherwise end on a day that is not
a Business Day, such Contract Period shall end on the next preceding day that is
a Business Day.
 
 
 
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(c)           On each Borrowing date on which Bankers’ Acceptances are to be
accepted, the Canadian Administrative Agent shall advise the Canadian Borrower
as to the Canadian Administrative Agent’s determination of the applicable
Discount Rate for the Bankers’ Acceptances which any of the Canadian Lenders
have agreed to purchase.
 
(d)           Each Canadian Lender agrees to purchase a Bankers’ Acceptance
accepted by it.  The Canadian Borrower shall sell, and such Canadian Lender
shall purchase, the Bankers’ Acceptance at the applicable Discount Rate.  Such
Canadian Lender shall provide to the Canadian Funding Office the Discount
Proceeds less the Acceptance Fee payable by the Canadian Borrower with respect
to such Bankers’ Acceptance.  Such proceeds will then be made available to the
Canadian Borrower by the Canadian Administrative Agent crediting an account as
directed by the Canadian Borrower with the aggregate of the amounts made
available to the Canadian Administrative Agent by such Canadian Lenders and in
like funds as received by the Canadian Administrative Agent.
 
(e)           Each Canadian Lender may from time to time hold, sell, rediscount
or otherwise dispose of any or all Bankers’ Acceptances accepted and purchased
by it.
 
(f)           To facilitate borrowings under the Canadian Commitments by way of
B/As, the Canadian Borrower hereby appoints each Canadian Lender as its attorney
to sign and endorse on its behalf, in handwriting or by facsimile or mechanical
signature as and when deemed necessary by such Canadian Lender, blank forms of
B/As.  In this respect, it is each Canadian Lender’s responsibility to maintain
an adequate supply of blank forms of B/As for acceptance under this
Agreement.  The Canadian Borrower recognizes and agrees that all B/As required
to be accepted and purchased by any Canadian Lender and which are signed and/or
endorsed on its behalf by a Canadian Lender shall bind the Canadian Borrower as
fully and effectually as if signed in the handwriting of and duly issued by the
proper signing officers of the Canadian Borrower.  Each Canadian Lender is
hereby authorized to issue such B/As endorsed in blank in such face amounts as
may be determined by such Canadian Lender; provided that the aggregate amount
thereof is equal to the aggregate amount of B/As required to be accepted and
purchased by such Canadian Lender. No Canadian Lender shall be liable for any
damage, loss or other claim arising by reason of any loss or improper use of any
such instrument except the gross negligence or willful misconduct of such
Canadian Lender or its officers, employees, agents or representatives.  On
request by the Canadian Borrower, a Canadian Lender shall cancel all forms of
B/As which have been pre-signed or pre-endorsed by or on behalf of the Canadian
Borrower and which are held by such Canadian Lender and have not yet been issued
in accordance herewith.  Each Canadian Lender shall maintain a record with
respect to B/As held by it in blank hereunder, voided by it for any reason,
accepted and purchased by it hereunder, and cancelled at their respective
maturities. Each Canadian Lender agrees to provide such records to the Canadian
Borrower at the Canadian Borrower’s expense upon request.
 
(g)           Drafts drawn by the Canadian Borrower to be accepted as Bankers’
Acceptances shall be signed by a duly authorized officer or officers of the
Canadian Borrower or the Borrower Representative or by their respective
attorneys, including attorneys appointed pursuant to Section 2.21(f) above.
Notwithstanding that any Person whose signature appears on any Bankers’
Acceptance may no longer be an authorized signatory for the Canadian Borrower or
Borrower Representative, as applicable, at the time of issuance of a Bankers’
Acceptance, that signature shall nevertheless be valid and sufficient for all
purposes as if the authority had remained in force at the time of issuance and
any Bankers’ Acceptance so signed shall be binding on the Canadian Borrower.
 
 
 
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(h)           The Canadian Administrative Agent, promptly following receipt of a
notice of Borrowing, continuation or conversion by way of Bankers’ Acceptances,
shall advise the applicable Canadian Lenders of the notice and shall advise each
such Canadian Lender of the face amount of Bankers’ Acceptances to be accepted
by it and the applicable Contract Period (which shall be identical for all
Canadian Lenders). The aggregate face amount of Bankers’ Acceptances to be
accepted by a Canadian Lender shall be determined by the Administrative Agent by
reference to such Canadian Lender’s Applicable Percentage of the issue of
Bankers’ Acceptances, except that, if the face amount of a Bankers’ Acceptance
which would otherwise be accepted by a Canadian Lender would not be
Cdn.$100,000, or a whole multiple thereof, the face amount shall be increased or
reduced by the Canadian Administrative Agent in its sole discretion to
Cdn.$100,000, or the nearest whole multiple of that amount, as appropriate.
 
(i)           The Canadian Borrower waives presentment for payment and any other
defense to payment of any amounts due to a Canadian Lender in respect of a
Bankers’ Acceptance accepted and purchased by it pursuant to this Agreement
which might exist solely by reason of the Bankers’ Acceptance being held, at the
maturity thereof, by such Canadian Lender in its own right and the Canadian
Borrower agrees not to claim any days of grace if such Canadian Lender as holder
sues the Canadian Borrower on the Bankers’ Acceptance for payment of the amount
payable by the Canadian Borrower thereunder.  On the specified maturity date of
a B/A, or the date of any prepayment thereof in accordance with this Agreement,
if earlier, the Canadian Borrower shall pay to such Canadian Lender that has
accepted such B/A the full face amount of such B/A (or shall make provision for
payment by way of conversion or continuation in accordance with Section 2.08) in
full and absolute satisfaction of its obligations with respect to such B/A, and
after such payment, the Canadian Borrower shall have no further liability in
respect of such B/A (except to the extent that any such payment is rescinded or
reclaimed by operation of law or otherwise) and such Canadian Lender shall be
entitled to all benefits of, and will make and otherwise be responsible for all
payments due to the redeeming holder or any third parties under, such B/A.
 
(j)           Whenever the Canadian Borrower requests a borrowing by way of
Bankers’ Acceptances, each Non BA Lender shall, in lieu of accepting and
purchasing any B/As, make a Loan (a “BA Equivalent Loan”) to the Canadian
Borrower in the amount and for the same term as each Draft which such Lender
would otherwise have been required to accept and purchase hereunder. Each such
Lender will provide to the Canadian Administrative Agent the amount of Discount
Proceeds of such BA Equivalent Loan for the account of the Canadian Borrower in
the same manner as such Lender would have provided the Discount Proceeds in
respect of the Draft which such Lender would otherwise have been required to
accept and purchase hereunder. Each such BA Equivalent Loan will bear interest
at the same rate that would result if such Lender had accepted (and been paid an
acceptance fee) and purchased (on a discounted basis) a B/A for the relevant
Contract Period (it being the intention of the parties that each such BA
Equivalent Loan shall have the same economic consequences for the relevant
Lenders and the Canadian Borrower as the B/A that such BA Equivalent Loan
replaces). All such interest shall be paid in advance on the date such BA
Equivalent Loan is made, and will be deducted from the principal amount of such
BA Equivalent Loan in the same manner in which the discounted portion of a B/A
would be deducted from the face amount of the B/A. Subject to the repayment
requirements of this Agreement, on the last day of the relevant Contract Period
for such BA Equivalent Loan, the Canadian Borrower shall be entitled to convert
each such BA Equivalent Loan into another type of Loan, or to roll over each
such BA Equivalent Loan into another BA Equivalent Loan, all in accordance with
the applicable provisions of this Agreement. Each Non BA Lender may, at its
discretion, request in writing to the Canadian Administrative Agent and the
Canadian Borrower that BA Equivalent Loans made by it shall be evidenced by
Discount Notes.
 
 
 
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(k)           For greater certainty, all provisions of this Agreement that are
applicable to B/As shall also be applicable, mutatis mutandis, to BA Equivalent
Loans, and notwithstanding any other provision of this Agreement, all references
to principal amounts or any repayment or prepayment of any Loans that are
applicable to B/As or BA Drawings shall be deemed to refer to the full face
amount thereof in the case of B/As and to the principal amount of any portion
thereof consisting of BA Equivalent Loans. As set out in the definition of
“Bankers’ Acceptances”, that term includes Discount Notes and all terms of this
Agreement applicable to Bankers’ Acceptances (including the provisions of
Section 2.21(f) relating to their execution by the Canadian Lenders under power
of attorney) shall apply equally to Discount Notes evidencing BA Equivalent
Loans with such changes as may in the context be necessary. For greater
certainty:
 
(i)           the term of a Discount Note shall be the same as the Contract
Period for Bankers’ Acceptances accepted and purchased on the same Borrowing
date in respect of the same borrowing;
 
(ii)           an acceptance fee will be payable in respect of a Discount Note
and shall be calculated at the same rate and in the same manner as the
Acceptance Fee in respect of a Bankers’ Acceptance; and
 
(iii)           the Discount Rate applicable to a Discount Note shall be the
Discount Rate applicable to Bankers’ Acceptances accepted by a Canadian Lender
that is not a Schedule I Lender in accordance with the definition of “Discount
Rate” on the same Borrowing date or date of continuation or conversion, as the
case may be, in respect of the same borrowing for the relevant Contract Period.
 
(l)           Depository Bills and Notes Act.  At the option of the Canadian
Borrower and any Canadian Lender, Bankers’ Acceptances under this Agreement to
be accepted by such Canadian Lender may be issued in the form of depository
bills for deposit with The Canadian Depository for Securities Limited pursuant
to the Depository Bills and Notes Act (Canada). All depository bills so issued
shall be governed by the provisions of this Section 2.21.
 
(m)           Upon acceptance of a Bankers’ Acceptance by a Canadian Lender, the
Canadian Borrower shall pay to the Canadian Administrative Agent on behalf of
such Canadian Lender a fee (the “Acceptance Fee”) calculated on the face amount
of the Bankers’ Acceptance at a rate per annum equal to the Applicable Rate on
the basis of the number of days in the Contract Period for such Bankers’
Acceptance. Any adjustment to the Acceptance Fee (including any adjustment as
necessary to reflect the operation of Section 2.13(e)) shall be computed based
on the number of days remaining in the Contract Period of such Bankers’
Acceptances from and including the effective date of any change in the
Applicable Rate. Any increase in such Acceptance Fee shall be paid by the
Canadian Borrower to the Canadian Administrative Agent on behalf of the Canadian
Lenders on the last day of the Contract Period of the relevant Bankers’
Acceptance. Any decrease in such Acceptance Fee shall be paid by each Canadian
Lender to the Canadian Borrower, through the Canadian Administrative Agent, on
the last day of the Contract Period of the relevant Bankers’ Acceptance.
 
 
 
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                      SECTION 2.22.      Circumstances Making Bankers’
Acceptances Unavailable.  (a) If prior to the commencement of any Contract
Period, (i) the Canadian Administrative Agent determines in good faith, which
determination shall be conclusive and binding on the Canadian Borrower, and
notifies the Canadian Borrower that, by reason of circumstances affecting the
money market, there is no readily available market for Bankers’ Acceptances, or
(ii) the Canadian Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Discount Rate or CDOR Rate, as applicable, for such
Contract Period; or (iii) the Canadian Administrative Agent is advised by one or
more Canadian Lenders that the Discount Rate or CDOR Rate, as applicable, for
such Contract Period will not adequately and fairly reflect the cost to such
Lenders (or Lender) of making or maintaining their portion of such BA Drawings
included in such Borrowing for such Contract Period then:
 
(i)           the right of the Canadian Borrower to request a borrowing by way
of BA Drawing shall be suspended until the Canadian Administrative Agent
determines that the circumstances causing such suspension no longer exist and
the Canadian Administrative Agent so notifies the Canadian Borrower; and
 
(ii)           any notice relating to a borrowing by way of BA Drawing which is
outstanding at such time shall be deemed to be a notice requesting a borrowing
by way of Canadian Prime Rate Loans (all as if it were a notice given pursuant
to Section 2.03).
 
(b)           The Administrative Agent shall promptly notify the Canadian
Borrower and the Canadian Lenders of the suspension in accordance with Section
2.22(a) of the Canadian Borrower’s right to request a borrowing by way of BA
Drawing and of the termination of such suspension.
 
                      SECTION 2.23.      Defaulting Lenders.  Notwithstanding
any provision of this Agreement to the contrary, if any Lender becomes a
Defaulting Lender, then the following provisions shall apply for so long as such
Lender is a Defaulting Lender:
 
(a)           fees shall cease to accrue on the unfunded portion of the
Revolving Commitment of such Defaulting Lender pursuant to Section 2.12(a);
 
(b)           the Revolving Commitment and the Credit Exposure of such
Defaulting Lender shall not be included in determining whether all Lenders or
the Required Lenders have taken or may take any action hereunder (including any
consent to any amendment or waiver pursuant to Section 9.02), provided that any
waiver, amendment or modification requiring the consent of all Lenders or each
affected Lender which affects such Defaulting Lender differently than other
affected Lenders shall require the consent of such Defaulting Lender;
 
 
 
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(c)           if any Swingline Exposure or LC Exposure exist at the time a
Lender becomes a Defaulting Lender then:
 
(i)           all or any part of such Swingline Exposure and LC Exposure shall
be reallocated among the non-Defaulting Lenders in accordance with their
respective Applicable Percentages but only to the extent (x) the sum of all
non-Defaulting Lenders’ Credit Exposures plus the Open Account Aggregate Cap
plus such Defaulting Lender’s Swingline Exposure and LC Exposure does not exceed
the total of all non-Defaulting Lenders’ Revolving Commitments and (y) the
conditions set forth in Section 4.02 are satisfied at such time; and
 
(ii)           if the reallocation described in paragraph (i) above cannot, or
can only partially, be effected, the Borrowers shall within one Business Day
following notice by the Administrative Agent (x) first, prepay such Defaulting
Lender’s Swingline Exposure (after giving effect to any partial reallocation
pursuant to paragraph (i) above) and (y) second, cash collateralize such
Defaulting Lender’s LC Exposure (after giving effect to any partial reallocation
pursuant to paragraph (i) above) in accordance with the procedures set forth in
Sections 2.06(k) and for so long as any such LC Exposure is outstanding;
 
(iii)           if the Borrowers cash collateralize any portion of such
Defaulting Lender’s LC Exposure pursuant to this Section 2.23(c), the Borrowers
shall not be required to pay any fees to such Defaulting Lender pursuant to
Section 2.12(b), as the case may be, with respect to such Defaulting Lender’s LC
Exposure, as the case may be, during the period such Defaulting Lender’s LC
Exposure is cash collateralized;
 
(iv)           if the LC Exposure of the non-Defaulting Lenders are reallocated
pursuant to this Section 2.23(c), then the fees payable to the Lenders pursuant
to Sections 2.12(a) and (b), as the case may be, shall be adjusted in accordance
with such non-Defaulting Lenders’ Applicable Percentages; or
 
(v)           if any Defaulting Lender’s LC Exposure is not cash collateralized,
prepaid or reallocated pursuant to this Section 2.23(c), then, without prejudice
to any rights or remedies of the applicable Issuing Bank or any Lender
hereunder, all facility fees that otherwise would have been payable to such
Defaulting Lender (solely with respect to the portion of such Defaulting
Lender’s Revolving Commitment that was utilized by such LC Exposure) and letter
of credit fees payable under Section 2.12(b) with respect to such Defaulting
Lender’s LC Exposure shall be payable to the applicable Issuing Bank until such
Defaulting Lender’s LC Exposure is cash collateralized;
 
 
 
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(d)           so long as any Lender is a Defaulting Lender, no Issuing Bank
shall be required to issue, extend, create, incur, amend or increase any Letter
of Credit unless it is satisfied that the related exposure will be 100% covered
by the Revolving Commitments of the non-Defaulting Lenders and/or cash
collateral will be provided by the Borrowers in accordance with Section 2.23(c),
and participating interests in any such newly issued, extended or created Letter
of Credit or newly made Swingline Loan shall be allocated among non-Defaulting
Lenders in a manner consistent with Section 2.23(c)(i) (and Defaulting Lenders
shall not participate therein); and
 
(e)           any amount payable to such Defaulting Lender hereunder (whether on
account of principal, interest, fees or otherwise and including any amount that
would otherwise be payable to such Defaulting Lender pursuant to Section 2.18(d)
but excluding Section 2.19(b)) shall, in lieu of being distributed to such
Defaulting Lender, be retained by the Administrative Agent in a segregated
account and, subject to any applicable requirements of law, be applied at such
time or times as may be determined by the Administrative Agent (i) first, to the
payment of any amounts owing by such Defaulting Lender to the Administrative
Agent hereunder, (ii) second, pro rata, to the payment of any amounts owing by
such Defaulting Lender to the applicable Issuing Bank or the Swingline Lender
hereunder, (iii) third, if so determined by the Administrative Agent or
requested by an Issuing Bank or the Swingline Lender, to be held in such account
as cash collateral for future funding obligations of the Defaulting Lender of
any participating interest in any Swingline Loan or any Letter of Credit, (iv)
fourth, to the funding of any Loan in respect of which such Defaulting Lender
has failed to fund its portion thereof as required by this Agreement, as
determined by the Administrative Agent, (v) fifth, if so determined by the
Administrative Agent and the Borrower Representative, held in such account as
cash collateral for future funding obligations of the Defaulting Lender of any
Loans under this Agreement, (vi) sixth, to the payment of any amounts owing to
the Lenders,  the Issuing Banks or the Swingline Lender as a result of any
judgment of a court of competent jurisdiction obtained by any Lender, any
Issuing Bank or the Swingline Lender against such Defaulting Lender as a result
of such Defaulting Lender’s breach of its obligations under this Agreement,
(vii) seventh, to the payment of any amounts owing to the Borrowers as a result
of any judgment of a court of competent jurisdiction obtained by the Borrowers
against such Defaulting Lender as a result of such Defaulting Lender’s breach of
its obligations under this Agreement, and (viii) eighth, to such Defaulting
Lender or as otherwise directed by a court of competent jurisdiction; provided
that if such payment is (x) a prepayment of the principal amount of any Loans or
reimbursement obligations in respect of LC Disbursements for which a Defaulting
Lender has funded its participation obligations and (y) made at a time when the
conditions set forth in Section 4.02 are satisfied, such payment shall be
applied solely to prepay the Loans of, and reimbursement obligations owed to,
all non-Defaulting Lenders pro rata prior to being applied to the prepayment of
any Loans, or reimbursement obligations owed to, any Defaulting Lender.
 
In the event that the Administrative Agent (or, in the case of any Canadian
Lender, the Canadian Administrative Agent), the Borrowers, the Issuing Banks and
the Swingline Lender each agrees that a Defaulting Lender has adequately
remedied all matters that caused such Lender to be a Defaulting Lender, then the
Swingline Exposure and LC Exposure of the Lenders shall be readjusted to reflect
the inclusion of such Lender’s Revolving Commitment and on such date such Lender
shall purchase at par such of the Loans of the other Lenders (other than
Swingline Loans) as the Administrative shall determine may be necessary in order
for such Lender to hold such Loans in accordance with its Applicable Percentage.
 
 
 
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                      SECTION 2.24.       Excess Resulting From Exchange Rate
Change.
 
                      (a)           With respect to the Canadian Commitment, at
any time following one or more fluctuations in the exchange rate of the Canadian
Dollar against the dollar, (i) the aggregate outstanding principal amount of
Canadian Loans of the Canadian Borrower exceeds the lesser of the Canadian
Borrowing Base or the Canadian Sublimit or any other limitations hereunder based
on dollars or (ii) the aggregate outstanding principal balance of Canadian Loans
exceeds any other limit based on dollars set forth herein for such Canadian
Obligations, the Canadian Borrower shall (A) if such excess is in an aggregate
amount that is greater than or equal to $1,000,000, within two Business Days of
notice from the Canadian Administrative Agent, (B) if such excess is an
aggregate amount that is less than $1,000,000 and such excess continues to exist
in an aggregate amount less than $1,000,000 for at least five Business Days,
within two Business Days of notice from the Canadian Administrative Agent or (C)
if any Event of Default has occurred and is continuing, immediately (x) make the
necessary payments or repayments to reduce such Canadian Obligations to an
amount necessary to eliminate such excess or (y) maintain or cause to be
maintained with the Administrative Agent (for the benefit of the Canadian Lender
Parties) deposits as continuing collateral security for the Canadian Obligations
in an amount equal to or greater than the amount of such excess, such deposits
to be maintained in such form and upon such terms as are acceptable to the
Canadian Administrative Agent.  Without in any way limiting the foregoing
provisions, the Canadian Administrative Agent shall, weekly or more frequently
in the sole discretion of the Canadian Administrative Agent, make the necessary
exchange rate calculations to determine whether any such excess exists on such
date and advise the Borrowers if such excess exists.
 
(b)           If one or more of the U.S. Borrowers provide cash collateral to
secure obligations related to U.S. Letters of Credit that are denominated in an
Alternative Currency (including, without limitation, pursuant to Section
2.06(k), 2.10(b) or 2.18(b)) and, as a result of fluctuations in the applicable
exchange rate between dollars and the applicable Alternative Currency, the
Dollar Amount of cash collateral held by the Administrative Agent is less than
the specified amount of cash collateral so required to be maintained by the U.S.
Borrowers, the U.S. Borrowers shall, promptly following a request therefor by
the Administrative Agent, deposit in the LC Collateral Account an additional
Dollar Amount of cash collateral equal to such shortfall to be held as cash
collateral in accordance with Section 2.06(k).
 
ARTICLE III

 
Representatives and Warranties
 
Each Loan Party represents and warrants to the Lender Parties that:
 
                      SECTION 3.01.      Organization; Powers.  Each of the Loan
Parties and each of the Subsidiaries is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, has all
requisite power and authority to carry on its business as now conducted and,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, is qualified to
do business in, and is in good standing in, every jurisdiction where such
qualification is required.
 
 
 
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                      SECTION 3.02.      Authorization; Enforceability.  The
Transactions are within each Loan Party’s organizational powers and have been
duly authorized by all necessary organizational actions and, if required,
actions by equity holders.  The Loan Documents to which each Loan Party is a
party have been duly executed and delivered by such Loan Party and each
constitutes a legal, valid and binding obligation of such Loan Party,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’ rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.
 
                      SECTION 3.03.      Governmental Approvals; No
Conflicts.  The Transactions (a) do not require any consent or approval of,
registration or filing with, or any other action by, any Governmental Authority,
except such as have been obtained or made and are in full force and effect and
except for filings necessary to perfect Liens created pursuant to the Loan
Documents, (b) will not violate any Requirement of Law applicable to any Loan
Party or any of the Subsidiaries, (c) will not violate or result in a default
under any indenture or other material agreement or instrument binding upon any
Loan Party or any of the Subsidiaries or its assets, or give rise to a right
under any such indenture, material agreement or instrument (other than a Loan
Document) to require any payment to be made by any Loan Party or any of the
Subsidiaries, and (d) will not result in the creation or imposition of any Lien
on any asset of any Loan Party or any of the Subsidiaries, except Liens created
pursuant to the Loan Documents.
 
                      SECTION 3.04.      Financial Condition; No Material
Adverse Change.  (a) The Company has heretofore furnished to the Lenders
(i) historical audited consolidated income statements, balance sheets and
statements of cash flow of the Company for its 2007 and 2008 fiscal years and
(ii) unaudited interim consolidated income statements, balance sheets and
statements of cash flow of the Company for each fiscal month and quarter ended
after December 31, 2008 through the Effective Date.  Such financial statements
present fairly, in all material respects, the financial condition and results of
operations and cash flows of the Company and its consolidated Subsidiaries as of
such dates and for such periods in accordance with GAAP, consistently applied,
subject to year end audit adjustments and the absence of footnotes in the case
of the unaudited consolidated income statements, balance sheets and statements
of cash flows of the Company.
 
(b)           No event, change or condition has occurred that has had, or could
reasonably be expected to have, a Material Adverse Effect, since December 31,
2008.
 
                      SECTION 3.05.      Properties.  (a) As of the date of this
Agreement, Schedule 3.05 sets forth the address of each parcel of real property
that is owned or leased by each Loan Party.  Each of such leases and subleases
is valid and enforceable in accordance with its terms and is in full force and
effect, and no default by any party to any such lease or sublease exists, except
where the foregoing, individually or in the aggregate, would not reasonably be
expected to have a  Material Adverse Effect.  Each of the Loan Parties and the
Subsidiaries has good and indefeasible title to, or valid leasehold interests
in, all its real and personal property that is material to its business, free of
all Liens other than Permitted Liens.
 
 
 
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(b)           Each Loan Party and the Subsidiaries owns, or is licensed to use,
all trademarks, tradenames, copyrights, patents and other intellectual property
necessary to its business as currently conducted, a correct and complete list of
which, as of the date of this Agreement is set forth on Schedule 3.05, and the
use thereof by the Loan Parties and the Subsidiaries does not infringe in any
material respect upon the rights of any other Person, and the Loan Parties’
rights thereto are not subject to any licensing agreement or similar arrangement
as of the Effective Date (except for agreements and arrangements reflected on
Schedule 3.05 and other licensing agreements that are not, either individually
or in the aggregate, material to any Loan Party).
 
                      SECTION 3.06.      Litigation and Environmental
Matters.  (a) Except for the Disclosed Matters, there are no actions, suits or
proceedings by or before any arbitrator or Governmental Authority pending
against or, to the knowledge of any Loan Party, threatened against or affecting
the Loan Parties or any of the Subsidiaries (i) as to which there is a
reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect (other than the Disclosed Matters) or (ii)
that involve this Agreement or the Transactions.
 
(b)           Except for the Disclosed Matters (i) no Loan Party nor any of the
Subsidiaries has received written notice of any claim with respect to any
material Environmental Liability or knows of any basis for any Environmental
Liability that, individually or in the aggregate, would reasonably be expected
to result in a Material Adverse Effect, and (ii) except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, no Loan Party nor any of the
Subsidiaries (1) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any permit, license or other approval required under any
Environmental Law or (2) has become subject to any Environmental Liability.
 
(c)           Since the Effective Date, there has been no change in the status
of the Disclosed Matters that, individually or in the aggregate, has resulted
in, or materially increased the likelihood of, a Material Adverse Effect.
 
                      SECTION 3.07.      Compliance with Laws and
Agreements.  Each Loan Party and the Subsidiaries is in compliance with all
Requirements of Law applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.  No Default has occurred and is
continuing.
 
                      SECTION 3.08.      Investment Company Status.  No Loan
Party nor any of the Subsidiaries is an “investment company” as defined in, or
subject to regulation under, the Investment Company Act of 1940.
 
                      SECTION 3.09.      Taxes.  Each Loan Party and each
Subsidiary has timely filed or caused to be filed all Tax returns and reports
required to have been filed and has paid or caused to be paid all Taxes required
to have been paid by it, except (a) Taxes that are being contested in good faith
by appropriate proceedings and for which such Loan Party or such Subsidiary, as
applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.  No Liens for Taxes (other than Permitted Encumbrances)
have been filed and no claims are being asserted with respect to any such Taxes.
 
 
 
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                      SECTION 3.10.      ERISA.  (a) No ERISA Event has occurred
or is reasonably expected to occur that, when taken together with all other such
ERISA Events for which liability is reasonably expected to occur, could
reasonably be expected to result in a Material Adverse Effect.  Except for any
failure that would not reasonably be expected to have a Material Adverse Effect,
each Pension Plan that is intended to be qualified under Section 401(a) of the
Code has been determined by the IRS to be so qualified, and each trust related
to such plan has been determined to be exempt under Section 501(a) of the Code.
No liability that could reasonably be expected to result in a Material Adverse
Effect has been incurred by the Loan Parties or any ERISA Affiliate which
remains unsatisfied for any taxes or penalties with respect to any Pension Plan
or any Multiemployer Plan.
 
                               (b)           Canadian Pension Plans.  Each
Canadian Loan Party and its Subsidiaries is in compliance with the requirements
of the Pension Benefits Act (Ontario) and other federal, provincial or state
laws with respect to each Canadian Pension Plan, except where the failure to so
comply would not reasonably be expected to have a Material Adverse Effect.  No
fact or situation that may reasonably be expected to result in a Material
Adverse Effect exists in connection with any Canadian Pension Plan.  Neither any
Canadian Loan Party nor any of its Subsidiaries has any material withdrawal
liability in connection with a Canadian Pension Plan.  No Pension Event has
occurred.  No Lien has arisen, choate or inchoate, in respect of any Canadian
Loan Party or its Subsidiaries or their property in connection with any Canadian
Pension Plan (save for contribution amounts not yet due)
 
                      SECTION 3.11.      Disclosure.  Each Borrower has
disclosed to the Lenders all agreements, instruments and corporate or other
restrictions to which it or any Subsidiary is subject, and all other matters
known to it, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.  Neither the Information
Memorandum nor any of the other reports, financial statements, certificates or
other information furnished by or on behalf of any Loan Party to the
Administrative Agent or any Lender in connection with the negotiation of this
Agreement or any other Loan Document (as modified or supplemented by other
information so furnished), when taken as a whole, 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, (a) the Borrowers represent only that such information was prepared
in good faith based upon assumptions believed to be reasonable at the time
delivered and, if such projected financial information was delivered prior to
the Effective Date, as of the Effective Date, and (b) it is understood and
agreed that uncertainty is inherent in any forecasts or projections and no
assurances can be given by the Company or the other Loan Parties of the future
achievement of such performance.
 
 
 
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                      SECTION 3.12.      No Default.  No Loan Party nor any of
the Subsidiaries is in default in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any agreement,
instrument or other undertaking to which such Person is a party or by which it
or any of its property is bound in any respect that could reasonably be expected
to have a Material Adverse Effect.  Immediately prior to, and after giving
effect to the occurrence of, the Effective Date, (a) no default or event of
default has occurred or will occur under the Indenture or the Existing Debt
Securities and (b) the Borrowers are not compelled under the Indenture to secure
the Existing Debt Securities equally and ratably with the Obligations.  No
Default or Event of Default has occurred and is continuing.
 
                      SECTION 3.13.      Solvency.  (a) Immediately after the
consummation of the Transactions to occur on the Effective Date (after giving
effect to Sections 10.08 and 10.09), (i) the fair value of the assets of each
Loan Party, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (ii) the present fair saleable value of
the property of each Loan Party will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (iii) each Loan Party will be able to pay its debts
and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (iv) no Loan Party will have
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted after
the Effective Date.
 
(b)           No Loan Party intends to, or will permit any of the Subsidiaries
to, and no Loan Party believes that it or any of the Subsidiaries will, incur
debts beyond its ability to pay such debts as they mature, taking into account
the timing of and amounts of cash to be received by it or any such Subsidiary,
the timing of the amounts of cash to be payable on or in respect of its
Indebtedness or the Indebtedness of any such Subsidiary and the funds available
under this Agreement.
 
                      SECTION 3.14.      Insurance.  Schedule 3.14 sets forth a
description of all insurance maintained by or on behalf of the Loan Parties as
of the Effective Date.  As of the Effective Date, all premiums in respect of
such insurance have been paid.  The Borrowers believe that the insurance
maintained by or on behalf of the Loan Parties is adequate.
 
                      SECTION 3.15.      Capitalization and
Subsidiaries.  Schedule 3.15 sets forth (a) a correct and complete list of the
name and relationship to the Company of each of the Company’s Subsidiaries and
each joint venture, partnership or similar arrangement of the Company and its
Subsidiaries, (b) a true and complete listing of each class of each of the
Borrowers’ authorized Equity Interests (other than the Company), of which all of
such issued shares are validly issued, outstanding, fully paid and
non-assessable, and owned beneficially and of record by the Persons identified
on Schedule 3.15, and (c) the type of entity of the Company and each of the
Subsidiaries and each joint venture, partnership or similar arrangement of the
Company and its Subsidiaries, in each case as of the Effective Date.  All of the
issued and outstanding Equity Interests of a Subsidiary owned by any Loan Party
have been duly authorized and issued and are fully paid and non-assessable (to
the extent such concepts are relevant with respect to such ownership interests).
 
 
 
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                      SECTION 3.16.      Security Interest in Collateral.  The
provisions of this Agreement and the other Loan Documents create legal and valid
Liens on all the Collateral in favor of the Administrative Agent, for the
benefit of the Lender Parties and the Canadian Lender Parties, as the case may
be, and, for so long as UCC and PPSA financing statements, RDPRM recordations or
Deposit Account Control Agreements, as the case may be, with respect to such
Collateral have not been terminated by the Administrative Agent (or otherwise
amended by the Administrative Agent in a manner that adversely affects the Lien
in favor of the Lender Parties or the Canadian Lender Parties, as the case may
be, thereby perfected) such Liens constitute perfected and continuing Liens on
the Collateral to the extent perfection can be obtained by filing UCC or PPSA
financing statements, RDPRM recordations or the entering into of a Deposit
Account Control Agreement, securing the Secured Obligations, enforceable against
the applicable Loan Party and all third parties, and having priority over all
other Liens on the Collateral except in the case of (a) Permitted Liens to the
extent any such Liens would have priority over the Liens in favor of the
Administrative Agent pursuant to any applicable law or agreement and (b) Liens
perfected only by possession (including possession of any certificate of title)
to the extent the Administrative Agent has not obtained or does not maintain
possession of such Collateral.
 
                      SECTION 3.17.      Employment Matters.  As of the
Effective Date, there are no material strikes, lockouts or slowdowns against any
Loan Party or any Subsidiary pending or, to the knowledge of the Borrowers,
threatened.  The hours worked by and payments made to employees of the Loan
Parties and the Subsidiaries have not been in material violation of the Fair
Labor Standards Act, the Employee Standards Act (Ontario) or any other
applicable federal, provincial, territorial, state, local or foreign law dealing
with such matters.  All material payments due from any Loan Party or any
Subsidiary, or for which any claim may be made against any Loan Party or any
Subsidiary, on account of wages, vacation pay and employee health and welfare
insurance and other benefits, including with respect to the Canada Pension
Plans, have been paid or accrued as a liability on the books of the Loan Party
or such Subsidiary.
 
                      SECTION 3.18.      Credit Card Arrangements.  Schedule
3.18 (as updated from time to time as permitted by Section 5.15) sets forth, a
list of all credit card processing arrangements to which any Loan Party is a
party with respect to the payment to any Borrower of the proceeds of all credit
card charges for sales by such Loan Party in the United States of America or
Canada.
 
                      SECTION 3.19.      PATRIOT Act and Other Specified
Laws.  (a) To the extent applicable, each Loan Party is in compliance, in all
material respects, with the (i) Trading with the Enemy Act, as amended, and each
of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling
legislation or executive order relating thereto, (ii) Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (the “Patriot Act”), and (iii) the Proceeds of Crime
Act.  No part of the proceeds of the Loans, Letters of Credit or payments made
to vendors of the Open Account Obligors pursuant to any Open Account Agreement
will be used, directly or indirectly, in violation in any material respect of
the United States Foreign Corrupt Practices Act of 1977, as amended or the
Proceeds of Crime Act.  No Loan Party is engaged in or has engaged in any course
of conduct that could reasonably be expected to subject any of their respective
properties to any Lien, seizure or other forfeiture under any criminal Law,
racketeer influenced and corrupt organizations law or the Proceeds of Crime Act
or other similar laws.  None of the Loan Parties is named on the list of
Specially Designated Nationals and Blocked Persons maintained by the United
States Department of Treasury Office of Foreign Assets Control.
 
 
 
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(b)           No Borrower nor any other Loan Party (i) is a Person whose
property or interest in property is blocked or subject to blocking pursuant to
Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism (66 Fed. Reg. 49079 (2001)), (ii) engages in any dealings or
transactions prohibited by Section 2 of such Executive Order, or is otherwise
associated with any such Person in any manner that violates such Section 2, or
(iii) is a Person on the list of Specially Designated Nationals and Blocked
Persons or subject to the limitations or prohibitions under any other U.S.
Department of Treasury’s Office of Foreign Assets Control regulation or
executive order.
 
                      SECTION 3.20.      Margin Regulations.  No Borrower nor
any other Loan Party is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying “margin stock” (as defined in Regulation U of the Board).  None of the
proceeds of any Loan or Letter of Credit will be used by the Borrowers or any
Subsidiaries for the purpose of purchasing or carrying “margin stock” as defined
in Regulation U of the Board or otherwise in violation of Regulations T, U or X
of the Board.
 
ARTICLE IV

 
Conditions
 
                      SECTION 4.01.      Effective Date.  The obligations of the
Lenders to make Loans and of the Issuing Banks to issue Letters of Credit
hereunder shall not become effective until the date on which each of the
following conditions are satisfied (or waived in accordance with Section 9.02)
to the satisfaction of each Lender and, where specifically referred to below,
the Administrative Agent and the Joint Collateral Agents; provided that the
Administrative Agent may declare the Effective Date to have occurred if all the
conditions set forth below are satisfied, other than the Administrative Agent
receiving satisfactory evidence that its first priority security interest in the
Collateral securing the Canadian Secured Obligations has been perfected;
provided further, however, that the Canadian Borrower may not utilize the
Canadian Commitments unless the Administrative Agent has received evidence of
its first priority perfected security interest in the Collateral securing the
Canadian Secured Obligations in a manner that is in form and substance
satisfactory to the Administrative Agent and the Lenders:
 
(a)           Credit Agreement and Loan Documents.  The Administrative Agent (or
its counsel) shall have received (i) from each party hereto either (A) a
counterpart of this Agreement signed on behalf of such party or (B) written
evidence satisfactory to the Administrative Agent (which may include PDF or
facsimile transmission of a signed signature page of this Agreement) that such
party has signed a counterpart of this Agreement and (ii) duly executed copies
(or PDF or facsimile copies) of the Loan Documents and such other certificates,
documents, instruments and agreements as the Lenders shall reasonably request in
connection with the transactions contemplated by this Agreement and the other
Loan Documents, including any promissory notes requested by a Lender pursuant to
Section 2.10 payable to the order of each such requesting Lender and written
opinions of the Loan Parties’ counsel, addressed to the Administrative Agent,
the Canadian Administrative Agent, the Issuing Banks, the Citibank Open Account
Agent, the Citibank Open Account Banks and the Lenders in substantially the form
of Exhibit B.
 
 
 
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(b)           Closing Certificates; Certified Certificate of Incorporation; Good
Standing Certificates.  The Agents shall have received (i) a certificate of each
Loan Party, dated the Effective Date and executed by its Secretary or an
Assistant Secretary, which shall (A) certify the resolutions of its Board of
Directors, members or other body authorizing the execution, delivery and
performance of the Loan Documents to which it is a party, (B) identify by name
and title and bear the signatures of the Financial Officers and any other
officers of such Loan Party authorized to sign the Loan Documents to which it is
a party, and (C) contain appropriate attachments, including the certificate or
articles of incorporation or organization of each Loan Party certified by the
relevant authority of the jurisdiction of organization of such Loan Party and a
true and correct copy of its bylaws or operating, management or partnership
agreement, and (ii) if obtainable from the applicable jurisdiction, a long form
good standing certificate for each Loan Party from its jurisdiction of
organization.
 
(c)           No Default Certificate.  The Agents shall have received a
certificate, signed by the chief financial officer of the Borrower
Representative and dated the Effective Date (i) stating that no Default has
occurred and is continuing, (ii) stating that the representations and warranties
contained in Article III are true and correct as of such date and (iii)
certifying any other factual matters as may be reasonably requested by any
Agent.
 
(d)           Fees.  The Lenders, the Administrative Agent, the Joint Collateral
Agents and the Joint Bookrunners shall have received all fees required to be
paid, and all expenses for which invoices have been presented (including the
reasonable fees and expenses of legal counsel of the Administrative Agent), on
or before the Effective Date.  All such amounts will be paid with proceeds of
Loans made on the Effective Date and will be reflected in the funding
instructions given by the Borrower Representative to the Administrative Agent on
or before the Effective Date.
 
(e)           Lien Searches.  The Agents shall have received the results of a
recent lien search report in each of the jurisdictions where assets of the Loan
Parties are located, and such search shall reveal no Liens on any of the assets
of the Loan Parties except for Permitted Liens or Liens discharged on or prior
to the Effective Date pursuant to a pay-off letter or other documentation
satisfactory to the Agents.
 
(f)           Pay-Off Letter.  The Agents shall have received pay-off letters
with respect to the Prior Credit Agreement and all other existing Indebtedness
to be repaid from the proceeds of the initial Borrowing, confirming that all
Liens upon any of the property of the Loan Parties constituting Collateral will
be terminated concurrently with such payment (other than Liens in favor of the
Administrative Agent).
 
 
 
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(g)           Funding Accounts.  The Agents shall have received a notice from
the Borrower Representative setting forth the deposit account(s) of the
Borrowers (the “Funding Accounts”) to which the Lender is authorized by the
Borrowers to transfer the proceeds of any Borrowings requested or authorized
pursuant to this Agreement.
 
(h)           Customer List.  The Agents shall have received a true and complete
customer list as of a recent date to be specified by the Administrative Agent.
 
(i)           Credit Card Notification Agreement.  The Agents shall have
received PDF or facsimile copies of Credit Card Notification Agreements
distributed to each of the Borrowers’ credit card processors.
 
(j)           Solvency.  The Agents shall have received a solvency certificate
from a Financial Officer of each Borrower.
 
(k)           Borrowing Base Certificate.  The Agents shall have received a
Borrowing Base Certificate which calculates the Borrowing Base as of April 18,
2009.
 
(l)           Closing Availability.  After giving effect to all Borrowings to be
made on the Effective Date, the issuance of any Letters of Credit (or deemed
issuance, in the case of Existing Letters of Credit) on the Effective Date and
payment of all fees and expenses due hereunder, and with all of the Loan
Parties’ indebtedness, liabilities and obligations current, the Borrowers’
Availability plus cash on hand shall not be less than $300,000,000.
 
(m)           Pledged Stock; Stock Powers; Pledged Notes.  The Administrative
Agent shall have received (i) the certificates representing the shares of Equity
Interests pledged pursuant to the U.S. Security Agreement or the Canadian
Security Agreement, together with an undated stock power for each such
certificate executed in blank by a duly authorized officer of the pledgor
thereof, and (ii) each promissory note (if any) pledged to the Administrative
Agent pursuant to the U.S. Security Agreement or the Canadian Security Agreement
endorsed (without recourse) in blank (or accompanied by an executed transfer
form in blank) by the pledgor thereof.
 
(n)           Filings, Registrations and Recordings.  Each document (including
any Uniform Commercial Code financing statement, PPSA financing statement or
RDPRM recordation) required by the Collateral Documents or under law or
reasonably requested by any Agent to be filed, registered or recorded in order
to create in favor of the Administrative Agent, for the benefit of the Lender
Parties or the Canadian Lender Parties, as the case may be, a perfected Lien on
the Collateral described therein, prior and superior in right to any other
Person (other than with respect to Permitted Liens), shall be in proper form for
filing, registration or recordation.
 
(o)           Approvals.  All governmental and third party approvals necessary
in connection with the Transactions and the financing contemplated hereby shall
have been obtained and be in full force and effect, and all applicable waiting
periods shall have expired without any action being taken or threatened by any
competent authority that would restrain, prevent or otherwise impose adverse
conditions on the Transactions or the financing contemplated hereby.
 
 
 
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(p)           Amendment to Indenture.  The Indenture shall have been amended in
accordance with the terms thereof to provide that the Indebtedness under  this
Agreement is excepted from the requirements of Section 4.04 of the Indenture.
 
(q)           Citibank Open Account Agreement.  The Agents shall have received a
true and complete copy of the Citibank Open Account Agreement.
 
(r)           Insurance.  The Agents shall have received evidence of insurance
coverage in form, scope and substance evidencing compliance with the terms of
Section 5.09 and Section 4.12 of the U.S. Security Agreement.
 
(s)           Appraisals and Field Exams.  The Agents shall have received
appraisals of Inventory and field exams from appraisers satisfactory to the
Joint Collateral Agents (it being understood and agreed that the receipt of the
field examination, dated as of March 17, 2009, and the appraisal, dated as of
March 26, 2009, shall satisfy the condition precedent set forth in this
paragraph (s)).
 
(t)           Letter of Credit Application.  The applicable Issuing Bank shall
have received a properly completed letter of credit application if the issuance
of a Letter of Credit will be required on the Effective Date.  The Borrowers
shall have executed the applicable Issuing Bank’s master agreement for the
issuance of Commercial Letters of Credit.
 
(u)           Other Documents.  The Agent shall have received such other
documents as any Agent, any Issuing Bank, any Open Account Bank, any Lender or
their respective counsel may have reasonably requested.
 
The Administrative Agent shall notify the Borrowers and the Lenders as of the
Effective Date, and such notice shall be conclusive and
binding.  Notwithstanding the foregoing, the obligations of the Lenders to make
Loans and of the Issuing Banks to issue Letters of Credit hereunder shall not
become effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.02) at or prior to 2:00 p.m., Chicago time, on June 1,
2009 (and, in the event such conditions are not so satisfied or waived, the
Revolving Commitments shall terminate at such time).
 
                      SECTION 4.02.      Each Credit Event.  The obligation of
(i) each Lender to make a Loan on the occasion of any Borrowing and (ii) each
Issuing Bank to issue, amend, renew or extend any Letter of Credit is subject to
the satisfaction of the following conditions:
 
(a)           The representations and warranties of the Loan Parties set forth
in this Agreement shall be true and correct in all material respects on and as
of the date of (i) such Borrowing or (ii) the issuance, amendment, renewal or
extension of such Letter of Credit, except that such representations and
warranties (A) that relate solely to an earlier date shall be true and correct
in all material respects as of such earlier date and (B) shall be true and
correct in all respects to the extent they are qualified by a materiality
standard.
 
 
 
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(b)           At the time of and immediately after giving effect to (i) such
Borrowing and (ii) the issuance, amendment, renewal or extension of such Letter
of Credit, as applicable, no Default shall have occurred and be continuing.
 
(c)           After giving effect to (i) such Borrowing and (ii) the issuance of
such Letter of Credit, Availability is not less than zero.
 
Each (i) Borrowing and (ii) issuance, amendment, renewal or extension of a
Letter of Credit shall be deemed to constitute a representation and warranty by
the Borrowers on the date thereof as to the matters specified in paragraphs (a),
(b) and (c) of this Section 4.02.
 
Notwithstanding the failure to satisfy the conditions precedent set forth in
paragraphs (a) or (b) of this Section, unless otherwise directed by the Required
Lenders, the Administrative Agent may, but shall have no obligation to, continue
to make (or authorize the Canadian Administrative Agent to make) Loans and an
Issuing Bank may, but shall have no obligation to, issue or cause to be issued
any Letter of Credit, in each case for the ratable account and risk of Lenders
from time to time if the Administrative Agent believes that making such Loans,
issuing or causing to be issued any such Letter of Credit is in the best
interests of the Lenders.
 
ARTICLE V

 
Affirmative Covenants
 
Until all the Revolving Commitments have expired or been terminated as provided
in Section 2.09(a) or (b), as the case may be, each Loan Party executing this
Agreement covenants and agrees, jointly and severally with all of the Loan
Parties, with the Lender Parties that:
 
                      SECTION 5.01.      Financial Statements; Borrowing Base
and Other Information.  The Borrowers will furnish to the Administrative Agent
and each Lender:
 
(a)           within 90 days after the end of each fiscal year of the Company,
its audited consolidated and unaudited consolidating balance sheet and related
statements of operations, stockholders’ equity and cash flows as of the end of
and for such year, setting forth in each case in comparative form the figures
for the previous fiscal year, all reported on by BDO Seidman, LLP or other
independent public accountants of recognized national standing (without a “going
concern” or like qualification or exception and without any qualification or
exception as to the scope of such audit) to the effect that such financial
statements present fairly in all material respects the financial condition and
results of operations of the Company and its consolidated Subsidiaries in
accordance with GAAP consistently applied accompanied by any management letter
prepared by said accountants;
 
(b)           within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Company, its consolidated balance sheet and
related statements of operations, stockholders’ equity and cash flows as of the
end of and for such fiscal quarter and the then elapsed portion of the fiscal
year, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by one of the Financial
Officers of the Borrower Representative as presenting fairly in all material
respects the financial condition and results of operations of the Company and
its consolidated Subsidiaries in accordance with GAAP consistently applied,
subject to normal year-end audit adjustments and the absence of footnotes;
 
 
 
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(c)           within 30 days after the end of each fiscal month of the Company,
its consolidated balance sheet and related statements of operations and cash
flows as of the end of and for such fiscal month and the then elapsed portion of
the fiscal year, setting forth in each case in comparative form the figures for
the corresponding period or periods of (or, in the case of the balance sheet, as
of the end of) the previous fiscal year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial condition
and results of operations of the Company and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;
 
(d)           concurrently with any delivery of financial statements under
paragraph (a) or (b) or (c) above, a Compliance Certificate of a Financial
Officer of the Borrower Representative (i) certifying, in the case of the
financial statements delivered under paragraph (b) or (c), as presenting fairly
in all material respects the financial condition and results of operations of
the Company and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes, (ii) certifying as to whether a
Default has occurred and, if a Default has occurred, specifying the details
thereof and any action taken or proposed to be taken with respect thereto, (iii)
certifying in the case of the financial statements delivered under paragraph
(c), a reasonably detailed calculation of the Fixed Charge Coverage Ratio and,
during any Level 1 Minimum Availability Period, demonstrating compliance with
Section 6.12, and (iv) stating whether any change in GAAP or in the application
thereof has occurred since the date of the audited financial statements referred
to in Section 3.04 and, if any such change has occurred, specifying the effect
of such change on the financial statements accompanying such certificate;
 
(e)           concurrently with any delivery of financial statements under
paragraph (a) above, a certificate of the accounting firm that reported on such
financial statements stating whether they obtained knowledge during the course
of their examination of such financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);
 
(f)           as soon as available, but within 15 days prior to the end of each
fiscal year of the Company, a copy of the plan and forecast (including a
projected consolidated and consolidating balance sheet, income statement and
funds flow statement in form acceptable to the Administrative Agent) of the
Company for each month of the upcoming fiscal year (the “Projections”) in form
reasonably satisfactory to the Administrative Agent;
 
 
 
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(g)           as soon as available, but in any event within 20 days of the end
of each fiscal month (or, within three Business Days of the end of each calendar
week (it being understood that a calendar week ends on Sunday), during any
Weekly Reporting Period), a Borrowing Base Certificate which calculates the
Borrowing Base as of the last day of the fiscal period then ended, together with
supporting information in connection therewith and any additional reports with
respect to the Borrowing Base as the Administrative Agent may reasonably
request;
 
(h)           as soon as available, but in any event within 20 days of the end
of each fiscal month (or, in the case of clauses (h)(i)(B)and (h)(ii) below
within three Business Days of the end of each calendar week, during any Weekly
Reporting Period) and at such other times as may be reasonably requested by the
Administrative Agent, as of the fiscal period then ended, all delivered
electronically in a formatted file acceptable to the Administrative Agent:
 
(i)           (A) a detailed aging of the Borrowers’ Accounts (1) including all
invoices aged by invoice date and due date (with an explanation of the terms
offered) and (2) reconciled to the Borrowing Base Certificate delivered as of
such date prepared in a manner reasonably acceptable to the Administrative
Agent, and (B) a summary aging of the Borrowers’ Accounts specifying the name,
address and balance due for each Account Debtor;
 
(ii)          a schedule detailing the Borrowers’ Inventory, in form
satisfactory to the Administrative Agent (which shall be in a short-form format
that is reasonably satisfactory to the Administrative Agent if delivered during
a Weekly Reporting Period), (1) by location (showing Inventory in transit, any
Inventory located with a third party under any consignment, bailee arrangement,
or warehouse agreement), by class (raw material, work-in-process and finished
goods), by product type and by volume on hand, which Inventory shall be valued
at the lower of cost (determined in accordance with the historical practices of
the Borrowers prior to the Effective Date) or market and adjusted for Reserves
as the Joint Collateral Agents have previously indicated to the Borrower
Representative are deemed by the Joint Collateral Agents to be appropriate, (2)
including a report of any variances or other results of Inventory counts
performed by the Borrowers since the last Inventory schedule (including
information regarding sales or other reductions, additions, returns, credits
issued by Borrowers and complaints and claims made against the Borrowers), and
(3) reconciled to the Borrowing Base Certificate delivered as of such date;
 
(iii)         a worksheet of calculations prepared by the Borrowers to determine
Eligible Credit Card Accounts Receivable, Eligible Accounts and Eligible
Inventory, such worksheets detailing the Credit Card Accounts Receivable,
Accounts and Inventory excluded from Eligible Credit Card Accounts Receivable,
Eligible Accounts and Eligible Inventory and the reason for such exclusion;
 
 
 
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(iv)         a reconciliation of the Borrowers’ Accounts and Inventory between
the amounts shown in the Borrowers’ general ledger and financial statements and
the reports delivered pursuant to paragraphs (i) and (ii) above; and
 
(v)          a reconciliation of the loan balance per the Borrowers’ general
ledger to the loan balance under this Agreement;
 
(i)           as soon as available, but in any event within 20 days of the end
of each fiscal month (or, within three Business Days of the end of calendar
week, during any Weekly Reporting Period) and at such other times as may be
reasonably requested by the Administrative Agent, as of the fiscal period then
ended, a schedule and aging of the Borrowers’ accounts payable, delivered
electronically in a formatted file acceptable to the Administrative Agent;
 
(j)           promptly upon the Administrative Agent’s request:
 
(i)           copies of invoices issued by the Borrowers in connection with any
Accounts, credit memos, shipping and delivery documents, and other information
related thereto;
 
(ii)           copies of purchase orders, invoices and shipping and delivery
documents in connection with any Inventory or equipment purchased by any Loan
Party;
 
(iii)          a schedule detailing the balance of all intercompany accounts of
the Loan Parties;
 
(iv)          a sales journal, cash receipts journal (identifying trade and
non-trade cash receipts) and debit memo/credit memo journal; and
 
(v)           copies of all tax returns filed by any Loan Party with the IRS or
Canada Revenue Service;
 
(k)           within 45 days of each March 31 and September 30, an updated
customer list for each Borrower and its Subsidiaries, which list shall state the
customer’s name, mailing address and phone number and shall be certified as true
and correct by a Financial Officer of the Borrower Representative;
 
(l)           promptly upon the Administrative Agent’s request (but, in any
event not more than once each calendar year), a certificate of good standing for
each Loan Party from the appropriate governmental officer in its jurisdiction of
incorporation, formation or organization;
 
(m)           promptly after the same become publicly available, copies of all
periodic reports, proxy statements and registration statements filed by the
Company or any Subsidiary with the U.S. Securities and Exchange Commission, the
Ontario Securities Commission or any Governmental Authority succeeding to any or
all of the functions of said Commissions, or with any national or provincial
securities exchange, or distributed by the Company to its shareholders
generally, as the case may be; provided that any documents required to be
delivered pursuant to this paragraph (n) shall be deemed to have been delivered
on the date (i) on which the Company posts such documents, or provides a link
thereto on the Company’s website on the Internet at the website address
referenced in Section 9.01(b); or (ii) on which such documents are posted on the
Company’s behalf on IntraLinks/IntraAgency or another relevant website, if any
to which each Lender and the Administrative Agent have access (whether a
commercial, third-party website or whether sponsored by the Administrative
Agent); provided further that: (x) upon written request by the Administrative
Agent, the Company shall deliver paper copies of such documents to the
Administrative Agent for further distribution to each Lender until a written
request to cease delivering paper copies is given by the Administrative Agent
and (y) the Company shall notify (which may be by facsimile or electronic mail)
the Administrative Agent of the posting of any such documents and provide to the
Administrative Agent by electronic mail electronic versions (i.e., soft copies)
of such documents; and
 
 
 
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(n)           promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of any
Borrower or any Subsidiary, or compliance with the terms of this Agreement, as
the Administrative Agent or any Lender, acting through the Administrative Agent,
may reasonably request.
 
                      SECTION 5.02.      Notices of Material Events.  The
Borrowers will furnish to the Administrative Agent (for delivery to each Lender)
written notice of the following:
 
(a)           the occurrence of any Default or Event of Default;
 
(b)           receipt of any notice of any governmental investigation or any
governmental or other litigation or proceeding commenced or threatened against
any Loan Party that (i) if adversely determined, could reasonably be expected to
result in liability in excess of $30,000,000, (ii) seeks injunctive relief,
(iii) is asserted or instituted against any Pension Plan, its fiduciaries or its
assets, (iv) alleges criminal misconduct by any Loan Party, (v) alleges the
violation of any law regarding, or seeks remedies in connection with, any
Environmental Laws which would result in liabilities or costs in excess of
$30,000,000, (vi) contests any tax, fee, assessment or other governmental charge
in excess of $30,000,000 or (vii) involves any material product recall;
 
(c)           any Lien (other than Permitted Encumbrances and Liens in favor of
the Administrative Agent (for the benefit of the Lender Parties or the Canadian
Lender Parties, as the case may be)) or claim made or asserted in writing
against any material portion of the Collateral;
 
(d)           any loss, damage or destruction to the Collateral in the amount of
$30,000,000 or more, whether or not covered by insurance;
 
(e)           any and all default notices received under or with respect to (i)
the Indenture or (ii) any actual knowledge of a Financial Officer of any leased
location or public warehouse where Collateral with a cost in excess of
$5,000,000 is located (which shall be delivered within two Business Days after
receipt thereof);
 
 
 
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(f)           all amendments to the Indenture, together with a copy of each such
amendment;
 
(g)           any Loan Party entering into a Swap Agreement or an amendment to a
Swap Agreement, together with copies of all agreements evidencing such Swap
Agreement or amendments thereto (which shall be delivered within two Business
Days);
 
(h)           any actual knowledge of a Financial Officer of the occurrence of
any ERISA Event or Pension Event that, alone or together with any other ERISA
Events and Pension Events that have occurred, could reasonably be expected to
result in liability of the Borrowers and their Subsidiaries in an aggregate
amount exceeding $30,000,000;
 
(i)           any amendment, modification or waiver of or with respect to any
licensing agreement pursuant to which any Eligible Licensee Receivable is
subject if the foregoing would reasonably be expected to reduce the amounts
paid, or postpone the date of any payment of any such Eligible Licensee
Receivable; and
 
(j)           any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
 
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower Representative
setting forth in reasonable detail the nature of the event or development
requiring such notice and any action taken or proposed to be taken with respect
thereto.
 
                      SECTION 5.03.      Existence; Conduct of Business.  Each
Loan Party will, and will cause each Subsidiary to, (a) do or cause to be done
all things necessary to preserve, renew and keep in full force and effect its
legal existence and, except where the failure to so preserve, renew or keep in
full force and effect any of the following could not reasonably be expected to
result in a Material Adverse Effect, the rights, qualifications, licenses,
permits, franchises, governmental authorizations, intellectual property rights,
licenses and permits material to the conduct of its business, and maintain all
requisite authority to conduct its business in each jurisdiction in which its
business is conducted; provided that the foregoing shall not prohibit any
merger, consolidation, liquidation or dissolution permitted under Section 6.03
and (b) carry on and conduct its business in substantially the same manner and
in substantially the same fields of enterprise as it is presently conducted.
 
                      SECTION 5.04.      Payment of Obligations.  Each Loan
Party will, and will cause each Subsidiary to, pay or discharge all Material
Indebtedness and all other material liabilities, including Taxes, before the
same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
such Loan Party or such Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.
 
 
 
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                      SECTION 5.05.      Maintenance of Properties.  Each Loan
Party will, and will cause each Subsidiary to, keep and maintain all property
material to the conduct of its business in good working order and condition,
ordinary wear and tear excepted.
 
                      SECTION 5.06.      Books and Records; Inspection
Rights.  Without limiting Sections 5.11 and 5.12, each Loan Party will, and will
cause each Subsidiary to, (i) keep proper books of record and account in which
full, true and correct entries are made of all dealings and transactions in
relation to its business and activities and (ii) permit any representatives
designated by the Administrative Agent (including employees of the
Administrative Agent or any consultants, accountants, lawyers and appraisers
retained by the Administrative Agent), upon reasonable prior notice, to visit
and inspect its properties, to examine and make extracts from its books and
records, including environmental assessment reports and Phase I or Phase II
studies, and to discuss its affairs, finances and condition with its officers
and independent accountants, all at such reasonable times and as often as
reasonably requested.  For purposes of this Section 5.06, it is understood and
agreed that a single site visit and inspection may consist of examinations
conducted at multiple relevant sites and involve one or more relevant Loan
Parties and Subsidiaries and their respective assets.  The Loan Parties
acknowledge that the Administrative Agent, after exercising its rights of
inspection, may prepare and distribute to the Lenders certain Reports pertaining
to the Loan Parties’ assets for internal use by the Administrative Agent and the
Lenders.
 
                      SECTION 5.07.      Compliance with Laws and Contractual
Obligations.
 
(a)           Each Loan Party will, and will cause each Subsidiary to, comply
with all of its contractual obligations and Requirements of Law applicable to it
or its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
 
(b)           In addition to and without limiting the generality of paragraph
(a), each Loan Party will, and will cause each Subsidiary and ERISA Affiliate to
(i) comply with all applicable provisions of ERISA, the Code, the ITA, the
Pension Benefits Act (Ontario) (or similar provincial statutes) and the
regulations and published interpretations thereunder with respect to all Pension
Plans and Canadian Pension Plans, except where the failure to comply could not
reasonably be expected to have a Material Adverse Effect, (ii) not take any
action or fail to take action the result of which would result in a liability to
the PBGC, FSCO (or similar Governmental Authority) or to a Multiemployer Plan in
an amount that could reasonably be expected to have a Material Adverse Effect
and (iii) furnish to the Administrative Agent upon the Administrative Agent’s
request such additional information about any Pension Plan and Canadian Pension
Plans concerning compliance with this covenant as may be reasonably requested by
the Administrative Agent.
 
                      SECTION 5.08.      Use of Proceeds.  The proceeds of the
Loans will be used only to (a) repay amounts outstanding under the Prior Credit
Agreement, (b) repay the Existing Debt Securities that are maturing in November
2009, subject to the limitations set forth in Section 6.08(b)(v), and (c) for
general corporate purposes (including, without limitation, payments on Open
Account Obligations) of the Borrowers and, subject to compliance with Article VI
of this Agreement, their respective Subsidiaries in the ordinary course of
business.  No part of the proceeds of any Loan and no Letter of Credit will be
used, whether directly or indirectly, for any purpose that entails a violation
of any of the Regulations of the Board, including Regulations T, U and X.
 
 
 
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                      SECTION 5.09.      Insurance.  Each Loan Party will, and
will cause each Subsidiary to, maintain with financially sound and reputable
carriers having a financial strength rating of at least A- by A.M. Best Company
(a) insurance in such amounts (with no greater risk retention) and against such
risks (including loss or damage by fire and loss in transit, theft, burglary,
pilferage, larceny, embezzlement and other criminal activities; business
interruption; and general liability) and such other hazards, as is customarily
maintained by companies of established repute engaged in the same or similar
businesses operating in the same or similar locations and (b) all insurance
required pursuant to the Collateral Documents.  The Borrowers will furnish to
the Lenders, upon request of the Administrative Agent, information in reasonable
detail as to the insurance so maintained.
 
                      SECTION 5.10.      Casualty and Condemnation.  The
Borrowers (a) will furnish to the Administrative Agent (for delivery to the
Lenders) prompt written notice of any casualty or other insured damage to any
material portion of the Collateral or the commencement of any action or
proceeding for the taking of any material portion of the Collateral or interest
therein under power of eminent domain or by condemnation or similar proceeding
and (b) will ensure that the Net Proceeds of any such event (whether in the form
of insurance proceeds, condemnation awards or otherwise) are collected and
applied in accordance with the applicable provisions of this Agreement and the
Collateral Documents.
 
                      SECTION 5.11.      Appraisals.  At any time that the Joint
Collateral Agents request, the Borrowers and the Subsidiaries will provide the
Joint Collateral Agents with appraisals or updates thereof of their Inventory
from an appraiser selected and engaged by the Joint Collateral Agents, and
prepared on a basis satisfactory to the Joint Collateral Agents, such appraisals
and updates to include, without limitation, information required by applicable
law and regulations; provided, however, only one such appraisal per calendar
year shall be at the sole expense of the Loan Parties; provided further,
however, (a) two such appraisals per calendar year shall be at the sole expense
of the Loan Parties if a Revolving Loan has been made during such calendar year,
(b) three such appraisals per calendar year shall be at the sole expense of the
Loan Parties if a Level 2 Minimum Availability Period, solely with respect to
clause (a) of such defined term, has been in effect for a period of at least
five consecutive Business Days during such calendar year and (c) if an Event of
Default has occurred during any calendar year there shall be no limitation as to
number and frequency of such appraisals during such calendar year that shall be
at the sole expense of the Loan Parties.  For purposes of this Section 5.11, it
is understood and agreed that a single appraisal may consist of examinations
conducted at multiple relevant sites, both domestic and international, and
involve one or more relevant Loan Parties and their assets.  The Joint
Collateral Agents will conduct not less than one appraisal per calendar year of
the Inventory of the Loan Parties.
 
                      SECTION 5.12.      Field Examinations.  At any time that
the Joint Collateral Agents request, the Borrowers and the Subsidiaries will
allow the Joint Collateral Agents to conduct field examinations or updates
thereof during normal business hours to ensure the adequacy of Collateral
included in any Borrowing Base and related reporting and control systems;
provided, however, only one such field examination per calendar year shall be at
the sole expense of the Loan Parties; provided further, however, (a) two such
field examinations per calendar year shall be at the sole expense of the Loan
Parties if a Revolving Loan has been made during such calendar year, (b) three
such field examinations per calendar year shall be at the sole expense of the
Loan Parties if a Level 2 Minimum Availability Period, solely with respect to
clause (a) of such defined term, has been in effect for a period of at least
five consecutive Business Days during such calendar year and (c) if an Event of
Default has occurred during any calendar year there shall be no limitation as to
number and frequency of such field examinations during such calendar year that
shall be at the sole expense of the Loan Parties. For purposes of this Section
5.12, it is understood and agreed that a single field examination may consist of
examinations conducted at multiple relevant sites, both domestic and
international, and involve one or more relevant Loan Parties and their
assets.  The Joint Collateral Agents will conduct not less than one field
examination per calendar year of the Collateral included in each Borrowing Base.
 
 
 
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                      SECTION 5.13.      Depository Banks.  The Borrowers and
the Subsidiaries will maintain one or more of the Lenders as its principal
depository bank, including for the maintenance of operating, administrative,
cash management, collection activity, and other deposit accounts for the conduct
of its business.
 
                      SECTION 5.14.      Additional Collateral; Further
Assurances.  (a) Subject to applicable law, each Borrower and each Subsidiary
that is a U.S. Loan Party shall cause each of the Domestic Subsidiaries and each
of the First-Tier Foreign DREs (other than Investments in Persons that are
permitted to be made pursuant to Sections 6.04(c)(ii) and (iii)) formed or
acquired after the Effective Date in accordance with the terms of this Agreement
to become a U.S. Loan Party by executing the Joinder Agreement set forth as
Exhibit E hereto (the “Joinder Agreement”).  Upon execution and delivery
thereof, each such Person (i) shall automatically become a U.S. Loan Guarantor
hereunder and thereupon shall have all of the rights, benefits, duties, and
obligations in such capacity under the Loan Documents and (ii) will grant Liens
to the Administrative Agent, for the benefit of the Lender Parties in any
property of such U.S. Loan Party which constitutes Collateral.
 
(b)           To secure the prompt payment and performance of all the U.S.
Secured Obligations, each Borrower and each Subsidiary that is a U.S. Loan Party
will cause (i) 100% of the issued and outstanding Equity Interests of each of
the Domestic Subsidiaries, (ii) 100% of the issued and outstanding Equity
Interests of each of the First-Tier Foreign DREs, (iii) 65% of the Equity
Interests constituting the total combined classes of Equity Interests entitled
to vote in each First-Tier Foreign Subsidiary, (iv) 100% of the non-voting
Equity Interests of each First-Tier Foreign Subsidiary, and (v) 309/476 of the
Equity Interests constituting the total combined classes of Equity Interests
entitled to vote, and 100% of the non-voting Equity Interests, of the Canadian
Borrower (it being understood that all such Equity Interests described in this
clause (v) shall be pledged by Jones Canada LP and not by Jones Canada GP) to be
subject at all times to a first priority, perfected Lien in favor of the
Administrative Agent (for the benefit of the U.S. Lender Parties) pursuant to
the terms and conditions of the Loan Documents or other security documents as
the Administrative Agent shall reasonably request, provided, however, that (i)
if the Canadian Borrower issues additional Equity Interests that are entitled to
vote, Jones Canada LP agrees to promptly pledge to the Administrative Agent such
additional number of whole limited partnership units of the Canadian Borrower
equal to approximately (but not in excess of) 65% of such additional limited
partnership units that are so issued and (ii) none of the Equity Interests of
Rachel Roy IP Company LLC shall be subject to such Lien so long as 100% of the
Equity Interests of Rachel Roy IP Company LLC are not owned by one or more U.S.
Loan Parties.  The Borrowers agree if (a) the Administrative Agent notifies the
Borrower Representative that as a result of a change in law there is a reason to
believe that a pledge of a greater percentage of any First-Tier Foreign
Subsidiary’s voting Equity Interests or a guarantee by any First-Tier Foreign
Subsidiary of the Guaranteed Obligations would not result in a “deemed dividend”
under Section 956 of the Code and (b) subsequent to the receipt of such notice
the Borrower Representative reasonably determines (which determination the
Borrower Representative agrees to consider, in consultation with its counsel and
other tax advisors, promptly following receipt of such notice from the
Administrative Agent) that a pledge of more than 65% of the total combined
voting power of all classes of Equity Interests entitled to vote of such
First-Tier Foreign Subsidiary or a guarantee by such First-Tier Foreign
Subsidiary of the Guaranteed Obligations would not result in such a “deemed
dividend” or any other tax liability to the Borrowers, the applicable Borrower
will promptly pledge such greater percentage of the voting Equity Interests of
each such First-Tier Foreign Subsidiary and cause each such First-Tier Foreign
Subsidiary to provide a guarantee of the Guaranteed Obligations, in each case to
the extent that the foregoing would not result in such a “deemed dividend” under
Section 956 of the Code or other tax liability to the Borrowers.
 
 
 
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(c)           Subject to applicable law, the Canadian Borrower and each other
Canadian Loan Party shall cause each of their Subsidiaries that is organized
under the laws of Canada or any province thereof (other than those Persons in
which Investments are made pursuant to Section 6.04(c)(ii) and (iii)) to become
party to a guarantee agreement that guarantees repayment of the Canadian
Obligations (which guarantee agreement shall be in substantially the form of the
Canadian Guarantee referred to  in clause (a) of the definition thereof) and a
security agreement (which shall, among other things, pledge 100% of the Equity
Interests in each such Subsidiary and grant a security interest in all the
personal property of each such Subsidiary, the foregoing to be in a form
substantially similar to General Security Agreement, the Securities Pledge
Agreement and, if any of such assets is located in the Province of Quebec, the
Deed of Hypothec, in each case as the foregoing are referred to in the
definition of “Canadian Security Agreement”) that secures repayment of the
Canadian Obligations, together with such other documentation and filings that
the Administrative Agent may reasonably require in order to perfect its first
priority security interest in the assets subject to the terms of such Security
Agreement; provided, however, that so long as 100% of the Equity Interests of
GRI are not owned by one or more Loan Parties, none of the Equity Interests of
GRI shall be subject to such Lien.
 
(d)           Without limiting the foregoing, each Loan Party will, and will
cause each Subsidiary to, execute and deliver, or cause to be executed and
delivered, to the Administrative Agent such documents, agreements and
instruments, and will take or cause to be taken such further actions (including
the filing and recording of financing statements, hypothecs, fixture filings,
mortgages, deeds of trust and other documents and such other actions or
deliveries of the type required by Section 4.01, as applicable), which may be
required by law or which the Administrative Agent may, from time to time,
reasonably request to carry out the terms and conditions of this Agreement and
the other Loan Documents and to ensure perfection and priority of the Liens
created or intended to be created by the Collateral Documents, all at the
expense of the Loan Parties.
 
 
 
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(e)           If any assets constituting personal property that are acquired by
any Borrower or any Subsidiary that is a Loan Party have at any time a fair
market value in excess of $2,000,000 individually or $5,000,000 in the aggregate
for all Loan Parties (other than assets constituting Collateral under the U.S.
Security Agreement or the Canadian Security Agreement that become subject to the
Lien in favor of the Administrative Agent (for the benefit of the Lender Parties
or the Canadian Lender Parties, as the case may be) upon acquisition thereof),
the Borrower Representative will promptly notify the Administrative Agent and
the Lenders thereof, and, if requested by the Administrative Agent or the
Required Lenders, the Borrowers will cause such assets to be subjected to a Lien
in favor of Administrative Agent (for the benefit of the Lender Parties or the
Canadian Lender Parties, as the case may be) securing the Secured Obligations
and will take, and cause the Subsidiary Loan Parties to take, such actions as
shall be necessary or reasonably requested by the Administrative Agent to grant
and perfect such Liens, including actions described in paragraph (c) of this
Section, all at the expense of the Loan Parties.
 
                      SECTION 5.15.      Credit Card Notification
Agreements.  The Borrowers and the Subsidiaries will maintain credit card
processing arrangements with the credit card issuers and processors identified
on Schedule 3.18; provided, however, that the Borrowers may amend Schedule 3.18
to remove any credit card issuer or processor identified therein or to add
additional credit card issuers and processors that are satisfactory to the
Administrative Agent, in its sole discretion, and concurrently with the making
of any such amendment the Borrowers shall provide to the Administrative Agent a
Credit Card Notification Agreement with respect thereto.
 
                      SECTION 5.16.      Post Closing Requirements.  The
Borrowers and the other Loan Parties shall deliver, when and as required by the
terms of the Post-Closing Deliverables Agreement, the items referenced therein.
 
ARTICLE VI

 
Negative Covenants
 
Until all the Revolving Commitments have expired or been terminated as provided
in Section 2.09(a) or (b), as the case may be, each Loan Party executing this
Agreement covenants and agrees, jointly and severally with all of the Loan
Parties, with the Lender Parties that:
 
                      SECTION 6.01.      Indebtedness.  No Loan Party will, nor
will it permit any of the Subsidiaries to, create, incur or suffer to exist any
Indebtedness, except:
 
(a)           the Secured Obligations;
 
(b)           Indebtedness existing on the date hereof and set forth in Schedule
6.01 and extensions, renewals and replacements of any such Indebtedness in
accordance with paragraph (f) hereof;
 
 
 
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(c)           Indebtedness of any Borrower to any Subsidiary and of any
Subsidiary to any Borrower or any other Subsidiary; provided that (i)
Indebtedness of any Subsidiary that is not a Loan Party to any Borrower or any
Subsidiary that is a Loan Party shall be subject to Section 6.04 and (ii)
Indebtedness of any Borrower to any Subsidiary and Indebtedness of any
Subsidiary that is a Loan Party to any Subsidiary that is not a Loan Party shall
be subordinated to the Secured Obligations on terms reasonably satisfactory to
the Administrative Agent;
 
(d)           Guarantees by any Borrower of Indebtedness of any Subsidiary and
by any Subsidiary of Indebtedness of any Borrower or any other Subsidiary,
provided that (i) the Indebtedness so Guaranteed is permitted by this Section
6.01, (ii) Guarantees by any Borrower or any Subsidiary that is a Loan Party of
Indebtedness of any Subsidiary that is not a Loan Party shall be subject to
Section 6.04(e) and (iii) Guarantees permitted under this paragraph (d) shall be
subordinated to the Secured Obligations of the applicable Subsidiary if, and on
the same terms as, the Indebtedness so Guaranteed is subordinated to the Secured
Obligations;
 
(e)           Indebtedness of any Borrower or any Subsidiary incurred to finance
the acquisition, construction or improvement of any fixed or capital assets
(whether or not constituting purchase money Indebtedness), including Capital
Lease Obligations and any Indebtedness assumed in connection with the
acquisition of any such assets or secured by a Lien on any such assets prior to
the acquisition thereof; provided that (i) such Indebtedness is incurred prior
to or within 120 days after such acquisition or the completion of such
construction or improvement and (ii) the aggregate principal amount of
Indebtedness permitted by this paragraph (e) shall not exceed $75,000,000 at any
time outstanding;
 
(f)            Indebtedness which represents an extension, refinancing,
replacement or renewal of any of the Indebtedness described in paragraphs (b),
(e), (i), (j) and (k) hereof; provided that (i) the principal amount of such
Indebtedness is not increased (except to the extent used to finance accrued
interest and premiums (including tender or make-whole premiums) thereon and
underwriting discounts, defeasance costs, fees, commissions and expenses), (ii)
any Liens securing such Indebtedness are not extended to any additional property
of any Loan Party, (iii) no Loan Party that is not originally obligated with
respect to repayment of such Indebtedness is required to become obligated with
respect thereto, (iv) such extension, refinancing, replacement or renewal does
not result in a shortening of the average weighted maturity of the Indebtedness
so extended, refinanced, replaced or renewed and (v) if the Indebtedness that is
refinanced, replaced, renewed or extended was subordinated in right of payment
to the Secured Obligations, then the terms and conditions of the refinancing,
replacement, renewal, or extension Indebtedness must include subordination terms
and conditions that are at least as favorable to the Administrative Agent and
the Lenders as those that were applicable to the refinanced, replaced, renewed,
or extended Indebtedness;
 
(g)           Indebtedness owed to any Person providing workers’ compensation,
health, disability or other employee benefits or property, casualty or liability
insurance, pursuant to reimbursement or indemnification obligations to such
Person, in each case incurred in the ordinary course of business;
 
 
 
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(h)           Indebtedness of any Borrower or any Subsidiary in respect of
performance bonds, bid bonds, appeal bonds, surety bonds and similar
obligations, in each case provided in the ordinary course of business;
 
(i)           secured Indebtedness incurred in connection with the IP Secured
Financing;
 
(j)           Indebtedness of any Person that becomes a Subsidiary after the
date hereof; provided that (i) such Indebtedness exists at the time such Person
becomes a Subsidiary and is not created in contemplation of or in connection
with such Person becoming a Subsidiary and (ii) the aggregate principal amount
of Indebtedness permitted by this paragraph (j) shall not exceed $50,000,000 at
any time outstanding;
 
(k)          other unsecured Indebtedness in an aggregate principal amount not
exceeding $300,000,000 at any time outstanding;
 
(l)           Indebtedness arising out of leases incurred in connection with
sale and leaseback transactions permitted by Section 6.06;
 
(m)         the Indebtedness of any joint venture, partnership or similar
arrangement which would be consolidated with those of the Company in the
Company’s consolidated financial statements in accordance with GAAP but of which
not more than 50% of the equity or the ordinary voting power (or in the case of
a partnership, not more than 50% of the general partnership interests) are, as
of such date, owned, controlled or held by the Company or any of its
consolidated Subsidiaries; and
 
(n)          Indebtedness of any Subsidiaries that are not Loan Parties;
provided that the aggregate principal amount of Indebtedness permitted by this
paragraph (n) shall not exceed $50,000,000 at any time outstanding.
 
                      SECTION 6.02.      Liens.  No Loan Party will, nor will it
permit any of the Subsidiaries to, create, incur, assume or permit to exist any
Lien on any property or asset now owned or hereafter acquired by it, or assign
or sell any income or revenues (including accounts receivable) or rights in
respect of any thereof, except:
 
(a)           Liens created pursuant to any Loan Document;
 
(b)           Permitted Encumbrances;
 
(c)           any Lien on any property or asset of any Borrower or any
Subsidiary existing on the date hereof and set forth in Schedule 6.02; provided
that (i) such Lien shall not apply to any other property or asset of such
Borrower or Subsidiary and (ii) such Lien shall secure only those obligations
which it secures on the date hereof and extensions, renewals and replacements
thereof that do not increase the outstanding principal amount thereof;
 
 
 
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(d)          Liens on fixed or capital assets acquired, constructed or improved
by any Borrower or any Subsidiary; provided that (i) such security interests
secure Indebtedness permitted by paragraph (e) of Section 6.01, (ii) such
security interests and the Indebtedness secured thereby are incurred prior to or
within 120 days after such acquisition or the completion of such construction or
improvement, (iii) the Indebtedness secured thereby does not exceed 100% of the
cost of acquiring, constructing or improving such fixed or capital assets and
(iv) such security interests shall not apply to any other property or assets of
such Borrower or Subsidiary or any other Borrower or Subsidiary;
 
(e)          any Lien existing on any property or asset (other than Accounts and
Inventory) prior to the acquisition thereof by any Borrower or any Subsidiary,
including or as a result of merger or consolidation with any Borrower or any
Subsidiary that is permitted pursuant to Section 6.03, or existing on any
property or asset (other than Accounts and Inventory) of any Person that becomes
a Subsidiary after the date hereof prior to the time such Person becomes a
Subsidiary; provided that (i) such Lien is not created in contemplation of or in
connection with such acquisition, merger or consolidation or such Person
becoming a Subsidiary, as the case may be, (ii) such Lien shall not apply to any
other property or assets of such Borrower or Subsidiary or any other Borrower or
Subsidiary and (iii) such Lien shall secure only those obligations which it
secures on the date of such acquisition or the date such Person becomes a
Subsidiary, as the case may be and extensions, renewals and replacements thereof
that do not increase the outstanding principal amount thereof except to the
extent permitted by paragraph (f) of Section 6.01;
 
(f)           Liens (i) of a collecting bank arising in the ordinary course of
business under Section 4-210 of the Uniform Commercial Code in effect in the
relevant jurisdiction covering only the items being collected upon or (ii) in
favor of a banking institution arising as a matter of law, encumbering amounts
credited to deposit or securities accounts (including the right of set-off) and
which are within the general parameters customary in the banking industry;
 
(g)          Liens arising out of sale and leaseback transactions permitted by
Section 6.06;
 
(h)          Liens on the registered intellectual property of the Borrowers
pursuant to the IP Secured Financing;
 
(i)           Liens granted by a Subsidiary that is not a Loan Party in favor of
any Borrower or another Loan Party in respect of Indebtedness owed by such
Subsidiary;
 
(j)           Liens arising from precautionary UCC or PPSA financing statements,
including in respect of any operating lease or disposition permitted by this
Agreement;
 
(k)          Liens arising solely by virtue of any statutory or common law
provision relating to banker’s liens, rights of setoff or similar rights and
remedies, in each case as to deposit accounts or other funds maintained with a
creditor depositary institution;
 
 
 
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(l)           Liens granted to secure payment of the Indebtedness permitted
pursuant to Section 6.01(f); provided that such Liens do not spread to cover any
property or assets that were not originally secured by the Indebtedness being so
refinanced; and
 
(m)         Liens not otherwise permitted by this Section 6.02 so long as (i)
neither (A) the aggregate outstanding principal amount of the obligations
secured thereby nor (B) the aggregate fair market value (determined as of the
date such Lien is incurred) of the assets subject thereto exceeds (as to the
Borrowers and all Subsidiaries) $25,000,000 at any one time and (ii) any such
Liens do not cover any Collateral.
 
Notwithstanding the foregoing, none of the Permitted Liens (other than
nonconsensual Permitted Liens securing Indebtedness in an aggregate amount at
any time not exceeding $5,000,000) may at any time attach to any Loan Party’s
(1) Accounts, other than those permitted under paragraph (a) of the definition
of “Permitted Encumbrances” and paragraph (a) and (g) above and (2) Inventory,
other than those permitted under paragraphs (a) and (b) of the definition of
“Permitted Encumbrances” and paragraph (a) above.
 
                      SECTION 6.03.      Fundamental Changes.  (a) No Loan Party
will, nor will it permit any of the Subsidiaries to, merge into or consolidate
or amalgamate with any other Person, or permit any other Person to merge into or
consolidate or amalgamate with it, or liquidate or dissolve, except that, if at
the time thereof and immediately after giving effect thereto no Event of Default
shall have occurred and be continuing (i) any Subsidiary of any Borrower may
merge into or amalgamate with any Borrower in a transaction in which such
Borrower is the surviving corporation, (ii) any Loan Party (other than a
Borrower) may merge into or amalgamate with any Loan Party in a transaction in
which the surviving entity is a Loan Party (iii) any Subsidiary may transfer its
assets to a Loan Party and any Subsidiary which is not a Loan Party may transfer
its assets to another Subsidiary that is not a Loan Party, (iv) any Borrower may
merge with any other Borrower, (v) any Loan Party (other than a Borrower) may
merge into or amalgamate with any other person if required to complete a
Permitted Acquisition; (vi) any Subsidiary that is not a Loan Party may merge
into or amalgamate with any other Subsidiary that is not a Loan Party and (vii)
any Subsidiary that is not a Loan Party may liquidate or dissolve if the
Borrower which owns such Subsidiary determines in good faith that such
liquidation or dissolution is in the best interests of such Borrower and is not
materially disadvantageous to the Lenders; provided that any such merger
involving a Person that is not a wholly owned Subsidiary immediately prior to
such merger shall not be permitted unless also permitted by Section 6.04.
 
                                (b)           No Loan Party will, nor will it
permit any of the Subsidiaries to, engage in any business other than businesses
of the type conducted by the Borrowers and the Subsidiaries on the date of
execution of this Agreement and businesses reasonably related thereto.
 
                      SECTION 6.04.      Investments, Loans, Advances,
Guarantees and Acquisitions.  No Loan Party will, nor will it permit any of the
Subsidiaries to, purchase, hold or acquire (including pursuant to any merger or
amalgamation with any Person that was not a Loan Party and a wholly owned
Subsidiary prior to such merger) any Equity Interests, evidences of indebtedness
or other securities (including any option, warrant or other right to acquire any
of the foregoing) of, make or permit to exist any loans or advances to,
Guarantee any obligations of, or make or permit to exist any investment or any
other interest in, any other Person, or purchase or otherwise acquire (in one
transaction or a series of transactions) any assets of any other Person
constituting a business unit (whether through purchase of assets, merger or
otherwise), except:
 
 
 
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(a)           Permitted Investments, subject (as provided in the U.S. Security
Agreement or the Canadian Security Agreement, as the case may be) to control
agreements in favor of the Administrative Agent (for the benefit of the Lender
Parties or the Canadian Lender Parties, as the case may be) or otherwise subject
to a perfected security interest in favor of the Administrative Agent (for the
benefit of the Lender Parties or the Canadian Lender Parties, as the case may
be);
 
(b)           Investments in existence on the date of this Agreement and
described in Schedule 6.04;
 
(c)           Investments by the Borrowers and the Subsidiaries in Equity
Interests in Persons that are (i) Loan Parties, (ii) Subsidiaries that are not
Loan Parties and (iii) GRI and Rachel Roy IP Company LLC; provided that (A) any
such Equity Interests held by a U.S. Loan Party shall be pledged pursuant to the
U.S. Security Agreement (subject to the limitations applicable to Equity
Interests of First-Tier Foreign Subsidiaries referred to in Section 5.14(b)(iv)
and any such Equity Interests held by a Canadian Loan Party shall be pledged
pursuant to the applicable Canadian Security Agreement) and (B) the aggregate
amount of Investments made after the date hereof by Loan Parties in any Person
described in clause (ii) or (iii) above (including intercompany loans permitted
under clause (B) to the proviso to Section 6.04(d) and outstanding Guarantees
permitted under the proviso to Section 6.04(e)) shall not exceed the sum of (1)
(x) Investments existing on the Effective Date in GRI, Rachel Roy IP Company LLC
and Subsidiaries that are not Loan Parties, (y) loans and advances existing on
the Effective Date of the Loan Parties to Subsidiaries that are not Loan Parties
and (z) Guarantees existing on the Effective Date by Loan Parties of the
aggregate principal amount of Indebtedness of Subsidiaries that are not Loan
Parties (in each case as set forth on Schedule 6.04) and (2) $30,000,000 (the
“Investment Basket”) at any time outstanding (in each case determined without
regard to any write-downs or write-offs);
 
(d)           loans or advances made by (i) any Borrower to any Subsidiary or
any other Borrower and (ii) any Subsidiary to any Borrower or any other
Subsidiary, provided that (A) any such loans and advances made by a Loan Party
shall be evidenced by a promissory note pledged pursuant to the U.S. Security
Agreement or the applicable Canadian Security Agreement, as applicable, and (B)
the amount of such loans and advances made after the Effective Date by Loan
Parties to Subsidiaries that are not Loan Parties (together with outstanding
Investments permitted under clause (B) to the proviso to Section 6.04(c) and
made after the Effective Date and outstanding Guarantees permitted under the
proviso to Section 6.04(e) and made after the Effective Date) shall not exceed
the Investment Basket at any time outstanding (in each case determined without
regard to any write-downs or write-offs);
 
(e)           Guarantees constituting Indebtedness permitted by Section 6.01,
provided that the aggregate principal amount of Indebtedness of Subsidiaries
that are not Loan Parties that is Guaranteed by any Loan Party after the
Effective Date shall (together with outstanding Investments permitted under
clause (B) to the proviso to Section 6.04(c) and made after the Effective Date
and outstanding intercompany loans permitted under clause (B) to the proviso to
Section 6.04(d) and made after the Effective Date) shall not exceed the
Investment Basket at any time outstanding (in each case determined without
regard to any write-downs or write-offs);
 
 
 
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(f)           loans or advances by the Borrowers and the Subsidiaries to their
employees in the ordinary course of business consistent with past practices for
travel and entertainment expenses, relocation costs and similar purposes up to a
maximum of $4,000,000 in the aggregate at any one time outstanding;
 
(g)          loans and advances to third party contractors in the ordinary
course of business and consistent with past practices in an aggregate
outstanding amount not to exceed at any time $2,000,000 (excluding such loans
and advances consisting of prepayments or advances for inventory or services);
 
(h)          subject to Sections 4.2(a) and 4.4 of the U.S. Security Agreement,
notes payable, or stock or other securities issued by Account Debtors to a Loan
Party pursuant to negotiated agreements with respect to settlement of such
Account Debtor’s Accounts in the ordinary course of business, consistent with
past practices;
 
(i)           Investments in the form of Swap Agreements permitted by Section
6.07;
 
(j)           Investments of any Person existing at the time such Person becomes
a Subsidiary of a Borrower or consolidates or merges with a Borrower or any of
the Subsidiaries (including in connection with a Permitted Acquisition) so long
as such Investments were not made in contemplation of such Person becoming a
Subsidiary or of such merger;
 
(k)           Investments received in connection with the dispositions of assets
permitted by Section 6.05;
 
(l)           Permitted Acquisitions; provided that both immediately before and
immediately after giving effect thereto, (i) no Default or Event of Default
shall have occurred and be continuing, (ii) the Fixed Charge Coverage Ratio for
the Test Period in effect at the time such Permitted Acquisition is to occur
shall be not less than 1.25 to 1.00 (determined on a Pro Forma Basis in respect
of the Test Period in effect at such time) and (iii) Availability will not be
less than 30% of the total Revolving Commitment as of the date such Permitted
Acquisition is consummated and for the period of 60 consecutive days immediately
preceding the consummation of such Permitted Acquisition after giving pro forma
effect thereto;
 
(m)           Investments constituting deposits described in paragraphs (c) and
(d) of the definition of the term “Permitted Encumbrances”;
 
(n)           Guarantees by the Borrower or any of the Subsidiaries of leases
(other than Capital Lease Obligations) or of other obligations of the Borrower
or any of its Subsidiaries that do not constitute Indebtedness, in each case
entered into in the ordinary course of business that is consistent with past
practice; and
 
 
 
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(o)           other Investments not otherwise permitted by this Section 6.04;
provided that both immediately before and immediately after giving effect
thereto, (i) no Default or Event of Default shall have occurred and be
continuing, (ii) the Fixed Charge Coverage Ratio  for the Test Period in effect
at the time such Investment is to occur shall be not less than 1.25 to 1.00
(determined on a Pro Forma Basis in respect of the Test Period in effect at such
time), (iii) Availability will not be less than 30% of the total Revolving
Commitment as of the date such Investment is consummated and for the period of
60 consecutive days immediately preceding the consummation of such Permitted
Acquisition after giving pro forma effect thereto, and (iv) the aggregate amount
of all Investments made pursuant to this paragraph (o) shall not exceed
$50,000,000 in any fiscal year of the Borrower.
 
                      SECTION 6.05.      Asset Sales.  No Loan Party will, nor
will it permit any of the Subsidiaries to, sell, transfer, lease or otherwise
dispose of any asset, including any Equity Interest owned by it, nor will any
Borrower permit any Subsidiary to issue any additional Equity Interest in such
Subsidiary (other than to another Borrower or another Subsidiary in compliance
with Section 6.04), except:
 
(a)           the sales, transfers, leases or dispositions of assets described
in Schedule 6.05;
 
(b)           sales, transfers and dispositions of (i) inventory in the ordinary
course of business and (ii) used, obsolete, worn out or surplus equipment or
property in the ordinary course of business;
 
(c)           sales, transfers and dispositions to any Borrower or any
Subsidiary, provided that any such sales, transfers or dispositions involving a
Subsidiary that is not a Loan Party shall (i) be made in compliance with Section
6.09 and (ii) not have an aggregate fair market value, when added to the fair
market value of all the assets sold, transferred or disposed of pursuant to
paragraph (h) below, of more than $10,000,000 during any fiscal year of the
Borrowers;
 
(d)           sales, transfers and dispositions of accounts receivable in
connection with the compromise, settlement or collection thereof;
 
(e)           sales, transfers and dispositions of Investments permitted by
paragraphs (c)(ii), (h) and (i) of Section 6.04 and the proviso to Section
6.04(d);
 
(f)            sale and leaseback transactions permitted by Section 6.06;
 
(g)           dispositions resulting from any casualty or other insured damage
to, or any taking under power of eminent domain or by condemnation or similar
proceeding of, any property or asset of any Borrower or any Subsidiary;
 
 
 
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(h)           sales, transfers and other dispositions of assets (other than
Equity Interests in a Subsidiary unless all Equity Interests in such Subsidiary
are sold) that are not permitted by any other paragraph of this Section,
provided that the aggregate fair market value of all assets sold, transferred or
otherwise disposed of in reliance upon this paragraph (h) and pursuant to
paragraph (c) to Subsidiaries that are not Loan Parties shall not exceed
$10,000,000 during any fiscal year of the Borrowers;
 
(i)            Restricted Payments permitted by Section 6.08; and
 
(j)            dispositions of cash and Permitted Investments in the ordinary
course of business that is consistent with past practices;
 
provided that all sales, transfers, leases and other dispositions permitted
hereby (other than those permitted by paragraphs (c) (to the extent that the
applicable transaction is solely among Loan Parties), (g) and (i) above) shall
be made for fair value and for at least 75% cash consideration.
 
                      SECTION 6.06.      Sale and Leaseback Transactions.  No
Loan Party will, nor will it permit any of the Subsidiaries to, enter into any
arrangement, directly or indirectly, whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
that it intends to use for substantially the same purpose or purposes as the
property sold or transferred, except for any such sale of any fixed or capital
assets by any Borrower or any Subsidiary that is made for cash consideration in
an amount not less than the fair value of such fixed or capital asset and is
consummated within 120 days after such Borrower or such Subsidiary acquires or
completes the construction of such fixed or capital asset.
 
                      SECTION 6.07.      Swap Agreements.  No Loan Party will,
nor will it permit any of the Subsidiaries to, enter into any Swap Agreement,
except (a) Swap Agreements entered into to hedge or mitigate risks to which any
Borrower or any Subsidiary has actual exposure (other than those in respect of
Equity Interests of any Borrower or any of its Subsidiaries), and (b) Swap
Agreements entered into in order to effectively cap, collar or exchange interest
rates (from fixed to floating rates, from one floating rate to another floating
rate or otherwise) with respect to any interest-bearing liability or Investment
of any Borrower or any Subsidiary.
 
                      SECTION 6.08.      Restricted Payments; Certain Payments
of Indebtedness.  (a) No Loan Party will, nor will it permit any of the
Subsidiaries to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, or incur any obligation (contingent or
otherwise) to do so, except (i) each Borrower may declare and pay dividends with
respect to its common stock payable solely in additional shares of its common
stock, and, with respect to its preferred stock, payable solely in additional
shares of such preferred stock or in shares of its common stock, (ii)
Subsidiaries may declare and pay dividends ratably with respect to their Equity
Interests, (iii) the Company may make Restricted Payments pursuant to and in
accordance with stock option plans or other benefit plans for management or
employees of the Company and any of its Subsidiaries in an aggregate amount not
to exceed $2,000,000 during any fiscal year of the Company; provided that, both
immediately before and immediately after giving effect to each such Restricted
Payment, no Default or Event of Default shall have occurred and be continuing,
and (iv) the Borrowers may make other Restricted Payments; provided that, (A)
both immediately before the declaration of, and (other than the declaration of a
dividend of a Loan Party that is a public company, which dividend shall be
subject to a Reserve as provided in the definition thereof) immediately after
giving effect to each such Restricted Payment, no Default or Event of Default
shall have occurred and be continuing, and (B) at the time any Restricted
Payment is declared (x) the Fixed Charge Coverage Ratio for the Test Period in
effect at the time shall not be less than 1.25 to 1.00 (determined on a Pro
Forma Basis in respect of the Test Period in effect at such time) and (y)
Availability shall not be less than 30% of the total Revolving Commitment for
the period of 60 consecutive days immediately preceding the date such Restricted
Payment is declared after giving pro forma effect thereto.
 
 
 
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(b)           No Loan Party will, nor will it permit any of the Subsidiaries to,
make or agree to pay or make, directly or indirectly, any payment or other
distribution (whether in cash, securities or other property) of or in respect of
principal of or interest on any Indebtedness, or any payment or other
distribution (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any Indebtedness,
except:
 
(i)            payment of Indebtedness created under the Loan Documents;
 
(ii)           payment of regularly scheduled interest and principal payments as
and when due in respect of any Indebtedness (including the Existing Debt
Securities that are maturing in November 2009), other than payments in respect
of the Subordinated Indebtedness prohibited by the subordination provisions
thereof or relating thereto; provided that (A) if, either immediately before or
after giving effect to any such payment on the Existing Debt Securities any
Default or Event of Default has occurred and is continuing, no such payment may
be made in an amount exceeding the Existing Debt Securities Reserve and (B) no
payment on any other Indebtedness shall be made if, either immediately before or
after giving effect to any such payment, any Default or Event of Default has
occurred and is continuing;
 
(iii)          refinancings, replacements and renewals of Indebtedness to the
extent permitted by Section 6.01;
 
(iv)          payment of secured Indebtedness that becomes due as a result of
the voluntary sale or transfer of the property or assets securing such
Indebtedness;
 
(v)           prepayment of the Existing Debt Securities that are maturing in
November 2009 pursuant to the tender offer for such Existing Debt Securities;
provided that both immediately before and after giving effect to such
prepayment, (A) no Default or Event of Default shall have occurred and be
continuing and (B) Availability plus cash on hand of the Loan Parties (which is
reasonably identified to the satisfaction of the Joint Collateral Agents) is not
less than $300,000,000; provided further, however, that such payment shall be
made not later than 30 days after the Effective Date; and
 
(vi)          payment of intercompany Indebtedness in accordance with past
practices arising in connection with cash management transactions in the
ordinary course of business; provided that no such payment shall be made by a
Loan Party to a Person that is not a Loan Party if immediately before or after
giving effect thereto any Default or Event of Default has occurred and is
continuing.
 
 
 
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                      SECTION 6.09.      Transactions with Affiliates.  No Loan
Party will, nor will it permit any of the Subsidiaries to, sell, lease or
otherwise transfer any property or assets to, or purchase, lease or otherwise
acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (a) transactions that (i) are
in the ordinary course of business and (ii) are at prices and on terms and
conditions not less favorable to such Borrower or such Subsidiary than could be
obtained on an arm’s-length basis from unrelated third parties, (b) transactions
between or among any Borrowers and other Loan Parties (including transfers of
Inventory) and any Subsidiary that is a Loan Party not involving any other
Affiliate, (c) any loans, advances, Guarantees or other Investments permitted by
Sections 6.04(c), (d) or (e), (d) any Indebtedness permitted under Section
6.01(c), (d) or (e), (e) any Restricted Payment permitted by Section 6.08, (f)
loans or advances to employees permitted under Section 6.04, (g) the payment of
reasonable fees to directors of any Borrower or any Subsidiary who are not
employees of such Borrower or Subsidiary, and compensation and employee benefit
arrangements paid to, and indemnities provided for the benefit of, directors,
officers or employees of the Borrowers or their Subsidiaries in the ordinary
course of business and (h) any issuances of securities or other payments, awards
or grants in cash, securities or otherwise pursuant to, or the funding of,
employment agreements, stock options and equity incentive and stock ownership
plans approved by a Borrower’s board of directors.
 
                      SECTION 6.10.      Restrictive Agreements.  No Loan Party
will, nor will it permit any of the Subsidiaries to, directly or indirectly,
enter into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of such Loan
Party or any of the Subsidiaries to create, incur or permit to exist any Lien
upon any of its property or assets to secure the Secured Obligations, or (b) the
ability of any Subsidiary to pay dividends or other distributions with respect
to any shares of its Equity Interests or to make or repay loans or advances to
any Borrower or any other Subsidiary or to Guarantee Indebtedness of any
Borrower or any other Subsidiary; provided that (i) the foregoing shall not
apply to restrictions and conditions imposed by law or by any Loan Document,
(ii) the foregoing shall not apply to restrictions and conditions imposed on the
Loan Parties existing on the date hereof identified on Schedule 6.10 (but shall
apply to any extension or renewal of, or any amendment or modification expanding
the scope of, any such restriction or condition), (iii) the foregoing shall not
apply to the IP Secured Financing to the extent approved by the Administrative
Agent in accordance with such defined term, (iv) the foregoing shall not apply
to customary restrictions and conditions contained in agreements relating to the
sale of a Subsidiary pending such sale; provided further that such restrictions
and conditions apply only to the Subsidiary that is to be sold and such sale is
permitted hereunder, (v) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness or sale and leaseback transactions permitted by this Agreement if
such restrictions or conditions apply only to the property or assets securing
such Indebtedness and (vi) clause (a) of the foregoing shall not apply to
customary provisions in leases restricting the assignment thereof.
 
                      SECTION 6.11.      Amendment of Material Documents.  No
Loan Party will, nor will it permit any of the Subsidiaries to, amend, modify or
waive any of its rights under (a) agreement relating to any Subordinated
Indebtedness, (b) its certificate of incorporation, by-laws, operating,
memorandum of association, management or partnership agreement or other
organizational documents or (c) the Indenture, any Open Account Agreement or the
Existing Debt Securities to the extent any such amendment, modification or
waiver would be materially adverse to the Lenders in any respect.
 
 
 
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                      SECTION 6.12.      Fixed Charge Coverage Ratio.  During
any Level 1 Minimum Availability Period, the Borrowers will not permit the Fixed
Charge Coverage Ratio as at the last day of any Test Period to be less than 1.0
to 1.0.
 
                      SECTION 6.13.      Open Account Agreements.  No Loan Party
will, nor will it permit any of its Subsidiaries to, enter into any Other Open
Account Agreement without the prior consent of the Administrative Agent, such
consent not to be unreasonably withheld or delayed.  The aggregate amount of
Open Account Obligations that are authorized to be outstanding at any time
pursuant to the terms of any Open Account Agreement shall not exceed (a) in the
case of Citibank Open Account Agreement, the Citibank Open Account Cap, and (b)
in the case of any Other Open Account Agreement, the Open Account Other Cap with
respect thereto as provided in the definition of “Open Account Other Cap.”
 
ARTICLE VII

 
Events of Default
 
If any of the following events (“Events of Default”) shall occur:
 
(a)           any Borrower shall fail to pay (i) any principal of any Loan or
any repayment or reimbursement obligation in respect of any LC Disbursement or
(ii) any Open Account Obligation, in each case, when and as the same shall
become due and payable, whether at the due date thereof or at a date fixed for
prepayment thereof or otherwise;
 
(b)           any Borrower shall fail to pay any interest on any Loan or any fee
or any other Obligation (other than an amount referred to in paragraph (a) of
this Article) payable pursuant to this Agreement, when and as the same shall
become due and payable, and such failure shall continue unremedied for a period
of three Business Days;
 
(c)           any representation or warranty made or deemed made by or on behalf
of any Loan Party or any Subsidiary in or in connection with this Agreement or
any other Loan Document or any amendment or modification thereof or waiver
thereunder, or in any report, certificate, financial statement or other document
furnished pursuant to or in connection with this Agreement or any other Loan
Document or any amendment or modification thereof or waiver thereunder, shall
prove to have been materially incorrect when made or deemed made;
 
(d)           any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02(a), 5.03 (with respect to a
Loan Party’s existence), 5.08, 5.15 or 5.16 or in Article VI;
 
 
 
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(e)           any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement or any other Loan Document
(other than those which constitute a default under another Section of this
Article), and such failure shall continue unremedied for (i) during a Weekly
Reporting Period, a period of one day after the earlier of any Loan Party’s
knowledge of such breach or notice thereof from the Administrative Agent (which
notice will be given at the request of any Lender) if such breach relates to
terms or provisions of Section 5.01(g), (h) or (i), (ii) a period of five days
after the earlier of any Loan Party’s knowledge of such breach or notice thereof
from the Administrative Agent (which notice will be given at the request of any
Lender) if such breach relates to terms or provisions of Section 5.01 (other
than Section 5.01(g), (h) or (i) during a Weekly Reporting Period), 5.02 (other
than Section 5.02(a)), 5.03 through 5.07, 5.09, 5.10, 5.11 or 5.12 of this
Agreement or (iii) a period of 15 days after the earlier of any Loan Party’s
knowledge of such breach or notice thereof from the Administrative Agent (which
notice will be given at the request of any Lender) if such breach relates to
terms or provisions of any other Section of this Agreement;
 
(f)            any Loan Party or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and payable;
 
(g)           any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided that this paragraph (g) shall not apply to secured
Indebtedness that becomes due as a result of the voluntary sale or transfer of
the property or assets securing such Indebtedness;
 
(h)           an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of a Loan Party or any Subsidiary of any Loan Party or its debts, or
of a substantial part of its assets, under any federal, state, provincial or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, interim receiver, trustee,
custodian, sequestrator, monitor, administrator, conservator or similar official
for any Loan Party or any Subsidiary of any Loan Party or for a substantial part
of its assets, and, in any such case, such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of the
foregoing shall be entered;
 
(i)            any Loan Party or any Subsidiary shall (i) voluntarily commence
any proceeding or file any petition, proposal or notice of intention to file a
proposal seeking liquidation, reorganization or other relief under any federal,
state, provincial or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition described
in paragraph (h) of this Article, (iii) apply for or consent to the appointment
of a receiver, interim receiver, trustee, custodian, sequestrator, monitor,
administrator, conservator or similar official for such Loan Party or Subsidiary
of any Loan Party or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or (vi)
take any action for the purpose of effecting any of the foregoing;
 
 
 
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(j)            any Loan Party or any Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become due;
 
(k)           one or more judgments for the payment of money in an aggregate
amount in excess of $50,000,000 shall be rendered against any Loan Party, any
Subsidiary or any combination thereof and the same shall remain undischarged for
a period of 30 consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to attach or
levy upon any assets of any Loan Party or any Subsidiary to enforce any such
judgment or any Loan Party or any Subsidiary shall fail within 30 days to
discharge one or more non-monetary judgments or orders which, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect,
which judgments or orders, in any such case, are not stayed on appeal or
otherwise being appropriately contested in good faith by proper proceedings
diligently pursued;
 
(l)            (i)(A) an ERISA Event shall have occurred, (B) a trustee shall be
appointed by a United States district court to administer any Pension Plan, (C)
the PBGC shall institute proceedings to terminate any Pension Plan, (D) any Loan
Party or any of their respective ERISA Affiliates shall have been notified by
the sponsor of a Multiemployer Plan that it has incurred or will be assessed
Withdrawal Liability to such Multiemployer Plan and such entity does not have
reasonable grounds for contesting such Withdrawal Liability or is not contesting
such Withdrawal Liability in a timely and appropriate manner; or (E) any other
event or condition shall occur or exist with respect to a Pension Plan; and in
each case in paragraphs (A) through (E) above, such event or condition, together
with all other such events or conditions, if any, could, in the opinion of the
Required Lenders, reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Effect; or (ii) a Pension Event shall occur
which, in the Administrative Agent’s determination, constitutes grounds for the
termination under any applicable law, of any Canadian Pension Plan or for the
appointment by the appropriate Governmental Authority of a trustee for any
Canadian Pension Plan, or if any Canadian Pension Plan shall be terminated or
any such trustee shall be requested or appointed, or if a Loan Party or any of
its Subsidiaries is in default with respect to payments to a Multiemployer Plan
or Canadian Pension Plan resulting from their complete or partial withdrawal
from such Canadian Pension Plan and any such event may reasonably be expected to
have a Material Adverse Effect or any Lien arises (except for contribution
amounts not yet due) in connection with any Canadian Pension Plan;
 
(m)          a Change in Control shall occur;
 
(n)           the occurrence of any “default”, under and as defined in the U.S.
Security Agreement or the Canadian Security Agreement, or the breach of any of
the terms or provisions of any Loan Document (other than this Agreement), which
default or breach continues beyond any period of grace therein provided;
 
 
 
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(o)           the Loan Guaranty shall fail to remain in full force or effect or
any action shall be taken to discontinue or to assert the invalidity or
unenforceability of the Loan Guaranty, or any Loan Guarantor shall fail to
comply with any of the terms or provisions of the Loan Guaranty to which it is a
party, or any Loan Guarantor shall deny that it has any further liability under
the Loan Guaranty to which it is a party, or shall give notice to such effect;
 
(p)           any Collateral Document shall for any reason fail to create a
valid and perfected first priority security interest in any Collateral purported
to be covered thereby, except as permitted by the terms of any Collateral
Document, or any Collateral Document shall fail to remain in full force or
effect or any action shall be taken to discontinue or to assert the invalidity
or unenforceability of any Collateral Document, or any Loan Party shall fail to
comply with any of the terms or provisions of any Collateral Document; or
 
(q)           any material provision of any Loan Document for any reason ceases
to be valid, binding and enforceable in accordance with its terms (or any Loan
Party shall challenge the enforceability of any Loan Document or shall assert in
writing, or engage in any action or inaction based on any such assertion, that
any provision of any of the Loan Documents has ceased to be or otherwise is not
valid, binding and enforceable in accordance with its terms);
 
then, and in every such event (other than an event with respect to the Borrowers
described in paragraph (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower Representative,
take either or both of the following actions, at the same or different
times:  (i) terminate the Revolving Commitments, and thereupon the Revolving
Commitments shall terminate immediately and (ii) declare the Loans and other
Obligations then outstanding to be due and payable in whole (or in part, in
which case any Obligations not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans and
other Obligations so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Borrowers accrued
hereunder, shall become due and payable immediately, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrowers; and in case of any event with respect to the Borrowers described
in paragraph (h) or (i) of this Article, the Revolving Commitments shall
automatically terminate and the principal of the Loans and other Obligations
then outstanding, together with accrued interest thereon and all fees and other
Obligations of the Borrowers accrued hereunder, shall automatically become due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrowers.  Upon the occurrence and the
continuance of an Event of Default, the Administrative Agent or the Canadian
Administrative Agent, may, and at the request of the Required Lenders shall,
exercise any rights and remedies provided to it under the Loan Documents or at
law or equity, including all remedies provided under the UCC, the PPSA, the
Civil Code of Quebec or any other legislation.
 
 
 
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ARTICLE VIII

 
The Administative Agent and Canadian Administrative Agent, Joint Collateral
Agents; Other Agents
 
                      SECTION 8.01.      The Administrative Agent and the
Canadian Administrative Agent.  Each of the Lender Parties hereby irrevocably
appoints each of the Administrative Agent and the Canadian Administrative Agent
as its agent hereunder and under the other Loan Documents and authorizes the
Administrative Agent and the Canadian Administrative Agent to take such actions
on its behalf, including execution of the other Loan Documents and an
intercreditor agreement in connection with the IP Secured Financing (as provided
in the definition of such term in Section 1.01), and to exercise such powers as
are delegated to the Administrative Agent and the Canadian Administrative Agent
by the terms of the Loan Documents, together with such actions and powers as are
reasonably incidental thereto.
 
Without limiting the powers of the Administrative Agent hereunder and under the
other Loan Documents, each Lender Party and the Administrative Agent (in its
sole capacity as the initial holder of the Bonds (as defined below)) hereby
acknowledges and agrees that the Administrative Agent (or any successor thereto)
shall, for the purposes of holding any security granted under the Loan Documents
pursuant to the laws of the Province of Quebec to secure payment of debentures
(or any similar instruments) issued by the Canadian Borrower or any other Loan
Party (which debentures as amended, restated, replaced, modified or supplemented
at any time, for purposes of this Section, shall be hereinafter referred to as
the “Bonds”), be the holder of an irrevocable power of attorney (“fondé de
pouvoir”) (within the meaning of Article 2692 of the Civil Code of Quebec) for
all present and future Lender Parties and holders of the Bonds.  Each Lender
Party and the Administrative Agent (solely in its capacity as the initial holder
of the Bonds) hereby ratifies the appointment of and constitutes, to the extent
necessary, the Administrative Agent as the holder of such irrevocable power of
attorney (“fondé de pouvoir”) in order to hold hypothecs or other Liens granted
by any one of the Loan Parties under the Loan Documents in the Province of
Quebec to secure payment of the Bonds.  Each assignee Lender Party and each
assignee holder of Bonds shall be deemed to have confirmed and ratified the
constitution of the Administrative Agent as the holder of such irrevocable power
of attorney (“fondé de pouvoir”) by execution of the relevant agreements
relating to such assignment.  The Administrative Agent agrees to act in such
capacity.  Furthermore, the Administrative Agent hereby agrees and each of the
other Lender Parties hereby appoints the Administrative Agent to act in the
capacity of the holder and depositary of the Bonds on its own behalf as
Administrative Agent and for and on behalf and for the benefit of all present
and future Lender Parties.  Each assignee Lender Party shall be deemed to have
confirmed and ratified the constitution of the Administrative Agent as such
holder and depositary of the Bonds by execution of the relevant agreements
relating to such assignment.  To the extent necessary, each Lender Party shall
be deemed to confirm and ratify the appointments made under this Section by its
execution of any the relevant Loan Document.  The execution by the
Administrative Agent prior to the date hereof of any document creating or
evidencing any such hypothec or other Lien for the benefit of any of the Lender
Parties is hereby ratified and confirmed.
 
The parties hereto expressly waive the provisions and protection of Section 32
of An Act Respecting Special Powers of Legal Persons (Québec).  The
Administrative Agent may acquire and be the holder of the Bonds or other titles
of indebtedness.  Each of the parties hereto acknowledges and agrees that the
Bonds constitute a title of indebtedness as such term is used in Article 2692 of
the Civil Code of Quebec.
 
 
 
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The bank serving as the Administrative Agent or the Canadian Administrative
Agent hereunder shall have the same rights and powers in its capacity as a
Lender as any other Lender and may exercise the same as though it were not the
Administrative Agent or the Canadian Administrative Agent, and such bank and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Loan Parties or any Subsidiary of a Loan Party or
other Affiliate thereof as if it were not the Administrative Agent or the
Canadian Administrative Agent hereunder.
 
Neither the Administrative Agent nor the Canadian Administrative Agent shall
have any duties or obligations except those expressly set forth in the Loan
Documents.  Without limiting the generality of the foregoing, (a) neither the
Administrative Agent nor the Canadian Administrative Agent shall be subject to
any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) the Administrative Agent and the Canadian
Administrative Agent shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated by the Loan Documents that the Administrative Agent or
the Canadian Administrative Agent is required to exercise in writing as directed
by the Required Lenders (or such other number or percentage of the Lenders as
shall be necessary under the circumstances as provided in Section 9.02), and (c)
except as expressly set forth in the Loan Documents, neither the Administrative
Agent nor the Canadian Administrative Agent shall have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating to any
Loan Party or any of the Subsidiaries that is communicated to or obtained by the
bank serving as Administrative Agent or Canadian Administrative Agent or any of
its Affiliates in any capacity.  The Administrative Agent and the Canadian
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02) or in the absence of its own gross negligence or
wilful misconduct.  The Administrative Agent or the Canadian Administrative
Agent, as the case may be, shall be deemed not to have knowledge of any Default
unless and until written notice thereof is given to the Administrative Agent and
the Canadian Administrative Agent by the Borrower Representative or a Lender
Party, and the Administrative Agent and the Canadian Administrative Agent shall
not be responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with any Loan
Document, (ii) the contents of any certificate, report or other document
delivered hereunder or in connection with any Loan Document, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth in any Loan Document, (iv) the adequacy, accuracy or
completeness of any information (whether oral or written) set forth or in
connection with any Loan Document, (v) the legality, the validity,
enforceability, effectiveness, adequacy or genuineness of any Loan Document or
any other agreement, instrument or document, (v) the creation, perfection or
priority of Liens on the Collateral or the existence of the Collateral, or (vi)
the satisfaction of any condition set forth in Article IV or elsewhere in any
Loan Document, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent and the Canadian Administrative Agent, as
the case may be.
 
 
 
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The Administrative Agent and the Canadian Administrative Agent shall be entitled
to rely upon, and shall not incur any liability for relying upon, any
representation, notice, request, certificate, consent, statement, instrument,
document or other writing or communication believed by it to be genuine, correct
and to have been authorized, signed or sent by the proper Person.  The
Administrative Agent and the Canadian Administrative Agent also may rely upon
any statement made to it orally or by telephone and believed by it to be made or
authorized by the proper Person, and shall not incur any liability for relying
thereon.  The Administrative Agent and the Canadian Administrative Agent may
consult with legal counsel (who may be counsel for the Borrowers), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.
 
The Administrative Agent and the Canadian Administrative Agent may perform any
and all its duties and exercise its rights and powers by or through any one or
more sub-agents appointed by the Administrative Agent or the Canadian
Administrative Agent, as the case may be.  The Administrative Agent, the
Canadian Administrative Agent and any such sub-agent thereof may perform any and
all its duties and exercise its rights and powers through their respective
Related Parties.  The exculpatory provisions of the preceding paragraphs shall
apply to any such sub-agent and to the Related Parties of the Administrative
Agent, the Canadian Administrative Agent and any such sub-agent, and shall apply
to their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as the Administrative Agent
and the Canadian Administrative Agent.
 
Subject to the appointment and acceptance of a successor Administrative Agent
and the Canadian Administrative Agent, as the case may be, as provided in this
paragraph, the Administrative Agent and the Canadian Administrative Agent may
resign at any time by notifying the Lenders, the Issuing Banks and the Borrower
Representative.  Upon any such resignation, the Required Lenders shall have the
right, in consultation with the Borrowers, to appoint a successor (which shall,
in the case of the Canadian Administrative Agent only, be an Affiliate of the
Administrative Agent acting through a branch or an office in Canada).  If no
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Administrative Agent
or Canadian Administrative Agent, as the case may be, gives notice of its
resignation, then the retiring Administrative Agent or Canadian Administrative
Agent, as the case may be, may, on behalf of the Lender Parties, appoint a
successor Administrative Agent which shall be a commercial bank or an Affiliate
of any such commercial bank (which shall, in the case of the Canadian
Administrative Agent only, be an Affiliate of the Administrative Agent acting
through an office in Canada).  Upon the acceptance of its appointment as
Administrative Agent or Canadian Administrative Agent, as the case may be,
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges, obligations and duties of the retiring (or
retired) Administrative Agent or Canadian Administrative Agent, as the case may
be, and the retiring Administrative Agent or Canadian Administrative Agent shall
be discharged from its duties and obligations hereunder.  The fees payable by
the Borrowers to a successor Administrative Agent and Canadian Administrative
Agent shall be the same as those payable to its predecessor unless otherwise
agreed between the Borrowers and such successor.  After the Administrative
Agent’s or Canadian Administrative Agent’s resignation hereunder, the provisions
of this Article, Section 2.17(d) and Section 9.03 shall continue in effect for
the benefit of such retiring Administrative Agent or Canadian Administrative
Agent as the case may be, its sub agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent or Canadian Administrative Agent as the case may
be.
 
 
 
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Each Lender Party acknowledges that it has, independently and without reliance
upon the Administrative Agent, the Canadian Administrative Agent or any other
Lender and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement.  Each
Lender Party also acknowledges that it will, independently and without reliance
upon the Administrative Agent, the Canadian Administrative Agent or any other
Lender Party and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any other Loan Document or any
related agreement or any document furnished hereunder or thereunder.
 
The first time (and no subsequent time) that Availability on any date is less
than $125,000,000, the Administrative Agent agrees to exercise its best efforts
to give the Citibank Open Account Agent prompt notice  of such event within one
Business Day after the occurrence thereof; provided that the Administrative
Agent shall not incur any liability for failing to deliver such notice.
 
                      SECTION 8.02.      The Joint Collateral Agents.  Each of
the Lender Parties hereby irrevocably appoints the Joint Collateral Agents as
its agent hereunder and under the other Loan Documents and authorizes the Joint
Collateral Agents to take such actions on its behalf and to exercise such powers
as are delegated to the Joint Collateral Agents by the terms of the Loan
Documents, together with such actions and powers as are reasonably incidental
thereto.
 
Each of the banks serving as a Joint Collateral Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not a Joint Collateral Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Loan Parties or any Subsidiary of a Loan Party
or other Affiliate thereof as if it were not a Joint Collateral Agent hereunder.
 
The Joint Collateral Agents shall not have any duties or obligations except
those expressly set forth in the Loan Documents.  Without limiting the
generality of the foregoing, (a) neither Joint Collateral Agent shall be subject
to any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) neither Joint Collateral Agent shall have any
duty to take any discretionary action or exercise any discretionary powers
except as expressly set forth in this Agreement and (c) except as expressly set
forth in the Loan Documents, neither Joint Collateral Agent shall have any duty
to disclose, nor shall be liable for the failure to disclose, any information
relating to any Loan Party or any of the Subsidiaries that is communicated to or
obtained by any bank serving as a Joint Collateral Agent or any of its
Affiliates in any capacity.  Neither Joint Collateral Agent shall be liable for
any action taken nor not taken by it in the absence of its own gross negligence
or wilful misconduct.  Neither Joint Collateral Agent shall be responsible for
or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with any Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or in
connection with any Loan Document, (iii) the performance or observance of any of
the covenants, agreements or other terms or conditions set forth in any Loan
Document, (iv) the adequacy, accuracy or completeness of any information
(whether oral or written) set forth or in connection with any Loan Document, (v)
the legality, the validity, enforceability, effectiveness, adequacy or
genuineness of any Loan Document or any other agreement, instrument or document,
(vi) the creation, perfection or priority of Liens on the Collateral or the
existence of the Collateral, or (vii) the satisfaction of any condition set
forth in Article IV or elsewhere in any Loan Document, other than to confirm
receipt of items expressly required to be delivered to the Joint Collateral
Agents.
 
 
 
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The Joint Collateral Agents shall be entitled to rely upon, and shall not incur
any liability for relying upon, any representation, notice, request,
certificate, consent, statement, instrument, document or other writing or
communication believed by it to be genuine, correct and to have been authorized,
signed or sent by the proper Person.  The Joint Collateral Agents may consult
with legal counsel (who may be counsel for the Borrowers), independent
accountants and other experts selected by them, in their Permitted Discretion,
and shall not be liable for any action taken or not taken by it in accordance
with the advice of any such counsel, accountants or experts.
 
The Joint Collateral Agents may perform any and all their duties and exercise
their rights and powers by or through any one or more sub-agents appointed by
either Joint Collateral Agent.  The Joint Collateral Agents and any such
sub-agent may perform any and all their duties and exercise their rights and
powers through their respective Related Parties.  The exculpatory provisions of
the preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Joint Collateral Agents and any such sub-agent, and shall apply
to their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as the Joint Collateral
Agents.
 
Either or both Joint Collateral Agents may resign at any time by notifying the
other Joint Collateral Agent, if any, the Administrative Agent, the Issuing
Banks and the Borrower Representative.  Upon any such resignation, the remaining
Joint Collateral Agent (the “Sole Remaining Collateral Agent”) shall perform all
of the functions of the Joint Collateral Agents, and the retiring Joint
Collateral Agent shall be discharged from its duties and obligations
hereunder.  If both Joint Collateral Agents shall resign substantially
simultaneously, the Required Lenders shall have the right, in consultation with
the Borrowers, to appoint one successor collateral agent, who shall be the sole
successor collateral agent hereunder (the “Sole Successor Collateral
Agent”).  If a Sole Successor Collateral Agent has not been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days after
both Joint Collateral Agents have given their notice of such resignation, then
the retiring Joint Collateral Agents may, on behalf of the Lender Parties,
appoint a Sole Successor Collateral Agent which shall be a commercial bank or an
Affiliate of any such commercial bank.  Upon the acceptance of its appointment
as Sole Successor Collateral Agent, such Person shall succeed to and become
vested with all the rights, powers, privileges, obligations and duties of the
retiring (or retired) Joint Collateral Agents, and the retiring Joint Collateral
Agent shall be discharged from the duties and obligations hereunder.
 
 
 
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The fees payable by the Borrowers to the Sole Remaining Collateral Agent or Sole
Successor Collateral Agent shall be the same as those payable to the Joint
Collateral Agents unless otherwise agreed between the Borrowers and such Sole
Remaining Collateral Agent or Sole Successor Collateral Agent, as the case may
be.  After any Joint Collateral Agent’s resignation hereunder, the provisions of
this Article, Section 2.17(d) and Section 9.03 shall continue in effect for the
benefit of such retiring Joint Collateral Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Joint Collateral Agent.
 
Each Lender Party hereby agrees that (a) it has requested a copy of each Report
prepared by or on behalf of the Joint Collateral Agents; (b) no Joint Collateral
Agent (i) makes any representation or warranty, express or implied, as to the
completeness or accuracy of any Report or any of the information contained
therein or any inaccuracy or omission contained in or relating to a Report and
(ii) shall not be liable for any information contained in any Report; (c) the
Reports are not comprehensive audits or examinations, and that any Person
performing any field examination will inspect only specific information
regarding the Loan Parties and will rely significantly upon the Loan Parties’
books and records, as well as on representations of the Loan Parties’ personnel
and that the Joint Collateral Agents undertake no obligation to update, correct
or supplement the Reports; (d) it will keep all Reports confidential and
strictly for its internal use, and it will not share the Report with any Loan
Party or any other Person except as otherwise permitted pursuant to this
Agreement; and (e) without limiting the generality of any other indemnification
provision contained in this Agreement, it will pay and protect, and indemnify,
defend, and hold the Joint Collateral Agents and any such other Person preparing
a Report harmless from and against, the claims, actions, proceedings, damages,
costs, expenses, and other amounts (including reasonable attorney fees) incurred
by as the direct or indirect result of any third parties who might obtain all or
part of any Report through the indemnifying Lender.
 
                      SECTION 8.03.      Other Agents.  The Joint Bookrunners,
the Joint Lead Arrangers, the Syndication Agent and the Documentation Agents
shall not have any right, power, obligation, liability, responsibility or duty
under this Agreement other than those applicable to all Lenders as such.
 
ARTICLE IX

 
Miscellaneous
 
                      SECTION 9.01.      Notices.  (a) Except in the case of
notices and other communications expressly permitted to be given by telephone
(and subject to paragraph (b) below), all notices and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by
facsimile, as follows:
 
(i)             if to any Loan Party, to the Borrower Representative at:
 
Jones Apparel Group, Inc.
1411 Broadway
New York, NY  10018
Attention: Chief Financial Officer
Telephone No.: (212) 703-9152
Telecopy No.: (212) 703-9154
 
 
 
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with a copy to:
 
Jones Apparel Group Canada, LP
388 Applewood Crescent
Vaughan, Ontario
L4K 4B4
Attention: Roger Flores
Phone: (905) 760-6070
Fax: (905) 660-6777

(ii)         if to the Administrative Agent or the Swingline Lender, to:
 
JPMorgan Chase Bank, N.A.
270 Park Avenue, 44th Floor
NY1-K855
New York, NY 10017
 
Attention: Jones Apparel Account Officer
 
Facsimile No:  (646) 534-2270
 
(iii)         if to the Canadian Administrative Agent or the Canadian Swingline
Lender, to:
 
JPMorgan Chase Bank, N.A., Toronto Branch
200 Bay Street
Royal Bank Plaza, Floor 18
Toronto M57 2J2 Canada
Attention:  Dan Howat
Telecopy:  (416) 981-2375
 
(iv)             if to any other Lender, any other Agent or any Issuing Bank, or
any Open Account Agent or Open Account Bank, to it at its address or facsimile
number set forth in its Administrative Questionnaire or in any other writing
delivered by any such Person to the Administrative Agent.
 
All such notices and other communications (i) sent by hand or overnight courier
service, or mailed by certified or registered mail, shall be deemed to have been
given when received or (ii) sent by facsimile shall be deemed to have been given
when sent, provided that if not given during normal business hours for the
recipient, shall be deemed to have been given at the opening of business on the
next Business Day for the recipient.
 
(b)           Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications (including e-mail and
internet or intranet websites) pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Article II, to compliance notices or to Event of Default
certificates delivered pursuant to Section 5.01(d) unless otherwise agreed by
the Administrative Agent and the Canadian Administrative Agent, as the case may
be, and the applicable Lender.  The Administrative Agent or the Borrower
Representative (on behalf of the Loan Parties) may, in its discretion, agree to
accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it; provided that approval of
such procedures may be limited to particular notices or communications.  All
such notices and other communications (i) sent to an e-mail address shall be
deemed received upon the sender’s receipt of an acknowledgement from the
intended recipient (such as by the “return receipt requested” function, as
available, return e-mail or other written acknowledgement), provided that if not
given during the normal business hours of the recipient, such notice or
communication shall be deemed to have been given at the opening of business on
the next Business Day for the recipient, and (ii) posted to an Internet or
intranet website shall be deemed received upon the deemed receipt by the
intended recipient at its e-mail address as described in the foregoing clause
(b)(i) of notification that such notice or communication is available and
identifying the website address therefor.
 
 
 
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(c)           Any party hereto may change its address or facsimile number for
notices and other communications hereunder by notice to the other parties
hereto.
 
                      SECTION 9.02.      Waivers; Amendments.  (a) No failure or
delay by any Lender Party in exercising any right or power hereunder or under
any other Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.  The
rights and remedies of the Lenders Parties, hereunder and under any other Loan
Document are cumulative and are not exclusive of any rights or remedies that
they would otherwise have.  No waiver of any provision of any Loan Document or
consent to any departure by any Loan Party therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this Section,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given.  Without limiting the generality of the
foregoing, the making of a Loan or the issuance of a Letter of Credit shall not
be construed as a waiver of any Default, regardless of whether any Lender Party
may have had notice or knowledge of such Default at the time.
 
 
 
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(b)           Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except (i) in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Borrowers and the Required Lenders or (ii) in the case of
any other Loan Document, pursuant to an agreement or agreements in writing
entered into by the Administrative Agent, the Canadian Administrative Agent (to
the extent it is a party to such Loan Document) and each Loan Party that is a
party thereto, with the consent of the Required Lenders; provided that no such
agreement shall (A) increase the Commitment of any Lender without the written
consent of such Lender, (B) reduce or forgive the principal amount of any Loan,
LC Disbursement or reduce the rate of interest thereon, or reduce or forgive any
interest or fees payable hereunder, without the written consent of each Lender
directly affected thereby, (C) postpone any scheduled date of payment of the
principal amount of any Loan or LC Disbursement, or any date for the payment of
any interest, fees or other Obligations payable hereunder, or reduce the amount
of, waive or excuse any such payment, postpone the scheduled date of expiration
of the Revolving Commitment, without the written consent of each Lender directly
affected thereby, (D) increase the advance rates set forth in the definition of
“Borrowing Base”, without the written consent of each Lender, (E) change the
penultimate sentence of Section 2.08(a), the last sentence of Section 2.09(d),
the third sentence of Section 2.18(a), Section 2.18(b) or Section 2.18(d) in a
manner that would alter the manner or order in which payments are shared or
change any provision requiring ratable funding, without the written consent of
each Lender, (F) modify eligibility criteria, as such eligibility criteria are
in effect on the Effective Date (including adding new categories of eligible
assets or eliminating any category of the reserves), in any manner that has the
effect of weakening or eliminating any applicable eligibility criteria or
increasing the amounts available to be borrowed hereunder without the written
consent of the Joint Collateral Agents and the Supermajority Lenders, (G) change
any of the provisions of this Section or the definition of “Required Lenders”,
“Joint Collateral Agents”  or “Supermajority Lenders” or any other provision of
any Loan Document specifying the number or percentage of Lenders required to
waive, amend or modify any rights thereunder or make any determination or grant
any consent thereunder, without the written consent of each Lender, (H) release
any Loan Guarantor from its obligation under its Loan Guaranty (except as
otherwise permitted herein or in the other Loan Documents), without the written
consent of each Lender, (I) except as provided in paragraphs (c) and (d) of this
Section or Section 6.01(i), release all or substantially all of the Collateral,
without the written consent of each Lender, (J) change Section 2.10(b) or
Section 2.11(f) without the written consent of each Lender, (K) increase the
total Revolving Commitments to an aggregate amount exceeding $700,000,000
without the written consent of each Lender, (L) subordinate the Liens of the
Administrative Agent, or with respect to any other Indebtedness of the Borrowers
cause the Liens of the Administrative Agent to be pari passu with the Liens
securing such other Indebtedness, in each case with respect to all or
substantially all of the Collateral (other than the Liens securing the IP
Secured Financing, the Indebtedness permitted to be incurred pursuant to Section
2.09(e) or other Indebtedness that is permitted to be outstanding pursuant to
Section 6.01) without the written consent of each Lender, (M) subordinate the
repayment of all or any substantial part of the Obligations to the repayment of
any other Indebtedness without the written consent of each Lender, (N) modify
(except as the following relates to the Citibank Open Account Agreement and
related terms, which shall be subject to clause (O)) (x) the defined terms “Open
Account Agent”, “Open Account Agreement”, “Open Account Bank”, “Open Account
Other Cap”, “Open Account Obligations” and “Open Account Excess Obligations” or
(y) Section 2.18(b) in a manner that would alter the manner or order in which
payments are made to any Open Account Agent or any Open Account Bank, in each
case without the written consent of the Required Lenders and the applicable Open
Account Agent affected thereby, or (O) modify (x) the defined terms “Citibank
Open Account Agent”, “Citibank Open Account Agreement”, “Citibank Open Account
Bank”, “Citibank Open Account Cap”, “Citibank Open Account Obligations”, and
“Open Account Excess Obligations” or (y) Section 2.18(b) in a manner that would
alter the manner or order in which payments are made to the Citibank Open
Account Agent or any Citibank Open Account Bank, in each case without the
written consent of the Required Lenders and the Citibank Open Account Agent;
provided further that no such agreement shall amend, modify or otherwise affect
the rights or duties of any Agent, Swingline Lender or Issuing Bank without the
prior written consent of such Agent, Swingline Lender or Issuing Bank. The
Administrative Agent may also amend the Revolving Commitment Schedule to reflect
assignments entered into pursuant to Section 9.04.
 
 
 
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(c)           The Lender Parties hereby irrevocably authorize the Administrative
Agent, at its option and in its sole discretion, to release any Liens granted to
the Administrative Agent by the Loan Parties or the Canadian Loan Parties, as
the case may be, on any Collateral (i) upon the termination of all Revolving
Commitments, payment and satisfaction in full in cash of all Secured Obligations
(other than Unliquidated Obligations), and the cash collateralization of all
Unliquidated Obligations in a manner satisfactory to each affected Lender Party,
(ii) constituting property being sold or disposed of if the Loan Party disposing
of such property certifies to the Administrative Agent that the sale or
disposition is made in compliance with the terms of this Agreement (and the
Administrative Agent may rely conclusively on any such certificate, without
further inquiry), and to the extent that the property being sold or disposed of
constitutes 100% of the Equity Interest of a Subsidiary, the Administrative
Agent is authorized to release any Loan Guaranty provided by such Subsidiary,
(iii) constituting property leased to a Loan Party under a lease which has
expired or been terminated in a transaction permitted under this Agreement, (iv)
as required to effect any sale or other disposition of such Collateral in
connection with any exercise of remedies of the Administrative Agent and the
Lenders pursuant to Article VII, (v) constituting registered intellectual
property that will secure other Indebtedness as permitted by Section 6.01(i) or
(vi) if such Liens were granted by any Loan Party with respect to which 100% of
the Equity Interests have been sold in a transaction permitted by
Section 6.05.  Except as provided in the preceding sentence and in Section
9.02(b)(ii)(I), the Administrative Agent will not release any Liens on
Collateral without the prior written authorization of the Required Lenders.  The
Lender Parties hereby irrevocably authorize the Administrative Agent, at its
option and in its sole discretion, to release any Loan Guarantor from its
obligation under its Loan Guaranty if 100% of the Equity Interests of such Loan
Guarantor have been sold in a transaction permitted pursuant to Section
6.05.  Any such release shall not in any manner discharge, affect, or impair the
Obligations or any Liens (other than those expressly being released) upon (or
obligations of the Loan Parties in respect of) all interests retained by the
Loan Parties, including the proceeds of any sale, all of which shall continue to
constitute part of the Collateral.  In connection with any termination or
release pursuant to this Section, the Administrative Agent shall reasonably
promptly execute and deliver to any Loan Party, at such Loan Party’s expense,
all documents that such Loan Party shall reasonably request to evidence such
termination or release.
 
(d)           If, in connection with any proposed amendment, waiver or consent
requiring the consent of “each Lender” or “each Lender affected thereby,” the
consent of the Required Lenders is obtained, but the consent of other necessary
Lenders is not obtained (any such Lender whose consent is necessary but not
obtained being referred to herein as a “Non-Consenting Lender”), then the
Borrowers may elect to replace a Non-Consenting Lender as a Lender party to this
Agreement, provided that, concurrently with such replacement, (i) another bank
or other entity which is reasonably satisfactory to the Borrowers and the
Administrative Agent shall agree, as of such date, to purchase for cash the
Loans and other Obligations due to the Non-Consenting Lender pursuant to an
Assignment and Assumption and to become a Lender for all purposes under this
Agreement and to assume all obligations of the Non-Consenting Lender to be
terminated as of such date and to comply with the requirements of paragraph (b)
of Section 9.04, and (ii) the Borrowers shall pay to such Non-Consenting Lender
in same day funds on the day of such replacement (1) all interest, fees and
other amounts then accrued but unpaid to such Non-Consenting Lender by the
Borrowers hereunder to and including the date of termination, including without
limitation payments due to such Non-Consenting Lender under Sections 2.15 and
2.17, and (2) an amount, if any, equal to the payment which would have been due
to such Lender on the day of such replacement under Section 2.16 had the Loans
of such Non-Consenting Lender been prepaid on such date rather than sold to the
replacement Lender.
 
 
 
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                      SECTION 9.03.      Expenses; Indemnity; Damage
Waiver.  (a) The Borrowers shall pay (i) all reasonable out-of-pocket expenses
incurred by the Administrative Agent and the Canadian Administrative Agent, the
Joint Collateral Agents, the Joint Lead Arrangers and their Affiliates,
including the reasonable fees, charges and disbursements of a single New York
counsel for the Administrative Agent and such special and local counsel as the
Administrative Agent and the Canadian Administrative Agent may deem appropriate
in its good faith discretion, in connection with the syndication and
distribution (including, without limitation, via the internet or through a
service such as Intralinks) of the credit facilities provided for herein, the
preparation and administration of the Loan Documents or any amendments,
modifications or waivers of the provisions of the Loan Documents (whether or not
the transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable out-of-pocket expenses incurred by the applicable Issuing Bank in
connection with the issuance, amendment, renewal or extension of any Letter of
Credit or any demand for payment thereunder, (iii) all reasonable out-of-pocket
expenses incurred by the Joint Collateral Agents in connection with the
performance of their duties pursuant to the provisions of the Loan Documents and
(iv) all reasonable out-of-pocket expenses incurred by the Administrative Agent,
any Issuing Bank or any Lender, including the fees, charges and disbursements of
any counsel for the Administrative Agent, any Issuing Bank or any Lender, in
connection with the enforcement, collection or protection of its rights in
connection with the Loan Documents, including its rights under this Section, or
in connection with the Loans made and Letters of Credit issued hereunder
including all such reasonable out-of pocket expenses incurred in connection with
any workout, restructuring or negotiations in respect of such Loans or Letters
of Credit.  Expenses being reimbursed by the Borrowers under this Section
include, without limiting the generality of the foregoing, costs and expenses
incurred in connection with:
 
(i)           subject to Section 5.11, appraisals and insurance reviews;
 
(ii)           subject to Section 5.12, field examinations and the preparation
of Reports based on the fees charged by a third party retained by the Joint
Collateral Agents or the internally allocated fees for each Person employed by
the Joint Collateral Agents with respect to each field examination;
 
(iii)           taxes, fees and other charges for (A) lien and title searches
and title insurance and (B) recording the Collateral Documents, filing financing
statements and continuations, and other actions to perfect, protect, and
continue the Administrative Agent’s Liens;
 
(iv)           sums paid or incurred to take any action required of any Loan
Party under the Loan Documents that such Loan Party fails to pay or take; and
 
(v)           forwarding loan proceeds, collecting checks and other items of
payment, and establishing and maintaining the accounts and lock boxes, and costs
and expenses of preserving and protecting the Collateral.
 
 
 
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All of the foregoing costs and expenses may be charged to the Borrowers as
Revolving Loans or to another deposit account, all as described in Section
2.18(c).
 
(b)           The Borrowers shall, jointly and severally, indemnify each Lender
Party, and Related Party thereof (each such Person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, penalties, incremental taxes, liabilities and related expenses,
including the reasonable fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of any actual or prospective claim, litigation,
investigation or proceeding relating to any of the following, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto (i) the execution or delivery of the Loan Documents or any
agreement or instrument contemplated thereby (other than the Open Account
Agreements, the Swap Agreements and the agreements pursuant to which Banking
Services are provided), the performance by the parties hereto of their
respective obligations thereunder or the consummation of the Transactions or any
other transactions contemplated hereby (other than transactions contemplated by
the Open Account Agreements, the Swap Agreements and the Banking Services), (ii)
any Loan or any Letter of Credit or the use of the proceeds therefrom (including
any refusal by an Issuing Bank to honor a demand for payment under a Letter of
Credit if the documents presented in connection with such demand do not strictly
comply with the terms of such Letter of Credit), (iii) any actual or alleged
presence or release of Hazardous Materials on or from any property owned or
operated by any Borrower or any of their Subsidiaries, or any Environmental
Liability related in any way to any Borrower or any of their Subsidiaries or
(iv) the failure of the Borrowers to deliver to the Administrative Agent the
required receipts or other required documentary evidence with respect to a
payment made by the Borrowers for Taxes pursuant to Section 2.17; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, penalties, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of such
Indemnitee.
 
(c)           To the extent that the Borrowers fail to pay any amount required
to be paid by them to the Administrative Agent, the Canadian Administrative
Agent, an Issuing Bank or the Swingline Lender under paragraph (a) or (b) of
this Section, each Lender severally agrees to pay to the Administrative Agent
the Canadian Administrative Agent, such Issuing Bank or the Swingline Lender, as
the case may be, such Lender’s Applicable Percentage (determined as of the time
that the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount; provided that (i) the unreimbursed expense or indemnified loss,
claim, damage, penalty, liability or related expense, as the case may be, was
incurred by or asserted against the Administrative Agent, such Issuing Bank or
the Swingline Lender in its capacity as such and (ii) if (A) all the Revolving
Commitments have been terminated, (B) all the Secured Obligations (other than
Unliquidated Obligations, Open Account Obligations, Banking Services Obligations
and Swap Obligations) owing to all the Lender Parties have been paid in full in
cash or, in the case of Letters of Credit, cash collateralized, subject to a
back-up standby letter of credit or refinanced, in each case as provided in
Section 2.09(b)(ii) (the date in which the events described in clauses (A) and
(B) having occurred being the “Revolver Termination Date”), and (c) one or more
of the Loan Documents continue to be effective for the sole purpose of the
Collateral securing the Open Account Obligations, the Banking Services
Obligations or the Swap Obligations, each Lender that ceases to be a Lender
hereunder shall have no additional liability to the Administrative Agent or any
other Lender Party or Loan Party with respect to events or circumstances
occurring after the date it ceases to be a Lender hereunder; provided that,
notwithstanding the foregoing, each such Lender shall, for the period prior to
the time it ceases to be a Lender, have all the rights and be subject to the
obligations as set forth in this Agreement and in the other Loan Documents.
 
 
 
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(d)           To the extent permitted by applicable law, no Loan Party shall
assert, and each hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as a
result of, this Agreement or any agreement or instrument contemplated hereby,
the Transactions, any Loan or Letter of Credit or the use of the proceeds
thereof.
 
(e)           All amounts due under this Section shall be payable promptly after
written demand therefor.
 
(f)           Notwithstanding any other provision contained in this Agreement or
any other Loan Document, no Open Account Bank, Open Account Agent or party to
any Swap Agreement or agreement relating to Banking Services shall have any
voting or consent rights under this Agreement or any other Loan Document (or any
actions taken or omitted to be taken in connection therewith) in its capacity as
obligee or obligor thereunder, except as provided in Section 9.02(b)(ii)(N) or
(O); provided that any such Person’s rights or obligations in its capacity as a
Lender under this Agreement or any other Loan Document shall be unaffected as a
result of it acting as an Open Account Bank, Open Account Agent or party to any
Swap Agreement or agreement relating to Banking Services.  No Lender Party
(solely in its capacity as a Lender Party) shall have any liability or
responsibility of any kind whatsoever in respect of any matters arising out of
or relating to any Open Account Agreement, Swap Agreement or agreement relating
to Banking Services Obligations.  To the extent that any Open Account
Obligations, Banking Services Obligations or Swap Obligations are outstanding on
the Revolver Termination Date (or there are any outstanding commitments with
respect thereto), this Agreement and the other Loan Documents shall continue in
order to provide security in the Collateral for such Secured Obligations on such
terms as may be mutually agreed upon by the Company, the Administrative Agent
and the applicable Open Account Banks, Open Account Agents and parties to the
Swap Agreements or agreements relating to the Banking Services.
 
                      SECTION 9.04.      Successors and Assigns.  (a) The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted hereby
(including any Affiliate of an Issuing Bank that issues any Letter of Credit),
except that (i) no Borrower may assign or otherwise transfer any of its rights
or obligations hereunder without the prior written consent of each Lender (and
any attempted assignment or transfer by a Borrower without such consent shall be
null and void) and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section.  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 (including any Affiliate of an Issuing Bank that issues any
Letter of Credit), Participants (to the extent provided in paragraph (c) of this
Section) and, to the extent expressly contemplated hereby, the Related Parties
of each of the Agents, the Issuing Banks and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.
 
 
 
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(b)           (i)           Subject to the conditions set forth in paragraph
(b)(ii) below, any Lender may assign to one or more assignees all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Revolving Commitment and the Loans at the time owing to it) with the
prior written consent (such consent not to be unreasonably withheld) of:
 
(A)     the Borrower Representative, provided that no consent of the Borrower
Representative shall be required for an assignment to a Lender, an Affiliate of
a Lender, any Approved Fund, a successor-in-interest to a Lender pursuant to a
consolidation, sale or merger or, if any Default or Event of Default has
occurred and is continuing, any other assignee;
 
(B)     the Administrative Agent; and
 
(C)     the Issuing Banks.
 
(ii)              Assignments shall be subject to the following additional
conditions:
 
(A)     except in the case of an assignment to a Lender, an Affiliate of a
Lender or a successor-in-interest to a Lender pursuant to a consolidation, sale
or merger or an assignment of the entire remaining amount of the assigning
Lender’s Revolving Commitment or Loans, the amount of the Revolving Commitment
or Loans of the assigning Lender subject to each such assignment (determined as
of the date the Assignment and Assumption with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $5,000,000 unless
each of the Borrower Representative and the Administrative Agent otherwise
consent; provided that no such consent of the Borrower Representative shall be
required if an Event of Default has occurred and is continuing;
 
(B)     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;
 
(C)     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;
 
(D)     the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire in which the assignee
designates one or more credit contacts to whom all syndicate-level information
(which may contain material non-public information about the Company, the Loan
Parties and their Related Parties or their respective securities) will be made
available and who may receive such information in accordance with the assignee’s
compliance procedures and applicable laws, including Federal and state
securities laws; and
 
 
 
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(E)     any assignments of all or a portion of a Lender’s Canadian Commitment or
other rights and obligations under this Agreement relating to the Canadian
Borrower shall be made to a Canadian Lender.
 
For the purposes of this Section 9.04(b), the term “Approved Fund” has the
following meaning:
 
“Approved Fund” means any Person (other than a natural person) that is engaged
in making, purchasing, holding or investing in bank loans and similar extensions
of credit in the ordinary course of its business and that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.
 
(iii)             Subject to acceptance and recording thereof pursuant to
paragraph (b)(v) of this Section, from and after the effective date specified in
each Assignment and Assumption the assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment and Assumption,
have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Assumption, be released from its obligations under this
Agreement (and, in the case of an Assignment and Assumption covering all of the
assigning Lender’s rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.15, 2.16, 2.17 and 9.03).  Any assignment or transfer by
a Lender of rights or obligations under this Agreement that does not comply with
this Section 9.04 shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
paragraph (c) of this Section.
 
(iv)             The Administrative Agent, acting for this purpose as an agent
of the Borrowers and the Lender Parties, shall maintain at one of its offices a
copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Revolving
Commitment of, and principal amount of the Loans and LC Disbursements owing to,
each Lender pursuant to the terms hereof from time to time (the
“Register”).  The entries in the Register shall be conclusive, and the
Borrowers, the Administrative Agent, the Agents, the Issuing Banks and the
Lenders may treat each Person whose name is recorded in the Register pursuant to
the terms hereof as a Lender or Issuing Bank, as the case may be, hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary.  The
Register shall be available for inspection by the Borrowers, any Issuing Bank
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.
 
 (v)              Upon its receipt of a duly completed Assignment and Assumption
executed by an assigning Lender and an assignee, the assignee’s completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Assumption and record the information contained therein in the Register;
provided that if either the assigning Lender or the assignee shall have failed
to make any payment required to be made by it pursuant to Section 2.05, 2.06(d)
or (e), 2.07(b), 2.18(d), 2.21(d) or 9.03(c), the Administrative Agent shall
have no obligation to accept such Assignment and Assumption and record the
information therein in the Register unless and until such payment shall have
been made in full, together with all accrued interest thereon.  No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.
 
 
 
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(c)           (i)           Any Lender may, without the consent of the
Borrowers, the Administrative Agent, the Issuing Banks or the Swingline Lender,
sell participations to one or more banks or other entities (a “Participant”) in
all or a portion of such Lender’s rights and obligations under this Agreement
(including all or a portion of its Revolving Commitment and the Loans owing to
it); provided that (A) such Lender’s obligations under this Agreement shall
remain unchanged, (B) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (C) the Borrowers,
the Agents, the Issuing Banks and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.  Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such
Participant.  Subject to paragraph (c)(ii) of this Section, the Borrowers agree
that each Participant shall be entitled to the benefits of Sections 2.15, 2.16
and 2.17 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 9.08 as though it were a Lender; provided that such Participant agrees
to be subject to Section 2.18(c) as though it were a Lender.
 
(ii)             A Participant shall not be entitled to receive any greater
payment under Section 2.15 or 2.17 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower Representative’s prior written consent.  A Participant that would be a
Lender that is not a U.S. Person if it were a Lender shall not be entitled to
the benefits of Section 2.17 unless the Borrower Representative is notified of
the participation sold to such Participant and such Participant agrees, for the
benefit of the Borrowers, to comply with Section 2.17(f) as though it were a
Lender.
 
(iii)            Each Lender that sells a participation shall, acting solely for
this purpose as an agent of the Borrowers, maintain a register on which it
enters the name and address of each Participant and the Revolving Commitment of,
and principal amount of the Loans, LC Disbursements and Factoring Advances owing
to each participant under the Loans or other obligations under this Agreement
(the “Participant Register”).  The entries in the Participant Register shall be
conclusive absent manifest error, and such Lender shall treat each Person whose
name is recorded in the Participant Register as the owner of such participation
for all purposes of this Agreement, notwithstanding notice to the contrary.
 
(d)            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, without limitation, any pledge or assignment to
secure obligations to a Federal Reserve Bank, and this Section shall not apply
to any such pledge or assignment of a security interest; provided that no such
pledge or assignment of a security interest shall release a Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.
 
 
 
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                      SECTION 9.05.      Survival.  All covenants, agreements,
representations and warranties made by the Loan Parties in the Loan Documents
and in the certificates or other instruments delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the other parties hereto and shall survive the
execution and delivery of the Loan Documents and the making of any Loans and
issuance of any Letters of Credit, regardless of any investigation made by any
such other party or on its behalf and notwithstanding that any Lender Party may
have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on any
Loan or any fee or any other amount payable under this Agreement is outstanding
and unpaid, or any Letter of Credit is outstanding (unless the same has been
cash collateralized in accordance with Section 2.06(k)) and so long as the
Revolving Commitments have not expired or terminated.  The provisions of
Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Revolving Commitments or the termination of
this Agreement or any provision hereof.
 
                      SECTION 9.06.      Counterparts; Integration;
Effectiveness.  This Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract.  This Agreement, the other Loan Documents and any separate letter
agreements with respect to fees payable to the Administrative Agent constitute
the entire contract among the parties relating to the subject matter hereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof.  Except as provided in Section 4.01, this
Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns.  Delivery of an executed counterpart of a signature page of this
Agreement by facsimile or PDF transmission shall be effective as delivery of a
manually executed counterpart of this Agreement.
 
                      SECTION 9.07.      Severability.  Any provision of any
Loan Document held to be invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions thereof; and the invalidity of a
particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.
 
                      SECTION 9.08.       Right of Setoff.  If an Event of
Default shall have occurred and be continuing, each Lender and each of its
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other obligations at any time owing by such Lender or Affiliate to or for the
credit or the account of the Borrowers or any Loan Guarantor against any of and
all the Secured Obligations held by such Lender, irrespective of whether or not
such Lender shall have made any demand under the Loan Documents and although
such obligations may be unmatured.  The applicable Lender shall notify the
Borrower Representative and the Administrative Agent of such set-off or
application; provided that any failure to give or any delay in giving such
notice shall not affect the validity of any such set-off or application under
this Section.  The rights of each Lender under this Section are in addition to
other rights and remedies (including other rights of setoff) which such Lender
may have.
 
 
 
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           SECTION 9.09.      Governing Law; Jurisdiction; Consent to Service of
Process.  (a)  The Loan Documents (other than those containing a contrary
express choice of law provision) shall be governed by and construed in
accordance with the laws of the State of New York, but giving effect to federal
laws applicable to national banks; provided, however, that if the laws of any
jurisdiction other than the State of New York shall govern in regard to the
validity, perfection or effect of perfection of any Lien or in regard to
procedural matters affecting enforcement of any Liens on all or any party of the
Collateral, such laws of such other jurisdictions shall continue to apply to
that extent, and provided further that the appointment of the Administrative
Agent as fondé de pouvoir in accordance with Section 8.01 shall be governed by
the laws of Quebec.
 
(b)           Each Loan Party hereby irrevocably and unconditionally submits,
for itself and its property, to the exclusive jurisdiction of any U.S. Federal
or New York State court sitting in the Borough of Manhattan, New York in any
action or proceeding arising out of or relating to any Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court; provided that claims with
respect to Canadian Loan Documents may, as provided therein, also be tried in
the courts of the Province of Ontario.  Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.  Nothing in this Agreement or any other Loan Document shall
affect any right that the Administrative Agent, the Canadian Administrative
Agent, any Issuing Bank or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement or any other Loan Document against any
Loan Party or its properties in the courts of any jurisdiction.
 
(c)           Each Loan Party hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Loan
Document in any court referred to in paragraph (b) of this Section.  Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
 
 
 
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(d)           Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01.  Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
 
                      SECTION 9.10.      WAIVER OF JURY TRIAL.  EACH PARTY
HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT
OR THE TRANSACTIONS CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY
OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.
 
                      SECTION 9.11.      Headings.  Article and Section headings
and the Table of Contents used herein are for convenience of reference only, are
not part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.
 
                      SECTION 9.12.      Confidentiality.  Each of the Lender
Parties 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) to the extent requested
by any regulatory or self-regulatory authority, (c) to the extent required by
Requirement of Laws or by any subpoena or similar legal process (in which case
each such Person agrees to promptly notify the Borrower Representative to the
extent not prohibited by law), (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to (i)
any assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under this Agreement or (ii) any actual or
prospective counterparty (or its advisors) to any swap or derivative transaction
relating to the Loan Parties and their obligations (and any such Person may
disclose such Information 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)), (g) with the written consent of the Borrower
Representative, (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section or (ii) becomes
available to any Lender Party on a non-confidential basis from a source other
than the Borrowers or their representatives which is not known by any such
Person to be under a duty of confidentiality with respect to the Information or
(i) subject to clause (d), in connection with a legal action related to this
Agreement (in which case each Lender Party shall at the sole cost and expense of
the Borrowers and if not adverse to its interests, use commercially reasonable
efforts to seek confidential treatment of the Information).  In addition, each
Lender Party may disclose the existence of this Agreement and the information
about this Agreement to market data collectors, similar service providers to the
lending industry and service providers to the Lender Parties in connection with
administration and management of this Agreement and the other Loan
Documents.  For the purposes of this Section, “Information” means all
information received from the Borrowers relating to the Borrowers or their
business, other than any such information that is available to any Lender Party
on a non-confidential basis prior to disclosure by the Borrowers; provided that,
in the case of information received from the Borrowers 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.
 
 
 
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EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN SECTION 9.12 FURNISHED
TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION
CONCERNING THE COMPANY AND ITS AFFILIATES AND THEIR RELATED PARTIES OR THEIR
RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES
REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE
SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND
APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.
 
ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE
BORROWERS OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF
ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY
CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE COMPANY, THE LOAN PARTIES AND
THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES.  ACCORDINGLY, EACH LENDER
REPRESENTS TO THE BORROWERS AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED
IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION
THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS
COMPLIANCE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES
LAWS.
 
                      SECTION 9.13.      Several Obligations; Nonreliance;
Violation of Law.  The respective obligations of the Lenders hereunder are
several and not joint and the failure of any Lender to make any Loan or perform
any of its obligations hereunder shall not relieve any other Lender from any of
its obligations hereunder.  Each Lender hereby represents that it is not relying
on or looking to any margin stock for the repayment of the Borrowings provided
for herein.  Anything contained in this Agreement to the contrary
notwithstanding, neither any Issuing Bank nor Lender shall be obligated to
extend credit to the Borrowers in violation of any Requirement of Law.
 
 
 
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                      SECTION 9.14.      USA PATRIOT Act.  Each Lender that is
subject to the requirements of the Patriot Act hereby notifies the Borrowers
that pursuant to the requirements of the Patriot Act, it is required to obtain,
verify and record information that identifies the Borrowers, which information
includes the names and addresses of the Borrowers and other information that
will allow such Lender to identify the Borrowers in accordance with the Patriot
Act.
 
                      SECTION 9.15.      Disclosure.  Each Loan Party and each
Lender hereby acknowledges and agrees that the Administrative Agent and/or its
Affiliates from time to time may hold investments in, make other loans to or
have other relationships with any of the Loan Parties and their respective
Affiliates.
 
                      SECTION 9.16.      Appointment for Perfection.  Each
Lender Party hereby appoints each other Lender Party as its agent for the
purpose of perfecting Liens, for the benefit of the Lender Parties or the
Canadian Lender Parties, as the case may be, in assets which, in accordance with
Article 9 of the UCC, the PPSA, the Securities Transfer Act (Ontario) or any
other applicable law can be perfected only by possession.  Should any Lender
Party (other than the Administrative Agent) obtain possession of any such
Collateral, such Lender Party shall notify the Administrative Agent thereof,
and, promptly upon the Administrative Agent’s request therefor shall deliver
such Collateral to the Administrative Agent or otherwise deal with such
Collateral in accordance with the Administrative Agent’s instructions.
 
                      SECTION 9.17.      Interest Rate
Limitation.  Notwithstanding anything herein to the contrary, if at any time the
interest rate applicable to any Loan, together with all fees, charges and other
amounts which are treated as interest on such Loan under applicable law
(collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum
Rate”) which may be contracted for, charged, taken, received or reserved by the
Lender holding such Loan in accordance with applicable law, the rate of interest
payable in respect of such Loan hereunder, together with all Charges payable in
respect thereof, shall be limited to the Maximum Rate and, to the extent lawful,
the interest and Charges that would have been payable in respect of such Loan
but were not payable as a result of the operation of this Section shall be
cumulated and the interest and Charges payable to such Lender in respect of
other Loans or periods shall be increased (but not above the Maximum Rate
therefor) until such cumulated amount, together with interest thereon at the
Federal Funds Effective Rate to the date of repayment, shall have been received
by such Lender.
 
                      SECTION 9.18.      Judgment Currency.  If for the purpose
of obtaining judgment in any court it is necessary to convert an amount due
hereunder in the currency in which it is due (the “Original Currency”) into
another currency (the “Second Currency”), the rate of exchange applied shall be
that at which, in accordance with normal banking procedures, the Administrative
Agent could purchase in the New York foreign exchange market, the Original
Currency with the Second Currency on the date two Business Days preceding that
on which judgment is given. Each Loan Party agrees that its obligation in
respect of any Original Currency due from it hereunder shall, notwithstanding
any judgment or payment in such other currency, be discharged only to the extent
that, on the Business Day following the date the Administrative Agent receives
payment of any sum so adjudged to be due hereunder in the Second Currency, the
Administrative Agent may, in accordance with normal banking procedures,
purchase, in the New York foreign exchange market, the Original Currency with
the amount of the Second Currency so paid; and if the amount of the Original
Currency so purchased or could have been so purchased is less than the amount
originally due in the Original Currency, each Loan Party agrees as a separate
obligation and notwithstanding any such payment or judgment to indemnify the
Administrative Agent against such loss. The term “rate of exchange” in this
Section 9.18 means the spot rate at which the Administrative Agent, in
accordance with normal practices, is able on the relevant date to purchase the
Original Currency with the Second Currency, and includes any premium and costs
of exchange payable in connection with such purchase.
 
 
 
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                      SECTION 9.19.      Canadian Anti-Money Laundering
Legislation.  (a) Each Borrower acknowledges that, pursuant to the Proceeds of
Crime Act and other applicable anti-money laundering, anti-terrorist financing,
government sanction and “know your client” laws (collectively, including any
guidelines or orders thereunder, “AML Legislation”), the Lender Parties may be
required to obtain, verify and record information regarding the Borrowers and
their respective directors, authorized signing officers, direct or indirect
shareholders or other Persons in control of the Borrowers, and the transactions
contemplated hereby. Each Borrower shall promptly provide all such information,
including supporting documentation and other evidence, as may be reasonably
requested by any Lender Party or any prospective assignee or participant of a
Lender, any Issuing Bank or any Agent, in order to comply with any applicable
AML Legislation, whether now or hereafter in existence.
 
(b)          If the Canadian Administrative Agent has ascertained the identity
of any Borrower or any authorized signatories of the Borrower for the purposes
of applicable AML Legislation, then the Canadian Administrative Agent:
 
(i)           shall be deemed to have done so as an agent for each Lender Party,
and this Agreement shall constitute a “written agreement” in such regard between
each Lender Party and the Canadian Administrative Agent within the meaning of
the applicable AML Legislation; and
 
(ii)          shall provide to each Lender Party copies of all information
obtained in such regard without any representation or warranty as to its
accuracy or completeness.
 
Notwithstanding the preceding sentence and except as may otherwise be agreed in
writing, each of the Lender Parties agrees that neither the Canadian
Administrative Agent nor any other Agent has any obligation to ascertain the
identity of the Borrowers or any authorized signatories of the Borrowers on
behalf of any Lender Party, or to confirm the completeness or accuracy of any
information it obtains from any Borrower or any such authorized signatory in
doing so.
 
                      SECTION 9.20.      Lender Loss Sharing Agreement.
 
(a)          Definitions.  As used in this Section 9.20, the following terms
shall have the following meanings:
 
(i)           “CAM” means the mechanism for the allocation and exchange of
interests in the Loans, participations in Letters of Credit and collections
thereunder established under Section 9.20(b).
 
 
 
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(ii)          “CAM Exchange” means the exchange of the U.S. Lenders’ interests
and the Canadian Lenders’ interests provided for in Section 9.20(b).
 
(iii)         “CAM Exchange Date” means the first date after the Effective Date
on which there shall occur (a) any event described in paragraphs (h) or (i) of
Article VII with respect to any Borrower, or (b) an acceleration of Loans and
termination of the Commitments pursuant to Article VII.
 
(iv)         “CAM Percentage” means as to each Lender, a fraction, (a) the
numerator of which shall be the aggregate amount of such Lender’s Commitments
immediately prior to the CAM Exchange Date and the termination of the
Commitments, and (b) the denominator of which shall be the amount of the
Commitments of all the Lenders immediately prior to the CAM Exchange Date and
the termination of the Commitments.
 
(v)          “Designated Obligations” means all Obligations of the Borrowers
with respect to (a) principal and interest under the Loans, (b) unreimbursed
drawings under Letters of Credit and interest thereon and (c) fees under Section
2.12.
 
(vi)         “Revolver Facility” means the facility established under the U.S.
Commitments and the Canadian Commitments.
 
(b)          CAM Exchange.
 
(i)           On the CAM Exchange Date,
 
(A)     the U.S. Commitments and the Canadian Commitments shall have terminated
in accordance with Article VII;
 
(B)     each U.S. Lender shall fund its participation in any outstanding
Swingline Loans and Protective Advances in accordance with Section 2.04 and
Section 2.05 of this Agreement, and each Canadian Lender shall fund its
participation in any outstanding Swingline Loans and Protective Advances in
accordance with Section 2.04 and Section 2.05;
 
(C)     each U.S. Lender shall fund its participation in any unreimbursed LC
Disbursements made under the U.S. Letters of Credit in accordance with Section
2.06(e), and each Canadian Lender shall fund its participation in any
unreimbursed LC Disbursements made under the Canadian Letters of Credit in
accordance with Section 2.06(e); and
 
(D)     the Lenders shall purchase in dollars at par Dollar Amount interests in
the Designated Obligations under each Revolver Facility (and shall make payments
in dollars to the Administrative Agent for reallocation to other Lenders to the
extent necessary to give effect to such purchases) and shall assume the
obligations to reimburse Issuing Banks for unreimbursed LC Disbursements under
outstanding Letters of Credit under such Revolver Facility such that, in lieu of
the interests of each Lender in the Designated Obligations under the U.S.
Commitments and the Canadian Commitments in which it shall have participated
immediately prior to the CAM Exchange Date, such Lender shall own an interest
equal to such Lender’s CAM Percentage in each component of the Designated
Obligations immediately following the CAM Exchange.
 
 
 
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(ii)           Each Lender and each Person acquiring a participation from any
Lender as contemplated by this Section 9.20 hereby consents and agrees to the
CAM Exchange.  Each Borrower agrees from time to time to execute and deliver to
the Lenders all such promissory notes and other instruments and documents as the
Administrative Agent shall reasonably request to evidence and confirm the
respective interests and obligations of the Lenders after giving effect to the
CAM Exchange, and each Lender agrees to surrender any promissory notes
originally received by it in connection with its Loans under this Agreement to
the Administrative Agent against delivery of any promissory notes so executed
and delivered; provided that the failure of any Lender to deliver or accept any
such promissory note, instrument or document shall not affect the validity or
effectiveness of the CAM Exchange.
 
(iii)           As a result of the CAM Exchange, from and after the CAM Exchange
Date, each payment received by the Administrative Agent pursuant to any Loan
Document in respect of any of the Designated Obligations shall be distributed to
the Lenders, pro rata in accordance with their respective CAM Percentages.
 
(iv)           In the event that on or after the CAM Exchange Date, the
aggregate amount of the Designated Obligations shall change as a result of the
making of a disbursement under a Letter of Credit by an Issuing Bank that is not
reimbursed by U.S. Borrowers or Canadian Borrower, if applicable, then each
Lender shall promptly reimburse such Issuing Bank for its CAM Percentage of such
unreimbursed payment in the Dollar Amount thereof.
 
Notwithstanding any other provision of this Section 9.20, the Administrative
Agent and each Lender agree that if the Administrative Agent or a Lender is
required under applicable law to withhold or deduct any taxes or other amounts
from payments made by it hereunder or as a result hereof, such Person shall be
entitled to withhold or deduct such amounts and pay over such taxes or other
amounts to the applicable Governmental Authority imposing such tax without any
obligation to indemnify the Administrative Agent or any Lender with respect to
such amounts and without any other obligation of gross up or offset with respect
thereto and there shall be no recourse whatsoever by the Administrative Agent or
any Lender subject to such withholding to the Administrative Agent or any other
Lender making such withholding and paying over such amounts, but without
diminution of the rights of the Administrative Agent or such Lender subject to
such withholding as against Borrowers and the other Loan Parties to the extent
(if any) provided in this Agreement and the other Loan Documents.  Any amounts
so withheld or deducted shall be treated as, for the purpose of this Section
9.20, having been paid to the Administrative Agent or such Lender with respect
to which such withholding or deduction was made.
 
                      SECTION 9.21.      No Fiduciary Duty.  Each Lender Party
may have economic interests that conflict with those of any Loan Party and its
Affiliates.  The Loan Parties agree that nothing in the Loan Documents or
otherwise will be deemed to create an advisory, fiduciary or agency relationship
or fiduciary or other implied duty between any Lender Party, on the one hand,
and any Loan Party and its Affiliates, on the other.  The Loan Parties
acknowledge and agree that (a) the transactions contemplated by the Loan
Documents (including the exercise of rights and remedies thereunder) are
arm’s-length commercial transactions between each Lender Party, on the one hand,
and each Loan Party, on the other, and (b) in connection therewith and with the
process leading thereto, (i) no Lender Party has assumed an advisory or
fiduciary responsibility in favor of any Loan Party and its Affiliates with
respect to the transactions contemplated hereby (or the exercise of rights or
remedies with respect thereto) or the process leading thereto (irrespective of
whether any Lender Party has advised, is currently advising or will advise any
Loan Party or any of its Affiliates on other matters) or any other obligation to
any Loan Party except the obligations expressly set forth in the Loan Documents
and (ii) each Lender Party is acting solely as principal and not as the agent or
fiduciary of each Loan Party, its management, stockholders, creditors or any
Affiliates thereof.  Each Loan Party acknowledges and agrees that each Loan
Party has consulted its own legal and financial advisors to the extent it deemed
appropriate and that it is responsible for making its own independent judgment
with respect to the transactions contemplated by the Loan Documents and the
process leading thereto.  Each Borrower agrees that it will not claim that any
Lender has rendered advisory services of any nature or respect, or owes a
fiduciary or similar duty to any Borrower, in connection with the transaction
contemplated by the Loan Documents or the process leading thereto.
 
 
 
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ARTICLE X
 
Loan Guaranty of US. Obligations
 
                      SECTION 10.01.      Guaranty.  Each U.S. Loan Guarantor
hereby agrees that it is jointly and severally liable for, and, as primary
obligor and not merely as surety, absolutely and unconditionally guarantees to
the Lender Parties the prompt payment when due, whether at stated maturity, upon
acceleration or otherwise, and at all times thereafter, of the Secured
Obligations (the “Guaranteed Obligations”).  Each U.S. Loan Guarantor further
agrees that the Guaranteed Obligations may be extended or renewed in whole or in
part without notice to or further assent from it, and that it remains bound upon
its guarantee notwithstanding any such extension or renewal.  All terms of this
Loan Guaranty apply to and may be enforced by or on behalf of any domestic or
foreign branch or Affiliate of any Lender Party that extended any portion of the
Guaranteed Obligations.
 
                      SECTION 10.02.      Guaranty of Payment.  This Loan
Guaranty is a guaranty of payment and not of collection.  Each U.S. Loan
Guarantor waives any right to require any Lender Party to sue any Borrower, any
other U.S. Loan Guarantor, any other guarantor, or any other Person obligated
for all or any part of the Guaranteed Obligations (each, an “Obligated Party”),
or otherwise to enforce its payment against any collateral securing all or any
part of the Guaranteed Obligations.
 
                      SECTION 10.03.      No Discharge or Diminishment of Loan
Guaranty.  (a) Except as otherwise provided for herein, the obligations of each
U.S. Loan Guarantor hereunder are unconditional and absolute and not subject to
any reduction, limitation, impairment or termination for any reason (other than
the indefeasible payment in full in cash of the Guaranteed Obligations),
including:  (i) any claim of waiver, release, extension, renewal, settlement,
surrender, alteration, or compromise of any of the Guaranteed Obligations, by
operation of law or otherwise; (ii) any change in the corporate existence,
structure or ownership of any Borrower or any other guarantor of or other person
liable for any of the Guaranteed Obligations; (iii) any insolvency, bankruptcy,
reorganization or other similar proceeding affecting any Obligated Party, or
their assets or any resulting release or discharge of any obligation of any
Obligated Party; (iv) the existence of any claim, setoff or other rights which
any U.S. Loan Guarantor may have at any time against any Obligated Party, any
Lender Party, or any other Person, whether in connection herewith or in any
unrelated transactions, or (v) any law or regulation of any jurisdiction or any
other event affecting any term of a guaranteed obligation.
 
 
 
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(b)           The obligations of each U.S. Loan Guarantor hereunder are not
subject to any defense or setoff, counterclaim, recoupment, or termination
whatsoever by reason of the invalidity, illegality, or unenforceability of any
of the Guaranteed Obligations or otherwise, or any provision of applicable law
or regulation purporting to prohibit payment by any Obligated Party, of the
Guaranteed Obligations or any part thereof.
 
(c)           Further, the obligations of any U.S. Loan Guarantor hereunder are
not discharged or impaired or otherwise affected by:  (i) the failure of any
Lender Party to assert any claim or demand or to enforce any remedy with respect
to all or any part of the Guaranteed Obligations; (ii) any waiver or
modification of or supplement to any provision of any agreement relating to the
Guaranteed Obligations; (iii) any release, non-perfection, or invalidity of any
indirect or direct security for the obligations of any Borrower for all or any
part of the Guaranteed Obligations or any obligations of any other guarantor of
or other person liable for any of the Guaranteed Obligations; (iv) any action or
failure to act by any Lender Party with respect to any collateral securing any
part of the Guaranteed Obligations; or (v) any default, failure or delay,
willful or otherwise, in the payment or performance of any of the Guaranteed
Obligations, or any other circumstance, act, omission or delay that might in any
manner or to any extent vary the risk of such U.S. Loan Guarantor or that would
otherwise operate as a discharge of any U.S. Loan Guarantor as a matter of law
or equity (other than the indefeasible payment in full in cash of the Guaranteed
Obligations).
 
                      SECTION 10.04.      Defenses Waived.  To the fullest
extent permitted by applicable law, each U.S. Loan Guarantor hereby waives any
defense based on or arising out of any defense of any Borrower or any U.S. Loan
Guarantor or the unenforceability of all or any part of the Guaranteed
Obligations from any cause, or the cessation from any cause of the liability of
any Borrower or any U.S. Loan Guarantor, other than the indefeasible payment in
full in cash of the Guaranteed Obligations.  Without limiting the generality of
the foregoing, each U.S. Loan Guarantor irrevocably waives acceptance hereof,
presentment, demand, protest and, to the fullest extent permitted by law, any
notice not provided for herein, as well as any requirement that at any time any
action be taken by any person against any Obligated Party or any other
Person.  The Administrative Agent may, at its election, following the occurrence
of an Event of Default, foreclose on any Collateral held by it by one or more
judicial or nonjudicial sales, accept an assignment of any such Collateral in
lieu of foreclosure or otherwise act or fail to act with respect to any
collateral securing all or a part of the Guaranteed Obligations, compromise or
adjust any part of the Guaranteed Obligations, make any other accommodation with
any Obligated Party or exercise any other right or remedy available to it
against any Obligated Party, without affecting or impairing in any way the
liability of such U.S. Loan Guarantor under this Loan Guaranty except to the
extent the Guaranteed Obligations have been fully and indefeasibly paid in
cash.  To the fullest extent permitted by applicable law, each U.S. Loan
Guarantor waives any defense arising out of any such election even though that
election may operate, pursuant to applicable law, to impair or extinguish any
right of reimbursement or subrogation or other right or remedy of any U.S. Loan
Guarantor against any Obligated Party or any security.
 
 
 
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                      SECTION 10.05.      Rights of Subrogation.  No U.S. Loan
Guarantor will assert any right, claim or cause of action, including, without
limitation, a claim of subrogation, contribution or indemnification that it has
against any Obligated Party, or any collateral, until the Loan Parties and the
U.S. Loan Guarantors have fully performed all their obligations to the Lender
Parties and no Obligation is outstanding.
 
                      SECTION 10.06.      Reinstatement; Stay of
Acceleration.  If at any time any payment of any portion of the Guaranteed
Obligations is rescinded or must otherwise be restored or returned upon the
insolvency, bankruptcy, or reorganization of any Borrower or otherwise, each
U.S. Loan Guarantor’s obligations under this Loan Guaranty with respect to that
payment shall be reinstated at such time as though the payment had not been made
and whether or not the Lenders Parties are in possession of this Loan
Guaranty.  If acceleration of the time for payment of any of the Guaranteed
Obligations is stayed upon the insolvency, bankruptcy or reorganization of any
Borrower, all such amounts otherwise subject to acceleration under the terms of
any agreement relating to the Guaranteed Obligations shall nonetheless be
payable by the U.S. Loan Guarantors forthwith on demand by the Lender Parties.
 
                      SECTION 10.07.      Information.  Each U.S. Loan Guarantor
assumes all responsibility for being and keeping itself informed of the
Borrowers’ financial condition and assets, and of all other circumstances
bearing upon the risk of nonpayment of the Guaranteed Obligations and the
nature, scope and extent of the risks that each U.S. Loan Guarantor assumes and
incurs under this Loan Guaranty, and agrees that no Lender Party shall have any
duty to advise any U.S. Loan Guarantor of information known to it regarding
those circumstances or risks.
 
                      SECTION 10.08.      Maximum Liability.  The provisions of
this Loan Guaranty are severable, and in any action or proceeding involving any
state corporate law, or any state, federal or foreign bankruptcy, insolvency,
reorganization or other law affecting the rights of creditors generally, if the
obligations of any U.S. Loan Guarantor under this Loan Guaranty would otherwise
be held or determined to be avoidable, invalid or unenforceable on account of
the amount of such U.S. Loan Guarantor’s liability under this Loan Guaranty,
then, notwithstanding any other provision of this Loan Guaranty to the contrary,
the amount of such liability shall, without any further action by the U.S. Loan
Guarantors or the Lender Parties, be automatically limited and reduced to the
highest amount that is valid and enforceable as determined in such action or
proceeding (such highest amount determined hereunder being the relevant U.S.
Loan Guarantor’s “Maximum Liability”).  This Section with respect to the Maximum
Liability of each U.S. Loan Guarantor is intended solely to preserve the rights
of the Lender Parties to the maximum extent not subject to avoidance under
applicable law, and no U.S. Loan Guarantor nor any other person or entity shall
have any right or claim under this Section with respect to such Maximum
Liability, except to the extent necessary so that the obligations of any U.S.
Loan Guarantor hereunder shall not be rendered voidable under applicable
law.  Each U.S. Loan Guarantor agrees that the Guaranteed Obligations may at any
time and from time to time exceed the Maximum Liability of each U.S. Loan
Guarantor without impairing this Loan Guaranty or affecting the rights and
remedies of the Lender Parties hereunder; provided that nothing in this sentence
shall be construed to increase any U.S. Loan Guarantor’s obligations hereunder
beyond its Maximum Liability.
 
 
 
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                      SECTION 10.09.      Contribution.  In the event any U.S.
Loan Guarantor (a “Paying Guarantor”) shall make any payment or payments under
this Loan Guaranty or shall suffer any loss as a result of any realization upon
any collateral granted by it to secure its obligations under this Loan Guaranty,
each other U.S. Loan Guarantor (each a “Non-Paying Guarantor”) shall contribute
to such Paying Guarantor an amount equal to such Non-Paying Guarantor’s
“Applicable Percentage” of such payment or payments made, or losses suffered, by
such Paying Guarantor.  For purposes of this Article X, each Non-Paying
Guarantor’s “Applicable Percentage” with respect to any such payment or loss by
a Paying Guarantor shall be determined as of the date on which such payment or
loss was made by reference to the ratio of (i) such Non-Paying Guarantor’s
Maximum Liability as of such date (without giving effect to any right to
receive, or obligation to make, any contribution hereunder) or, if such
Non-Paying Guarantor’s Maximum Liability has not been determined, the aggregate
amount of all monies received by such Non-Paying Guarantor from the Borrowers
after the date hereof (whether by loan, capital infusion or by other means) to
(ii) the aggregate Maximum Liability of all U.S. Loan Guarantors hereunder
(including such Paying Guarantor) as of such date (without giving effect to any
right to receive, or obligation to make, any contribution hereunder), or to the
extent that a Maximum Liability has not been determined for any U.S. Loan
Guarantor, the aggregate amount of all monies received by such U.S. Loan
Guarantors from the Borrowers after the date hereof (whether by loan, capital
infusion or by other means).  Nothing in this provision shall affect any U.S.
Loan Guarantor’s several liability for the entire amount of the Guaranteed
Obligations (up to such U.S. Loan Guarantor’s Maximum Liability).  Each of the
U.S. Loan Guarantors covenants and agrees that its right to receive any
contribution under this Loan Guaranty from a Non-Paying Guarantor shall be
subordinate and junior in right of payment to the payment in full in cash of the
Guaranteed Obligations.  This provision is for the benefit of both the Lender
Parties and the U.S. Loan Guarantors and may be enforced by any one, or more, or
all of them in accordance with the terms hereof.
 
                      SECTION 10.10.      Liability Cumulative.  The liability
of each Loan Party as a U.S. Loan Guarantor under this Article X is in addition
to and shall be cumulative with all liabilities of each Loan Party to the
Lenders Parties under this Agreement and the other Loan Documents to which such
Loan Party is a party or in respect of any obligations or liabilities of the
other Loan Parties, without any limitation as to amount, unless the instrument
or agreement evidencing or creating such other liability specifically provides
to the contrary.
 
                      SECTION 10.11.      Common Enterprise.  The successful
operation and condition of each of the Loan Parties is dependent on the
continued successful performance of the functions of the group of the Loan
Parties as a whole and the successful operation of each of the Loan Parties is
dependent on the successful performance and operation of each other Loan
Party.  Each Loan Party expects to derive benefit (and its board of directors or
other governing body has determined that it may reasonably be expected to derive
benefit), directly and indirectly, from (i) the successful operations of each of
the other Loan Parties and (ii) the credit extended by the Lenders to the
Borrowers hereunder, both in their separate capacities and as members of the
group of companies.  Each Loan Party has determined that execution, delivery,
and performance of this Agreement and any other Loan Documents to be executed by
such Loan Party is within its purpose, will be of direct and indirect benefit to
such Loan Party, and is in its best interest.
 
 
 
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ARTICLE XI

 
The Borrower Representative
 
                       SECTION 11.01.      Appointment; Nature of
Relationship.  The Company is hereby appointed by each of the Borrowers as its
contractual representative (herein referred to as the “Borrower Representative”)
hereunder and under each other Loan Document, and each of the Borrowers
irrevocably authorizes the Borrower Representative to act as the contractual
representative of such Borrower with the rights and duties expressly set forth
herein and in the other Loan Documents.  The Borrower Representative agrees to
act as such contractual representative upon the express conditions contained in
this Article XI.  Additionally, the Borrowers hereby appoint the Borrower
Representative as their agent to receive all of the proceeds of the Loans in the
Funding Account(s), at which time the Borrower Representative shall promptly
disburse such Loans to the appropriate Borrower; provided that, in the case of a
Revolving Loan, such amount shall not exceed such Borrower’s Availability.  None
of the Lender Parties, respective officers, directors, agents or employees shall
be liable to the Borrower Representative or any Borrower for any action taken or
omitted to be taken by the Borrower Representative or the Borrowers pursuant to
this Section 11.01.
 
                      SECTION 11.02.      Powers.  The Borrower Representative
shall have and may exercise such powers under the Loan Documents as are
specifically delegated to the Borrower Representative by the terms of each
thereof, together with such powers as are reasonably incidental thereto.  The
Borrower Representative shall have no implied duties to the Borrowers, or any
obligation to the Lenders Parties to take any action thereunder except any
action specifically provided by the Loan Documents to be taken by the Borrower
Representative.
 
                      SECTION 11.03.      Employment of Agents.  The Borrower
Representative may execute any of its duties as the Borrower Representative
hereunder and under any other Loan Document by or through authorized officers.
 
                      SECTION 11.04.      Notices.  Each Borrower shall
immediately notify the Borrower Representative of the occurrence of any Default
hereunder referring to this Agreement describing such Default and stating that
such notice is a “notice of default.”  In the event that the Borrower
Representative receives such a notice, the Borrower Representative shall give
prompt notice thereof to the Administrative Agent and the other Lender
Parties.  Any notice provided to the Borrower Representative hereunder shall
constitute notice to each Borrower on the date received by the Borrower
Representative.
 
                      SECTION 11.05.      Successor Borrower
Representative.  Upon the prior written consent of the Administrative Agent, the
Borrower Representative may resign at any time, such resignation to be effective
upon the appointment of a successor Borrower Representative.  The Administrative
Agent shall give prompt written notice of such resignation to the Lender
Parties.
 
 
 
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                      SECTION 11.06.      Execution of Loan Documents; Borrowing
Base Certificate.  The Borrowers hereby empower and authorize the Borrower
Representative, on behalf of the Borrowers, to execute and deliver to the Lender
Parties the Loan Documents and all related agreements, certificates, documents,
or instruments as shall be necessary or appropriate to effect the purposes of
the Loan Documents, including without limitation, the Borrowing Base
Certificates and the Compliance Certificates.  Each Borrower agrees that any
action taken by the Borrower Representative or the Borrowers in accordance with
the terms of this Agreement or the other Loan Documents, and the exercise by the
Borrower Representative of its powers set forth therein or herein, together with
such other powers that are reasonably incidental thereto, shall be binding upon
all of the Borrowers.
 
                      SECTION 11.07.      Reporting.  Each Borrower hereby
agrees that such Borrower shall furnish promptly after each fiscal month to the
Borrower Representative a copy of its Borrowing Base Certificate and any other
certificate or report required hereunder or requested by the Borrower
Representative on which the Borrower Representative shall rely to prepare the
Borrowing Base Certificates and Compliance Certificates required pursuant to the
provisions of this Agreement.
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
 

  BORROWERS:      
JONES APPAREL GROUP, INC.,
  a Pennsylvania corporation  
JONES APPAREL GROUP HOLDINGS, INC.,
  a Delaware corporation  
JONES APPAREL GROUP USA, INC.,
 
a Delaware corporation
 
JONES RETAIL CORPORATION,

 
a New Jersey corporation

 
NINE WEST FOOTWEAR CORPORATION,

 
a Delaware corporation

 
JONES INVESTMENT CO. INC.,

 
a Delaware corporation

 
NINE WEST DEVELOPMENT CORPORATION,

 
a Delaware corporation

 
 
By
/s/ Joseph T. Donnalley
 
    Name:   Joseph T. Donnalley    
In his capacity as officer for each aforenamed
Borrower as set forth opposite such Borrower
on Schedule I attached hereto

 
 
 
 
 
 
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]
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ENERGIE KNITWEAR, INC.,

 
a Delaware corporation

 
JONES JEANSWEAR GROUP, INC.,

 
a New York corporation

 
L.E.I. GROUP, INC.,

 
a Delaware corporation

 

 
By
/s/ Tami Fersko
 
   
Name:   Tami Fersko
   
In his capacity as officer for each aforenamed
Borrower as set forth opposite such Borrower
on Schedule I attached hereto

 
 
 
 
 
 
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]
S-2
 

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VICTORIA + Co Ltd.,

 
a Rhode Island corporation

 

 
By
/s/ Thomas Murray
 
   
Name:  Thomas Murray
   
In his capacity as officer for each aforenamed
Borrower as set forth opposite such Borrower
on Schedule I attached hereto

 
 
 
 

 
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]
S-3
 
 

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JONES APPAREL GROUP CANADA, LP,
an Ontario Limited Partnership
          By: JONES CANADA, INC., its General Partner                      
 
By
/s/ Roger Flores       Name:  Roger Flores      
In his capacity as officer for each aforenamed
Borrower as set forth opposite such Borrower
on Schedule I attached hereto
         

 
 
 
 

 
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]
S-4
 

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LOAN GUARANTORS:
         
APPAREL TESTING SERVICES, INC.,
a New Jersey corporation
   
JONES DISTRIBUTION CORPORATION,
a Delaware corporation
   
JONES MANAGEMENT SERVICE COMPANY,
a Delaware corporation
   
JONES HOLDING, INC.,
a Delaware corporation
                 
 
By
/s/ Joseph T. Donnalley       Name:  Joseph T. Donnalley      
In his capacity as officer for each aforenamed Guarantor as set forth opposite
such Guarantor on Schedule I attached hereto
         

 
 
 
 

 

 
[SIGNATURE PAGE TO CREDIT AGREEMENT]
S-5
 
 

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JPMORGAN CHASE BANK, N.A., as U.S. Lender, Issuing Bank, Administrative Agent,
Joint Collateral Agent, U.S. Swingline Lender, Chase Open Account Agent and
Chase Open Account Bank
                 
 
By
/s/ Susanna Profis       Name:  Susanna Profis       Title:  Vice President    
     

 
 
 
 
 

 
[SIGNATURE PAGE TO CREDIT AGREEMENT]
S-6

 

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JPMORGAN CHASE BANK, N.A., TORONTO BRANCH, as Canadian Lender, Issuing Bank,
Canadian Administrative Agent, Canadian Swingline Lender and Chase Open Account
Bank
                   
By
/s/ Dan Howat
     
Name: Dan Howat
     
Title: Senior Vice President
         

 

 
 
 
 
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]
S-7
 
 

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GENERAL ELECTRIC CAPITAL CORPORATION, as Lender and Joint Collateral Agent
                   
By
/s/ Philip F. Carfora
     
Name:  Philip F. Carfora
     
Title:  Duly Authorized Signatory
         

 
 
 
 
 
 
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]
S-8
 
 

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CITIBANK, N.A., as Lender and Syndication Agent
                   
By
/s/ Thomas M. Halsch
     
Name:  Thomas M. Halsch
     
Title:  Vice President
         

 
 
 
 
 
 
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]
S-9

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BANK OF AMERICA, N.A., as Lender and Documentation Agent
                   
By
/s/ David Vega
     
Name:  David Vega
     
Title:  Managing Director
         

 
 
 

 
BANK OF AMERICA, NATIONAL ASSOCIATION, as Canadian Lender
                   
By
/s/ Medina Sales de Andrade
     
Name: Medina Sales de Andrade
     
Title: Vice President
         

 

 
 
 
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]
S-10
 
 

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WACHOVIA BANK, NATIONAL ASSOCIATION, as Lender, Issuing Bank and Documentation
Agent
                   
By
/s/ Irene Rosen Marks
     
Name:   Irene Rosen Marks
     
Title:  Managing Director
         

 
 
 
 

 
[SIGNATURE PAGE TO CREDIT AGREEMENT]
S-11
 
 

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SUNTRUST BANK, as Lender and Documentation Agent
                   
By
/s/ William L Otott Jr.
     
Name:  William L Otott Jr.
     
Title:  Director
         

 
 
 
 
 
 
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]
S-12
 

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CIT BANK, as Lender
                   
By
/s/ Benjamin Haslam
     
Name:  Benjamin Haslam
     
Title:   Authorized Signatory
         

 
 
 
 
 

 
[SIGNATURE PAGE TO CREDIT AGREEMENT]
S-13
 

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PNC BANK, NATIONAL ASSOCIATION, as Lender
                   
By
/s/ Diane M. Shaak
     
Name:  Diane M. Shaak
     
Title:  Senior Vice President
         

 
 
 
 
 
 
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]
S-14
 

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US BANK NATIONAL ASSOCIATION, as Lender
                   
By
/s/ Jeffrey S. Gruender
     
Name:  Jeffrey S. Gruender
     
Title:  Vice President
         

 
 
 
 
 
 
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]
S-15
 

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CAPITAL ONE LEVERAGE FINANCE CORP.,
as Lender
                   
By
/s/ Paul Dellova
     
Name:  Paul Dellova
     
Title:   SVP & Manager – Syndicated Bank Loans
         

 
 
 
 
 
 
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]
S-16
 
 

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GOLDMAN SACHS LENDING PARTNERS LLC,
as Lender
                   
By
/s/ Mark Walton
     
Name:   Mark Walton
     
Title:  Authorized Signatory
         

 
 
 
 
 
 
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]
S-16
 
 
 

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BORROWER/LOAN GUARANTOR
 
FINANCIAL OFFICER
NAME & TITLE
 
 
 
 
 
JONES APPAREL GROUP USA, INC.
Joseph Donnalley
 
Treasurer
 
 
JONES APPAREL GROUP, INC.
Joseph Donnalley
 
Treasurer and Senior Vice President,  Corporate Taxation and Risk Management
 
 
JONES APPAREL GROUP HOLDINGS, INC.
Joseph Donnalley
    
Treasurer
 
 
JONES RETAIL CORPORATION
Joseph Donnalley
 
Vice President and Treasurer
 
 
NINE WEST FOOTWEAR CORPORATION
Joseph Donnalley
 
Treasurer
 
 
ENERGIE KNITWEAR, INC.
Tami Fersko
 
Vice President and Treasurer
 
 
JONES INVESTMENT CO. INC.
Joseph Donnalley
 
Vice President/Finance, Treasurer and Assistant Secretary
 
 
JONES JEANSWEAR GROUP, INC.
Tami Fersko
 
Vice President and Treasurer
 
 
L.E.I. GROUP, INC.
Tami Fersko
 
Vice President and Treasurer
 
 
 
NINE WEST DEVELOPMENT CORPORATION
Joseph Donnalley
 
 
Vice President/Finance, Treasurer and Assistant Secretary
 
 

 
 
 

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VICTORIA + CO LTD.
Thomas Murray
 
Senior Executive Vice President, Chief Financial Officer, Treasurer and
Secretary
 
 
APPAREL TESTING SERVICES, INC.
Joseph Donnalley
 
Treasurer and Assistant
 
Secretary
 
 
 
 
JONES DISTRIBUTION CORPORATION
Joseph Donnalley
 
 
Vice President & Treasurer
 
 
JONES MANAGEMENT SERVICE COMPANY
Joseph Donnalley
 
Vice President/Finance
 
Treasurer and Assistant
 
Secretary
 
 
 
 
JONES HOLDING, INC.
Joseph Donnalley
 
Vice President and Treasurer